Appellate Victory in Title Coverage and Closing Protection Coverage Case

Sikora Law obtained its 31st appellate victory (now on 24 different real estate subjects) in an Opinion affirming a Jury Trial verdict in favor of a major title insurance underwriter.  Johnson v. U.S. Title Agency, Inc., 2020-Ohio-4056.   Plaintiff asserted claims for breach of contract and bad faith stemming from mechanic’s liens that were recorded after the issuance of an Owner’s Policy of Title Insurance and also asserted a claim for breach of the Closing Protection Letter.   After a nine-day Jury Trial, the jury specifically found that the underwriter had not breached the terms of the Policy or Closing Protection Letter, and entered a defense verdict on all claims.

In a 44-page Opinion, the 8th District Court of Appeals unanimously affirmed, specifically rejecting each of the Plaintiff’s assignments of error, and affirming that, based on the evidence presented at Trial, the mechanic’s liens at issue were not covered matters under the Owner’s Policy because those liens arose after the Owner’s Policy was issued.  Plaintiff’s transactional counsel claimed to have given vague, oral closing instructions to the closing agent, which testimony Plaintiff then used to argue that Plaintiff should be considered a third-party beneficiary of the lender’s closing instructions.   That important subject became the main issue at Trial, and Plaintiff was defeated on that point – both at Trial and on Appeal.

To review the Johnson v. U.S. Title Opinion, click here.

Court Orders Eviction Despite Arguments Raised by Tenant

Commercial lease disputes continue to rise.  Meanwhile, the Eighth District Court of Appeals recently held that a landlord may evict a tenant for nonpayment of rent, even when a tenant has made a claim against the landlord for failure to make repairs and where the tenant unilaterally deposited its rent with the court.  In Di Fiore v. Booker, the tenant challenged the Trial Court’s judgment for restitution that was granted to a landlord in a forcible entry and detainer action.

The dispute in the Di Fiore case started in early 2018, when the tenant filed an action against the landlord over financial responsibility for certain repairs to the premises and water and sewer bills (“2018 Case”). After the Trial Court issued the preliminary injunction, the landlord served a three-day notice for failure to pay rent on January 4, 2019, based upon rent that was due on January 1, 2019.   The tenant began to tender its monthly rent payments to the Trial Court on March 1, 2019.

The landlord then filed an eviction action (“2019 Case”), at which point the Trial Court denied the tenant’s request for injunctive relief, consolidated the 2018 Case with the 2019 Case, and ordered that the consolidated case move forward.  Ultimately, the Trial Court ordered eviction of the tenant due to nonpayment of rent and rejected the retaliation argument asserted by the tenant on the basis that a retaliation claim cannot prevail when the tenant is in default of its rental obligations.  The Court of Appeals concluded that the lease provided for monthly rent payments to the landlord, there was no court order that allowed the tenant to tender its rent payments to the Trial Court, and therefore the tenant could not avoid eviction.

As more and more tenant default and lease disputes occur as a result of the Covid-19 pandemic and associated economic distress, Di Fiore is a reminder that lease obligations must generally be strictly complied with, unless there is a court order to the contrary, and that a retaliatory eviction claim should not succeed when the tenant is default due to non-payment of rent.

Disputes Between Landlords and Tenants Heating Up

As the COVID-19 pandemic continues to take its toll on the economy, especially the retail, restaurant, and hospitality sectors, more and more tenants have stopped paying rent, forcing landlords to take more aggressive action to obtain payment.  Contention between landlords and tenants in the retail sector has really intensified.  In one day alone, the entity that owns Easton Town Center in Columbus filed a dozen separate lawsuits against tenants, nearly all of which are well-recognized name brand national retailers.  The following day, Abercrombie & Fitch Stores, Inc. filed suit in Franklin County Common Pleas Court against all of its Simon Group landlord entities, 69 Simon Group landlord defendants in total, asserting that Abercrombie paid April and May rent “under protest,” and asking the Court to order that those rent payments be refunded.

As the economy struggles to reopen in its entirety, certain sectors will continue to suffer financially, increasing the stress on the commercial real estate system, and leading to more disputes.  Our commercial real estate developer and owner Clients are selectively having us play a greater role, generally with helping them obtain payment in their most severe situations, although the threshold for severity seems to be lower and interest that landlords have in taking action now is greater than it has been over the past several months.

How Ohio’s Judgment Lien Statute May Change

On July 24, 2020, Mike Sikora presented at the Ohio State Bar Association’s Council of Delegates Meeting to lawyers from all throughout Ohio who serve on that Council.  Mike advocated for the improvement of Ohio’s Judgment Lien Statute by presenting two main recommended improvements to the Statute.  Those recommendations presented by Mike Sikora were approved, and now the Ohio State Bar Association will take the lead on advocating for those improvements through its legislative advocacy process.

Rights That Transfer with Title versus Reservations of Interests

The Supreme Court of Ohio recently decided that absent an express reservation, the right to receive rents runs with the land and follows the transfer of legal title.  See LRC Realty, Inc. v. B.E.B. Properties, 2020-Ohio-319.  The Supreme Court of Ohio’s decision in LRC overturned a lower court’s decision regarding a dispute involving whether the buyer or the seller was entitled to receive rental payments from the owner of a cell tower that was located on leased land that had been transferred to the buyer.

Opportunity Zones: Fact or Fiction?

We believe we know more about Ohio Opportunity Zone law than any other firm.  There are a lot of myths and misperceptions flying around about Opportunity Zones.  See for yourself, some of the most important details about Ohio Opportunity Zones with Sikora Law’s Fact or Fiction summary below:

Almost $30M of the $50M allocation was awarded after Ohio’s Opportunity Zone Program was effective for only 10 weeks.
That’s true.  Ohio’s Opportunity Zone Program had been effective for only 10 weeks in 2019.  That Program has been extremely successful thus far.

Everyone who applies for Ohio Opportunity Zone Tax Credits receives them.
That’s false.  The Ohio Development Services Agency received nearly $35M in applications for Ohio Opportunity Zone tax credits, and approximately $30M in tax credits were awarded. The main reasons certain applicants did not receive tax credits was generally due to their structure, flow of funds, and/or non-compliant  documentation – they did not do what they needed to do in order to receive the credits.

Some developers received tax credits for work performed or money invested in Opportunity Zones even before Ohio’s Opportunity Zone law became effective.
That’s true. Our firm was advising Clients about what they needed to do to comply with the law even before it became effective. When it became apparent that the Bill was likely to pass, we closely advised our Clients on how to take the necessary steps to ensure compliance with the requirements of the new law.

Mike Sikora presents to the Ohio State Bar Association Counsel of Delegates Screening Committee

Mike Sikora presented to the Ohio State Bar Association Council of Delegates Screening Committee on several improvements to Ohio’s Judgment Lien Statute.  The Screening Committee voted unanimously to move forward with the initiative, which now heads to the full OSBA Council of Delegates next month for a vote.

Sikora Law announces new website

Sikora Law is excited to announce the launch of our new Ohio Opportunity Zone website, which summarizes the latest information about Ohio Opportunity Zone law and its interplay with federal Opportunity Zone law and highlights certain projects that we’ve helped utilize those laws.

Mike Sikora quoted in Crain’s Cleveland Business

Sikora Law’s Managing Partner Mike Sikora quoted in Crain’s Cleveland Business article about Ohio’s Opportunity Zone Program.

$30,000,000 Opportunity Zone Tax Credits Issued by the Ohio Development Services Agency in Inaugural Round

Sikora Law’s Clients (40 successful applicants) were awarded approximately 20% of the $30,000,000 Ohio Opportunity Zone tax credits issued for 2019 investments in Ohio Opportunity Zones, a figure that we believe exceeds any firm in the state.

In 2019 Mike worked closely with the Senator who sponsored the Bill that became Ohio’s Opportunity Zone law as well as provided expert testimony on behalf of NAIOP to the Ohio General Assembly in support of the passage of that Bill.  These efforts have resulted in one of the most beneficial Opportunity Zone tax credit programs in the country.

Sikora Law utilized its expertise and unique perspective on this new law to maximize the financial benefits of this fantastic new program for our Clients.  If you are considering an Opportunity Zone investment, or if you have questions about how you can make the most of Ohio’s Opportunity Zone program, contact the Sikora Law Team.