Midura v. Bosley

[Cite as Midura v. Bosley, 2012-Ohio-5115.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF WAYNE )
TIMOTHY J. MIDURA, et al. C.A. No. 12CA0020
Appellants
v. APPEAL FROM JUDGMENT
ENTERED IN THE
WENDY BOSLEY COURT OF COMMON PLEAS
COUNTY OF WAYNE, OHIO
Appellee CASE No. 10-CV-0712
DECISION AND JOURNAL ENTRY
Dated: November 5, 2012
DICKINSON, Judge.
INTRODUCTION
{¶1} A few months after Timothy and Melissa Midura moved into a house they had
purchased from Wendy Bosley and her ex-husband, water began entering the basement. After
spending over $15,000 correcting the problem, they sued Ms. Bosley alleging fraud and mutual
mistake. Following a bench trial, the judge found in favor of Ms. Bosley. The Miduras have
appealed, arguing that the judge’s decision was against the manifest weight of the evidence. We
affirm because the trial judge did not lose his way when he determined that the Miduras failed to
establish fraud or mutual mistake.
BACKGROUND
{¶2} According to Ms. Bosley, she and her ex-husband hired a company to build the
house for them in 2002. They took possession the following year. Because they needed more
storage space, her ex-husband installed shelving in part of the basement shortly after they moved
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in. She testified that, because her children enjoyed playing in the basement, her ex-husband
painted the rest of its walls white. She also said that the only problem that they had ever had
with water in the basement was from a cable box that had not been sealed correctly when it was
installed. That issue was fixed, however, long before they sold the house to the Miduras.
{¶3} Mr. Midura testified that, when he viewed the house before buying it, the only
defect he noticed in the basement was a golf-ball-sized light brown spot on the back wall near
the end of the shelves. He said that he and his wife moved into the house in January 2007 and
did not have any problems in the basement until May or June. Once the weather turned wet,
however, water began coming down the south and back walls of the basement. The water
accumulated in one of the corners and left spots on other parts of the floor. Over 60 feet of the
walls developed a brownish discoloration. Throughout the year the problem got worse until the
Miduras hired a company to repair it.
{¶4} Michael Kellam, the foreman of the work crew who performed the repairs,
testified that, when he inspected the basement, he discovered that the sump pump was leaking,
that there was hydrostatic pressure on the floor, that there were water stains on some of the
cement blocks, that there was an exterior crack in one of the walls, and that there was no drain
tile under the floor. He opined that, based on his examination of the walls and his observations
after opening the floor, he could tell that the problem with the basement “did not develop
overnight” and “probably took a number of years to get to that point.”
STANDARD OF REVIEW
{¶5} The Miduras’ assignment of error is that the trial court’s decision was against the
manifest weight of the evidence. When reviewing the manifest weight of the evidence in a civil
case, this Court “weighs the evidence and all reasonable inferences, considers the credibility of
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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.” Eastley v. Volkman, 132 Ohio St. 3d 328, 2012-Ohio-2179, ¶
20 (quoting Tewarson v. Simon, 141 Ohio App. 3d 103, 115 (9th Dist. 2001)).
FRAUD
{¶6} In their complaint, the Miduras alleged that Ms. Bosley committed fraud because
she indicated on a residential property disclosure form that she did not know of any water
intrusion problem other than the problem with the cable box that had been fixed. She also
indicated that she did not know of any structural problems such as cracking of the basement
walls or of any drainage or flooding problems with the property.
{¶7} The doctrine of caveat emptor precludes a purchaser from recovering for a
structural defect in real estate if “(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.” Layman v. Binns, 35
Ohio St. 3d 176, syllabus (1988). “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 County Bd. of Comm’rs,
23 Ohio St. 3d 69, paragraph two of the syllabus (1986). Regarding fraudulent concealment or
nondisclosure, the Ohio Supreme Court has held that “a [seller] has a duty to disclose material
facts which are latent, not readily observable or discoverable through a [buyer’s] reasonable
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inspection.” Binns, 35 Ohio St. 3d at 178. “Fraudulent concealment exists where a [seller] fails
to disclose sources of peril of which [s]he is aware, if such a source is not discoverable by the
[buyer].” Bryk v. Berry, 9th Dist. 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.{¶8} The trial judge found that the Miduras had failed to present any evidence that Ms.
Bosley knew there was a water intrusion problem in the basement. At trial, Mr. Midura testified
that, when he viewed the house, the basement had been painted white. He said that, although he
did not know when the walls had been painted, he believed the paint was fresh because it was so
white. The Miduras argued that the fresh painting of the basement and the sheer magnitude of
the water infiltration problem were evidence that Ms. Bosley must have known of the problem.
They also argued that Mr. Midura’s observation of the brown spot on a basement wall when he
viewed the house and Mr. Kellam’s testimony that the problem had developed over a number of
years established that the problem was not something that had started after they took possession
of the property.
{¶9} Ms. Bosley testified that she had not observed the water infiltration problem that
the Miduras experienced. She also testified that her ex-husband was the one who had handled
the basement renovations. Ms. Bosley’s father corroborated part of her testimony, stating that he
had been in the basement of the house “quite often” and had never noticed any dampness or
other moisture problem.
{¶10} Upon review of the record, we cannot say that the trial judge lost his way when he
found that the Miduras had failed to establish that Ms. Bosley knew there was a water intrusion
problem in the basement when she completed the residential property disclosure form.
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According to Mr. Kellam, the problem he identified would have taken a number of years to
develop to the point that he observed it. The Miduras bought the house from Ms. Bosley in the
fall of 2006, but did not hire Mr. Kellam’s company until March 2008. The fact that the problem
would have taken a number of years to develop implies that it would not have been as extensive
or observable at the time of the sale as it was a year and a half later. In addition, there was no
evidence that Ms. Bosley was the one who allegedly repainted the walls before the Miduras
viewed the property. We further note that Mr. Kellam said that he did not see the crack in the
exterior wall until his crew dug an inspection trench, so that issue could not have been readily
observed by Ms. Bosley. Accordingly, we agree that the Miduras failed to establish that Ms.
Bosley’s answers on the residential property disclosure form were “made falsely, with
knowledge of [their] falsity, or with such utter disregard and recklessness as to whether [they
are] true or false that knowledge may be inferred[.]” Burr v. Stark County Bd. of Comm’rs, 23
Ohio St. 3d 69, paragraph two of the syllabus (1986).
MUTUAL MISTAKE
{¶11} The Miduras have also argued that the trial judge incorrectly rejected their mutual
mistake claim. According to the Miduras, if Ms. Bosley did not, in fact, know about the water
intrusion problem, then the doctrine of mutual mistake applies to the sale of the property.
{¶12} “[Ohio] recognizes the doctrine of mutual mistake as a ground for the rescission
of a contract under certain circumstances.” Reilley v. Richards, 69 Ohio St. 3d 352, 352 (1994).
“[A] buyer is entitled to rescission of a real estate purchase contract [if] there is a mutual mistake
as to a material part of the contract and . . . the complaining party is not negligent in failing to
discover the mistake.” Id. at 352-53. “A mistake is material to a contract when it is ‘a mistake . .
. as to a basic assumption on which the contract was made [that] has a material effect on the
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agreed exchange of performances.’” Id. at 353 (quoting 1 Restatement of the Law 2d, Contracts,
Section 152(1), at 385 (1981)). “[T]he intention of the parties must have been frustrated by the
mutual mistake.” Id.
{¶13} The residential property disclosure form informed the Miduras that, “other than
having lived at . . . the property, [Ms. Bosley] possesses no greater knowledge than that which
could be obtained by a careful inspection of the property by a potential purchaser.” The form
indicated that it was “not a warranty of any kind” or “a substitute for any inspections.” It also
advised the Miduras “to obtain their own professional inspection.” Despite warning the Miduras
that they should hire a professional inspector and Mr. Midura’s observation of a brown spot on
the wall of the basement, even though it appeared to have been freshly painted, there is no
evidence in the record that the Miduras hired a professional to inspect the property. We,
therefore, conclude that there was sufficient evidence for the court to find that the Miduras were
“negligent in failing to discover” the water intrusion problem before purchasing the house.
Reilley v. Richards, 69 Ohio St. 3d 352, 352-53 (1994). In addition, the Miduras did not submit
any evidence that their home lost a significant amount of its fair market value or became
uninhabitable because of the problem. Accordingly, it cannot be said that the problem
“materially affected a basic underlying assumption of the parties’ purchase agreement.” Novotny
v. Fierle, 11th Dist. No. 2011-L-148, 2012-Ohio-4007, ¶ 30 (concluding that the doctrine of
mutual mistake did not apply when there was an unknown pre-existing condition that caused
water to enter basement after sale of house was completed); Wallington v. Hageman, 8th Dist.
No. 94763, 2010-Ohio-6181, ¶ 27 (concluding that basement water-infiltration problem did not
affect the character of the property or the parties’ ability to complete the contract).
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{¶14} The Miduras have argued that this case is similar to the facts of Reilley. In that
case, David Richards bought a parcel of land from Thomas Reilley intending to build a house on
it. At the time of the sale, the parties did not know that the land was located in a floodplain, that
a house could not be built on it unless it met certain conditions, or that Mr. Richards would not
be able to obtain a warranty from the builder he had hired if he constructed a house on the land.
The Ohio Supreme Court determined that Mr. Richards could rescind the sale under those
circumstances because the parties were mistaken about a fact “that goes to the character of the
property such that it severely frustrate[d] [Mr. Thomas’s] ability to build a home on the
property.” Reilley v. Richards, 69 Ohio St. 3d 352, 353 (1994). The Court noted that, even
though Mr. Richards had had his builder inspect the property, the builder could not have
discovered the existence of the floodplain simply by looking at it. Id.{¶15} Unlike in Reilley, the water intrusion problem that the Miduras experienced did
not severely frustrate their ability to use the house as their home. It was not “a mistake . . . as to
a basic assumption on which the contract was made [that] ha[d] a material effect on the agreed
exchange of performances.” Reilley v. Richards, 69 Ohio St. 3d 352, 353 (1994) (quoting 1
Restatement of the Law 2d, Contracts, Section 152(1), at 385 (1981)); see Irwin v. Wilson, 45
Ohio St. 426, syllabus (1887) (concluding that William Irwin could rescind land trade because
the parties were misled by a third-party about which land he would receive in the exchange).
{¶16} Because the Miduras did not hire a professional to inspect the basement before
buying the house and because the water intrusion problem was not a mistake regarding a basic
assumption on which the contract was made, the trial court correctly awarded judgment to Ms.
Bosley on their mutual mistake claim. The Miduras’ assignment of error is overruled.
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CONCLUSION
{¶17} The trial court’s decision is not against the manifest weight of the evidence. The
judgment of the Wayne County Common Pleas Court is affirmed.
Judgment affirmed.
There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Wayne, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellants.
CLAIR E. DICKINSON
FOR THE COURT
WHITMORE, P. J.
MOORE, J.
CONCUR
APPEARANCES:
DANIEL S. WHITE, Attorney at Law, for Appellants.
ROBERT J. REYNOLDS, Attorney at Law, for Appellee.