Ohio History Connection v. Moundbuilders Country Club
Ohio History Connection v. Moundbuilders Country Club
Ohio History Connection v. Moundbuilders Country Club
ex rel. Ohio History Connection v. Moundbuilders Country Club Co., Slip Opinion No. 2022-
Ohio-4345.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
DONNELLY, J.
{¶ 1} We accepted this discretionary appeal to address a dispute over an
extraordinary piece of land: the Octagon Earthworks in Newark. Appellant,
Moundbuilders Country Club Company, is a private entity that wants to retain its
decades-long leasehold in the earthworks. Appellee, Ohio History Connection, is
a state-funded entity that wants to acquire the country club’s lease interest by
eminent domain so that it can establish a public park on the site and nominate it, as
part of a larger interconnected collection of Hopewell Ceremonial Earthworks, for
the internationally recognized World Heritage list.
{¶ 2} The legal controversy in this appeal concerns two of the statutory
requirements that the History Connection must satisfy during the beginning stages
of its appropriation action: (1) it must make a good-faith purchase offer for the lease
interest, R.C. 163.04(B), and (2) its exercise of eminent-domain powers must be
necessary and for a public use, R.C. 163.021(A). The Fifth District Court of
Appeals affirmed the judgment of the Licking County Court of Common Pleas,
which had held that appropriation was necessary for the purpose of turning the
Octagon Earthworks into a public park and that although the History Connection’s
purchase offer was based on a misinterpretation of appraisal reports, the offer was
not made in bad faith.
{¶ 3} The country club argues that the History Connection’s evidence that
it lacked bad faith does not establish good faith and that the courts below employed
an incorrect, overly narrow standard in assessing the History Connection’s good
faith. It also argues that a governmental entity can establish that an appropriation
is necessary for a public use only if it shows that its proposed use of the property
would provide more of a benefit to the public than the current private use.
{¶ 4} We agree that the courts below painted an incomplete picture of the
good-faith standard under R.C. 163.04(B), but we conclude that the outcome is the
same under the country club’s proposed standard. Further, we hold that the country
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unable to negotiate the purchase of the country club’s leasehold, the History
Connection filed an appropriation action in the Licking County Court of Common
Pleas.
{¶ 11} During the discovery process that followed the filing of the
complaint, the attorney representing the History Connection discovered that the
$500,000 figure in the Weiler appraisal was not actually the value of the leasehold
interest; it was the value of the leased fee, i.e., the value of the property as
encumbered by the lease. The appraised value of the unencumbered estate in fee
simple in the Weiler appraisal was $2.25 million, which means that the value of the
leasehold interest, though not specifically stated in the Weiler report, was implicitly
appraised at $1.75 million.
{¶ 12} In its answer, the country club asserted that the History Connection
had failed to satisfy certain statutory prerequisites to filing an appropriation action,
which triggered an initial hearing process under R.C. 163.09(B). During the four-
day hearing, the parties largely focused on the requirement that the appropriation
of the land be necessary and for a public use under R.C. 163.021(A) and on the
requirement that the appropriating entity submit a good-faith purchase offer prior
to initiating appropriation proceedings under R.C. 163.04(B).
{¶ 13} The country club argued that appropriation of its leasehold interest
was not necessary, because the History Connection would not adequately care for
the property and because the country club would have allowed public access for
educational and research purposes if the History Connection had made that request.
It argued that the taking was not necessary for the purpose of having the property
listed on the World Heritage list because the History Connection’s aspiration for
such a designation was speculative. The country club also argued that its positive
economic impact in the community and its efforts to preserve the earthworks
provided a far greater tangible benefit to the public that outweighed the hypothetical
and unlikely benefit to the public that allegedly would be realized by the
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appropriation.
{¶ 14} Regarding the prefiling requirement for a good-faith purchase offer,
the country club asserted that Logan and the History Connection had acted in bad
faith by purposefully hiding the Weiler appraisal, seeking out a new appraisal in
order to lower the fair market valuation of the property, and presenting the much
lower amount from the Koon appraisal in its written offer. It further argued that
Logan’s failure to consult an attorney regarding the appraisal was direct evidence
that the offer was not in good faith.
{¶ 15} The History Connection argued that its purpose of creating a public
park at the site of ancient earthworks is presumed to be a public use as a matter of
law. And because the History Connection could not convert the private golf course
into a public park without owning the real property in fee simple, the appropriation
was necessary to fulfill the public purpose. Witnesses for the History Connection
testified that members of the public had been able to informally arrange some visits
to the Octagon Earthworks prior to 2003 but that the country club had increasingly
denied access to the public over the last 15 to 20 years, either directly by refusing
to allow people onto the site or indirectly by rendering access impossible through
inconveniently timed maintenance activities.
{¶ 16} The History Connection contended that its use of an independent
qualified appraiser alone established that it had made its offer in good faith. It
further argued that the country club’s accusation of bad faith was unfounded
because Logan had made an honest mistake regarding the appraisal values. Logan
testified that the Ohio History Connection asked both Koon and Weiler to appraise
the leasehold value of the country club. Logan did not realize that the $500,000
figure stated in the Weiler appraisal was not the leasehold value until he was told
so by the History Connection’s attorney. At the time that he made the offer, Logan
thought the $500,000 appraisal by Weiler was in the same ballpark as the $800,000
appraisal by Koon and that it therefore seemed like a reasonable estimate. Logan
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testified that he did not make an offer of $500,000 to the country club based on the
Weiler appraisal, because he decided that an offer of $800,000 was more honorable.
{¶ 17} The trial court entered judgment denying the challenges to the
History Connection’s authority to commence appropriation proceedings. It rejected
the country club’s assertion that the court should weigh the benefits of continued
private use against the proposed public use as part of its necessity determination. It
found that the History Connection’s full ownership of the disputed land was
required to allow public use and access to the Octagon Earthworks and, therefore,
that appropriation of the lease interest was necessary.
{¶ 18} The trial court then addressed the good-faith requirement and
asserted that the failure of good faith was the same as bad faith, citing Hoskins v.
Aetna Life Ins. Co., 6 Ohio St.3d 272, 276, 452 N.E.2d 1315 (1983). But the trial
court held that the History Connection had made a good-faith offer because it was
based on a state-certified appraiser’s determination of the fair market value of the
leasehold. It also held that the “mere existence of another appraisal for a higher
value” did not make the History Connection’s offer a bad faith offer. It further held
that Logan’s testimony about misinterpreting the Weiler appraisal was credible and
that the misinterpretation was “completely reasonable” based on the trial court’s
own reading of the Weiler report.
{¶ 19} Accordingly, the trial court granted the petition to appropriate,
allowing the action to move forward.
{¶ 20} The Fifth District Court of Appeals affirmed the trial court’s
decision. It acknowledged the country club’s arguments that it would provide
superior stewardship of the property and greater economic benefit to the community
by maintaining its private use of the property but ultimately held that the country
club’s arguments did not disprove the necessity of the History Connection’s
acquisition for the purpose of allowing full public access and public preservation
of the Octagon Earthworks.
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{¶ 21} The court of appeals repeated the trial court’s depiction of good faith
as the absence of bad faith: it defined “bad faith” as involving dishonesty or other
intentional misfeasance. The court stressed that a determination of good or bad
faith is for the trier of fact, and it concluded that there was no basis to overturn the
trial court’s holding that the History Connection’s purchase offer was made in good
faith.
{¶ 22} The country club sought our discretionary review of the Fifth
District’s decision. We accepted the appeal on the following two propositions of
law:
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often portrayed as being synonymous with a lack of bad faith, the meaning of “good
faith” can vary depending on the context.
{¶ 29} The Licking County Court of Common Pleas and the Fifth District
focused on jurisprudence stating that good faith is the absence of bad faith. See
Frank v. Nationwide Mut. Ins. Co., 10th Dist. Franklin No. 02AP-1336, 2003-Ohio-
4684 (holding in an action construing an employment-release agreement that bad
faith is the opposite of good faith); Hicks v. Leffler, 119 Ohio App.3d 424, 695
N.E.2d 777 (1997) (holding in an action discussing immunity from tort liability of
a political subdivision that bad faith is the opposite of good faith); Hoskins v. Aetna
Life Ins. Co., 6 Ohio St.3d 272, 452 N.E.2d 1315 (1983) (holding in an action
addressing an insurer’s lack of good faith regarding the settlement and payment of
claims that the lack of good faith is the equivalent of bad faith). The country club
argues that these cases do not provide relevant guidance regarding the standard of
good faith in the context of eminent domain and that other decisions of this court
provide more pertinent analysis, namely, Kalain v. Smith, 25 Ohio St.3d 157, 159,
495 N.E.2d 572 (1986) (examining whether a party against whom prejudgment
interest was awarded “failed to make a good faith effort to settle the case,” as
required by R.C. 1343.03(C)); Worth v. Huntington Bancshares, Inc., 43 Ohio St.3d
192, 540 N.E.2d 249 (1989) (examining an employment contract that granted
certain benefits contingent on the employee’s good-faith determination that his
responsibilities have been diminished).
{¶ 30} In Worth, this court acknowledged that a lack of good faith has been
described in some situations as synonymous with bad faith. Worth at 198. But we
have also rejected the notion that good faith can be disproved only through
affirmative proof of a party’s subjective intent to act in bad faith. Kalain at 159;
Worth at 197-198. We held that in certain situations, good faith can be
demonstrated by objective factors such as the party’s full cooperation in the
procedural matters of a claim, a rational evaluation of the risks and potential
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liabilities of a cause of action, and the lack of foot-dragging or other dilatory tactics.
Kalain at 159. Conversely, behavior that is unreasonable, uninformed, or irrational
in light of the circumstances can establish a lack of good faith irrespective of the
party’s subjective intentions. Worth at 197-198; see Zoppo v. Homestead Ins. Co.,
71 Ohio St.3d 552, 644 N.E.2d 397 (1994), paragraph one of the syllabus (a party
“fails to exercise good faith” when its behavior “is not predicated upon
circumstances that furnish reasonable justification therefor”).
{¶ 31} Our reasoning in Kalain and Worth is consistent with definitions of
“good faith” and “bad faith” found in Black’s Law Dictionary. The definition of
“bad faith” is “[d]ishonesty of belief, purpose, or motive.” Black’s Law Dictionary
171 (11th Ed.2019). The definition of “good faith” is “a state of mind consisting
in honesty in belief or purpose,” “faithfulness to one’s duty or obligation,” or
“observance of reasonable commercial standards of fair dealing in a given trade or
business.” Id. at 836. In other words, a person can demonstrate good faith through
behavior that is reasonable in a particular context or that conforms with justified
expectations, not just through a claim of having honest intentions. And conversely,
a person can potentially demonstrate a lack of good faith by acting unreasonably or
failing to meet justified expectations.
{¶ 32} Irrespective of whether one categorizes the concept of
unreasonableness referred to in Kalain and Worth as falling in some kind of limbo
between good and bad faith or falling within a definition of “bad faith,” we hold
that the objective standard articulated in Kalain and Worth is apt here. It is,
therefore, appropriate to consider whether the History Connection established that
it acted reasonably under the circumstances in addition to considering whether it
acted honestly.
{¶ 33} The statutes governing eminent domain provide insight into the
kinds of acts or omissions that are relevant to a determination of an appropriating
agency’s good faith or lack thereof; they set forth specific examples in the
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R.C. 163.59.
{¶ 35} We note that the policies set out in R.C. 163.59 are explicitly not
prerequisites to the filing of an appropriation action. R.C. 163.52(A) (“The failure
of an acquiring agency to satisfy a requirement of section 163.59 of the Revised
Code does not affect the validity of any property acquisition by purchase or
condemnation”). An agency’s adherence or nonadherence to the appraisal and offer
provisions in R.C. 163.59(C) and (D) would therefore not conclusively establish
whether the agency satisfied the good-faith-offer prerequisite found in R.C.
163.04(B). Nonetheless, the appraisal and offer provisions are certainly relevant to
our analysis.
{¶ 36} R.C. 163.04 and 163.041 also call attention to the importance of the
appraisal process. Under R.C. 163.04(C), an agency must provide a copy or
summary of the appraisal to an owner “at or before the time the agency makes its
first offer to purchase the property.” Under R.C. 163.04(A), an agency’s notice of
its intent to acquire property through eminent domain must be substantially in the
form set forth in R.C. 163.041; that form states that the written offer must be based
on the agency’s determination of the fair market value of the property following an
appraisal.
{¶ 37} The country club does not dispute that the History Connection
provided an appraisal with its offer and that the offer was not less than the value
quoted in Koon appraisal. The country club claims, notwithstanding the History
Connection’s substantial compliance with the basic requirements of the statutory
scheme, that the following four acts or omissions establish a lack of good faith: (1)
obtaining a second appraisal, (2) failing to notify the country club prior to the
appraisers’ inspections of the property, (3) failing to disclose that a second appraisal
existed when making its purchase offer, and (4) failing to consult an attorney prior
to relying on any dollar amounts listed in either of the appraisals. The country club
argues, based on the first three factors, that the History Connection tried to
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{¶ 51} The trial court did not account for the speculative nature of
acceptance of the earthworks for the World Heritage List. In its resolution, the
History Connection stated that “the United States Department of the Interior will
not forward the Hopewell Ceremonial Earthworks to be considered for nomination
to the World Heritage List until a precise schedule is established to terminate the
leasehold estate and for [the country club] to leave the Octagon Earthworks site.”
Moundbuilders Country Club does not dispute that. But being nominated is not an
assurance that the site will be selected for World Heritage status. Between 2008
and the hearing in this matter before the trial court, only two of the five sites
nominated by the United States for World Heritage designation were accepted as
World Heritage sites. Further, no contract, agreement, or memorandum of
understanding was submitted as evidence that the appropriation by the History
Connection will result in the earthworks’ designation as a World Heritage Site.
{¶ 52} In Norwood, this court determined that a city code section that
allowed the city to acquire property that was “in danger” of deteriorating into a
blighted area was unacceptable for eminent-domain purposes. This court wrote that
the “statutory definition * * * incorporates not only the existing condition of a
neighborhood, but also extends to what that neighborhood might become. But what
it might become may be no more likely than what might not become. Such a
speculative standard is inappropriate in the context of eminent domain, even under
the modern, broad interpretation of ‘public use.’ ” Norwood, 110 Ohio St.3d 353,
2006-Ohio-3799, 853 N.E.2d 1115, at ¶ 99.
{¶ 53} This court explained, “A municipality has no authority to
appropriate private property for only a contemplated or speculative use in the
future.” Id. at ¶ 100, citing State ex rel. Sun Oil Co. v. Euclid, 164 Ohio St. 265,
271-272, 130 N.E.2d 336 (1955), citing Cincinnati v. Vester, 281 U.S. 439, 448, 50
S.Ct. 360, 74 L.Ed. 950 (1930).
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{¶ 54} Here, the trial court determined that “the word ‘necessary,’ as used
in acts conferring the right of eminent domain, does not mean ‘absolutely
necessary’ or ‘indispensable,’ but, rather, ‘reasonably necessary to secure the end
in view.’ ” Licking C.P. No. 18 CV 01284 (May 10, 2019), quoting Sayre v.
Orange, 67 A. 933 (N.J.1907). The end in view here is inclusion on the list of
World Heritage Sites. And that end in view was speculative and outside the control
of the History Connection.
{¶ 55} I would reverse the judgment of the court of appeals and remand the
case to the trial court to consider the necessity of the appropriation while accounting
for the speculative nature of the History Connection’s ultimate use. Because the
majority remands for a jury trial to determine compensation, I dissent.
_________________
Dave Yost, Ohio Attorney General, Benjamin M. Flowers, Solicitor
General, Samuel C. Peterson, Deputy Solicitor General, and Keith O’Korn, Jennifer
S.M. Croskey, and Eythan Gregory, Assistant Attorneys General, for appellee.
Mitchell, Pencheff, Fraley, Catalano & Boda, Joseph A. Fraley, and Joshua
M. Fraley; and Reese Pyle Meyer, P.L.L., and J. Andrew Crawford, for appellant.
_________________
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