Goodman v. Schneider

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[Cite as Goodman v. Schneider, 2012-Ohio-5411.] 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. 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. 2 {¶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: In addition to the parties claiming secured creditor status, the court ordered a ten per cent secured creditor allocation * * * to the court appointed receiver. 3 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 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. 4 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 remaining. 5 {¶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

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