Jack Turturici Family Trust v. Carey
962 N.E.2d 347
Ohio Ct. App.2011Background
- Turturici Family Trust contracted to buy 701 N. Market St. (commercial) for $451,050 and 703 N. Market St. (residential) for $115,000, with closing on Aug. 15, 2008 for 701.
- Loop Net listing for 701 showed a 9% cap rate, implying $3,800 monthly rent; Turturici relied on that figure.
- Tenant at 701 began missing rent in December 2007; by mid-2008 arrears reached about $20,000, though listing and tax data did not reflect this.
- Broker Bagi and the Careys knew of tenant delinquency by May 2008 but did not disclose it or correct the cap rate before closing.
- City stormwater letter dated Aug. 1, 2008 advised improvements to curb runoff; neither Lostcreek nor Bagi disclosed this to Turturici prior to closing.
- Closing occurred Aug. 15, 2008; subsequent mortgage and promissory notes were executed to finance 701, while 703 sale did not close; tenant vacated and rent ceased.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether there was fraudulent misrepresentation by defendants | Turturici alleges intentional false cap rate and undisclosed rent delinquency. | Defendants contend no misrepresentation of present facts or duty to disclose. | First assignment sustained; misrepresentation established; remand for remaining elements. |
| Whether there was fraudulent nondisclosure | Defendants failed to disclose latent facts creating misleading impressions. | No duty to disclose absent fiduciary or special relation; partial disclosure not actionable. | Second assignment sustained; duty to disclose found under Restatement and Blon framework; remand for further proof of elements. |
| Whether Lostcreek breached contract by failing to disclose the Aug. 1, 2008 city notice | Paragraph 8 imposed a continuing duty to disclose notices; disclosure of Aug. 1 notice was mandatory. | Notice occurred largely post-signing; representations survive closing, not a continuing duty to disclose. | First cross-assignment sustained; breach found; remand for damages considerations. |
| Appropriate damages for Lostcreek’s breach | Cost of repair governs damages; expert testimony supports this measure. | Damages should be capped by market value delta; cost-of-repair only if not excessive. | Second cross-assignment affirmed in part; cost-of-repair approved with factual caps; remand for consistent calculation. |
Key Cases Cited
- Sutton Funding, L.L.C. v. Herres, 188 Ohio App.3d 686 (2010-Ohio-3645) (fraud elements; reliance and damages framework applied)
- Cohen v. Lamko, Inc., 10 Ohio St.3d 167 (1984) (elements of common-law fraud; duty to disclose contexts)
- Blon v. Bank One, Akron, N.A., 35 Ohio St.3d 98 (1988) (duty to disclose; fiduciary/ trust relationships; misrepresentation context)
- Collins v. Natl. City Bank, 2003-Ohio-6893 (Montgomery App. No. 19884, 2003-Ohio-6893) (fraud elements; disclosures in real estate transactions)
- Miles v. McSwegin, 58 Ohio St.2d 97 (1979) (fiduciary/relationship-based disclosure duties)