Brown v. Lagrange Dev. Corp. ( 2015 )

[Cite as Brown v. Lagrange Dev. Corp., 2015-Ohio-133.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
Sonja Brown Court of Appeals No. L-09-1099
Appellant Trial Court No. CI0200703897
v.
Lagrange Development Corporation, et al. DECISION AND JUDGMENT
Appellees Decided: January 16, 2015
*****
John A. Coble, Joseph F. Albrechta and Brad Culbert, for appellant.
James S. Nowak, Brian C. Kalas, Zachary M. Clark and Patricia A.
Wise, for appellees.
*****
PIETRYKOWSKI, J.
{¶ 1} Appellant, Sonja Brown, appeals a judgment of the Lucas County Court of
Common Pleas, journalized on February 26, 2009, after a bench trial. In the judgment,
the trial court provided findings of fact and conclusions of law and rendered judgment in
favor of appellees, Lagrange Development Corporation (“Lagrange”), Terry Glazer, and
Nancy Sobecki, and against appellant on all claims asserted by appellant.
{¶ 2} The dispute between the parties arises out of appellant’s purchase of a house
located at 52 Rockingham Avenue in Toledo, Ohio, from Lagrange in 2004. Lagrange is
a nonprofit corporation which acquires and rehabilitates real property in the Lagrange
neighborhood in Toledo, Ohio. Appellee Glazer was the executive director of Lagrange
at the time. Appellee Sobecki was the housing program manager. Appellant filed suit
against the appellees and others on May 29, 2007, on claims arising from the purchase,
including claims asserting defective conditions of the property. The trial court dismissed
all claims against the other defendants in the case and the case proceeded to trial on
December 15 and 16, 2008, solely against appellees.
{¶ 3} Appellant asserts three assignments of error on appeal:
Assignment of error No. 1. The trial court erred as a matter of law
by permitting the defense of Caveat Emptor based upon the “As Is” clause
in the contract.
Assignment of error No. 2. The trial court erred as a matter of law
by finding the validity of a contract between the parties in the absence of
agreement.
Assignment of error No. 3. The judgment of the trial court must be
reversed as against the manifest weight of the evidence.
{¶ 4} We address assignment of error No. 2 first. Appellant contends under
assignment of error No. 2 that the trial court erred in finding that there existed a valid
contract between Lagrange and appellant for the purchase of the property. Appellant
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contends that there was no contract to purchase the property because she did not agree to
the purchase on the terms proposed by Lagrange.
{¶ 5} “Essential elements of a contract include an offer, acceptance, contractual
capacity, consideration (the bargained for legal benefit and/or detriment), a manifestation
of mutual assent and legality of object and of consideration.” Kostelnik v. Helper, 96
Ohio St. 3d 1, 2002-Ohio-2985, 770 N.E.2d 58, ¶ 16. Central to the analysis is that a
contract requires a “meeting of the minds” of the parties. Noroski v. Fallet, 2 Ohio St. 3d
77, 79, 442 N.E.2d 1302 (1982). “Although the interpretation of the terms of a contract
is undertaken as a matter of law and subject to a de novo review, the existence of a
contract is a question for the trier of fact.” Guardian Alarm Co. v. Portentoso, 196 Ohio
App.3d 313, 2011-Ohio-5443, 963 N.E.2d 225, ¶ 17 (3d Dist.); Gruenspan v. Seitz, 124
Ohio App. 3d 197, 211,705 N.E.2d 1255 (8th Dist.1997).
{¶ 6} Appellate review of a trial court’s findings of fact at trial is undertaken under
a manifest weight of the evidence standard. C.E. Morris Co. v. Foley Constr. Co., 54
Ohio St. 2d 279, 376 N.E.2d 578 (1978), syllabus; Seasons Coal Co., Inc. v. Cleveland, 10
Ohio St. 3d 77, 79-80, 461 N.E.2d 1273 (1984). “Judgments supported by some
competent, credible evidence going to all the essential elements of the case will not be
reversed by a reviewing court as being against the manifest weight of the evidence.”
Foley at syllabus.
{¶ 7} The trial court found that appellant presented Nancy Sobecki a written offer
to purchase the Rockingham Avenue house for $79,900 on July 27, 2004. Sobecki then
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prepared a loan analysis which was required by Lagrange’s Home Committee to
determine if appellant was financially eligible to purchase the house. Sobecki submitted
the offer with the loan analysis for approval.
{¶ 8} The court also found that Terry Glazer penciled in modifications to the offer,
including increasing the purchase price to $84,200. Glazer also changed the date for
acceptance of the offer from July 29 to August 3, 2004. Glazer initialed the changes and
signed the revised document on July 28, 2004. The court found that Sobecki presented
the modified offer to purchase to appellant, and that appellant initialed the document
where the acceptance date had been changed but did not initial where the purchase price
had been changed. Appellant also did not sign the proposed revised agreement.
{¶ 9} The trial court treated the modified contract terms as a counteroffer, which
appellant accepted by her conduct and performance:
When defendant Glazer changed material terms of plaintiff’s offer
and initialed such changes, he effectively presented to plaintiff a
counteroffer. Upon receipt of the counteroffer, plaintiff placed her initials
only at the top of the contract where the newly inserted date of “8-3-2004”
indicated the date until which the offer remained open for acceptance.
While such action by itself, although ambiguous, does not necessarily show
acceptance of the counteroffer, subsequent conduct by plaintiff evinces the
intention to accept the contract as modified. On August 3, 2004, after the
counteroffer was submitted to her, she was present and consented to Ms.
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Sobecki faxing the contract and Loan Analysis form to Neighborhood
Housing Services for the purpose of securing a mortgage. If plaintiff
believed there was no contract, she would have no reason to pursue a
mortgage to purchase the property. Approximately one month later
plaintiff agreed to close on the property upon the terms as set forth in the
modified contract and she received a deed. * * * In the instant case,
defendants’ counteroffer was accepted by plaintiff through her conduct and
performance.
{¶ 10} Appellant testified that she did not agree to the change in purchase price or
the other proposed changes to her offer to purchase. Appellant claims there is no
evidence that she ever agreed to the proposed changes to her offer.
{¶ 11} Appellees argue that appellant’s original proposal required changes to the
house (adding central air conditioning) and requiring Lagrange to help pay closing costs.
Ms. Sobecki testified that she discussed with appellant the changes proposed by
Lagrange.
{¶ 12} It is not necessarily required for all parties to sign a contract for a valid
enforceable contract to exist. Richard A. Berjian, D.O., Inc. v. Ohio Bell Tel. Co., 54
Ohio St. 2d 147, 152-153, 375 N.E.2d 410 (1978); Hocking Valley Community Hosp. v.
Community Health Plan of Ohio, 4th Dist. Hocking No. 02CA28, 2003-Ohio-4243, ¶ 16;
CME Fed. Credit Union v. Stultz, 10th Dist. Franklin No. 98AP-1598, 1999 WL
1009728, * 2, fn. 1 (Nov. 9, 1999). “In case of doubt an offer is interpreted as inviting
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the offeree to accept either by promising to perform what the offer requests or by
rendering the performance, as the offeree chooses.” Restatement of the Law 2d,
Contracts, Section 32 (1981). “Generally conduct sufficient to show agreement,
including performance, constitutes acceptance of an offer. Nagle Heating & Air
Conditioning Co. v. Heskett, 66 Ohio App. 3d 547, 550, 585 N.E.2d 866 (4th Dist.1990).”
Foor v. Columbus Real Estate Pros.com, 5th Dist. Delaware No. 12 CAE 08 0063, 2013-
Ohio-2848, ¶ 24.
{¶ 13} The counteroffer by Lagrange did not restrict the manner of acceptance.
Under the trial court’s findings of fact, after Lagrange prepared its counteroffer,
appellant applied for and received a loan to finance the purchase, closed on the purchase
under the terms proposed by Lagrange, and received a deed on the property. We find
competent, credible evidence in the record supports the trial court’s finding that
appellant accepted the terms of Lagrange’s counteroffer by performance.
{¶ 14} We find assignment of error No. 2 not well-taken.
{¶ 15} Under assignment of error No. 1, appellant objects to the trial court’s
treatment of the defense of caveat emptor and the “as is” clause in the purchase
agreement. Appellant contends that caveat emptor is not available as a defense because
the defects in the property were not open and discoverable but were latent. Appellant
argues that as a result, appellees are subject to liability for claims due to nondisclosure of
property defects.
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{¶ 16} Appellees argue appellant has mischaracterized defenses arising under the
doctrine of caveat emptor and those created by an “as is” clause in the purchase
agreement. Appellees argue that caveat emptor and the “as is” clause present separate
defenses, not reliant on the other, with caveat emptor providing a defense to claims as to
patent defects and “as is” clauses providing a defense claims whether the defects are
latent or patent.
{¶ 17} Layman v. Binns, 35 Ohio St. 3d 176, 519 N.E.2d 642 (1988), outlined the
elements of the doctrine of caveat emptor in purchases of real property:
The doctrine of caveat emptor precludes recovery in an action by the
purchaser for a structural defect in real estate where (1) the condition
complained of is open to observation or discoverable upon reasonable
inspection, (2) the purchaser had the unimpeded opportunity to examine the
premises, and (3) there is no fraud on the part of the vendor. (Traverse v.
Long [1956], 165 Ohio St. 249, 59 Ohio Op. 325, 135 N.E.2d 256, approved
and followed.) Layman at syllabus.
{¶ 18} As the elements of the defense demonstrate, caveat emptor protects against
claims arising from conditions of the property that are “open to observation or
discoverable upon reasonable inspection.” Loomis v. Troknya, 165 Ohio App. 3d 300,
2006-Ohio-731, ¶ 20 (6th Dist.). Where it applies, the defendant may still remain subject
to liability for latent conditions. Stackhouse v. Logangate Property Mgt., 172 Ohio
App.3d 65, 2007-Ohio-3171, 872 N.E.2d 1294, ¶ 18-21 (7th Dist.).
7.
{¶ 19} The purchase agreement in this case, however, includes an “as is” clause:
6. Condition of Property. Except as previously disclosed in
writing to Purchaser, Seller has no knowledge of any underground tanks,
faulty major appliances, faulty electrical, plumbing, heating, cooling,
sewer, septic, well or water systems, structural or chimney defects, hidden
or latent defects (including leakage, water seepage or wall dampness in
basement, foundation, bathroom or kitchen areas) in the Property.
EXCEPT _____________________________Purchaser acknowledges that,
subject to Purchaser’s inspection rights in Paragraph 8, Purchaser is
purchasing the Property in its present “as is” condition, including any
defects of problems specified in this Agreement or that have been otherwise
disclosed in writing by Seller.
{¶ 20} An “as is” clause relieves sellers from a duty to disclose latent defects and
defeats claims of fraudulent nondisclosure whether the defects are patent or latent. Akl v.
Maher, 6th Dist. Lucas No. L-96-125, 1996 WL 748187, *3 (Dec. 30, 1996); Stackhouse
at ¶ 22; Felker v. Schwenke, 129 Ohio App. 3d 427, 430, 717 N.E.2d 1165 (8th
Dist.1998). Even with an “as is” clause in the sales agreement, the seller remains subject
to liability for a claim of positive fraud, “that is, a fraud of commission rather than
omission, such as fraudulent misrepresentation or fraudulent concealment.” Majoy v.
Hord, 6th Dist. Erie No. E-03-037, 2004-Ohio-2049, ¶ 18; Boulton v. Vadakin, 4th Dist.
Washington No. 07CA26, 2008-Ohio-666, ¶ 17.
8.
{¶ 21} We find appellant’s argument that the defects were latent and that appellees
remained subject to liability for failure to disclose latent defects is without merit. The “as
is” clause removed any duty to disclose latent defects and acts to defeat claims of
fraudulent nondisclosure. We address under assignment of error No. 3 whether the trial
court erred in granting appellees judgment on appellant’s claims of fraudulent
misrepresentation and fraudulent concealment.
{¶ 22} We find assignment of error no. 1 not well-taken.
{¶ 23} Under assignment of error No. 3, appellant asserts that the trial court
judgment is against the manifest weight of the evidence. The standard of review for a
manifest weight of the evidence challenge to a trial court verdict is the same in civil and
criminal cases. Eastley v. Volkman, 132 Ohio St. 3d 328, 2012-Ohio-2179, 972 N.E.2d
517, ¶ 17. Such a challenge questions whether the prevailing party met their burden of
persuasion. Id. at ¶ 19. The analysis in State v. Thompkins, 78 Ohio St. 3d 380, 678
N.E.2d 541 (1997) applies:
“The [reviewing] court * * * weighs the evidence and all reasonable
inferences, considers the credibility of witnesses and determines whether in
resolving conflicts in the evidence, the [finder of fact] clearly lost its way
and created such a manifest miscarriage of justice that the [judgment] must
be reversed and a new trial ordered.” (Alterations made in Tewarson.)
Eastley at ¶ 20, quoting Tewarson v. Simon, 141 Ohio App. 3d 103, 115,
750 N.E.2d 176 (9th Dist.2001). (Additional citations omitted.)
9.
{¶ 24} In undertaking this analysis, we give deference to the findings of the trial
court “with the knowledge that the trial judge is best able to view the witnesses and
observe their demeanor, gestures and voice inflections, and use these observations in
weighing the credibility of the proffered testimony.” Seasons Coal, 10 Ohio St. 3d at 80,
461 N.E.2d 1273.
{¶ 25} Appellant contends that the weight of the evidence established that
Lagrange and its employees engaged in fraudulent misrepresentations of fact as to the
condition of the property and fraudulent concealment of the conditions. 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. Cohen v. Lamko, Inc., 10 Ohio St. 3d
167, 169, 462 N.E.2d 407 (1984).
{¶ 26} Appellant contends that Lagrange offered the house for sale as “completely
rehabilitated,” on the for sale sign posted on the property, when it was not. Lagrange also
referred to the property as a “complete rehab” in a loan analysis form. In its judgment,
the trial court directly addressed appellant’s contention that Lagrange fraudulently
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misrepresented that the house was completely rehabilitated. With respect to contentions
based upon the for sale sign, the court concluded:
Plaintiff claims that defendants fraudulently misrepresented that the
house was completely rehabilitated, when it was not. Plaintiff has not
proven by a preponderance of the evidence that a sign at the front of the
house stated it had been “completely rehabilitated.” Other than plaintiff’s
testimony as to her recollection of the wording on the sign, there was
nothing else presented to corroborate her statement. Plaintiff called several
neighbors in her case-in chief, but none of them testified as to the sign
defendants had placed at the house.
{¶ 27} The record also discloses that Nancy Sobecki testified with respect to the
for sale sign used at the house. Sobecki testified that Lagrange used its own signs and
she is the person who has designed them. She testified that Lagrange had used a sign
stating “Another home under rehab” in the past and denied use of other language on its
signs. According to Sobecki, the language used always indicated Lagrange was involved
in rehabbing another home in the neighborhood.
{¶ 28} With respect to the “complete rehab” language in the loan analysis form,
the court concluded:
Plaintiff cannot rely upon the wording of the Loan Analysis form, as
that was an internal document of LDC [Lagrange] which Nancy Sobecki
prepared for its Home Committee. Such document does not constitute a
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representation to plaintiff, and is not evidence of an intent to mislead
plaintiff.
{¶ 29} Nancy Sobecki testified that the loan analysis form is an internal document
prepared on a homebuyer who requests financial assistance from Lagrange to purchase
the home. The form was prepared by her and submitted to Lagrange’s housing
committee for approval. Sobecki testified that the document was not intended to be given
to appellant and that she never showed the document to appellant.
{¶ 30} Sobecki also testified that the term “complete rehab” used on the form was
for internal use and meant “we completed to the housing code, the City of Toledo, the
electrical, plumbing, furnace and roof.”
{¶ 31} The trial court also considered claims by appellant “that defendants
committed fraud by concealing from her the conditions relating to basement flooding,
defective wiring, and leakage from the roof and chimney.” The court found:
As to faulty electric components and roof or chimney issues, such
had been inspected by the City of Toledo and had found to meet code
requirements. Moreover, plaintiff has failed to prove a fraudulent
concealment by defendants of such conditions.
{¶ 32} With respect to claimed concealment of the condition of the basement, the
court found:
Regarding the basement, the weight of the evidence is that the water
problem was from heavy rains causing a sewer backup. However, there is
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insufficient evidence to find that the defendants either misrepresented the
condition of the basement or knew of flooding problem in plaintiff’s
basement and concealed it from her. Further, absent a fraudulent
concealment, defendants had no duty to disclose any such condition
because the contract contained the “as is” clause.
{¶ 33} We have reviewed the record and find competent, credible evidence in the
record supports the trial court’s judgment. We find no miscarriage of justice in the
court’s resolution of the credibility of witnesses and conflicts in the evidence at trial. We
conclude that the trial court’s judgment is not against the manifest weight of the
evidence.
{¶ 34} We find assignment of error No. 3 not well-taken.
{¶ 35} Justice having been afforded the party complaining, we affirm the
judgment of the Lucas County Court of Common Pleas. We order appellant to pay the
costs of this appeal, pursuant to App.R. 24.
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
13.
Brown v. Lagrange Dev. Corp.
C.A. No. L-09-1099
Mark L. Pietrykowski, J. _______________________________
JUDGE
Arlene Singer, P.J.
_______________________________
Thomas J. Osowik, J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.
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