Hog Heaven of New Philadelphia, Inc. v. M & M W. High Ave., L.L.C. , 2014 Ohio 5125 ( 2014 )

[Cite as Hog Heaven of New Philadelphia, Inc. v. M & M W. High Ave., L.L.C., 2014-Ohio-5125.]
COURT OF APPEALS
TUSCARAWAS COUNTY, OHIO
FIFTH APPELLATE DISTRICT
HOG HEAVEN OF JUDGES:
NEW PHILADELPHIA, INC. Hon. William B. Hoffman, P.J.
FKA HOG CITY, LTD Hon. Sheila G. Farmer, J.
Hon. Patricia A. Delaney, J.
Plaintiff-Appellee
Case No. 2014 AP 02 0006
-vs-
M AND M WEST HIGH AVENUE OPINION
LLC
Defendant-Appellant
CHARACTER OF PROCEEDING: Appeal from the Tuscarawas County
Common Pleas Court, Case No.
2012 CV 11 1057
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: November 14, 2014
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
LEE E. PLAKAS MICHAEL C. JOHNSON
MARIA C. KLUTINOTY EDWARDS Johnson, Urban & Range, Co., LPA
COLLIN S. WISE 117 South Broadway, P.O. Box 1007
Tzangas Plakas Mannos Ltd. New Philadelphia, Ohio 44663
220 Market Avenue, Eighth Floor
Canton, Ohio 44702
Tuscarawas County, Case No. 2014 AP 02 0006 2
Hoffman, P.J.
{¶1} Defendant-appellant M & M West High Avenue, LLC appeals the January
23, 2014 Judgment Entry entered by the Tuscarawas County Court of Common Pleas,
which granted summary judgment in favor of plaintiff-appellee Hog Heaven of New
Philadelphia, Inc. FKA Hog City Ltd.
STATEMENT OF THE FACTS AND CASE
{¶2} Appellant owns real property located at 1290 West High Avenue, New
Philadelphia, Ohio 44663 (“the Premises”). On July 26, 2002, Appellee and Appellant
entered into a Lease Agreement with Option to Purchase (“the Lease Option”) for the
Premises. Section V of the Lease Option provides Appellee with the option to purchase
the Premises during the initial term or any subsequent renewal, and reads:
In consideration of the covenants and conditions hereby
established, the parties further agree that at any time during the initial term
of the within Lease, or any properly exercised extension periods hereof,
Lessee shall have the right and option of purchasing the premises herein
leased for an amount as determined by the following procedure:
(A) The parties hereto shall attempt to select a mutually agreed
upon MAl appraiser to determine the fair market value of the premises.
Said appraiser shall be commissioned by the parties to formulate an
opinion regarding the appraised value of the premises. The appraised
value as determined by such mutually agreed upon appraiser shall
constitute the amount of the purchase price to be paid by Lessee pursuant
Tuscarawas County, Case No. 2014 AP 02 0006 3
to its option to purchase. The costs incurred by said mutually agreed upon
appraiser shall be shared equally by the parties; or
(B) In the event that the parties are unable to select a mutually
agreeable MAl appraiser pursuant to the term of subparagraph (A), above,
then each party shall commission an MAl appraiser of their own choosing
who shall formulate written findings concerning the fair market value of the
premises. In the event that the appraisals formulated by the two MAl
appraisers are within ten percent (10%) of each other, then the difference
between said two appraisals shall be split evenly, and the midpoint
between said two appraisals shall constitute the purchase price for the
premises. In the event that the two appraisals formulated by the two MAl
appraisers are not within ten percent (10%) of each other, then the two
MAl appraisers shall select a third independent MAl appraiser whose
determination regarding fair market value shall be the purchase price paid
for the premises. Each party shall assume responsibility for payment of
any expenses incurred by their respective MAl appraisers. If applicable,
the costs incurred by a third, independent MAl appraiser pursuant to the
foregoing shall be shared equally by the parties.
For purposes of the within section pertaining to Lessee's option to
purchase, the term "the premises" shall be defined as the real estate,
attendant structures, fixtures, and those items of personalty that remain on
the premises in the event of termination of the within lease.
Tuscarawas County, Case No. 2014 AP 02 0006 4
Lessee may exercise its option to purchase by providing Lessor of
written notice thereof at any time during the pendency of the within lease,
or during the period of any extensions hereof. In such case, the appraisal
process outlined above shall be completed by the parties within sixty (60)
days. In the event that Lessee determines not to exercise its option to
purchase following completion of the appraisal process, then Lessee shall
bear full responsibility for the MAl appraisal costs incurred pursuant to
subparagraphs (A) and (B), above.
Should Lessee determine to exercise its option to purchase the
premises, then the sale thereof shall proceed pursuant to the terms and
conditions of the Purchase Agreement attached hereto as Appendix B.
(Said Appendix B is unsigned and undated; and makes no provision for
the purchase price, which shall be determined according to the procedure
outlined above).
{¶3} On November 4, 2011, Appellee notified Appellant of its intent to exercise
its right to purchase the Premises pursuant to Section V of the Lease Option. Each
party obtained an appraisal of the Premises. Because the two appraisals were not
within ten percent of each other, Section V required the two appraisers “select a third
independent MAl appraiser whose determination regarding fair market value shall be
the purchase price paid for the premises.” The two appraisers did not select the third
appraiser within the sixty-day time frames set forth in Section V.
{¶4} Appellee made efforts to assist in the joint selection of the third appraiser.
Appellee proposed a method for the selection process, however, Appellant rejected the
Tuscarawas County, Case No. 2014 AP 02 0006 5
proposal. In addition to monthly base rent, Appellee also pays Appellant a percentage
of its profits as overage rent. The overage rent represents significant income for
Appellant. Appellee would not have owed any overage rent had the purchase been
completed in a timely fashion.
{¶5} On November 15, 2012, Appellee filed a complaint against Appellant for
specific performance, declaratory judgment, unjust enrichment, and breach of contract.
Appellee sought equitable relief as well as money damages. Appellee filed an amended
complaint on December 31, 2012. Appellant filed a timely answer to the amended
complaint.
{¶6} On September 13, 2012, upon completion of discovery, Appellee filed a
motion for summary judgment. On January 8, 2014, Appellant filed its own motion for
summary judgment as well as a response in opposition to Appellee’s motion for
summary judgment. Appellee filed a motion to strike, asking to court to strike
Appellant’s motion for summary judgment as said motion was filed approximately four
months past the dispositive motion deadline.
{¶7} Via Judgment Entry filed January 23, 2014, the trial court granted
Appellee’s motion to strike and awarded summary judgment in Appellee’s favor. The
trial court ordered specific performance of the Lease Option and instructed the parties to
select an appraiser as required by the terms of the Lease Option. The appraiser’s
opinion alone would determine the amount which Appellee could pay to purchase the
Premises. The trial court also awarded Appellee a credit for rental payments made to
Appellant from January 3, 2012, until the date of the parties’ receipt of the third
appraisal.
Tuscarawas County, Case No. 2014 AP 02 0006 6
{¶8} It is from this judgment entry Appellant appeals, raising as error:
{¶9} "I. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION
FOR SUMMARY JUDGMENT AND ISSUING A DECREE OF SPECIFIC
PERFORMANCE.
{¶10} "II. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION
FOR SUMMARY JUDGMENT AS GENUINE ISSUES OF MATERIAL FACT EXISTED
AS WHETHER APPELLANT VIOLATED THE TERMS OF THE LEASE OPTION
NECESSITATING A TRIAL ON THE MERITS.
{¶11} "III. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION
FOR SUMMARY JUDGMENT IN AWARDING APPELLEE A RENT CREDIT FOR
BASE AND OVERAGE RENT AGAINST THE PURCHASE PRICE TO BE
DETERMINED BY THIRD APPRAISER."
STANDARD OF REVIEW
{¶12} Summary judgment proceedings present the appellate court with the
unique opportunity of reviewing the evidence in the same manner as the trial court.
Smiddy v. The Wedding Party, Inc., 30 Ohio St.3d 35, 36, 506 N.E.2d 212 (1987). As
such, this Court reviews an award of summary judgment de novo. Grafton v. Ohio
Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).
{¶13} Civ.R. 56 provides summary judgment may be granted only after the trial
court determines: 1) no genuine issues as to any material fact remain to be litigated; 2)
the moving party is entitled to judgment as a matter of law; and 3) it appears from the
evidence that reasonable minds can come to but one conclusion and viewing such
evidence most strongly in favor of the party against whom the motion for summary
Tuscarawas County, Case No. 2014 AP 02 0006 7
judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc.,
50 Ohio St.2d 317, 364 N.E.2d 267 (1977).
{¶14} It is well established the party seeking summary judgment bears the
burden of demonstrating that no issues of material fact exist for trial. Celotex Corp. v.
Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). The standard for
granting summary judgment is delineated in Dresher v. Burt, 75 Ohio St.3d 280 at 293,
662 N.E.2d 264 (1996): “ * * * a party seeking summary judgment, on the ground that
the nonmoving party cannot prove its case, bears the initial burden of informing the trial
court of the basis for the motion, and identifying those portions of the record that
demonstrate the absence of a genuine issue of material fact on the essential element(s)
of the nonmoving party's claims. The moving party cannot discharge its initial burden
under Civ.R. 56 simply by making a conclusory assertion the nonmoving party has no
evidence to prove its case. Rather, the moving party must be able to specifically point to
some evidence of the type listed in Civ.R. 56(C) which affirmatively demonstrates the
nonmoving party has no evidence to support the nonmoving party's claims. If the
moving party fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the nonmoving party
then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing
there is a genuine issue for trial and, if the nonmovant does not so respond, summary
judgment, if appropriate, shall be entered against the nonmoving party.” The record on
summary judgment must be viewed in the light most favorable to the opposing party.
Williams v. First United Church of Christ, 37 Ohio St.2d 150, 309 N.E.2d 924 (1974).
Tuscarawas County, Case No. 2014 AP 02 0006 8
I, II
{¶15} In its first assignment of error, Appellant contends the trial court erred in
granting summary judgment in favor of Appellee and issuing a decree of specific
performance. In its second assignment of error, Appellant argues the trial court erred in
granting summary judgment in favor of Appellee as genuine issues of material fact
existed as to whether Appellant violated the terms of the Lease Option. Specifically,
Appellant maintains the failure to select the third appraiser was not occasioned by any
fault of Appellant or its selected appraiser, but rather was merely the result of the two
appraisers reaching an impasse regarding the third appraiser.
{¶16} Specific performance as a remedy for breach of contract is a matter
resting in the sound discretion of the court, not arbitrary, but controlled by principles of
equity, on full consideration of the circumstances of each particular case. Roth v.
Habansky, Cuyahoga App. No. 82027, 2003-Ohio-5378. The standard of review in such
a case is whether the trial court, sitting as a court of equity, abused its discretion. Id.,citing Manning v. Hamamey (Feb. 12, 1998), Cuyahoga App. No. 72072.
{¶17} “The remedy of specific performance is governed by the same general
rules which control the administration of all other equitable remedies. The right to it
depends upon elements, conditions, and incidents which equity regards as essential to
the administration of all its peculiar modes of relief. When all these elements,
conditions, and incidents exist, the remedial right is perfected in equity. These elements,
conditions, and incidents, as collected from the cases, are the following: The contract
must be concluded, certain, unambiguous, mutual, and based upon a valuable
consideration; it must be perfectly fair in all its parts; it must be free from any
Tuscarawas County, Case No. 2014 AP 02 0006 9
misrepresentation or misapprehension, fraud or mistake, imposition or surprise; it
cannot be an unconscionable or hard bargain; its performance must not be oppressive
upon the defendant; and, finally, it must be capable of specific execution through a
decree of the court.” Id.{¶18} The Lease Option sets forth the specific procedure to be followed if the
two appraisals were not within ten percent (10%) of each other:
In the event that the two appraisals formulated by the two MAl
appraisers are not within ten percent (10%) of each other, then the two
MAl appraisers shall select a third independent MAl appraiser whose
determination regarding fair market value shall be the purchase price paid
for the premises.
***
The appraisal process outlined above shall be completed by the
parties within sixty (60) days. (Emphasis added.)
{¶19} Pursuant to this provision, because the appraisals were not within ten
percent (10%) of each other, the parties’ appraisers, Jeff Smith for Appellee and
Charles Snyder for Appellant, were obligated to choose the third appraiser. For
whatever reason, Smith and Snyder were unable to agree on a third appraiser within the
requisite time frame. Appellee moved the trial court for an order of specific
performance. We find the trial court did not abuse its discretion in ordering specific
performance – instructing Smith and Snyder to choose the third appraiser – as such
remedy was necessary to effectuate the intent of the parties.
Tuscarawas County, Case No. 2014 AP 02 0006 10
{¶20} Appellant also challenges the trial court’s finding it breached the Lease
Option. Assuming, arguendo, such finding was erroneous, we find such error to be
harmless as the trial court’s award of specific performance was not predicated upon the
breach.
{¶21} Appellant’s first and second assignments of error are overruled.
III
{¶22} In its final assignment of error, Appellant submits the trial court erred in
granting Appellee’s motion for summary judgment and awarding Appellee rent credit
against the purchase price to be determined by the third appraiser as set off for base
and overage rent paid during the period of the impasse. We disagree.
{¶23} “ ‘[W]hen a decree for specific performance in the sale of real estate is
granted to the purchaser he is entitled to be put in the position he would have been in
had the contract of sale and purchase been carried out on the date agreed upon.’ “
Sandusky Properties v. Aveni (1984), 15 Ohio St.3d 273, 274, 473 N.E.2d 798 (quoting
Hellkamp v. Boiman (1970), 25 Ohio App.2d 117, 122, 267 N.E.2d 323).
{¶24} The trial court's award accomplishes this result. Accordingly, we find the
trial court did not abuse its discretion by awarding Appellee the rent and overage rent
paid during the period of the impasse.
{¶25} Appellant’s third assignment of error is overruled.
Tuscarawas County, Case No. 2014 AP 02 0006 11
{¶26} Judgment of the Tuscarawas County Court of Common Pleas is affirmed.
By: Hoffman, P.J.
Farmer, J. and
Delaney, J. concur