text:
    BASS RIVER TENNIS CORPORATION & others v. Manuel C. BARROS.
    17-P-1230
    Appeals Court of Massachusetts.
    Entered: June 29, 2018.
    MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

      Mark Greenberg and Michael LaPierre.

   The defendant, Manuel C. Barros, appeals from those portions of an amended judgment entered in the Superior Court requiring him to pay damages to plaintiffs Mark Greenberg and Michael LaPierre in the amount of $95,000 plus interest, and $8,703.20 in attorney's fees and costs. We affirm.

Background. In 2014, Barros appealed from the entry of summary judgment for the plaintiffs. In an unpublished memorandum and order issued pursuant to our rule 1:28 on February 12, 2016, a panel of this court affirmed the judgment in all respects but one: the panel vacated the portion of the judgment that required Barros to pay $173,000 plus interest to Greenberg and LaPierre based on Barros's failure to pay off a loan in that amount from one Thomas Hawley, secured by a mortgage on the property where the plaintiff tennis club is situated (together referred to as the Hawley mortgage). Accepting Barros's argument that the plaintiffs had failed to demonstrate quantifiable damages from Barros's failure to discharge the Hawley mortgage, the panel remanded the case for further proceedings to determine the amount of the plaintiffs' damages.

A few months later, on August 3, 2016, the plaintiffs paid $95,000 to the Hawley estate to discharge the mortgage, and on November 30, 2016, the parties filed a joint submission in the Superior Court in which they stated that "the parties agree that the issue of damages remanded to this Court is now settled, and that that portion of the judgment should enter in the amount of $95,000," plus twelve per cent interest from August 16, 2016.

Within two weeks, however, Barros had a change of heart and filed a motion to revoke the joint submission. In his motion he claimed for the first time, and contrary to his repeated representations both prior to and throughout the course of this litigation, that his obligation to Hawley had been in default since August, 2007, and had been unenforceable since August, 2013, barred by the six-year statute of limitations applicable to commercial instruments, G. L. c. 106, § 3-118(a ). Barros asserted that LaPierre and Greenberg "were not damaged by [Barros's] non-payment" of the Hawley mortgage and "should not have paid this money" to discharge it. On this basis, he argued that he should be relieved from the joint submission on the ground of mutual mistake. A Superior Court judge rejected this gambit and ordered, in pertinent part, that judgment enter in favor of Greenberg and LaPierre in the agreed-upon amount of $95,000, plus interest and attorney's fees and costs.

Barros appeals, pressing the same grounds he asserted in his motion to revoke the joint submission.

Discussion. 1. Relief from joint submission. As a general matter, parties are held to their stipulations. See Stuart v. Brookline, 412 Mass. 251, 254-255 (1992) ; New England Legal Foundation v. Boston, 423 Mass. 602, 609 n.7 (1996). A court "may vacate a stipulation made by the parties if it is deemed improvident or not conducive to justice." Loring v. Mercier, 318 Mass. 599, 601 (1945). See Anastos v. Sable, 443 Mass. 146, 153 (2004) ; Gore v. Daniel O'Connell's Sons, Inc., 17 Mass. App. Ct. 645, 649 (1984). We review a judge's decision whether to vacate a stipulation for abuse of discretion. See Commonwealth v. Buswell, 468 Mass. 92, 104 (2014).

We discern no abuse of discretion. As the judge concluded, relieving Barros of his agreement to the joint submission, after he had consistently maintained that the Hawley mortgage was enforceable, would be contrary to justice. Relying on Barros's representations, LaPierre and Greenberg paid $95,000 to discharge the Hawley mortgage-not incidentally, their payment relieved Barros of any obligation going forward. "Obviously, at the time [Barros] entered into the agreement, [he] did not view [it] as inimical to [his] interests or unjust." Stuart, supra at 254. See Anastos v. Sable, supra ("A stipulation made through negotiation and consistently maintained through litigation should not be set aside as improvident").

Nor did the judge err or abuse his discretion in rejecting Barros's claim of mutual mistake. A party seeking rescission of a written agreement on this ground "must prove the mistake by 'full, clear, and decisive proof.' " Hingham Mut. Fire Ins. Co. v. Mercurio, 71 Mass. App. Ct. 21, 27 (2008), quoting from Polaroid Corp. v. Travelers Indem. Co., 414 Mass. 747, 756 (1993). "Relief is only appropriate in situations where a mistake of both parties has such a material effect on the agreed exchange of performances as to upset the very basis for the contract." Shawmut-Canton LLC v. Great Spring Waters of America, Inc., 62 Mass. App. Ct. 330, 337 (2004), quoting from Restatement (Second) of Contracts § 152 comment a (1981).

Here, the basis for the joint submission was the fact that the plaintiffs had liquidated the damages attributable to making a payment. The parties stipulated to the plaintiffs' uncontested out-of-pocket costs, which represented a substantial savings for Barros. The late-raised, speculative defense to the underlying obligation did not upset the mutual understanding underlying the joint submission.

Moreover, "even [if Barros] had provided clear and convincing evidence of a mutual mistake, reformation need not necessarily be awarded." Hingham Mut. Fire Ins. Co., supra. A judge may withhold the equitable remedy of reformation on equitable grounds. Ibid. In denying relief, the judge pointed to the "undisputed fact" of the plaintiffs' payment, Barros's attempt "to second guess those damages by arguing" what "creative counsel" might have done, as well as the doctrines of waiver and estoppel. As we have said in the context of a late motion to amend the pleadings, "[a]mong the good reasons ... for which a motion to amend may be denied are that no justification for the lateness of the motion is apparent (beyond counsel for the moving party having had a late dawning idea) and that one or more of the nonmoving parties would be caught off balance by the proffered amendment." DiVenuti v. Reardon, 37 Mass. App. Ct. 73, 77 (1994). The judge did not abuse his discretion in rejecting Barros's attempt to evade his liability.

Attorney's fees. Barros argues that the plaintiffs are not entitled to attorney's fees and costs because they should not have paid off the Hawley mortgage and should not have opposed his motion to revoke the joint submissions. We reject these arguments for the same reasons that we conclude there was no abuse of discretion in the denial of the motion to revoke. Barros makes no claim regarding the reasonableness of the fees and costs award. See WHTR Real Estate Ltd. Partnership v. Venture Distrib., Inc., 63 Mass. App. Ct. 229, 235-237 (2005). We therefore affirm the award of fees and costs.

Further, the plaintiffs have properly requested in their brief, see Yorke Mgmt. v. Castro, 406 Mass. 17, 20 (1989), that they be awarded attorney's fees and costs with respect to this appeal, both under § 7.6 of the securities purchase agreement and under Mass.R.A.P. 25, as appearing in 376 Mass. 949 (1979). We need not reach the question whether Barros's appeal is frivolous because we conclude that the plaintiffs are entitled to attorney's fees under the agreement. Accordingly, the plaintiffs may submit a petition for appellate attorney's fees, accompanied by appropriate supporting documentation, within fourteen days of the date of the rescript. Barros shall have fourteen days thereafter to file any opposition. See Fabre v. Walton, 441 Mass. 9, 10-11 (2004).

Amended judgment entered June 2, 2017, affirmed.

      Bass River Tennis Corp. v. Barros, 89 Mass. App. Ct. 1105 (2016).

      The Superior Court judge granted summary judgment to the plaintiffs with respect to the Hawley mortgage on the ground that Barros had breached the securities purchase agreement by falsely representing at the closing, in December, 2010, that the Hawley mortgage had a zero balance. Barros testified at his deposition in 2014 that the Hawley mortgage was "not in default." In his submissions to this court in the prior appeal he argued successfully that "[r]equiring Barros to pay $173,000 to Greenberg and LaPierre when he would still be liable to Hawley on the Hawley Note is simply a penalty that is not justified by any principle of contract law," and that the award would allow the plaintiffs to "pocket the damages and leave Barros to bear the full brunt of any foreclosure action Hawley might bring."

      If, as Barros now claims, his obligation to Hawley had become unenforceable, nothing prevented Barros from bringing his own declaratory judgment action to establish that fact-an action that the plaintiffs may not have had standing to bring. Moreover, Barros points to no authority requiring a party to undertake the expense, time, and uncertainty of litigation to mitigate damages.


source: Caselaw Access Project

license: Public Domain

text:
    COMMONWEALTH v. Radelle E. HUBBARD.
    17-P-249
    Appeals Court of Massachusetts.
    Entered: June 29, 2018
    MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
   The Commonwealth appeals from a Superior Court judge's order allowing the defendant's motion to suppress. The Commonwealth argues that the judge erred because the police officers had reasonable suspicion to stop the defendant's motor vehicle and conduct a threshold inquiry. For the reasons stated below, we conclude that there was error in the application of legal principles, and, thus, reverse the order allowing the defendant's motion to suppress.

Background. We summarize the judge's findings, supplemented by uncontroverted evidence from the hearing on the motion to suppress. See Commonwealth v. Watson, 430 Mass. 725, 726 n.5 (2000). On July 8, 2015, two Dunkin Donuts stores located in Brockton were robbed. An employee from the store that was first robbed reported that the robber was a black man about six feet tall, weighing 180 to 200 pounds. The employee also reported that the robber was wearing dark gray or black jeans, a sweatshirt with a light blue logo, and a ski mask. Another employee from that store reported that his mother saw a black male wearing a hoodie and a ski mask leave the store, enter a small blue vehicle, and drive away. Video surveillance recorded the robber wearing a hooded sweatshirt.

An employee from the store that was next robbed, which occurred about an hour and one-half after the first robbery, reported that the robber was a black male wearing a multi-colored mask and holding a handgun. The robber came to the drive-through window and instructed the employee not to push the panic button. The robber then reached through the window, manipulated the register to open the cash drawer, and stole the cash inside the drawer. A surveillance camera recorded the robber wearing plastic gloves and a "very distinct red and black jacket." The store manager reported that the robber might be the defendant, who previously had been terminated as an employee at that store. Upon investigating the defendant, Brockton police Detective Thomas Hyland learned that the defendant lived in Brockton, that he weighed less than 180 to 200 pounds, and that his brother's girl friend (girl friend) owned a blue Honda motor vehicle.

On July 22, 2015, a third Dunkin Donuts store in Brockton was robbed by a black man wearing a ski mask and holding a handgun. Officers immediately went to the defendant's home, which was an approximate five minute drive from that Dunkin Donuts store, and observed a blue Honda motor vehicle, running and with its headlights on, in the driveway. The area was "very poorly lit." Brockton police Officer Brian Donahue, using his cruiser, blocked the Honda in the driveway, and reported to other officers that the vehicle's registration numbers matched that of the girl friend's motor vehicle. Brockton police Detective Michael Bunker could see a thin, black male sitting in the vehicle.

Upon approaching the vehicle, Detective Bunker, who was with another detective, observed the defendant's brother, Travone Hubbard, in the driver's seat and the defendant in the front passenger seat. The defendant was seen lowering his hands "below ... the area of the window, so [that Detective Bunker] couldn't see what [the defendant] was doing." The detectives identified themselves. Detective Bunker then ordered the defendant to place his hands on the dashboard because the movements of his hands were "concerning." Detective Bunker testified that, because the officers "were investigating an armed robbery where a handgun was used, ... [he] didn't know if [the defendant] was trying to access a weapon." The defendant complied with Detective Bunker's order but thereafter moved his hands again. Detective Bunker repeated several times his order that the defendant place his hands on the dashboard. One of the officers subsequently opened the passenger side door and the defendant was ordered out of the vehicle. The defendant did not immediately comply; rather, he tried to kick a black article of clothing under the front passenger seat. Officer Donahue forced the defendant out of the vehicle and read him his Miranda warnings. The defendant was pat frisked and approximately $272 were found in his pocket.

Upon searching the vehicle, the officers found plastic gloves, sixty-five dollars, a red and black sweatshirt that matched the description of the robber's sweatshirt from the second Dunkin Donuts store robbery, and a black article of clothing, i.e., a stocking cap with the word "DOPE" written in white letters, that "matche[d] up with the picture" from the security footage of one of the robberies. The stocking cap was the item that the defendant attempted to kick under the seat. The total amount of cash found on the defendant and in the vehicle was less than the amount that was reportedly stolen from the third Dunkin Donuts store. No weapon was found inside the vehicle.

Video surveillance from the third Dunkin Donuts store robbery recorded the robber wearing dark pants with two vertical white stripes on the leg, and black and white sneakers. The defendant, at the time he was taken out of the vehicle, was wearing such pants and sneakers.

Discussion. When reviewing a motion to suppress, "we adopt the motion judge's factual findings absent clear error." Commonwealth v. Isaiah I., 450 Mass. 818, 821 (2008). Although we give the facts found by the judge deference, we "independently determine whether the judge correctly applied constitutional principles to the facts as found." Ibid. A police officer may make a threshold inquiry of an individual only if the officer has reason to suspect that the individual has committed, is committing, or is about to commit a crime. Commonwealth v. Willis, 415 Mass. 814, 817 (1993). "[A] combination of factors that are each innocent of themselves may, when taken together, amount to the requisite reasonable belief." Commonwealth v. Phillips, 452 Mass. 617, 626 (2008), quoting from Commonwealth v. Fraser, 410 Mass. 541, 545 (1991). A mere "hunch" is not enough for reasonable suspicion to exist. Commonwealth v. Torres, 433 Mass. 669, 673 (2001).

Here, the officers had ample information to reasonably suspect that the defendant had committed a crime. Contrary to the judge's conclusions, the officers' reasonable suspicion was not "based on no more than a hunch by the manager of the [second] Dunkin Donuts" and mere "speculation by the police that the blue car used by the robber" belonged to the girl friend "because they were both small, blue cars." The officers, in addition to obtaining the manager's statement and the information regarding the blue motor vehicle, found the defendant inside a blue Honda, parked in his driveway with its engine running and headlights on, and in close temporal and geographic proximity to the third Dunkin Donuts store robbery. See Commonwealth v. Warren, 475 Mass. 530, 536 (2016) ("[P]roximity of the stop to the time and location of the crime is a relevant factor in the reasonable suspicion analysis.... Proximity is accorded greater probative value in the reasonable suspicion calculus when the distance is short and the timing is close").

Furthermore, the officers also had information that the robber was familiar with the inside, employee area of the second Dunkin Donuts store due to the reports that the robber instructed an employee not to push the panic button, knew where the cash drawer was located, and knew how to open the drawer. This information was especially relevant as the defendant previously had been employed at that Dunkin Donuts store, adding another link in the chain connecting him to the robberies. All of this information, taken together with reasonable inferences, supported the officers' reasonable suspicion that the defendant and the blue Honda were involved in the Dunkin Donuts store robberies. Thus, the officers' stop of the vehicle, based on reasonable suspicion, was constitutional.

The Commonwealth next argues that the officers' exit order, subsequent pat frisk of the defendant, and search of the vehicle were constitutional due to safety concerns. We agree. There must be specific and articulable facts to support an exit order, however, "it does not take much for a police officer to establish a reasonable basis to justify an exit order or search based on safety concerns." Commonwealth v. Gonsalves, 429 Mass. 658, 664 (1999). "[W]hen approaching a stopped car, a police officer is to some degree impaired in seeing whether a person therein may be drawing a gun." Commonwealth v. Fitzgibbons, 23 Mass. App. Ct. 301, 306 (1986). In a justified stop, such as the one at issue here, "officers may take reasonable precautions for their own safety, including 'ordering occupants out of a car for questioning.' " Commonwealth v. Moses, 408 Mass. 136, 142 (1990) (quotation omitted). We do not require officers "to gamble with their personal safety." Ibid. (quotation omitted).

Here, there are a number of factors that, viewed together, justified the exit order: (1) the recent string of armed robberies of Dunkin Donuts stores in Brockton; (2) the temporal and geographic proximity of the stop to the third Dunkin Donuts store robbery; (3) the similarity between the robber's blue motor vehicle and the running blue Honda in the defendant's driveway; (4) the defendant's movements in that vehicle; and (5) the defendant ignoring an officer's repeated commands to place his hands on the vehicle's dashboard. Because the exit order was justified due to safety concerns, the subsequent search of the vehicle for weapons in the immediate vicinity of the defendant was constitutional for the same reasons. See id. at 144 (officers "may include a search extending into the interior of an automobile, but they are 'confined to what is minimally necessary to learn whether the suspect is armed and to disarm him once the weapon is discovered' ") (quotation omitted).

Furthermore, there were sufficient exigent circumstances justifying the immediate, warrantless search of the motor vehicle, which the officers had probable cause to believe was involved in the armed robberies of the Dunkin Donuts stores. The officers had probable cause after they observed the defendant attempting to kick a black article of clothing under the front passenger seat and confirmed that the defendant was wearing identical clothing as the robber of the third Dunkin Donuts store robbery. Exigent circumstances arose from the following facts: the robber was armed at the time of the third Dunkin Donuts store robbery that occurred merely minutes before the stop; the defendant's uncooperative behavior; the black article of clothing in plain view inside the motor vehicle linking the defendant to the robberies; and the owner of the motor vehicle, the girl friend of the defendant's brother, could have moved the vehicle out of the jurisdiction or removed evidence from the vehicle before the officers could obtain a warrant. See Commonwealth v. Rand, 363 Mass. 554, 560 (1973) (exigent circumstances existed where "police were dealing with a vehicle [stopped on a public highway and] of unascertained ownership that could have been moved out of the jurisdiction at the owner's direction"); Commonwealth v. King, 389 Mass. 233, 238, 246-247 (1983) (exigent circumstances to search vehicle existed where armed driver had fired at troopers and fled, and defendant, a passenger in that vehicle, had been armed and was uncooperative); Commonwealth v. Scott, 29 Mass. App. Ct. 1004, 1007 (1990) (exigent circumstances existed where "[a]ny delay in determining ownership of the car could have had a detrimental effect on the ability of the police to apprehend the criminal while he could still be linked with his distinctive clothing").

Order allowing motion to suppress reversed.

      The appeal is interlocutory.

      Information regarding the panic button was not included in the motion judge's findings, however, it was uncontroverted at the motion hearing. See Watson, supra.

      The officers searched underneath the front passenger's seat, the vehicle's glove box, and the back pocket of the front passenger's seat.

      We reject the defendant's request that the case be remanded for further findings and rulings on the events following the officers' stop of the motor vehicle. Based on the adequacy of the facts found by the motion judge as well as the uncontroverted evidence from the hearing on the motion to suppress, there is no need to remand for further findings.


text:
    COMMMONWEALTH v. Joao L. FERNANDES.
    17-P-927
    Appeals Court of Massachusetts.
    Entered: June 29, 2018
    MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
   The defendant appeals his convictions of unlawful possession of a rifle and unlawful possession of ammunition. He argues that there was insufficient evidence to support the convictions, that the motion judge erred in denying postconviction discovery, and that the charges were improperly joined with the murder-related charges (see note 1, supra ). We affirm.

Background. We summarize the evidence, and the reasonable inferences therefrom, in the light most favorable to the Commonwealth. See Commonwealth v. Latimore, 378 Mass. 671, 676-677 (1979). On February 17, 2010, Manuel Rodrigues was shot and killed in Brockton. The previous day, the defendant had appeared at the home of his cousin, Nilton Darosa, asking for latex gloves, a ski mask, and a .45 caliber weapon. Several minutes later, the defendant returned and handed Darosa a rifle wrapped in a sheet, stating that he wanted to hide it in case the police "raided" his house.

Darosa had seen the rifle numerous times before. The first instance was in early 2010 at his mother's house. The rifle was hidden in the basement wall, and the defendant "pulled it out and showed it to [Darosa]." According to Darosa, the rifle "was supposed to be Jigga's [the defendant's nickname]." The defendant also told his friend, Joao Mendes, that he had an "AK-47," and Mendes saw the defendant carrying it on several occasions in 2009.

In August of 2010, the defendant and Darosa took the rifle to 44 Parker Street in Brockton, where the defendant lived in a private room on the second floor. Another of the defendant's cousins, Carlos Fernandes, lived in the third-floor apartment. The defendant put the rifle, wrapped in a sheet, on a closed-in porch in Carlos's apartment. The defendant also brought a backpack containing the same .45 caliber weapon that Darosa had given him in February and handed it to Carlos.

In October of 2010, police executed a search warrant on all three floors at 44 Parker Street. The defendant, who was in his room on the second floor, directed the officers to a backpack in his closet that contained latex gloves and a .45 caliber magazine. On the third floor, the officers discovered the rifle, still wrapped in a sheet on the closed-in porch, which was locked. The magazine contained eleven live rounds and held up to forty.

The defendant and Carlos were both arrested, taken to the police station, and placed in separate cells. As a detective passed by the defendant's cell, the defendant said to him, "[Y]ou can let Carlos go." When the detective asked why, the defendant replied, "[B]ecause the AK-47 was mine. [Carlos] had nothing to do with it."

Discussion. 1. Sufficiency of the evidence. We review the evidence in the light most favorable to the Commonwealth to determine whether any "rational trier of fact could have found the essential elements of the crimes beyond a reasonable doubt." Commonwealth v. Mendez, 476 Mass. 512, 523 (2017). The Commonwealth proceeded on a theory of constructive possession, which requires proof of the defendant's "knowledge coupled with the ability and intention to exercise dominion and control" over the contraband. Commonwealth v. Romero, 464 Mass. 648, 653 (2013), quoting from Commonwealth v. Brzezinski, 405 Mass. 401, 409 (1989). The only element at issue here is the defendant's ability to exercise dominion and control.

The defendant argues that the evidence was insufficient to establish this element because the rifle and ammunition were found in a locked room, located in a separate residence from his. He relies primarily on our decision in Commonwealth v. Lovering, 89 Mass. App. Ct. 76 (2016), where we held that ownership of a firearm was insufficient, by itself, to prove the defendant's ability to control the firearm. But the facts in Lovering are distinguishable from those here. In Lovering, the firearm was discovered by the defendant's wife in the apartment that they used to share; but by that time, the defendant had moved out and had not returned to the apartment for nearly a month. Id. at 77-78. In fact, there was a legal impediment to his doing so, as his wife had obtained an abuse prevention order requiring him to stay away. Id. at 77. There was also no evidence as to the defendant's whereabouts on the day his wife found the gun. Ibid.

In contrast, in the present case the defendant was apprehended in his room, one floor below where the rifle was found by the officers. The defendant personally transported the rifle to Carlos's apartment and placed it on the porch. He confessed that the rifle was his and not Carlos's. Given this evidence of proximity and ownership, and especially considering the defendant's familial relationship with Carlos, a reasonable juror could have found that, since Carlos allowed the defendant to store the rifle in his apartment, he likewise would have allowed the defendant access to remove it. See Commonwealth v. Gouse, 461 Mass. 787, 796 (2012) ("It is well established that constructive possession does not require exclusive control"). Thus, unlike in Lovering, the evidence was sufficient to prove that the defendant had the ability to exercise control over the rifle on the date he was charged.

2. Postconviction discovery. The defendant next argues that he made a prima facie showing of prosecutorial misconduct and therefore the motion judge (who was not the trial judge) should have allowed him to take postconviction discovery. To obtain postconviction discovery, the defendant "must make a sufficient showing that the discovery is reasonably likely to uncover evidence that might warrant granting a new trial." Commonwealth v. Morgan, 453 Mass. 54, 61-62 (2009), quoting from Commonwealth v. Daniels, 445 Mass. 392, 407 (2005). This requires that the defendant "make specific, not speculative or conclusory, allegations that the newly discovered evidence would have 'materially aid[ed] the defense against the pending charges,' ... and that this evidence if explored further through discovery, could yield evidence that might have 'played an important role in the jury's deliberations and conclusions....' " Id. at 62, quoting from Daniels, 445 Mass. at 407.

We review the denial of a motion for posttrial discovery only for abuse of discretion, see Commonwealth v. Camacho, 472 Mass. 587, 598 (2015), and we see none here. As the defendant puts it, "[t]he discovery sought was intended to determine what role, if any, the prosecution played in the reversal of [Darosa's] testimony" at the murder trial of Michael Goncalves. The motion judge found, however, that Darosa did not in fact reverse or recant his testimony, which is supported by the transcripts from Goncalves's trial. The defendant makes no argument that the judge erred in this respect. Instead, the defendant claims that the judge erred by not granting discovery on his allegations of prosecutorial misconduct committed in other cases, including the Goncalves case. But without a showing of misconduct in this case, the defendant failed to establish that such discovery would lead to evidence that would have materially aided his defense. The judge was therefore within his discretion to deny the motion.

3. Joinder. Finally, the defendant contends that the trial judge erred in denying his motion to sever the murder-related charges from the charges pertaining to possession of the rifle. Under Mass.R.Crim.P. 9(a)(3), 378 Mass. 859 (1979), related offenses "shall" be joined for trial unless the judge "determines that joinder is not in the best interests of justice." Offenses are "related" if "they are based on the same criminal conduct or episode or arise out of a course of criminal conduct or series of criminal episodes connected together or constituting parts of a single scheme or plan." Mass.R.Crim.P. 9(a)(1), 378 Mass. 859 (1979).

"The propriety of joinder is a matter for the trial judge's discretion." Commonwealth v. Sullivan, 436 Mass. 799, 803 (2002). To show an abuse of discretion, "[t]he defendant bears the burden of demonstrating that the offenses were unrelated, and that prejudice from joinder was so compelling that it prevented him from obtaining a fair trial." Commonwealth v. Gaynor, 443 Mass. 245, 260 (2005). " 'Prejudice requiring severance does not arise from the mere fact that the defendant's chances for acquittal of [one or more charges] might have been better' had the offenses been tried separately." Commonwealth v. Spray, 467 Mass. 456, 469 (2014), quoting from Commonwealth v. Gallison, 383 Mass. 659, 672 (1981). "Rather, the defendant must show that a particular tactic or right was foreclosed by the joinder." Ibid.

The defendant has not met his burden of showing that the offenses here were unrelated. As the trial judge found, the defendant's act of hiding the rifle at Darosa's house was evidence that he planned the murder, and the subsequent seizure of the rifle "demonstrate[d] that the defendant moved weapons, including the .45 [the alleged murder weapon] from various stash houses where they eventually ended up at 44 Parker Street." Inversely, the evidence about the murder lent credibility to Darosa's testimony that the defendant brought the rifle to Darosa's house in case his own house was "raided." As the offenses "[arose] out of a course of criminal conduct or series of criminal episodes connected together," Mass.R.Crim.P. 9(a)(1), we do not think it was beyond the range of reasonable alternatives for the judge to find them related. See Commonwealth v. Pillai, 445 Mass. 175, 183 (2005) (joinder proper where evidence of one offense would likely be admissible at trial of the other to corroborate victim's testimony); Commonwealth v. Hernandez, 473 Mass. 379, 394 (2015) (joinder proper where evidence of the offenses was "inextricably intertwined" [quotations omitted] ).

Furthermore, the defendant has failed to meet his burden of proving prejudice so compelling that it requires a new trial. The defendant does not articulate any "particular tactic or right [that] was foreclosed by the joinder." Spray, 467 Mass. at 469. Instead, he argues generally that the joinder created a risk that the jury would use evidence of the murder to infer his criminal propensity or bad character. But this does not satisfy the defendant's burden of showing specific prejudice. See ibid. (while firearms and murder charges were not "related offenses," defendant failed to demonstrate prejudice where he "claim[ed] only that joinder tended to show his bad character or propensity to commit a crime"). Also, we think that the evidence on the firearms charges was overwhelming, and the fact that the jury did not convict the defendant of the murder shows "discernment ... in assessing the evidence"-"a strong indication that a misjoinder of offenses has not resulted in any actual prejudice to the defendant." Ibid., quoting from Commonwealth v. Green, 52 Mass. App. Ct. 98, 103 (2001).

Judgments affirmed.

Order denying motion for new trial and postconviction discovery affirmed.

      The judge declared a mistrial on a charge of murder and three related firearms charges after the jury could not reach unanimous verdicts.

      The firearm was actually a semiautomatic rifle, but was referred to by witnesses at trial as an AK-47.

      To avoid confusion, we will refer to Carlos Fernandes by his first name.

      The .45 caliber weapon was not recovered.

      A trooper testified that "he believe[d] [the officers] were given a key by an individual at the residence."

      The defendant and Goncalves were both charged in connection with the shooting of Manuel Rodrigues, but their cases were severed before trial.

      We also note that the judge allowed defense counsel to review, under a protective order, one of the documents sought in the motion: a competency evaluation report of Darosa, in which he allegedly made statements that one or more prosecutors involved in the defendant's case instructed Darosa to lie at Goncalves's trial.


text:
    COMMONWEALTH v. Phillip E. CARRINGTON.
    17-P-51
    Appeals Court of Massachusetts.
    Entered: June 29, 2018.
    MEMORANDUM AND ORDER PURSUANT TO RULE 1:28
   After a jury trial on an indictment charging murder in the first degree, the defendant was convicted of murder in the second degree of Celestine Walker. He also appeals his conviction of violating a G. L. c. 209A abuse prevention order. On appeal, he claims his motions to dismiss and to suppress were improperly denied, improper bad acts were admitted in evidence, and that he was improperly denied a Bowden instruction. We affirm.

1. Motion to dismiss. The defendant claims that the motion judge should have allowed his motion to dismiss the indictments because the omission of Ashia Reese's prior statement to the police impaired the integrity of the grand jury. We disagree.

Reese told the police that she drove the victim and the defendant to the victim's apartment on the night of May 11, 2013, that she saw them walking towards the apartment where the victim lived, and that she did not actually see them go into the apartment. In the grand jury, Reese testified that she saw the defendant and the victim walk towards and enter the victim's building, but she did not see them enter the apartment itself.

Although the prosecutor did not present Reese's police interview to the grand jury, this did not constitute withholding exculpatory evidence. As the motion judge properly found, Reese's grand jury testimony was "consistent, in material respects, with her earlier statements to the police that she drove the victim and the [d]efendant to the victim's apartment on the night of May 11, 2013." Even though Reese told the police that she did not see the defendant and the victim go into the victim's apartment, and then told the grand jury that she saw them enter the building, this was consistent since she was responding to two different questions: the first being whether she "saw them actually get into the apartment," and the second being whether she saw them "go into the building." As the motion judge found, this is far from proof that the prosecutor knowingly or recklessly presented false or deceptive evidence to the grand jury, nor is there proof that this was presented for the purpose of obtaining an indictment. See Commonwealth v. Mayfield, 398 Mass. 615, 620-622 (1986).

Rather, the Commonwealth provided the grand jury with a compelling case that identified the defendant as the individual who killed the victim and provided sufficient probable cause to arrest the defendant for murder. See Commonwealth v. McCarthy, 385 Mass. 160, 163 (1982). The defendant has failed to show that the difference in Reese's statement probably influenced the grand jury's decision to indict. Indeed, it should be noted that the petit jury heard the audio recording of Reese's prior statements to the police, and they still found the defendant guilty beyond a reasonable doubt. See Commonwealth v. Trowbridge, 419 Mass. 750, 754 (1995).

2. Motion to suppress. The defendant also claims that the motion judge erred in denying his motion to suppress the allegedly coerced statements he made to the victim's children after they entered the apartment of his friend, Melva Page, on the day the victim's body was found. We disagree.

As an initial matter, the defendant's statements that "it was an accident" and that he had left the victim sleeping, were spontaneously made when the victim's children entered Page's apartment and prior to any physical contact. As the motion judge properly determined, "the [victim's] family's unwanted entry into Ms. Page's apartment is insufficient to show that the [d]efendant's statements were a product of physical or psychological coercion." Even if the defendant was surprised, that was not sufficient to establish that his will was overborne when he made his initial statements.

When the victim's children confronted the defendant, he repeated what the children had previously heard him state, i.e., that it had been an "accident." Even the defendant admits, this was an effort to "acquit himself," which the judge was free to conclude was evidence of a rational intellect and free will. See Commonwealth v. Vasquez, 387 Mass. 96, 100 (1982). While the victim's children did hit, kick, and punch the defendant while asking about their mother's whereabouts, the defendant merely repeated that "I didn't do it" and "I'm sorry, it was an accident." As the judge found, even if the defendant's mental state was affected by the physical violence, this does not automatically render his statements involuntary. See Commonwealth v. Selby, 420 Mass. 656, 664 (1995). Contrast Commonwealth v. Mahnke, 368 Mass. 662, 669-671 (1975). Also, there was no evidence that the defendant sustained any injuries during the incident, nor was there any evidence of him being in distress when the police arrived. In the end, the motion judge properly concluded that the defendant's statements were the "product of his own free will," and that he was not entitled to have them suppressed.

3. Prior bad acts. The defendant also claims that the judge erred by admitting in evidence that the defendant had choked the victim on two prior occasions because such testimony "was irrelevant to the extent it was cumulative of other evidence admitted to show motive," and "unduly prejudiced the defendant by leading the jury to believe he acted in conformity and killed the victim." We disagree.

Prior to the defendant's first trial, the trial judge held a voir dire on the Commonwealth's proposed admission of twelve prior bad acts. Four witnesses described seeing the defendant choke the victim on specific occasions or generally over a period of time. The judge exercised his discretion to admit only two of the choking incidents. Contrary to the defendant's claim, these two incidents were properly admitted to show the hostile nature of the defendant's relationship with the victim and his pattern of acting on that hostility. See Commonwealth v. Butler, 445 Mass. 568, 575 (2015) ; Commonwealth v. Oliveira, 74 Mass. App. Ct. 49, 54 (2009).

While four other witnesses testified about prior incidents of abuse, this did not render the choking incidents cumulative and overly prejudicial. No other witnesses testified to seeing the defendant choke the victim between 2011 and 2013. Furthermore, the cause of death in this case did not make the choking incidents either "unnecessary" or propensity evidence. The two choking incidents were relevant and admissible for an independent purpose (as discussed above), which was also relevant to the defendant's motive. Finally, the judge properly instructed the jury (on three occasions) on the proper use of the prior bad act evidence. There was no error or abuse of discretion.

4. Bowden instruction. Finally, the defendant claims that the trial judge erred by denying the defendant's request for a Bowden instruction regarding the alleged shortcomings of the police investigation. We disagree.

In Commonwealth v. Bowden, 379 Mass. 472, 485-486 (1980), the Supreme Judicial Court held that the "failure of the authorities to conduct certain tests or produce certain evidence was a permissible ground on which to build a defense." The error in Bowden was the judge's removal of the adequacy of the investigation evidence from the jury's consideration.

The defendant's claim that the same occurred here-in the absence of an instruction-has no basis in the record. In fact, the defendant was allowed to argue Bowden principles throughout trial. See Commonwealth v. DaSilva, 471 Mass. 71, 84 (2015). It was brought out in the defendant's opening statement, his closing argument, and through his examination of multiple witnesses. Under these circumstances, there was no error in the judge's refusal to instruct the jury on the defendant's Bowden defense. It was simply not required. See Commonwealth v. Daye, 411 Mass. 719, 740-741 (1992).

Judgments affirmed.

      The defendant filed a notice of appeal from this conviction, but he makes no argument on appeal as to why it is infirm. Therefore, the defendant's conviction of violating a 209A abuse prevention order is affirmed. See Mass.R.A.P. 16(a)(4), as amended, 367 Mass. 921 (1975).

      See Commonwealth v. Bowden, 379 Mass. 472, 485-486 (1980).


author: Per Curiam.

text:
    OLENTANGY LOCAL SCHOOLS BOARD OF EDUCATION, Appellant, v. DELAWARE COUNTY BOARD OF REVISION et al., Appellees.
    No. 2015-1192
    Supreme Court of Ohio.
    Submitted July 11, 2017 Decided November 2, 2017
    Rich & Gillis Law Group, L.L.C., Mark H. Gillis, and Kelley A. Gorry, Dublin, for appellant.
    Thompson Hine, L.L.P., and Thomas Wyatt Palmer, Columbus, for appellee Algoma Group.
   Per Curiam.

{¶ 1} This case returns to this court after we issued a remand order based on the parties' stipulation that the Board of Tax Appeals ("BTA") should address certain issues. See 141 Ohio St.3d 1462, 2015-Ohio-370, 24 N.E.3d 1180. On remand, the BTA addressed those issues and adopted the appraisal valuation of the owner's appraiser for the second time, and appellant, Olentangy Local Schools Board of Education ("BOE"), has again appealed. According to the BOE, the law required that the property be valued as if unencumbered, pursuant to Muirfield Assn., Inc. v. Franklin Cty. Bd. of Revision , 73 Ohio St.3d 710, 654 N.E.2d 110 (1995). The BOE also argues that the BTA's reliance on the appraisal is unsupported by the record, and it calls for the reinstatement of the auditor's valuation. We disagree, and we therefore affirm.

FACTUAL BACKGROUND

{¶ 2} At issue is the tax-year-2011 value of a vacant 22.27-acre parcel that is zoned "planned residential district" and is subject to a homeowners' association agreement. The agreement creates easement rights in a "common access driveway" for neighboring parcels as well as an easement to enjoy a pond. The easements encompass slightly more than half of the parcel.

{¶ 3} The Delaware County auditor originally valued the property at $654,100, and the property owner, appellee Algoma Group, filed a complaint with the Delaware County Board of Revision ("BOR"). Algoma presented an appraisal by Samuel D. Koon, a member of the Appraisal Institute, who determined a value of $26,000 per acre, totaling $580,000 (after rounding) for the 22.27 acres. The BOR also certified as part of the record transmitted to the BTA a study by the county's own appraiser indicating a total value of $530,000 (approximately $24,000 per acre).

{¶ 4} The BOR ordered a reduction to $580,000 after adopting Koon's appraisal, and the BOE appealed to the BTA, which affirmed the adoption of the appraisal. Pursuant to this court's remand order, the BTA addressed (1) whether an appraisal valuing the property as encumbered for tax year 2011 can be considered competent and probative evidence and (2) whether one of the tax commissioner's rules requires real property to be valued as encumbered for tax year 2011. BTA No. 2012-4555, 2015 Ohio Tax LEXIS 2802, *1-2 (June 22, 2015). Taking the second issue first, the BTA held that Ohio Adm.Code 5703-25-11(B) did not require real property to be valued as encumbered for tax year 2011. Id. at *7-8, quoting Alliance Towers, Ltd. v. Stark Cty. Bd. of Revision , 37 Ohio St.3d 16, 523 N.E.2d 826 (1988), paragraph one of the syllabus (for " 'real property tax purposes, the fee simple estate is to be valued as if it were unencumbered' "). Regarding the first issue, the BTA determined that Koon's appraisal report "properly supports his ultimate opinion of value, even if the deed restrictions on the subject property are not considered." Id. at *8. The BTA identified aspects of the appraisal that led it to accord the appraisal probative force.

{¶ 5} On appeal, the BOE advances three propositions of law:

1. Algoma's appraiser valued the subject property as encumbered by private, voluntary deed restrictions in violation of Muirfield .
2. The second BTA decision is not supported by the record.
3. Algoma did not affirmatively negate the auditor's original valuation.

ANALYSIS

{¶ 6} The BTA valued the property at issue by adopting an appraisal valuation offered on behalf of the property owner. The BOE challenges the propriety of relying on that appraisal, but R.C. 5717.04 requires us to affirm the BTA's decision if it is reasonable and lawful, and it is well settled that the BTA, as the finder of fact, possesses wide discretion in determining the weight to be accorded to appraisal evidence, EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision , 106 Ohio St.3d 1, 2005-Ohio-3096, 829 N.E.2d 686, ¶ 9. {¶ 7} Our deferential standard of review disposes of the BOE's second proposition of law, which sets forth reasons why the BOE deems Koon's appraisal to be deficient. We leave to the discretion of the BTA the appropriate weight to accord to the appraisal, id. at ¶ 14, and we see no evidence of an arbitrary or unconscionable attitude in the BTA's decision, see Renacci v. Testa , 148 Ohio St.3d 470, 2016-Ohio-3394, 71 N.E.3d 962, ¶ 32 ("Abuse of discretion connotes an unreasonable, arbitrary, or unconscionable attitude"). The BOE offers no evidence of an abuse of discretion but instead proposes grounds for this court to "reevaluate the evidence considered by the BTA"; because we do not sit as "a super BTA or a trier of fact de novo," we decline to second-guess the finding of fact made below. EOP-BP Tower at ¶ 17.

{¶ 8} Under its first proposition of law, the BOE argues that Koon's appraisal is not, as a matter of law, competent or probative because it does not value the property as if unencumbered by the deed restrictions. The authority the BOE cited for this proposition is Muirfield , 73 Ohio St.3d 710, 654 N.E.2d 110.

{¶ 9} In Muirfield , we addressed the valuation of a recreational parcel that had been part of a residential development. The parcel was owned by the homeowners' association-made up of all homeowners in the development as members by virtue of their ownership of their own realty-and the recreational parcel was subject to rights of those homeowners embodied in deed restrictions. The county auditor determined a substantial value for the property, and the homeowners' association complained, asserting that the property was essentially unsaleable and therefore had negligible value. The association supported that point of view with an appraisal prepared by its expert. The BTA agreed, but we reversed and remanded the case to the BTA. We held that in valuing the parcel, the homeowners' easement and contractual rights should be disregarded. We specified that upon remand, the BTA should value the property as an unencumbered fee-simple estate. Id. at 712, 654 N.E.2d 110.

{¶ 10} This case factually differs from Muirfield . In Muirfield , the parcel was owned by the homeowners' association and was entirely subject to the association's agreement and easement. The property at issue here, in contrast, is only about half encumbered. That means fully developable land remains part of the parcel along with the portion subject to easements, and Koon appraised the property accordingly.

{¶ 11} Contrasting Koon's statement of the property's highest and best use with that of the owner's appraiser in Muirfield makes the point. In Muirfield , the owner's appraiser stated the highest and best use in terms of the "only purpose of the common areas [being] to provide aesthetic and recreational benefits to the development's private property owners." In this case, appraiser Koon determined the highest and best use to be "holding for future development of the site for single family residential use."

{¶ 12} The difference is reflected in Koon's value opinion. Koon did not assign a purely nominal value to the parcel on the theory that it was unsaleable, as the owner's appraiser in Muirfield did. Instead, Koon assigned a substantial value of $26,000 per acre based on a study of six comparable sales. Moreover, Koon's valuation did not fall into the low part of the range of his six comparables. In fact, Koon's opinion of value for the subject property lies just below the median of the six comparables.

{¶ 13} For the foregoing reasons, we reject the assertion that Muirfield imposed a legal bar on the BTA's consideration of and reliance upon Koon's appraisal.

{¶ 14} Additionally, the BOE's citation of Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision , 139 Ohio St.3d 212, 2014-Ohio-1940, 11 N.E.3d 222, is unavailing. That case involved valuations of condominiums, and the owner's appraisal violated a statute by valuing the individual units together as an economic unit in terms of their investment value rather than as individually saleable units. We see no analogy to this case.

{¶ 15} Under its second proposition of law, the BOE states an objection that is relevant here: that Koon's appraisal report does not specifically quantify the amount of downward "site utility" adjustment that related to the encumbrances. A review of the appraisal as a whole, however, raises the inference that the adjustment was small, especially in light of the value of Koon's determination vis-à-vis the values of his six comparables.

{¶ 16} Finally, the BOE's third proposition of law, which contends that Koon's appraisal does not negate the auditor's value, is a moot point in light of our holding that the BTA reasonably and lawfully relied upon that appraisal as constituting a proper determination of the property's value.

CONCLUSION

{¶ 17} Because the BTA acted reasonably and lawfully when it relied on Koon's appraisal, we affirm the decision of the BTA.

Decision affirmed.

O'Connor, C.J., and O'Donnell, Kennedy, French, O'Neill, Fischer, and DeWine, JJ., concur.

      See Colonial Village, Ltd. v. Washington Cty. Bd. of Revision , 123 Ohio St.3d 268, 2009-Ohio-4975, 915 N.E.2d 1196, ¶ 3, fn. 1 (although the BTA's order following a mandate of the court is usually not a final determination that can itself be appealed, "we have not hesitated to entertain an appeal from a later BTA decision if that appeal contests additional findings and conclusions that the BTA rendered pursuant to the remand order").


text:
    LAFARGE NORTH AMERICA, INC., Appellant, v. TESTA, Tax Commr., Appellee.
    No. 2016-1074
    Supreme Court of Ohio.
    Submitted April 10, 2018 Decided May 31, 2018
    Bingham Greenebaum Doll, L.L.P., Cincinnati, and Mark A. Loyd, for appellant.
    Michael DeWine, Attorney General, and Daniel G. Kim and Raina Nahra Boulos, Assistant Attorneys General, for appellee.
   Per Curiam.

{¶ 1} This case involves slag, a by-product that separates from molten ore during steelmaking. Once separated from the ore, molten slag cools and solidifies into a stony substance. From there, it may be crushed into different sizes and used in construction applications, often as a base for roads.

{¶ 2} The Ohio operations of appellant, Lafarge North America, Inc., include manufacturing pelletized slag at a facility in Lordstown. At issue here is whether the Ohio use tax applies to Lafarge's purchases of fuel and repair parts for equipment used to break up and transport solidified slag from what the parties refer to as the "slag mountain," a large slag mass that numerous steel mills created over several decades. Whether the tax applies depends on whether the activity is part of Lafarge's "manufacturing operation" under R.C. 5739.02(B)(42)(g).

{¶ 3} After an audit, the Ohio Department of Taxation assessed the use tax, interest, and a penalty against Lafarge for purchases for the equipment in question. Lafarge challenged the assessment, and appellee, the tax commissioner, determined that the breaking up and transporting of slag from the slag mountain precedes Lafarge's manufacturing operation. The commissioner concluded that Lafarge's manufacturing operation does not begin until the slag reaches equipment that screens and sorts it by size. The Board of Tax Appeals ("BTA") affirmed the commissioner's final determination.

{¶ 4} Lafarge appealed to this court. Because the BTA misapplied the law to the undisputed facts, we reverse the BTA's decision and remand the case to the BTA for further proceedings consistent with this opinion.

Facts and Procedural History

{¶ 5} In 1926, steel mills near Youngstown began dumping slag at a single waste site. Over the years, the discarded slag accumulated, forming the slag mountain. From this mass, Lafarge manufactures various sizes of pelletized slag, which it sells for use in road construction.

{¶ 6} Lafarge's manager of the Lordstown facility, Timothy Wirtz, explained in his testimony before the BTA that the slag mountain does not consist of "manageable size pieces" that can be easily removed for processing. So to transform the slag mountain into marketable slag, Lafarge undertakes three basic steps that involve (1) a bulldozer, (2) front-end loaders and dump trucks, and (3) a screening plant.

{¶ 7} The bulldozer, fitted with a large steel tooth at its rear, rips the slag in a grid pattern, breaking up a section of the slag mountain. The bulldozer then drives back and forth over the broken slag, crushing it into smaller pieces. Next, the bulldozer pushes the broken slag to a "surge pile." From there, front-end loaders transfer the slag to dump trucks that take the material to a screening plant, also at the Lordstown facility. There, the material is placed into a "grizzly" or "vibratory" feeder that separates oversized pieces, removes pieces of iron, and funnels the remaining slag to a conveyor belt that leads to screens that sort the material by size. Once the slag is screened and sorted, the process is finished and the product is ready to be sold. The finished product varies in size from as large as eight inches in diameter to as small as dust.

{¶ 8} The Department of Taxation audited all of Lafarge's Ohio operations, covering the period April 2009 through March 2013. As a result of the audit, the department assessed a use tax of $656,871.14, plus a 15 percent penalty of $98,530.28 and interest totaling $59,895.12. Lafarge paid a substantial portion of these amounts ($698,979.15 in total) but challenged the assessment, interest, and penalty associated with its Lordstown slag-manufacturing operation. The department had found that the bulldozer, two front-end loaders, and three dump trucks Lafarge uses to remove slag from the slag mountain and transport it to the screening plant are not part of the manufacturing operation and that purchases of fuel and repair parts for that equipment are therefore taxable. Lafarge disagreed, claiming that under R.C. 5739.02(B)(42)(g), the use tax does not apply, because the equipment is used to manufacture slag.

{¶ 9} The tax commissioner denied Lafarge's objection, finding that the "items at issue are used to excavate slag from the slag pile prior to the start of the manufacturing process. This is analogous to a manufacturer removing a raw material from initial storage. Equipment used to move raw materials prior to the start of the manufacturing process is taxable." The commissioner also denied Lafarge's request for abatement of the penalty.

{¶ 10} Lafarge appealed to the BTA, which found that "the cutting and crushing of the slag, and the slag's transport to the mill, are not part of the manufacturing process." BTA No. 2015-763, 2016 WL 3469366, *4 (June 21, 2016). Continuing, the BTA stated that "Lafarge is simply moving raw material from a pre-production point of storage, not 'continuing' a manufacturing operation. * * * We agree with the commissioner that the time at which the slag is committed to 'processing,'

and manufacturing begins, is * * * when the slag pieces arrive at the mill." Id. The BTA thus affirmed the tax assessment and the penalty.

{¶ 11} Lafarge appealed to this court as a matter of right.

Analysis

When the manufacturing operation begins

{¶ 12} Ohio's use tax does not apply to the purchase of an item intended for use "primarily in a manufacturing operation to produce tangible personal property for sale." R.C. 5739.02(B)(42)(g) ; see also R.C. 5741.02(C)(2). The tax commissioner concedes that Lafarge's production of pelletized slag is a manufacturing operation within the meaning of R.C. 5739.02(B)(42)(g), but he rejects Lafarge's argument as to when its manufacturing operation begins. He says that Lafarge's activities at the slag mountain involve merely the excavation and transportation of raw material from storage and that Lafarge's manufacturing operation does not begin until the slag reaches the screening plant. Lafarge disagrees, emphasizing that it breaks up the slag to marketable sizes almost entirely at the slag mountain-before the slag reaches the screening plant.

{¶ 13} We must determine whether the BTA's decision is "reasonable and lawful." R.C. 5717.04. In doing so, we must defer to the BTA's factual findings, so long as they are supported by " 'reliable and probative' " evidence in the record.

Satullo v. Wilkins , 111 Ohio St.3d 399, 2006-Ohio-5856, 856 N.E.2d 954, ¶ 14, quoting Am. Natl. Can Co. v. Tracy , 72 Ohio St.3d 150, 152, 648 N.E.2d 483 (1995). But we must review legal issues de novo. Crown Communication, Inc. v. Testa , 136 Ohio St.3d 209, 2013-Ohio-3126, 992 N.E.2d 1135, ¶ 16. Because the issue presented involves an application of the law to largely undisputed facts, we review the issue de novo. Cincinnati v. Testa , 143 Ohio St.3d 371, 2015-Ohio-1775, 38 N.E.3d 847, ¶ 15.

{¶ 14} The use tax does not apply to a purchase when "the purpose of the purchaser is * * * [t]o use the thing transferred, as described in [R.C.] 5739.011 * * *, primarily in a manufacturing operation to produce tangible personal property for sale." R.C. 5739.02(B)(42)(g). The tax commissioner does not dispute that "thing transferred" includes fuel and repair parts for equipment used in a manufacturing operation. See R.C. 5739.011(B)(1), (2), and (11) ; Ohio Adm.Code 5703-9-21(C)(5). "Manufacturing operation" is defined in R.C. 5739.01(S) and Ohio Adm.Code 5703-9-21(B)(1).

{¶ 15} R.C. 5739.01(S) defines "manufacturing operation" as "a process in which materials are changed, converted, or transformed into a different state or form from which they previously existed and includes refining materials, assembling parts, and preparing raw materials and parts by mixing, measuring, blending, or otherwise committing such materials or parts to the manufacturing process." The operative language of this definition is its first clause-"a process in which materials are changed, converted, or transformed into a different state or form from which they previously existed." The second clause, which lists activities "include[d]" within the primary definition, merely illustrates types of actions that constitute a manufacturing operation. See Trans Rail Am., Inc. v. Enyeart , 123 Ohio St.3d 1, 2009-Ohio-3624, 913 N.E.2d 948, ¶ 28.

{¶ 16} After repeating the language of R.C. 5739.01(S), Ohio Adm.Code 5703-9-21(B)(1) further defines when a manufacturing operation begins:

The manufacturing operation begins when the raw materials or parts are committed to the manufacturing process. If the raw materials or parts are stored after being received at the manufacturing facility, the raw materials or parts are not committed until after they are removed from such initial storage. The point of commitment is where the materials handling from such initial storage has ceased or the point where the materials or parts have been mixed, measured, blended, heated, cleaned, or otherwise treated or prepared for the manufacturing process, whichever first occurs. If the raw materials or parts are not stored, they are committed at the point where materials handling from the place of receipt ceases or where they are mixed, measured, blended, heated, cleaned, or otherwise treated or prepared for the manufacturing process, whichever first occurs. The commitment of the materials or parts need not be irrevocable, but they must have reached the point, after materials handling from initial storage has ceased, where they normally will be utilized within a short period of time. The point of commitment frequently will be different for particular materials and parts, since they are introduced at different times in the manufacturing operation.
Things used in any activity, including movement or storage of the materials of parts before they are committed are taxable.

Here, the operative language is: "The manufacturing operation begins when the raw materials or parts are committed to the manufacturing process." What follows that sentence is conditional; whether the text following that sentence is applicable to a manufacturing operation depends on the nature of the operation and whether the material is "stored after being received."

{¶ 17} Thus, to determine whether Lafarge's Lordstown slag-manufacturing operation begins at the slag mountain, we must answer two questions: When is the slag "changed, converted, or transformed into a different state or form from which [it] previously existed"? And when is the slag "committed to the manufacturing process"?

{¶ 18} To answer these questions, it is important to understand that the object of Lafarge's manufacturing operation is to reduce the slag mountain to smaller, marketable pieces of slag. To get there, Lafarge simply breaks up the material and crushes it. Its process never involves mixing or blending in other materials, adding chemicals, heating, cooling, or otherwise treating the slag.

{¶ 19} The BTA found that "the cutting and crushing of the slag, and the slag's transport to the mill [i.e., the screening plant], are not part of the manufacturing process." 2016 WL 3469366 at *4. It characterized Lafarge's activity before the slag arrives at the screening plant as "simply moving raw material from a pre-production point of storage, not 'continuing' a manufacturing operation." Id. In defense of these findings, the tax commissioner points to evidence showing that Lafarge's activity at the slag mountain facilitates transportation of the slag to the screening plant. He emphasizes Wirtz's testimony that the bulldozer breaks up the slag "a little bit" into "manageable size pieces" that can be picked up by a front-end loader. Wirtz also characterized the slag mountain as "a storage pile." This evidence, the tax commissioner argues, shows that Lafarge uses the equipment at issue only to transport raw material to the actual manufacturing operation.

{¶ 20} But when viewed as a whole, the evidence shows that the equipment is not merely facilitating the transportation of slag from "initial storage" to the screening plant. It is undisputed that after separating slag from the mountain, the bulldozer drives over it, crushing it in the process. To be sure, this action allows the front-end loaders to pick up the slag for transport, but the evidence does not support the conclusion that that is the bulldozer's only purpose.

{¶ 21} No evidence shows that the slag undergoes any significant transformation in form once it reaches the screening plant. To the contrary, Wirtz explained that the slag has "already been broken up" by the time the bulldozer has pushed it into a surge pile. When the slag reaches the screening plant, the vibratory feeder removes slag pieces that are "still too oversized to fit through the mill," and then it is mostly just a matter of sorting by size.

{¶ 22} The undisputed evidence shows that once it arrives at the screening plant, the slag does not undergo any additional material "change[ ], conver[sion], or transform[ation] into a different state or form from which [it] previously existed," R.C. 5739.01(S). That is because the real change has already taken place at the slag mountain. It follows that the act of cutting slag from the mountain "commit[s] [the material] to the manufacturing process," Ohio Adm.Code 5703-9-21(B)(1). Once it has begun, the manufacturing operation continues until Lafarge has completed its manufacture of pelletized slag. See R.C. 5739.011(A)(6) (defining "continuous manufacturing operation" as "the process in which raw materials or components are moved through the steps whereby manufacturing occurs"). Therefore, the manufacturing operation begins once Lafarge cuts slag from the mountain, and the manufacturing operation continues as the bulldozer crushes the material, the front-end loaders place it in dump trucks, and the trucks transport it to the screening plant.

{¶ 23} The only remaining question is whether the fuel and repair parts Lafarge purchased for the equipment at issue are used "primarily" in Lafarge's manufacturing operation. See R.C. 5739.02(B)(42)(g). Regarding the primary-use question, R.C. 5739.011(D) provides that

if the "thing transferred" is a machine used by a manufacturer in both a taxable and an exempt manner, it shall be totally taxable or totally exempt from taxation based upon its quantified primary use. If the "things transferred" are fungibles, they shall be taxed based upon the proportion of the fungibles used in a taxable manner.

{¶ 24} The main issue here is the extent to which the fuel and repair parts are used in slag manufacturing, as opposed to a landfill operation that Lafarge also operates at the same site. On remand, with the guidance of R.C. 5739.011(D), the BTA shall determine on the existing record the extent to which the use tax applies to the fuel and repair-part purchases that Lafarge made for the six pieces of equipment it uses for slag manufacturing at its Lordstown facility.

The penalty

{¶ 25} Lafarge also argues that we should abate the 15 percent penalty imposed by the Department of Taxation. Lafarge will not owe penalty attributable to any portion of the tax that was erroneously assessed. Therefore, on remand, the BTA also shall determine the extent to which the previously assessed penalty must be abated.

Conclusion

{¶ 26} For the foregoing reasons, we reverse the BTA's decision and remand the case to the BTA for further proceedings consistent with this opinion.

Decision reversed and cause remanded.

O'Connor, C.J., and O'Donnell, Kennedy, French, Fischer, DeWine, and Degenaro, JJ., concur.


text:
    CLEVELAND METROPOLITAN BAR ASSOCIATION v. GAY.
    No. 2017-1413
    Supreme Court of Ohio.
    Submitted November 21, 2017 Decided June 7, 2018
    Heather M. Zirke and Kari L. Burns, Bar Counsel, for relator.
    Tyrone E. Reed Co., L.P.A., and Tyrone E. Reed, Cleveland, for respondent.
   Per Curiam.

{¶ 1} Respondent, James Arthur Gay, of Cleveland, Ohio, Attorney Registration No. 0025646, was admitted to the practice of law in Ohio in 1979. We indefinitely suspended him from the practice of law in 1994 for misappropriating funds from and failing to file an inventory of his father's probate estate, accepting fees from clients without performing the contracted work, and failing to cooperate in the ensuing disciplinary investigation. Cleveland Bar Assn. v. Gay , 68 Ohio St.3d 190, 625 N.E.2d 593 (1994). We reinstated his license to practice law on February 27, 2002. Cleveland Bar Assn. v. Gay , 94 Ohio St.3d 404, 763 N.E.2d 585 (2002).

{¶ 2} In a four-count complaint filed in February 2017, relator, Cleveland Metropolitan Bar Association, alleged that Gay violated the Rules of Professional Conduct by mismanaging his Interest on Lawyers' Trust Account ("IOLTA") on several occasions and by making a personal loan to a client.

{¶ 3} Based on the parties' stipulations, a panel of the Board of Professional Conduct found by clear and convincing evidence that Gay committed the charged rule violations and recommended that he be suspended from the practice of law for one year, with the suspension fully stayed on conditions. The board adopted the panel's report and further recommends that the costs of the proceedings be assessed to Gay. We adopt the board's report in its entirety and suspend Gay from the practice of law for one year, with the suspension fully stayed on conditions.

Misconduct

Count I-IOLTA Overdraft

{¶ 4} On July 21, 2015, Gay disbursed settlement proceeds to two of his clients, Carmen Graham and Breonna Crawford, from his IOLTA. He also disbursed $5,747.56 in settlement proceeds to pay his fees and to reimburse himself for expenses he had advanced to his clients. On July 28, 2015, Gay directly withdrew $5,747.56 from his IOLTA for the same fees and expenses, causing a negative balance in the account. The next day, he became aware of the overdraft and returned the funds that he had mistakenly withdrawn. In response to a letter of inquiry from relator, Gay acknowledged that he had mistakenly paid himself twice. The parties agreed, and the board found by clear and convincing evidence that Gay's conduct violated Prof.Cond.R. 1.15(a) (requiring client funds to be properly safeguarded in a client trust account).

Count II-Failure to Properly Manage IOLTA

{¶ 5} Gay admits that he did not maintain separate ledger sheets for his clients. He also admits that he did not consistently maintain and have his clients sign disbursement sheets and closing statements. The parties agreed and the board found that Gay's conduct violated Prof.Cond.R. 1.5(c)(2) (requiring a lawyer to furnish closing statements that are signed by both the client and the lawyer in contingent-fee cases), 1.15(a)(2) (requiring a lawyer to maintain a record for each client setting forth the date, amount, payee, and purpose of each disbursement made on behalf of each client), and 1.15(a)(5) (requiring a lawyer to perform and retain a monthly reconciliation of the funds held in the lawyer's client trust account).

Count III-Making a Personal Loan to a Client

{¶ 6} Gay admits that he made a personal loan of $300 to a client, Carmen Graham, and repaid himself from the settlement proceeds of Graham's personal-injury claim. The parties agreed and the board found that Gay's conduct violated Prof.Cond.R. 1.8(e) (prohibiting a lawyer from providing financial assistance to a client in connection with pending or contemplated litigation).

Count IV-Failure to Properly Manage IOLTA

{¶ 7} Gay admits that prior to depositing the settlement proceeds of clients Vanessa Cannon and Layvonne Washington in two separate cases, he withdrew funds from his IOLTA to pay himself for the work he did in those cases. The parties agreed and the board found that Gay's conduct violated Prof.Cond.R. 1.15(a).

{¶ 8} We agree with the board's findings of misconduct.

Sanction

{¶ 9} When imposing sanctions for attorney misconduct, we consider several relevant factors, including the ethical duties that the lawyer violated, the aggravating and mitigating factors listed in Gov.Bar R. V(13), and the sanctions imposed in similar cases.

{¶ 10} The only aggravating factor found by the board is that Gay has a prior disciplinary record. See Gov.Bar R. V(13)(B)(1).

{¶ 11} The panel found the following mitigating factors: although alcohol and depression were involved in Gay's first disciplinary case, Gay has maintained his sobriety such that alcohol was not a factor in this case; Gay had been practicing law for 38 years; Gay did not have a dishonest or selfish motive; Gay's misconduct was not intentional but instead was the result of sloppiness and bad recordkeeping; Gay made a full and free disclosure to relator and has had a cooperative attitude toward these proceedings; no clients were harmed as a result of Gay's failure to deposit settlement checks prior to withdrawing funds or his failure to keep appropriate IOLTA records; Gay has taken appropriate action, with the assistance of relator, to educate himself in order to prevent further errors with his IOLTA; Gay now maintains a general ledger and client ledgers; he understands that he must deposit settlement funds prior to withdrawing his fees or disbursing funds to clients; he understands that he must perform monthly reconciliations of his IOLTA; he now has clients sign disbursement statements; and he understands that he is not permitted to make loans to clients and has averred that he will not make loans to clients in the future. See Gov.Bar R. V(13)(A) and (C)(2) through (4).

{¶ 12} The board recommends that we impose a fully stayed one-year suspension on conditions for Gay's misconduct. In support of that recommendation, the board examined cases in which we imposed one- or two-year suspensions partially or fully stayed on conditions for similar misconduct. See Toledo Bar Assn. v. Royer , 133 Ohio St.3d 545, 2012-Ohio-5147, 979 N.E.2d 329 (imposing a one-year suspension, stayed on conditions, including a two-year period of monitored probation, on an attorney for misconduct that was the result of poor time management and poor recordkeeping; the attorney had no prior disciplinary record and did not have a dishonest motive); Akron Bar Assn. v. Tomer , 138 Ohio St.3d 302, 2013-Ohio-5494, 6 N.E.3d 1133 (imposing a two-year suspension, stayed on conditions, including a two-year period of monitored probation, on an attorney for mismanagement of her IOLTA and submitting false evidence during the disciplinary investigation; although the attorney had no prior disciplinary record, she engaged in dishonesty during the disciplinary investigation); Disciplinary Counsel v. Thompson , 139 Ohio St.3d 452, 2014-Ohio-2482, 12 N.E.3d 1203 (imposing a two-year suspension with 18 months stayed on conditions, including an 18-month period of monitored probation, on an attorney for mismanaging and failing to maintain appropriate accounting records for his client trust account; the attorney had one prior instance of discipline for similar misconduct).

{¶ 13} We agree with the board that Gay's misconduct is less severe than the misconduct in any of the cases cited above. Here, it was Gay's poor bookkeeping that caused his violations. Upon discovery of his errors, Gay immediately corrected them and cooperated with relator's investigation.

{¶ 14} Having independently reviewed the record, we adopt the board's findings of fact and misconduct and agree that a one-year suspension, stayed in its entirety on the conditions recommended by the board, is the appropriate sanction in this case.

{¶ 15} Accordingly, we suspend James Arthur Gay from the practice of law for one year, with the suspension fully stayed on the conditions that he (1) serve a two-year term of monitored probation that includes oversight of his office management and IOLTA recordkeeping procedures, (2) complete a minimum of six hours of continuing legal education, in addition to the requirements of Gov.Bar R. X, in law-practice management, including at least one hour of IOLTA instruction, and (3) engage in no further misconduct. If he fails to comply with any condition of the stay, the stay will be lifted and he will serve the full one-year suspension. Costs are taxed to Gay.

Judgment accordingly.

O'Connor, C.J., and O'Donnell, Kennedy, French, Fischer, DeWine, JJ., concur.

Degenaro, J., not participating.


text:
    FAIRFIELD TOWNSHIP BOARD OF TRUSTEES, Appellant, v. TESTA, Tax Commr., et al., Appellees.
    No. 2016-0995
    Supreme Court of Ohio.
    Submitted April 10, 2018 Decided June 21, 2018.
    Schroeder, Maundrell, Barbiere & Powers, Lawrence E. Barbiere, and John W. Hust, Mason, for appellant.
    Michael DeWine, Attorney General, and Christine T. Mesirow and Kody R. Teaford, Assistant Attorneys General, for appellee Tax Commissioner.
   Per Curiam.

{¶ 1} In this appeal, appellee tax commissioner defends the property owner's entitlement to its exemption from taxation as a house of public worship pursuant to R.C. 5709.07(A)(2). Appellant, Fairfield Township Board of Trustees, filed a complaint against the continued exemption pursuant to R.C. 5715.27(E). The township claims that by granting and continuing the public-worship exemption, the tax commissioner unlawfully relieved the church of its payment obligations as the owner of property subject to a recorded covenant. The covenant relates to a tax-increment-financing ("TIF") agreement entered into between the township and a previous owner of the church property.

{¶ 2} The tax commissioner found that R.C. 5709.911 subordinated the property's original TIF exemption to the public-worship exemption, and therefore he rejected the township's argument. The Board of Tax Appeals ("BTA") affirmed.

{¶ 3} The township has appealed.

I. Factual Background

A. The TIF Agreement

{¶ 4} Tax-increment financing "is a method of promoting and financing the development of real property by directing ' ''all or a portion of the increased property tax revenue that may result" ' from the development toward defraying the cost of improvements that are part of the development." Kohl's Illinois, Inc. v. Marion Cty. Bd. of Revision , 140 Ohio St.3d 522, 2014-Ohio-4353, 20 N.E.3d 711, ¶ 3, quoting Princeton City School Dist. Bd. of Edn. v. Zaino , 94 Ohio St.3d 66, 68, 760 N.E.2d 375 (2002), quoting Meck & Pearlman, Ohio Planning and Zoning Law , Section T 15.29, at 704 (2000). In this case, the "development" involved "public infrastructure improvements" that included road and bridge construction, signalization of an intersection, and the extension of public utilities. See R.C. 5709.73 ; R.C. 5709.40(A)(7).

{¶ 5} Once a TIF agreement is in place, any increase in the assessed value of the designated parcels is subject, in whole or in part, to (1) an exemption from taxation and (2) a concomitant obligation of the property owner to make payments "in lieu of tax" into a special fund used to pay for the development-such payments are referred to as "service payments." R.C. 5709.73(B), (D) ; R.C. 5709.74. In this case, Fairfield Township obtained the agreement of the Fairfield City School District and the Butler County Joint Vocational School District to exempt 100 percent of the increased assessed value and extend the TIF agreement over a 20-year period in consideration of an agreement to compensate those districts with a portion of the payments to be made in lieu of taxes.

{¶ 6} In addition to the township's TIF resolution and the TIF Compensation Agreement between the township and the school districts, the record contains the "Developer's Service Agreement," to which there were several parties: (1) the township, (2) the county, (3) the developer, DPR Properties, Inc., and (4) a lending bank. The agreement sets forth the parties' obligations relating to the township's TIF zone. Among other things, DPR consented to the TIF agreement and agreed to apply for exemption of the designated property from real-estate taxes. DPR committed itself and its assigns to making service payments in lieu of taxes into the township's "tax increment equivalent fund."

{¶ 7} The term of the TIF agreement is 20 years, unless the bonds and obligations are paid off earlier. Thus, the obligation to make service payments extends from 1998 through 2018. The agreement states that it must be recorded and referenced in any deed transferring property owned by DPR. It also provides that the service-payment obligations "shall be covenants running with the land and shall be enforceable by Township and County, against DPR and all successors and assigns of DPR."

B. The Parcel at Issue

{¶ 8} The parties stipulated at the BTA that DPR had conveyed the parcel at issue to W.M.M. Partnership on September 14, 1999. The property was then used as an insurance office. On December 13, 2011, W.M.M. conveyed the then-vacant property to Tri-City Church of God.

C. Course of Proceedings

{¶ 9} On September 3, 2013, the church filed an application to exempt the property as a house of public worship. The tax commissioner granted the exemption on December 9, 2013, finding that under R.C. 5709.911, the public-worship exemption was superior to the previously approved TIF exemption. The township's efforts to intervene in the church's exemption case were rebuffed for lack of standing.

{¶ 10} On December 11, 2014, the township filed a complaint against the continued exemption of the real property as a house of public worship. The tax commissioner's final determination denied the complaint and retained the exempt status of the property on April 13, 2015. The denial of the township's complaint was based on the same rationale as the commissioner's grant of exemption to the church: the commissioner again found that the TIF exemption was subordinated to the public-worship exemption by R.C. 5709.911.

{¶ 11} The township appealed to the BTA. Relying on the record created below it and the parties' stipulations, the BTA affirmed the tax commissioner's determination. BTA No. 2015-633, 2016 Ohio Tax LEXIS 1269 (June 10, 2016).

II. Analysis

A. How the Exemption Statutes Apply to this Case

{¶ 12} As discussed, under R.C. 5709.73, the township passed a resolution that created tax-exempt status for the increase in assessed value of the properties designated by the TIF agreement, and pursuant to the service agreement, the developer, DPR, was obligated to file an application to "effect and maintain" that exemption during the period of the TIF agreement. Before 2004, it was unclear whether a later owner of a parcel could obtain a different exemption based on its own use of the property and thereby supersede the TIF exemption, thus relieving the later owner of the obligation to make service payments.

{¶ 13} In 2004, the legislature addressed this issue by enacting R.C. 5709.911, which established a priority of exemptions. Broadly speaking, for any TIF exemption approved after the effective date of R.C. 5709.911, the priority of exemptions depends upon whether the property owner either filed the application for the TIF exemption or consented to that exemption in writing if the political subdivision had filed the application. In either of those circumstances, the TIF exemption controls over a later claim of another exemption. R.C. 5709.911(B). On the other hand, if the political subdivision applied for the TIF exemption without the owner's written consent, the TIF exemption is subordinate to another exemption of the property. R.C. 5709.911(A).

{¶ 14} For TIF exemptions, such as the one at issue here, that were approved before the effective date of R.C. 5709.911, Sub.H.B. No. 427 ("H.B. 427"), Section 10(B), 150 Ohio Laws, Part III, at 4122-4123, an uncodified provision of the act, is dispositive. That section states that all TIF exemptions approved prior to the effective date of that act "shall be considered to have been granted subject to the limitations set forth in division (A) of section 5709.911 of the Revised Code, as enacted by this act."

{¶ 15} Those limitations are twofold. First, "[a]n exemption granted under [ R.C. 5709.73 ] shall be subordinate to an exemption with respect to the property or portion of the property granted under any other provision of the Revised Code." R.C. 5709.911(A)(2)(a). Second, service payments in lieu of taxes under R.C. 5709.74 are not required with respect to the property that is exempt from real property taxes under another provision of the Revised Code during the effective period of the exemption. R.C. 5709.911(A)(2)(b).

{¶ 16} H.B. 427, Section 10(B), mitigates the harshness of that rule by specifying steps that a township can take to preserve its right to service payments. An application for a TIF exemption could have been refiled within 90 days of the effective date of H.B. 427 and was subject to only ministerial approval by the tax commissioner. If an owner had filed the application for the exemption and the exemption was approved before H.B. 427 became effective, the township could have filed a notice under R.C. 5709.911(C) to preserve the right to service payments. Additionally, the third and fourth sentences of Section 10(B) prescribe a process that, in a proper case, permits a township to preserve its rights by re-recording its TIF agreement.

{¶ 17} According to the parties' stipulations, the township "did not file an application for exemption with the Tax Commissioner with respect to the property within the TIF district, including the Subject Property, after the effective date of Sub.H.B. 427." Additionally, the township "did not make any filing with respect to the TIF district with the Butler County Recorder's Office after the effective date of Sub.H.B. 427." The township does not contest the tax commissioner's argument that by failing to perform one or the other of these acts, the township failed to exercise its option under H.B. 427 to preserve the priority of the TIF exemption over the public-worship exemption.

B. The Statutes Control over the Real Covenant

{¶ 18} The gravamen of the township's appeal is that the law of contracts and real covenants provides that the service payments are covenants running with the land that can be enforced against the church. In the township's view, the continued enforceability of the real covenants means that the church cannot claim a public-worship exemption but is limited to the partial TIF exemption, which requires that service payments be made.

{¶ 19} We disagree. Under R.C. 5709.911, the church's public-worship exemption has priority, and thus no service payments are required. As a general matter, townships are " 'creatures of the law and have only such authority as is conferred on them by law.' " Drees Co. v. Hamilton Twp. , 132 Ohio St.3d 186, 2012-Ohio-2370, 970 N.E.2d 916, ¶ 13, quoting State ex rel. Schramm v. Ayres , 158 Ohio St. 30, 33, 106 N.E.2d 630 (1952). And as demonstrated in Drees , this legal limitation militates against permitting townships to enforce tax or in-lieu-of-tax obligations that the statutes themselves no longer authorize.

{¶ 20} Moreover, the law of real covenants by its own force makes Section 10(B) of H.B. 427 and R.C. 5709.911(A)(2)(b) controlling, with the result that the requirement to make service payments can no longer be enforced. A well-established prerequisite for enforcing a covenant that runs with the land is that the restrictions imposed cannot be against public policy. Dixon v. Van Sweringen Co. , 121 Ohio St. 56, 166 N.E. 887 (1929), paragraph one of the syllabus. This doctrine derives from the more general contract principle that " 'the right of making contracts at pleasure is a personal privilege of great value,' " but that privilege " 'must be restrained when contracts are attempted against the public law, general policy, or public justice.' " Cincinnati City School Dist. Bd. of Edn. v. Conners , 132 Ohio St.3d 468, 2012-Ohio-2447, 974 N.E.2d 78, ¶ 15-17, quoting Key v. Vattier , 1 Ohio 132, 147 (1823). As a result, under the common law, the public-policy doctrine calls for the court to "examine whether the subject deed restriction accomplishes a result that the legislature has sought to prevent." Orwell Natural Gas Co. v. Fredon Corp. , 2015-Ohio-1212, 30 N.E.3d 977 ¶ 62, (11th Dist.). If so, the covenant becomes unenforceable.

{¶ 21} For example, in Conners , we invalidated a deed restriction that prevented property that had been sold by a school district from being used for educational purposes when the new owners sought to use the property as a community school because the restriction violated R.C. 3313.41. That statute called for public-school property, when offered for sale by a school district, to be made available to community schools.

{¶ 22} Applying this doctrine to the present appeal is straightforward: by dictating that TIF exemptions be subordinated to other exemptions and by invalidating the requirement that service payments be made, R.C. 5709.911 bars the enforcement of the real covenant with respect to service payments.

C. The Kohl's Case Is Inapposite

{¶ 23} The township argues that our decision in Kohl's , 140 Ohio St.3d 522, 2014-Ohio-4353, 20 N.E.3d 711, establishes that real covenants in TIF agreements operate outside the TIF statutes and somehow supersede them. We disagree.

{¶ 24} In Kohl's , we addressed a complaint filed by a property owner. The property was subject to a TIF agreement that included a "no-contest" covenant, that is, a covenant that explicitly barred filing a challenge to the valuation on which the assessment of the service payments was based. The covenant had been recorded in the chain of title of the owner who had filed a valuation complaint. We vacated the BTA's decision holding that the owner's valuation complaint was void. We held that the covenant by itself did not eclipse the statutory right to file a complaint, with the result that the covenant was not a jurisdictional bar. Id. at ¶ 22. But we also held open the possibility that the covenant might constitute a valid defense against the valuation complaint if the beneficiaries of the covenant-the county commissioners and the school district-demonstrated that it was legally and factually proper to enforce it against the complainant. Id. at ¶ 29. Accordingly, we vacated the decision and remanded the matter to the BTA for further proceedings.

{¶ 25} The township relies on our statement in Kohl's that "if the no-contest covenant is valid and binding on Kohl's, the source of its legal force is not statutory, and accordingly, it does not impose a jurisdictional limitation on the BOR." Id. at ¶ 27. That phrase, the township argues, means that H.B. 427 does not affect the binding force of the covenant, which requires the property owner to make service payments.

{¶ 26} That argument is mistaken, because the passage in Kohl's not only addresses a jurisdictional issue that is simply not present here but also emphasizes that no statutory provision addressed the no-contest covenant. By stark contrast, R.C. 5709.911 directly addresses the issue of the priority of exemptions. In Kohl's , there was no conflict between a statute and the covenant because there was no statutory provision addressing the propriety of the covenant. But in this appeal, H.B. 427 conflicts with enforcement of the real covenant. Kohl's is therefore inapposite.

D. The Township Lacks Standing to Raise its Constitutional Challenge

{¶ 27} The township also argues that if the statute supersedes the real covenant and if the public-worship exemption supersedes the requirement to make service payments, the township's contractual rights have been unconstitutionally impaired. In essence, the township argues that R.C. 5709.911 cannot retroactively change TIF obligations entered into in 1998.

{¶ 28} This argument invokes Article II, Section 28, Ohio Constitution, which states: "The general assembly shall have no power to pass retroactive laws, or laws impairing the obligation of contracts * * *." The township invokes the contract-impairment prohibition as an as-applied challenge to R.C. 5709.911, citing Middletown v. Ferguson , 25 Ohio St.3d 71, 495 N.E.2d 380 (1986) (setting aside the result of a legislative initiative in a bond-validation proceeding based on the impairment-of-contract claim advanced by the city). The township argues that the real covenant requiring service payments may not be impaired by the statute.

{¶ 29} We disagree. As discussed, the parties have stipulated that the township did not take action pursuant to H.B. 427 to preserve the priority of the TIF exemption and thereby retain its right to service payments. Because the township did not avail itself of the statutorily created opportunity to preserve its rights, it has been injured by its own omissions rather than by the operation of the statute itself.

{¶ 30} We have held that "[t]he constitutionality of a state statute may not be brought into question by one who is not within the class against whom the operation of the statute is alleged to have been unconstitutionally applied and who has not been injured by its alleged unconstitutional provision." Palazzi v. Estate of Gardner , 32 Ohio St.3d 169, 512 N.E.2d 971 (1987), syllabus. The township in this appeal was injured by its own failure to take the prescribed step to preserve its rights under the very law it challenges, and the township did not establish why it could not have done so. We conclude that the township lacks standing under Palazzi to advance an as-applied contract-impairment challenge.

{¶ 31} The tax commissioner argues more broadly that as a political subdivision, the township cannot claim any protection under the contract-impairment clause. With respect to this argument, the commissioner relies on Toledo City School Dist. Bd. of Edn. v. State Bd. of Edn. , 146 Ohio St.3d 356, 2016-Ohio-2806, 56 N.E.3d 950, ¶ 2, in which we held that "the Retroactivity Clause * * * does not protect political subdivisions * * * that are created by the state to carry out the state's governmental functions." The commissioner argues that by extension, no political subdivision may assert a contract-impairment claim.

{¶ 32} We decline to address this far-reaching argument because we have already found that the township lacks standing to assert the as-applied challenge.

III. Conclusion

{¶ 33} For the foregoing reasons, we affirm the decision of the BTA.

Decision affirmed.

O'Connor, C.J., and O'Donnell, Kennedy, French, Fischer, DeWine, and DeGenaro, JJ., concur.