As we previously wrote about, here, Finney Law Firm was honored to serve as co-counsel to Tea Party groups throughout the nation in what we believe was the only certified class action ever against the Internal Revenue Service for its targeted discrimination against the plaintiffs resulting in protracted delays in processing and granting tax exemption status due to their political viewpoints. The targeting was led by Obama administration IRS official Lois Lerner and her chief deputy at the IRS, Holly Paz.

After years of pitched legal battles, that litigation ended with a dramatic settlement in which the IRS paid damages to Tea Party groups, the IRS paid the Tea Parties’ attorneys fees, and then-US Attorney General Jeff Sessions issued a personal apology on behalf of the United States of America that included this unequivocal statement about the IRS intentional wrongdoing: “this abuse of power will not be tolerated.”

In that litigation, plaintiffs succeeded in obtaining the depositions of Lerner and Paz, but the transcripts of the depositions — finally revealing their own testimony about the origins and implementation of the outrageous policies and practices — have remain sealed under a temporary emergency Order by Judge Michael Barrett. (Even US House and Senate Committees investigating the wrongdoing were stymied in getting that testimony when Lerner and Paz each invoked their 5th Amendment right against self-incrimination.)  That Order bottling up the deposition transcripts was never made final, and thus it could not be appealed.  Thus, to this day — more than three years later — the deposition transcripts remain hidden from public scrutiny.

As a result, this week, Plaintiff’s counsel filed a Motion for Writ of Mandamus before the 6th Circuit Court of Appeals seeking to have the depositions unsealed.  You may read the Motion here.

A bill passed this week by the Ohio legislature could make major changes in the current process for Ohio tax valuation challenges before Ohio Boards of Revision as it relates to participation by Boards of Education if Governor DeWine signs it into law.

Unlike the procedures in many other states, in Ohio, Boards of Education (the major recipients of property tax monies) may both initiate complaints to increase the valuation of real property (and thus increase property taxes owed) and may oppose a property owner’s legal attempts to secure a reduction in tax values as well.

Some major features of the legislation, Am. Sub. H.B. 126, follow:

  1. School districts may not initiate a complaint to increase valuation unless the challenge meets all of three requirements (a) the challenge is based upon an actual arm’s length sale of the subject property before the tax lien date in question (this would then, it seems, also rule out challenges at all of “entity transfer” sales and sales after the tax lien date in question), (b) the sale is at least 10% above the then-established Auditor’s valuation and (c) such sale price exceeds the Auditor’s valuation by at least $500,000 (that amount is then annually subject to a CPI adjustment).
  2. Boards of Education would have to carefully undertake extensive and detailed procedures to specifically authorize by resolution such challenges, on a property-by-property basis, with at least seven days’ advance certified mail notice to each affected property owner.  The level of detail of these procedures appears to be nothing more than a series of procedural traps for Boards of Education to discourage their involvement in the tax valuation process.
  3. The involvement of Boards of Education stop at the Board of Revision.  While property owners or the Auditor may pursue an appeal of a Board of Revision decision, Boards of Education will have no authority to appeal (or participate in a property owner appeal) of a Board of Revision decision.
  4. Presently, property owners may enter into private settlements with school districts to avoid or end their opposition to a valuation reduction or its attempts to seek valuation increases. H.B. 126 will outlaw the practice of entering into these “side deals.”

More minor changes include:

  1. Boards of Education may file counterclaims to property owner complaints to reduce valuations only if the initial Complaint seeks a reduction of at least $17,500 (Boards of Education rarely if ever file counterclaims below this level at present).
  2. Boards of Revision lose jurisdiction to increase valuations of claims by Boards of Education are not acted upon within one year of the date of the filing of the Complaint (in our experience, this delay only happens in a few large urban counties in the year following a triennial revaluation, so this type of prolonged delay is quite uncommon).

There is no language in the bill about its effective date, upon our initial review, and thus it would seem its effective date would be 91 days after it becomes law (under the Ohio Constitution).  Thus, some of these provisions (pursuit of appeals, for example) could have an impact on valuation complaints and school board counterclaims filed in calendar year 2022.

We will promptly update this blog when Governor DeWine either vetoes or signs the legislation into law. He has 10 days to act, or the bill automatically becomes law.

Read more about the legislation here:

Read the actual legislation here. Contact Chris Finney (513.943.6655) if you have questions about the legislation or desire to pursue or defend against an Ohio or Kentucky property tax valuation challenge.

 

Listen in as Chris Finney discusses his 8-0 unanimous victory against the Ohio Civil Rights Commission as they attempted to extract money for a tenant in an entirely frivolous case.  The conduct of the Ohio Attorney General’s office and the Ohio Civil Rights Commission was shameful and outrageous in this case.

 

Truth can be stranger than fiction.  And the last few weeks at the Finney Law Firm that has been the case.

Yesterday, Chris Finney, Jessica Gibson and Julie Gugino racked up a unanimous jury verdict (8-0) to defeat a case of claimed retaliation in response to a tenant’s claimed request for a disability accommodation that was met with a non-renewal of a residential lease.  The case was styled Ohio Civil Rights Commission v. Abundant Life Faith Fellowship in front of Judge Christian Jenkins in Hamilton County Common Pleas Court.  The Civil Rights Commission was also suing the Church’s pastor who had served for 41 years.  In candor, the Civil Rights Commission did a terrible job of vetting its own case with a terrible, dishonest plaintiff and a very sympathetic defendant.  Its attorneys at trial also were not exactly prepared or stellar.

The Civil Rights Commission case was full of demonstrable untruths about a kind-hearted 74-year-old African American minister who had suffered two strokes.  By the testimony of two of her fellow tenants in the building, the complaining tenant had plotted starting fewer than two weeks into her tenancy to drum up a fictitious lawsuit against the landlord as a way to extract money from him — she told this to her fellow tenants.  And for a year, she made his life a living hell, with incessant complaints about inadequate heat and fabrication about needing more light for a vision disability (in fact, her complaints about lighting had been adequately addressed early in her tenancy).  Dozens of complaints were addressed by visits by with servicemen, engineers, and repairmen to cater to her many whims and incessant gripes.  The Cincinnati Health Department came out and confirmed the unit in every room was heated to a comfortable 72°F to 73°F (the tenant lied to the jury — never a good idea — and said the readings were 62°F, 64°F and 66°F).

In the funniest part of the trial, the tenant at first denied and then admitted sending a bizarre text message to the landlord in the depth of winter, after he noticed that the windows of every unit in the building were open, including those of the tenant who constantly complained it was too cold!  Here is the text message, grammatical errors and misspellings included:

Yes, her crazy assertion to the landlord was that he must maintain the heat in the unit at 70°F even if the windows of the unit are left open!

Of course Pastor Brown and the Church had to fund the 4-year defense of the Civil Rights Administrative Complaint and the lawsuit, which he did with aplomb, but at great expense.  For the benefit of all landlords subject to outrageous prosecutions from obstinate public agencies, he saw this case through to its appropriate and proper end.  He refused to be bullied by the Ohio Civil Rights Commission, the office of the Ohio Attorney General and Housing Opportunities Made Equal (H.O.M.E.) (which manufactured evidence and knowingly lied to the Civil Rights Commissions in “building their case”).

For more information or to avoid being bullied by these same agencies: (a) DO NOT TALK TO THEM in an investigation EVER and (b) contact Jessica Gibson  (513.943.5677) for assistance with your case.

As we wrote here, in November the Ohio First District Court of Appeals in White v. Cincinnati unanimously ruled in favor of clients of the 1851 Center for Constitutional Law and Finney Law Firm in a challenge to the City of Cincinnati’s alarm tax scheme. The City of Cincinnati asked the Ohio Supreme Court to review that decision, a discretionary call by Court.  Historically, Ohio’s top Court accepts only about 5% of such cases for consideration.

Today, the Ohio Supreme Court declined to accept for review the First District decision.  Since that was the last stop on the railroad for the City, the inevitable next legal steps are injunction against further collection of the tax, class certification and an order of restitution before Common Pleas Court Judge Wende Cross.

Amazingly, even after the First District ruled that the tax was illegal, through today the City of Cincinnati insisted on continued collection of the tax. So, an injunction by the trial court now will be necessary.

If you are a Cincinnati alarm fee payor, you should be expecting a refund once the amount has been calculated and the procedural hurdles cleared, perhaps later this year.  If the City continues to attempt to extract alarm charges from you, respectfully decline and send them this blog entry!

We most value the accolades and appreciation from our clients, but the various legal ratings services are pretty much unanimous that the Finney Law Firm attorneys are superior in their various fields.  The latest of these comes from SuperLawyers, a Thompson Reuters rating system.

This year, attorney Bradley M. Gibson was recognized for his skills in the Civil Litigation Category, and Finney Law Firm founder Christopher P. Finney was honored for his work in each of his disciplines of Business Litigation, Land Use/Zoning, Real Estate, Constitutional Law, State, Local & Municipal, and Tax.  Each of them are licensed to appear before all Courts in the State of Ohio and the Commonwealth of Kentucky and in the Federal District Court and Appellate Courts in Ohio.  Mr. Finney is also licensed before the United States Supreme Court, U.S. Tax Court and in the District of Columbia.

Let us know how we can apply our experience and skill to “Make a Difference” for your legal needs.

If you see a headline about a jury verdict in an employment case, it’s likely to be about a case where an employee was fired. Those are the cases where the impact of discrimination can be the most harmful. A wrongful firing can often cause enormous financial and emotional distress to a family, and the jury verdicts in such cases can sometimes be eye-popping.

But people often forget that federal and state employment laws prohibit discrimination at ALL phases of the employment relationship. They apply at the hiring stage as much as at the termination stage. And they also apply at various stages DURING the employment relationship. When employers make decisions about promotions, for instance, they are required to give opportunities without regard to race, sex, age, disability, etc. The same is true for decisions about pay. Employees cannot be denied raises or other benefits based on these characteristics.

Another example is training. And this can be key. If an employee is denied training opportunities, that in turn can lead to being denied opportunities for advancement later on. The Civil Rights Act of 1964, and comparable state laws, provide that employers must not discriminate when making decisions about which employees will be given the chance to learn new skills.

Employers are often mindful of anti-discrimination laws when preparing to terminate employees. They tend to be most fearful of lawsuits when making those kinds of momentous decisions. They sometimes are less careful, however, when making other kinds of employment decisions, and that lack of care can come back to haunt them. Their hiring, promotion, and pay practices and processes are very important as well, and can expose them to significant legal liabilities if they are not even-handed in their application.

Employers are well-advised to have good legal counsel review these process and procedures And employees should be mindful that they have the right to be free from illegal discrimination not just at termination, but at all phases of the employment relationship.

In the law, people aren’t always held to the promises they make. “I promise I’ll marry you,” or “I promise I’ll buy you a car,” are examples of promises the law usually will not enforce.

We are taught to live up to our promises, but in the law a promise is not normally enforceable unless the person making the promise receives something in exchange. If there is an exchange of promises the law usually considers that a contract. In the absence of a contract, however, a promise usually can’t be enforced at law.

But there is an exception. This is called “promissory estoppel.” This phrase means that sometimes a person will be stopped (“estopped”) from breaking a promise they made, even if there was not a contract.

This doctrine can have an interesting application in the field of employment law. If an employer promises an employee something, and the employee takes some action to his or her detriment in reliance on that promise, the employer may be held to the promise it made.

For instance, say an employer is trying to hire someone away from another employer. To get her to come on board the employer promises that the employees will be hired for at least two years. If the employee leaves her former employer in reliance on the promise of at least a two-year employment, and if that reliance is reasonable, the employer can be held legally liable if it breaks the promise, even though there was never a contract made.

Another example is when an employer promises an employee a raise and promotion if he transfers to a different city. If the employee uproots his family and moves across country in reliance on that promise, the employer risks a lawsuit for promissory estoppel if it doesn’t live up to what it told the employee about the raise and promotion.

We are often told to “get it in writing” when it comes to promises of future benefits. That’s good advice. But sometimes promises can be enforceable even if they are not made in written form, and even if they do no come in the form of a contract.

Do you own land on one of the seven hills of Cincinnati? Has your downhill neighbor started digging on their land? Has such digging threatened to cause or caused your land to slide? If you answered yes to the preceding questions, then you might be entitled to an injunction or damages due to your neighbor removing the “lateral support” to your land.

This blog post will address a (i) background on lateral support; (ii) neighbor’s liability for removing lateral support from a landowner’s land when such land is in its natural or improved state; and (iii) landowner’s recourse when their land is going to start or starts to slide due to their neighbor’s digging.

Background:

The right to lateral support is a landowner’s right to have their land supported laterally by their neighbor’s land. The right varies based on whether the damaged land is natural or improved. Land in its natural state is always entitled to lateral support. However, improved land is not so entitled unless provided by statute or a neighbor negligently removes lateral support. Ohio provides such a statute.

Natural Land:

If a neighbor’s digging causes damage (e.g., sliding) to a landowner’s natural land, then the neighbor is liable for the damages that flow from such digging. There is no need for the landowner to show fault; it is a strict liability standard. To prove strict liability, the landowner must show (i) that their land was injured by the removal of its lateral support, (ii) that the injury resulted from the neighbor’s digging, and (iii) ascertainable damages.

Improved Land:

The Ohio Revised Code, under Sections 723.49 – 723.50, allows a neighbor to excavate down to (i) nine feet below the curb or street grade and (ii) the full depth of the foundation wall of any building on the landowner’s land, without liability. That said, if a neighbor digs to a depth greater than nine feet below the curb of the street, and such digging causes damage to any of a landowner’s buildings, then the neighbor is liable regardless of whether the neighbor is negligent. However, the neighbor’s digging must be the proximate cause of the damage.

Under a negligence standard, a neighbor might also be liable when the neighbor’s digging causes damage to a landowner’s building. The landowner must demonstrate that the neighbor was negligent by showing that the neighbor’s digging (i) removed the lateral support to the landowner’s building, (ii) caused injury thereto, and (iii) caused ascertainable damages.

Note: Concerning negligence, a neighbor has a duty to perform work, even if on their land, in such a manner as not to damage an uphill landowner’s land.

Landowner’s Recourse:

When dealing with the possible removal or the removal of lateral support, a landowner may seek an injunction or sue for damages. A landowner may seek an injunction to ask the court to prevent a neighbor from taking actions that will remove the lateral support to the landowner’s land. Alternatively, a landowner may seek monetary damages after a neighbor damages the landowner’s land. Such damages are based on “the time required to repair and a comparison of the cost to repair to the diminution in the fair market value of the [landowner’s land] before and after the damage.”[1]

Note: If a landowner lives uphill from a neighbor, and the neighbor removes soil downhill from the landowner’s land resulting in damage to the landowner’s land, then the neighbor must make the repairs.

Conclusion:

If (i) you own land on one of the seven hills of Cincinnati; (ii) your downhill neighbor started digging on their land; and (iii) such digging threatened to cause or caused your land to slide, then call the Finney Law Firm today, where an experienced professional can provide insight as to whether you have a claim for an injunction or damages.

[1] 1 Ohio Real Property Law and Practice § 8.07 (2021).

The business buzzword for 2022 is: Inflation.

The inflation rate in 2021 was 7.5%, a rate that the the Federal Reserve says took them completely by surprise.  And 2022?  Many prognosticators (this author included) believe inflation will hit double digits for the first time in more than 30 years.  This comes after rates of inflation consistently at or below 2% for the past decade.  As a result, many marketplace participants simply are not aware of strategies that will enable them to navigate the shoals of an inflationary environment.

This blog entry may pivot between references to rates of inflation and rates of interest for borrowing.  These two concepts, while different, are addressed interchangeably as (a) inflation is a widely accepted indicator of an over-stimulated economy and (b) the predictable response to inflation is raising interest rates charged to banks by the Fed to dampen that economic activity.  In turn, banks will then raise the rates charged to consumer and commercial borrowers.  So, higher inflation inevitably begets higher interest rates.  The Fed has forecasted both (i) the possibility of front-loaded rate increases, meaning sharp rises in the coming months (as opposed to sequential rate hikes being stretched out over months and years) and (ii) as many as seven rate hikes in 2022 alone.  This means interest rates could rise by a full 2% or more from today’s rates before January of 2023.  How high can rates go? In March of 1980 the prime rate of interest peaked at 19.5%.  Imagine the impact of interest rate adjustments on your business model at those exorbitant rates.

Here are a few things to consider to protect yourself in inflationary times:

  1. Utilize commercial rent adjustments to your advantage.  During low inflationary times, landlords and tenants have commonly avoided complex periodic calculations for rent increases based upon Consumer Price Increases (CPI) increases, in favor of either fixed rent rates during the term of a lease or rent increases only pursuant  to a fixed schedule (say, for example 5% increases every 3 years).  As inflation accelerates and persists at high levels, landlords will hope they had full CPI adjustments built into their leases past and will start demanding then in leases in the future.  Conversely, tenants will cherish fixed-rate, longer-term leases that create a benefit to them of inflation (but the rapidly-changing office and retail markets might cause devaluation of spaces that previous saw decades of stability and strength).  As always, we recommend that tenants consider asking for an early termination provision in all commercial leases.
  2. Anticipate and avoid mortgage interest rate surprises. Many residential mortgages and most commercial mortgages have fixed interest rates only for a few years.  As to residential rates, after the period of the fixed rate, frequently rate increases are capped, but will still be painful.  But for commercial borrowers, when the fixed term expires, the rate increase is typically unlimited.  As a result, commercial borrowers locked into mortgages that might not be paid off for a decade or more could have dramatic, uncapped and unanticipated increases in the interest portion of the mortgage payment that continues to escalate each adjustment period.  To mitigate these impacts, consider refinancing into a new fixed-rate term that gives you breathing room before the impact of higher rates hits with full force.  Also, the sale of parts of your portfolio to pay down debt could lift your P&L from the greatest impacts of interest rate hikes.
  3. Be careful of fixed-rate pricing.  Home builders, contractors and manufacturers are experiencing difficulties fulfilling obligations under fixed-price contracts for matters that have a delivery date well into the future, shrinking their profit margins or turning winning contracts into losers.  Our office then is seeing instances of home builders trying to walk away from contracts and contractors seeking to convert fixed-price contracts into cost-plus agreements, shifting material and subcontractor pricing increases to buyers.  If you are that builder or contractor, consider adding an automatic or negotiated inflation adjustment in the contract and as a buyer, you want to lock in that fixed pricing firmly.
  4. Anticipate suppliers walking away from contracts. Similarly, we have seen manufacturers and distributors of certain products avoiding their obligations to supply certain goods or equipment.  As a buyer, do you have your supply contracts documented correctly and have you diversified your supply pipeline to protect yourself if a supplier lets you down?  Is the party with whom you are contracting sufficiently capitalized to stand behind their contractual obligations?
  5. Consider inflation and interest-rate contingencies.  The Cincinnati Area Board of Realtors/Dayton Area Board of Realtors form residential purchase contract allows a buyer to state the specific terms of the mortgage it is seeking as a contingency to ia buyer’s performance under the contract.  If you specify a “fixed rate loan for 80% of the purchase price at a rate below 3.5% per annum fixed for a period of 30 years,” and interest rates rise before the closing, the buyer has a perfect out.  Similarly, buyers and sellers can include in any contract an “out” for high rates of inflation and higher interest rates.
  6. Be wary of options.  Options to renew leases and options to purchase may seem innocuous and predictable in stable times.  But in a dynamic high-interest rate marketplace, an option acquired today to buy a property at a fixed price three, five or ten years into the future (say under a long-term commercial lease) can unexpectedly enrich the option holder.  Options can be a way a way to leverage dramatic profits to the option holder.
  7. Be prepared to offer seller financing.  A close partner to higher interest rates are tighter lending standards.  Fewer and fewer buyers can afford to buy at inflated interest rates, and lenders also frequently tighten their loan eligibility standards.  As a result, a eligible buyers — abundant today — become frighteningly scarce.  In the worst of the inflationary period at the end of 1977 to 1981, sellers had to offer loan assumptions, land contracts, leases with options (or obligations) to purchase (with the warning noted above) and simple notes with accompanying mortgages to get any property sold.
  8. Be prepared to buy at foreclosure sales.  Foreclosure sales, which have virtually disappeared for the past two years, could come roaring back as commercial and residential owners cannot afford their new, higher mortgage payments, and, of course, mortgage foreclosure moratoria have been lifted.
  9. Be prepared to offer seller financing.  A close partner to higher interest rates are frequently tighter lending standards.  Fewer and fewer buyers can afford to buy at inflated interest rates, and lenders also frequently tighten their loan eligibility standards.  As a result, a eligible buyers — abundant today — become frighteningly scarce.  When lending is loose (as today), it seems readily available to anyone.  And when it tightens, it seems to strangle the marketplaces.  In the worst of the inflationary period at the end of 1977 to 1981, sellers had to offer loan assumptions, land contracts, leases with options (or obligations) to purchase and simple notes with accompanying mortgages to get almost any property sold.

We saw with the rapid deterioration of the real estate market from 2006 to 2010 that buyers many times would willfully breach their contractual obligations to buy or rent.  In this process, they would search for a contingency or loophole — any argument whatsoever — to evade their contractual promises.  And in other instances, they would just outright walk away.  Accompanying these contractual breaches were also insolvency and bankruptcy, making collection impractical or impossible.  Similarly, as the real estate marketplace has heated up over the past five years, we have seen sellers work to evade their contractual obligations so they could retain an appreciating investment or simply realize a higher price from a second buyer.

How can you protect yourself in this type of dynamic market to assure performance by a buyer or seller?

  • Consider escrow deposits, guarantees and other security. Sellers can demand higher earnest money deposits, non-refundable deposits and short contingency periods. Buyers can use tools we have written about here and here of Affidavits of Facts Relating to Title and legal actions for specific performance. Further, consider adding personal guarantees to contractual promises from corporate and LLC buyers or sellers.  Additionally, the performance by buyers and sellers can be further secured with mortgages against real property and secured positions in other assets.
  • Add an attorneys fee provision.  Also, consider adding a contract provision shifting the expense of attorneys fees to the breaching party in a contract.  That can sometimes change the calculus of a prospective breaching party.
  • Tighten your contract language. To lock buyers and sellers into real estate and supply contracts and leases, carefully consider ways the other party might find a contingency or loophole in their performance. Contingencies (commonly for inspection or financing) are the tunnel through which most buyers drive to walk away from a contract.  Ohio law provides that a buyer must “reasonably” attempt to fulfill a contract contingency, but many still attempt to use contingencies to artificially and intentionally avoid their legal obligations.  Fraud on the part of a seller (such as an undisclosed material defect discovered before closing) can also arguably be the basis for a buyer not performing.  Conversely, typically there are no contingencies to a seller’s performance under a contract.  But consider everything in the instrument — the date, the property description, the parties’ names, the “acceptance” language and timing, in considering how the other party might try to squirm away from their promises.

As the economy becomes more unpredictable and more dynamic in terms of pricing, supply shortages and interest rates, market participants would be wise to carefully think about the impact of inflation and interest rate hikes on their contractual obligations and market positioning.