Father's House Internatl., Inc. v. Kurguz
71 N.E.3d 711
Ohio Ct. App.2016Background
- Parties entered a land-installment contract (Sept. 29, 2010) for commercial property in Columbus; purchaser (Father's House) took possession and agreed to monthly installments plus a balloon payment at month 61.
- Father's House made ≈$128,000 in improvements (partly via city grant) and subleased the property to the Community Shelter Board/Y.M.C.A. for $5,500/month.
- Dispute over an alleged oral modification (lower monthly installments continuing after month 12) and defaults on taxes/utilities; seller (Kurguz) issued a Notice of Forfeiture in April 2013; Father's House sent a rescission letter in Aug. 2013 and stopped payments after June 2013.
- Trial court canceled the contract on summary judgment as to equitable interest but left breach/timing issues for trial; jury found Kurguz materially breached, Father's House substantially performed, and awarded $62,000 to Father's House.
- Kurguz appealed, arguing (1) trial court should have instructed on market-value damages, (2) evidence of damages was not reasonably certain (directed verdict/JNOV), (3) error in permitting rescission/restitution instructions after Father's House allegedly elected expectation damages, and (4) failure to instruct on offset by fair rental value.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether court should have instructed jury that damages for breach of land installment contract are the difference between contract price and market value at breach | Market-value rule is not exclusive here; other damages and restitution are available given improvements and commercial use | Market-value measure is the proper (exclusive) damages rule for seller's recovery on buyer default | Court: Market-value is a recognized measure but not exclusive; given commercial property, substantial improvements, and alternative remedies (expectation, reliance, restitution), refusal to give market-value-only instruction was not an abuse of discretion |
| Whether rescission/restitution instructions were improper because Father's House had elected expectation damages | Father's House argued election of remedies was a factual question for the jury and rescission/restitution were available if election was proved | Kurguz argued Father's House had already elected rescission and therefore should be limited to expectation damages or barred from restitution | Court: Election of remedies requires knowledge and clear election; it is factual. Rescission/restitution instruction was warranted and properly limited to avoid double recovery |
| Whether jury should have been instructed to reduce restitution by fair rental value during occupancy | Father's House did not timely request/argue this instruction; trial counsel discussed instruction options | Kurguz argued restitution should be offset by fair rental value received from occupancy/sublease | Court: Issue waived—defendant failed to timely request or timely object to omission; appellate review denies claim |
| Whether evidence of damages was legally sufficient (directed verdict/JNOV) | Father's House produced evidence it could have paid remaining installments/balloon and conferred $128,000 in improvements; jury could award expectation or restitution (or both as applicable) | Kurguz argued damages were speculative; lack of market-value testimony undermined award | Court: Evidence, viewed in plaintiff's favor, was sufficient to submit to jury and support $62,000 (and JNOV properly denied); jury interrogatories did not require specifying theory of damages, so restitution or expectation could support award |
Key Cases Cited
- Krischbaum v. Dillon, 58 Ohio St.3d 58 (1991) (party need not formally object to a charge omission where proposed instruction was argued and trial court was fully apprised of correct law)
- Roesch v. Bray, 46 Ohio App.3d 49 (Ohio App. 6th Dist. 1988) (general rule: seller may recover contract price minus market value when buyer defaults)
- McCarty v. Lingham, 111 Ohio St. 551 (1924) (discusses measure of damages in real estate contract breaches)
- Goldfuss v. Davidson, 79 Ohio St.3d 116 (1997) (Civ.R. 51 waiver rule: failure to timely object forfeits appellate review)
- Frederickson v. Nye, 110 Ohio St. 459 (1924) (discusses election of remedies and requirements for an effective election)