Patel v. Strategic Group, L.L.C.
2020 Ohio 4990
Ohio Ct. App.2020Background
- Strategic Group purchased commercial property in Akron and listed it for sale; Patel (buyer) paid $50,000 earnest money by three personal checks at a March meeting. Strategic Group deposited the funds in its business account rather than escrow as the purchase agreement required.
- The written purchase agreement (with handwritten additions in Rider A and paragraph 6) required delivery and buyer approval of title work; Rider A’s wording was susceptible to multiple readings about whether the handwritten additions were contingencies.
- Barristers delivered a title commitment showing an existing lease (with exercised renewal options through Nov. 2020) and a handwritten note that assignment of the lease would occur outside escrow — Patel said this was his first notice of the lease’s renewal status.
- Patel, through counsel, terminated the purchase agreement under its contingency/termination provisions and demanded return of the $50,000; Strategic Group refused, asserting Patel breached and forfeited the earnest money.
- At bench trial the court admitted parol evidence, found the contract ambiguous, concluded Patel validly terminated, awarded $50,000 for breach of contract and also entered a conversion judgment; on appeal the court affirmed the breach award but vacated the conversion finding (to avoid double recovery).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of parol evidence / contract ambiguity | Rider A and ¶6 are ambiguous; parol evidence should explain parties’ intent that handwritten additions were contingencies | Contract is clear; no parol evidence allowed | Court: contract terms reasonably susceptible to multiple meanings; parol evidence properly considered to ascertain intent; assignment overruled |
| Right to terminate / refund of earnest money | Title commitment showed objectionable lease encumbrance; under ¶5/¶12 Patel validly terminated and is entitled to full refund | Patel could not terminate (or breached), so earnest money is forfeit | Court: Patel validly terminated under the contingencies and received $50,000; appellate court affirmed |
| Deposit of earnest money (escrow requirement) and breach | Strategic Group failed to escrow and refused refund — breach of contract | Earnest money retained for buyer breach | Court: Strategic Group breached by not returning earnest money; judgment for $50,000 awarded for breach |
| Conversion claim vs. breach remedy | Conversion is available for wrongful withholding of funds | Conversion duplicative of contract remedy; cannot recover both | Court: Conversion claim vacated as moot/duplicative once breach award restored full value; appellate court vacated conversion portion and affirmed breach award |
Key Cases Cited
- MRI Software, L.L.C. v. W. Oaks Mall FL, L.L.C., 116 N.E.3d 694 (Ohio App. 2018) (standard of review and deference when interpreting ambiguous contract terms)
- Hamilton Ins. Servs., Inc. v. Nationwide Ins. Cos., 714 N.E.2d 898 (Ohio 1999) (courts enforce clear contract language and generally may not consider extrinsic evidence)
- Seasons Coal Co. v. Cleveland, 461 N.E.2d 1273 (Ohio 1984) (deference to trial court credibility findings after bench trial)
- Beverage Holdings, L.L.C. v. 5701 Lombardo, L.L.C., 150 N.E.3d 28 (Ohio 2019) (if contract language is plain, courts must enforce its terms without extrinsic evidence)
- Castlebrook Ltd. v. Dayton Properties Ltd., 604 N.E.2d 808 (Ohio App. 1992) (abuse-of-discretion standard for trial court’s interpretation of ambiguous language)
- Hillsboro v. Fraternal Order of Police, Ohio Labor Council, Inc., 556 N.E.2d 1186 (Ohio 1990) (defining ambiguity as reasonably susceptible to more than one explanation)
- Kelly v. Med. Life Ins. Co., 509 N.E.2d 411 (Ohio 1987) (presumption that parties’ intent is reflected in contract language)
- Richardson v. Shaw, 209 U.S. 365 (U.S. 1908) (conversion and contract as alternate remedies)