[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Emerson Network Power Energy Sys., N. Am., Inc. v. Lorain Cty. Bd. of Revision, Slip Opinion
No. 2016-Ohio-8392.]




                                        NOTICE
     This slip opinion is subject to formal revision before it is published in an
     advance sheet of the Ohio Official Reports. Readers are requested to
     promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
     South Front Street, Columbus, Ohio 43215, of any typographical or other
     formal errors in the opinion, in order that corrections may be made before
     the opinion is published.



                         SLIP OPINION NO. 2016-OHIO-8392
    EMERSON NETWORK POWER ENERGY SYSTEMS, NORTH AMERICA, INC.,
   APPELLANT, v. LORAIN COUNTY BOARD OF REVISION ET AL., APPELLEES.
  [Until this opinion appears in the Ohio Official Reports advance sheets, it
 may be cited as Emerson Network Power Energy Sys., N. Am., Inc. v. Lorain
             Cty. Bd. of Revision, Slip Opinion No. 2016-Ohio-8392.]
Taxation—Real-property-valuation—Board of Tax Appeals erred by declining to
        consider property owner’s posthearing evidence of transfer of property and
        by determining that BTA’s first decision was based on clerical error that
        could be corrected without weighing conflicting evidence of value of
        property—BTA’s decisions vacated and cause remanded.
  (No. 2014-1781—Submitted August 30, 2016—Decided December 28, 2016.)
              APPEAL from the Board of Tax Appeals, No. 2013-5354.
                                ____________________
        Per Curiam.
        {¶ 1} This real-property-valuation case concerns the proper valuation for
tax year 2012 of an unused office-warehouse property. The Lorain County auditor
                              SUPREME COURT OF OHIO




valued the property at $1,388,700, and the property owner—appellant, Emerson
Network Power Energy Systems, North America, Inc. (“Emerson”)—variously
sought a sale-price valuation of $50,000 and an appraisal valuation of either
$450,000 or $588,000. Although the sale price was originally rejected by the
Lorain County Board of Revision (“BOR”) on the grounds that the sale had not
been consummated, the transfer allegedly did occur after the hearing held by the
Board of Tax Appeals (“BTA”). Because the evidence of transfer was presented
after the close of its hearing, the BTA rejected the sale price and, in the final of its
three decisions in this matter, adopted $588,000 as the value of the property.
       {¶ 2} On appeal, Emerson argues that the BTA had a duty to consider its
posthearing evidence of the consummation of the sale for a price of $50,000.
Alternatively, Emerson argues that the appraisal valuation was shown to be
$450,000 rather than $588,000. Given the peculiarities of the case, we hold that
the BTA erred both by declining to consider the belated evidence of the transfer of
the property as well as by concluding that the BTA’s initial decision was based on
a “clerical error” that could be corrected without weighing the conflicting evidence
of the value of the property. We therefore vacate the BTA’s decisions and remand
the cause for further proceedings.
                           FACTUAL BACKGROUND
The property
       {¶ 3} The subject property was vacant as of the tax-lien date, January 1,
2012. Construction dated to 1948, with later additions in the 1950s, the 1960s, and
finally 1972. The building amounted to 89,400 square feet. On the lien date, it was
in need of repair and contained asbestos. According to Emerson’s vice president
Stephen Clarke, who testified before the BTA, the company had long planned to
demolish the building or sell the property by the January 1, 2012 tax-lien date. At
the BOR, Bob Pollock, facility manager for Emerson, testified that Emerson




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                                January Term, 2016




vacated the property at issue in September 2010. Thereafter, Emerson attempted
to donate the property but without success.
The BOR proceedings
       {¶ 4} Emerson filed a complaint challenging the auditor’s $1,388,700
valuation of its property for 2012, a reappraisal year in Lorain County, and seeking
a reduction to $400,000. Appellee Lorain City Schools Board of Education
(“BOE”) filed a countercomplaint seeking retention of the auditor’s valuation.
       {¶ 5} At the BOR, Emerson introduced into evidence a draft purchase
agreement for the property, under which the buyer would pay $50,000 to acquire
the property for a call-in data center. The buyer had no preexisting relationship
with Emerson. The BOR heard the testimony offered by Emerson witnesses and
considered the purchase agreement but ruled that the draft agreement was not itself
a sale and retained the auditor’s valuation.
The BTA proceedings
       {¶ 6} Emerson appealed to the BTA.         At the BTA hearing, Emerson
presented two theories of value as alternatives: (1) the $50,000 sale price, again
based not on an actual transfer of the property but only on the draft purchase
agreement, and (2) an appraisal report in two written versions, prepared by
Lawrence Mitchell, MAI.
       {¶ 7} In light of Emerson’s submission of two versions of the appraisal
report, Mitchell’s testimony led to confusion at the BTA. One version of the report
bore the date March 19, 2014, and was the subject of most of Mitchell’s testimony.
That version of the report stated a valuation of $588,000. But Emerson also
introduced a different version of the report that bore the date March 21, 2014, used
the same comparables as the March 19 version, and stated a valuation of $450,000.
       {¶ 8} Emerson’s counsel examined Mitchell on the March 19 version of the
report, and Mitchell testified, “Mr. Louis [Emerson’s counsel] said it was
450,000—but we’re actually at 588,000 that was our final value conclusion on




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this.” Later in his testimony, he reiterated, “So my final conclusion as of January
1st, 2012 was $588,000.”
       {¶ 9} Thereafter, Emerson’s counsel mentioned the March 21 version of the
appraisal report with an opinion of value of $450,000 and asked whether Mitchell
was familiar with it. Mitchell responded, “Now that you’ve mentioned it, yes.”
Then counsel asked, “Can you talk to the Board about your work and the difference
between reaching a conclusion of $450,000 and $588,000?” Mitchell’s answer was
“inefficiency in the market data” and that “a value anywhere in that range
[presumably meaning $450,000 to $588,000] would be supportable and
reasonable.” He also stated, “I couldn’t find anything that would indicate that it’s
worth $50,000.”
       {¶ 10} The hearing examiner asked Mitchell to elaborate on the existence
of the two reports with two different dates. Mitchell responded that a coworker
took responsibility for the first version, after which Mitchell made his comments
and updates, resulting in the later version.
       {¶ 11} No further testimony of Mitchell on the March 21 version of the
appraisal report was elicited. Notable by its absence is any direct testimony from
Mitchell that the $450,000 opinion of value is more accurate than the $588,000
valuation.
       {¶ 12} No briefing was scheduled at the BTA hearing. After the hearing,
Emerson nonetheless filed a brief in the BTA on August 14, 2014; that brief, along
with a reply brief filed on September 10, 2014, stated that the alleged $50,000 sale
of the subject property closed “on or about August 1, 2014.” Attached to the brief
were an auditor-stamped copy of the deed and an executed but not stamped or
certified conveyance-fee statement indicating $50,000 as the sale price.
       {¶ 13} In a response brief, the BOE objected to Emerson’s submission after
the hearing of the sale evidence as improper, challenging the documents as




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                                January Term, 2016




insufficient evidence of the sale price and noting the lack of cross-examination
regarding the completed sale.
The BTA’s three decisions
       {¶ 14} The BTA issued three successive decisions in this matter, in
conjunction with two successive motions for reconsideration filed by the parties.
       {¶ 15} The first of the three decisions was issued on September 11, 2014;
in it, the BTA made no mention of the posthearing evidence of the transfer of the
property submitted by Emerson and observed that a sale has not occurred until
property has been transferred. BTA No. 2013-5354, 2014 WL 5406601, *2 (Sept.
11, 2014).   The BTA then adopted the $450,000 opinion of value stated in
Mitchell’s March 21 appraisal report. Id.
       {¶ 16} After Emerson filed a motion for reconsideration, the BTA issued a
second decision on September 30, 2014. Emerson’s motion had urged the BTA to
consider the posthearing sale evidence and adopt the alleged $50,000 sale price as
the property value. The BTA’s second decision denied the motion, stating that
Emerson “seeks to have this board consider evidence of a sale that was not properly
made part of the record, i.e., through the hearing process or by motion and/or
stipulation of facts after the hearing.” BTA No. 2013-5354, 2014 WL 5406402, *1
(Sept. 30, 2014).
       {¶ 17} Meanwhile, on September 29, 2014, the BOE had filed a motion for
reconsideration of its own, stating that Emerson had “submitted an appraisal
valuing the subject property at $450,000 which was amended at the hearing to value
the subject property at $588,000.” The BOE’s motion asked the BTA to “correct
its clerical error and use [the] appraiser’s actual opined value of $588,000.” This
motion led to the issuance of the third BTA decision in this matter, on October 9,
2014; in it, the BTA granted the BOE’s motion and adopted $588,000 as the
property value, accepting as undisputed the BOE’s assertion of a “clerical issue” in




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                                 SUPREME COURT OF OHIO




the BTA’s original decision.1 BTA No. 2013-5354, 2014 WL 5406662, *1 (Oct.
9, 2014).
         {¶ 18} The October 9 decision of the BTA vacated the decision that the
BTA had issued on September 11. Thus, the BTA’s final decision reached the
valuation for tax year 2012—$588,000—that we consider in this appeal.
                                         ANALYSIS
    The BTA Improperly Declined to Consider the Transfer Evidence that Was
                               Submitted after the Hearing
         {¶ 19} The sale in this case is not alleged to have occurred until on or about
August 1, 2014—several weeks after the June 17, 2014 BTA hearing. The BOR
and the BTA both correctly refused to rely on the draft purchase agreement alone
to establish the property value, given that the sale had not been consummated. See
N. Royalton Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 129 Ohio St. 3d 172,
2011-Ohio-3092, 950 N.E.2d 955, ¶ 19 (for purposes of property valuation, “the
transfer is an essential element and the sale has not occurred until the property has
been transferred”).
         {¶ 20} Emerson does not dispute that the BTA hearing had ended and the
record had closed by the time of the alleged sale, but argues that the BTA should
have considered the evidence of the transfer once Emerson had alleged that the sale
had been consummated.            We agree. Although the deed and conveyance-fee
statement had been attached to the property owner’s brief, the BTA initially issued
a decision predicating a “find[ing] that no sale has taken place” upon a purported
“absence of any transfer of title,” BTA No. 2013-5354, 2014 WL 5406601, at *2
(Sept. 11, 2014).         No acknowledgement was made of the submission of
documentation with the brief, and no ruling was made on whether the documents


1
  Emerson’s notice of appeal to this court was filed on October 14, 2014, and was therefore within
the 30-day appeal periods started by the BTA’s September 30 decision and its October 9 decision
(which vacated its September 11 decision).




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                                January Term, 2016




should be considered. We acknowledge the general principle that new evidence
may not be submitted after a hearing, Columbus Bd. of Edn. v. Franklin Cty. Bd. of
Revision, 76 Ohio St. 3d 13, 16, 665 N.E.2d 1098 (1996), but we conclude that the
present case constitutes an exception to the rule.
       {¶ 21} In this case, the evidence of transfer supplemented the evidence of
an impending sale that was already in the record, and the property owner’s motion
for reconsideration squarely placed a request to consider that evidence before the
BTA. At a minimum, reconsideration was necessary to make a ruling on the new
evidence, and the BTA erred by doing nothing more than stating that, to date, the
transfer evidence had not properly been made part of the record—thereby dodging
the issue whether it ought to be made part of the record. We hold that under these
particular circumstances, further proceedings to allow admission of the evidence
were warranted.      Upon remand, if the BTA finds that the sale has been
consummated, the BTA should next determine whether the sale is a recent, arm’s-
length transaction that constitutes the value of the property on the tax-lien date.
The BTA Erred By Not Explaining Why It Relied on the $588,000 Valuation
                       Rather than the $450,000 Valuation
       {¶ 22} The BTA based its decision to adopt the $588,000 valuation after
reconsideration in place of the $450,000 valuation on the theory that the first
decision was based on a clerical error. Emerson argues that the conflict between
the two differing opinions of value is anything but clerical in nature—that it is a
substantive difference calling for the exercise of the BTA’s authority to value the
property. We agree.
       {¶ 23} The BTA’s third decision adopts the opinion of value set forth in the
March 19, 2014 version of the appraisal report—$588,000—as opposed to the
opinion of value set forth in the March 21, 2014 version of the report—$450,000.
BTA No. 2013-5354, 2014 WL 5406662 (Oct. 9, 2014). The two opinions of value
offered by the same appraiser are conflicting evidence of value, and we have held




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                               SUPREME COURT OF OHIO




that “[w]here there is conflicting evidence, the BTA must address potentially
material conflicts in the evidence before simply adopting an appraiser’s opinion of
value,” Jefferson Industries Corp. v. Madison Cty. Bd. of Revision, __ Ohio St.3d
__, 2016-Ohio-7089, __ N.E.3d __, ¶ 24. We hold that this principle applies to the
two opinions of the same appraiser here and that the BTA must explain its reasons
for preferring the one value over the other.
                                    CONCLUSION
          {¶ 24} For the foregoing reasons, we conclude that the BTA erred by
declining to consider the posthearing evidence of the transfer of the property and
by determining that the BTA’s first decision was based on a clerical error that could
be corrected without weighing the conflicting evidence of the value of the property.
We therefore vacate the BTA’s decisions as to both points, and we remand the cause
with instructions to the BTA to reconsider its decision not to rely on the $50,000
sale price. If the BTA finds that the sale has been consummated, it shall determine
whether the sale was recent and at arm’s length; if not, the BTA shall weigh the
appraisal evidence.
                                                             Judgment accordingly.
          O’CONNOR, C.J., and PFEIFER, KENNEDY, FRENCH, and O’NEILL, JJ.,
concur.
          LANZINGER, J., concurs in judgment only.
          O’DONNELL, J., dissents, with an opinion.
                                 _________________
          O’DONNELL, J., dissenting.
          {¶ 25} Respectfully, I dissent.
          {¶ 26} In my view, the majority loses sight of our limited function in
reviewing determinations by the Board of Tax Appeals (“BTA”) of the value of
real estate. The majority overrules two BTA rulings: first, its decision not to
consider evidence of a transfer of the property when that evidence was submitted




                                            8
                                January Term, 2016




after the close of the hearing; and second, its decision that the appraiser’s $588,000
valuation more accurately estimates the value of the property than his $450,000
valuation. Both of these decisions lie squarely within the BTA’s discretionary
power to regulate the submission of evidence and determine its probative force.
Indeed, it is elemental and undisputed that “[a]bsent a showing of an abuse of
discretion, the BTA’s determination as to the credibility of witnesses and the weight
to be given to their testimony will not be reversed by this court.” EOP-BP Tower,
L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St. 3d 1, 2005-Ohio-3096, 829
N.E.2d 686, ¶ 14, citing Witt Co. v. Hamilton Cty. Bd. of Revision, 61 Ohio St. 3d
155, 157, 573 N.E.2d 661 (1991). I fail to discern any abuse of discretion on either
point.
         {¶ 27} As for the sale price, the majority acknowledges that the board of
revision (“BOR”) and the BTA both correctly rejected the use of a sale price given
that the sale had not yet been consummated. The alleged consummation took place
almost a month and a half after the BTA hearing closed, and the general principle
is that new evidence may not be submitted after the parties have rested their case at
the BTA hearing. Columbus Bd. of Edn. v. Franklin Cty. Bd. of Revision, 76 Ohio
St.3d 13, 16, 665 N.E.2d 1098 (1996) (“Because these documents were not part of
the original record from the BOR and were submitted after the BTA hearing, they
must be disregarded by the BTA”); accord Fogg-Akron Assocs., L.P. v. Summit
Cty. Bd. of Revision, 124 Ohio St. 3d 112, 2009-Ohio-6412, 919 N.E.2d 730, ¶ 14
(BTA justified in not considering evidence submitted not only after hearing but
after decision); AP Hotels of Illinois, Inc. v. Franklin Cty. Bd. of Revision, 118 Ohio
St.3d 343, 2008-Ohio-2565, 889 N.E.2d 115, ¶ 8, fn. 1 (declining to consider new
evidence presented during appeal from BTA’s decision). In my view, that principle
amply justified the BTA in declining to consider the documents that Emerson
submitted on August 14, 2014.




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                             SUPREME COURT OF OHIO




       {¶ 28} Finally, there is the matter of which appraisal valuation is correct.
The BTA vacillated, first adopting the $450,000 value set forth in the later appraisal
report, then vacating that determination and adopting the $588,000 value from the
earlier appraisal report. Whether or not the BTA’s initial determination rested on
a clerical error is a matter for resolution by the BTA. What confronts this court is
a change in the BTA’s evaluation of the record. Given the appraiser’s testimony
regarding the $588,000 valuation, the BTA did not abuse its discretion by adopting
that value.
       {¶ 29} Accordingly, I would defer to the BTA and affirm its ultimate
decision in this case. I therefore dissent from the majority’s decision to vacate the
BTA’s decisions and remand the cause to the BTA.
                               _________________
       Bailey Cavalieri, L.L.C., and Harlan S. Louis, for appellant.
       Kolick & Kondzer, Thomas A. Kondzer, and Matthew Marsalka, for
appellee Lorain City School District Board of Education.
                               _________________




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