IN THE COURT OF APPEALS OF OHIO THIRD APPELLATE DISTRICT AUGLAIZE COUNTY
February 10, 2020
2020-Ohio-433
Appeal from Auglaize County Common Pleas Court Trial Court No. 2018 CV 0123. Judgment Reversed and Cause Remanded.
APPEARANCES:
Lee R. Schroeder for Appellants/Cross-Appellees
Taryn A. Douglas for Appellees/Cross-Appellants
ZIMMERMAN, J.
{1} Plaintiff-appellant, Keith A. Fahncke (“Keith“), appeals the May 29, 2019 judgment entry of the Auglaize County Court of Common Pleas dismissing his complaint against defendant-appellees, Larry R. Fahncke (“Larry“), Robert J. Fahncke (“Robert“), Ronald E. Fahncke (“Ronald“), Lisa M. Merkle (“Lisa M.“), Kathy K. Poppe (“Kathy“) aka Kathy K. Williams, Amy S. Schlenker (“Amy“) (collectively, “Keith‘s siblings“), Lisa A. Fahncke (“Lisa F.“), Janye A. Fahncke (“Jayne“), Therese M. Fahncke (“Theresa“), Steven R. Merkle (“Steven“), Scot A. Poppe (“Scot“), David P. Schlenker (“David“) (collectively, “defendants“). For the reasons that follow, we reverse.
{2} This case stems from the estate plan of Richard C. Fahncke (“Richard“) and Rosalyn M. Fahncke (“Rosalyn“) (collectively, the “parents“) who deeded four separate parcels of land containing 247 acres located in Auglaize County, (collectively, the “Fahncke-family farm“), to their seven children Keith, Larry, Robert, Ronald, Lisa M., Kathy, and Amy (collectively, the “Fahncke children“) as tenants-in-common.1 (Doc. No. 1, Exs. A, B, C); (Doc. No. 22, Ex. 2). Richard died on May 25, 2014, and Rosalyn died on March 15, 2018.2 Rosalyn‘s interest in the farm (terminated upon her death) and vested the Fahncke children as tenants-in-common of the Fahncke-family farm.3
{3} At the core of this appeal is a written agreement between the parents and the Fahncke children dated September 27, 2003 wherein Keith was given an option to purchase the Fahncke-family farm which triggered after the parents’ death. (Doc. No. 47). Such agreement, in its pertinent part provided as follows:
That at the death of the survivor of Richard C. Fahncke and of Rosalyn M. Fahncke, KEITH A. FAHNCKE shall have the right to purchase all of the real property subject to this agreement for an amount equal to the fair market value of said real property determined at the time of the death of the survivor of Richard C. Fahncke and of Rosalyn M. Fahncke by an independent appraiser hired by the remaining parties hereto. The appraiser shall appraise the real property at its agricultural use value unless said appraiser has knowledge that KEITH A. FAHNCKE will not use said real property for farming, in which case, the fair market value of the real property shall apply. For purpose of determining the purchase price of said real property, the appraised [sic] value of the real property shall first be reduced by
twenty percent (20%) and the remaining balance shall be reduced further by one-seventh (1/7). The remaining number shall be the purchase price of said real estate and shall be binding on all parties herein.
(Id.).
{4} Pertinent to this appeal, Keith and his siblings disagreed as to the valuation of the Fahncke-family farm after Rosalyn died. Based on that disagreement, Keith did not exercise his purchase option, which expired on September 21, 2018. Instead, Keith filed a complaint in the trial court against the defendants seeking a declaratory judgment, with further claims for breach of contract, anticipatory repudiation, and unjust enrichment. (Doc. No. 1). On October 22, 2018, the defendants filed their answer and counterclaims for declaratory judgment and partition. (Doc. No. 22).
{5} All parties filed summary judgment requests, and on May 29, 2018, the trial court granted the defendants’ motion for summary judgment and denied Keith, HAC, and Diane‘s motion for summary judgment. (Doc. Nos. 26, 42, 47, 63). However, in its decision, the trial court granted Keith 30 days to exercise his option to purchase the Fahncke-family farm. (Id.). (See also Doc. No. 66).
{6} Keith, HAC, and Diane filed a notice of appeal on June 28, 2019. (Doc. No. 67). They raise six assignments of error for our review, which we will address together. The defendants filed a cross-appeal on July 8, 2019, and raise one assignment of error. (Doc. No. 77).
{7} We will address Keith, HAC, and Diane‘s assignments of error, first followed by the defendants’ cross assignment of error.
Keith, HAC, and Diane‘s Assignment of Error No. I
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because Reasonable Minds Cannot Come To One Conclusion Entitled The Appellees’ To Judgement As A Matter Of Law.
Keith, HAC, and Diane‘s Assignment of Error No. II
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because The Trial Court Failed To Apply The Special Meaning Of The Geographic Location And The Industry To Correctly Construe The Terms Of The Contract.
Keith, HAC, and Diane‘s Assignment of Error No. III
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because The Trial Court Failed To Give All Of The Provisions Of The Agreement Weight And Meaning During The Construction Of The Agreement.
Keith, HAC, and Diane‘s Assignment of Error No. IV
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because The Trial Court Failed To Give Any Weight To Evidence Demonstrating That A Scriveners’ Error Existed And Affected The Meaning Of The Agreement.
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because The Trial Court Determined That “Agricultural Use Value” And “Fair Market Value” Had The Same Meaning.
Keith, HAC, and Diane‘s Assignment of Error No. VI
The Trial Court Erred In Denying The Appellants’ Motion For Summary Judgment And Granting The Appellees’ Motion For Summary Judgment Because The Trial Court Relied Upon Extrinsic Evidence Of An Unrelated Real Estate Purchase To Determine What Appellant Should Pay In The Instant Case.
{8} Before we review the merits of this case, we must address a threshold jurisdictional question. Although the parties did not raise the issue of whether the trial court‘s judgment entry is reviewable by this court as a final, appealable order, this is a jurisdictional question which we must raise sua sponte. In re Murray, 52 Ohio St.3d 155, 159-160 (1990), fn. 2. Whitaker-Merrell Co. v. Geupel Constr. Co., 29 Ohio St.2d 184, 186 (1972).
{9} We have appellate jurisdiction over “final appealable orders.”
When determining whether a judgment or order is final and appealable, an appellate court engages in a two-step analysis. First, the court must determine if the order is final within the requirements of
Nnadi v. Nnadi, 10th Dist. Franklin No. 15AP-13, 2015-Ohio-3981, ¶ 12, citing Gen. Acc. Ins. Co. at 21.
(B) An order is a final order that may be reviewed, affirmed, modified, or reversed, with or without retrial, when it is one of the following:
(1) An order that affects a substantial right in an action that in effect determines the action and prevents a judgment;
(2) An order that affects a substantial right made in a special proceeding or upon a summary application in an action after judgment;
(3) An order that vacates or sets aside a judgment or grants a new trial;
(4) An order that grants or denies a provisional remedy and to which both of the following apply:
(a) The order in effect determines the action with respect to the provisional remedy and prevents a judgment in the action in favor of the appealing party with respect to the provisional remedy. (b) The appealing party would not be afforded a meaningful or effective remedy by an appeal following final judgment as to all proceedings, issues, claims, and parties in the action.
(5) An order that determines that an action may or may not be maintained as a class action;
(6) An order determining the constitutionality of any changes to the Revised Code made by Am.Sub.S.B. 281 of the 124th general assembly * * *;
(7) An order in an appropriation proceeding that may be appealed pursuant to division (B)(3) of section 163.09 of the Revised Code.
{10} ”
”
Civ.R. 54(B) cannot abridge, enlarge, or modify any substantive right. * * * It permits both the separation of claims for purposes of appeal and the early appeal of such claims, within the discretion of the trial court, but it does not affect either the substantive right to appeal or the merits of the claims. * * *”
Id., quoting Alexander v. Buckeye Pipe Line Co., 49 Ohio St.2d 158, 159 (1977). ”
{11} Ordinarily, in a multi-party or multi-claim case, when a trial court‘s judgment entry affects a substantial right of some but not all parties or determines some but not all claims pending before the trial court, the absence of a
{12} In the case before us, the trial court did not dismiss the defendants’ third-party complaint against HAC and Diane. (See Doc. No. 63). However, even though the third-party complaint remains pending, it does not impact the finality of the trial court‘s order. See Mangen at ¶ 7. Because the trial court granted the defendants’ declaratory-judgment and partition claims and dismissed Keith‘s claims for declaratory judgment, breach of contract, anticipatory repudiation, and unjust enrichment, HCA and Diane‘s third party complaint for declaratory judgment and partition were implicitly rejected and rendered moot. Id. at ¶ 8-9, citing Wise at 243.
{13} Having concluded that we have jurisdiction to review this case, we now turn to Keith, HAC, and Diane‘s assignments of error in which they argue that the trial court erred by granting summary judgment in favor of the defendants after incorrectly interpreting the terms of the agreement.
Standard of Review
{14} We review a decision to grant summary judgment de novo. Doe v. Shaffer, 90 Ohio St.3d 388, 390 (2000). “De novo review is independent and without deference to the trial court‘s determination.” ISHA, Inc. v. Risser, 3d Dist. Allen No. 1-12-47, 2013-Ohio-2149, ¶ 25, citing Costner Consulting Co. v. U.S. Bancorp, 195 Ohio App.3d 477, 2011-Ohio-3822, ¶ 10 (10th Dist.). Summary judgment is proper where there is no genuine issue of material fact, the moving party is entitled to judgment as a matter of law, and reasonable minds can reach but one conclusion when viewing the evidence in favor of the non-moving party, and the conclusion is adverse to the non-moving party.
Analysis
{15} In this case, the trial court issued an entry interpreting the terms of the agreement through a declaratory judgment. An appellate court reviews a trial court‘s determination “concerning the appropriateness of the case for declaratory judgment” under an abuse-of-discretion standard. Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-3208, ¶ 1. After the trial court determines that a complaint for declaratory judgment presents a justiciable question, an appellate court reviews de novo purely legal issues. Id. at ¶ 17.
{16} “‘A declaratory judgment action provides a means by which parties can eliminate uncertainty regarding their legal rights and obligations.‘” Mid-Am. Fire and Cas. Co. v. Heasley, 113 Ohio St.3d 133, 2007-Ohio-1248, ¶ 8, quoting Travelers Indemn. Co. v. Cochrane, 155 Ohio St. 305, 312 (1951). See also
{17} Here, Keith, HAC, Diane, and the defendants are unable to agree on the Fahncke-family farm‘s valuation under the terms of the agreement. Specifically, the parties disagree as to the meaning of the
{18} We now turn to the terms of the agreement to determine if the language of the agreement is ambiguous. “The construction of written contracts and instruments, including deeds, is a matter of law.” Long Beach Assn., Inc. v. Jones, 82 Ohio St.3d 574, 576 (1998), citing Inland Refuse Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 15 Ohio St.3d 321, 322 (1984). We review questions of law de novo. Id., citing Ohio Bell Tel. Co. v. Pub. Util. Comm., 64 Ohio St.3d 145, 147 (1992). “When interpreting a contract, we will presume that words are used for a specific purpose and will avoid interpretations that render portions meaningless or unnecessary.” Beverage Holdings, L.L.C. v. 5701 Lombardo, ___ Ohio St.3d ___, 2019-Ohio-4716, ¶ 33 (Kennedy, J. dissenting), quoting Wohl v. Swinney, 118 Ohio St.3d 277, 2008-Ohio-2334, ¶ 22.
{19} The relevant term of the agreement subject to dispute reads as follows:
That at the death of the survivor of Richard C. Fahncke and of Rosalyn M. Fahncke, KEITH A. FAHNCKE shall have the right to purchase all of the real property subject to this agreement for an amount equal to the fair market value of said real property determined at the time of the death of the survivor of Richard C. Fahncke and of Rosalyn M. Fahncke by an independent appraiser hired by the remaining parties hereto. The appraiser shall appraise the real property at its agricultural use value unless said appraiser has knowledge that KEITH A. FAHNCKE will not use said real property for farming, in which case, the fair market value of the real property shall apply. For purpose of determining the purchase price of said real property, the appraised [sic] value of the real property shall first be reduced by twenty percent (20%) and the remaining balance shall be reduced further by one-seventh (1/7). The remaining number shall be the purchase price of said real estate and shall be binding on all parties herein.
(Emphasis added.) (Doc. No. 47).
{20} The parties do not dispute that the agreement is unambiguous; rather, Keith, HAC, and Diane contend that the trial court erred in its interpretation of the valuation language in the terms of the agreement. Specifically, they argue that the trial court erred by concluding that the Fahncke-family farm should be valued at its fair-market value at current-market value and not at its agricultural-use value or CAUV.4 The trial court in reaching its conclusion (valuing the land at its fair-market value instead of its agricultural-use value) reasoned that the absence of the word current in conjunction with agricultural-use value in the agreement was dispositive. We disagree.
{21} “Typically, real property is valued by the county auditor at its ‘true value in money.‘” Johnson v. Clark Cty. Bd. of Revision, 155 Ohio St.3d 264, 2018-Ohio-4390, ¶ 10, citing
{22} CAUV is based upon soil types. See
{23} In our review of the agreement between the parents, Keith, and his siblings, it is clear that Richard and Rosalyn‘s intention was to create an opportunity for Keith to purchase the family farm “at its agricultural use value” unless the appraiser (chosen by Keith‘s siblings) had knowledge that Keith was not farming the land. (See Doc. No. 47). Here, the record reveals, at all times relevant, that Keith was farming the land. Thus, the only question for us to answer is whether or not the appraiser‘s value is the “agricultural use value” of the farm as of Rosalyn‘s passing.
{24} As we noted above, the agricultural-use value of farmland is an Ohio real estate tax program that sets farmland values below true market values for working farmers. Every year the Ohio Department of Taxation sets the agricultural-use values for each of Ohio‘s soil types, including use values of both cropland and woodland. See
{25} When the trial court construed that the absence of the word current (in the agreement) meant that the agricultural-use value is equal to fair-market value at current-market value, it rendered the term agricultural-use value and the contingency clause in the parties’ agreement
{26} When considering whether to permit parole evidence regarding ambiguity of the term agricultural-use value, the trial court reasoned that the use of language requiring an independent appraisal was indicative that the parents’ intended to define fair-market value at current-market value because CAUV was a figure that was readily ascertainable from the Auglaize County Auditor‘s Office. Thus, negating any argument that this term is ambiguous. Because we concluded that the agreement is not ambiguous—parole evidence is not needed to discern the intent of the parents (notwithstanding this conclusion) it is inconsequential whether CAUV was readily ascertainable. The purpose of the independent appraisal was to meet the condition precedent in the contingency clause regarding Keith‘s use of the Fahncke-family farm. Put more plainly, the independent appraiser‘s task was to determine whether Keith was going to “farm” the land. If so, the agreement clearly states that the appraiser was to appraise the farm at its agricultural-use value.
{27} To construe this agreement otherwise would negate the parents’ intention that this estate-planning tool be used to permit the multi-generational use of the Fahncke-family farm, to comply with Medicaid spend-down for the parents’ Medicaid-eligibility determination, and to avoid federal-inheritance taxes as it relates to the Fahncke-family farm. (See Doc. No. 47).
{28} Accordingly, we conclude that the trial court erred in determining the meaning of fair-market value under the terms of the agreement. In this instance fair-market value at its agricultural-use value means “taxable value” and not “true value in money.” Therefore, summary judgment was inappropriate.
Defendants’ Assignment of Error
The trial court erred in holding that Appellant/Cross Appellee, Keith A. Fahncke‘s, purchase option under the agreement did not lapse. Ohio Law and the Agreement is clear that a failure to affirmatory exercise the option within the specified timeframe causes the option to lapse and become null and void.
{29} In their assignment of error, the defendants argue that the trial court erred by concluding that the purchase option under the terms of the agreement did not lapse.
{30} In light of our decision to sustain Keith, HAC, and Diane‘s assignments of error, we decline to address the defendants’ assignment of error which is rendered moot.
{31} Having found error prejudicial to the appellants herein in the particulars assigned and argued in their assignments of error, we reverse the judgment of the
SHAW, P.J. and PRESTON, J., concur.
/jlr
Judgment Reversed and Cause Remanded