Cleveland v. 3006 Montclair Ave., L.L.C.

2024 Ohio 1274, 244 N.E.3d 537

• Court: Ohio Court of Appeals
• Decided: April 4, 2024
• Docket: 112695
• Status: Published

Opinion

[Cite as Cleveland v. 3006 Montclair Ave., L.L.C., 2024-Ohio-1274.]

COURT OF APPEALS OF OHIO

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

CITY OF CLEVELAND, :

Plaintiff-Appellee, : No. 112695

v. :

3006 MONTCLAIR AVENUE, LLC, :

Defendant-Appellant. :

JOURNAL ENTRY AND OPINION

JUDGMENT: MODIFIED AND REMANDED RELEASED AND JOURNALIZED: April 4, 2024

Criminal Appeal from the Cleveland Municipal Court Housing Division Case No. 2022-CRB-001130

Appearances:

Mark D. Griffin, Director of Law for the City of Cleveland, and Michael T. Mahoney, Assistant Director of Law, for appellee.

Bower Stevenson LLC and Justin Stevenson, for appellant.

EILEEN A. GALLAGHER, P.J.:

Defendant-appellant, 3006 Montclair Avenue, LLC (“Montclair

LLC”), appeals from the Cleveland Municipal Housing Court’s (“the housing court”)

sentencing judgment entry after Montclair LLC pled no contest to ten counts of failure to comply in violation of Cleveland Codified Ordinances (“C.C.O.”)

3103.25(e). Montclair LLC contends that the housing court erred and abused its

discretion by including terms and conditions relating to other entities and properties

owned by those other entities in the community-control sanctions imposed against

Montclair LLC. For the reasons that follow, we modify the housing court’s judgment

to remove any terms or conditions related to other entities or properties owned by

those other entities.

Procedural and Factual Background

On November 11, 2020, Cleveland’s Department of Building and

Housing (the “building department”) conducted an inspection of the property

located at 3006 Montclair Avenue in Cleveland. Following the inspection, the

building department issued a “Notice of Violation of Building and Housing

Ordinances” (the “notice”) to Montclair LLC. The notice indicated that the driveway

and gutters of the 3006 Montclair Avenue property were in need of repair in

violation of C.C.O. 369.13, and that the garage or shed was in need of painting in

violation of C.C.O. 369.15. The notice gave Montclair LLC until December 16, 2020

to correct the violations.

On February 11, 2022, plaintiff-appellee, the city of Cleveland (the

“city”), filed a complaint against Montclair LLC in the Cleveland Municipal Court,

Housing Division, alleging that Montclair LLC had failed to comply with the notice.

On March 16, 2022, Montclair LLC entered a plea of not guilty on all counts. On January 11, 2023, the parties reached a plea agreement. Montclair

LLC agreed to plead no contest to ten counts of failure to comply in violation of

C.C.O. 3103.25(e), a first-degree misdemeanor. In exchange, 192 counts of the same

violation, i.e., one count for each day in which Montclair was noncompliant with the

notice, were nolled. After considering the city’s proffer of evidence, the housing

court found Montclair LLC guilty of the ten counts of failure to comply.

On March 1, 2023, the housing court conducted a sentencing hearing.

Mayukh Babu appeared as a representative for Montclair LLC at the sentencing

hearing.

At the sentencing hearing,1 a housing court specialist presented a

presentence-investigation report to the housing court.2 The report consisted of

information Babu and Montclair LLC had provided to the housing court specialist

prior to the hearing,3 as well as information the housing court specialist had

obtained as a result of his own independent investigation. The report included

1 This summary of what occurred at the sentencing hearing is based on a joint

statement of proceedings submitted pursuant to App.R. 9(C).

2 It is unclear from the record whether the housing court specialist submitted a

written presentence-investigation report or merely provided an oral report to the housing court at the sentencing hearing. No written presentence-investigation report was included in the record forwarded to this court on appeal.

3 In its appellate brief, Montclair LLC asserts that, during the presentence investigation, “Montclair [LLC] was required to provide, among other things, the address and property information [for] all properties owned by [Babu].” Montclair LLC indicated that “[t]o ensure candor with the [h]ousing [c]ourt,” “it complied with the request” and disclosed the 3305 W. 111th Street property and the 10325 Bernard Avenue property, which are “owned and managed under separate limited liability companies.” information about the 3006 Montclair Avenue property owned by Montclair LLC

and two other properties owned by other, separate entities: (1) 3305 W. 111th Street

in Cleveland, owned by 3305 W. 111th LLC (“W. 111th LLC”) and (2) 10325 Bernard

Avenue in Cleveland, owned by 10325 Bernard Avenue LLC (“Bernard LLC”)

(collectively, the “other properties”).4

The housing court specialist advised the housing court that he had

inspected all three properties and he presented his findings, including the current

status of the violations at 3006 Montclair Avenue, other conditions that he thought

warranted repair at 3006 Montclair Avenue and his assessment of the conditions at

the 3305 W. 111th Street and 10325 Bernard Avenue properties.

After hearing from the housing court specialist, the city and counsel

for Montclair LLC, the housing court sentenced Montclair LLC to two years of active

community-control sanctions and stayed a maximum potential fine of $50,000. As

terms and conditions of Montclair LLC’s community control, the housing court

ordered Montclair LLC to (1) remedy all violations at the 3006 Montclair Avenue,

W. 111th Street and 10325 Bernard Avenue properties, (2) obtain rental registrations

and lead certifications or exemptions for each of the properties, (3) allow the

housing court specialist to conduct internal and external inspections of the

properties, (4) keep all three properties clean and free of junk and debris and (5)

prepare and submit monthly repair and maintenance reports for each of the

4 Babu was reportedly the sole owner of each of these entities. properties to the housing court specialist. The housing court also ordered Babu to

attend a landlord clinic and indicated that none of the properties could be sold,

gifted or otherwise transferred during the period of community control without the

approval of the housing court.

On April 6, 2023, the trial court issued a written sentencing judgment

entry and order (the “sentencing entry”). The sentencing entry set forth the terms

and conditions of Montclair LLC’s two years of active community-control sanctions,

the “stayed” $50,000 maximum potential fine and incorporated an “attached

property list” that identified the properties the housing court considered to be

“properties owned” by Montclair LLC for purposes of the sentencing entry. These

properties included not only the property that was the subject of the complaint —

the 3006 Montclair Avenue property — but two other properties that were not, in

fact, owned by Montclair LLC: (1) the 3305 West 111th Street property, whose

“deeded owner” was identified on the attached property list as W. 111th LLC and (2)

the 10325 Bernard Avenue property, whose “deeded owner” was identified on the

attached property list as Bernard LLC.

The terms and conditions included, among other things, a

requirement that Montclair LLC “clean all of the properties * * * and keep them free

from all junk, debris, and dumping,” that Montclair LLC “submit a repair and

maintenance plan” every 30 days for all the properties, that Montclair LLC allow a

building department inspector to conduct an interior and exterior inspection of the

properties and a prohibition on the sale, gift or transfer of any of the properties on the “attached property list.” The sentencing entry stated that “failure to

substantially comply” with the terms and conditions of community control could

result in the imposition of “more restrictive community control sanctions,”

including “increased community control for up to five years” and financial sanctions

of up to $50,000. The sentencing entry further stated that “[s]elling properties

without permission of the Court is an AUTOMATIC VIOLATION of the ORDER of

the Court and will result in a community control violation hearing.”

Montclair LLC appealed, raising the following three assignments of

error for review:

Assignment of Error I: The trial court erred when it imposed numerous community control sanctions on W. 111th LLC and Bernard LLC without providing those entities with any notice or any opportunity to be heard, as required by due process.

Assignment of Error II: The trial court erred when it sentenced W. 111th LLC and Bernard LLC because the trial court did not have jurisdiction over the entities.

Assignment of Error III: The trial court erred when it imposed unreasonable community control sanctions on W. 111th LLC and Bernard LLC as part of Montclair’s sentence.

Montclair LLC’s assignments of error are interrelated. Accordingly,

we address them together.

Law and Analysis

In its assignments of error, Montclair LLC contends that the housing

court erred, “[p]rocedurally and constitutionally,” in “extend[ing] Montclair [LLC]’s

sentence” to include the other properties and to punish and restrict the “fundamental property rights” of W. 111th LLC and Bernard LLC without providing

W. 111th LLC and Bernard LLC notice and “an opportunity to speak in their defense.”

It contends that W. 111th LLC and Bernard LLC were denied due process and that

the portions of the sentencing judgment entry that impose sanctions against W.

111th LLC and Bernard LLC “are inherently void” due to lack of personal jurisdiction

because neither entity was served with a notice of violation or complaint or

voluntarily submitted to the housing court’s jurisdiction. Montclair LLC also argues

that the housing court abused its discretion when it “unreasonably and arbitrarily”

imposed community-control sanctions that exceeded both the housing court’s

“general sentencing guidelines” and the housing court’s statutory authority to

include properties owned by W. 111th LLC and Bernard LLC.

The city responds that “[f]or judicial economy,” when sanctioning a

defendant for a housing code violation, “the Housing Court requests information on

all properties controlled by the offender, not just those properties owned by the

defendant in name” and that it then “brings community control sanctions toward all

properties owned by the [d]efendant” so that it “can ensure compliance for more

properties owned, managed, or controlled by a party who has been charged with a

violation of the City Codes.” The city maintains that its placement of community

control conditions was a proper exercise of the housing court’s statutory sentencing

authority and that “Housing Court Criminal Rule 2(S) contemplates other

properties owned by a defendant in the [c]ity.” Standing

As an initial matter, we note that the only appellant in this case is

Montclair LLC. W. 111th LLC and Bernard LLC were not parties to the proceeding

below and are not parties to this appeal. However, in its first and second

assignments of error and also, in part, in its third assignment of error, it is the rights

of W. 111th LLC and Bernard LLC — rather than its own rights — that Montclair LLC

contends have been violated.

An appeal is permitted only to correct errors injuriously affecting an

appellant. Ohio Contract Carriers Assn., Inc. v. Pub. Util. Comm., 140 Ohio St. 160,

42 N.E.2d 758 (1942), syllabus. A party does not ordinarily have standing to

prosecute an appeal to protect the rights of a third party, and an appellant may not

generally assign as error errors committed against a nonappealing party. See, e.g.,

UBS Fin. Servs. v. Lacava, 8th Dist. Cuyahoga No. 106256, 2018-Ohio-3165, ¶ 42;

Wells Fargo Bank, N.A. v. Kessler, 10th Dist. Franklin No. 15AP-216, 2015-Ohio-

5085, ¶ 22-23; see also Mulqueeny v. Mentor Chiropractic Ctr., Inc., 11th Dist. Lake

No. 2001-L-034, 2002 Ohio App. LEXIS 1671, 4-5 (Apr. 12, 2002) (“An appealing

party is not permitted to vicariously assert that a non-party’s constitutional due

process rights were violated.”). However, an appealing party may complain of an

error committed against another when the error is prejudicial to the rights of the

appellant. Lacava at ¶ 42. In other words, to have standing to raise an error on

appeal, a party must generally assert its own rights rather than the rights of a third party. Id., citing Util. Serv. Partners, Inc. v. Pub. Util. Comm. of Ohio, 124 Ohio

St.3d 284, 2009-Ohio-6764, 921 N.E.2d 1038, ¶ 49.

Although neither party has raised the issue, because standing is

jurisdictional, a court may raise it sua sponte. See, e.g., In re $75,000.00 United

States Currency (Katz), 2017-Ohio-9158, 101 N.E.3d 1209, ¶ 45 (8th Dist.) (“‘[T]he

issue of standing is jurisdictional and may be raised by the court sua sponte.’”),

quoting State v. Langston, 6th Dist. Lucas No. L-12-1014, 2012-Ohio-6249, ¶ 7.

Accordingly, we consider Montclair’s LLC assignments of error only to the extent

that the assignments of error claim error that injuriously affects Montclair LLC.

Terms and Conditions of Community Control

In cases involving building or housing code violations, “the primary

goal of the court is to correct the violation and bring the property into compliance

with all building codes, rather than punish the defendant for misconduct.”

Cleveland v. Pentagon Realty, L.L.C., 133 N.E.3d 580, 583, 2019-Ohio-3775, ¶ 9

(8th Dist.); Cleveland v. Schornstein Holdings, L.L.C., 2016-Ohio-7479, 73 N.E.3d

889, ¶ 19 (8th Dist.). To achieve that goal, the housing court has broad discretion in

fashioning a sentence to determine the most effective way to bring about

compliance. Pentagon Realty at ¶ 10; R.C. 2929.22(A), 2929.25, 2929.27.

However, that discretion is not limitless. Community control conditions must not

be overbroad and must be reasonably related to the goals of community control, e.g.,

rehabilitation of the defendant, administering justice, protection of the community and ensuring good behavior. See, e.g., Pentagon Realty at ¶ 11, 13; N. Olmsted v.

Rock, 8th Dist. Cuyahoga No. 105566, 2018-Ohio-1084, ¶ 32, 34.

The city maintains that the trial court acted within its discretion by

“incorporating” the 3305 West 11th Street and 10325 Bernard Avenue properties

“into the community control sanctions of 3006 Montclair LLC” because (1)

Montclair “provided the information used to sanction W. 111th LLC and Bernard

LLC” (when ordered to do so by the housing court), (2) “the ownership and

maintenance of the Montclair, Bernard, and W. 111th properties are reasonably

related due to a common owner known to the Court,” (3) “the potential for future

criminality is significantly lessened for having these properties in community

control because the Court can ensure that the properties are fully compliant before

releasing them from these sanctions” and (4) although the other entities “have not

been charged with a crime,” “served, arraigned, or sentenced,” “these LLCs are not

being sanctioned with intent to punish, but to bring the properties into compliance

in an expedient fashion.”

This court addressed a similar issue in Cleveland v. United States

Bank Natl. Assn., 8th Dist. Cuyahoga No. 108195, 2019-Ohio-3776. In that case,

U.S. Bank, in its individual corporate capacity was named in a 25-count complaint,

charging it with violating C.C.O. 3103.25(e) for failing to repair or demolish a single-

family home it owned that was located on Puritas Avenue in Cleveland. Id. at ¶ 2.

The bank pled no contest to the complaint and was sentenced to a five-year term of

community-control sanctions and ordered to pay a $100,000 fine. Id. In its judgment entry setting forth the sentence, including the terms and conditions of

community control, the housing court ordered U.S. Bank to provide a list of all real

property it “owns or controls,” including properties for which the bank served only

as a trustee. Id. at ¶ 3, 6. U.S. Bank appealed. While U.S. Bank argued that the

housing court had erred in ordering it to provide such a list, the city maintained that

the housing court’s placement of community control conditions on the bank’s trust

properties was a proper exercise of the housing court’s statutory sentencing

authority. Id. at ¶ 4-5, 8.

This court concluded that “because U.S. Bank was charged in its

individual corporate capacity, the housing court only had authority to order U.S.

Bank to provide a list of its properties within the city of Cleveland and village of

Bratenahl that it owns in its individual corporate capacity,” which did “not include

[properties] U.S. Bank serves, holds, or controls as trustee.” Id. at ¶ 12.

This court explained:

In this case, U.S. Bank was charged in its individual corporate capacity, not as trustee. This distinction is important because U.S. Bank, as a corporate individual, and U.S. Bank, as trustee, are two separate persons. See generally Cleveland v. Deutsch Bank Natl. Trust Co., 8th Dist. Cuyahoga No. 99944, 2014-Ohio-1948. In Deutsch Bank, this court found that an entity cannot be found criminally liable in its individual capacity for a property it owns as trustee. Deutsch Bank applies here — U.S. Bank in its individual corporate capacity cannot be liable for property its holds as trustee.

* * * [A] court only has jurisdiction over the person or entity before it — the court cannot impose community control sanctions against a nonparty. By requiring U.S. Bank to provide a list of all the properties it holds or controls as trustee, the housing court is effectively ordering an entity that was not a defendant to the underlying criminal action to abide by a court order and be subject to criminal liability. The housing court was without authority to impose this condition of community control.

(Emphasis added.) Id. at ¶ 10-11. This court modified the trial court’s judgment and

remanded the case for further proceedings. Id. at ¶ 12.

The sole defendant in this case was Montclair LLC — not Babu, not

“the ownership group” that “controlled” Montclair LLC and not West 111th LLC or

Bernard LLC. Montclair LLC, Babu, West 111th LLC and Bernard LLC are all

separate legal persons. See, e.g., Firstmerit Bank, N.A. v. Wash. Square Ents., 8th

Dist. Cuyahoga No. 88798, 2007-Ohio-3920, ¶ 15 (“Limited liability companies are

entities separate and distinct from their owners.”); Gundel v. Whalen Lawn &

Landscaping, LLC, 5th Dist. Stark No. 2021CA00128, 2022-Ohio-2763, ¶ 23 (a

limited liability company is a separate entity from its members); Bridge Health Care

Partners, LLC v. LTAH Real Estate Holdings, LLC, 7th Dist. Jefferson No. 21 JE

0010, 2022-Ohio-1053, ¶ 45 (same); R.C. 1706.04(A) (“A limited liability company

is a separate legal entity.”).

In this case, as terms and conditions of its community-control

sanctions, Montclair LLC was ordered, among other things, to repair and maintain

properties it did not own, to submit repair and maintenance plans for properties it

did not own and to allow an inspector to conduct interior and exterior inspections

of properties it did not own. It was also subject to sanctions for violation of

community control if properties it did not own were sold or otherwise transferred

without the permission of the housing court. The city does not address U.S. Bank in its appellate brief and cites no

legal authority whatsoever supporting its claim that the housing court (1) had

authority to impose community-control sanctions against a nonparty and (2) had

authority to impose restrictions or requirements on Montclair LLC relating to

properties owned by nonparties as a term or condition of Montclair LLC’s

community control. None of the cases the city cites in support of its position involves

a situation in which nonparties (or properties owned by nonparties) were

“incorporated” into a sentence imposed on a defendant. Cf. Deutsche Bank, 2014-

Ohio-1948, at ¶ 15 (“Liability, whether civil or criminal, can only be imposed against

the entity that owns the property.”).

We sustain Montclair LLC’s third assignment of error, in part. The

housing court erred and abused its discretion to the extent that it imposed

restrictions or requirements relating to properties owned by other entities as a term

or condition of Montclair LLC’s community control. The housing court’s judgment

is modified to remove any terms or conditions related to West 111th LLC or Bernard

LLC or any properties owned by West 111th LLC or Bernard LLC.

Judgment modified and remanded.

It is ordered that appellant recover from appellee the costs herein taxed.

The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the

Cleveland Municipal Court, Housing Division, to carry this judgment into execution. Case remanded for the trial court to issue a journal entry consistent with this

opinion.

A certified copy of this entry shall constitute the mandate pursuant to Rule

27 of the Rules of Appellate Procedure.

EILEEN A. GALLAGHER, PRESIDING JUDGE

EILEEN T. GALLAGHER, J., and EMANUELLA D. GROVES, J., CONCUR