Ownerland Realty, Inc. v. Zhang

[Cite as Ownerland Realty, Inc. v. Zhang, 2014-Ohio-2585.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
WARREN COUNTY
OWNERLAND REALTY, INC., :
CASE NOS. CA2013-09-077
Plaintiff-Appellant, : CA2013-10-097
: OPINION
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:
LEMIN ZHANG, et al., :
Defendants-Appellees. :
CIVIL APPEAL FROM WARREN COUNTY COURT OF COMMON PLEAS
Case No. 12 CV 82595
Jason Phillabaum & Associates LLC, Jason R. Phillabaum, 810 Sycamore Street, 5th Floor,
Cincinnati, Ohio 45202, for plaintiff-appellant
Graydon Head & Ritchey LLP, Michael A. Roberts, 1900 Fifth Third Center, 511 Walnut
Street, Cincinnati, Ohio 45202, for defendants-appellees, Lemin & Liping Zhang
HENDRICKSON, J.
{¶ 1} Plaintiff-appellant, Ownerland Realty, Inc., appeals from decisions in the
Warren County Court of Common Pleas granting summary judgment to defendants-
appellees, Lemin and Liping Zhang (Homeowners), and awarding attorney fees to
Homeowners in an action involving claims of breach of contract, unjust enrichment, and
fraudulent inducement. For the reasons outlined below, we affirm in part and reverse in part
the decision of the trial court granting summary judgment to Homeowners and reverse the
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decision of the trial court awarding Homeowners attorney fees.
{¶ 2} Ownerland is a company involved in the sale of real estate in Ohio. When
Homeowners planned to sell their residential property located on Cherrydale Court in Mason,
Ohio and relocate to the Washington, D.C. area, they utilized Ownerland as an exclusive
listing agent. In the course of their relationship, Ownerland and Homeowners signed two
exclusive-right-to-sell contracts and a cancellation agreement relating to the property.
{¶ 3} The first contract was signed by Ownerland and Homeowners on January 31,
1
2012 giving Ownerland the exclusive right to sell Homeowners' property. The first contract
also provided that Ownerland would receive a two percent commission from the sale of the
property. An additional three percent commission was to be provided to the buyer's agent.
Paragraph 14 provided a protection period of 90 days after the expiration date of the contract
whereby Ownerland would still be entitled to the commission. Pursuant to paragraph 14,
Ownerland would only be entitled to the commission if Homeowners acted as their own agent
in the sale of the property and had not listed the property exclusively with another broker.
The first contract was set to expire on July 31, 2012. The second contract was signed by
Ownerland and Homeowners on May 2, 2012. Except for the listing price, the second
contract possessed identical provisions to the first contract and was to expire on August 2,
2012.
{¶ 4} The parties signed a cancellation agreement on May 31, 2012. This document
states: "The undersigned agree that the Exclusive Right to Sell Agreement entered into by
the parties on * * * 2/1/2012 * * * is cancelled as of * * * 5/31/2012 * * *. The parties further
agree that neither party has any further obligation or responsibility to each other, except: [.]"
1. While the first contract was signed on January 31, 2012, the cancellation agreement references a date of
February 1, 2012. It does not appear that the parties dispute that the date in the cancellation agreement
references the first contract signed by the parties.
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(Emphasis sic.) Following the word "except," the space is blank.
{¶ 5} On June 1, 2012, almost immediately after signing the cancellation agreement,
Homeowners entered an exclusive-right-to-sell contract with Home Wise Real Estate, LLC.
On or about July 13, 2012, the property sold for $437,500. A two percent commission of
$8,750 was never paid to Ownerland.
{¶ 6} On August 2, 2012, Ownerland filed a complaint alleging breach of contract,
unjust enrichment, and fraudulent inducement. Ownerland argued that the cancellation
agreement signed by the parties only canceled the Multiple Listing Service (MLS) listing of
the property and did not affect its exclusive right to sell. Consequently, Ownerland asserted
that it was entitled to commission from the sale.
{¶ 7} On April 18, 2013, Homeowners filed a motion for summary judgment.
Homeowners argued that Ownerland was not entitled to any commission because the
cancellation agreement signed by the parties cancelled both exclusive-right-to-sell contracts.
Furthermore, Homeowners contended that the claim of unjust enrichment was an improper
theory of recovery because a contract governed the relationship of the parties and there was
no evidence to support a fraud claim.
{¶ 8} The trial court granted Homeowners' motion for summary judgment. The trial
court found that Homeowners did not breach any contract with Ownerland as the cancellation
agreement effectively cancelled the exclusive-right-to-sell contracts and nullified the
protection clause. Furthermore, the trial court found that Ownerland could not recover under
a theory of unjust enrichment or fraud because an express contract was involved.
Additionally, following a hearing regarding attorney fees, the trial court determined that the
contract claim was not based on existing law and was frivolous. The trial court stated that
Ownerland could have dismissed the complaint upon completion of discovery when it
realized it had prepared the cancellation agreement and did not provide any reservations.
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The trial court also found that Ownerland misused the court process to try to collect a
commission to which it clearly was never entitled because it knew it had a logistical
advantage over Homeowners who had moved outside of Ohio. As a result of finding
Ownerland's contract claim frivolous, judgment was entered ordering Ownerland to pay
Homeowners $6,318.32 in attorney fees.
{¶ 9} Ownerland now appeals and asserts two assignments of error for review.
{¶ 10} Assignment of Error No. 1:
{¶ 11} THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT
AGAINST PLAINTIFF OWNERLAND REALTY.
{¶ 12} Ownerland sets forth three independent arguments as to why the trial court
erred in granting Homeowners' summary judgment motion. First, Ownerland argues that
there is a genuine issue of material fact regarding the parties' intent in signing the
cancellation agreement. Second, Ownerland contends that there is a genuine issue of
material fact as to whether Homeowners misrepresented their intention as to why they
wanted to sign the cancellation agreement. Ownerland thus argues that it was fraudulently
induced into signing the cancellation agreement. Third, Ownerland asserts that all three
conditions were met for Ownerland to recover damages from Homeowners on the basis of
unjust enrichment.
{¶ 13} Summary judgment is a procedural device used to terminate litigation and avoid
a formal trial when there are no issues in a case to try. Norris v. Ohio Standard Oil Co., 70
Ohio St.2d 1, 2 (1982). This court's review of a trial court's ruling on a summary judgment
motion is de novo. As such, we review the trial court's judgment independently and without
deference to its determinations. BAC Home Loans Servicing, L.P., v. Hall, 12th Dist. Warren
No. CA2009-10-135, 2010-Ohio-3472, ¶ 11.
{¶ 14} A trial court may grant summary judgment only when: (1) there is no genuine
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issue of any material fact; (2) the moving party is entitled to judgment as a matter of law; and
(3) the evidence submitted can only lead reasonable minds to a conclusion which is adverse
to the nonmoving party. Civ.R. 56(C); Harless v. Willis Day Warehousing Co., 54 Ohio St.2d
64, 66 (1978). The party moving for summary judgment bears the burden of demonstrating
no genuine issue of material fact exists. Dresher v. Burt, 75 Ohio St.3d 280, 292-293 (1996).
The nonmoving party must then present evidence, by affidavit or otherwise, to show that
there is some issue of material fact yet remaining for the trial court to resolve. Id. at 293;
Civ.R. 56. A material fact is one which would affect the outcome of the suit under the
applicable substantive law. Hillstreet Fund III, L.P. v. Bloom, 12th Dist. Butler No. CA2009-
07-178, 2010-Ohio-2961, ¶ 9. In deciding whether a genuine issue of material fact exists, the
evidence must be construed in the nonmoving party's favor. Walters v. Middletown
Properties Co., 12th Dist. Butler No. CA2001-10-249, 2002-Ohio-3730, ¶ 10.
{¶ 15} Ownerland argues that there is an ambiguity in the cancellation agreement
because the intent of the parties was only to cancel the MLS agreement and keep the
contractual relationship regarding the exclusive right to sell in place. Ownerland asserts
special circumstances surrounded the agreement because Homeowners stated to
Ownerland's agent that they were going to rent the property rather than sell the property.
Furthermore, Ownerland asserts that it logically should maintain its status as the exclusive
listing agent for the property because it spent time and money marketing the home. We find
that Ownerland's arguments are contrary to the clear meaning of the words utilized in the
cancellation agreement.
{¶ 16} In reviewing a contract, the court's primary role is to ascertain and give effect to
the intent of the parties. O'Bannon Meadows Homeowners Assn., Inc. v. O'Bannon
Properties, L.L.C., 12th Dist. Clermont No. CA2012-10-073, 2013-Ohio-2395, ¶ 19, citing
Hamilton Ins. Serv., Inc. v. Nationwide Ins. Cos., 86 Ohio St.3d 270, 273 (1999). In
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ascertaining the intent of the parties, the court must presume that the intent resides in the
language the parties chose to employ in the agreement. Towne Dev. Group, Ltd. v.
Hutsenpiller Contrs., 12th Dist. Butler No. CA2012-09-181, 2013-Ohio-4326, ¶ 17, citing
Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth., 78 Ohio St.3d
353, 361 (1997). "A court will resort to extrinsic evidence in its effort to give effect to the
parties' intentions only where the language is unclear or ambiguous, or where the
circumstances surrounding the agreement invest the language of the contract with a special
meaning." Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132 (1987). When the language
of a written contract is clear, a court may look no further than the writing itself to find the
intent of the parties. Safe Auto Ins. Co. v. Semenov, 192 Ohio App.3d 37, 2011-Ohio-163, ¶
8 (12th Dist.).
{¶ 17} In this instance, the cancellation agreement specifically states that an
"Exclusive Right to Sell Agreement" is being cancelled. It does not say that a MLS listing is
cancelled as Ownerland contends. Ownerland asserts that if the cancellation agreement
terminates the first exclusive-right-to-sell contract, then the second exclusive-right-to-sell
contract remains in effect. Nevertheless, the cancellation agreement states "neither party
has any further obligation or responsibility to each other * * *." (Emphasis added.) It is clear
from the writing itself that the parties intended to sever obligations and responsibilities to one
another, which would include the second exclusive-right-to-sell contract. If Ownerland
wanted to limit the scope of the cancellation agreement or document any special
circumstances surrounding the cancellation agreement it should have done so in the
cancellation agreement itself in the space provided. Because the cancellation agreement
clearly and unambiguously terminated any obligations Homeowners had to Ownerland, there
is no genuine issue of material fact regarding Ownerland's contract claim and Homeowners
are entitled to judgment as a matter of law.
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{¶ 18} Ownerland next argues that the trial court erred in granting summary judgment
to Homeowners because Homeowners fraudulently induced Ownerland to sign the
cancellation agreement. Ownerland contends that it detrimentally relied on Homeowners'
statement that they were going to rent the property rather than sell it. Homeowners, on the
other hand, state that they did not tell Ownerland's agent that they were going to rent the
property, but that they were going to pursue "all options." We find that the conflict in
statements creates a genuine issue of material fact precluding summary judgment.
{¶ 19} To prevail on a fraudulent inducement claim, one must establish (1) a false
representation concerning a fact, (2) knowledge of the falsity of the representation or utter
disregard for its truthfulness, (3) intent to induce reliance on the representation, (4) justifiable
reliance upon the representation, and (5) injury proximately caused by the reliance. Togo
Internatl., Inc. v. Mound Steel Corp., 106 Ohio App.3d 282, 286 (12th Dist.1995), citing
Mussivand v. David, 45 Ohio St.3d 314, 322 (1989). Buchanan v. Improved Properties, LLC,
3d Dist. Allen No. 1-13-38, 2014-Ohio-263, ¶ 16. The question of justifiable reliance is one of
fact and requires an inquiry into the relationship between the parties. Togo at 286. Reliance
is justifiable if the representation does not appear unreasonable on its face and if, under the
circumstances, there is no apparent reason to doubt the veracity of the representation. Id. at
287.
{¶ 20} In this instance, Homeowners established through an affidavit that they were
growing increasingly dissatisfied with Ownerland, resulting in the mutual signing of the
cancellation agreement. Homeowners averred that prior to signing the cancellation
agreement they told Ownerland's agent that they still needed to sell the property but were
contemplating "all options," including renting the property. In response, Ownerland's agent
averred that Homeowners had represented that they were going to rent the property rather
than sell and that is why they were taking the property off the MLS listing.
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{¶ 21} When construing the evidence most favorably to Ownerland, the disagreement
as to Homeowners' statement creates a genuine issue of material fact. If Ownerland's
version of events is believed, then Homeowners planned to rent the property. Homeowners
admitted in an affidavit that renting was a possibility. Nevertheless, the day after entering the
cancellation agreement with Ownerland, Homeowners entered an exclusive-right-to-sell
contract with another real estate company. Consequently, construing the evidence in
Ownerland's favor, Homeowners made a false representation of a fact that resulted in
Ownerland losing commission from the sale of the property. Absent signing the cancellation
agreement, both exclusive-right-to-sell contracts would have been in place at the time of the
sale. The evidence also creates an issue of fact as to whether Homeowners knew of the
falsity of their representation to Ownerland and whether Homeowners intended to induce
reliance on the false representation.
{¶ 22} Additionally, Homeowners averred that they were growing increasingly
dissatisfied with Ownerland. However, the emails between Homeowners and Ownerland
attached to Homeowners' affidavit indicate that Homeowners continued to work with
Ownerland to sell their property until Ownerland's agent sent an email asking Homeowners to
sign and date a "Release/Cancel Listing Agreement" in order to take their "listing off the
market." Construing the evidence most favorably to Ownerland, the relationship between the
parties appeared amicable and there is a question of fact as to whether reliance on
Homeowner's representation was reasonable. Consequently, reasonable minds can
conclude that it is possible for Ownerland to meet the elements of fraudulent inducement.
Accordingly, Homeowners were not entitled to judgment as a matter of law and summary
judgment in favor of Homeowners regarding Ownerland's fraudulent inducement claim was
improper.
{¶ 23} Ownerland last asserts that it would be unjust for Homeowners to retain the
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benefit of the selling their home without compensating Ownerland. Ownerland contends that
it engaged in several marketing efforts, including listing the property on the MLS, creating a
virtual tour, and employing multiple photographers, all of which resulted in the sale of
Homeowners' property. We find that Ownerland failed to meet its burden to survive summary
judgment regarding its unjust enrichment claim.
{¶ 24} A party may recover damages under a theory of unjust enrichment if he or she
can establish that "(1) his or her actions conferred a benefit on the defendant, (2) the
defendant knew of the benefit that had been conferred upon him or her, and (3) it would be
unjust to allow the defendant to retain the benefit conferred upon him or her without requiring
the defendant to pay for that benefit." Leesburg Fed. Sav. Bank v. McMurray, 12th Dist.
Fayette No. CA2012-02-002, 2012-Ohio-5435. Nevertheless, a party pursuing relief for
breach of contract cannot at the same time seek equitable relief for unjust enrichment.
Weiper v. W.A. Hill & Assoc., 104 Ohio App.3d 250, 262, 661 (1st Dist.1995). In the absence
of fraud, illegality or bad faith, where a contract describes the nature of services to be
rendered and the compensation to be paid, plaintiffs are entitled to compensation only in
accordance with the terms of the agreement. Aultman Hosp. Assn. v. Community Mut. Ins.
Co., 46 Ohio St.3d 51, 55 (1989), citing Ullman v. May, 147 Ohio St. 468 (1947), paragraph
three of the syllabus.
{¶ 25} In this instance, the terms of the exclusive-right-to-sell contracts provided for
the compensation of Ownerland during the exclusive listing period and also provided a
protection period of 90 days. As stated above, the cancellation agreement specified that
"neither party has any further obligation or responsibility to each other * * *." While the
exclusive-right-to-sell contracts provided for the compensation of Ownerland for its marketing
efforts resulting in the sale of the property, any obligations were terminated per the
cancellation agreement. Nevertheless, summary judgment was proper even if Homeowners
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fraudulently induced Ownerland to sign the cancellation agreement. The only evidence
presented by Ownerland was the affidavit of its real estate agent stating Ownerland engaged
in certain marketing efforts for which it advanced the cost. There was no evidence presented
indicating that the alleged benefit conferred on Homeowners of the sale of their property was
actually a result of Ownerland's marketing efforts. Consequently, Ownerland failed to
establish a genuine issue of material fact and Homeowners are entitled to summary
judgment as a matter of law on Ownerland's unjust enrichment claim.
{¶ 26} Ownerland's first assignment of error is overruled as to the contract and unjust
enrichment claims. Ownerland's first assignment of error is sustained as to the fraudulent
inducement claim.
{¶ 27} Assignment of Error No. 2:
{¶ 28} THE TRIAL COURT ERRED IN AWARDING ATTORNEY FEES AND COSTS.
{¶ 29} Ownerland asserts that the trial court erred in finding its breach of contract
claim frivolous and awarding Homeowners attorney fees. Specifically, Ownerland argues that
its breach of contract claim was not "wholly unwarranted," but was rather a justified
interpretation of Ohio law based on the language of the exclusive-right-to-sell contracts and
the actions of the parties. We agree with Ownerland.
{¶ 30} Reviewing a trial court's decision regarding frivolous conduct involves mixed
questions of law and fact. Lucchesi v. Fischer, 12th Dist. Clermont No. CA2008-03-023,
2008-Ohio-5935, ¶ 4. A trial court's factual determinations are accorded a degree of
deference and will not be disturbed on appeal if there is competent, credible evidence in the
record to support them. State ex rel. Chrisman v. Clearcreek Twp., 12th Dist. Warren No.
CA2013-03-025, 2014-Ohio-252, ¶ 8. De novo review, however, is utilized to review legal
questions, such as a whether a party's conduct is not warranted under existing law and
cannot be supported by a good faith argument for an extension, modification, or reversal of
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existing law. Dudley v. Dudley, 196 Ohio App.3d 671, 2011-Ohio-5870, ¶ 11 (12th Dist.),
citing Ferron v. Video Professor, Inc., 5th Dist. Delaware No. 08-CAE-09-0055, 2009-Ohio-
3133, ¶ 44.
{¶ 31} R.C. 2323.51(B)(1) provides that a trial court may award court costs,
reasonable attorney fees, and other reasonable expenses incurred in connection with a civil
action to a party adversely affected by frivolous conduct. Courts must be careful not to deter
legitimate claims when determining whether conduct is frivolous. Chrisman at ¶ 10. The
statute "is designed to chill egregious, overzealous, unjustifiable, and frivolous action."
Cleveland v. Abrams, 8th Dist. Cuyahoga No. 97814, 2012-Ohio-3957, ¶ 17. The question to
ask when determining whether a claim is frivolous is "whether no reasonable lawyer would
have brought the action in light of the existing law." Chrisman at ¶ 10, quoting Cleveland at ¶
17. As such, R.C. 2323.51 applies an "objective standard in determining frivolous conduct,
as opposed to a subjective one" and thus frivolous conduct "is determined without reference
to what the individual knew or believed." Chrisman at ¶ 10.
{¶ 32} In this instance, the trial court determined that Ownerland's conduct was
frivolous under R.C. 2323.51(A)(2)(a)(ii). R.C. 2323.51(A)(2)(a)(ii) provides that conduct is
frivolous when it is "not warranted under existing law, cannot be supported by a good faith
argument for an extension, modification, or reversal of existing law, or cannot be supported
by a good faith argument for the establishment of new law."
{¶ 33} While we find the cancellation agreement clear and unambiguous, we
nevertheless find Ownerland's breach of contract argument legitimate. According to Ohio
law, when a contract is clear and unambiguous, extrinsic evidence is not needed to
determine the intent of the parties. Nevertheless, even without resorting to extrinsic
evidence, a legitimate argument can be made that the cancellation agreement only
terminated the first exclusive-right-to-sell contract as that was the contract specifically
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referenced in the agreement. It was proper for a court of law to determine the effect of the
cancellation agreement on the second exclusive-right-to-sell contract even though
Ownerland's contract claim appropriately failed to survive summary judgment. Consequently,
we find the trial court erred in finding Ownerland's contract claim frivolous and awarding
Homeowners attorney fees. Ownerland's second assignment of error is sustained.
{¶ 34} Judgment affirmed in part and reversed in part. Judgment is affirmed as to the
grant of summary judgment to Homeowners on Ownerland's claims based on contract and
unjust enrichment. Judgment is reversed as to granting summary judgment to Homeowners
on Ownerland's claim based on fraudulent inducement and finding Ownerland's contract
claim frivolous. We hereby vacate the award of attorney fees to Homeowners.
RINGLAND, P.J., and M. POWELL, J., concur.
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