Oryann, Ltd. v. SL & MB, L.L.C.
2015 Ohio 5461
Ohio Ct. App.2015Background
- Gregg Battersby and Amy Virant transferred a 24‑acre horse farm to their LLC, SL & MB, which operated a horse‑boarding business. Gregg later moved out of state; Amy remained on the property.
- Denver Barry (through an entity Oryann, Ltd.) negotiated with Gregg for ~1 year to buy the farm; total agreed price in negotiations was $640,000 throughout. Multiple offers originally priced the amount solely as real estate.
- Contemporaneous documents executed at closing: a Real Estate Purchase Agreement (land/buildings for $350,000 with owner financing), an Agreement for Purchase and Sale of Assets (purporting to sell business assets for $290,000; Exhibit A listing assets was blank), a Note & Security Agreement for $640,000 and mortgages securing different portions.
- Oryann and Denver paid 13 monthly $10,000 installments, then defaulted. Oryann sued SL & MB and Amy for fraud and breach (failure to deliver business assets); SL & MB counterclaimed for unpaid balance.
- Trial court: enforced the real estate contract and awarded SL & MB $170,000; found the asset purchase agreement unenforceable for lack of meeting of the minds/consideration and dismissed Oryann’s fraud claim. Both parties appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of asset purchase agreement (meeting of minds / consideration) | Oryann: Parties intended one integrated $640,000 transaction; asset agreement is valid; consideration existed (assets delivered; payments made). | SL & MB: Asset agreement is illusory/ambiguous (Exhibit A blank) and lacked consideration from seller, so unenforceable. | Court: Reversed trial court — agreements are part of one transaction, parties manifested intent, consideration existed; asset agreement and related security instruments are enforceable. |
| Whether contracts must be read together | Oryann: The real estate and asset contracts reference each other and should be construed as a whole. | SL & MB: (Implicit) Trial court treated agreements separately; asset agreement severable. | Court: Contracts construed together; trial court erred by nullifying the asset agreement while enforcing the real estate agreement. |
| Fraud / fraudulent concealment by sellers | Oryann: Sellers concealed material defects (basement water intrusion, septic, barn roof, drain tiles, foundation) to induce purchase. | SL & MB: Defects were open, disclosed, or corrected; buyers had opportunity to inspect; no reasonable reliance; lack of proof of damages. | Court: Affirmed trial court — Oryann failed to prove material misrepresentation, concealment, reasonable reliance, or damages by clear and convincing evidence. |
| Damages for fraud / proof of repair costs | Oryann: Presented evidence of repair payments and damages. | SL & MB: Payments were unsupported by invoices or witness proof tying costs to repairs; no admissible proof of reduced value or repair cost. | Court: Held Oryann failed to show reasonable damages; trial court’s finding upheld. |
Key Cases Cited
- Kostelnik v. Helper, 96 Ohio St.3d 1 (Ohio Supreme Court) (contract elements and meeting of minds)
- Prudential Ins. Co. of Am. v. Corporate Circle, LTD, 103 Ohio App.3d 93 (8th Dist.) (multiple writings concerning same transaction must be read together)
- Williams v. Ormsby, 131 Ohio St.3d 427 (Ohio Supreme Court) (consideration requirement)
- Layman v. Binns, 35 Ohio St.3d 176 (Ohio Supreme Court) (caveat emptor in real estate sales)
- Cross v. Ledford, 161 Ohio St. 469 (Ohio Supreme Court) (clear and convincing evidence standard for fraud)