Opinion
C. A. 29817
01-12-2024
STATE ex rel. RIVERSIDE VIEWS, LLC Relator v. MONTGOMERY COUNTY TREASURER AND MONTGOMERY COUNTY AUDITOR Respondents
DECISION AND FINAL JUDGMENT ENTRY
PER CURIAM
{¶ 1} This matter is before the court on Riverside Views, LLC's ("Riverside") September 28, 2023, motion for default judgment. Previously, on September 6, 2023, this court overruled the motion to dismiss of the respondents, the Montgomery County Treasurer and Montgomery County Auditor, and sustained Riverside's motion for leave to file its amended complaint instanter. The respondents were ordered to respond to the amended complaint within 14 days of our decision; however, no responsive pleading was filed. Subsequently, on November 2, 2023, the respondents filed a response in opposition to the default judgment motion, to which Riverside replied. Accordingly, this matter is ripe for our consideration.
The respondents allege that Riverside did not serve the motion. Hence, their response was filed late, more than 20 days after the motion for default judgment. See Loc.App.R. 8(F)(2). Riverside disputes the allegation.
I. Factual Background
{¶ 2} On October 2, 2020, U.S. Real Estate Equity Builder, LLC, and U.S. Real Estate Equity Builder Dayton, LLC filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court, District of Kansas (Case Nos. 20-21358-11 and 20-21359-11 (jointly administered)).
{¶ 3} On May 19, 2021, the bankruptcy court approved an order for the Chapter 11 trustee to sell certain real property belonging to U.S. Real Estate Equity Builder Dayton, LLC's bankruptcy estate, including "1923 Riverside Drive, Dayton, Ohio 45405," pursuant to 11 U.S.C. 343(f). The bankruptcy court's order declares that it serves as a determination that "all liens, claims, encumbrances, and other interests in and to" properties sold subject to that order "have been unconditionally released, discharged, and terminated."
{¶ 4} On May 27, 2021, the Chapter 11 trustee conveyed four parcels of property to JRM Financial, LLC:
Parcel Number
Commonly Known As:
R72-06111-0013
1923-1923 Riverside Dr., Dayton, OH 45405
R72-06111-0020
1933-1935 Riverside Dr., Dayton, OH 45405
R72-06110-0048
Riverside Dr., Dayton, OH 45405
R72-06110-0050
Riverside Dr., Dayton, OH 45405
{¶ 5} The parcels form a single apartment complex, which includes the street addresses 1923 through 1971 Riverside Drive inclusive.
{¶ 6} The Chapter 11 trustee's authority to transfer the properties "by virtue of" the bankruptcy court's May 19, 2021, order is referenced in the deed conveying the parcels to JRM Financial, LLC. On July 25, 2022, JRM Financial, LLC conveyed these parcels to Riverside.
{¶ 7} In 2023, Riverside attempted to pay current real estate taxes on Parcel No. R72-06111-0020. The Montgomery County Treasurer rejected its payment. Riverside claims that its payment was rejected because "red flags" alerted the Montgomery County Treasurer that there were outstanding tax certificates on the parcel that had not been released. The Montgomery County Treasurer had previously sold tax certificates on the parcel to FIG, as custodian for FIG OH18, LLC ("FIG"), on November 25, 2019 (Tax Certificate No. 2019-0000001551), and November 23, 2020 (Tax Certificate No. 2020-0000000135).
A county treasurer may collect delinquent property taxes by selling tax certificates to investors in exchange for payment of the delinquency. The investor will attempt to collect the delinquent taxes, interest, and fees from the owner of the property and, if necessary, commence foreclosure proceedings. See R.C. 5721.30 et seq.
The 2020 tax certificate may be void because it was sold during the pendency of the bankruptcy case. See R.C. 5721.31(A)(1)(c) (a county treasurer may not select for a tax certificate sale "[a] parcel[,] the owner of which has filed a petition in bankruptcy, so long as the parcel is property of the bankruptcy estate"); R.C. 5721.34(A) ("A county treasurer shall not sell any tax certificate respecting a parcel of delinquent land to which any of divisions (A)(1)(a) to (c) of section 5721.31 of the Revised Code apply. A certificate sold in violation of this section is void").
{¶ 8} The red flags referenced by Riverside allegedly read "Tax Lien Sold" in the Montgomery County Treasurer's records and "9919-Tax Lien Sold" in the Montgomery County Auditor's records. Riverside alleges that "the appearance of these 'red flags' on county records indicate to the public or any person inspecting those records including county officials that there are delinquent taxes on the [parcel] for which Tax Certificates were sold which remain as liens on the [parcel]."
{¶ 9} Riverside requested that the Montgomery County Treasurer delete the red flags from its records citing the language of the bankruptcy court's order. The Montgomery County Treasurer has refused to delete the red flags and "ordered" Riverside to obtain releases from FIG. Riverside indicates that its efforts to obtain lien releases from FIG have been unsuccessful.
{¶ 10} On June 5, 2023, Riverside filed this mandamus action. Riverside alleges that because the respondents are public officials bound by the May 19, 2021, bankruptcy court order, they must be compelled to comply with its terms. Further, Riverside asks that this court compel the respondents to "[d]elete (a) any and all references to the Tax Certificates; and (b) the phrases "Tax Lien Sold" and "9919-TX LIEN SOLD" from county records" and "to correct their records to delete any and all reference(s) to the Tax Certificates as being liens on the Property." In other words, the respondents should be made to treat the liens as having been "unconditionally released, discharged, and terminated" and correct their records to the reflect that understanding.
II. Default Judgment Standard
{¶ 11} "When appropriate, a Civ.R. 55 default judgment may be entered in a mandamus action." State ex rel. Shimola v. Cleveland, 70 Ohio St.3d 110, 112, 637 N.E.2d 325 (1994), citing State ex rel. Spirko v. Court of Appeals, 27 Ohio St.3d 13, 501 N.E.2d 625 (1986). However, "the court must look beyond the simple admissions resulting from a failure to serve a responsive pleading" before granting judgment against the state to determine if the relator has established their claim "by evidence satisfactory to the court." Id. citing State ex rel. Weiss v. Indus. Comm., 65 Ohio St.3d 470, 473, 605 N.E.2d 37 (1992). "The analysis as to whether a default judgment is proper in a mandamus action is essentially the same as an analysis as to whether a peremptory writ of mandamus is appropriate against a respondent who fails to respond to a complaint." State ex rel. State Farm Mut. Ins. Co. v. O'Donnell, 163 Ohio St.3d 541, 2021-Ohio-1205, 171 N.E.3d 321, ¶ 15. If the pertinent facts of the complaint are uncontroverted and from these facts it appears beyond doubt that the relator is entitled to the requested extraordinary relief, no further evidence and briefing is necessary; a peremptory writ shall issue. See State ex rel. Findlay Publishing Co. v. Schroeder, 76 Ohio St.3d 580, 583, 699 N.E.2d 835 (1996).
III. Elements of Mandamus
{¶ 12} A writ of mandamus will be issued when the relator establishes a clear legal right to the requested relief, a clear legal duty on the part of the respondent to provide it, and the lack of an adequate remedy in the ordinary course of the law. State ex rel. Waters v. Spaeth, 131 Ohio St.3d 55, 2012-Ohio-69, 960 N.E.2d 452, ¶ 6.
IV. Law and Analysis
{¶ 13} Upon consideration of the amended complaint and the exhibits attached thereto, Riverside has not demonstrated beyond doubt that it is entitled to a writ of mandamus.
The amended complaint was not verified. Riverside did not support its motion for default judgment with additional evidence to consider.
{¶ 14} As a preliminary matter, we note that the rights and duties which are enforceable in mandamus must be the creation of the legislature, not the judiciary. State ex rel. Cable News Network, Inc v. Bellbrook-Sugarcreek Local Schools, 2019-Ohio-4187, 134 N.E.3d 268, ¶ 27 (2d Dist.), citing State ex rel. Woods v. Oak Hill Community Med. Ctr, 91 Ohio St.3d 459, 461-462, 746 N.E.2d 1108 (2001). Thus, "courts in mandamus actions have a duty to construe constitutions, charters, and statutes, if necessary, and thereafter evaluate whether the relator has established the required clear legal right and clear legal duty," and a "duty to resolve all doubts concerning the legal interpretation of these provisions." State ex rel. Fattlar v. Boyle, 83 Ohio St.3d 123, 125, 698 N.E.2d 987 (1998). (Emphasis added.) Here, Riverside's amended complaint references some duties of the respondents with respect to tax collection. Specifically, the amended complaint references R.C. 319.28 (county auditor's duty to compile and make up a general tax list of real property) and R.C. 5721.011 (county auditor's duty to compile a list and duplicate of all delinquent lands). The amended complaint also references a county treasurer's duties with respect to issuing tax certificates under R.C. 5721.31. Nevertheless, the amended complaint fails to connect these statutory duties with the factual allegations with much precision. In other words, we find it difficult to construe the statutes referenced in the amended complaint in such a manner as to compel this court to grant the relief Riverside seeks. Accordingly, we do not find that Riverside has established a clear legal right to the requested relief or a clear legal duty on the part of the respondents to provide it.
{¶ 15} Although Riverside points out that mandamus has been held to compel correction of a county treasurer's records to show that property taxes have been paid, see State ex rel. Essinger v. Holzemer, 54 Ohio App. 477, 8 N.E.2d 155 (6th Dist. 1936), the complaint does not allege that the delinquent taxes on Parcel No. R72-06111-0020 have been paid. Indeed, the opposite appears to be true. A tax certificate holder receives the same super-priority lien that a county treasurer is entitled to under state law. In re Cortner, 400 B.R. 608, 614 (S.D. Ohio 2008); R.C. 5721.32(E) ("Upon issuing a tax certificate, the delinquent taxes that make up the certificate purchase price are transferred, and the superior lien of the state and its taxing districts for those delinquent taxes is conveyed intact to the certificate holder"). If the delinquent taxes on Parcel No. R72-06111-0020 were not paid to FIG out of the Chapter 11 trustee's sale, FIG would have no incentive to release its liens. Given FIG's failure to release its liens as alleged in the amended complaint, we reasonably assume that the liens remain unpaid. And, under those apparent circumstances, the respondents have refused to "correct" their records to reflect a release of those liens. Thus, the central legal question in this action appears to be whether the respondents must release the liens on account of the bankruptcy court's May 19, 2021, order, notwithstanding the lack of payment either to FIG or the respondents. To that end, Riverside's amended complaint seeks the interpretation and enforcement of the bankruptcy court's judgment against the respondents.
Assuming FIG's 2020 tax certificate is void, the state's lien for delinquent real estate taxes would remain with the county treasurer. The county treasurer would be responsible for refunding the purchase price and paying interest to FIG, see R.C. 5721.34(B), and the delinquent tax would remain unpaid.
To the extent that FIG possesses the state's lien, mandamus will not lie to enforce a private right against a private person. State ex rel. Pressley v. Ind. Comm., 11 Ohio St.2d 141, 163, 228 N.E.2d 631 (1967).
{¶ 16} In general, "the use of extraordinary relief to enforce a judgment is not widespread, because of the availability of other means of enforcement, e.g., motion for contempt." Dzina v. Celebrezze, 108 Ohio St.3d 185, 2006-Ohio-1195, 843 N.E.2d 1202, ¶ 14. Thus, a party seeking to enforce a judgment generally has an adequate remedy at law. We also consider the principle that the court that issues an order is the best interpreter and enforcer of that order. State ex rel. Bitter v. Missig, 72 Ohio St.3d 249, 252, 648 N.E.2d 1355 (1995) ("the court that issued the order sought to be enforced is in the best position to determine if that order has been disobeyed").
{¶ 17} Here, Riverside has asked us to interpret a Kansas bankruptcy court's order authorizing a trustee to sell "1923 Riverside Drive," i.e., Parcel No. R72-06111-0013, free and clear of liens to authorize the sale of 1933-1935 Riverside Drive, i.e., Parcel No. R72-06111-0020, free and clear of liens. While the interpretation of court orders is within our wheelhouse, we are necessarily in a "second-best" position with respect to the bankruptcy court's order. We are reluctant to do the job when, presumably, the United States Bankruptcy Court, District of Kansas, has the capacity to interpret and enforce its own orders. Indeed, that court is the obvious choice of forum for the task.
{¶ 18} Our position finds support in federal caselaw. The Supreme Court of the United States has commented that a bankruptcy court "plainly [has] jurisdiction to interpret and enforce its own prior orders." Travelers Indem. Co. v. Bailey, 557 U.S. 137, 151, 129 S.Ct. 2195, 174 L.Ed.2d 99 (2009). Further, various cases have applied this principle in the specific context of resolving motions to interpret orders authorizing the sale of assets. See, e.g., New England Power & Marine, Inc. v. Tyngsborough (In re Middlesex Power Equipment & Marine, Inc.), 292 F.3d 61, 66 (1st Cir. 2002) (bankruptcy court had jurisdiction to reopen case to decide scope of order specifying that the sale of debtor's assets would be free and clear of tax liens at request of purchaser); Elliott v. Gen. Motors, LLC (In re Motors Liquidation Co.), 829 F.3d 135, 153 (2d Dist. 2016) (bankruptcy court had jurisdiction to interpret and enforce a prior sale order); Mid-City Bank v. Skyline Woods Homeowners Assn. (In re Skyline Woods Country Club), 636 F.3d 467, 471 (8th Cir. 2006) (bankruptcy court assumed to have jurisdiction over post-bankruptcy dispute over scope of sale order between purchaser and third parties seeking to enforce restrictive covenants); VIP Financial Servs. v. Frost Bank (In re Munn), 643 B.R. 141, 152-157, (N. Dist. Tex. 2022) (affirming bankruptcy court's judgment denying purchaser's motion to interpret sale of property as free and clear of liens). Accordingly, we are not persuaded by Riverside's allegation that it lacks standing to obtain relief from the bankruptcy court and must seek relief here.
{¶ 19} While we stop short of deciding that Riverside has an adequate remedy at law given that bankruptcy courts are commonly (if not entirely accurately) described as "courts of equity," see, e.g., Young v. United States, 535 U.S. 43, 50, 122 S.Ct. 1036, 152 L.Ed.2d 79 (2002); see also Krieger, "The Bankruptcy Court is a Court of Equity:" What Does That Mean?, 50 S.C. L. Rev. 275 (1999) (characterizing the statement as ubiquitous in bankruptcy courts), we are mindful of the principle that mandamus is an extraordinary remedy, "to be exercised with caution and discretion and only when the way is clear." State ex rel. Taylor v. Glasser, 50 Ohio St.2d 165, 166, 364 N.E.2d 1 (1977); see also Patterson v. Cuyahoga Cty Common Pleas Court, 8th Dist. Cuyahoga No. 107755, 2019-Ohio-110, ¶ 7 (a court of appeals has discretion to deny mandamus relief "in the close case"). In our view, Riverside's right to extraordinary relief in this case has not been established beyond doubt. No element of Riverside's mandamus claim has been established by evidence satisfactory to this court. Therefore, Riverside's motion for default judgment is OVERRULED.
V. Conclusion
{¶ 20} Because we have determined that Riverside has not established the elements of its claim and cannot do so, a writ of mandamus is DENIED. This action, Montgomery County Appellate Case No. 29817, is DISMISSED. Costs taxed to the relator.
{¶ 21} SO ORDERED.
JEFFREY M. WELBAUM, PRESIDING JUDGE, MICHAEL L. TUCKER, JUDGE, CHRISTOPHER B. EPLEY, JUDGE
To The Clerk: Within three (3) days of entering this judgment on the journal, you are directed to serve on all parties not in default for failure to appear notice of the judgment and the date of its entry upon the journal, pursuant to Civ.R. 58(B).
JEFFREY M. WELBAUM, PRESIDING JUDGE