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Woods Cove III, L.L.C. v. American Guaranteed Management Co., L.L.C.

Court of Appeals of Ohio, Eighth District, Cuyahoga

May 10, 2018

WOODS COVE III, L.L.C. PLAINTIFF -APPELLEE
v.
AMERICAN GUARANTEED MANAGEMENT CO., L.L.C., ET AL. DEFENDANTS-APPELLANTS

          Civil Appeal from the Cuyahoga County Court of Common Pleas Case Nos. CV-14-836666, CV-15-839377

          ATTORNEYS FOR APPELLANTS Joseph Bancsi Michael F. Westerhaus

          ATTORNEYS FOR APPELLEE David T. Brady Austin B. Barnes, III Suzanne M. Godenswager Brian Steven Gozelanczyk Manbir S. Sandhu Andrew M. Tomko Sandhu Law Group, L.L.C.

          For Cuyahoga County Treasurer Awatef Assad Cuyahoga County Law Department Assistant Director of Law Michael C. O'Malley Cuyahoga County Prosecutor By: Michael A. Kenny Gregory B. Rowinski Assistant County Prosecutors

          BEFORE: Keough, J., McCormack, P.J., and Blackmon, J.

          JOURNAL ENTRY AND OPINION

          KATHLEEN ANN KEOUGH, JUDGE

         {¶1} In these consolidated appeals, defendants-appellants Nick Papadelis ("Papadelis") and American Guaranteed Management Co., L.L.C. ("American Guaranteed") (collectively, "appellants") appeal from the trial court's judgments adopting the magistrate's decisions that granted summary judgment in favor of plaintiff-appellee Woods Cove III, L.L.C. ("Woods Cove") and denied appellants' motions for summary judgment. For the reasons that follow, we affirm.

         I. Background

         {¶2} This case concerns tax certificates purchased by Woods Cove from the Cuyahoga County Treasurer and the ensuing foreclosure actions.

Ohio's tax certificate legislation, R.C. 5721.30 through 5721.43, allows a county government to sell tax certificates to private investors. A tax certificate entitles the certificate holder to the first lien on the real property. R.C. 5721.32. A property owner can redeem the certificate and remove the lien by paying the certificate holder the purchase price plus interest, penalties, and costs. R.C. 5721.38. If the property owner fails to redeem the certificates, the tax certificate holder may initiate foreclosure proceedings on the real property after complying with certain statutory requirements.

Woods Cove II L.L.C. v. Am. Guaranteed Mgmt. Co., L.L.C, 8th Dist. Cuyahoga No. 103652, 2016-Ohio-3177, ¶ 2.

         {¶3} American Guaranteed owed property taxes on property located on Torwood Court in Cleveland, and Papadelis owed property taxes on property located on Orchard Boulevard in Parma Heights. Woods Cove purchased tax certificates representing the tax liens on the properties from the county treasurer. When Papadelis and American Guaranteed failed to redeem the certificates, Woods Cove filed foreclosure actions pursuant to R.C. Chapter 5721. The cases were assigned to the same trial court judge.

         {¶4} Papadelis and American Guaranteed filed identical answers to the complaints, and both asserted a counterclaim seeking a declaratory judgment that Ohio's tax certificate legislation is unconstitutional.

         {¶5} Woods Cove subsequently filed identical motions for summary judgment in both cases. In its motions, Woods Cove asserted that there were no genuine issues of material fact that (1) it was the holder of the tax certificates, (2) the amount and nonpayment of the taxes as shown on the tax certificates was presumptively valid, (3) it had not received any payment on the assessments referred to in the tax certificates, (4) it had filed a notice of intent to foreclose with the county treasurer, and (5) the treasurer had certified that the properties had not been redeemed. Accordingly, Woods Cove argued that it was entitled to judgment as a matter of law.

         {¶6} In their identical motions for summary judgment and responses to Woods Cove's motion, Papadelis and American Guaranteed did not dispute Woods Cove's arguments regarding their liability on the tax certificates, or the amount and validity of the taxes, assessments, charges, penalties, and interest due and unpaid. Instead, they argued they were entitled to summary judgment on their counterclaims that Ohio's tax certificate legislation is unconstitutional.

         {¶7} Papadelis and American Guaranteed argued that the tax certificate legislation violates the equal protection requirements of the United States and Ohio Constitutions because the statute treats similarly situated property owners (i.e., those on the delinquent land list) differently by allowing the treasurer to arbitrarily select which tax certificates will be sold, thereby requiring the property owners chosen for tax certificate foreclosure to pay ...


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