Opinion
No. 88-1487
Submitted January 26, 1990 —
Decided September 12, 1990.
Taxation — Board of Tax Appeals' denial of continuance an abuse of discretion, when — Factors considered when granting requests for continuances.
APPEAL and CROSS-APPEAL from the Board of Tax Appeals, Nos. 86-H-1480, 86-H-1481, 87-C-1354 and 87-C-1355.
The subject real property located in Cuyahoga County and operated under lease by Riverside Racquet Club, Ltd. ("Riverside") consists of a 6.015-acre parcel in the city of Strongsville, Cuyahoga County, improved with one-story masonry and metal buildings and zoned for business uses. Improvements to the property include ten indoor tennis courts and six indoor racquetball courts, as well as locker rooms, pro shop, lounge and front desk area.
The Cuyahoga County Auditor determined the true value of the subject real estate to be $2,025,000 for tax year 1985, and $1,684,000, for tax year 1986. On appeal, the Cuyahoga County Board of Revision determined the true value to be $1,684,000 for 1985 and $1,684,000 for 1986. For tax year 1985, the Strongsville Board of Education and the city of Strongsville ("Strongsville") appealed to the Board of Tax Appeals ("BTA") in case Nos. 86-H-1480 and 86-H-1481. For tax year 1986, Riverside appealed to the BTA in case Nos. 87-C-1354 and 87-C-1355, and the cases were consolidated for hearing.
A hearing was scheduled for February 25, 1988. At Strongsville's request, the matter was continued so that additional information could be obtained to respond to interrogatories submitted by Riverside. The continuance granted by the BTA was qualified in that the BTA stated that no additional continuances would be granted in the matter. In preparation for the evidentiary hearing, each of the parties had arranged for the services of an expert appraiser. Strongsville intended to use Sam Canitia and Riverside, Richard T. Van Curen.
On March 18, 1988, Strongsville received notice from the BTA of the reassignment of the hearing for May 6, 1988. Counsel for Strongsville learned, upon contacting Canitia, that he would be unavailable at the scheduled time by reason of a pre-arranged, out-of-state seminar. Counsel for Riverside was notified of the conflict and he responded that before discussing a continuance, the parties should enter into settlement negotiations. These negotiations eventually failed and, since counsel for Riverside could not be reached, on or about April 14, 1988, counsel for Strongsville telephoned the BTA to advise of the unavailability of the expert witness and to request a continuance. The BTA hearing officer suggested that a letter describing the request be submitted to the BTA. On April 20, 1988, counsel for Strongsville was informed of counsel for Riverside's objection to a continuance. Accordingly, on that day, a letter was sent to the BTA requesting a continuance of the scheduled hearing. On April 25, the BTA hearing examiner informed counsel for Strongsville by telephone that the request would be denied. A written motion for a continuance filed with the BTA on April 27, was denied on April 29, 1988. Counsel for Strongsville then attempted, unsuccessfully, to obtain the services of a substitute appraiser. On May 6, 1988, at the hearing before the BTA, counsel for Strongsville again moved the BTA to continue the hearing in order that his expert witness could be present to testify. This motion was denied. The hearing proceeded as scheduled and witnesses on behalf of Riverside testified and were cross-examined by counsel for Strongsville.
Van Curen discussed the factors involved in his appraisal study and expressed the opinion that the fair market value of the subject property was $1,150,000 for 1985 and $1,200,000 for 1986. Both estimates were based upon the appraiser's use of the income approach to valuation and upon the market or sales comparison approach. He also indicated by testimony and in his appraisal that the estimated net income for the tax years 1985 and 1986 was $175,400 and $180,000 respectively. The developed capitalization rate utilized in his appraisal was 13.5 percent, plus a 1.83 percent provision for real estate taxes for tax year 1985. For tax year 1986, a slightly lower base capitalization rate of 13.0 was used, but the provision for real estate taxes was increased to 2.17 by reason of an adjustment in the real estate tax base.
In its decision, the BTA referred to its denial of the requested continuance. Based upon the evidence before it, which, inter alia, included the report which Canitia had presented to the board of revision and Van Curen's appraisal, the BTA determined that the true value of the subject property was $1,570,130 for tax year 1985 and $1,620,130 for tax year 1986. The BTA modified Van Curen's income approach, which it concluded was the best evidence of value, by utilizing a net income estimate of $225,000 and a capitalization rate of 14.33 percent.
These cases are before this court upon an appeal and cross-appeal as of right.
Daniel J. Kolick, assistant director of law, for appellants Strongsville Board of Education and city of Strongsville.
John T. Corrigan, prosecuting attorney, and William J. Day, for appellees Cuyahoga County Board of Revision and Cuyahoga County Auditor.
Kahn, Kleinman, Yanowitz Arnson Co., L.P.A., and Thomas L. Dettelbach, for appellee Riverside Racquet Club, Ltd.
Strongsville claims the BTA abused its discretion in denying the motion for continuance, and that the BTA erred in its determination of true value which was based upon evidence which excluded the proposed expert testimony of Strongsville's appraiser. Riverside's cross-appeal asserts the erroneous computation of true value based upon the capitalization rate and the net income estimate used by the BTA.
While there is dispute as to the proper capitalization rate and net income estimate, the initial emphasis should be, as Strongsville has placed it, on whether the BTA abused its discretion in refusing to grant the requested continuance. We find that it did and that its action was unreasonable and unlawful.
In Coats v. Limbach (1990), 47 Ohio St.3d 114, 548 N.E.2d 918, we set forth the criteria to guide the BTA in granting requests for continuances: the witness's absence must be unavoidable, the witness's testimony must be critical, the request must be made in good faith, and the witness's attendance at a future hearing must be probable. Moreover, we stated "* * * courts liberally continue cases because denying a continuance would deny a litigant his day in court." Coats v. Limbach, supra, at 116, 538 N.E.2d at 919, citing with approval Buck v. McCabe (1942), 140 Ohio St. 535, 538, 24 O.O. 552, 553, 45 N.E.2d 763, 766.
In the instant appeal, counsel for Strongsville proceeded with diligence when advised of the unavailability of his witness in that he: (1) requested opposing counsel to agree to a continuance; (2) contacted the BTA by letter and telephone requesting a continuance; (3) contacted numerous substitute expert witnesses who were also unavailable; (4) filed a formal motion for continuance; and (5) persisted in his effort to obtain a continuance at the hearing before the BTA at which time he attempted to make his case on cross-examination and by reference to the statutory transcript.
We find that Strongsville has shown good cause for a continuance: Strongsville's witness was unavoidably absent, would have given essential testimony and would probably have been available to attend a hearing at some future time, and the request for continuance was made in good faith.
We stated in Ojalvo v. Bd. of Trustees of Ohio State Univ. (1984), 12 Ohio St.2d 230, 12 OBR 313, 466 N.E.2d 875, that "the standard for `abuse of discretion' is readily defined, albeit broadly, as more than an error of law or judgment, but implies an attitude on the part of the trial court that is unreasonable, arbitrary, or unconscionable." Id. at 232, 12 OBR at 315, 466 N.E.2d at 877. Also, we agree with the holding of the appellate court in Prime Kosher Foods, Inc. v. Bur. of Emp. Serv. (1987), 35 Ohio App.3d 121, at 122, 519 N.E.2d 868, at 869, that "[a]buse of discretion connotes more than an error of judgment; rather, it implies a decision that is without a reasonable basis and is clearly wrong."
The capitalization rate and the net income estimate which were used by the BTA to determine the true value of the subject property for the tax years 1985 and 1986 must be supported by sufficient probative evidence of record. Hawthorn Mellody, Inc. v. Lindley (1981), 65 Ohio St.2d 47, 19 O.O. 2d 234, 417 N.E.2d 1257, syllabus. Such evidence does not appear in the record here. Accordingly, we reverse the BTA's decision and remand this matter to the BTA for an additional hearing and for redetermination of the true value of the subject property in conformity with this opinion.
Decision reversed and cause remanded.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, WRIGHT, H. BROWN and RESNICK, JJ., concur.