[Cite as Cleveland Mun. School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 107 Ohio
St.3d 250, 2005-Ohio-6434.]




  BOARD OF EDUCATION OF THE CLEVELAND MUNICIPAL SCHOOL DISTRICT,
         APPELLEE, v. CUYAHOGA COUNTY BOARD OF REVISION ET AL.,
                      APPELLEES; VLAXOS, L.L.C., APPELLANT.
   [Cite as Cleveland Mun. School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of
                  Revision, 107 Ohio St.3d 250, 2005-Ohio-6434.]
Taxation — Real property — Value — Property owner fails to show economic
        duress was factor in fixing purchase price, when.
(No. 2004-1078 — Submitted August 23, 2005 — Decided December 21, 2005.)
APPEAL from the Board of Tax Appeals, Nos. 2002-R-2641 and 2002-R-2642.
                                 __________________
        PER CURIAM.
        {¶ 1} Appellant, Vlaxos, L.L.C. (“Vlaxos”), contends that the price it
paid for certain real property was the result of economic duress and, therefore, the
sale was not an arm’s-length sale. We disagree and, therefore, affirm the decision
of the Board of Tax Appeals (“BTA”).
        {¶ 2} The property involved in this case, located in the Grand Arcade at
408 and 500 West St. Clair Avenue in Cleveland, consists of two condominium
parcels, known as units 101 and 102, which house the Greek Isles Restaurant.
The property was purchased by Vlaxos in December 2000 for $1,350,000. The
Board of Education of the Cleveland Municipal School District (“BOE”) filed a
real property valuation complaint with the Cuyahoga County Board of Revision
(“BOR”) contending that as a result of the recent sale, the true value of the
property should be increased to $1,350,000 for tax year 2000. Vlaxos filed a
countercomplaint contending that the auditor’s valuation of $415,000 was the
correct value.
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       {¶ 3} After a hearing, the BOR determined that the valuation should
remain at the auditor’s valuation of $415,000. The BOE filed two appeals from
the BOR’s decision to the BTA. Before the appeals were decided by the BTA,
they were dismissed upon the authority of Cleveland Elec. Illum. Co. v. Lake Cty.
Bd. of Revision, 96 Ohio St.3d 165, 2002-Ohio-4033, 772 N.E.2d 1160, and
remanded to the BOR for proper certification. After the actions were properly
certified by the BOR, the BOE refiled its two appeals with the BTA. The BTA
consolidated the appeals for hearing and decision.
       {¶ 4} The parties waived a hearing before the BTA and relied on the
testimony and evidence presented to the BOR. At the BOR hearing, the only
witness presented by Vlaxos was George Servetas, one of Vlaxos’s two members,
the other being Nicholas Stavridis. Prior to the sale, Servetas and Stavridis leased
the property in question for their Greek Isles Restaurant from West Sixth
Associates Limited Partnership. The term of the lease was five years, from April
15, 1993, through April 14, 1998. Under the terms of the lease, the rent escalated
until it reached $6,281.33 per month for the time period February 1, 1995,
through April 14, 1998.
       {¶ 5} Although the lease contained a provision for renewal for an
additional five years, there is no evidence that any attempt was made to exercise
that provision. At some time after the expiration of the lease, the lessor said it
would raise the rent to $16,000 per month. In the alternative, the lessor said it
would sell the property for $1,800,000.       The parties apparently carried on
negotiations from sometime after the expiration of the original lease on April 14,
1998, until December 2000, when the price had been negotiated down to
$1,350,000.
       {¶ 6} Servetas testified that when they initially moved into the space in
1992, they spent over $725,000 to finish the space and equip the restaurant, and if




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they were forced to move, they probably could not take more than $50,000 to
$60,000 of the improvements.
         {¶ 7} The $1,350,000 purchase price was primarily financed by two
notes from the Metropolitan Bank & Trust Company (“Bank”), both dated
December 22, 1999. One note was in the amount of $725,000, and the other was
for $580,000. The $725,000 note had an initial interest rate of 8.25 percent for
the first five years, after which the interest rate was to be reset until the note
matured in January 2011. The other note, in the amount of $580,000, matured on
April 1, 2001, and carried an interest rate of prime plus one percent.          The
remainder of the purchase price apparently was paid in cash. Servetas stated that
Vlaxos needed a Small Business Administration (“SBA”) loan to purchase the
property; however, he never identified which loan was the SBA loan.
         {¶ 8} Each of the Bank’s notes was secured by an open-end mortgage
and security agreement covering the real and personal property located on the
property. In addition, Stavridis and Servetas each personally guaranteed payment
of the loans; however, neither Stavridis nor Servetas pledged any personal assets
for the loans. Contrary to Servetas’s testimony, there is no evidence that either of
their spouses signed any note or guaranty.
         {¶ 9} After obtaining title to the property, Vlaxos leased it to Stavserv,
Inc., d.b.a. Greek Isles Restaurant, for five years at an initial rental rate of
$165,600 per year, payable in monthly installments. The rental rate could be
adjusted during the term to reflect changes in the costs of financing.
         {¶ 10} The BTA determined that the purchase was not the result of
economic duress and that the purchase price, $1,350,000, was the best evidence of
value.
         {¶ 11} The cause is before this court on an appeal as of right.
         {¶ 12} Because the parties waived a hearing before the BTA, the only
testimony and evidence in this matter is that presented to the BOR. As the




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appellant at the BTA, and the party asserting that the valuation determined by the
board of revision should be increased, the BOE bore the burden of proving that
the value it alleged should be the true value. The BOE met that burden by
introducing documents establishing that the property sold in December 2000 for
$1,350,000. Columbus Bd. of Edn. v. Franklin Cty. Bd. of Revision (1996), 76
Ohio St.3d 13, 16, 665 N.E.2d 1098. This court has held that when property has
been the subject of a recent arm’s-length sale between a willing buyer and a
willing seller, the sale price of the property shall be the true value for taxation
purposes. Berea City School Dist. Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision,
106 Ohio St.3d 269, 2005-Ohio-4979, 834 N.E.2d 782.
       {¶ 13} Although the presumption exists that the sale price is the best
evidence of true value, that presumption may be rebutted where the sale is not an
arm’s-length sale.    Lakeside Ave. Ltd. Partnership v. Cuyahoga Cty. Bd. of
Revision (1996), 75 Ohio St.3d 540, 544, 664 N.E.2d 913. If the presumption that
the sale price was the result of an arm’s-length transaction is successfully
rebutted, then the sale price may not be the best evidence of true value, and a
review of independent appraisals based upon other factors may become
appropriate. Pingue v. Franklin Cty. Bd. of Revision (1999), 87 Ohio St.3d 62,
64, 717 N.E.2d 293.
       {¶ 14} In its first two propositions of law, Vlaxos contends that its
purchase was economically coerced and, therefore, was not an arm’s-length
transaction. In Walters v. Knox Cty. Bd. of Revision (1989), 47 Ohio St.3d 23,
546 N.E.2d 932, syllabus, we held that “[a]n arm’s-length sale is characterized by
these elements: it is voluntary, i.e., without compulsion or duress; it generally
takes place in an open market; and the parties act in their own self-interest.”
       {¶ 15} Thus, it became Vlaxos’s burden to rebut the presumption that the
sale price represented true value. This court discussed the concept of rebuttable
presumptions in Myocare Nursing Home, Inc. v. Fifth Third Bank, 98 Ohio St.3d




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545, 2003-Ohio-2287, 787 N.E.2d 1217, stating that “where a rebuttable
presumption exists, a party challenging the presumed fact must produce evidence
of a nature that counterbalances the presumption or leaves the case in equipoise.
Only upon the production of sufficient rebutting evidence does the presumption
disappear.” Id. at ¶ 35.
       {¶ 16} Vlaxos contends that its purchase was made under economic
coercion because the landlord threatened to increase the rent if it did not purchase
the property, and if it moved to another location, much of the restaurant
equipment that was installed on the property would have to be left behind.
       {¶ 17} In Lakeside, the facts established that the purchase in question was
made as the result of economic coercion, and therefore the sale was not an arm’s-
length sale, and the sale price might not represent the true value of the property.
As a result, we reversed the decision of the BTA as unlawful and unreasonable.
The purchase in Lakeside was not voluntary, because the purchaser never had any
real choice, but was compelled to purchase the property at the price that had been
set by the seller or face a “swift and sure corporate death.” Id., 75 Ohio St.3d at
549, 664 N.E.2d 913.
       {¶ 18} Vlaxos states that “[t]he facts of this case closely mirror those of
the Lakeside case * * *.” However, a review of the facts shows that the evidence
in this case does not demonstrate the economic compulsion found in Lakeside.
The sale price in Lakeside was not subject to negotiation. Here, Servetas testified
that he negotiated the price down from $1,800,000 to $1,350,000. In Lakeside,
the buyer’s primary asset-based lender refused to finance the purchase and
prohibited the company using the property (Triton) from applying its cash or
working capital to acquire the property. Triton tried to secure financing through
another bank, which also refused to finance the purchase. The financing was
finally secured when the principals of Triton formed the Lakeside Avenue
Limited Partnership (“Lakeside”), which, along with Triton and the principal




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shareholder of Triton, executed a note for just over 50 percent of the purchase
price. The note was secured by a mortgage on the purchased property and the real
and personal property of Triton, and certain personal assets owned by Triton’s
principal shareholder.    In addition, Triton, Lakeside, and Triton’s principal
shareholder signed two notes in favor of the seller, the city of Cleveland loaned
monies to Lakeside, and the state of Ohio made a grant to Lakeside. Triton was
also required to put a certain amount of its working capital into an escrow
account. Here, there is no evidence that any bank turned down the financing of
the purchase, and Vlaxos financed over 95 percent of the purchase price.
Furthermore, there is no evidence that the financing of the property was out of the
ordinary.
       {¶ 19} In Lakeside, an officer of Triton testified that “there wasn’t any
land or location to relocate to.” Id., 75 Ohio St.3d at 541, 664 N.E.2d 913. Here,
it was evident that the owners, Servetas and Stavridis, had invested time, effort,
and money in this location, and there would be a loss incurred for the fixtures that
would be left behind if they were forced to move. However, there was nothing in
the record to indicate that the owners had made any efforts to determine whether
the business could have been relocated and the costs of such relocation. The
testimony in Lakeside was that failure to purchase the property would have
resulted in Triton’s bankruptcy. While the owners of the Greek Isles Restaurant
would have lost much of their investment in the fixtures if they had had to move,
there was no evidence that the restaurant could not be relocated or that losing this
location would cause the owners to file bankruptcy.
       {¶ 20} The copy of the lease in the record contains a five-year renewal
clause. While the amount of rent for the renewal period is not clear on the copy,
there is no evidence to indicate that the owners attempted to exercise the lease
renewal option for a second five years. The evidence in this case does not show




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that Vlaxos’s purchase was the result of economic duress and, therefore, the
presumption that the sale was an arm’s-length sale was not rebutted.
       {¶ 21} Near the end of the argument supporting its first proposition of
law, Vlaxos states that its rights of equal protection under the Ohio and United
States Constitutions were violated because using the sale to assess Vlaxos’s
property treated it differently from other involuntary purchasers of property.
Vlaxos presented no further discussion of that allegation. We will not respond to
that allegation because we regard it as waived. In Litton Sys., Inc. v. Tracy
(2000), 88 Ohio St.3d 568, 728 N.E.2d 389, Litton claimed in its notice of appeal
that its rights to due process and equal protection were violated. Litton, like
Vlaxos, did not present any proposition of law on those points. Litton claimed
that it could not fully discuss the claims because of the page constraints. We
regarded the constitutional claims as waived because Litton did not present any
argument on them, stating:
       {¶ 22} “We have dismissed issues if a party did not brief them. State ex
rel. Brooks v. Trans World Airlines, Inc. (1990), 53 Ohio St.3d 713, 560 N.E.2d
772. We have also said, ‘Vague allegations of denial of due process or equal
protection are not sufficient to establish [one’s case].’ State ex rel. Smith v.
Columbus (1993), 66 Ohio St.3d 271, 272, 611 N.E.2d 827.” (Brackets sic.)
Litton, 88 Ohio St.3d at 573, 728 N.E.2d 389.
       {¶ 23} In its third proposition of law, Vlaxos contends that a pledge of
non-real estate items as collateral and the personal guarantee of multiple loans
does not constitute typical financing in a real estate transaction. A review of the
record fails to show any evidence to support that contention. The record shows
that the only pledge of non-real estate items was the security agreement included
in the open-end mortgage that pledged the personal property on the premises
defined as the mortgaged property, which might not otherwise be deemed to form
part of the premises or constitute a fixture. There is no testimony or evidence in




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the record to establish what a typical financing arrangement would be for a
transaction of this type. Therefore, Vlaxos has failed to provide any evidence to
support its third proposition of law and, therefore, we reject it.
       {¶ 24} For all of the foregoing reasons, we find that the decision of the
BTA was reasonable and lawful and, therefore, affirm it.
                                                                     Decision affirmed.
       MOYER, C.J., RESNICK, LUNDBERG STRATTON, O’CONNOR, O’DONNELL
and LANZINGER, JJ., concur.
       PFEIFER, J., concurs in judgment only.
                               __________________
       PFEIFER, J., concurring in judgment only.
       {¶ 25} “Although the sale price is the ‘best evidence’ of true value of real
property for tax purposes, it is not the only evidence. A review of independent
appraisals based upon factors other than the sale price is appropriate where it is
shown that the sale price does not reflect true value. (Columbus Bd. of Edn. v.
Fountain Square Assoc., Ltd. [1984], 9 Ohio St.3d 218, 219 [9 OBR 528, 459
N.E.2d 894], construed.)” Ratner v. Stark Cty. Bd. of Revision (1986), 23 Ohio
St.3d 59, 23 OBR 192, 491 N.E.2d 680, syllabus. This standard is fair.
       {¶ 26} In this case, Vlaxos purchased the building housing its restaurant.
Vlaxos contends that the sale price was higher than fair market value.
Apparently, Vlaxos was willing to spend as much as it did because of the
significant value of improvements it had made to the building, which Vlaxos
could not take with it if it had to move. I believe that this is enough to defeat the
rebuttable presumption that sale price is the best evidence of value. Vlaxos did
not, however, take the next step required by Ratner of obtaining an independent
appraisal. Accordingly, Vlaxos cannot prevail. I concur in judgment.
                               __________________




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       Todd W. Sleggs & Associates, Todd W. Sleggs, and Susan K. French-
Scaggs, for appellant.
       James H. Hewitt Co., L.P.A., and James H. Hewitt III, for appellee Board
of Education of the Cleveland Municipal School District.
                          ______________________




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