In the case of Coventry Courts, L.L.C. v. Cuyahoga Cty., 2023-Ohio-1037, an appellate court held that (1) a county has sovereign immunity against fraud claims pursuant to R.C. Chapter 2744 when the county is performing a governmental function, such as collecting taxes, (2) taxpayers have a claim for the illegal collection of taxes under R.C. 2723.01 rather than an unjust enrichment claim, and (3) the business could not sue the county after the business waived all claims against the county in a settlement.
In this case, the business argued that (1) political subdivisions are not immune from liability for fraud claims; (2) the county had unjustly retained money belonging to the business by collecting illegal taxes; and (3) the settlement only applied to the 2015 tax year. In response, the county argued that (1) political subdivisions are immune from liability for fraud and unjust enrichment claims under R.C. Chapter 2744; (2) R.C. 2723.01 provides a remedy for the collection of illegal taxes, therefore the business could not sue on a different claim; and (3) the settlement agreement broadly released all claims against the county. The appellate court agreed with the county on the fraud claim, the unjust enrichment claim, and the settlement defense.
In support of its decision in favor of the county on the fraud and unjust enrichment claim, the appellate court explained that there is no exception to the general immunity for fraud claims.
In support of its decision in favor of the county on the illegal taxes claim, the appellate court explained that “R.C. 2723.01 provides an adequate remedy at law. Therefore, an unjust-enrichment claim, as a form of equitable relief, is not the proper remedy for recovering the overpayment of taxes. … [B]ecause [the business] had an adequate remedy at law, an unjust-enrichment claim is not available.” 2023-Ohio-1037 at ¶ 24.
In support of its decision in favor of the county on the settlement defense, the appellate court explained that the business could have included language specifically limiting the release of claims to just the 2015 tax year, but instead broadly released the county of all claims.
To read this case, click here.
Authors: Matthew John Markling and the McGown & Markling Team.
Note: This blog entry does not constitute – nor does it contain – legal advice. Legal jurisprudence is like the always-changing Midwestern weather. As a result, this single blog entry cannot substitute for consultation with a McGown & Markling attorney. If legal advice is needed with respect to a specific factual situation, please feel free to contact a McGown & Markling attorney.