2016 Ohio 1396
Ohio Ct. App.2016Background
- Stewart I. Mandel owned three contiguous lots (Lots 398–400) in the Burgundy Bay subdivision; a house sat on Lot 399 and Lots 398 and 400 were vacant.
- Deed restrictions required annual dues/charges to Burgundy Bay Association (BBA) and Lake Erie Utilities (LEU) for common-area and utility maintenance; Mandel signed a 1991 contiguous-lot agreement with BBA and LEU.
- The agreement stated BBA/LEU would “waive their dues and charges” so long as the residential and contiguous lots were owned by the same Owner and the contiguous lots remained vacant; the agreement specified two triggers that would void the waiver and require retroactive payment: (1) non-accessory construction on the contiguous lot, or (2) Owner’s written notice terminating the agreement; it also provided for 10% interest and attorneys’ fees upon enforcement.
- In 1996 Mandel transferred the lots into his revocable inter vivos trust (he remained trustee); after his 2010 death the trust (as plaintiff) contracted to sell the vacant lots, prompting BBA/LEU to assert breach and demand retroactive dues.
- The trust sued for declaratory judgment; both sides moved for summary judgment. The probate court held the agreement was a continuing waiver (not merely a deferral), found no breach or termination event in the record, and denied BBA/LEU retroactive dues or fees; BBA and LEU appealed.
Issues
| Issue | Plaintiff's Argument (Trust / Mandel) | Defendant's Argument (BBA / LEU) | Held |
|---|---|---|---|
| Is the contiguous-lot provision a continuing waiver or a deferral of dues? | The agreement creates an ongoing, irrevocable waiver while owner retains both lots vacant. | The agreement effectively defers dues; waived amounts become payable upon certain events or breach. | Waiver: court held language ("exempt" and "so long as") shows an ongoing waiver, not mere deferral. |
| Did transferring the lots into Mandel’s revocable trust in 1996 breach the agreement (assignment without written consent)? | No — Mandel remained the legal titleholder/trustee and did not assign rights to a third party; no breach. | Yes — transfer to the trust was an assignment requiring prior written consent and thus breached the contract. | No breach: court found transfer into Mandel’s revocable trust did not trigger liability. |
| Did the trust’s later contracts to sell the vacant lots trigger retroactive dues/penalties? | No — the agreement specifies only non-accessory construction or written termination as triggers; sale/transfer is not a specified trigger. | Yes — attempted sale constituted an event triggering enforcement and retroactive obligations. | No: court held sale negotiations alone did not meet the contract’s specified triggering events. |
| Are BBA/LEU entitled to attorneys’ fees under the agreement? | Fees are not recoverable because no enforceable breach or triggering event occurred. | Fees are recoverable because enforcement was required by the trust’s attempted transfers. | No: because no breach/termination was proved, fees not awarded. |
Key Cases Cited
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (summary-judgment review standard)
- Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51 (contract interpretation—ascertain parties’ intent)
- Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130 (presumption that parties’ intent resides in contract language)
- Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (plain-meaning rule for common contract terms)
- Four Howards, Ltd. v. J & F Wenz Road Investment, L.L.C., 179 Ohio App.3d 399 (ambiguities construed against drafter)
- State v. Blackburn, 118 Ohio St.3d 163 (definition of waiver as intentional relinquishment of a known right)