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Real Estate Cases
Ware v. Fairfax Bd. of Zoning Appeals
(Dec. 9, 2005), 1st Dist. No. C-050149,
2005-Ohio-6516
Zoning: Senior
Daycare
Property owners sought to renovate
an American Legion Hall into an senior daycare
with hair saloon, fitness room, and occasional
on-site podiatrist and optometrist. The daycare
was set to open five days a week during business
hours. The Fairfax Village planning commission
and ZBA denied owners’ application for permission
to use the property as a daycare because the adult
daycare was not a permitted use under the zoning
code. The trial court affirmed finding that a
daycare is not listed as a permitted use anywhere
in the zoning regulations. As a result, the
daycare was categorized as a “D” zone
“convalescent care facility.” The proposed
daycare was located in the “E” zone.
The appellate court reversed,
finding that the proposed daycare was more similar
to permitted uses in the “E” zone, such as
personal services, commercial recreation
establishments, retail sales shops, and eating and
drinking establishments. The Village argued that
unlike other “E” zone establishments, the proposed
daycare would not rely on a heavy traffic flow for
its business since it would cater to a limited
clientele. The court found that many “E” zone
businesses only catered to a limited clientele and
dismissed this argument.
Gonda v. Austintown Twp. Bd. Of
Zoning,
7th Dist. No. 05 MA 14, 2006 Ohio 670
Zoning:
Appeal from Administrative Hearing – New Evidence
in Trial Court
Appellant had
appealed an adverse ruling of the Board of Zoning
Appeals to the court of common pleas. At the
hearing before the trial court, appellant
attempted to admit evidence that had not been
admitted in the administrative hearing. The trial
court refused to hear the new evidence and
affirmed the decision of the board.
On appeal, the
court found that the decision not to hear the new
evidence was an abuse of discretion. “R.C.
2506.03 provides that a trial court shall hear
additional evidence when reviewing an
administrative order if one of the exceptions
within that status applies. R.C. 2506.03 does not
limit the type of evidence which can be introduced
and the Ohio Supreme Court has called this a
‘liberal provision for the introduction of new or
additional evidence.’ In this case, one of the
exceptions in that statute applies.” In this case,
appellant was seeking to introduce evidence that
was not available at the time of the hearing. The
court noted that there is a split of authority on
this point, but sided with those districts that
have allowed admission. “A trial court’s review
of an administrative decision under R.C. Chapter
2506 is only static if none of the exceptions in
R.C. 2506.03 apply. Once one of those exceptions
apply, the court is free to hear any new evidence
introduced by the parties in order to determine
whether an administrative order is
unconstitutional, illegal, arbitrary, capricious,
unreasonable, or unsupported by the preponderance
of substantial, reliable, and probative evidence.
Therefore, the trial court erred as a matter of
law when it refused to allow Gonda to introduce
additional evidence.” Reversed and remanded.
Orchard Isle Mobile Home Park I
Condo. Ass’n. Inc. v. Sandy Shores,
6th Dist. No. OT-05-018, 2006 Ohio 326
Lease:
Perpetual Renewal Provision
A condominium association that
leased condominium property to a partnership
brought a declaratory judgment action against the
partnership concerning its ability to terminate
the lease. The trial court awarded summary
judgment to the association. The partnership
appealed. The appellate court held that the lease
was a perpetual lease. A lease allowing a
partnership to occupy a portion of condominium
property, which also provided for annual renewals
"solely at the option of the Lessee under the same
terms and conditions set forth herein," was a
perpetual lease. The association could not
unilaterally refuse to renew the lease. Use of
word "solely" in the lease indicated the clear
intent of the parties to make the lease
perpetually renewable at the partnership's option.
Construction Cases
Cousino Constr. Co. v. Wilkins
(2006), 108 Ohio St.3d 90, 2006-Ohio-162
Use Tax: Janitorial Services
A general contractor may owe use
taxes on the janitorial services it purchases.
Here, the GC restored homes and offices from
disaster damage. It hired subs to remove
soot, smoke, water, mold, etc. from a site, then
the GC returned the site to its original condition
with drywall, paint, etc. The TC determined
the contractor owed more than $46,000 in unpaid
use taxes. The Ohio Use Tax is levied on
storage, use, or other consumption of tangible
personal property in this state or the benefit
realized in this state of any services provided.
R.C. § 5741.02(A)(1). The purchase of
cleaning services is generally subject to the use
tax.
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Construction Cases (cont'd)
The TC determined that the GC’s
purchase of subcontracted cleaning services were
subject to the same use tax imposed on janitorial
services. However, the GC maintained that
the cleaning services it provided to nonprofit
customers such as public schools and churches were
not subject to the use tax.
The Ohio Supreme Court found that
the GC was the consumer of the subs’ cleaning
services since it benefited from the services by
passing on those costs to its final customers –
insurance companies and the owners of the damaged
properties. As a result, the GC was eligible
for the use tax.
The Court also determined that the
GC was eligible for a statutory exemption under
R.C. § 5739.02(B)(13). This provision allows
use tax exemption when construction services are
sold to construction contractors for incorporation
into a structure or improvement of real property
under a construction contract with the state or
its political subdivisions. Although the GC
did not site this provision in its notice of
appeal, the BTA chalked this up to a typographical
error and allowed the exemption. The Court
disagreed, stating that an appellant must specify
the particular exemption it seeks to preserve the
issue for review.
Higbee Co v. Cuyahoga Cty. Bd. of Revision
(2006), 107 Ohio St.3d 325
Tax
Valuation: Real Property Factors
In this case, the tax valuation of
the SouthPark Center Dilliard’s was appealed.
Higbee, a subsidiary of Dilliard’s, Inc., had
purchased the 15 acre lot for $10. The building
was built for $15 million by a contractor who is a
wholly-owned subsidiary of Dilliard’s. The
auditor valued the property at approximately $17
million in 1997 while Higbee contended it had a
fair market value of $6.8 million. The BOR made
no change in value and Higbee appealed to the BTA.
The BTA valued the building and land at nearly $15
million after deducting “external obsolescence.”
The City of Strongsville filed a
notice of appeal with the Ohio Supreme Court
stating that the BTA erred by accepting a
sales-per-square-foot business valuation instead
of a real-estate valuation opinion. The Court
agreed, finding that external obsolescence cannot
be calculated by using sales-per-square-foot. For
example, one store may have a higher
sales-per-square-foot than an identical store.
Although different business valuations may
result, the Court determined that a
sales-per-square-foot analysis is meaningless when
determining real property valuations.
Rosenow v. Shutrump & Assocs. et al.
(7th Dist. 2005), 163 Ohio App.3d 500,
2005-Ohio-5313
Negligence:
Statute of Limitations
The Seventh Appellate District
determined that a negligence claim for failure to
install a roof in a workmanlike manner is governed
by a 4-year statute of limitations.
In 1998, homeowner Rosenow entered
into a purchase agreement with contractor Shutrump
& Associates for the construction of a residence.
At the time, Rosenow chose a one-year builder’s
warranty over a maintenance plan for the
residence. Rosenow began experiencing roofing
problems nearly three years later. The one-year
builder’s warranty had expired, but Shutrump’s
roofing contractor C & R replaced damaged shingles
and made other repairs for free. A roofing
inspector recommended replacement of the whole
roof since the installation was against
manufacturer’s instructions and the shingles’
warranties would not be upheld by the
manufacturer. Also, Rosenow’s insurance company
canceled his policy because of the defective
installation. Rosenow then replaced his roof
without Shutrump’s knowledge.
In 2001, Rosenow brought suit
against a contractor for breach of contract,
negligence, breach of implied covenant of good
faith and fair dealing, and unfair, deceptive, and
unconscionable acts. The Shutrump filed a
third-party complaint against C & R for
contribution and indemnification. The trial court
granted summary judgment in favor of Shutrump and
C & R.
Rosenow appealed, arguing that the
trial court failed to consider his negligence
claim when determining Shutrump’s motion for
summary judgment. He argued that the statute of
limitations begins to run when the unworkmanlike
work is discovered, or when the failure should
have been discovered through reasonable
diligence. Shutrump argued that Revised Code §
1302.98 applies. This statute allows a purchase
agreement to reduce a statute of limitations to
one year for a breach of contract. He also
claimed that the statute reduces the statute of
limitations to one year for a negligence claim.
The appellate court found that R.C.
§ 1302.98 is part of the Ohio Uniform Commercial
Code which does not apply to real property.
Instead, Revised Code § 2305.09(D) provides that
any action against a builder for failure to
construct in a workmanlike manner must be brought
within four years after the cause of action
accrues. The 1998 purchase agreement, in which a
one-year builders warranty was chosen in lieu of a
maintenance plan, did not restrict the statute of
limitations. As a result, Rosenow’s claim for
negligent failure to install falls within the
statute of limitations.
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