Court of Appeals of Ohio, Eighth District, Cuyahoga
JACQUELINE T. WILLIAMS,  DIRECTOR OHIO DEPARTMENT OF COMMERCE PLAINTIFF
JOANNE C. SCHNEIDER, ET AL. DEFENDANTS-APPELLANTS
Appeal from the Cuyahoga County Court of Common Pleas Case
Nos. CV-04-548887, CV-05-555252, CV-05-555408, CV-05-555412,
CV-05-558095, CV-05-559117, CV-05-559879, CV-05-571494,
CV-05-572965 CV-05-560633, CV-05-564814, CV-05-569073, and
Cleveland Construction, Inc. James R. Small James L. Ferro
Cleveland Construction, Inc. For Home Savings and Loan
Company of Youngstown Richard J. Thomas Jerry R. Krzys
Henderson Covington Messenger, Newman & Thomas Co.,
L.P.A., Charles Richley Raley Jr. Michael J. Sikora Sikora
Law L.L.C. For City of Parma Heights Darrel A. Clay Robert T.
Hunt Charles T. Riehl Walter & Haverfield, L.L.P.
ATTORNEYS FOR APPELLANTS
Matthew L. Fornshell M. Colette M. Gibbons Robert M.
Stefancin Ice Miller, L.L.P., For Parma Heights Land
Development, L.L.C. Joseph H. Gutkoski Harvey Labovitz Tim L.
Collins Collins & Scanlon L.L.P., For Cuyahoga County
Treasurer, W. Christopher Murray, II Michael C. O'Malley
Cuyahoga County Prosecutor BY: Colleen Majeski Assistant
County Prosecutor ATTORNEYS FOR APPELLEES
BEFORE: Jones, J., Kilbane, P.J., and E.T. Gallagher, J.
JOURNAL ENTRY AND OPINION
In the early 2000s, Joanne and Alan Schneider were involved
in a Ponzi scheme that cost innocent investors millions of
dollars. Individual investors were not the only
ones affected by the couple's fraud, and litigation
resulting from the Schneiders' investment scheme is still
ongoing. These consolidated appeals are the culmination of
court proceedings that arose from part of the Schneiders'
wrongdoings and involved investment in property in Parma
Heights, a suburb of Cleveland.
In 8th Dist. Cuyahoga No. 104201, intervenor-appellant, city
of Parma Heights, appeals the trial court's judgment
denying its motion for summary judgment and granting summary
judgment in favor of appellee, The Home Savings & Loan
Company of Youngstown, Ohio ("HSL"). In 8th Dist.
Cuyahoga No. 104206, appellant Cleveland Construction, Inc.
("CCI"), also appeals the trial court's
judgment denying its motion for summary judgment and granting
summary judgment in favor of HSL. In 8th Dist. Cuyahoga No.
104232, appellant HSL challenges the trial court's
judgments relating to the distribution of receivership
assets. Additional parties to these appeals that filed
appellate briefs include the receiver on the case, Matthew
Fornshell, and prior owners of the subject property, Parma
Heights Land Development, L.L.C., and ATC Realty Sixteen,
Inc. Numerous other parties in the underlying cases are not
part of this consolidated appeal.
For the purposes of judicial clarity, we consider the
arguments raised in each appeal separately, but issue one
consolidated opinion because the resolution of issues raised
in one case impact those posed in the others.
For the reasons set forth below, we affirm in part, reverse
in part, and remand for further proceedings consistent with
Procedural and Factual History
The assigned errors raised herein concern trial court
judgments relating to the priority and validity of various
liens filed against parcels of real property in Parma Heights
and the court's receivership orders.
The Cornerstone Properties Project
In 2003, Pearl Development Company ("PDC"), an
entity controlled by Joanne Schneider, proposed a mixed-use
development project funded by private and public sources that
could have potentially revitalized a large portion of Parma
Heights near the intersection of Pearl Road and West 130th
Street; the project was called "Cornerstone" and
the involved property, "Cornerstone Properties."
The real property compromising Cornerstone Properties
consisted of five separate parcels of land: three of the
parcels were aggregated into the "Pearl" property
and the other two parcels were known as "Garnet"
In March 2003, the Schneiders approached CCI, a construction
management firm, to discuss the Cornerstone project.
Thereafter, CCI entered into a contract with PDC to provide
construction management for the project.
On June 26, 2003, HSL issued a loan in the amount of $3, 320,
000 to the Schneiders in their personal capacities. To secure
the debt, the Schneiders executed a note and an open-end
mortgage in favor of HSL encumbering the Garnet property. On
July 9, 2003, HSL issued a loan in the amount of $3, 700, 000
to PDC through its president, Joanne Schneider. In return,
PDC executed a note and two separate open-end mortgages in
favor of HSL encumbering the Pearl and Ruby properties. The
Schneiders used $2, 802, 627.20 from the proceeds of the loan
from HSL to satisfy two pre-existing mortgages that had
previously encumbered the Pearl and Ruby
In December 2003, Parma Heights City Council passed an
ordinance authorizing the city to enter into a "Project
Development Agreement" with the Schneiders and their
business entities. The city and the Schneiders agreed that
all reasonable costs incurred by the city for improvements to
the Cornerstone Properties would be paid for by the
Schneiders through service payments in lieu of taxes under a
Tax Increment Financing Program ("TIF"). The
contract also allowed for the collection of special
assessments of 40 semi-annual payments over a 20-year period
against the Cornerstone Properties if the Schneiders failed
to make the payments under the TIF. The Schneiders agreed to
file a petition with Parma Heights to levy a special
assessment for the construction of the public improvements.
In May 2004, the city passed a resolution to proceed with
construction of the project. In July 2004, CCI provided PDC
with a bridge loan in the amount of $2, 500, 000 so that PDC
could continue construction on the project. Unfortunately,
the Schneiders' scheme fell apart soon after construction
began. When the Ponzi scheme collapsed, so did the funding
for the Cornerstone project and by December 2004,
construction on the project had completely halted. The
Schneiders defaulted on their obligations to make service
payments in lieu of taxes under the TIF. Joanne Schneider
eventually pleaded guilty to a number of criminal charges and
went to prison. Investors and contractors scrambled to
recover what they could from the Schneiders' remaining
assets, but, as mentioned, litigation resulting from their
criminal activities continues to the present day. The
property is still not fully developed or in use, and remains
the largest undeveloped parcel in the city.
CCI filed two separate mechanic's liens in the amounts of
$720, 152.22 and $837, 583.50 against the Pearl property
pursuant to R.C. 1311.01. The affidavits supporting each
mechanic's lien stated that the last day of work on the
Pearl property was December 3, 2004. CCI also obtained a
judgment lien against PDC for the $2, 500, 000 bridge loan
the construction management firm had provided to the
More than a dozen separate civil actions were filed in the
Cuyahoga County Court of Common Pleas as a result of the
project's failure. The actions were consolidated before a
single trial judge. On February 4, 2005, the trial court
appointed a receiver, appellee Matthew Fornshell, to oversee
Parma Heights' work on public improvements to the
Cornerstone Properties ceased sometime in 2005 or 2006. On
May 22, 2006, Parma Heights passed Ordinance 2006-16 and
levied a special assessment in the amount of $2, 695, 852.55,
which was the amount the city had spent "to date"
on improvements to the Cornerstone Properties for
"construction and installation of public sanitary
sewers, storm sewers, water mains, street lighting, concrete
curbs, asphalt pavement sidewalks, traffic signals, other
public utility lines, and all together with the necessary
On October 16, 2006, the city certified $3, 743, 190.74 to
Cuyahoga County for collection, which included the $2, 695,
852.55 in costs and $1, 047, 338.19 in estimated interest
over the 20-year repayment period. The amount did not include
$394, 366.48 in fees and expenses the city had determined it
was owed pursuant to the Project Development Agreement. The
city had originally estimated that it would spend about $15
million on improvements to the Cornerstone Properties.
In the meantime, the receiver moved the court to authorize
the sale of the Cornerstone Properties free and clear of any
liens, claims, or encumbrances and transfer the interests of
the lienholders to the proceeds of the sale. The court set
forth the auction procedures and, in doing so, precluded any
claims on the property via the following June 2006 order:
The Court further finds that the sales of the properties
shall be free and clear of all liens, claims and encumbrances
* * *. Accordingly, all such liens, claims and encumbrances
which now exist or are hereafter placed of record prior to
the date of sale on or against the properties shall be, and
they hereby are, extinguished as liens, claims and
encumbrances against the properties; rather, the liens,
claims and encumbrances against a particular property will
attach to the net proceeds of the sale of that property. All
such net proceedings from the sale of a Property will be held
in a separate interest bearing account until further order of
In November 2006, the Cornerstone Properties sold at auction
for $7, 900, 000 to the McGill Property Group, L.L.C.
("McGill"). The court confirmed the sale on January
2, 2007, and, consistent with the terms of the purchase
agreement entered into at auction, issued a judgment entry
stating, in part:
4. The sale of the Properties to the Buyer shall be free and
clear of any lien, claim, or encumbrance whether known or
unknown, * * * including but not limited to those liens and
encumbrances expressly identified and included in the title
commitment issued with respect to the Properties and
incorporated by reference in this Order * * *. Sale of the
Property shall be free and clear of any and all asserted or
unasserted, known or unknown, statutory or contractual * * *
assessments and governmental funded improvements whether
assessed or not, including assessments that can be filed or
certified for inclusion on the County Auditor's tax
duplicate now or in the future for any improvements already
made to or for the benefit of the Properties. Any and all
valid and enforceable liens, claims or encumbrances of the
Properties, including but not limited to any liens or claims
arising from any assessments, liens or taxes, or the
provisions of any governmentally funded improvements, whether
assessed or not, shall be transferred, fixed and attached to
the net proceeds of the sale of the Properties, with the same
validity, priority, force and effect as such liens and/or
claims had upon the properties immediately prior to the
The net proceeds of the sale after expenses were $6, 621,
496.23, and was held by the receiver in a separate account.
Following the sale, McGill assigned its rights to Cornerstone
Properties to appellee Parma Heights Land Development,
L.L.C. It was not until after the sale, McGill
alleged, that it learned that the city had previously placed
a special assessment on the property.
On December 4, 2007, the city sought to intervene in the
matter to protect its rights under the special assessment.
The trial court granted the city's motion to intervene.
The city now alleges it is owed $4, 137, 557.72 pursuant to
its special assessment, which includes $3, 743, 190.74 it
spent on improvements to the Cornerstone Properties (the
principal amount due plus 20 years of interest) and an
additional $394, 366.48 in legal fees, engineering fees,
other professional fees, and miscellaneous expenses.
On December 21, 2007, the trial court issued a Findings and
Order of Distribution. The decision limited secured claims to
amounts due and owing as of February 4, 2005 and stated that
allowed claims would be given the following priority: (1)
administrative claims, (2) secured claims, and (3) unsecured
claims. The distribution order also provided for a Secured
Creditor Allocation account, which the court defined as
"ten percent (10%) of each Secured Claim that shall be
set aside for payment of Allowed Administrative Claims."
The order required the receiver to obtain the court's
approval by way of application before paying an
administrative claim, required the applications be served on
"all parties desiring notice that have filed a Notice of
Appearance, " and indicated that "objections to the
applications must be filed and served in accordance with the
Local Rules of the Court."
In late 2008, the trial court issued an order requiring those
parties that claimed secured creditor status with respect to
the Cornerstone Properties to move for summary judgment on
the issue of priority of the various liens. CCI, HSL, and
Parma Heights each argued their respective liens had
priority. Parma Heights Land Development, L.L.C., who owned
Cornerstone Properties at the time, argued that the trial
court should transfer the city's assessment on the
Cornerstone Properties to the proceeds from the sale of the
HSL argued that because the proceeds of its loan were used to
satisfy the Pearl mortgage, its lien had priority on the
Pearl property pursuant to R.C. 1311.14. CCI claimed that
their mechanic's liens on the Pearl property had priority
pursuant to R.C. 1311.13(A) because the first visible work
occurred prior to the recording of HSL's loan. CCI
further asserted that the recorded instruments upon which HSL
relied were flawed, thereby negating HSL's priority
argument. Parma Heights argued that its special assessment
had priority against all others asserting secured creditor
The Priority Opinion and Order
On May 16, 2011, the trial court issued its ruling on the
priority of the liens asserted by the parties ("Priority
Opinion"). In its Priority Opinion, the trial court made
the following determinations: (1) the ten percent Secured
Creditor Allocation set up for the benefit of the
receivership had priority over all other lienholders; (2)
HSL's July 10, 2003 recorded mortgage satisfied the two
pre-existing mortgages that encumbered the Ruby and Garnet
properties; (3) HSL's mortgage lien had "priority as
against all subsequently filed mechanic's liens, * * *
but only as to the Ruby Property and the Garnet
Property"; (4) "the Pearl Property was not
encumbered by the mortgages [HSL's loan] satisfied";
(5) HSL's loan funds were not used "for improvements
at the Pearl Property"; and (6) because "visible
construction work commenced at the Cornerstone Properties
before [HSL] recorded its mortgage, " CCI's
mechanic's liens took precedence as to the Pearl
The trial court further found, with respect to the city's
claim of priority based on its special assessment:
[Parma Heights] maintains that it is entitled to priority of
its claims as against all others asserting secured status.
The City bases its claim on legislation enacted on May 22,
2006[, ] and thereafter certified to the Auditor of Cuyahoga
County on October 16, 2006[, ] imposing a Special Assessment
against the Cornerstone Properties.
* * *
For a variety of reasons, the City of Parma Heights is not
entitled to assert a claim of priority as against Home
Savings and Loan Company or Lienholders. Putting aside for
the moment the question whether the City's effort to
impose its assessments is void as a matter of law, the City
cannot unilaterally achieve retroactive super priority over
other liens previously recognized in law.
* * * [T]he liens of Home Savings and Loan Company or
Lienholders clearly predate the City's October 16, 2006
Special Assessment. The fact that the City had a contractual
arrangement with the previous owners, the Schneiders who were
operating a Ponzi scheme, is immaterial and does not affect
in any way the priority of claims subsequently perfected
before the City took any action of its own.
Following the issuance of its May 16, 2011 opinion and order,
it was discovered that the order contained internal
discrepancies. HSL filed a notice of appeal (8th Dist.
Cuyahoga No. 96911) and we remanded the case to the trial
court for a decision on HSL's previously filed motion to
partially vacate the Priority Opinion. In that motion, HSL
argued that the Priority Opinion mistakenly identified the
Garnet property as the property to which HSL's loan
applied, rather than the Pearl property. HSL further argued
that the evidence demonstrated that only "$2, 802,
627.20 of the proceeds of the loan [to PDC] * * * were used
to satisfy the J.A.M. Pearl Mortgage, " so that fact
should have been included in the Priority Opinion.
On August 29, 2011, the trial court issued a judgment entry
granting HSL's motion to partially vacate the Priority
Opinion. The amended judgment entry clarified that HSL's
loan satisfied two pre-existing mortgages that encumbered the
Ruby and Pearl properties and not the Garnet property. Based
on this inadvertent error, the trial court reversed its prior
determination that CCI had priority over the Pearl property,
and concluded that HSL "ha[d] priority of its liens as
against all [other] lienholders." The court clarified
that "[t]o the extent that the court's May 16, 2011
opinion and order regarding the priority of liens held
otherwise, the order is corrected consistent with the
HSL and CCI separately appealed the trial court's August
29, 2011 amended judgment entry. This court heard CCI and
HSL's consolidated appeals relating to the Priority
Opinion and affirmed the trial court's determination that
HSL had priority over CCI's mechanic's liens with
respect to the Pearl property. This court stated, in relevant
[W]here a mortgagee substantially adheres to the provisions
of R.C. 1311.14, its lien on the property has "super
priority" over that of any mechanic's liens. R.C.
1311.14 gives a construction mortgage priority over
mechanic's liens even if the mortgage was recorded
subsequent to the effective date of the mechanic's liens.
In this case, HSL provided evidence to show that: (1) it
provided a construction loan to PDC, (2) the loan provided to
PDC was used to satisfy the J.A.M. Pearl mortgage, and (3)
PDC then began the Cornerstone project. This evidence was
sufficient to satisfy R.C. 1311.14.
* * *
This court, therefore, cannot find that the trial court acted
improperly in granting summary judgment to HSL on the
priority of its lien against the Pearl property.
omitted). Cleveland Constr., Inc. v. Schneider, 8th
Dist. Cuyahoga Nos. 96911, 97352, 97361 and 97513,
2012-Ohio-5707, ¶ 49. This court clarified that the opinion
was limited to issues of priority and that, "in accord
with the understanding of all parties, the trial court
specifically stated that the issues of validity and amounts
[owed to the lienholders] were matters for later
decision." Id. at ¶ 51.
The Validity Opinion and Order
The case was remanded to the trial court for the final
disposition of the assets in the receivership estate. Parma
Heights, CCI, and HSL each filed additional motions for
summary judgment. In an order dated June 15, 2015, the trial
court issued an opinion regarding the validity of liens
("Validity Opinion"). That decision granted summary
judgment in favor of HSL, finding that HSL's mortgage on
the Pearl property was a valid lien and CCI's
mechanic's liens were invalid. In rendering its decision,
the trial court rejected CCI's contention that HSL's
mortgage was defectively executed and did not afford
constructive notice to third parties that the mortgage
encumbered the Pearl property. The trial court found that CCI
failed to satisfy its burden of showing that it recorded the
mechanic's liens within 75 days of its last day of work
on the Pearl Property, as required by R.C. 1311.06(B)(3).
The Validity Opinion did not address the validity of
CCI's judgment lien or the city's special assessment.
CCI and the city initiated appeals from the Validity Opinion,
but this court dismissed the appeals for lack of final
appealable orders. White v. Schneider, 8th Dist.
Cuyahoga No. 103260, Motion No. 488703 (Oct. 1, 2015);
Bradley v. Schneider, 8th Dist. Cuyahoga No. 103261,
Motion No. 488600 (Oct. 1, 2015).
In November 2015, HSL filed a supplemental motion for summary
judgment as to the amounts owed to HSL. In the motion, HSL
argued that it is owed $3, 320, 000 plus contractual interest
on the Garnet mortgage, and $3, 700, 000 plus contractual
interest on the Pearl and Ruby mortgages, for a total of $7,
020, 000, plus contractual interest at a rate of 5.25% per
The receiver filed a brief in opposition, arguing that the
trial court's December 2007 Order of Distribution
decision expressly stated that secured claims could not
include interest or penalty charges after February 4, 2005.
Thus, the receiver claimed, HSL's "request to
include contractual interest at a rate of 5.25% per annum is
contrary to the court's prior orders, which is the law of
the case." HSL moved for leave to file a reply to the
receiver's brief in opposition, which the trial court
Also in November 2015, CCI filed a supplemental motion for
summary judgment with respect to the validity of its judgment
lien. The receiver filed a brief in opposition, arguing that
CCI's judgment lien was invalid. CCI moved for leave to
file a reply brief, which the trial court denied.
On February 11, 2016, the trial court issued a series of
judgment entries. The trial court denied HSL's
supplemental motion for summary judgment as to the amounts
owed to HSL. The trial court limited the amount of HSL's
secured claim to $6, 715, 183.11 and determined that HSL was
not entitled to interest accrued after February 4, 2005. The
court stated that "there are no additional funds in the
Receivership Estate on which [HSL] has a secured claim."
The trial court relied on the receiver's December 4, 2015
report filed pursuant to Local R. 26(B), where the receiver
As of December 1, 2015, the aggregate balance of the real
property accounts was $8, 015, 086.88. The proceeds from the
sale of the Cornerstone Properties account for $6, 715,
183.11 of that aggregate balance. * * * The balance of the
Secured Creditor Allocation Account as of December 1, 2015,
was $416, 112.46. There have been no transfers from this
account since the Receiver's last report.
The trial court determined that the city's special
assessment was not a valid lien because (1) it did not comply
with statutory requirements, and (2) the city certified the
special assessment without the trial court's consent.
The trial court also denied CCI's supplemental motion for
summary judgment as to the validity of its judgment lien. The
court reasoned that: (1) CCI's action in obtaining its
December 3, 2004 cognovit lien and judgment lien against the
Schneiders violated the trial court's December 1, 2004
injunction; (2) CCI did not qualify as a secured creditor
because it was never in the business of routinely lending
money nor did it have secured liens on the date services were
provided; and (3) CCI had not submitted evidence to support
its judgment lien despite repeated requests from the receiver
for documentation to prove its lien.
Finally, the trial court issued a journal entry instructing
the receiver to "distribute any remaining assets in the
Receivership to unsecured creditors in a pro rata
allocation" or "to a charity of the receiver's
choice" if he is "unable to distribute assets to
any unsecured creditors."
Parma Heights, CCI, and HSL now appeal from various aspects
of the foregoing judgments. Upon motions of Parma Heights and
CCI, the trial court granted a stay and ordered the receiver
to stay distribution of all funds pending appeal, except that
the receiver was to continue payment of the ongoing fees and
expenses of the receivership.
Law and Analysis
Standard of Review - Summary Judgment
Our review of a trial court's decision on a summary
judgment motion is de novo. Grafton v. Ohio Edison Co.,
77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). The Ohio
Supreme Court has provided the following standard for courts
to follow when deciding a summary judgment motion:
Pursuant to Civ.R. 56, summary judgment is appropriate when
(1) there is no genuine issue of material fact, (2) the
moving party is entitled to judgment as a matter of law, and
(3) reasonable minds can come to but one conclusion and that
conclusion is adverse to the nonmoving party, said party
being entitled to have the evidence construed most strongly
in his favor. The party moving for summary judgment bears the
burden of showing that there is no genuine issue of material
fact and that it is entitled to judgment as a matter of law.
omitted.) Zivich v. Mentor Soccer Club, 82 Ohio
St.3d 367, 369-370, 696 N.E.2d 201 (1998).
Once the moving party satisfies its burden, the nonmoving
party "may not rest upon the mere allegations or denials
of the party's pleadings, but the party's response,
by affidavit or as otherwise provided in this rule, must set
forth specific facts showing that there is a genuine issue
for trial." Civ.R. 56(E); Mootispaw v.
Eckstein, 76 Ohio St.3d 383, 385, 667 N.E.2d 1197
(1996). Doubts must be resolved in favor of the nonmoving
party. Murphy v. Reynoldsburg, 65 Ohio St.3d 356,
358-359, 604 N.E.2d 138 (1992).
Parma Heights' Appeal
Parma Heights raises three assignments of error challenging
the trial court's denial of its motion for summary
judgment, its determination that the city's certified
special assessment was invalid as a matter of law, and the
court's finding that the city did not have priority over
other lien claimants. Parma Heights further contends that the
trial court did not have the authority to authorize the sale
of the Cornerstone Properties free and clear of the
city's lien by special assessment.
We consider the second assignment of error first, whether
Parma Heights had a valid lien. If the city's lien was
not valid, as the trial court held, then the issue of whether
Parma Heights' lien has priority over other lienholders
Ohio courts have repeatedly found special assessments to be
akin to general taxes and, as a result, they are collected in
the same manner as other taxes. Cleveland Metro. Hous.
Auth. v. Lincoln Prop. Mgmt. Co., 22 Ohio App.2d 157,
259 N.E.2d 512 (8th Dist.1970); Collister v. Kovanda,
51 Ohio App. 43, 199 N.E. 477 (8th Dist.1935); State
ex rel. Brown v. Cooper, 123 Ohio St. 23, 24, 173 N.E.
725 (1930) (special assessments upon real estate for public
improvements are taxes within the meaning of the statutory
law); Jackson v. Bd. of Edn., 115 Ohio St. 368, 372,
154 N.E. 247 (1926). In this case, the city originally
contracted with the Schneiders and their business entities
and agreed that the improvements would be paid by service
payments in lieu of taxes (a TIF program) pursuant to R.C.
5709.40. Like assessments levied under R.C. Chapter 727,
service payments in lieu of taxes under R.C. 5709.40 are
another form of statutory special assessment. Chu Bros.
Tulsa Partnership, P.L.L. v. Sherwin-Williams Co., 187
Ohio App.3d 261, 2010-Ohio-858, 931 N.E.2d 1116, ¶ 10
The Schneiders petitioned Parma Heights to make public
improvements and levy special assessments on the Cornerstone
Properties. Pursuant to the petition, Parma Heights City
Council passed Ordinance No. 2004-11 on May 24, 2004,
declaring it necessary to construct public improvements at
the Cornerstone Properties and stating that 100 percent of
the improvements would be paid by the special assessments.
The work began in 2004 and was completed in 2005 or 2006.
Terrence Hickey, the city's finance director, averred
that once the city realized that neither the Schneiders nor
the receiver (after the property went into receivership) were
going to develop buildings on the Cornerstone Properties that
could then pay for the TIF program, it became necessary to
levy a special assessment against the property.
This court has previously held that "legislative
determinations for special improvements and the procedures
for such assessments are presumed valid and reasonable until
a showing to the contrary has been made." Blake v.
Solon, 8th Dist. Cuyahoga No. 65255, 1994 Ohio App.
LEXIS 1688, 11 (Apr. 21, 1994). "Where a party seeks to
overturn an assessment on the ground that certain legal
requirements were not complied with in making the assessment,
such party has the burden of alleging and proving that such
requirements were not met." Id., citing
Schiff v. Columbus, 9 Ohio St.2d 31, 223 N.E.2d 54
Substantial Compliance and Waiver
The trial court found that Parma Heights failed to
substantially comply with the statutory requirements when it
levied the special assessment; therefore, the city's lien
"The authority to levy special assessments for local
improvements is conferred only by statute and the validity of
such assessments is conditioned upon compliance with the
requirements of these statutes." Davis v.
Willoughby, 173 Ohio St. 338, 343, 182 N.E.2d 552
(1962). "[S]tatutes imposing taxes and public burdens of
that nature are to be strictly construed and any doubt as to
construction or effect must be resolved in favor of those on
whom the burden is sought to be imposed." Id.
While such statutes are to be strictly construed, Ohio courts
have held that substantial, not strict, compliance with the
statutes is generally sufficient. Ninth St. Community
Paving Project Commt. v. Ironton, 22 Ohio St.3d 25, 29,
488 N.E.2d 204 (1986); State ex rel. Wise v. Solon,
8th Dist. Cuyahoga No. 64210, 1993 Ohio App. LEXIS 5560, 8
(Nov. 18, 1993); but see Mallo v. Dover, 36 Ohio
App. 84, 84, 172 N.E. 841 (8th Dist.1929) (notice provisions
of assessing statute must be strictly conformed to).
When considering whether the city substantially complied with
the statutory provisions, this court also takes into
consideration principles of equity. See Ninth St.
Community Paving Project Commt. at 28 ("The use of
equitable principles is proper not only because appellants
have sought injunctive relief, but also by virtue of this
court's longstanding application of equity to real estate
assessment controversies."); see also Kellogg v.
Ely, 15 Ohio St. 64, 1864 Ohio LEXIS 103 (1864) and
Steese v. Oviatt, 24 Ohio St. 248, 1873 Ohio LEXIS
The trial court held that the special assessment was invalid
because the city failed to comply with the requirements and
procedures set forth in R.C. 727.12 and 727.23 - 727.25 and
the city's contract with the Schneiders did not waive any
defects in the ...