Brown v. Lagrange Dev. Corp.

2015 Ohio 133

• Court: Ohio Court of Appeals
• Decided: January 16, 2015
• Docket: L-09-1099
• Status: Published

Opinion

[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

2. 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

3. 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.

4. 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

5. 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.

6. {¶ 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 O.O. 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

10. 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

11. 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

12. 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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