Goodman v. Schneider

2012 Ohio 5411

Opinion

Court of Appeals of Ohio

EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 96883

DAVID GOODMAN,1 DIRECTOR, OHIO DEPARTMENT OF COMMERCE

PLAINTIFF-APPELLEE

vs.

JOANNE C. SCHNEIDER, ET AL.

DEFENDANT-APPELLANT

[APPEAL BY CITY OF PARMA HEIGHTS]

JUDGMENT: DISMISSED

Civil Appeal from the

1 The original caption of this case was Doug White, Director, Ohio Department of Commerce v. Joanne C. Schneider, et al. In accordance with App.R.29(C), the Court substitutes David Goodman, the present Director of the Ohio Department of Commerce, for Doug White.

Cuyahoga County Court of Common Pleas Case Nos. CV-548887, CV-555252, CV-555408, CV-555412, CV-558095, CV-559117, CV-559879, CV-560633, CV-564814, CV-569073, CV-571494, CV-572965 and CV-592402

BEFORE: Sweeney, J., Stewart, P.J., and Rocco, J. RELEASED AND JOURNALIZED: November 21, 2012

ATTORNEYS FOR APPELLANTS

Charles T. Riehl Darrell A. Clay R. Todd Hunt Aimee W. Lane Walter & Haverfield The Tower at Erieview, Suite 3500 1301 East Ninth Street Cleveland, Ohio 44114

Michael D. Pokorny Assistant Director of Law City of Parma Heights 6281 Pearl Road Parma Heights, Ohio 44130

ATTORNEYS FOR APPELLEE

Jonathon M. Yarger Yarger, Radel & Pentz 1111 Superior Avenue, Suite 530 Cleveland, Ohio 44114

Tim L. Collins Brendan R. Doyle Harvey Labovitz Thomas J. Scanlon Julie A. Perkins Collins & Scanlon, L.L.P. 3300 Terminal Tower 50 Public Square

Cleveland, Ohio 44113

Matthew D. Wartko Hahn, Loeser & Parks, L.L.P. 200 Public Square, Suite 2800 Cleveland, Ohio 44114

James D. Ludwig David Honig Daniel Wireman Cleveland Construction, Inc. 5390 Courseview Drive Mason, Ohio 45040

Jean Kerr Korman Barry J. Miller Benesch, Friedlander, Coplan & Arnoff 2300 BP Tower 200 Public Square Cleveland, Ohio 44114-2378

Matthew L. Fornshell, Receiver 250 West Street Columbus, Ohio 43215

Michael J. Warrell 30285 Bruce Industrial Parkway Suite C, Second Floor Solon, Ohio 44139

Timothy J. Duff Gary F. Werner Berns, Ockner & Greenberger 3733 Park East Drive Suite 200 Beachwood, Ohio 44122

Audra J. Zarlenga Thompson Hine, L.L.P. 3900 Key Center 127 Public Square Cleveland, Ohio 44114

Richard T. Craven MacAllister A. West Michael J. Sikora, III Sikora Law, L.L.C. 8532 Mentor Avenue Mentor, Ohio 44060

Jeremy R. Teaberry, Esq. Joseph A. Pope Richard J. Thomas Jerry M. Bryan Henderson, Covington, Messenger, Newman & Thomas Co., L.P.A. 6 Federal Plaza Central, #1300 Youngstown, Ohio 44503

James W. Moennich Wickens, Herzer, Panza, Cook & Batista 35765 Chester Road Avon, Ohio 44011

Joseph N. Isabella 921 Literary Road Cleveland, Ohio 44113

Alan P. Digirolamo David J. Lindner Buckingham, Doolittle & Burroughs 1375 East Ninth Street Suite 1700 Cleveland, Ohio 44114

John J. Hurley Nelson Sweet & Hurley 8 North State Street Suite 201 Painesville, Ohio 44077

Timothy J. McGinty

Cuyahoga County Prosecutor By: Colleen Majeski Assistant County Prosecutor Justice Center, Ninth Floor 1200 Ontario Street Cleveland, Ohio 44113

Joanne C. Schneider P.O. Box 30279 Middleburg Heights, Ohio 44130-0279

Michael L. Fortney Fortney & Klingshirn 4040 Embassy Parkway, Suite 280 Akron, Ohio 44333

Jerome W. Cook McDonald Hopkins, L.L.C. 600 Superior Avenue, East Suite 2100 Cleveland, Ohio 44114

Clint R. Zollinger, Esq. Day Ketterer 200 Market Avenue, North Suite 300 P.O. Box 24213 Canton, Ohio 44701

Jude J. Nohra 275 Federal Plaza West P.O. Box 1111 Youngstown, Ohio 44503

JAMES J. SWEENEY, J.:

{¶1} Intervenor-appellant the city of Parma Heights (“the City”) appeals the

court’s denial of its summary judgment motion, which concluded that the City’s lien by special assessment did not have priority over other mortgages and lienholders concerning

the development of commercial property that was used in a Ponzi scheme in late 2004.

After reviewing the facts of the case and pertinent law, we dismiss for lack of a final

appealable order.

{¶2} In 2003, Joanne and Alan Schneider were involved in the development of

the Cornerstone Properties (“Cornerstone”) in the City. On July 10, 2003, Home Savings

and Loan Company of Youngstown (“HSL”) recorded various mortgages on Cornerstone.

On May 24, 2004, the City passed a resolution to proceed with construction of

Cornerstone. This resolution contemplated that the cost of the improvements shall be

levied and collected by a “special assessment.” The City’s “work on the public

improvements on the Cornerstone Properties was commenced in 2004 and completed on

or about 2005 to 2006.”

{¶3} At the end of 2004, the Schneiders’ investment scheme fell apart, and on

December 4, 2004, various contractors obtained judgments against the Schneiders and/or

their companies and filed accompanying mechanic’s liens.2 In February 2005, this action

was filed against the Schneiders and a receiver was appointed over Cornerstone.

2 For detailed analyses of the associated litigation, see Cleveland Constr., Inc.

v. Schneider, 8th Dist. Nos. 97352, 96911, 97361 and 97513; Fornshell v. Roetzel & Andress, L.P.A., 8th Dist. Nos. 92132 and 92161, 2009-Ohio-2728; and Cleveland Constr., Inc. v. Roetzel & Andress, L.P.A., 8th Dist. No. 94973, 2011-Ohio-1237.

{¶4} On May 22, 2006, the City passed an ordinance and levied a special

assessment regarding the aforementioned improvements at Cornerstone. On October 16,

2006, the City certified the special assessment to the county for collection.

{¶5} On February 13, 2007, the receiver transfered title of Cornerstone to Parma

Heights Land Development LLC (“PHLD”) pursuant to a previous sale. The court order

approving the sale states in part that “[t]he sale of the Properties to the Buyer shall be free

and clear of any lien, claim or encumbrance * * * including * * * assessments * * *.”

{¶6} The City was not a party to the Cornerstone litigation to determine lien

priority and first intervened in this case on December 4, 2007. The entities claiming

“secured creditor status” in connection with Cornerstone are: the City as the special

assessment lienholder; HSL as the mortgage holder; various mechanic’s lienholders; and

PHLD as the subsequent purchaser of the properties.3

{¶7} By spring 2009, all parties, including the City, had filed summary judgment

motions limited to the issue of lienholder priority. On May 16, 2011, the court issued an

opinion and journal entry regarding the summary judgment motions. The bulk of this

opinion discusses HSL’s mortgages and the mechanic’s liens, which are not at issues in

the instant case. The court’s analysis of the City’s “claim of priority based on its October

16, 2006 special assessment” states in pertinent part as follows:

3 In addition to the parties claiming “secured creditor status,” the court ordered a “ten per cent secured creditor allocation * * * to the court appointed receiver.”

For a variety of reasons, the City of Parma Heights is not entitled to assert a claim of priority as against [HSL] or Lienholders. Putting aside for the moment the question whether the City’s effort to impose its assessment is void as a matter of law, the City cannot unilaterally achieve retroactive superpriority over other liens previously recognized in law.

{¶8} The court denied the City’s summary judgment motion, and it is from this

order that the City appeals,4 raising one assignment of error for our review.

I.

The trial court erred by concluding that Parma Heights’ lien arising from a duly-enacted and properly certified special assessment for improvements that benefitted the real property in question was not entitled to priority over liens arising from an alleged construction mortgage lender and from other mechanics and materialmen.

{¶9} We first address whether the court’s order denying the City’s summary

judgment motion is a final appealable order. In TCIF REO GCM, LLC v. Natl. City

Bank, 8th Dist. No. 92447, 2009-Ohio-4040, this court held that an order determining the

priority of liens and contemplating further foreclosure proceedings was final and

appealable. This court based its holding on the Ohio Supreme Court’s decision in Queen

City S. & L. Co. v. Foley, 170 Ohio St. 383, 165 N.E.2d 633 (1960) at syllabus, which

states that, “[i]n a mortgage foreclosure action, a journalized order determining that the

Subsequent to the trial court’s May 16, 2011 journal entry, this court has 4

twice remanded the companion case, Cleveland Constr., Inc. v. Schneider, 8th Dist. Nos. 97352, 96911, 97361 and 97513, to the trial court concerning HSL related issues. Consequently, the trial court issued multiple journal entries during the pendancy of this appeal; however, we base our review in the instant case on the order from which the City appealed.

mortgage constitutes the first and best lien upon the subject real estate is a judgment or

final order from which an appeal may be perfected.”

{¶10} The case at hand, however, is distinguishable in that lien validity in TCIF

and Queen City was not at issue. In TCIF and Queen City, the court determined priority

between two parties and contemplated further proceedings, which included foreclosure

and sale of the property.

{¶11} In the instant case, the court bifurcated lien priority and lien validity,

choosing to initially tackle the priority issue in the abstract. The court made a

preliminary determination of priority as to most, but not all, of the multiple parties and

contemplated further proceedings, which included lien validity. The court opined that

the receiver shall have priority over all other parties, HSL shall have priority over the

mechanic’s lienholders, and the City shall have no priority. The court did not reach a

conclusion regarding the priority of PHLD’s claims, finding “questions of law and fact

5

remaining.”

{¶12} However, all issues of priority were conditional upon lien validity, which

the court expressly put “aside for the moment.” Specifically, in its analysis of the City’s

summary judgment motion, the court stated in a footnote that “the city’s assessment is

fraught with legal questions. Firstly, it appears to violate the most fundamental

principles relating to the manner in which special assessments may be levied.”

5 This issue is also on appeal in Doug White, Dir., Ohio Dept. of Commerce v. Joanne C.

Schneider, 8th Dist. No. 96922.

{¶13} Accordingly, until the court determines whether the City has a valid lien,

the order determining priority remains interlocutory. See Bank of Am. NA v. Omega

Design/Build Group, LLC, 1st Dist. No. C-100018, 2011-Ohio-1650, ¶ 4 (Cunningham,

J., dissenting) (“Queen City does not apply because any determination of priority in this

case cannot occur until the court rules on the validity of the mechanic’s liens. Until [then]

* * * no relief has been afforded to any party”).

{¶14} Having distinguished the case at hand from TCIF, we turn to whether the

May 16, 2011 journal entry is a final appealable order under R.C. 2505.02, which states in

pertinent part as follows: “An order is a final order that may be reviewed, affirmed,

modified, or reversed * * * when it is * * * [a]n order that affects a substantial right in an

action that in effect determines the action and prevents a judgment * * *.” R.C.

2505.02(B)(1). Assuming, without deciding, that the City’s lien by special assessment is

a “substantial right,” the court’s order bifurcating validity and priority does not

“determine” the action nor “prevent” a judgment; rather, it envisions further litigation.

As such, it is not a final appealable order.

{¶15} Furthermore, courts do not favor piecemeal litigation. As a general rule,

“[a]n order denying a motion for summary judgment is not a final appealable order.”

State ex rel. Overmeyer v. Walinski, 8 Ohio St.2d 23, 23, 222 N.E.2d 299 (1966).

“Generally, orders determining liability in the plaintiffs’ or relators’ favor and deferring

the issue of damages are not final appealable orders under R.C. 2505.02 because they do not determine the action or prevent a judgment.” State ex rel. White v. Cuyahoga Metro.

Hous. Auth., 79 Ohio St.3d 543, 546, 684 N.E.2d 72 (1997). See also Civ.R. 54(B).

{¶16} Because there is no final appealable order in the instant case, we are

without jurisdiction to review the court’s journal entry or the City’s arguments.

{¶17} Appeal dismissed.

It is ordered that appellee recover of appellants its costs herein taxed.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

JAMES J. SWEENEY, JUDGE

MELODY J. STEWART, P.J., and KENNETH A. ROCCO, J., CONCUR