Dublin School Dist. Bd. of Edn. v. Limbach - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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Board of Education of the City of Dublin School District,
Appellant and Cross-Appellee, v. Limbach, Tax Commr., Appellee;
Friendship Village of Dublin, Ohio, Inc., Appellee and
Cross-Appellant.
[Cite as Dublin School Dist. Bd. of Edn. v. Limbach
(1994), Ohio St.3d .]
Taxation -- Real property -- Exemption -- Hospital facilities
-- R.C. 140.08 -- Board of Tax Appeals' decision
unreasonable and unlawful when.
(No. 92-1497 - - Submitted January 4, 1994 - -
Decided May 11, 1994.)
Appeal and Cross-Appeal from the Board of Tax Appeals, No.
89-K-23.
This case involves a claim for real property tax
exemption. The subject property, owned by Friendship Village
of Dublin, Ohio, Inc. ("Village"), consists of two multistory
buildings containing two hundred thirty-six residential
apartment units, an interconnecting one-story facility licensed
for skilled nursing care containing sixty beds for use by
residents or nonresidents, and a common area with dining
facilities, lounges, a laundry, crafts area and beauty/barber
shop, situated on 20.714 acres. Phase One of the complex was
constructed between 1978 and 1981. Phase Two was constructed
in 1985, and the entire project was refinanced with funds
acquired through hospital facilities revenue bonds authorized
and issued by the Franklin County Hospital Commission ("FCHC").
In a 1981 bond validation proceeding, the Common Pleas
Court of Franklin County determined that the FCHC "has
authority to issue" the revenue bonds "as valid special
obligations" of the county, and that the existing facilities1
"qualif[y] within the definition of 'Hospital Facilities' * * *
in * * * [R.C.] 140.01."
On January 7, 1987, Village applied for real property tax
exemption for tax year 1986. The Tax Commissioner granted the
exemption, finding that the subject property was used
exclusively for hospital facility purposes under former R.C.
140.08. The BTA affirmed the commissioner, and both the Board
of Education of the City of Dublin School District ("school

board") and Village appealed.
The cause is before this court upon an appeal and
cross-appeal as of right.

Teaford, Rich, Coffman & Wheeler and Jeffrey A. Rich, for
appellant and cross-appellee.
Lee Fisher, Attorney General, Richard C. Farrin and Janyce
C. Katz, Assistant Attorneys General, for appellee.
Vorys, Sater, Seymour & Pease, Raymond D. Anderson and
Tony C. Merry, for appellee and cross-appellant.

Per Curiam. Ultimately, the issue is whether the BTA's
decision is unreasonable or unlawful. Subsumed within that
issue is whether the subject property is entitled to tax
exemption as property "used * * * as hospital facilities" under
former R.C.140.08.
The school board first contends that the BTA erred in
relying on collateral estoppel to conclude that the bond
validation proceeding determined that Village is a "hospital
facility" as defined in R.C. 140.01(E) because the school board
was not a party to, was not served with notice of, and did not
participate in, the bond validation proceeding, and because the
tax exemption issue was not decided in that action.
Ancillary to this issue, the school board on appeal
contends that some parts of the subject property are used for
private residential purposes under former R.C. 140.08, and not
as hospital facilities, and that the commissioner should have
split-listed the property under R.C. 5713.04. 2
The BTA's decision, that the school board is estopped from
questioning whether the subject property was exempt hospital
facilities, is unreasonable and unlawful. Accordingly, it is
not necessary to decide the further issues of the school
board's challenge of the constitutionality of former R.C.
140.08, or the claim by Village on cross-appeal that the school
board lacked standing to raise constitutional questions.
The BTA found that the issue of whether the Friendship
Village complex qualified as a hospital facility was an issue
to be determined by the common pleas court, and that the court
had decided the complex was a hospital facility, even though it
partially served residential purposes. Additionally, the BTA
found the question of split-listing was likewise determinable
in common pleas court, and that if the school board wanted to
raise an argument about how that court's decision might have an
impact on property tax exemption, it should have pursued the
argument in that forum.
Collateral estoppel does not apply in the instant appeal.
In Am. Soc. for Metals v. Limbach (1991), 59 Ohio St.3d. 38,
39, 569 N.E.2d 1065, 1066, we set forth the basic requirements
for collateral estoppel: "(1) an administrative proceeding of
a judicial nature, (2) an identity of the parties, and (3) an
identity of the issues." See, also, Hooven & Allison Co. v.
Lindley (1983), 4 Ohio St.3d 169, 4 OBR 410, 447 N.E.2d 1295.
The 1981 common pleas court proceeding satisfies the first
requirement. However, there is a failure to meet the other
requirements. The school board was not named as a party, nor
did it participate in that action. The issues involved in the
two proceedings were not identical. The question in the 1981

common pleas court action was not whether, as here in tax year
1986, the property was tax exempt but, rather, whether the
revenue bonds issued to refinance the construction of the
complex were valid.
The common pleas court held, in the bond validation
proceeding, that the property to be financed with the proceeds
of said bonds qualified as a hospital facility under R.C.
140.01. The common pleas court, thus, validated the bonds.
There is no suggestion that the common pleas court attempted to
decide the issue of real property tax exemption, or that it
had, or believed it had, authority to do so.
Collateral estoppel does not bar the school board from
litigating, as it has attempted to do, the issue of whether the
subject property, or some portion of it, was exempt as hospital
facilities under R.C. 140.01(E).
As to the dispositive issue herein, the test for exemption
under former R.C. 140.08 is whether property is (1) owned by a
"public hospital agency" as defined in R.C. 140.01 (B) or to be
financed by obligations issued by a "public hospital agency"
and (2) used as a "hospital facilit[y]" as defined in R.C.
140.01(E). It is not disputed that FCHC is a public hospital
agency as defined in R.C. 140.01(B). The subject property was
refinanced by obligations issued by a public hospital agency.
However, as we stated in Ohio Presbyterian Homes v. Kinney
(1984), 9 Ohio St..3d 90, 94, 9 OBR 319, 322-323, 459 N.E.2d
500, 504:
"This court has consistently held that 'in order for a
taxpayer to derive the benefit of a statutory exemption from
taxation, it must be proven that the property in question
satisfies each and every requirement of the exemption
statute.'" Also, in paragraph two of the syllabus of Woman's
Internatl. Bowling Congress, Inc. v. Porterfield (1971), 25
Ohio St.2d 271, 54 O.O.2d 383, 267 N.E.2d 781, we held:
"Where a statute defines terms used therein which are
applicable to the subject matter affected by the legislation,
such definition controls in the application of the statute.* *
* "
Under R.C. 140.01(E), "hospital facilities," inter alia,
consists of buildings, improvements, equipment and real estate
where health or hospital services, diagnosis, treatment or
research is made available for sick, injured, disabled or
handicapped persons. The portion of the subject property that
is used for residential purposes does not meet that
definition. Rather, that portion of the property appears to be
typical living quarters for the personal use of residents. In
addition, with regard to the residential use of the purported
"hospital facilities," the term specifically includes
education, training and food service facilities for health
professions personnel, and housing facilities for such
personnel and their families. R.C. 140.01(E). Since there is
no evidence that the residents of Friendship Village were
health professions personnel, the exemption does not apply to
those parts of the subject property that are used for
residential purposes.
The BTA's decision is reversed as being unreasonable and
unlawful, and the cause is remanded with instructions to the
BTA to order the Tax Commissioner to determine, consistent with

this opinion, what parts, if any, of the subject property are
hospital facilities and thus tax exempt, and to make the
appropriate split-listing of exempt and nonexempt property.

Decision reversed
and cause remanded.
Moyer, C.J., A.W. Sweeney, Douglas, Wright, Resnick, F.E.
Sweeney and Pfeifer, JJ., concur.
FOOTNOTE
1 In 1981, the subject property consisted of the sixty-bed
nursing facility and one hundred seventy-four residential
units. The school board concedes the sixty-bed nursing
facility is used exclusively for purposes of "hospital
facilities" and is not at issue in this appeal.
2 R.C. 5713.04 provides that if real property is used so
that part of it "would be exempt from taxation, and the balance
thereof would not be exempt from taxation, the listing thereof
shall be split, and the part thereof used exclusively for an
exempt purpose shall be regarded as a separate entity and be
listed as exempt, and the balance thereof used for a purpose
not exempt shall * * * be listed * * * and taxed accordingly."

Also, the school board raises substantial constitutional
questions, asserting that the granting of the exemption for
private residential units violates: (1) the Uniform Rule
provision of Article XII, Section 2 of the Ohio Constitution,

(2) the Equal Protection Clause of Article I, Section 2 of the
Ohio Constitution, and (3) the Fourteenth Amendment of the
Constitution of the United States. In addition, the school
board contends that R.C. 140.08, as interpreted by the BTA,
constitutes an unconstitutional delegation of legislative power
to a public hospital agency to determine tax exemption, and
that the result of the BTA's decision is a violation of the
lending of aid or credit provision of Article VIII, Section 6
of the Ohio Constitution.
In its cross-appeal Village asserts the BTA erred in
rejecting its argument before the BTA that the school board
lacks standing to challenge the constitutionality of R.C.
140.08 because a school board, as a state agency, has only such
powers as the General Assembly has entrusted to it and it is
not authorized to challenge the constitutionality of state
statutes. Moreover, constitutional provisions such as equal
protection and due process, protect only the fundamental rights
of individual citizens and not political subdivisions.
(As to Village's claim that the school board lacks standing
to assert constitutional questions, a board of education, as a
statutory party to exemption matters under R.C. 5715.27, is
responsible for defending against exemption. Moreover, the
school board's constitutional arguments of "uniform law" and
"equal protection" may be meritorious. However, because
collateral estoppel does not apply, it is not necessary for the