Kiddie Co. Enrichment Ctr. v. Cuyahoga Cty. Bd. of RevisionKiddie Co. Enrichment Ctr. v. Cuyahoga Cty. Bd. of Revision
JOURNAL ENTRY AND OPINION
JUDGMENT:
REVERSED AND REMANDED
ATTORNEY FOR APPELLANT
Jeffrey D. Haines
Haines Law Office, LLC
Normandy Professional Bldg.
77 Normandy Drive, Suite 1
Painesville, Ohio 44077
ATTORNEYS FOR APPELLEE
Cuyahoga County Board of Revision
Jennifer A. Antoon
Brindza Mcintyre & Seed LLP
1111 Superior Avenue
Suite 1025
Cleveland, Ohio 44114
Timothy J. McGinty
Cuyahoga County Prosecutor
By: Mark R. Greenfield
Assistant County Prosecutor
The Justice Center, 8th Floor
1200 Ontario Street
Cleveland, Ohio 44113
South Euclid-Lyndhurst School District
Jennifer A. Antoon
Robert A. Brindza
Susanne M. Degennaro
Daniel M. Mcintyre
David A. Rose
David H. Seed
Brindza Mcintyre & Seed LLP
1111 Superior Avenue
Suite 1025
Cleveland, Ohio
EILEEN A. GALLAGHER, J.:
{¶1} This cause came to be heard upon the acelerated calendar pursuant to
{¶2} Appellant is a limited liability company incorporated in the state of Ohio. Scott Kellogg is the managing member and president of the company. {¶3} In July 2008, appellant purchased three parcels of real property for $875,000 as the sole bidder at a public auction in Lyndhurst, Ohio. The parcels are located at 1111 Alvey Avenue and are identified by the Cuyahoga County fiscal officer as parcels 712-08-010, 712-08-011 and 712-07-005. In tax year 2009, the fair market value of the properties was appraised at a combined value of $2,258,800.
{¶4} Scott Kellogg filed a complaint (the “2010 complaint“) against the tax year 2009 valuation. In filling out the complaint form, Kellogg listed himself and his wife, Faith Kellogg, as the owners of the property. On the signature line of the form, Kellogg signed his name but did not indicate any position with, or relation to, appellant. Appellant‘s name is not mentioned anywhere on the face of the 2010 complaint.
{¶5} The board of revision dismissed the 2010 complaint. Relying on Public Square Tower One v. Cuyahoga Cty. Bd. of Revision, 34 Ohio App.3d 49, 516 N.E.2d 1280 (8th Dist.1986), the board found that Kellogg‘s failure to list the correct owner of the property rendered the complaint defective and, therefore, the board lacked jurisdiction to hear the case on its merits. The record does not indicate that Kellogg or appellant appealed that order.
{¶6} A second complaint (the “2011 complaint“) was filed against the valuation of the real property located at 1111 Alvey Avenue. Scott Kellogg again completed the complaint form in which appellant was listed as the owner of the property and Kellogg was listed as the complainant. In the signature area, Kellogg indicated that he was signing and filing the complaint in his capacity as the president and managing member of appellant.
{¶7} The board of revision dismissed the 2011 complaint by relying on
{¶8} Pursuant to
{¶9} Appellant‘s sole assignment of error states:
The Cuyahoga County Court of Common Pleas erred in affirming the Board of Revision‘s dismissing of Kiddie Company Enrichment Center, Ltd.‘s 2010 complaint for lack of jurisdiction pursuant to Elkem Metals Co., L.P. v. Washington Cty. Bd. of Revision (1988), 81 Ohio St.3d 683 (second filing in a triennium period) as there is no evidence that it had ever previously filed a complaint against the valuation of real property.
{¶10} We review an appeal from a trial court‘s decision on a complaint against the valuation of real property for an abuse of discretion. Black v. Bd. of Revision of Cuyahoga Cty., 16 Ohio St.3d 11, 475 N.E.2d 1264 (1985); Weiss v. Bd. of Revision, 8th Dist. No. 67681, 1995 Ohio App. LEXIS 1932 (May 11, 1995). An appellate court undertaking a review for abuse of discretion may not overturn the trial court “simply because the appellate court might not have reached the same conclusion or is, itself, less persuaded by the trial court‘s reasoning process than by the countervailing arguments.” State v. Morris, 132 Ohio St.3d 337, 2012-Ohio-2407, 972 N.E.2d 528, ¶ 14. Appellant bears the burden of showing that the trial court‘s decision was “unreasonable, arbitrary, or unconscionable.” J.M. Smucker, LLC v. Levin, 113 Ohio St.3d 337, 2007-Ohio-2073, 865 N.E.2d 866, ¶ 16.
{¶11}
{¶12} Appellant‘s argument is simple: it did not file the 2010 complaint; Scott Kellogg did. Appellant argues that Kellogg made no indication in the 2010 complaint that he was acting in his capacity as an agent of appellant and, therefore, he was acting in his individual capacity. Thus, appellant should not be held responsible for Kellogg‘s actions. We find this argument compelling.
{¶13} The idea that a corporation is a legal entity separate and distinct from its members is an accepted principle of law. As stated by the United States Supreme Court in Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 121 S.Ct. 2087, 150 L.Ed.2d 198 (2001), a corporation and an employee “are different ‘persons,’ even where the employee is the corporation‘s sole owner.” Id. at 163. The court reasoned that this construction is appropriate because the “basic purpose” of incorporation is to create a “distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs.” Id. The Ohio Supreme Court also agrees with this proposition. See Agley v. Tracy, 87 Ohio St.3d 265, 268, 719 N.E.2d 951 (1999) (“A corporation is an entity separate and apart from the individuals who compose it; it is a legal fiction for the purpose of doing business.“) (Emphasis omitted.)
{¶14} A corollary of the “distinct legal entity” principle is that corporate officers, members and employees may act in more than one capacity: they may act in their corporate capacity, according to their status within the corporation or in their individual capacity, as citizens and members of society. J.D.S. Properties v. Walsh, 8th Dist. No. 91733, 2009-Ohio-367, ¶ 19 (“An officer of a corporation is not personally liable on contracts
{¶15} Therefore, the central issue in this appeal is whether Kellogg signed the 2010 complaint in his individual capacity or in his corporate capacity as the president and managing member of appellant.
{¶16} The trial court‘s journal entry affirming the dismissal of appellant‘s 2011 complaint indicates that the trial court concurred in the board of revision‘s reliance on Elkem. The facts of Elkem are distinguishable from those in this case in one crucial respect, however. The taxpayer‘s argument in Elkem was that its second complaint was not barred by
{¶17} Appellee‘s argument for a plain-text reading of
{¶18} Furthermore, this interpretation reinforces the goal of the statute. The self-evident purpose of
{¶19} Appellees also argue that appellant should be bound by the 2010 complaint because there is a “unity of interest” between appellant and Kellogg. In support of this argument, appellees cite two cases from the Board of Tax Appeals: Richmond Mall, Inc. v. Cuyahoga Cty. Bd. of Revision, BTA No. 90-P-1155, 1993 WL 233138 (June 18, 1993) and Jaydee Realty Co. v. Cuyahoga Cty. Bd. of Revision, BTA Nos. 98-S-239, 98-S-310, and 98-S-311, 1998 WL 724798. Each of those cases involved a lessor-lessee situation where one of the parties attempted to file a valuation complaint after the other party had filed a complaint within the same interim period. The board of tax appeals held that, because the lessee and lessor in each case were in privity with each other and the lessee‘s right to file the complaint was a derivative right acquired by contract from the lessor, the preceding complaint in each case barred the subsequent complaint within the same interim period. Richmond Mall. Applying this holding to the facts of the case at bar, appellees argue that there is a unity of interest between the parties because Kellogg is the president and managing member of appellant.
{¶20} We do not agree. The unity of interest theory is premised on contractual privity between parties and one party acquiring derivative rights from the other. Here, there is no such privity, and no derivative rights are at issue. As discussed above, even if Kellogg is the sole member or officer of appellant, appellant is nevertheless a distinct legal entity from Kellogg as an individual. There is certainly a unity of interest between appellant and Kellogg as appellant‘s president and managing member, and Kellogg acquired derivative rights to act on behalf of the company in his capacity as president and managing member; but this unity of interest and these derivative rights do not extend to Kellogg as an individual. Absent evidence of a contract between appellant and Kellogg, the individual, expressly granting to Kellogg the power to bring valuation complaints on behalf of appellant, we cannot agree that Kellogg, the individual, was in privity with or acquired derivative rights of appellant. The question, therefore, is whether Kellogg signed and filed the 2010 complaint in his corporate capacity as appellant‘s agent or in his individual capacity.
{¶21} As the trial court failed to address the issue of whether Kellogg signed the 2010 complaint in his individual or corporate capacity, we find that the trial court‘s decision is arbitrary and unreasonable and, therefore, an abuse of its discretion. Accordingly, we reverse and remand to the trial court with instructions to remand to the Cuyahoga County Board of
{¶22} Appellant‘s sole assignment of error is sustained.
{¶23} The judgment of the trial court is reversed and the case is remanded to the Cuyahoga County Board of Revision.
It is ordered that appellant recover of said appellee costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the lower court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
EILEEN A. GALLAGHER, JUDGE
MARY J. BOYLE, P.J., and FRANK D. CELEBREZZE, JR., J., CONCUR