Crockett Homes, Inc. v. Hamilton

2012 Ohio 2162
Ohio Court of Appeals·Decided May 14, 2012·No. 2011-CCA-00222·Published

Opinion

COURT OF APPEALS

STARK COUNTY, OHIO

FIFTH APPELLATE DISTRICT

JUDGES:

CROCKETT HOMES, INC., ET AL : Hon. Patricia A. Delaney, P.J.

: Hon. W. Scott Gwin, J.

Plaintiffs-Appellees : Hon. John W. Wise, J.

:

-vs- :

: Case No. 2011-CA-00222 JENNIFER ROHRER HAMILTON, ET : AL :

: OPINION

Defendants-Appellants

CHARACTER OF PROCEEDING: Civil appeal from the Stark County Court of Common Pleas, Case No. 2010CV02794

JUDGMENT: Affirmed in part; Reversed in part

DATE OF JUDGMENT ENTRY: May 14, 2012 APPEARANCES: For Plaintiff-Appellee For Defendants-Appellants

GREGORY W. HAPP RICHARD A. PAOLO 238 West Liberty Street EDWARD P. AKIN Medina, OH 44256 2200 U.S. Bank Tower (Counsel withdrew) 425 Walnut Street Cincinnati, OH 45202

ROBERT B. HOLMAN Box 46390 CRAIG PELINI 24262 Broadway Avenue 2848 Carrington Street N.W. Cleveland, OH 44146 North Canton, OH 44720

Gwin, J.

{1} Defendants-appellants Jennifer Rohrer-Hamilton, Jed Rohrer, James Richard Rohrer, Mohler Lumber Company, Inc., Rohrer Development Company, LLC, and Jed A. Rohrer, Sr., as Executor of the Estate of Richard G. Rohrer, Deceased, appeal a judgment of the Court of Common Pleas of Stark County, Ohio, entered in favor of plaintiffs-appellees Crockett Homes, Inc. and Crockett Construction Company, Inc. Appellants assign eight errors to the trial court:

{2} “I. THE TRIAL COURT ERRED IN CONCLUDING THAT ANY ACTIONS OF DEFENDANTS CAUSED CROCKETT TO LOSE ITS ENTIRE REMAINING PROJECTED PROFITS FROM THE PROJECT.

{3} “II. THE TRIAL COURT ERRED IN CALCULATING DAMAGES, EVEN IF CROCKETT HAD FULLY PERFORMED AND DEFENDANTS WERE IN BREACH.

{4} “III. THE TRIAL COURT HAD NO RATIONAL BASIS FOR ITS $24,000 PER LOT MONEY DAMAGES AWARD TO CROCKETT.

{5} “IV. THERE WAS NO LEGAL BASIS FOR ASSIGNING ANY JOINT AND SEVERAL LIABILITY FOR THE DEVELOPMENT AGREEMENT TO MOHLER.

{6} “V. ANY DUTY TO CONVEY A PARTICULAR LOT WAS BREACHED, IF AT ALL, WITH RESPECT TO CROCKETT HOMES, NOT CROCKETT CONSTRUCTION.

{7} “VI. THE TRIAL COURT ERRED IN ASSIGNING AND ADVERTISING COSTS AS DAMAGES TO DEFENDANTS, IN DEROGATION OF THE WRITTEN DEVELOPMENT AGREEMENT.

{8} “VII. ANY DUTY RICHARD ROHRER OWED CROCKETT ARISING FROM THE DEVELOPMENT AGREEMENT EXPIRED UPON HIS DEATH.

{9} “VIII. THE TRIAL COURT ABUSED ITS DISCRETION BY PARING THE JUDGMENT OWED BY CROCKETT HOMES BENEATH THE LEVEL DAVID HAYES ADMITTED TO IN SWORN TESTIMONY.”

THE FACTS

{10} The matter was tried over four days to the bench. The court’s judgment entry of August 25, 2011 sets out the court’s findings. The court found David Hayes is a majority shareholder of Crockett Homes, Inc. and Crockett Construction Company, Inc. (hereinafter “Crockett”). Crockett Homes builds residential houses. In 2004, Hayes learned a large parcel of land was available in the Tuslaw area of Stark County. Hayes obtained an option to buy the property. A local lumber company, not Mohler Lumber, was interested in backing the development with Hayes, but Hayes was a regular customer at Mohler Lumber. When Mohler Lumber representatives learned of the project, they approached Hayes to discuss backing the development in return for providing the lumber for the homes.

{11} Dr. Richard Rohrer was the controlling owner of Mohler Lumber Company.

He was a physician who resided in Morrow County, Ohio, and was not a hands-on owner. For the most part, the negotiations for the land development project involved Mohler employees Loomis and Zepp. The court found Hayes did have a few discussions with Dr. Rohrer, but most often, discussed the matters with Loomis, or sometimes, Zepp.

Stark County, Case No. 2011-CA-00222 4

{12} Eventually the parties struck an agreement where Crockett would sign the option to buy over to Dr. Rohrer. In return, Dr. Rohrer and Crockett would cooperate on developing the land in four phases. Dr. Rohrer was to contribute the capital. Crockett was to act as general contractor supervising the development of the property into residential lots and then to market the lots. The parties were to split the profits from the venture 60% to Dr. Rohrer and 40% to Hayes. In addition to the profit-splitting clause, the agreement provided for a premium on each lot sold, with the parties splitting the premium depending upon whether Crockett or a third party sold the lot.

{13} Dr. Rohrer’s attorney drafted a contract titled “Development Agreement”, dated March 23, 2005. Dr. Rohrer and Hayes signed the agreement. The agreement included an “Exhibit E” attached and incorporated by reference. The exhibit was a spreadsheet computing the costs of developing the land and preparing the lots, and explained how the profits would be distributed. Instead of cash, Crockett would receive lots, transferred in installments as the lots were sold.

{14} Both sides began to perform under the Development Agreement, and complied with its terms. The first phase of the development was completed and sold well; most of the lots in phase one were sold. However, two events caused the development to come to a halt approximately two years after the development was commenced.

{15} First, the real estate market, to use the trial court’s apt word, tanked. Sales dropped on existing lots and new construction fell to virtually nothing.

{16} The second event was the deteriorating health of Dr. Rohrer. Dr. Rohrer had participated in a minor way in the on-going development of the property, and granted a broad power of attorney to Loomis and Zepp to make decisions.

{17} As the doctor’s health worsened, his children Jennifer, Jed and James began to act on his behalf. The court found no evidence was produced to demonstrate Dr. Rohrer delegated any right to act to his children, but as a practical matter, they did become involved in the development. The court found there was no proof that the Rohrer children had any legal authority to assume their father’s affairs while he was still alive. Dr. Rohrer died in May, 2010.

{18} At first the parties had a good relationship, but eventually the Rohrer children felt it was too expensive to complete the Development Agreement because it had become a losing proposition. The development came to a standstill when the Rohrer children decided they did not want to put any more of their father’s money into the development to finish the next phase. At the time, Dr. Rohrer was still alive, but the Rohrer children indicated they spoke on his behalf.

THE DISPUTE

{19} The Rohrer family contended that Hayes and Crockett went forward with the completion of phase two by completing roads and other development items even though the Rohrers told them not to proceed. The court found there were two face-to- face meetings that occurred prior to the doctor’s death. Present were Loomis and perhaps Zepp, both of whom had full power of attorney to act for Dr. Rohrer. Also present were the three Rohrer children, Hayes, and Hayes’ daughter. Dr. Rohrer did not attend. The court found both sides had different opinions as to the result of the two meetings. The Rohrer children wanted no further cash outlay, but Hayes felt it was time to finish phase two and he could obtain the final work without a large cash outlay. Hayes proposed to find an excavator who would finish the excavation work and accept payments over time as the lots sold. At the conclusion of the meetings, Hayes hired a contractor to complete phase two.

{20} The Rohrers claimed they did not agree to this and that they had refused to move forward with the development. The contractor who completed phase two was not paid and filed a lien on the property.

{21} Jed Rohrer is the executor of the estate of Dr. Rohrer and in his capacity as executor he refused to convey a lot in violation of the Development Agreement. The court found while Crockett had fulfilled its obligations under the agreement, Dr. Rohrer and his estate have not complied with the terms of the agreement.

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