Snider-Cannata Interests, L.L.C. v. RuperSnider-Cannata Interests, L.L.C. v. Ruper
JUDGMENT: AFFIRMED IN PART; REVERSED AND REMANDED IN PART
Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-622267
BEFORE: McMonagle, J., Rocco, P.J., and Boyle, J.
RELEASED: April 29, 2010
JOURNALIZED:
Gerald W. Phillips
Cannata Phillips LPA, LLC
9555 Vista Way Suite 200
Garfield Heights, OH 44125
ATTORNEYS FOR APPELLEES
Mark R. Jacobs
Brian E. Ambrosia
Michael H. Diamant
Taft, Stettinius & Hollister LLP
200 Public Square, Suite 3500
Cleveland, OH 44114-2302
N.B. This entry is an announcement of the court‘s decision. See
{¶ 1} Plaintiff-appellant, Snider-Cannata Interests, LLC, appeals the trial court‘s judgment granting summary judgment in favor of defendants-appellees, John and Barbara Ruper. We affirm in part and reverse and remand in part.
I
{¶ 2} The Rupers were the owners of property located at 8757 Brecksville Road, Brecksville, Ohio, which they operated as a motel (Pilgrim Inn). On February 1, 2006, the Rupers and Snider-Cannata entered into a contract, whereby the Rupers were to sell the property to Snider-Cannata for $1.7 million. The sale between the parties did not take place, however.
{¶ 3} In April 2007, Snider-Cannata filed this action against the Rupers, seeking a declaratory judgment, and asserting claims for breach of contract, fraud, and misrepresentation. The Rupers counterclaimed for breach of contract, and were granted leave to file a third-party complaint. During discovery, Snider-Cannata sought to obtain John Ruper‘s medical records and to have him submit to an examination, but the trial court denied its requests.
{¶ 4} The Rupers filed a motion for summary judgment; the court granted the motion and awarded judgment in favor of the Rupers and against
II
{¶ 5} Although not raised by the parties, we address the issue of jurisdiction because it appears uncertain. See Kohout v. Church of St. Rocco Corp., Cuyahoga App. No. 88969, 2008-Ohio-1819, ¶4. As mentioned, Snider-Cannata sought a declaratory judgment. In particular, the company sought “a declaration that the Contract is null and void, void and voidable, cancelled, and the Plaintiff is entitled to recession of the Contract and the return of any and all earnest money and deposits paid upon said Contract[.]” The judgment that granted the Rupers’ summary judgment motion reads in relevant part: “court grants summary judgment in defendants’ favor and awards defendants judgment against plaintiff in the amount of $744,433.04 plus prejudgment and postjudgment interest at the statutory rate, and costs of this action.”
{¶ 6} This court remanded the case to the trial court for clarification of: (1) the disposition of Snider-Cannata‘s claims against the Rupers, and (2) the disposition of the Rupers’ claims against the third-party defendants. On remand, the trial court issued a judgment stating that “all of
{¶ 7} This court has held that “when a trial court enters a judgment in a declaratory judgment action, the order must declare all of the parties’ rights and obligations in order to constitute a final, appealable order.” Stiggers v. Erie Ins. Group, Cuyahoga App. No. 85418, 2005-Ohio-3434, ¶5; Klocker v. Zeiger, Cuyahoga App. No. 92044, 2009-Ohio-3102, ¶13. “As a general rule, a trial court does not fulfill its function in a declaratory judgment action when it fails to construe the documents at issue. Hence the entry of a judgment in favor of one party or the other, without further explanation, is jurisdictionally insufficient; it does not qualify as a final order.” Highland Business Park, LLC v. Grubb & Ellis Co., Cuyahoga App. No. 85225, 2005-Ohio-3139, ¶23; Klocker, at ¶13.
{¶ 8} Here, the trial court‘s judgment rendered a judgment in favor of the Rupers without further explanation and, therefore, on its face, is jurisdictionally insufficient. However, the trial court could not have rendered a judgment in favor of the Rupers on its breach of contract claim if it had found that the contract was “null and void, void and voidable, cancelled,
III
{¶ 9} Under the contract, the Rupers were required to: (1) convey the property by warranty deed and provide a standard owner‘s title insurance policy showing good and marketable title, and (2) deliver to the escrow agent all instruments necessary to complete the contract. If title to the property was defective, the Rupers had 30 days from the date of notice of the defect to perfect same. If the defect could not be cured within the time limit, Snider-Cannata could cancel the contract or elect to accept the defective title. The parties agreed that Snider-Cannata‘s “ability to cancel this agreement
{¶ 10} The contract also provided that the Rupers “represent that as of the Closing Date (a) there will be no liens, or security interests against the Property which will not be satisfied out of the sales proceeds unless securing payment of any loans assumed by [Snider-Cannata] and (b) assumed loans will not be in default. * * * During the Closing period and any extension thereof, [the Rupers] agree not to [ ] enter into and/or permit any liens, easements or leases as they may affect the subject real estate[.]”
{¶ 11} Further, the contract provided that Snider-Cannata inspected the property, and that “as a result of said inspection and not upon any representation made by the [Rupers], or any selling agent, or any agent for the [Rupers] * * * [Snider-Cannata] hereby expressly waives any and all claims for damages occasioned by any representation made by any person whomsoever * * * and the [Rupers] or their agent shall not be responsible or liable for any inducement, promise, representation, agreement, condition or stipulation not specifically set forth herein.”
{¶ 12} A final relevant provision of the contract provided that Snider-Cannata‘s obligation to close the transaction was contingent upon successful rezoning of the property so that it would allow for senior housing. The contract contemplated that rezoning would require a rezoning petition on
IV
{¶ 13} Appellate review of summary judgments is de novo. Grafton v. Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241; Zemcik v. La Pine Truck Sales & Equip. (1998), 124 Ohio App.3d 581, 585, 706 N.E.2d 860. The Ohio Supreme Court enunciated the appropriate test in Zivich v. Mentor Soccer Club (1998), 82 Ohio St.3d 367, 369-70, 696 N.E.2d 201, as follows:
{¶ 14} “Pursuant to
{¶ 15} The party moving for summary judgment bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Dresher v. Burt (1996), 75 Ohio St.3d 280, 292-293, 662 N.E.2d 264. Once the moving party satisfies its burden, the nonmoving party “may not rest upon the mere allegations or denials of the
V
{¶ 16} The first four assignments of error relate to interpretation of the contract. In construing a contract, a court is to ascertain the intent of the parties. St. Marys v. Auglaize Cty. Bd. of Commrs., 115 Ohio St.3d 387, 2007-Ohio-5026, 875 N.E.2d 561, ¶18. Where the contract is clear and unambiguous, then its interpretation is a matter of law. State ex rel. Parsons v. Fleming, 68 Ohio St.3d 509, 511, 1994-Ohio-172, 628 N.E.2d 1377. A contract is unambiguous as a matter of law if it can be given a definite legal meaning. Cincinnati Ins. Co. v. CPS Holdings, Inc., 115 Ohio St.3d 306, 2007-Ohio-4917, 875 N.E.2d 31, ¶7.
{¶ 17} For its first assigned error, Snider-Cannata contends that a genuine issue existed about the rezoning of the property. Snider-Cannata‘s argument is based on the fact that, under the Codified Ordinances of the City of Brecksville, the rezoning was conditional — it would be null and void if the city and its planning commission did not approve its plans.
{¶ 19} Further evidence that the rezoning condition was satisfied can be gleaned from the fact that the contract contemplated a closing date within 14 days of the Cuyahoga County Board of Elections’ Certification of the rezoning of the property, while the city‘s ordinances provided that “[t]he change in zoning” would be void if development plans were not submitted or approved within one year from the “approval of the change of zoning.” The clear language of the contract provided that if the voters approved rezoning, the sale would be consummated upon that condition; approval by the city and its planning commission of Snider-Cannata‘s development plans was not a condition of the sale. Moreover, the language of the city‘s ordinances (“the change in zoning“) indicates that, in fact, the zoning had changed. Accordingly, the first assignment of error is overruled.
{¶ 20} In its second assignment of error, Snider-Cannata contends that a genuine issue existed as to whether the Rupers breached the contract by placing further encumbrances and liens on the property.
{¶ 22} In support of its contention, Snider-Cannata cites notification it gave to the Rupers in March 2007, that there were “various title issues.” That notice, however, was outside of the 120-day time period for cancellation by Snider-Cannata clearly set forth in the contract. Moreover, we are not persuaded by the company‘s argument that the 120-day limit was tolled by the two amendments to the initial February 1, 2006 contract. Both amendments set forth substantive additions or modifications (none of which relate to further encumbrances and liens on the property) and provide that “[b]oth Parties agree that all other covenants previously agreed upon to in the February 1, 2006 Real Estate Offer and Acceptance Contract apply.” Thus, under the clear terms of the contract, the company had until June 1, 2006 to notify the Rupers of defects in the title, and failed to do so. The second assignment of error is therefore overruled.
{¶ 24} Second, Snider-Cannata contends that because it was concerned about good and marketable title, it obtained preliminary title commitments on its own and discovered encumbrances beyond those allowed under the contract. It cites in particular to a May 2006 foreclosure action filed by Adelphia of the Midwest and a September 2006 mortgage filed by Keith A. Somer.
{¶ 25} Under the contract, the Rupers agreed “that as of the Closing Date (a) there will be no liens, or security interests against the Property which will not be satisfied out of the sales proceeds unless securing payment of any loans assumed by [Snider-Cannata] and (b) assumed loans will not be in default. * * * During the Closing period and any extension thereof, [the Rupers] agree not to [ ] enter into and/or permit any liens, easements or leases as they may affect the subject real estate[.]”
{¶ 27} Third, Snider-Cannata contends that the Rupers could not have provided marketable title to the property because “[d]efendant John Ruper‘s capacity and authority to contract comes into dispute * * *.” The company relies on three documents in contesting John Ruper‘s capacity: (1) a letter from Barbara Ruper to the state fire marshal, (2) a court order obtained by Barbara Ruper during her divorce from John Ruper, and (3) a durable power of attorney executed by John Ruper.
{¶ 28} In the letter, written sometime in 2005, Barbara stated that she had to take over the day-to-day operations of the motel because John‘s “bipolar condition and increasing dementia were causing him to neglect the property.” The letter further stated that “[t]he City was well aware of John‘s
{¶ 29} Likewise, the power of attorney and court order do not demonstrate that John was incompetent. The power of attorney gave John‘s two children, as attorneys-in-fact, authority to perform specific acts on his behalf. See Testa v. Roberts (1988), 44 Ohio App.3d 161, 164, 542 N.E.2d 654. John‘s ability to transfer his interest in the property was not limited under the document. “[I]t is completely inconsistent with the fundamental principles of agency law to assert that an otherwise competent principal loses the capacity to enter into his own transactions simply because he has executed a durable power of attorney.” Smith v. Flaggs (Oct. 29, 1998), Cuyahoga App. No. 74414, citing Restatement of the Law 2d, Agency Section 119.
{¶ 30} The court order did not demonstrate that John was incompetent. It was obtained by Barbara during her divorce from John and, in relevant part, provided that Barbara “shall be in charge of the day-to-day operations of
{¶ 31} A party seeking to void a contract because of lack of capacity has the burden of proof by clear and convincing evidence. DiPietro v. DiPietro (1983), 10 Ohio App.3d 44, 46, 460 N.E.2d 657. Clear and convincing evidence is the measure or degree of proof that “will produce in the mind of the trier of facts a firm belief or conviction as to the facts sought to be established.” Cross v. Ledford (1954), 161 Ohio St. 469, 120 N.E.2d 118, paragraph three of the syllabus. The documents relied on by Snider-Cannata do not clearly and convincingly demonstrate that John Ruper was incompetent when he executed the contract; at most, they demonstrate that he was not able to handle the day-to-day operations of the business.
{¶ 32} In light of the above, the third assignment of error is overruled.
{¶ 33} For its fourth assigned error, Snider-Cannata contends that genuine issues existed regarding its claims of fraud and misrepresentation. It relies on Barbara‘s letter to the fire marshal, wherein she addressed her efforts to comply with a number of building code violations, and cites
{¶ 34} “The elements of fraud are: (a) a representation or, where there is a duty to disclose, concealment of a fact, (b) which is material to the transaction at hand, (c) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (d) with the intent of misleading another into relying upon it, (e) justifiable reliance upon the representation or concealment, and (f) a resulting injury proximately caused by the reliance.” Burr v. Stark Cty. Bd. of Commrs. (1986), 23 Ohio St.3d 69, 491 N.E.2d 1101, paragraph two of the syllabus.
{¶ 35} Regarding fraudulent concealment or nondisclosure, the Supreme Court of Ohio has held that “a vendor has a duty to disclose material facts which are latent, not readily observable or discoverable through a purchaser‘s reasonable inspection.” Layman v. Binns (1988), 35 Ohio St.3d 176, 178, 519 N.E.2d 642. “Fraudulent concealment exists where a vendor fails to disclose sources of peril of which he is aware, if such a source is not discoverable by the vendee.” Bryk v. Berry, Wayne App. No. 07CA0045, 2008-Ohio-2389, ¶ 7. “The nature of the defect and the ability of the parties to determine through a reasonable inspection that a defect exists are key to determining whether or not the defect is latent.” Id.
{¶ 37} The fifth, sixth, and seventh assignments of error relate to John Ruper‘s capacity to contract. In the fifth assignment, Snider-Cannata contends that there were genuine issues about John‘s capacity to contract. The company relies on the three documents previously discussed, i.e., Barbara Ruper‘s letter to the fire marshal, the power of attorney, and the court order. We reiterate our previous finding regarding these documents:
{¶ 38} In the sixth assignment of error, the company contends that the Rupers fraudulently misrepresented or concealed John‘s mental capacity. Because there was no evidence demonstrating that John did not have the capacity to enter into the contract, the claim must necessarily also fail. The sixth assignment of error is overruled.
{¶ 39} For its seventh assigned error, Snider-Cannata contends that the trial court improperly denied its motion to compel John‘s mental health records and his submission for evaluation.
{¶ 40} A trial court is vested with discretion in rendering decisions on discovery matters. Dandrew v. Silver, Cuyahoga App. No. 86089, 2005-Ohio-6355, ¶35, citing Mauzy v. Kelly Services, Inc., 75 Ohio St.3d 578, 592, 1996-Ohio-265, 664 N.E.2d 1272. To show an abuse of discretion, the complaining party must show that the judge‘s actions were “unreasonable, arbitrary, or unconscionable.” Blakemore v. Blakemore (1983), 5 Ohio St.3d 217, 219, 450 N.E.2d 1140.
{¶ 41} Before a court may order a physical or mental examination, the physical or mental condition of a party must be in controversy, and there
{¶ 42} Snider-Cannata relies on the same three documents previously discussed in support of its argument that it had “good cause” for the sought-after discovery and that John‘s mental capacity was “in controversy.” For the same reasons already discussed, we are not persuaded and find that
{¶ 43} Finally, Snider-Cannata contends that the trial court calculated the Rupers’ damages incorrectly. We agree.
{¶ 44} The Rupers submitted Barbara‘s affidavit and the expert report of W. Farley Helms, a senior vice president at Colliers Ostendorf-Morris, in support of their damage claim. Snider-Cannata did not contest the accuracy of the information in those documents, or present any contradictory evidence.
{¶ 45} The proper measure of damages for a buyer‘s breach of contract for the sale of real property is the difference between the original contract price and the fair market value of the property at the time of the breach. Roesch v. Bray (1988), 46 Ohio App.3d 49, 50, 545 N.E.2d 1301. In Helms‘s opinion, the fair market value of the property “was slightly under $800,000.” Courts however have recognized that, in some circumstances, the subsequent sale price of the real property is sufficient evidence of its fair market value. Id. In considering whether to accept a subsequent resale as the fair market value at the time of the breach, the court must consider the following factors: (1) the length of time between the breach and resale; (2) the terms of the original contract and resale; and (3) any evidence as to the stability of the real estate market during the months between the breach and resale. Id.
{¶ 47} Snider-Cannata concedes that using the subsequent resale amount for the fair market value and adding the commission expenses was proper, but contests the award for the real estate taxes.
{¶ 48} Ohio courts have held that “a seller is not entitled to damages to compensate for additional property taxes, interest, utilities, and home maintenance expenses following a buyer‘s breach of a real estate contract.” Hiatt v. Giles, Darke App. No. 1662, 2005-Ohio-6536, ¶41, citing Hussey v. Daum (May 3, 1996), Montgomery App. No. 15434; Kauder v. Thompson (May 9, 1986), Montgomery App. No. 9265. As explained in Kauder, the argument “that after the breach and an award of the difference in value [between the contract price and the eventual sale price], the vendor is as a matter of law also entitled to recover maintenance and other expenses for his own property
{¶ 49} “‘The inconvenience and expense of managing or disposing of one‘s own property after a prepared sale is breached or otherwise terminated is not a proper element of special damages against the defaulting purchaser.‘” Hiatt, at ¶41, quoting Hussey. See, also, Peterman v. Dimoski, Hamilton App. No. C-020116, 2002-Ohio-7337, ¶11 (the cost of utilities, real estate taxes, and homeowners’ association dues for the period until the home was sold were generally incidental to continued ownership and management of the property, and not recoverable as a proper element of additional special damages); Roesch, supra, at 51 (maintenance, utilities, and resale expenses are incidental to ownership).
{¶ 50} In light of the above, the eighth assignment of error is well taken. The damages award is affirmed as to the $550,000 and $66,000 amounts and the award of pre- and postjudgment interests and costs, but reversed as to the $128,433.94 amount.
{¶ 51} Judgment affirmed in part, and reversed and remanded in part for the trial court to issue an amended judgment consistent with this opinion.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate be sent to said court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to
CHRISTINE T. McMONAGLE, JUDGE
MARY J. BOYLE, J., CONCURS;
KENNETH A. ROCCO, P.J., DISSENTS WITH SEPARATE OPINION
KENNETH A. ROCCO, P.J., DISSENTING:
{¶ 52} I disagree with the majority‘s determination that the trial court judgment in favor of the Rupers impliedly denied Snider-Cannata‘s claim for declaratory relief. To be sure, the common pleas court had the discretion to decline to rule on Snider-Cannata‘s request for a declaratory judgment,3 but in
{¶ 53} A complaint for a declaratory judgment asks the court to declare the parties’ rights and obligations. While the complainant may ask for a declaration favorable to him or her, the declaration ultimately entered by the court may favor either party. Consequently, it is not fair to conclude that the judgment for the Rupers here impliedly declined to address Snider-Cannata‘s request for a declaratory judgment. The two are not corollaries of one another: the court could have granted judgment for the Rupers and entered a declaratory judgment construing the parties’ contract and determining its validity. For this reason, intent to deny a claim for declaratory judgment cannot be inferred from a judgment favorable to the opposing party.
{¶ 54} I would hold that the common pleas court‘s judgment is not final and appealable because the court did not declare the parties’ rights and obligations. In my opinion, the majority has effectively usurped the trial court‘s function by construing the contract terms and determining that the contract was valid and enforceable. Accordingly, I dissent.