COURT OF APPEALS, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 71682 JANET A. DOLOHANTY, ET AL. : : : JOURNAL ENTRY PLAINTIFFS-APPELLANTS : : AND v. : : OPINION CITY OF MAYFIELD HEIGHTS, : ET AL. : : DEFENDANTS-APPELLEES : DATE OF ANNOUNCEMENT OF DECISION: OCTOBER 9, 1997 CHARACTER OF PROCEEDING: Civil appeal from Common Pleas Court, No. CV-305361. JUDGMENT: AFFIRMED. DATE OF JOURNALIZATION: APPEARANCES: For Plaintiffs-Appellants: Christopher J. Swift, Esq. Michael K. Farrell, Esq. Baker & Hostetler 3200 National City Center 1900 E. 9th Street Cleveland, OH 44114-3485 For Defendants-Appellees: Rick J. Carbone, Esq. Director of Law City of Mayfield Heights 1392 Som Center Road Mayfield Heights, OH 44124 2 DAVID T. MATIA, P.J.: Janet Dolohanty, et al., appellants, appeal the decision of the Cuyahoga Court of Common Pleas affirming the Income Tax Board of Review's refusal to issue a tax refund. Appellants raise one assignment of error. This court, finding no error, affirms the decision of the trial court. I. STATEMENT OF FACTS Janet Dolohanty and other fellow employees, appellants, worked for Progressive Casualty Insurance Company ( P.C.I.C. ). As part of its compensation program, P.C.I.C. issued appellants' shares of restricted stock in P.C.I.C.'s parent company, The Progressive Corporation. The restricted stock was issued to appellants at various times prior to 1990 and in various amounts. At the time the shares were issued to appellants, the stock was registered in their names with the transfer agent. Moreover, the appellants enjoyed certain rights associated with being stock holders such as the ability to receive dividends and to vote their shares at stockholder meetings. However, the appellants were restricted from selling, giving, devising or bequeathing the stock in any manner until the restriction lapsed. Further, appellants were unable to cash the stock in until the restriction lapsed. Finally, the stock was subject to forfeiture if appellants left P.C.I.C. before the restriction lapsed. During the years 1990 through 1993, the restrictions on appellants' stock lapsed. P.C.I.C. reported the fair market value of the stock as income on appellants' Form W-2s for municipal 3 income tax purposes for the years 1990-1993. This resulted in appellants collectively paying to the City of Mayfield Heights the amount of $106,342 in municipal income tax on the value of the stock. On April 22, 1994, the appellants' representatives submitted a letter to the Regional Income Tax Agency ( R.I.T.A ) and the City of Mayfield Heights requesting a refund of all municipal incomes taxes paid by appellants with respect to the restricted stock. On September 28, 1995, the Tax Administrator of the City of Mayfield Heights denied said refund. Appellants appealed the decision of the Tax Administrator to the Board of Review which held a hearing and affirmed the decision. Pursuant to R.C. 2506.04, appellants appealed to the Court of Common Pleas. On October 31, 1996, the trial court affirmed the decision of the Board of Review. Appellants timely filed this appeal. II. ASSIGNMENT OF ERROR Janet Dolohanty, et al.'s, appellants', sole assignment of error states: . THE COURT BELOW ERRED IN HOLDING THAT THE FAIR MARKET VALUE OF THE STOCK WAS TAXABLE BY THE CITY AS INCOME AT THE TIME THAT THE TRANSFER RESTRICTION LAPSED. . ISSUE RAISED: WHETHER A PREPONDERANCE OF RELIABLE, PROBATIVE AND SUBSTANTIAL EVIDENCE SUPPORTED THE TRIAL COURT'S RULING. Janet Dolohanty, et al., appellants, argue the trial court erred in affirming the decision of the Board of Review that the stock at issue was earned when the restrictions lapsed. 4 Specifically, appellants argue: 1) according to R.I.T.A.'s own Rules and Regulations, the stock was subject to municipal income tax at the time of receipt which was prior to 1990, 2) the appreciation value in the value of appellants' stock from the time of receipt to the time the restrictions had lapsed is intangible income and cannot be taxed pursuant to R.C. 718.01(F)(3), and 3) since the stock should have been taxed in the years it was issued and transferred to appellants, any attempt to assess or collect municipal income tax is barred by the three year statute of limitations as set forth in R.C. 718.06(A). Appellants' sole assignment of error is not well taken. B. STANDARD OF REVIEW: ADMINISTRATIVE APPEAL PURSUANT TO R.C. 2506.04 Initially, we note that in an administrative appeal, we must give due deference to the administrative agency's findings of fact. Moreover, the court may not substitute its judgment for that of the agency, especially on questions of administrative expertise. See Gerstenberger v. Manedonia (1994), 97 Ohio App.3d 167, 172. In Lesser v. Cleveland (1995) 102 Ohio App.3d 151, 156, this court set forth the following standard of review to be applied to administrative appeals pursuant to R.C. 2506.04: In an administrative appeal, pursuant to R.C. 2506.04, a court of common pleas, after reviewing the entire record, must affirm the decision of the administrative agency if it is supported by a preponderanceof substantial, reliable and probative evidence. If a preponderance of substantial, reliable and probative evidence does not exist to support the administrative agency's decision, the common pleas court may reverse, vacate, modify or remand. Thus, to a limited extent, a substitution of judgment by the common pleas court is permissible. 5 Pursuant to R.C. 2506.04, a judgment of the court of common pleas may be appealed to an appellate court on questions of law. Our inquiry is limited to a determination of whether we can say, as a matter of law, that there did exist a preponderance of reliable, probative and substantial evidence to support the findings of the trial court. Stated alternatively, in reviewing the court of common pleas judgment, the court of appeals, limited to a review of that judgment only on questions of law, can reverse if that judgment is against the manifest weight of the evidence. (Citations omitted). See, also, Dudukovich v. Lorain Metro. Hous. Auth. (1979), 58 Ohio St.2d 202; Cincinnati Bengals, Inc. v. Papania (1993), 92 Ohio App.3d 785. 6 . THERE EXISTS A PREPONDERANCE OF RELIABLE, PROBATIVE AND SUBSTANTIAL EVIDENCE SUPPORTING THE TRIAL COURT'S RULING. In the case sub judice, both parties agree that the issuance of stock was a form of compensation. After a review of the entire record, we find there exists a preponderance of reliable, probative and substantial evidence supporting the trial court's holding that, contrary to appellants' assertions, the value of the stock is not intangible income arising out of investments as defined and/or contemplated by R.C. 718.01(A)(4). Rather, as agreed to by the parties, the restricted stock is compensation subject to taxation under Section 793.03 of the Mayfield Heights Codified Ordinance applies which states: An annual tax *** shall be imposed on or after December 31, 1971 *** upon the following: a) on all salaries, wages, commissions and other forms of compensation earned after December 31, 1971 by residents of the City; b) on all salaries wages, commissions and other compensation earned after December 31, 1971 by non-residents of the City for work done or services performed or rendered in the City. Therefore, the central issue upon appeal is when, as a matter of law, did the appellants earn the restricted stock. It is true that due to the nature of restricted stocks, the appellants enjoyed some, but not all, rights of ownership when the stocks were issued prior to 1990. Again, these rights include the ability to receive dividends and to vote their shares at stockholder meetings. However, appellants were restricted from selling the stock, encumbering it, giving it, or devising the stock in any manner until the restrictions had lapsed. More importantly, if appellants 7 left their employment before the restrictions lapsed, they would forfeit the stock without ever having the opportunity to use it as they would any other form of earned compensation. Appellees put forth the following scenario in support of its decision: An employee is issued a certain amount of restricted stock subject to forfeiture for five years if the employee leaves the employer within that time period. If the employee pays tax on the fair market value on the stock as of the issue date and the employee leaves four years after being issued the stock, then the employee has paid taxes on stock which is not his/hers and he/she cannot file for a refund due to the three year statute of limitation. Not only is such argument persuasive, but due to the nature of restricted stock, we must defer to the Income Tax Board of Review's expertise if there exists reliable, probative and substantial evidence supporting its decision. Gerstenberger, supra. After a review of the record, we find such evidence exists. Accordingly, the trial court did not err in affirming the decision of the Board of Review. Judgment affirmed. 8 It is ordered that appellees recover of appellants their 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 Common Pleas Court 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. PORTER, J. and SPELLACY, J., CONCUR. DAVID T. MATIA PRESIDING JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(D) and 26(A); Loc.App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's .