Ohio Bell Telephone Co. v. Levin
921 N.E.2d 212
Ohio
2009
Check Treatment

*1 conclusion, turn, effectively disability compensation. total permanent evidence was when the surveillance report, Dr. Dunkin’s because invalidated ¶ 28-29, This lack discredited, Id. at 33. was left without foundation. report disability for total permanent why compensation of foundation is termination not be Lawson. upheld could did not Dr. Freeman evidence in this case is different. The medical Lowe, upon and based He examined videotape. personally view the

simply exam, sedentary employment. of sustained capable determined that Lowe was in this case it Thus, discredited—which if the surveillance evidence had been even sustained his own exami- independently opinion was not —Dr. Freeman’s words, is irrelevant In other the surveillance evidence findings. nation viability report. of Freeman’s case, and the with the video The medical combined reports commis- analysis, supporting

commission’s nonmedical are “some evidence” sion’s decision. court is affirmed. appeals affirmed.

Judgment Lundberg C.J., and Stratton, O’Connor, O’Donnell, Pfeifer, Moyer, Cupp, JJ., concur. Lanzinger, Weisser, appellant. & and Mark B. for

Weisser Wolf Becker, Cincinnati, Inc. Shohl, L.L.P., for Gary appellee Dinsmore & E. General, Ina, Attorney and Rema A. Assistant Cordray, Attorney Richard General, for Industrial Commission. appellee Telephone Company, Appellee,

Ohio Appellant. Levin, Commr., Levin, Bell Tel. Co. v. [Cite 211, 2009-Ohio-6189.] Ohio St.3d *2 (No. 2009.) 3, July 2007-1807 Submitted 2009 Decided December Cupp, J. (“BTA”) The Tax Commissioner contends the Board of Tax Appeals

{¶ 1} lacked to reduce his valuation of certain personal property of The (“Ohio Bell”). Telephone Ohio Bell In Company the modifying valuation, the BTA relied on a of error that was not in Ohio Therefore, Bell’s notice of to the BTA. agree we that the BTA lacked jurisdiction, and we reverse the decision of the and reinstate the determina- tion of the commissioner.

I statute, public Pursuant to utilities pay property must tax. The property {¶ 2} tax; tax is an ad valorem the tax applied rate is to the taxable percentage of the true value of utility’s personal 5727.06, 5727.10, the property. 5727.11, R.C. tax, 5727.111. To impose the commissioner must first determine the value of utility’s property. R.C. 5727.10. That value forms the base for the ultimate determination of the amount of the tax.1 R.C. 5727.111. This case a involves dispute over true value. In spring Ohio Bell submitted annual public-utility its

property report fall, for the year. 2003 tax That the commissioner issued his preliminary Using assessment. required by 5727.11(A), method R.C. takes historical cost as starting point and then subtracts industry-specific depreciation allowances developed by the the commissioner deter- mined that $2,466,085,652. the true value of Ohio property Bell’s Believing that this valuation was too high, Ohio Bell filed a petition for reassessment under 5727.47. petition R.C. The objections, contained two but only pertinent one is here: “The Commissioner’s determination of the true value of all taxable

property does not [Ohio Bell] reflect its true value in money required value, usually cases, 1. After the property-tax determination of true which is the critical issue in computes portion using assessment also percentages supplied by taxable of true value R.C. Then, 5727.15, apportioned 5727.111. under taxing R.C. the taxable value is to those districts utility’s property final, which the is located. requires Once the assessment becomes R.C. 5727.23 county’s apportioned each auditor to using applicable list the taxable value for collection local rate. erroneous, unjust and determination law. The Tax Commissioner’s lives and alia, costs and service because, it overstates both inter unreasonable value. Correction reasonably reflect true a method that does not utilizes in true value in a total reduction errors results Tax Commissioner’s $351,611,285.” $919,726,091 value of and a reduction taxable reassessment, Ohio Bell submitted In for support petition with Ohio study Replacement Study.” Cost “Depreciated —consistent service lives”— both costs and objection “overstate[d] that the commissioner had new”) new cost (using “replacement cost sought figure to establish new the true loss of lives that “better figures (using reflect[ ] service depreciation assets”). petition, commissioner denied the value in the company’s service accurate of the true gauge had not established “a more finding than assessed value.” value of [its] *3 notice, like the a with the BTA. The appeal Ohio Bell filed notice error, only pertinent but the second is specifications contained two

petition, here: Tax by method utilized the Commissioner depreciation cost less “[T]he money value in taxable [Ohio Bell’s]

does not reflect the true erroneous, law. The Tax determination is required by Ohio Commissioner’s alia, because, inter it overstates both costs and service unjust and unreasonable a not reflect true value.” lives and utilizes method does study present- valuation it had In Bell submitted the same support, Ohio its appeal Bell filed its notice of but before ed to the commissioner. After Ohio telephone a different involving BTA the BTA decided another case hearing, (Cincinnati Bell), study a valuation similar to the rejected in which it company Bell Tel. v. Zaino one Ohio Bell had its case. See Cincinnati Co. prepared (June decision, 10, 2005), BTA In that the Nos. 2003-K-765 and 2003-K-1612. not an alternative valua- study acceptable BTA observed that the valuation was 5727.11(A), permits within of R.C. which the use meaning tion method the if “will not result in the statutory “another method of valuation” the method study valuation was determination of true value.” The concluded the valuation. The BTA contrasted acceptable, not because it was not fact a in Texas E. Transm. study appraisal presented Bell’s with the unit Cincinnati In (1997), appraisal, 676 N.E.2d 523. a unit Corp. Tracy v. (such as the appraised public determines the “unit” to be professional appraiser unit, of that estimates the market value utility’s operating properties), id. at taxing jurisdiction. of the unit to the See appropriate portion allocates an 83-84, acceptable an presented Bell had not 676 N.E.2d 523. Because Cincinnati method, to address whether Cincinnati proceeded the BTA alternative valuation the evidence “through competent probative [that] had demonstrated application prescribed unjust of the commissioner’s rates creates an or unreason- result, upon statutory able reliance the method is inappropriate.” [and that] Concluding showing, Cincinnati Bell had failed to make such a the BTA affirmed the final determination of Commissioner. rejected After the BTA study, Cincinnati Bell’s valuation Ohio Bell

{¶ abandoned own. Instead of presenting replacement-cost and service-life studies that Ohio Bell had it filed a motion for a record, continuance. The motion itself is not according contained but to a order, BTA interim that in light “indicated [the decision BTA’s] * * *, Cincinnati Bell Tel. rejected Co. Zaino a valuation study similar * * * to that upon which apparently rely,” [Ohio intended to company Bell] engaged had an appraiser prepare “to an public utility personal of its property.” commissioner filed motion to the proposed appraisal, exclude

arguing that the BTA’s only extended by “matters decided Commissioner that have by been as error taxpayer” and that neither condition was satisfied Ohio Bell. The BTA denied the motion and allowed testimony. It held that Ohio petition for reassessment and notice of an error, contained adequate specification of as “the commissioner and this board were clearly put on notice that appellant objecting to the application of the cost depreciation less typically method employed by the commissioner in valuing its public utility property.” The pleadings, BTA, notice according error, are required provide notice of claimed but did not provide need to “all of sic.) in support evidence” of that claim. (Emphasis *4 Accordingly, at the BTA hearing, {¶ the unit 12} testimony and the appraiser who had prepared it. In his report, appraiser explained that he employed had “three indicators or approaches to cost, income, value”—based on comparable and sales—to “make a judgment determination of the market value” of Ohio public-utility property. Giving weight emphasis most to the income approach, appraiser concluded that the $1,672,518,399, true value of Ohio Bell’s property was over million $790 less than $2,466,085,652. the commissioner’s original valuation of The BTA agreed with the appraiser. After making adjustments to reflect Ohio Bell’s eventual issue, abandonment of a separate the BTA set the true value of Ohio Bell’s public-utility property $1,702,157,675, at over $760 million less than the original valuation. The commissioner appealed, and we now reverse.

{¶ 14}

II The commissioner raises number of arguments assailing the BTA’s decision; them, among he asserts that “Ohio Bell to jurisdiction failed confer on

215 notice of BTA because Ohio Bell’s appraisal-based challenge to consider in final determination any failed to error the Commissioner’s appeal specify disposition Because of our relating appraisal challenge.” agree. to We issue, unnecessary challenges. it is to address the commissioner’s other A tax For an BTA from a final determination of the appeal appeal “specify R.C. 5717.02 the notice of errors requires jurisdictional. Newman v. complained requirement E.g.,

therein of.” This ¶ (the Levin, 127, 2008-Ohio-5202, 995, 120 Ohio 896 N.E.2d 27 notice of St.3d * * * BTA, error to the appeal specifications “never identified the issue his result, jurisdiction and therefore the BTA lacked to consider that issue. As a we it”). jurisdiction specificity requirement are without to consider is also Levin, 335, 2008-Ohio-4081, 35, “stringent.” Brown v. 894 N.E.2d Ohio St.3d “ ¶ Thus, a appeal explicitly precisely 18. notice of ‘must recite the errors ” ¶ 26, contained in the Tax final Newman at Commissioner’s determination.’ Wilkins, 2006-Ohio-162, 90, quoting Cousino Constr. Co. v. ¶ N.E.2d 41. We have made clear that a of error must not be so specification generic

that it fails to tax. apart any involving set the case from other case the same ¶ 22 (holding fatally Broum at that the notice was defective when the claimed * * * error “might (emphasis have been raised income tax case Ohio” sic)); Aviation, Wilkins, 290, 2006-Ohio-2420, Castle Inc. v. 109 Ohio ¶ (“The 420, 41 wording general N.E.2d of Castle’s constitutional claim is so case”); Queen Valves, every could be used in almost use tax Inc. v. Peck City (an (1954), 579, 583, 161 Ohio St. 53 O.O. 120 N.E.2d 310 assertion that 5717.02). “might nearly any specific be advanced case” is not under R.C. standards, Applying modify these lacked appraisal. commissioner’s valuation of Ohio Bell’s on the basis of unit B earlier, pointed As out Ohio Bell’s notice of to the BTA contained

one specification pertinent error here: *5 depreciation by cost less method utilized the Commissioner “[T]he money property

does not reflect the true value of taxable [Ohio Bell’s] erroneous, required by Ohio law. The Tax Commissioner’s determination is because, alia, unjust costs and service and unreasonable inter overstates both reasonably lives and utilizes a method that does not reflect true value.” that paragraph stating This could be read as two errors: one is the 21} {¶ lives”; “overstates both costs and service the other is that the determination reasonably “not true value.” by “method” used the commissioner did reflect The statement that the commissioner’s determination “overstates both 22} {¶ not that a unit preserve theory costs and service lives” did value, establishes true and Ohio Bell does not contend otherwise. This statement basically theory describes the presented commissioner but BTA: namely, theory statutory not to the certain variables in the (that lives) is, high. language method cost and service had been set too put would have the commissioner on notice that Ohio Bell intended to present BTA. same But language gave no hint that the commissioner erred not by using

a unit appraisal to establish true value. Nor did this mention of language concepts on which the reduction in was appraisal’s premised: apprais- value er’s determination of the market value or the income by the produced property. Notably, appraiser place considered but did not much weight on the “cost one valuation method approach” arguably fore- —the far, shadowed the notice of “gave weight, by the BTA—but most approach.” the income This shows the dissimilarity fundamental between the (which valuation theory presented to the commissioner was revising focused on variables) (which the cost and depreciation and the one to the BTA appraiser’s professional opinion of the market value of Ohio expert focused on an Texas E. Corp., Transm. operating properties). See 78 Ohio St.3d at 86- 87, 676 N.E.2d 523 a “unit (upholding acceptance appraisal” BTA’s as an valuation). alternate statutory valuation method to the cost-based method short, In the assertion that the commissioner both “overstated] costs and service lives” did not cover the unit-appraisal issue. This leaves only the assertions the method used the commission-

er “does not reflect in money the true value taxable property” [Ohio Bell’s] “does not reflect true previous value.” Whereas the statement was specify broad, too narrow to the need for a unit appraisal, these assertions are too they specify any do not error for 5717.02. purposes R.C. It kept against must be mind that the standard which valuation decisions measured is are “true value.” The statute under which this case was litigated requires the commissioner to find “the true value of all taxable proper- 5727.11(A). ty.” goal” R.C. We have observed that the “ultimate in a case of this

217 85, at 78 Ohio Corp., E. Transm. Texas is “true value.” See sort case). final making in his Accordingly, property-tax 523 (public-utility N.E.2d of Ohio true value” “the determination, to establish attempted commissioner property. that the commission- of appeal in its notice Thus, Bell stated when Ohio that the value,” claimed essentially it true “not reflect method did er’s it fell how specifying without to meet the standard valuation failed and added ultimate standard Indeed, restated the simply short. Ohio at all. nothing it specifies that is so broad “specification” “not.” Such a word just presented, have been “true value” could alternate theories of Innumerable the commissioner’s against raised could have been innumerable claims of error any enough encompass is broad specification Ohio Bell’s determination. While actually presented (including or faults one of these theories in These statements BTA), any way. in this case it narrow the issues did not of final determination with the disagreement simply register general Ohio Bell’s of the by the existence already than what is evidenced value—which is little more appeal. notice of Specifica statute. of the requirements is not to meet the enough 127, Newman, 2008- 120 Ohio St.3d explicit precise,

tions of error must be ¶ in this notice is so Ohio-5202, 995, 26, of error wording but the 896 N.E.2d case,” tax in [property] that it indeed have been raised “might general 35, omitted) 2008-Ohio-4081, Brown, 894 N.E.2d 119 Ohio St.3d (emphasis ¶ error alleged of the case” to the way in no “tie the facts 22. These statements See Castle valuing property. commissioner erred by explaining “how” the ¶ have Aviation, 290, 2006-Ohio-2420, 41. And we 847 N.E.2d 109 Ohio St.3d standard was general that some that did no more than state rejected notices (notice merely stated that appeal or not satisfied. See id. violated specificity failed the Protection Clause” Equal of a tax “violates imposition ¶35, 21-22 Brown, 335, 2008-Ohio-4081,894 N.E.2d requirement); (notice by not supported that “the assessment is merely stated require specificity statute failed income-tax proper application” general does; ment). for purposes notice of appeal all of Ohio Bell’s portion That is then, 5717.02, no at all. specifies it error R.C. need not taxpayer is that a response only argument Ohio Bell’s {¶29} claim” support taxpayer [its] used notice of “the evidence provide statutory Bell, was that the sic), that claim according (emphasis in true value. method failed to result an appellant specify While it is true that need not the evidence on

it irrelevant issue is rely, dispositive intends here —the whether charged argued error to the commissioner and before the above, appeal. the notice As discussed was not.

4 Because no statement the notice of can be 31} {¶ as on specifying construed the error which the BTA relied the value modifying jurisdiction of Bell’s BTA lacked to do unit property, Ohio so. Because the (Ohio only factual appraisal presented constituted the basis to the BTA Bell study), abandoned its earlier valuation we the decision of it reverse that stated, jurisdiction unit-appraisal had to consider the issue. As our of disposition unnecessary this issue makes it to reach arguments. other

C While we have focused on the Bell’s failings Ohio notice of appeal BTA, we briefly would note that the in that merely flaws notice are not error, technical. Ohio Bell’s did not any notice mention appraisal-related because Ohio Bell had not appraisal-related theory devised at the time it its drafted here, jurisdictional then, notice. The issue stems from Ohio failure to Bell’s a present appraisal case based on a unit to the not from an unfortunate choice of words. Our cases that such a suggest present failure an to the issue precludes

commissioner BTA from taking jurisdiction over that if issue—even specified See, the issue is notice of appeal. CNG Dev. e.g., Co. v. Limbach (1992), 28, 32, 1180; Zaino, 63 Ohio 584 St.3d N.E.2d also see DeWeese ¶ 324, 2003-Ohio-6502, decide, Ohio N.E.2d We 19-22. need not however, whether could presented have a unit-appraisal theory to the BTA if had in all applicable notice not pleadings but had a unit to the appraisal commissioner. The notice appeal, as discussed, error, did not specify particular that ground and alone requires reversal.

Ill reasons, For we decision foregoing reverse the of the BTA and

reinstate the determination commissioner.

Judgment reversed. Pfeifer, O’Connor, Moyer, C.J., O’Donnell, Lanzinger, JJ., and and concur. Lundberg J., dissents. Stratton,

Lundberg Stratton, J., dissenting. in light appropriate Commissioner I believe that remand (June 2005), BTA Nos. Tel. v. Zaino intervening of the case Cincinnati to that study similar 2003-K-1612, rejected valuation and 2003-K-765 unit value. relied, an allowing appraisal instead which Ohio Bell upon notice of the sufficient appeal provided I also believe study and that the valuation to establish claimed errors jurisdiction. not to presented, the evidence proof to the method of went it had evidence, to the method BTA, fact, pursuant accepted trier of as the Bell. Cincinnati already acceptable determined affirm of the BTA and would Therefore, expertise I defer to the would $1,702,157,675. personal property value of Ohio Bell’s *8 Rosato, Griswold, L.L.P., F. Peter A. Calfee, Lang, James Halter & Lauderdale, for Jeffrey appellee. J. Hubbard, Attor- General, Barton A. Assistant Cordray, Attorney

Richard General, ney appellant. for County al., Appellees, v. Lake et Historical

Stewart Society, Inc., Appellant, et al. Cty. Soc., v. Lake Historical

[Cite as Stewart Inc., 219, 2009-Ohio-6427.] 2009.) (No. 17, 2009 Decided December November 2006-2029 Submitted authority on the appeals of the court of is reversed 2009-Ohio-2495, Motel, Inc., 909 N.E.2d Holly Hill Lang 120.