COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 69583 TEAMSTER HOUSING, INC. : : Plaintiff-Appellant : : JOURNAL ENTRY -vs- : AND : OPINION J. TIMOTHY McCORMACK, ET AL. : : Defendant-Appellee : : DATE OF ANNOUNCEMENT OF DECISION MAY 9, 1996 CHARACTER OF PROCEEDING Civil appeal from Court of Common Pleas Case No. 267964 JUDGMENT Reversed and remanded. DATE OF JOURNALIZATION APPEARANCES: For Plaintiff-Appellant: For Defendant-Appellee East Cleveland Board of ROBERT M. LUSTIG, ESQ. Education: MATTHEW HARRIS LUCAS, ESQ. Lustig, Icove & Lustig JAMES H. HEWITT, III, ESQ. Co., L.P.A. Director of Law 615 Leader Building City of East Cleveland Cleveland, Ohio 44114 RONDA G. CURTIS, ESQ. Assistant Director of Law 14340 Euclid Avenue East Cleveland, Ohio 44112 [continued on next page] For Defendant J. Timothy STEPHANIE TUBBS JONES McCormack, et al. Cuyahoga County Prosecutor TIMOTHY KOLLIN, Assistant Prosecuting Attorney 1200 Ontario Street Cleveland, Ohio 44113 - 3 - JAMES M. PORTER, J., Plaintiff-appellant Teamster Housing, Inc. ("THI") appeals from a decision of the Common Pleas Court affirming the 1991 valuation of apartment property (known as "Terrace Towers") at 15600 Terrace Road, East Cleveland, Ohio at $2,428,310 as established by the County Auditor and approved by the Board of Revision. Plaintiff contends that the trial court applied the wrong standard of appellate review, failed to follow the controlling statute (R.C. 5717.05) and improperly considered an appraiser's supplemental report which was hearsay and not contained in the record on appeal to the Common Pleas Court. We find merit to the appeal and reverse and remand for the reasons hereinafter stated. The auditor's assessed value of Terrace Towers for 1991 reflects a fair market value of $2,428,310. Plaintiff THI filed a complaint with the Cuyahoga County Board of Revision requesting a finding of fair market value at $1,900,000. Defendant East Cleveland Board of Education filed a cross-complaint with the Board of Revision requesting a finding of fair market value of $3,350,000. Sam Canitia was the East Cleveland Board of Education's appraiser and expert witness before the Board of Revision. Wesley Baker was the plaintiff's expert appraiser. Baker presented a full appraisal to the Board of Revision; Canitia's appraisal was a short form analysis. - 4 - The prior valuation of this same property had been before the Board of Revision for the year 1988. The same appraisers appeared for the respective parties. At that time, the Board's decision was appealed to the Board of Tax Appeals which adopted the valuation of Wesley Baker. The decision of the Board of Tax Appeals for the 1988 valuation ($1,600,000) was affirmed by this Court in East Cleveland Bd. of Educ. v. Cuy. Co. Bd. of Revision, et al. (March 31, 1994), Cuyahoga App. Nos. 65001/65002, unreported. Each appraiser used the same method for 1991 that was used for 1988. Plaintiff contends that Canitia overestimates gross income, underestimates expenses and overestimates capitalization rates, which "serve to extravagantly overstate the value of the Property." (Applt's Brf. at 2). Plaintiff asserts that its appraiser Baker correctly appraised the property. The Board of Revision affirmed the auditor's evaluation. The case was appealed to the Cuyahoga County Court of Common Pleas. For the reasons that hereinafter appear, it will not be necessary to go into the evaluation methodology or the merits of the valuation issues that divide the parties and their experts. During the course of proceedings before the trial court, which was sitting in an appellate capacity, pursuant to R.C. 5717.05, the parties filed the record made before the Board of Revision and submitted various briefs. The East Cleveland brief attached a supplemental appraisal report by Canitia, dated August 5, 1994, which tended to support his valuation of $3,500,000, the fair - 5 - market value East Cleveland was attempting to establish on its cross-complaint. Plaintiff moved to strike on the grounds it was hearsay and it did not have an opportunity to cross-examine Canitia on the supplemental report. The trial court held on April 18, 1995: "Since Teamster Housing has had a full opportunity to depose or cross-examine Canitia and has not availed itself of that opportunity, it has waived any right to cross-examine." On August 30, 1995, the trial court entered its ruling and opinion on the merits of the appeal finding that the decision of the Board of Revision was not unreasonable or unlawful under its standard of review and affirmed the Board's valuation of $2,428,310, the same as the auditor's appraisal. This appeal timely ensued. We will address defendant's assignments of error in the order asserted and together where it is appropriate for discussion. I. THE TRIAL COURT INCORRECTLY APPLIED AN APPELLATE STANDARD OF REVIEW TO THE RECORD. On appeal from a Board of Revision, the property owner, plaintiff THI here, has the option of appealing to the Board of Tax Appeals or the Common Pleas Court. R.C. 5717.05 states in pertinent part as follows: As an alternative to the appeal provided for in section 5717.01 of the Revised Code, [from the board of revision to the BTA] an appeal from the decision of a county board of revision may be taken directly to the court of common pleas of the county by the person in whose name the property is listed or sought to be listed for taxation. *** - 6 - * * * The court may hear the appeal on the record and the evidence thus submitted, or it may hear and consider additional evidence. It shall determine the taxable value of the property whose valuation or assessment for taxation by the county board of revision is complained of, or if the complaint and appeal is against a discriminatory valuation, shall determine a valuation that shall correct the discrimination, and the court shall determine the liability of the property for assessment for taxation, if that question is in issue, and shall certify its judgment to the auditor, who shall correct the tax list and duplicate as required by the judgment. The correct standard of review by the Common Pleas Court on such an appeal was described in Park Ridge Co. v. Franklin Cty. Bd. of Revision (1987), 29 Ohio St.3d 12, 14 as follows: This court recently addressed the scope of a common pleas court's review for property values established by the board of revision. See Black v. Bd. of Revision (1985), 16 Ohio St.3d 11, 16 OBR 363, 475 N.E.2d 1264. The provisions of R.C. 5717.05 require the common pleas court to consider the administrative record from the board of revision. They permit the court to consider additional evidence in its discretion, but do not require it to do so. Black, supra, at paragraph one of the syllabus. The appellate court cited, and the auditor and the school boards rely on, the following language in the Black opinion at 14, 16 OBR at 365-366, 475 N.E.2d at 1268: "*** In effect, R.C. 5717.05 contemplates a decision de novo. It does not, however, provide for an original action or trial de novo. ***" That language simply means that the common pleas court should make its own independent decision but is not required to conduct an independent proceeding. It should reach its - 7 - decision without any deference to the administrative finding. However, it should consider the administrative record, giving that record whatever weight the court deems appropriate, even if the court accepts additional evidence. As the plaintiff aptly points out, the Court of Common Pleas herein followed an incorrect standard of review. The Common Pleas Court held that its role was "to review the record in order to determine whether the decision of the Board was unreasonable or unlawful. Consolidated Aluminum Corp. v. Board of Revision (1981), 66 Ohio St.2d 410, 414; and Canton Towers, Ltd. v. Board of Revision, supra." (Ruling and Opinion at 3). In explanation, it stated that "[a] Court will not disturb a decision of the Board of Revision with respect to such valuation unless it affirmatively appears from the record that such decision is unreasonable or unlawful. Canton Towers, Ltd. v. Board of Revision (1983), 3 Ohio St.3d 4, 6; and Conalco v. Bd. of Revision (1977), 50 Ohio St.2d 129, paragraph one of syllabus" (Ruling and Opinion at 2). The cases cited by the trial court do not apply to appeals taken from the Board of Revision but rather from the Board of Tax Appeals, which is accorded a measure of deference not given to the Board of Revision's decisions. "The BTA has wide discretion to determine the weight given to evidence and the credibility of witnesses before it. Its true value decision is a question of fact which will be disturbed only when it firmly appears from the record that such decision is unreasonable or unlawful." Meijer v. Montgomery Cty. Bd. of Revision (1996), 75 Ohio St.3d 181, 185-86. - 8 - The trial court herein incorrectly afforded to the decision of the Board of Revision a prima facie level of deference to which a trial court would have been entitled had it engaged in fact finding. It is the role of the Board of Tax Appeals and the Common Pleas Courts as fact finders issuing a "decision de novo" that gives their decisions this status. See Black v. Board of Revision (1985), 16 Ohio St.3d 11, 13-14: The requirements of R.C. 5717.05, as interpreted by Cleveland, supra, establish that the common pleas court has a duty on appeal to independently weigh and evaluate all evidence properly before it. The court is then required to make an independent determination concerning the valuation of the property at issue. The court's review of the evidence should be thorough and comprehensive, and should ensure that its final determination is more than a mere rubber stamping of the board of revision's determination. The Cleveland case does not, however, require a trial de novo. Id. at 13-14. Also, see, Albrecht, Inc. v. Summit Board of Revision (1987), 39 Ohio App.3d 115; Weiss v. Bd. of Revision (May 11, 1995), Cuyahoga App. No. 67681, unreported at 3. Although a trial de novo is not required, a de novo review is required: "It [the trial court] should reach its decision without any deference to the administrative finding." Park Ridge, supra, at paragraph one of the syllabus. Since the trial court obviously applied the wrong standard on appeal, we cannot conclude that its findings were without error. We must accordingly reverse and remand the valuation decision for - 9 - review and consideration de novo by the trial court consistent with the Park Ridge and Black standards of review. Assignment of Error I is sustained. II. THE TRIAL COURT FAILED TO APPLY OHIO REV. CODE 5717.05. V. THE TRIAL COURT ADMITTED AND/OR CONSIDERED INADMISSIBLE HEARSAY. R.C. 5717.05 states that "the Court may hear the appeal on the record and the evidence thus submitted, or it may hear and consider additional evidence." In this case, the trial court admitted "additional evidence" in the form of the supplemental report of Sam Canitia. The trial court allowed the report to be admitted as evidence despite THI's objection, based on the fact THI could have deposed Canitia or filed a report in opposition. By not exercising its opportunity to cross-examine Canitia by deposition, the court found THI waived its right of cross-examination. Although a small part of the supplemental report was in the record before the Board of Revision, most of the report contained new information. The only support in the Board of Revision record for the East Cleveland position is a one page form, not signed by Sam Canitia, entitled "Economic Analysis." This form contains conclusions without analysis to arrive at an appraisal nearly twice the amount of the 1988 appraisal affirmed by this Court. The rest of Canitia's evidence before the Board showed no logical analysis. The plaintiff, of course, contends that its expert report from Wesley Baker should have prevailed at both the Board of Revision and - 10 - Common Pleas Court level. We do not pause to address that issue nor to visit the "alleged shortcomings" of Mr. Canitia as an appraiser in other cases upon which plaintiff dwells. The issue squarely confronted here is whether the court's right to "hear and consider additional evidence" allowed it to admit the supplemental report of Mr. Canitia. Plaintiff contends it was inadmissible hearsay and therefore not proper evidence before the court. We agree. "'Hearsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Evid. R. 801(C). The trial court found that Canitia's report was admissible because the plaintiff had the opportunity to "cross examine" him by taking his deposition. That is no substitute for the right to cross-examine at trial or in a court hearing before the trier of fact. Nor does it fall under the non-hearsay categories contained in Evid. R. 801(D)(1). That section states that "[a] statement is not hearsay if *** [t]he declarant testified at trial or hearing and is subject to cross examination concerning the statement, and the statement is" a prior inconsistent statement; a prior statement offered to rebut a charge of fabricating testimony; or, a prior statement identifying a person soon after perceiving him. In the instant case, the trial court never held a trial or hearing at which Mr. Canitia could have been subjected to cross-examination concerning his report and the report does not fit into any of the - 11 - categories of Evid. R. 801(D)(1). Nor do we find other exceptions to the hearsay rule which would excuse the inadmissible nature of Canitia's supplemental report. Evid. R. 802 sets forth the general rule that hearsay is not admissible subject to certain exceptions, most of which are set forth in Evid. R. 803, "Hearsay Exceptions; Availability of Declarant Immaterial," and Evid. R. 804, "Hearsay Exceptions; Declarant Unavailable." The record before us does not indicate that Canitia was unavailable, so Evid. R. 804 does not apply, and none of the twenty-two classes of exceptions set for in Evid. R. 803 are applicable either. Thus, pursuant to the Rules of Evidence, the report was inadmissible hearsay. See, also, Collins v. Collins (Feb. 7, 1991), Cuyahoga App. No. 58035, unreported at 10 (trial court erred in allowing evidence of expert report as report was unauthenticated and was "hearsay as defined by Evid. R. 801 and Evid. R. 802 and did not fall within one of the hearsay exceptions as defined by Evid. R. 803"); Worthington City Schools v. ABCO Insulation (1992), 84 Ohio App.3d 144, 151 (as long as expert report was not offered into evidence independently, but was testified to by the expert who created the report, the report was not hearsay). As stated in Beavercreek Local Schools v. Basic, Inc. (1991), 71 Ohio App.3d 669, 676: Hearsay testimony does not afford the opposing party an opportunity to confront and to cross- examine the out-of-court declarant, thereby depriving the party of the "guaranty of truthfulness resulting from the oath of [the] declarant." Furthermore, the opportunity to - 12 - test the accuracy of the declarant's observations is not present when hearsay statements are admitted into evidence. Potter v. Baker (1955), 162 Ohio St.488, 494, 55 O.O. 389, 392, 124 N.E.2d 140, 144. Therefore, hearsay statements generally lack indicia of reliability to the hearsay rule. The appellee School Board errs in relying on Black v. Bd. of Revision (1985), 16 Ohio St.3d 11 for the proposition that Canitia's supplemental report was admissible. In Black, the parties stipulated to the admissibility of the reports; that was not done here. Indeed, the plaintiff's counsel objected vigorously to the court's consideration of the challenged report. The trial court's failure to hold an evidentiary hearing on Mr. Canitia's opinion and supplemental report deprived the plaintiff of the opportunity to cross-examine Canitia and attack his basis for the $3,500,000 appraisal. We cannot say to what extent, if any, Canitia's supplemental report played a role in or otherwise influenced the court's judgment affirming the auditor's appraisal. Nevertheless, since the case must be remanded for de novo review under the correct appellate standard, it is not necessary for us to speculate about that. Assignments of Error II and V are sustained. Given our disposition of the foregoing assignments of error, the remaining Assignments of Error (III and IV) become moot and will not be considered. App. R. 12(A)(1)(c). - 13 - Judgment reversed and remanded for de novo consideration consistent with this opinion. - 14 - It is ordered that appellant recover of appellee its costs herein taxed. It is ordered that a special mandate be sent to the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. SPELLACY, C.J., and JAMES D. SWEENEY, J., CONCUR. JAMES M. PORTER JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof, this document will be stamped to indicate journalization, at which .