Scalise, Summit Cty. Fiscal Officer v. Johnston Invests., L.L.C.

2021 Ohio 2916

Opinion

[Cite as Scalise, Summit Cty. Fiscal Officer v. Johnston Invests., L.L.C., 2021-Ohio-2916.]

STATE OF OHIO ) IN THE COURT OF APPEALS )ss: NINTH JUDICIAL DISTRICT COUNTY OF SUMMIT )

KRISTEN SCALISE, as Fiscal Officer of C.A. No. 29383 Summit County, Ohio

Appellee APPEAL FROM JUDGMENT v. ENTERED IN THE COURT OF COMMON PLEAS JOHNSTON INVESTMENTS, LLC COUNTY OF SUMMIT, OHIO CASE No. CV 2017-06-2726 Defendant

and

XE PROPERTIES, LLC, et al.

Appellants

DECISION AND JOURNAL ENTRY

Dated: August 25, 2021

CARR, Judge.

{¶1} Defendants-Appellants XE Properties, LLC and Gary Thomas appeal from the

judgments of the Summit County Court of Common Pleas. This Court reverses.

I.

{¶2} The matter before this Court began as a foreclosure for unpaid real property taxes

on property located on South Arlington Street and was initiated by Plaintiff-Appellee Kristen M.

Scalise, Fiscal Officer, Summit County Fiscal Office (“Fiscal Officer”). The record owner of the

property at the time of the foreclosure complaint was 627 S Arlington St LLC, an entity

incorporated by Mr. Thomas. A foreclosure order was issued, and a sheriff’s sale was held. XE

Properties, LLC placed the highest bid of $57,000 at the sale. Mr. Thomas was listed as the 2

contact person for XE Properties, LLC. An order confirming the sale was issued September 4,

2018. An amended order confirming the sale was filed September 20, 2018.

{¶3} That order provided in part the following:

It is further Ordered that the Sheriff convey the premises so sold * * * to the purchaser(s): XE Properties LLC., c/o Gary Thomas * * * by deed according to law.

***

It is further Ordered that title to the parcel is incontestable in the purchase and free of all liens and encumbrances as provided by law.

It is further Ordered that a writ of possession be and is hereby awarded to put said purchaser in possession of said premises.

It is further Ordered that the Clerk of Court cause a memorandum of release of mortgage or other lien on said premises to be entered on the record thereof in the office of the Fiscal Officer of Summit County, Ohio.

And this cause coming on further to be heard upon the pleadings herein and upon motion to distribute the proceeds of the sale, amounting to the sum of $57,000.00, it is further Ordered that the Sheriff of Summit County, Ohio, pay:

FIRST: Pursuant to Local Rule 11.08, the purchaser(s) must provide a certificate to the Summit County Sheriff that shows that all taxes were paid in full to the Summit County Fiscal Officer and the Fiscal Officer shall distribute said funds as provided by law. Total amount to be paid by purchaser to Fiscal Office: $14,180.27[;]

SECOND: To the Clerk of Courts, for their costs in this action, the sum of $2,359.93;

THIRD: To the Sheriff of Summit County, for their costs in this action, including deed and poundage, the sum of $823.10[;]

FOURTH: To Equity Trust Company, Custodian FBO Maria Bush IRA # 93503, the sum of $39,626.70[.]

{¶4} On October 23, 2018, Appellee Steve Barry, the Summit County Sheriff (“the

Sheriff”) moved the trial court for an order finding Mr. Thomas and XE Properties, LLC in

contempt pursuant to R.C. 2329.30 and Loc.R. 11 and 12 of the Court of Common Pleas of 3

Summit County, General Division “for failing to pay the balance of the bid amount, including

but not limited to, the court costs and the rest of the bid amount, and to supply the necessary

document to complete this Sheriff sale * * * within 30 days of the filing of the Confirmation of

Sale.”

{¶5} XE Properties, LLC and Mr. Thomas responded in opposition. They argued that

XE Properties, LLC had paid all of the taxes due and that, on October 26, 2018, XE Properties,

LLC made a direct payment to the mortgage holder, Equity Trust Company, Custodian FBO,

Maria Bush IRA #93503 (“Equity Trust”). XE Properties, LLC indicated that it would pay the

remaining balance of costs when Mr. Thomas returned to Ohio. The docket contains a filing

dated October 26, 2018, reflecting that Equity Trust received payment of $39,626.70 from XE

Properties, LLC. On November 29, 2018, an amended docket receipt was filed. That document

stated that, “[t]o correct the record, Equity Trust [] received a new mortgage on another bank of

properties by XE Properties, LLC, not a direct payment, therefore the mortgage in the above

captioned case is satisfied and replaced by the new mortgage. Due to the new mortgage, Equity

Trust [] waives any interest in the available funds in this case in the amount of $39,626.70.”

{¶6} A hearing was held before a magistrate. On December 4, 2018, the magistrate

issued a decision finding Mr. Thomas and XE Properties, LLC in contempt of court. The

magistrate ordered the confirmation of sale order and the Sheriff’s sale vacated. In addition, the

magistrate concluded that, Mr. Thomas and XE Properties, LLC “or any other business entity of

Gary Thomas be, and hereby is, barred from bidding at a Summit County Sheriff sale, on any

real property that Gary Thomas or one of his business entities currently owns, or did own at the

time of the filing of the foreclosure action from which the Sheriff sale was ordered to sale.” 4

{¶7} On December 10, 2018, the action involving South Arlington Street was

consolidated with several other tax foreclosure cases in which Mr. Thomas was the agent and/or

member of the entities involved. All of the cases were consolidated under the case captioned

Scalise, Fiscal Officer Summit County Fiscal Office v. Johnston Investments, LLC, et al. A

similar order was also filed on December 17, 2018.

{¶8} On December 17, 2018, XE Properties, LLC and Mr. Thomas filed objections to

the magistrate’s decision. Therein, they argued that “XE Properties has complied with the

requirements contemplated by the Order[.]” They further asserted that any non-compliance did

not result in prejudice. XE Properties, LLC and Mr. Thomas pointed out that XE Properties,

LLC had paid all of the taxes, had tried to pay the court costs but the Sheriff refused to allow

payment of the same, and that the trial court was informed that the existing mortgage on the

property was satisfied and a new mortgage “secured by another bank of properties by XE

Properties” was executed. XE Properties, LLC and Mr. Thomas argued that the latter was

tantamount to a payment of $39,626.70 as required.

{¶9} XE Properties, LLC and Mr. Thomas additionally objected on the grounds that it

was not XE Properties, LLC’s duty to supply additional documents, that Mr. Thomas was not a

purchaser and, under R.C. 1705.48, he was not personally liable for the amounts owed. Thus,

they argued that Mr. Thomas should not have been found in contempt. Finally, they asserted that

the punishment, which included a bar on who could bid on future sales, was unconstitutional.

{¶10} That same day, Equity Trust also filed objections to the magistrate’s decision.

Mr. Thomas and XE Properties, LLC later re-filed their objections under the consolidated case

number. 5

{¶11} On March 29, 2019, the trial court overruled XE Properties, LLC and Mr.

Thomas’ objections. The trial court adopted the magistrate’s decision, including its findings and

conclusion. The trial court found Mr. Thomas and XE Properties, LLC in contempt for failing to

pay the balance due for over 30 days since the filing of the amended confirmation of sale. The

amended confirmation of sale and the Sheriff’s sale were vacated. Certain monies were ordered

returned to XE Properties, LLC. Mr. Thomas’ and XE Properties, LLC’s deposit was ordered

forfeited. Finally, Mr. Thomas and XE Properties, LLC, along with any other business entity of

Mr. Thomas, was barred from bidding at a Summit County Sheriff sale on any real property that

Mr. Thomas or any of his business entities then owned or did own at the time of the foreclosure

action. The entry included Civ.R. 54(B) language.

{¶12} On April 18, 2019, XE Properties, LLC and Mr. Thomas filed a motion for relief

from judgment pursuant to Civ.R. 60(B)(5). They again argued that Mr. Thomas was not

required to pay the purchase price and should not have been found in contempt. They also

maintained that the trial court lacked subject matter jurisdiction to hold Mr. Thomas in contempt

because he was not a purchaser and that the finding of contempt violated his right to due process.

An opposition to the motion was filed.

{¶13} On April 26, 2019, Mr. Thomas and XE Properties, LLC filed a notice of appeal,

appealing the March 29, 2019 entry of the trial court. Thereafter, Mr. Thomas and XE

Properties, LLC moved this Court to stay the appeal and remand the matter to the trial court to

rule on the pending Civ.R. 60(B) motion. This Court granted the motion. On July 24, 2019, the

trial court denied the Civ.R. 60(B) motion. On July 25, 2019, this Court issued an order

extending the remand following a request by Mr. Thomas and XE Properties, LLC. 6

{¶14} On August 22, 2019, Mr. Thomas and XE Properties, LLC filed a second motion

for relief from judgment pursuant to Civ.R. 60(B)(5). Mr. Thomas and XE Properties, LLC

asserted that one of the other consolidated cases involving TXS Property Services, LLC

presented similar facts but there was no finding of contempt. They pointed out that, while TXS

Property Services, LLC made the required payments they did not do so in a timely manner.

Thus, XE Properties, LLC and Mr. Thomas maintained that the trial court was unreasonable

holding Mr. Thomas and XE Properties, LLC in contempt. The Sheriff filed a brief in

opposition. The Sheriff pointed out that, unlike in the instant matter, TXS Property Services,

LLC paid the full bid, that the Sheriff withdrew its motion to show cause in the TXS Property

Services, LLC case, and that the decision in this matter was issued before the decision in the

TXS Property Services, LLC matter. On September 11, 2019, the trial court denied the second

motion for relief from judgment. Mr. Thomas and XE Properties filed two amended notices of

appeal to include the July 24, 2019 and September 11, 2019 entries in their appeal. This Court

attempted to mediate this matter; however, it was unsuccessful.

{¶15} Mr. Thomas and XE Properties, LLC have raised four assignments of error for

our review.

II.

ASSIGNMENT OF ERROR I

THE TRIAL COURT’S ORDER, ENTERED MARCH 29, 2019 IS VOID FOR FAILURE TO CONDUCT AN INDEPENDENT REVIEW OF THE MAGISTRATE’S DECISION, IN VIOLATION OF RULE 53(D)(4)(D) OF THE OHIO RULES OF CIVIL PROCEDURE; AS SUCH, IS NOT AN APPEALABLE ORDER.

{¶16} Mr. Thomas and XE Properties, LLC argue in their first assignment of error that

the trial court in its March 29, 2019 entry failed to conduct an independent review of the 7

magistrate’s decision in violation of Civ.R. 53(D)(4)(d) and assert that the order is not final and

appealable.

{¶17} “A magistrate’s decision is not effective unless adopted by the court.” Civ.R.

53(D)(4)(a). “Whether or not objections are timely filed, a court may adopt or reject a

magistrate’s decision in whole or in part, with or without modification.” Civ.R. 53(D)(4)(b). “If

no timely objections are filed, the court may adopt a magistrate’s decision, unless it determines

that there is an error of law or other defect evident on the face of the magistrate's decision.”

Civ.R. 53(D)(4)(c). “If one or more objections to a magistrate’s decision are timely filed, the

court shall rule on those objections. In ruling on objections, the court shall undertake an

independent review as to the objected matters to ascertain that the magistrate has properly

determined the factual issues and appropriately applied the law.” Civ.R. 53(D)(4)(d). “A court

that adopts, rejects, or modifies a magistrate’s decision shall also enter a judgment * * *.” Civ.R.

53(D)(4)(e). “Thus, for a trial court’s ruling on a magistrate’s decision to be final and

appealable, the trial court must independently enter judgment setting forth the outcome of the

dispute, indicating the remedy provided, and fully determining the action.” Figetakis v. My

Pillow, Inc., 9th Dist. Summit No. 29136, 2020-Ohio-3949, ¶ 10.

{¶18} Here, despite Mr. Thomas’ and XE Properties, LLC’s claim to the contrary, the

trial court’s order is final and appealable as the trial court did independently enter judgment. See

id.

{¶19} Nonetheless, the foregoing does not foreclose the possibility that the trial court

failed to comply with Civ.R. 53(D)(4)(d) in entering judgment. “Appellate courts * * * presume

that a trial court conducted an independent analysis in reviewing a magistrate’s decision in

accordance with Civ.R. 53(D)(4)(d) * * *. Accordingly, a party asserting error bears the burden 8

of affirmatively demonstrating the trial court’s failure to perform its * * * duty of independent

analysis. An affirmative duty requires more than a mere inference, it requires appellant to

provide the reviewing court with facts to rebut our general presumption.” (Internal quotations

and citations omitted.) Stowe v. Chuck’s Automotive Repair, LLC, 9th Dist. Summit No. 29017,

2019-Ohio-1158, ¶ 7.

{¶20} Here, as pointed out by Mr. Thomas and XE Properties, LLC, there are some

troubling features of the trial court’s entry. See Weber v. Devanney, 9th Dist. Summit Nos.

28876, 28938, 2018-Ohio-4012, ¶ 21 (noting that the trial court’s language in its judgment entry

can affirmatively demonstrate a failure to conduct the appropriate review). In the entry, the trial

court adopts the magistrate’s decision and enters judgment. However, that judgment essentially

reiterates the conclusions of the magistrate’s decision. It includes no independent analysis of the

objections nor does it reference portions of the record. See Stowe at ¶ 9 (concluding appellant

had not demonstrated the absence of an independent review when the trial court did not merely

adopt the magistrate’s decision, pointed to testimony not referenced by the magistrate, and struck

one of the magistrate’s findings).

{¶21} Notably, the trial court’s entry does not reference Civ.R. 53(D)(4)(d) in its

judgment entry. While the trial court began the entry by noting that the matter was before it for

independent review, it points to Civ.R. 53(D)(4)(c), the provision detailing the procedure when

there are no objections, as opposed to Civ.R. 53(D)(4)(d). The trial court then stated that,

“[u]pon consideration of the magistrate’s decision, and all of the associated briefing, the court

determines that there is no error of law or defect on the face of the magistrate’s decision.” This

language also comes from Civ.R. 53(D)(4)(c). The trial court next determined that “the

magistrate’s decision contains sufficient findings of fact and conclusions of law to allow this 9

court to make its own independent analysis of the issues and to apply the appropriate rules of law

in making its final judgment entry in this matter.” While this is similar to language in Civ.R.

53(D)(4)(d), it misstates the duty of the trial court. Civ.R. 53(D)(4)(d) requires the trial court to

“undertake an independent review as to the objected matters to ascertain that the magistrate has

properly determined the factual issues and appropriately applied the law.” Civ.R. 53(D)(4)(d)

thus contemplates that the trial court conducts an independent review focused on the areas

objected to in order to determine if the magistrate’s findings and conclusions are correct. The

trial court’s language implies that it only examined the findings and conclusions and determined

that they were sufficient to allow the trial court to review the objections; it does not indicate that

the trial court conducted the appropriate independent review.

{¶22} Considering the entirety of the entry, and the arguments made on appeal, we agree

that the trial court failed to undertake the appropriate review contemplated by Civ.R.

53(D)(4)(d).

{¶23} Accordingly, we sustain Mr. Thomas’ and XE Properties, LLC’s first assignment

of error.

ASSIGNMENT OF ERROR II

THE TRIAL COURT ERRED IN ITS RULING ON THE OBJECTIONS, WHEN IT FOUND GARY L. THOMAS IN CONTEMPT OF COURT FOR THE FAILURE OF XE PROPERTIES LLC TO PAY THE PURCHASE PRICE OF THE PROPERTY.

ASSIGNMENT OF ERROR III

THE TRIAL COURT ERRED AS A MATTER OF LAW IN OVERRULING XE PROPERTIES LLC’S OBJECTION THAT PAYMENT OF THE BALANCE DUE THAT WAS INTENDED FOR THE CREDITOR WAS NOT REQUIRED UNDER THE CONFIRMATION OF SALE BECAUSE SAID CREDITOR DISCLAIMED AND WAIVED ALL INTEREST IN THE PROCEEDS FROM THE SALE OF THE PROPERTY. 10

ASSIGNMENT OF ERROR IV

THE TRIAL COURT ABUSED ITS DISCRETION IN FAILING TO SUSTAIN APPELLANTS’ MOTION FOR RELIEF FROM JUDGMENT OR ORDER, FILED AUGUST 22, 2019, WHEN A DEBTOR IN A COMPANION CASE FAILED TO PAY THE PURCHASE PRICE WITHIN 30 DAYS, AS REQUIRED UNDER A CONFIRMATION OF SALE, WAS NOT FOUND IN CONTEMPT FOR FAILURE TO DO AS SUCH.

{¶24} Mr. Thomas and XE Properties, LLC assert in their second assignment of error

that the trial court erred in finding Mr. Thomas in contempt. In their third assignment of error,

they argue that the trial court erred in finding XE Properties, LLC in contempt. In their fourth

assignment of error, they maintain that the trial court abused its discretion in failing to grant their

second motion for relief from judgment.

{¶25} In light of our disposition of the first assignment of error, these arguments are not

properly before this Court at this time, and we decline to address them.

III.

{¶26} Mr. Thomas’ and XE Properties, LLC’s first assignment of error is sustained.

The remaining assignments of error are not properly before us at this time. The judgment of the

Summit County Court of Common Pleas is reversed, and the matter is remanded for proceedings

consistent with this decision.

Judgment reversed, and cause remanded.

There were reasonable grounds for this appeal.

We order that a special mandate issue out of this Court, directing the Court of Common

Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy

of this journal entry shall constitute the mandate, pursuant to App.R. 27. 11

Immediately upon the filing hereof, this document shall constitute the journal entry of

judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the

period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is

instructed to mail a notice of entry of this judgment to the parties and to make a notation of the

mailing in the docket, pursuant to App.R. 30.

No costs are taxed.

DONNA J. CARR FOR THE COURT

TEODOSIO, J. CALLAHAN, J. CONCUR.

APPEARANCES:

ROBERT C. MEEKER, Attorney at Law, for Appellant.

REGINA M. VANVOROUS, Assistant Prosecuting Attorney, for Appellee.