Herhold v. Smith Land Co., L.L.C.
2019 Ohio 2418
Ohio Ct. App.2019Background
- In 2002 Shawn and Malavanh Herhold bought a vacant lot (the Property) from Smith Land Co., LLC and Robert Smith; the parties discussed that the lot was buildable and the sales contract included a handwritten notation: "Seller to provide documentation that lot is buildable with fill dirt."
- The subdivision plat contained wetlands-designation language and a restriction that wetlands not shown “to be filled” required Army Corps permits; Smith Land had earlier obtained an Army Corps Nationwide Permit to fill certain wetlands on the larger tract.
- After purchase the Herholds later learned the City of Fairlawn would not issue a building permit without Ohio EPA approval because fill had been placed over wetlands; Ohio EPA found excess/unpermitted fill and the Herholds removed fill and restored wetlands, diminishing the lot’s usable area.
- The Herholds sued Smith Land and Robert Smith for breach of contract, fraud/fraudulent concealment, and related claims; a first jury verdict was later set aside, a second jury again found for the Herholds, awarding contract and fraud damages, attorney fees, prejudgment interest, and punitive damages.
- Defendants moved for JNOV/new trial and appealed; the Ninth District Court of Appeals affirmed the trial court’s judgment in favor of the Herholds on all issues challenged on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of contract — was the lot sold as buildable?/Did defendants breach the sales contract? | Herhold: contract (including handwritten promise and addendum) guaranteed a buildable lot with existing fill; defendants failed to deliver and caused damages. | Smith: "AS IS" clause, inspection contingency, and merger into deed bar contract recovery; no breach. | Court: Evidence (handwritten notation, addendum, disclosures, Corps permit/map, Ohio EPA findings) permitted a reasonable jury to find breach; appellate challenge rejected. |
| Fraud / fraudulent concealment — did defendants knowingly conceal unauthorized fill or misrepresent buildability? | Herhold: defendants knew of unauthorized/excess fill and misled Plaintiffs about buildability; Plaintiffs justifiably relied. | Smith: No duty separate from contract; no knowledge of unauthorized fill; cannot predicate fraud on future performance. | Court: Sufficient evidence supported fraud elements (disclosure form, Corps map/permit, testimony, Ohio EPA conclusion); directed verdict/JNOV denied. |
| Evidentiary/discovery rulings — admissibility of Ohio EPA witness (Wilk) and denial to reopen discovery to depose him | Herhold: Wilk’s testimony relevant to what was required for permits and the nature/extent of fill; Plaintiffs relied on his inspection evidence. | Smith: Wilk’s testimony irrelevant/misleading; trial court abused discretion by not reopening discovery to depose him about documents/photos. | Court: Defendants failed to preserve or develop relevance objections; trial court did not abuse discretion reopening discovery when defendants already had the public-records file and could subpoena Wilk at trial. |
| Punitive damages and new trial — award size and post-trial motions for new trial (Civ.R. 59) | Herhold: punitive damages supported by fraud findings; no cap applies because cause of action accrued before punitive-cap statute effective date. | Smith: No malice/egregious fraud to support punitive damages; statutory cap on punitive damages applies; trial errors warrant new trial. | Court: Plaintiffs’ fraud verdict supports punitive damages; statutory cap (R.C. 2315.21) not retroactively applicable to pre-effective conduct; no abuse of discretion on new-trial grounds. |
Key Cases Cited
- Solid Waste Agency of N. Cook County v. U.S. Army Corps of Engineers, 531 U.S. 159 (2001) (federal wetlands-jurisdiction rule relied on by witnesses to explain shift from Corps to state jurisdiction)
- Spicer v. James, 21 Ohio App.3d 222 (2d Dist. 1985) (corporate officer not personally liable unless he binds himself individually)
- Marhofer v. Baur, 101 Ohio App.3d 194 (9th Dist. 1995) (same principle on officer liability and signature form)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983) (standard for abuse of discretion review)