Long v. Rice , 2013 Ohio 2402 ( 2013 )

[Cite as Long v. Rice, 2013-Ohio-2402.]
IN THE COURT OF APPEALS
ELEVENTH APPELLATE DISTRICT
ASHTABULA COUNTY, OHIO
RANDY LONG, : OPINION
Plaintiff-Appellant, :
CASE NO. 2012-A-0056
- vs - :
RALPH RICE, :
Defendant-Appellee. :
Civil Appeal from the Ashtabula County Court, Eastern Division.
Case No. 2012 CVI 319 E.
Judgment: Reversed and remanded.
Michael A. Hiener, P.O. Box 1, Jefferson, OH 44047 (For Plaintiff-Appellant).
Katherine S. Riedel, Law Offices of Katherine S. Riedel Co., L.P.A., Jefferson
Commercial Park, 1484 State Route 46 North, No. 5, Jefferson, OH 44047 (For
Defendant-Appellee).
TIMOTHY P. CANNON, P.J.
{¶1} Appellant, Randy Long, appeals the judgment of the Ashtabula County
Court, Eastern Division, granting appellee, Ralph Rice’s, motion to dismiss pursuant to
Civ.R. 41(B)(2) for failure to demonstrate a right to relief. As sufficient evidence exists
in the record to withstand dismissal, we reverse and remand this case for a new
hearing.
{¶2} Mr. Long initiated this action by filing a small claims complaint, claiming
Mr. Rice sold him a defective used tractor in a private sale. Mr. Long sought $3,000 in
damages. The matter was presented to the court at a small claims hearing on
September 10, 2012. The court characterized the matter as a fraudulent
misrepresentation case.
{¶3} Mr. Long, not represented by counsel, explained that he entered into an
oral agreement with Mr. Rice for the private sale of a “very old” used tractor around
June 2011. The prior relationship between these men is not clear, though testimony
indicates they share at least one mutual acquaintance. Mr. Long, who owns a small
farm but is not a professional farmer, explained to Mr. Rice the tractor had to be “ready
to go to the field” and “the hydraulics” had to work. According to Mr. Long, Mr. Rice
made representations about the tractor, including that it was indeed “field-ready.” Mr.
Rice is not a dealer or vendor of any kind.
{¶4} In exchange for the tractor, Mr. Long traded in his fully-operational 8N
Ford tractor and paid $2,000.00. Mr. Long admitted that he completed the purchase
without going to Mr. Rice’s residence to inspect or test the tractor.
{¶5} When Mr. Rice delivered the tractor, Mr. Long observed the tractor
smoking. Upon inquiry, Mr. Rice explained the smoking was typical and would cease
once the tractor got “warmed up.” Over the next few days, Mr. Long, in changing and
checking the oil, determined the fuel pump was not functioning correctly. Mr. Long
explained he confronted Mr. Rice, who indeed admitted there was a bad fuel pump, but
that this was the only defective item in the tractor. Mr. Rice refunded $500 so Mr. Long
could have the fuel pump fixed. After the fuel pump was repaired, however, the tractor
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continued to smoke and have mechanical issues, which rendered it nonoperational. Mr.
Long took the tractor to a mechanic; there, he learned the engine had a blown head
gasket and a cylinder groove—serious mechanical defects that require a new engine
block. Mr. Long unsuccessfully attempted to get back his tractor and money from Mr.
Rice. Mr. Long never made any further repairs and the tractor remains nonoperational.
{¶6} Richard Ring testified as part of Mr. Long’s case. Mr. Ring previously sold
the tractor to Mr. Rice. Mr. Ring explained that he informed Mr. Rice that the motor and
hydraulic systems were not functioning properly; thus, Mr. Long argued that Mr. Rice
knew the tractor was defective prior to the sale at issue but omitted these material facts.
Mr. Ring indicated the mechanical issues with the tractor were serious, explaining he
sold the tractor to Mr. Rice essentially for the value of its tires, $1,000.
{¶7} Mr. Rice, represented by counsel, presented a motion to dismiss for failure
to demonstrate a right to relief after the close of Mr. Long’s case. The court granted the
motion on the grounds that the testimony did not establish a fraudulent
misrepresentation, especially given Mr. Long’s failure to diligently inspect the tractor
prior to the purchase.
{¶8} Mr. Long now appeals and asserts one assignment of error:
{¶9} “The trial court erred by granting Appellee’s motion to dismiss.”
{¶10} Mr. Rice’s motion to dismiss was made pursuant to Civ.R. 41(B)(2), which
states:
{¶11} After the plaintiff, in an action tried by the court without a jury, has
completed the presentation of the plaintiff's evidence, the
defendant, without waiving the right to offer evidence in the event
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the motion is not granted, may move for a dismissal on the ground
that upon the facts and the law the plaintiff has shown no right to
relief. The court as trier of the facts may then determine them and
render judgment against the plaintiff or may decline to render any
judgment until the close of all the evidence. If the court renders
judgment on the merits against the plaintiff, the court shall make
findings as provided in Civ.R. 52 if requested to do so by any party.
{¶12} Thus, Civ.R. 41(B)(2) permits a defendant in a non-jury action to move for
dismissal of the action on the basis the plaintiff has shown no right to relief. The rule is
somewhat akin to a motion for directed verdict in a jury action; however, the rule “is not
governed by the standards which control the granting of a directed verdict.” Comments
to Civ.R. 41(B)(2). Indeed, the rule provides that the trial court may consider both the
law and the facts. See Intl. Language Bank, Inc. v. Law Office of Zukerman, Daiker &
Lear, 11th Dist. Nos. 2007-A-0086 & 2007-A-0087, 2008-Ohio-5940, ¶22 (“[i]n ruling on
a Civ.R. 41(B)(2) motion, it is the function of the trial court to review the evidence and
the law”). “Thus, under the rule, the trial judge, as the trier of fact, does not view the
evidence in a light most favorable to the plaintiff, but instead actually determines
whether the plaintiff has proven the necessary facts by the appropriate evidentiary
standard.” Cooper v. Smith, 155 Ohio App. 3d 218, ¶9; see also Harris v. Cincinnati, 79
Ohio App. 3d 163, 168 (1st Dist.1992). “Even if the plaintiff has presented a prima facie
case, dismissal is still appropriate where the trial court determines that the necessary
quantum of proof makes it clear that plaintiff will not prevail.” Id.
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{¶13} This court reviews a trial court’s dismissal of an action under Civ.R.
41(B)(2) to determine whether the decision was erroneous as a matter of law or against
the manifest weight of the evidence. Intl. Language Bank, Inc., supra, ¶27. It is
important to recognize that this standard applies only to situations where the trial court
dismisses an action, i.e., grants a motion to dismiss under Civ.R. 41(B)(2). See Tillman
v. Watson, 2d Dist. No. 06-CA-10, 2007-Ohio-2429; ¶12-13; accord O’Bryon v. Poff, 9th
Dist. No. 02CA0061, 2003-Ohio-3405, ¶6 (noting a denial of a motion to dismiss
pursuant to Civ.R. 41(B)(2) is reviewed for an abuse of discretion).
{¶14} In order to determine whether a decision is erroneous as a matter of law
or against the manifest weight of the evidence, we first employ an abuse of discretion
standard, giving deference to the trial court’s factual findings provided they are
supported by competent, credible evidence; then, we review the trial court’s application
of law to those facts de novo to determine whether the decision is sound as a matter of
law. See Cooper, supra, ¶9 (setting forth a hybrid standard of review in Civ.R. 41(B)(2)
dismissals where the trial court decides questions of both fact and law).
{¶15} Fraudulent misrepresentation in the sale of personal property requires the
following: (1) a false representation, or the concealment of a material fact, made falsely;
(2) knowledge of the falsity, or statements made with such recklessness that knowledge
is inferred; (3) intent to mislead another into relying on the representation; (4) justifiable
reliance upon the representation or concealment; and (5) injury as a consequence of
that reliance. Goddard v. Stabile, 185 Ohio App. 3d 485, 2009-Ohio-6375, ¶30 (11th
Dist.).
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{¶16} As Mr. Long is seeking damages under the contract, he bears the burden
of proving the elements of fraudulent misrepresentation by a preponderance of the
evidence. See Colvenbach v. McLaughlin, 11th Dist. No. 1082, 1982 Ohio App. LEXIS
13569 (June 18, 1982), *3; see also Andrew v. Power Mktg. Direct, 10th Dist. No. 11AP-
603, 2012-Ohio-4371, ¶47 (“[a] party seeking an equitable remedy, such as declaratory
judgment, reformation or rescission of a contract, must prove a fraud claim with clear
and convincing evidence, while a party seeking a monetary remedy must prove fraud by
the preponderance of the evidence”).
{¶17} Before we apply the law of fraudulent misrepresentation to the facts of this
case, we must address Mr. Rice’s point that a purchaser has a legal duty to inspect
before relying on a representation when the purchaser is put on notice as to the truth of
the representation. Though not labeling it as such, Mr. Rice is restating the principle of
caveat emptor—the “buyer beware” theory—which explains that a purchaser has no just
cause for complaint where that purchaser has an opportunity to inspect and the
conditions are observable, i.e., have not been concealed, even though there may be
misstatements or misrepresentations. However, it must be emphasized that the rule of
caveat emptor does not apply to sales of personal property, only to real estate. Layman
v. Binns, 35 Ohio St. 3d 176, 177 (1988); LaVeck v. Al’s Mustang Stable, 73 Ohio
App.3d 700, 704 (11th Dist.1991).
{¶18} The trial court granted Mr. Rice’s motion to dismiss chiefly on the grounds
that Mr. Long was not justified on relying on any representations from Mr. Rice; rather,
Mr. Long was required to diligently inspect the tractor and evaluate its worth and
reliability before finalizing the transaction. In assessing whether reliance was justifiable
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or whether there was a reckless failure to exercise diligence, courts must consider
numerous factors including the relationship, age, experience, and intelligence of the
parties, as well as the form and materiality of the representation. Feliciano v. Moore, 64
Ohio App. 2d 236 (10th Dist.1979). Of course, a buyer of personal property is required
to exercise reasonable diligence rather than blindly rely upon a seller to protect his or
her interests in a transaction; however, this requirement is not carried so far as to permit
positive, intentionally fraudulent statements, which are known to the seller as material to
the transaction. Id.
{¶19} Here, there are two “misrepresentations” that must be assessed. The first
is Mr. Rice’s representation that the tractor was “field ready.” Mr. Rice’s statement that
the tractor was “field ready” is misleading: it represents Mr. Rice was familiar with the
operational capabilities of the tractor and therefore allowed him to state affirmatively it
could function in a field. This representation was material to the transaction because it
was made after Mr. Long explained his requirement that the tractor must be “ready to
go” in the field. This demonstrates that Mr. Rice made the assurance concerning the
tractor’s capabilities with the expectation of influencing Mr. Long into buying the tractor,
and that a reasonable person would conclude that such a result would follow.
{¶20} In actuality, the tractor was anything but “field ready.” The unrefuted
testimony demonstrates this fact was known to the seller. The prior owner, Mr. Ring,
testified that he informed Mr. Rice there was a defective motor and hydraulic system in
the tractor. Mr. Long therefore demonstrated that Mr. Rice indeed had knowledge of the
tractor’s defunct mechanical state, yet affirmatively and intentionally misrepresented the
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tractor’s ability in return for a fully-functional tractor plus $2,000. The burden is on Mr.
Rice to present a defense to dispute these points.
{¶21} Additionally, Mr. Long justifiably relied upon this material
misrepresentation. Given the circumstances, a reasonable person would attach
importance to the representation of the tractor being “field ready” in determining whether
to purchase a tractor for use in a field. Further, as indicated above, Mr. Rice knew,
based on the unrefuted testimony, that Mr. Long regarded the “field ready”
representation as important, material, and central to his decision concerning whether to
enter the purchase agreement because Mr. Long explained this requirement prior to
purchase. Again, Mr. Rice would need to present a defense if there is evidence that
disputes this point. Further, Mr. Long’s failure to inspect is not fatal as “the recipient of
a fraudulent misrepresentation of fact is justified in relying upon its truth even though he
might have ascertained its falsity had he made an investigation.” Anna v. Nickles, 9th
Dist. No. 2411, 1989 Ohio App. LEXIS 1250 (April 5, 1989), *9. Additionally, though the
tractor was smoking upon delivery, Mr. Long’s inquiry into the smoke was met with
another misrepresentation: that the smoke would cease once the tractor got warmed up.
When pressed into the matter of the defective fuel pump, Mr. Long’s inquiry was again
met with another misrepresentation: that the fuel pump was the only defective item in
the tractor.
{¶22} In addition to the affirmative misrepresentation that the tractor was “field
ready,” the unrefuted testimony was that Mr. Rice concealed a material fact concerning
the tractor’s hydraulic system. Another of Mr. Long’s prerequisites for the purchase was
that the tractor have good hydraulics. Again, this was material to the transaction, and
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after learning of this requirement, Mr. Rice did not state anything about the hydraulic
system not functioning properly. However, the evidence demonstrates the prior owner,
Mr. Ring, informed Mr. Rice that the tractor’s motor and hydraulic system were failing.
This is a misrepresentation by omission. Indeed, a “representation stating the truth so
far as it goes but which the maker knows or believes to be materially misleading
because of his failure to state additional or qualifying matter is a fraudulent
misrepresentation.” Id. Further, “[t]he recipient is entitled to know the undisclosed facts
in so far as they are material and to form his own opinion of their effect.” Id. Mr. Long
was justified in relying on this omission because a reasonable purchaser would think
that, following such a statement, if the hydraulics were indeed failing, there would be
such a disclosure. Again, it is incumbent upon Mr. Rice to raise a defense to dispute
these above-framed points.
{¶23} This case is distinguishable from prior precedent in this court. In LaVeck,
supra, we determined a trial court did not err in directing a verdict in favor of a seller.
There, discontented purchasers entered into the sale of a used automobile from a
private, non-dealer seller who operated a repair shop. This court found the purchasers
failed to establish justifiable reliance upon the representations of the private seller that
the engine was like new because it had been rebuilt. The purchasers called upon a
mechanically-savvy friend who worked in a local service station for input on the
automobile. Following a test drive of the automobile, the purchasers’ friend
recommended that they not purchase the vehicle. The purchasers unqualifiedly ignored
this recommendation and nonetheless entered into a contract for the sale of the
automobile. Therefore, the purchasers in LaVeck were not justified in relying upon the
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representations of the seller concerning the vehicle’s quality when they had full
knowledge the aged car was not worth the money according to a source they held out to
be trusted.
{¶24} Instead, we find Anna v. Nickles, supra, to be analogous to the instant
case. There, the purchaser bought a used tractor in a private, non-dealer sale. Id. at
*1. The seller offered the purchaser an opportunity to test drive the tractor, but the
purchaser declined, explaining that his father had a tractor just like the one for sale, and
he knew how it operated. Id. at *2. The purchaser explained he had a large parcel of
land and that the tractor would need to be able to mow an acre and an eighth. Id. The
seller made a representation that he had not had any trouble with his yard, which was at
least as big as the buyer’s tract, and accordingly, the buyer should likewise not have
any issue. Id. This representation was false, and in actuality, the seller never mowed
his lawn with the tractor and sold it just six weeks after obtaining it. Id. The Ninth
Appellate District reversed the small claims court for granting the equitable remedy of
rescission, but explained the trial court could award damages for fraudulent
misrepresentation. Id. at *4.
{¶25} In support, the Ninth District explained the seller’s statements were indeed
misleading, and “the half-truths were material in that further investigation would have
been warranted had [the buyer] known that [the seller] had not used the tractor and had
not owned it for some time.” Id. at *8. Further, the seller made the statements after
learning the buyer’s requirements for a tractor and tailored the representations to meet
those requirements, just as the evidence indicates in the case sub judice. Id.
Additionally, there was justifiable reliance because a reasonable person would attach
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importance to the misrepresentation in determining whether to purchase the tractor, and
the seller knew or had reason to know the buyer was likely to regard those
representations as important, as is the case here. Id.
{¶26} After a thorough review of the record, we determine the trial court, though
correctly determining the quantum of proof to be preponderance of the evidence, did not
properly apply the facts to the elements of fraudulent misrepresentation, because upon
the facts and the law, Mr. Long has demonstrated a right to relief under a claim of
fraudulent misrepresentation. This ruling should not be construed to run afoul of the
general principle that courts do not rewrite contracts for parties in the face of a bad
bargain. Indeed, this is not a breach of contract claim nor is it a warranty claim brought
under the provisions of the Uniform Commercial Code. Rather, this is an assessment of
an intentional tort, whereby sufficient evidence exists in the record to withstand
dismissal pursuant to Civ.R. 41(B)(2).
{¶27} As such, appellant’s sole assignment of error has merit.
{¶28} The judgment of the Ashtabula County Court, Eastern Division, is
reversed and remanded for a new hearing.
DIANE V. GRENDELL, J.,
COLLEEN MARY O’TOOLE, J.,
concur.
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