Goodman v. Schneider

2012 Ohio 5412

• Court: Ohio Court of Appeals
• Decided: November 21, 2012
• Docket: 96922
• Status: Published

Opinion

[Cite as Goodman v. Schneider, 2012-Ohio-5412.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 96922

DAVID GOODMAN,1 DIRECTOR, OHIO DEPARTMENT OF COMMERCE, ET AL.

PLAINTIFFS

vs.

JOANNE C. SCHNEIDER, ET AL.

DEFENDANTS

[APPEAL BY CITY OF PARMA HEIGHTS LAND DEVELOPMENT, LLC]

JUDGMENT: DISMISSED

The original caption of this case was Doug White, Director, Ohio Department of Commerce 1

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. Civil Appeal from the 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: Stewart, P.J., Sweeney, J., and Rocco, J.

RELEASED AND JOURNALIZED: November 21, 2012

ATTORNEYS FOR INTERVENOR-DEFENDANT/APPELLANT CITY OF PARMA HEIGHTS LAND DEVELOPMENT, LLC

Thomas J. Scanlon Tim L. Collins Harvey Labovitz Julie A. Perkins Collins & Scanlon LLP 3300 Terminal Tower 50 Public Square Cleveland, OH 44113

ATTORNEYS FOR INTERVENOR-DEFENDANT/APPELLEE CITY OF PARMA HEIGHTS, OHIO

Michael D. Pokorney Director of Law City of Parma Heights, OH

BY: Charles T. Riehl Darrell A. Clay Aimee W. Lane Walter & Haverfield, LLP 3500 Tower at Erieview 1301 E. 9th Street Cleveland, OH 44114 ATTORNEYS FOR THE HOME SAVINGS AND LOAN COMPANY OF YOUNGSTOWN, OHIO

Richard J. Thomas Jeremy R. Teaberry Joseph A. Pope Henderson, Covington, Messenger and Thomas Co., L.P.A. 6 Federal Plaza Central, Suite 1300 Youngstown, OH 44503

Michael J. Sikora, III Richard T. Craven Sikora Law LLC 8532 Mentor Avenue Mentor, OH 44060

ATTORNEYS FOR PLAINTIFF MARY TAYLOR, LIEUTENANT GOVERNOR/OHIO DEPARTMENT OF SECURITIES, DIVISION OF SECURITIES

Mike DeWine Ohio Attorney General

BY: Michael J. Lampke Deputy Attorney General Executive Agencies Section 30 E. Broad Street, Floor 26 Columbus, OH 43215

Michael R. Stavnicky Singerman, Mills, Desberg & Kauntz Co., LPA 3333 Richmond Road, Suite 370 Beachwood, OH 44122

ATTORNEY FOR DEFENDANT R.W. SIDLEY, INC.

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

ATTORNEYS FOR RECEIVER M. Colette Gibbons Robert M. Stefancin Ice Miller, LLP Fifth Third Center 600 Superior Avenue, East, Suite 1701 Cleveland, OH 44114

Jonathon M. Yarger Victor D. Radel Yarger, Radel & Pentz, LLC 1111 Superior Avenue, Suite 530 Cleveland, OH 44114

ATTORNEYS FOR McGILL PROPERTY GROUP, LLC AND JOHN McGILL

Dale H. Markowitz David M. Ondrey Thrasher, Dinsmore & Dolan 100 7th Avenue, Suite 150 Chardon, OH 44024

Robert J. Dubyak Dubyak, Connick, Sammong, Thompson & Bloom, LLC 3401 Enterprise Parkway, Suite 205 Cleveland, OH 44122

Timothy J. Weyls, Jr. Weyls Peters, L.L.C. 6505 Rockside Road, Suite 300 Independence, OH 44131

ATTORNEYS FOR DEFENDANT RICHARD SENSENBRENNER, CUYAHOGA COUNTY TREASURER

Timothy J. McGinty Cuyahoga County Prosecutor

BY: Colleen Majeski Assistant County Prosecutor The Justice Center 1200 Ontario Street, 9th Floor Cleveland, OH 44113

ATTORNEY FOR SKY BANK, AS SUCCESSOR

Jerry M. Bryan Henderson, Covington, Messenger and Thomas Co., L.P.A. 6 Federal Plaza Central, Suite 1300 Youngstown, OH 44503

ATTORNEY FOR DEFENDANT TYCOR ROOFING, INC.

R. Clint Zollinger Day Ketterer Millennium Centre 200 Market Avenue North, Suite 300 P.O. Box 24213 Canton, OH 44701

ATTORNEYS FOR DEFENDANT HARRINGTON ELECTRIC CO.

Audra J. Zarlenga Daniel M. Haymond Mark A. Smith Robert S. Lewis Thompson Hine LLP 127 Public Square 3900 Key Center Cleveland, OH 44114

ATTORNEYS FOR DEFENDANT DONLEY’S INC.

Allison E. Taller Barry J. Miller Jean Kerr Korman Benesch, Friedlander, Coplan & Aronoff, LLP 200 Public Square 2300 BP Tower Cleveland, OH 44114

ATTORNEYS FOR DEFENDANTS TOMKO METAL FABRICATING, INC. AND NORTHERN VALLEY CONTRACTORS COMPANY, INC. Erin K. Walsh Jerome W. Cook Richard W. Cline McDonald Hopkins Co., LLC 600 Superior Avenue East, Suite 2100 Cleveland, OH 44114

ATTORNEY FOR DEFENDANT NORTHERN VALLEY CONTRACTORS COMPANY, INC.

Joseph N. Isabella 921 Literary Road Cleveland, OH 44113

ATTORNEYS FOR CLEVELAND CONSTRUCTION, INC.

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

ATTORNEYS FOR GQ CONTRACTING CO., LLC

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

ATTORNEY FOR TIMOTHY KREUZER

Sara M. Donnersbach Weltman, Weinberg, Reis & Co., LPA 323 W. Lakeside Avenue, Suite 200 Cleveland, OH 44113 ATTORNEY FOR LORAIN GLASS CO., INC.

James W. Moennich Wickens, Herzer, Panza, Cook & Batista 35765 Chester Road Avon, OH 440111

ATTORNEY FOR STEINGASS MECHANICAL CONTRACTING

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

FOR DEFENDANT

Joanne C. Schneider P.O. Box 30279 Middleburg Heights, OH 44130

MELODY J. STEWART, P.J.:

{¶1} Intervenor-appellant Parma Heights Land Development, LLC (“PHLD”)

appeals from an order denying its motion for summary judgment on its request that the

court extinguish a lien claimed by appellee city of Parma Heights against property owned

by PHLD.2 The court held that there were “questions of law and fact” on the issue.

PHLD’s two assignments of error collectively challenge the court’s refusal to grant

summary judgment.

Home Savings and Loan Company has filed an “appellee’s” brief in this appeal, but it has no 2

standing to do so. The notice of appeal filed by PHLD challenges only that part of the court’s order that refused to grant summary judgment on legal issues relating to the city’s special assessment. Home Savings and Loan Company is involved in other aspects of this litigation, particularly with respect to lien priority, but it has no obvious interest in the outcome of the legal questions posed by the special assessment. {¶2} We find that the order denying summary judgment is not a final appealable

order.

I

{¶3} The subject matter of this case relates to the failure of the Cornerstone

development project in the city of Parma Heights. Cornerstone was a residential/retail

development project financed with a combination of private and public funds. The

co-owners of the project, Joanne and Alan Schneider, recruited investors for the project,

but those investments were used to support a Ponzi scheme that Joanne, who was also the

project manager, was running. When the Ponzi scheme collapsed, so did the funding for

Cornerstone. The development was cancelled, and Joanne Schneider eventually pleaded

guilty to a number of criminal charges. Investors and contractors scrambled to recover

what they could from Schneider’s assets, with the ensuing litigation centering on the

priority of liens against her remaining assets.

{¶4} The assets of the Cornerstone project consisted of three different entities

owned by Schneider: Pearl Development Co., LLC, Ruby Development Co., LLC, and

Garnet Development Co., LLC. These assets were put under the control of a

court-appointed receiver who was to auction off those assets. In June 2006, the court set

forth the auction procedures and, in doing so, precluded any claims on the property. The

court stated:

Without prior consent from the Court, all creditors, claimants, bodies politic, parties in interest, and their respective attorneys, servants, agents, and employees, and all other persons, firms and corporations be, they hereby are, jointly and severally, enjoined and stayed from (1) commencing or continuing any action at law or suit or proceeding in equity to foreclose any lien or enforce any claim against the Receivership Assets, or against the Receiver in any court, and (b) from executing or issuing or causing the execution or issuance out of any court of any writ, process, summons, attachment, subpoena, replevin, execution, or other process for the purpose of impounding or taking possession of or interfering with the Receiver in the discharge of his duties in this proceeding or with the exclusive jurisdiction of this Court over the Receivership Assets and the said Receiver.

{¶5} The court also gave the receiver permission to sell the Cornerstone assets free

and clear of any claims, stating:

The Court further finds that the sales of the properties shall be free and clear of all liens, claims and encumbrances (for purposes hereof, easements, covenants and restrictions of record which do not secure the repayment of money shall not be included as a lien, claim or encumbrance subject hereto). Accordingly, all such liens, claims and encumbrances which now exist or are hereafter placed of record prior to the date of sale on or against the properties shall be, and they hereby are, extinguished as liens, claims and encumbrances against the properties; rather, the liens, claims and encumbrances against a particular property will attach to the net proceeds of the sale of that property. All such net proceedings from the sale of a Property will be held in a separate interest bearing account until further order of the Court.

{¶6} The Cornerstone properties were sold at auction in November 2006 to the

McGill Property Group, LLC. The receiver asked the court to authorize the sale “free

and clear of liens, claims, and encumbrances and to transfer the interests of lienholders to

the proceeds of the sale.” The court confirmed the sale on January 2, 2007, and,

consistent with the terms of the purchase agreement entered into at the auction, stated:

4. The sale of the Properties to the Buyer shall be free and clear of any lien, claim, or encumbrance whether known or unknown, liquidated or unliquidated, contingent or otherwise, including but not limited to those liens and encumbrances expressly identified and included in the title commitment issued with respect to the Properties and incorporated by reference in this Order * * *. Sale of the Property shall be free and clear of any and all asserted or unasserted, known or unknown, statutory or contractual * * * assessments and governmental funded improvements whether assessed or not, including assessments that can be filed or certified for inclusion on the County Auditor’s tax duplicate now or in the future for any improvements already made to or for the benefit of the Properties. Any and all valid and enforceable liens, claims or encumbrances of the Properties, including but not limited to any liens or claims arising from any assessments, liens or taxes, or the provisions of any governmentally funded improvements, whether assessed or not, shall be transferred, fixed and attached to the net proceeds of the sale of the Properties, with the same validity, priority, force and effect as such liens and/or claims had upon the properties immediately prior to the closing.

{¶7} Following the sale, McGill assigned its rights to Cornerstone properties to

PHLD.

{¶8} In November 2006, after the sale to McGill had been completed, McGill

learned that the city had placed a special assessment on the property in order to recoup

public funds it expended to improve the site for construction. That assessment was

passed by Parma Heights Ordinance No. 2006-16 in May 2006. At the time the city

passed the ordinance, Martin Zanotti, the mayor of Parma Heights, knew that the court

had ordered the sale of the Cornerstone properties “free and clear” of liens and

encumbrances. All told, the special assessment would raise $4,137,557.72. The

ordinance was certified to the county auditor in October 2006. The city claimed that the

special assessment was in essence a tax on the property; thus, giving the assessment

“super” priority over all other liens and claims.

{¶9} PHLD argued that the city’s special assessment was invalid because the court

granted the receiver permission to sell the Cornerstone properties free and clear of any liens or encumbrances, either present or future. It also argued that the court erred by

refusing to enforce its order that the Cornerstone properties be sold free and clear of any

liens. The city argued that the court had no authority to authorize a receiver to sell

receivership property free and clear of a lien for an unpaid municipal special assessment

and that by doing so, the court essentially prohibited the city from imposing its special

assessment.

{¶10} When denying PHLD’s motion for summary judgment, the court stated that

there were “questions of law and fact.” However, the court did not state what questions

remained for resolution.

II

{¶11} R.C. 2505.02 defines a final order as, among other things, an order that

affects a substantial right in an action that in effect determines the action and prevents a

judgment.

{¶12} Ordinarily, an order denying a motion for summary judgment is not a final,

appealable order because it does not determine the action. Nayman v. Kilbane, 1 Ohio

St.3d 269, 271, 439 N.E.2d 888 (1982). We have held, however, that an order

determining the priority of liens, but not ordering foreclosure and sale, is final and

appealable, even if the court has not yet ordered foreclosure or sale of the property.

TCIF Reo GCM, LLC v. Natl. City Bank, 8th Dist. No. 92447, 2009-Ohio-4040, ¶ 13;

Bank of Am. NA v. Omega Design/Build Group, LLC, 1st Dist. No. C-100018,

2011-Ohio-1650, ¶ 16. {¶13} Some of the companion appeals to this case do raise questions of lien

priority, so they potentially fall within the rule set forth in TCIF Reo GCM. This case,

however, does not. The question presented on summary judgment was whether the court

should have declared that the Cornerstone properties were sold free and clear of any liens,

including any special assessments levied by the city. This issue does not involve a

priority dispute between lienholders, but whether the court-authorized conditions of sale

allowed PHLD to take the properties free and clear of the city’s special assessment. This

issue does not involve the priority of liens, so it falls outside the rule of appealability set

forth in TCIF Reo GCM.

{¶14} It follows that the order denying the motion for summary judgment was not

final and appealable under R.C. 2505.02. We therefore lack jurisdiction to hear this

appeal.

{¶15} Appeal dismissed.

It is ordered that appellee, City of Parma Heights, recover of appellant, PHLD, its

costs herein taxed.

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

the Rules of Appellate Procedure.

MELODY J. STEWART, PRESIDING JUDGE

JAMES J. SWEENEY, J., and KENNETH A. ROCCO, J., CONCUR