2019 Ohio 3907
Ohio Ct. App.2019Background
- Summer Rays, Inc. and Reynoldsburg Revolve Church (RRC) are 501(c)(3) sober‑living charities; Charles Kirk is executive director. The Attorney General sued alleging misuse of charitable assets and related claims.
- The parties entered an Agreed Order (July 16, 2018) that appointed a receiver with broad authority to manage assets, including authority in paragraph 27 to apply to the court to sell assets if liquidation of some real property was deemed appropriate.
- The receiver found revenues insufficient to sustain operations, obtained valuations, and sought court approval to sell four vacant, unoccupied properties in private sales to fund operations and receivership expenses.
- The trial court held a hearing, approved the receiver's receivership plan, and on November 5, 2018 and February 4, 2019 authorized and confirmed the four sales, directing priority distribution of sale proceeds for taxes, closing costs, and receivership administrative expenses.
- Appellants appealed, raising three assignments of error: (1) receiver subverted Agreed Order by liquidating assets, (2) lack of statutory authority absent showing of irreparable harm, and (3) internal inconsistency and due‑process violations (including bond, lien protections, and access to records).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused its discretion in authorizing receiver sales as contrary to the Agreed Order's preservation purpose | Receiver/State: "Preserve" allows actions to prevent waste and may include limited liquidation to preserve the estate; paragraph 27 expressly authorizes sales after court approval | Summer Rays: Agreed Order required a status‑quo receiver; sales subvert preservation and effect liquidation for profit | Court: No abuse of discretion; "preserve" read in context permits selling vacant properties under ¶27 to preserve overall estate; findings supported by receiver affidavit |
| Whether receiver needed to show "irreparable harm" or other equitable precondition under R.C. 2735 before selling property | Receiver/State: Appointment and sale authority were contracted in Agreed Order; R.C. 2735.04 governs sale process and does not require an "irreparable harm" showing | Summer Rays: Receiver lacked statutory authority to sell absent equity‑type showing of irreparable harm | Court: Appellants waived challenge to appointment and to the irreparable‑harm argument; R.C. 2735.04's procedural protections (notice, hearing, best interest/ fairness) govern sales; no irreparable harm showing required |
| Whether the sale orders were internally inconsistent or violated due process (liens, bond, records access) | Receiver/State: Statutory protections for lienholders and judicial supervision of sales protect due process; bond and records access were addressed by the Agreed Order and subsequent magistrate orders | Summer Rays: Sales would extinguish owners' liens; receiver had $0 bond and seized records, denying due process | Court: No due‑process violation—orders protected recorded lienholders; $0 bond and seizure were part of the Agreed Order (waived on appeal); records‑access dispute was resolved procedurally and is moot |
Key Cases Cited
- State ex rel. Celebrezze v. Gibbs, 60 Ohio St.3d 69 (1991) (trial court must exercise sound discretion in receivership matters)
- McGee v. C & S Lounge, 108 Ohio App.3d 656 (10th Dist. 1996) (abuse‑of‑discretion standard explained)
- Park Natl. Bank v. Cattani, Inc., 187 Ohio App.3d 186 (12th Dist. 2010) (trial court may authorize private receiver sales free and clear of liens)
- Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d 353 (1997) (contract interpretation rule: read contract as a whole; give effect to all parts)
- Ohio Bur. of Workers Comp. v. Am. Professional Emp., Inc., 184 Ohio App.3d 156 (10th Dist. 2009) (appointment of a receiver is an equitable remedy; parties seeking appointment must show need)
- Lockard v. Lockard, 175 Ohio App.3d 245 (4th Dist. 2008) (receiver powers may be excessive where sale of operating inventory would irreparably harm business)
- Peebles v. Clement, 63 Ohio St.2d 314 (1980) (prejudgment attachment scheme held constitutionally deficient where judicial supervision was lacking)