The Ohio Supreme Court on Tuesday, January 10th, heard three oral arguments, including one asking if time spent under house arrest entitled a defendant to detention-time credit.

The session started at 9 a.m. with the cases being heard at the Thomas J. Moyer Ohio Judicial Center in Columbus. All arguments are streamed live online at sc.ohio.gov and broadcast live and archived on The Ohio Channel.

Brief summaries of the cases are available below:

Mary Ann Diller v. Phyllis Diller, co-executor, and Linda Pennucci et al., Case No. 2022-0058

Third District Court of Appeals (Mercer County)

ISSUE

Did a 2012 rewrite of the Ohio “anti-lapse” statute eliminate a “primary devise” from the definition of “devise,” and limit the ability of descendants of those named in a will to inherit.

BACKGROUND

In 1974, Theodore Penno became owner of a 64-acre farm in Mercer County. He farmed the land with his brother, John, and John’s son, David Penno. In 1998, Theodore Penno created a will, which stated: “I hereby give, devise, and bequeath my farm located in Butler Township, Mercer County, Ohio, and any interest that I may have in any farm chattel property to my brother, JOHN PENNO.” The next item in his will stated that whatever was left after the payments of his debts and expenses was to be equally divided by his brother John and his sister, Mary Ann Diller.

Before Theodore Penno died, he and his brother retired from farming. David rented the property from his uncle and took over all the farming of the land.

In 2016, John died. In 2019, Theodore died without a spouse or children. His closest surviving relatives were his sister, Mary Ann; her daughter Phyllis Diller; and John’s children David Penno and Linda Pennucci.

In 2019, Mary Ann asked the Mercer County Probate Court to declare that her brother’s estate be equally divided between her and John’s children. She argued that because John died before Theodore died, the farm could not be left to John. That meant the property would be divided equally between her and John’s descendants. She asked the court to declare that she was entitled to half of all of Theodore’s property, and that David and Linda were entitled to split John’s half, giving them each one-quarter of the property.

David and Linda objected. They argued that under the “anti-lapse” law, R.C. 2107.52(B)(2), the gift to John was still valid after his death. Since Theodore willed his farm to his brother, they were entitled to the farm property and did not have to split ownership of it with Mary Ann.

The trial court agreed, describing Theodore’s will as containing a typical “primary devise” by stating he was giving the farm to his brother without specifying any other conditions as to what should happen to the property if John died before him. The trial court ruled that the anti-lapse law protects the descendants of someone named in a primary devise, and the property passed to David and Linda as if John received the property and passed it on to them.

Diller appealed the decision to the Third District Court of Appeals. The Third District reversed the trial court, finding the amended version of the anti-lapse law enacted in 2012 no longer protected a primary devise. The Third District questioned whether lawmakers intended to eliminate protection for the vast majority of devises in Ohio wills by removing primary devises, but ruled it must follow what the legislature wrote.

David and Linda appealed to the Supreme Court of Ohio, which agreed to hear the case.

State of Ohio ex rel. US Bank Trust, Natl. Assn. v. Cuyahoga County; State of Ohio ex rel. US Bank Trust, Natl. Assn. v. Lucas County Board of Commissioners; State of Ohio ex. rel. US Bank Trust, Natl. Assn. v. Summit County, Case Nos. 2021-1090, 2021-1091, and 2021-1181

Sixth, Eighth, and Ninth District Courts of Appeals (Lucas, Cuyahoga, and Summit counties)

ISSUES

Has a county unconstitutionally taken a property when it retains the value of a property above the amount owed for delinquent taxes, penalties, and interests in a tax foreclosure proceeding?

Can a taxpayer file a writ of mandamus to pursue compensation for a property transferred to a county land bank for the amount of the property’s value above the amount owed for delinquent taxes?

OVERVIEW

The Supreme Court of Ohio will hear oral arguments regarding the claims of US Bank and three counties in which property was transferred to a county land bank because they owed back taxes. The Supreme Court has consolidated the oral arguments in three cases on this topic. In the cases from Cuyahoga and Lucas counties, US Bank held a mortgage on a property that was transferred to a county land bank for failure to pay delinquent taxes. In the Summit County case, the property transferred to the land bank was owned by US Bank. The bank makes similar legal arguments in all three cases, as do the counties.

BACKGROUND

State lawmakers authorized municipalities and counties to create “land reutilization programs” to address abandoned properties within their boundaries. To assist local governments, the state allowed for “county land banks,” which are non-profit corporations operated under the direction of county elected officials.

In 2006, the legislature approved an expedited tax foreclosure process that counties could use to address the collection of delinquent taxes for abandoned property. Instead of using the traditional method where foreclosed property is sold at auction by the sheriff, the expedited process allows the county treasurer to request a county board of revision to foreclose on the property. Under the expedited procedure, property owners are notified, given an opportunity to pay the back taxes, and told they can contest the foreclosure action in court. If the owners don’t reclaim the property, ownership of the foreclosed property is transferred to the county land bank. Because the property isn’t sold, no funds are raised from the transfer. The county waives its right to collect the delinquent taxes, and the land bank owns the property free and clear of any tax liens or other interests in the property.

In 2017, Summit County foreclosed on a home in Akron. At the time, US Bank owned the property and owed $4,020 in delinquent taxes. The county determined the fair market property value of land was $48,000. US Bank did not respond to notices of the foreclosure or participate in the expedited process. Ownership of the land was transferred to the county land bank.

That same year in Cuyahoga County, the county foreclosed on a Cleveland residence valued at $22,300 and owing $5,722 in property taxes. One mortgage company held a mortgage on the property at the time the county announced it was foreclosing. Before the board of revision conducted a hearing, the mortgage was assigned to US Bank. Neither lender participated in the foreclosure process, and the property was transferred to the county land bank.

In late 2016, Lucas County used the expedited process to foreclose on a Toledo home, where $7,267 in delinquent taxes was owed on a home valued at $38,100. The mortgage was held by the Federal Home Loan Mortgage Corporation. The lender didn’t participate in the proceedings, and the land was transferred to the county land bank. In 2018, US Bank received an assignment of the mortgage.

In 2021, US Bank filed writs of mandamus in the three counties, seeking to initiate appropriations proceedings. The bank argued that the counties engaged in a “taking” of the property and that they were entitled to reimbursement for the amount of equity in each property that was above the amount owed in taxes, interest, and penalties. The bank argued that had the properties been sold in the traditional fashion by the county sheriff, any funds collected by the sale above the amount owed to the county would be returned to the property owners. Instead of providing any cash to the property owner, the land bank received the property and all the equity in property without paying for it, the bank maintained.

Courts in all three counties rejected the lawsuits. US Bank appealed to the Sixth, Eighth, and Ninth District courts of appeals, which all affirmed the lower court decisions.

The bank appealed to the Supreme Court, which agreed to hear the case.

Highland Tavern LLC et al. v. Michael DeWine, governor of the State of Ohio et al., Case No. 2022-0014

Tenth District Court of Appeals (Franklin County)

ISSUES

Did the governor violate the constitution with an emergency rule during the COVID-19 pandemic ordering liquor permit holders to stop serving alcohol after 10 p.m.?

Can a liquor permit holder seek a declaratory judgment in common pleas court to have an emergency rule declared unconstitutional while pursuing a separate administrative appeal to have its liquor license reinstated?

BACKGROUND

In May 2020, Gov. Mike DeWine and health authorities sought to reopen Ohio businesses shut down during the early days of the COVID-19 pandemic. The governor issued a “Dine Safe” order to reopen establishments such as restaurants and bars. As part of the plan, he directed the Liquor Control Commission to enact a temporary rule ending the sales of liquor at 10 p.m.

On July 30, 2020, the commission proposed “Rule 80,” a 120-day rule to stop the carryout sale of beer, wine, and liquor by 10 p.m. and allow consumption of alcohol on the premises until 11 p.m. The state had suspended normal rule-making procedures and adopted the rule the next day.

Highland Square Tavern owned and operated the Highland Tavern in Akron, having purchased the assets and liquor permits eight years earlier. It had not incurred any violation of its liquor permit prior to the imposition of Rule 80.

Highland Tavern didn’t abide by Rule 80 and was cited three times by the Liquor Control Commission within a month for violating the 10 p.m. curfew. In September 2020, the commission revoked Highland Tavern’s liquor permit, and by October, the business closed. It hasn’t reopened.

Highland Tavern filed an administrative appeal with the commission, contesting the revocation of its permits and questioning the constitutionality of the law. The commission denied the appeal, and under the procedures in state law, the bar was allowed to appeal the commission’s decision to the Franklin County Common Pleas Court.

As the appeal of its permit was being considered, Highland Tavern filed a separate lawsuit, in the same court to have Rule 80 proclaimed unconstitutional under the Ohio “separation of powers” provisions. That case was assigned to a different Franklin County judge.

The Ohio Attorney General’s Office, representing the governor and the commission, sought to have the two cases consolidated into the administrative appeal. The judge hearing the administrative appeal denied the motion and noted that in both cases Highland Tavern was contesting the constitutionality of the rule. The judge found the bar could not bypass the administrative process by filing a separate case directly with the court.

The court rejected Highland Tavern’s administrative appeal, and the bar didn’t appeal the ruling. The other trial court judge dismissed the declaratory judgment case. Highland Tavern appealed that decision to the Tenth District Court of Appeals, which affirmed the trial court’s decision.

The bar appealed to the Supreme Court, which agreed to hear the case.

Along with the descriptions in this article, the Office of Public Information has released in-depth summaries of the cases online at: https://www.courtnewsohio.gov/cases/previews/23/0110/0110.asp#.Y73sihXMKUk