Hi, How Can We Help You?

Author Archives: Finney Law Firm

Ohio’s Statute of Frauds – Get it in Writing!

Author By Finney Law FirmPosted on

As discussed in a previous post, courts will only enforce contracts for the sale of real estate if the contract is in writing (and signed by the person against whom you seek enforcement). Click here to read that post.

The legal principle that requires certain contracts to be in writing is the Statute of Frauds. In Ohio, the Statute of Frauds is codified in Chapter 1335 of the Ohio Revised Code; and the Statute of Frauds covers more than just real estate contracts (both sales and leases). For example, R.C. 1335.02 requires loan agreements with financial institutions be in a signed writing to be enforced. However, “the use of a credit card results in the person using the card being bound by the card member agreement.” Citibank, N.A. v. Ebbing, 2013 -Ohio- 4761, ¶ 13, 2013 WL 5783722, at *3 (Ohio App. 12 Dist.,2013)

R.C. 1335.05 extends the Statute of Frauds to a promise to pay the debts of another person; an executor’s promise to pay the debts of the estate from her own funds; an agreement made in consideration of marriage; and for contracts that are not to be performed within one year.

R.C. 1335.11 further extends the requirements of the Statute of Frauds to sales commissions.

These same subjects are covered by Kentucky’s the Statute of Frauds at K.R.S. 371.010.

Despite the formal language of the statute, we see these in everyday life: a parent cosigning on a child’s student loans for instance. An agreement made in consideration of marriage includes prenuptial agreements (but not the agreement to marry itself).

When faced with oral agreements that are not to be performed within one year, courts will often engage in detailed analysis to determine if it is possible that the contract could have been performed within one year. For instance, in Jones v. Pouch, 41 Ohio St. 146, 1884 WL 84 (Ohio 1884), the Ohio Supreme Court ruled that an oral contract to construct a section of road in 1 year and 20 days was enforceable, because it was possible to have completed the work within one year, the additional twenty days were merely a precaution against contingencies. This case is still good law and was cited in the 2015 edition of Williston on Contracts despite being 131 years old.

Additionally with respect to agreements that are not to be performed within one year, Ohio’s courts have determined that the statute of frauds will not bar recovery where one party has fully performed their obligations under the contract but has not been fully paid. In another 19th century case, Towsley v. Moore, 30 Ohio St. 184, 1876 WL 176 (Ohio 1876) the mother of Olive Towsley, an 11 year old girl arranged for her to work in the home of Mr. Moore until she turned 18, in exchange for room and board, and, when she turned 18, Moore was to pay Olive the value of her services. The Court rejected Moore’s argument that the statute of frauds prevented Olive from recovering the value of her services. Ultimately, Moore was ordered to pay Olive $300.00 for her nearly 7 years of service.

Even where a contract fails to satisfy the requirements of the Statute of Frauds and a breach of contract claim cannot be brought, a claim for unjust enrichment or other equitable claims may allow you to obtain a just result.

Whether you are the borrower or the lender, employer or employee, you can avoid these questions by getting your contract in writing and signed by all parties.

St. Clair Township Sues for Property Tax Revenue Payments

Author By Finney Law FirmPosted on

St. Clair Township in Butler County, Ohio has filed suit against the City of Hamilton, the Butler County Commissioners, Butler County Treasurer, and Butler County Auditor to recover lost tax revenue owed to it for properties that were annexed and excluded from the Township into the City of Hamilton.

Ohio Revised Code Section 709.19 provides that when property is annexed and excluded from a township, that township is entitled to be made whole via payments of a portion of the property taxes it would have collected over the next twelve years.

In 2016, the City of Hamilton and County Commissioners acted to exclude from St. Clair Township thousands of parcels that had previously been annexed from the township. This action triggered the obligation to make St. Clair Township whole. The City of Hamilton has thus far refused to comply with its obligations under Ohio law.

The complaint details the missteps along the way in excluding the property as well as the failure to make St. Clair Township whole.

The case has been assigned to Judge Craig Stephens of the Butler County Court of Common Pleas.

St. Clair Township is represented by Chris Finney of Finney Law Firm and Curt Hartman of the Law Firm of Curt C. Hartman. Mr. Hartman is lead counsel in the case.

The Journal News has coverage of the lawsuit here.

Read the complaint below or here.

[scribd id=440303771 key=key-YrcnNaHN1kzjq4Cd4PwG mode=scroll]

City Files Motion to Dismiss John Doe Suit

Author By Finney Law FirmPosted on

Lawyers for the City of Cincinnati filed a motion to dismiss the John Doe complaint regarding the Gang of Five Texts messages. The Gang of Five is the name Cincinnati City Councilmembers PG Sittenfeld, Wendell Young, Tamaya Dennard, Chris Seelbach, and Greg Landsman gave themselves when they were conducting city business via email, text message, and conference call.

Politics and apparently, litigation, makes strange bedfellows as the anonymous plaintiffs are suing not only the City, but also, a Finney Law Firm attorney, who sought public records on behalf of clients. And, curiously, the Plaintiffs, who in their filings with the Court claim to be personal friends of the Gang of Five, chose not to name the councilmembers themselves as defendants in the litigation.

The anonymous plaintiffs seek to have the Gang of Five’s text messages destroyed to avoid further public access to what are clearly public records.

If successful, the Plaintiffs will undo decades of public records law in Ohio and create a new avenue of litigation to prevent disclosure of public records. In short, efforts at government accountability would be stifled for years to come.

Read the Complaint here. 

Read the City’s Motion to Dismiss here.

Ohio Commercial Litigation: Using text messages to defeat a “home defects” case

Author By Finney Law FirmPosted on

In a recent case, we defended a couple who were being sued by the buyers of their former home; alleging that my clients had engaged in fraud in completing the residential disclosure form. As has been discussed in previous blog posts here and here, Ohio law requires that the seller of residential property complete a disclosure form relating to potentially issues – chief among them water intrusion.

Our clients completed the disclosure form noting that they had experienced a water intrusion event when the sump pump failed; and that they hired a local water remediation firm for the clean-up.

Shortly after closing, Greater Cincinnati experienced record precipitation, and the basement flooded. The buyers filed suit claiming that the sellers had lied on the disclosure form.

Necessity of Justifiable Reliance

A claim for fraud requires that the plaintiff actually relied on the supposedly fraudulent misrepresentation, and that she was justified in so doing. This means that for instance, if the buyers were skeptical of the sellers’ disclosure form, or found their own evidence that contradicted the disclosure form, the buyers cannot be said to be “relying” or that their reliance is “justified.”

Additionally, in this instance our clients did disclose what they knew and therefore did not make any fraudulent misrepresentations at all. But simply disputing the allegations is not enough to win the day in court. We sought evidence to undercut all of the allegations.

 

Text Messages Undo the Buyers’ Claims

After the filing of the lawsuit, we conducted discovery, including requesting copies of text messages and emails between the buyers and their real estate agent. The text messages revealed that prior to even making an offer on the home, the buyers told their agent that they knew that water intrusion and mold was an issue. Indeed, the buyers “priced the risk into their offer.” In one text message the buyer stated: “A little concerned with the basement and flooding. They have had issues. Not sure it isn’t why these people are selling.” and “We love it. Just not for $300k . . . Especially with water damage . . . Don’t want to end up upside down or having to fix water damage etc.” And, true to their word, the buyers did not pay $300,000; they paid $275,000 for the home, pricing the potential cost of the anticipated water damage.

At one point the buyers asked their agent for a copy of the documents from the water remediation company the sellers had used. Unfortunately, the buyers’ agent never followed up and asked the sellers for those documents.

After signing the contract, the buyers hired an inspector and instructed him to conduct a mold test. For whatever reason, the inspector did not conduct a mold test, and the buyers did not follow up.

Summary Judgment

Armed with the buyers’ communications with their agent, and the disclosure form, we filed a motion for summary judgment. We argued that the disclosure form was accurate and put the buyers were on notice of water intrusion. Additionally we argued that the buyers’ communications with their agent proved that they were skeptical about the information the sellers provided (meaning they were not relying on the disclosure form) and priced the question into the purchase price.

The court agreed with our argument; “The [buyers’] personal notes and text messages with their real estate agent evince that they had ongoing, multiple concerns about water damage and mold based on the Disclosure Form and their own observations in inspecting the basement.” “Accordingly, the court finds that the [buyers] could not have justifiably relied on any fraudulent misrepresentation or concealment by the [sellers]. As such, their claim for fraud must fail, and summary judgment is appropriate as a matter of law.”

The Lessons

For attorneys defending these cases the lesson is clear, make ample use of discovery. Turn over every stone.

For the plaintiff’s attorney, ask more questions up front. Conduct your own “discovery” on your client, ask for those text messages before the defense attorney does. Don’t let your client waste your time litigating a bad claim.

For home sellers, make sure you complete the disclosure form to the best of your ability; knowing that there are brazen people out there who will file suit even though you disclosed issues and even when the are going to have to turn over the evidence that sinks their own case.

For buyers, remember in Ohio caveat emptor is the law. Make sure you get all the information you asked your agent to get you. Make sure your inspector conducts all of the inspections you asked for. And, when trouble arises in your new home (as it inevitably will) be honest with yourself about what you knew when you bought the house. Don’t bring lawsuits that are doomed to fail hoping the other side will roll over. Our civil litigation system only works when people do not abuse it.

Contact Christopher P. Finney at 513-943-6655 or using this form if you’ve sold a home and the buyer is now claiming that you did not disclose an issue.

Ohio Property Tax Valuation Reduction – Online auctions of bank owned property

Author By Finney Law FirmPosted on

We’ve heard it said a million times (and said it ourselves a million more), “the recent sale price of a piece of real estate is the best evidence of its value.” And the concept of sales price as value is so ingrained in our minds that we sometimes forget that this is just shorthand, that the actual language of the statute is what matters; and, ultimately, what must be proven before the board of revision or the board of tax appeals.

“In determining the true value of any tract, lot, or parcel of real estate under this section, if such tract, lot, or parcel has been the subject of an arm’s length sale between a willing seller and a willing buyer within a reasonable length of time, either before or after the tax lien date, the auditor may consider the sale price of such tract, lot, or parcel to be the true value for taxation purposes.” R.C. 5713.03

 

What is “Arm’s-Length”

What the actual language of the statute means is that the sale has to be arm’s-length: “A transaction between unrelated parties under no duress.” (Appraisal Institute). Boards of Revision and the Board of Tax Appeals look for the following factors when determining whether a sale price should be adopted as the true value:

  1. Buyer and Seller are typically motivated.
  2. Both parties are well informed or well advised and each is acting in his/her own best interest.
  3. A reasonable time is allowed for exposure in the open market.
  4. Payment is made in terms of case in U.S. dollars or financial arrangements comparable thereto and
  5. The price represents normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
The Board of Revision

Recently Ohio’s Ninth District Court of Appeals upheld a decision by the Board of Tax Appeals to reverse the decision of the Summit County Board of Revision to adopt the online auction price as the true value.

In Green Local Schools Board of Education v. Manolakis, et al. 2019-Ohio-4250, the property owners initially filed a complaint with the Summit County Board of Revision seeking to lower the value of their home from $1,498,350.00 to $836,300 – the owners’ purchase price in an online auction. Before the Board of Revision, the owners explained that the property had been subject of a sheriff’s sale and that the foreclosing bank had purchased the property at that sale. A few months later, the bank placed the property for sale via an online auction site, hubzu. The owner’s put in a bid and won.

The Board of Revision accepted the owner’s testimony and adopted the sale price. However, the school board appealed to the Board of Tax Appeals and pointed to a lack of evidence supporting a finding that the auction was “arm’s-length.”

The Board of Tax Appeals

After the property owners prevailed at the Board of Revision, the local school board (which typically receive 60-70% of the property tax collections) filed an appeal arguing that the owners did not meet their burden to show that the sale was “arm’s-length.”

The owners testified at the Board of Revision that they had no relationship with the seller but were unable to provide any information about the bank’s motivation in selling. Notably, the owners were unable to show that the property had been marketed for sale other than via a sign in the yard of the property one week before the auction, or whether there was a minimum bid for the auction, or any other bidders.

Another problem for the owners is that they agreed to let the Board of Tax Appeals decide the case without putting on any additional evidence. So the owners forfeited the right to supplement the evidence to bolster their claim that the sale was arm’s-length.

The Board of Tax Appeals, looking only at what was before the Board of Revision found that there was not enough evidence in the record to show that the sale was arm’s-length. And, once the sale price was disregarded, the only evidence of value was the auditor’s original value. So the Board of Tax Appeals reinstated the auditor’s value $1,498,350.00.

The Court of Appeals affirmed the decision of the Board of Tax Appeals, finding that “we cannot say that the BTA was unreasonable in concluding that the evidence of value presented by Mr. and Mrs. Manolakis to the BOR was not sufficient.”

The Lesson

Don’t take the Board of Revision process lightly. This is a serious endeavor – particularly when you are seeking a substantial  reduction in value. Remember, when you bring a challenge to the Board of Revision it is your burden to prove that your proposed value is right and that the auditor’s value is wrong. Bring everything you can think of to prove your case. And if there is an appeal, take the opportunity to bring in additional evidence to bolster your case.

Your Case

Finney Law Firm has represented commercial and residential property owners (and one school board) before the Boards of Revision throughout Ohio and before the Ohio Board of Tax Appeals in property tax valuation challenges.

Every case should be evaluated based on its own unique set of circumstances. The time to file a challenge begins January 1 of each year and ends March 31. If you have questions about the value of your property, or if you recently purchased property at a price less than the auditor’s value, we can help. More information about the property tax valuation process is available here.

Contact Christopher P. Finney at 513-943-6655 or contact us here.

Ohio Public Interest Law: Finney Law Firm files suit to enjoin unauthorized lawsuit

Author By Finney Law FirmPosted on

In June 2019, Cincinnati City Solicitor Paula Boggs Muething filed suit against the state of Ohio, arguing that a state law provision prohibiting cities from enacting their own firearms regulations violates the Ohio Constitution. Unfortunately, it seems, she went off “half-cocked.”  We say this because, while the suit was brought in the name of the City of Cincinnati, the Cincinnati City Council never voted to authorize the lawsuit.

State Representative Tom Brinkman

On July 19, 2019, State Representative, and Cincinnati resident, Tom Brinkman sent a letter to Ms. Boggs Muething demanding that she seek an injunction to restrain the abuse of corporate powers (in essence to sue herself to keep her from bringing suit in the City’s name without specific authorization from the City Council).

Ms. Boggs Muething rejected Mr. Brinkman’s demand, thus permitting Brinkman to file suit himself on behalf of the City. Brinkman filed suit on August 13, 2019, and a few days later, the court ordered Brinkman’s suit consolidated with the original lawsuit against the State of Ohio.

While the lawsuit has been presented as an attack on the City’s efforts to regulate firearms, the lawsuit simply seeks to have the City Solicitor live within the bounds of her authority. If the Cincinnati City Council wishes to authorize the Solicitor to bring suit, she would be authorized to do so. But, to date, the council has not authorized such a suit and it is improper to have the solicitor deciding on her own to bring suit in the City’s name. This is an abuse of her power and everyone concerned about transparency and accountability should agree that Council’s authority should not be usurped.

The State of Ohio filed a motion to dismiss the City’s original complaint, the city’s response to that motion is due August 19, 2019.

Read Brinkman’s Complaint here  and Motion for an Injunction here. Fox 19’s coverage of the suit is available here.

Finney Law Firm Takes On Huron, Ohio Open Meetings Case

Author By Finney Law FirmPosted on

Our firm was recently retained to represent Stacy and Jason Hinners in a suit against the city of Huron Ohio and its council members for violating Ohio’s Open Meetings Act.

In 2017 and 2018 the city council voted during an executive session to award a Bonus and salary increase to the city manager. Ohio’s Open Meetings  Act is clear, while the council can deliberate on these issues in executive session, they can never take formal action or vote in executive session. But by authorizing a pay increase and bonus payments, that’s exactly what the Council did.

In this case in Erie County, Ohio, Hinners v City of Huron, Case No. 2019 CV 0275 the Hinners actually alerted the city to the violations and asked the city to undo the illegal payments. Instead the city informed the Hinners that the council would simply “ratify” the illegal payments.

The Hinners filed suit; and true to their word, the council voted the next day to ratify the illegal payments. But not before first arresting Mrs. Hinners on the pretext of “disrupting a public meeting” in violation of her civil rights.

Mrs. Hinners is represented by Subodh Chandra in the criminal case. You can read more about the criminal case at the Chandra Law Firm’s website.

A visiting judge has been appointed to hear the Open Meetings case, retired judge Michael Jackson formerly of the Cuyahoga County Common Pleas court. Judge Jackson has set a short schedule for the case. Trial is scheduled for February 2020.

Given that the city’s first response was to arrest our client, we expect that the city will mount an aggressive defense and we are prepared to mount an equally aggressive offense. We have already issued our first round of written discovery and anticipate deposing the council members in the next few months.

Read the Complaint below or here. And read the City’s Answer here.

[scribd id=419874630 key=key-AeIUceCLZP9RZIKCPjpA mode=scroll]

Ohio Public Interest Law: New Twist in Cincinnati Gang of Five Records

Author By Finney Law FirmPosted on

Updated with links to recent filings below

More than three months after the open meetings lawsuit against Cincinnati’s self-proclaimed “Gang of Five” – Councilmembers Tamaya Dennard, Greg Landsman, Wendell Young, Chris Seelbach and PG Sittenfeld – there is a new development with the filing of a lawsuit against the City of Cincinnati, Binary Intelligence, and a Finney Law Firm, essentially seeking to undo Ohio’s public records laws.

Bizarrely, the case is brought by two “John Does” in an effort to conceal their identities, but whom allege their communications with members of the Gang of Five have been produced in response to public records requests coming since the resolution of the Finney Law Firm suit, and a public records suit won by Angenette Levy and Channel 12. The Levy lawsuit provided a judicial declaration that there is no practical difference between text messages and emails in the context of public records law, and that the fact that a communication is made from or stored on a personal device does not mean that the communication is not a record under Ohio law. Read the text messages released in response to Angenette Levy’s suit here.

The John Does seek to enjoin the City from maintaining its file of communications to and from the Gang of Five and to force Finney Law Firm to destroy the public records he has obtained from the City in response to requests he has made on behalf of clients.

A hearing on the Plaintiffs’ motion for a temporary restraining order is scheduled for Tuesday, July 2 at 3 pm before Judge Michael Barrett.

Media Roundup:

Channel 12’s story is here.

Cincinnati Enquirer coverage is here.

Channel 9’s coverage is here.

Channel 19’s coverage is here.

The City’s memo in opp to the motion for a temporary restraining order is here, Exhibits A-E are here, here, here, here, and here.

 

[scribd id=415030882 key=key-aBcXlVnsaTxHkdQBzGFx mode=scroll]

 

Another Win for Leased Fee Property Buyers

Author By Finney Law FirmPosted on

The Ohio Supreme Court recently issued decisions in three cases further clarifying the valuation of “leased fee sales” (property that is subject to an existing lease at the time of the sale).

The purchase price of a leased fee interest, particularly when the lease has a many years left, more accurately reflect the value of the cash flow that the lease will generate rather than the value of the underlying real estate. This is why real estate investors had for years sought changes to Ohio’s property valuation law (the legislature  acted in 2013). Since then, the battle has been in the courts to determine how the changes would be implemented.

In recent years, the courts have given life to those changes in decisions ordering the board of tax appeals to disregard the sales in “sale leaseback transactions” and in these most recent cases, in ordering the Board of Tax Appeals to consider appraisal evidence of leased fee sales.

The Court issued decisions on that issue in three cases on May 6, 2019:

Store Master Funding VI, LLC v. Franklin County Board of Revision, 155 Ohio St.3d 253, 2018-Ohio-4301

Spirit Master Funding IX, LLC v. Cuyahoga County Board of Revision, 155 Ohio St.3d 254, 2018-Ohio-4302

Northland-4, LLC v. Franklin County Board of Revision, 155 Ohio St.3d 257, 2018-Ohio-4303

The Court also issued a decision regarding the exclusion of easement rights in determining the value “as if unencumbered.” The Court found that the express language of the statute, ordering that the value of real estate be determined “as if unencumbered” means that the value of an easement benefiting a parcel should be excluded when determining the value of that parcel. Worthington City Schools Bd. of Edn. V. Franklin County Board of Revision, 155 Ohio St.3d 187, 2018-Ohio-2909

The end result for all four of these cases points to a better opportunity for real estate investors to challenge the auditor’s adoption of the recent sale price of properties subject to leases or other encumbrances,

Learn more about Finney Law Firm’s Property Valuation practice here.

1 2 3 4 … 11