Hog Heaven of New Philadelphia, Inc. v. M & M W. High Ave., L.L.C.

2014 Ohio 5125

• Court: Ohio Court of Appeals
• Decided: November 14, 2014
• Docket: 2014AP02006
• Status: Published

Opinion

[Cite as Hog Heaven of New Philadelphia, Inc. v. M & M W. High Ave., L.L.C., 2014-Ohio-5125.]

COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

HOG HEAVEN OF JUDGES: NEW PHILADELPHIA, INC. Hon. William B. Hoffman, P.J. FKA HOG CITY, LTD Hon. Sheila G. Farmer, J. Hon. Patricia A. Delaney, J. Plaintiff-Appellee Case No. 2014 AP 02 0006 -vs-

M AND M WEST HIGH AVENUE OPINION LLC

Defendant-Appellant

CHARACTER OF PROCEEDING: Appeal from the Tuscarawas County Common Pleas Court, Case No. 2012 CV 11 1057

JUDGMENT: Affirmed

DATE OF JUDGMENT ENTRY: November 14, 2014

APPEARANCES:

For Plaintiff-Appellee For Defendant-Appellant

LEE E. PLAKAS MICHAEL C. JOHNSON MARIA C. KLUTINOTY EDWARDS Johnson, Urban & Range, Co., LPA COLLIN S. WISE 117 South Broadway, P.O. Box 1007 Tzangas Plakas Mannos Ltd. New Philadelphia, Ohio 44663 220 Market Avenue, Eighth Floor Canton, Ohio 44702 Tuscarawas County, Case No. 2014 AP 02 0006 2

Hoffman, P.J.

{¶1} Defendant-appellant M & M West High Avenue, LLC appeals the January

23, 2014 Judgment Entry entered by the Tuscarawas County Court of Common Pleas,

which granted summary judgment in favor of plaintiff-appellee Hog Heaven of New

Philadelphia, Inc. FKA Hog City Ltd.

STATEMENT OF THE FACTS AND CASE

{¶2} Appellant owns real property located at 1290 West High Avenue, New

Philadelphia, Ohio 44663 (“the Premises”). On July 26, 2002, Appellee and Appellant

entered into a Lease Agreement with Option to Purchase (“the Lease Option”) for the

Premises. Section V of the Lease Option provides Appellee with the option to purchase

the Premises during the initial term or any subsequent renewal, and reads:

In consideration of the covenants and conditions hereby

established, the parties further agree that at any time during the initial term

of the within Lease, or any properly exercised extension periods hereof,

Lessee shall have the right and option of purchasing the premises herein

leased for an amount as determined by the following procedure:

(A) The parties hereto shall attempt to select a mutually agreed

upon MAl appraiser to determine the fair market value of the premises.

Said appraiser shall be commissioned by the parties to formulate an

opinion regarding the appraised value of the premises. The appraised

value as determined by such mutually agreed upon appraiser shall

constitute the amount of the purchase price to be paid by Lessee pursuant Tuscarawas County, Case No. 2014 AP 02 0006 3

to its option to purchase. The costs incurred by said mutually agreed upon

appraiser shall be shared equally by the parties; or

(B) In the event that the parties are unable to select a mutually

agreeable MAl appraiser pursuant to the term of subparagraph (A), above,

then each party shall commission an MAl appraiser of their own choosing

who shall formulate written findings concerning the fair market value of the

premises. In the event that the appraisals formulated by the two MAl

appraisers are within ten percent (10%) of each other, then the difference

between said two appraisals shall be split evenly, and the midpoint

between said two appraisals shall constitute the purchase price for the

premises. In the event that the two appraisals formulated by the two MAl

appraisers are not within ten percent (10%) of each other, then the two

MAl appraisers shall select a third independent MAl appraiser whose

determination regarding fair market value shall be the purchase price paid

for the premises. Each party shall assume responsibility for payment of

any expenses incurred by their respective MAl appraisers. If applicable,

the costs incurred by a third, independent MAl appraiser pursuant to the

foregoing shall be shared equally by the parties.

For purposes of the within section pertaining to Lessee's option to

purchase, the term "the premises" shall be defined as the real estate,

attendant structures, fixtures, and those items of personalty that remain on

the premises in the event of termination of the within lease. Tuscarawas County, Case No. 2014 AP 02 0006 4

Lessee may exercise its option to purchase by providing Lessor of

written notice thereof at any time during the pendency of the within lease,

or during the period of any extensions hereof. In such case, the appraisal

process outlined above shall be completed by the parties within sixty (60)

days. In the event that Lessee determines not to exercise its option to

purchase following completion of the appraisal process, then Lessee shall

bear full responsibility for the MAl appraisal costs incurred pursuant to

subparagraphs (A) and (B), above.

Should Lessee determine to exercise its option to purchase the

premises, then the sale thereof shall proceed pursuant to the terms and

conditions of the Purchase Agreement attached hereto as Appendix B.

(Said Appendix B is unsigned and undated; and makes no provision for

the purchase price, which shall be determined according to the procedure

outlined above).

{¶3} On November 4, 2011, Appellee notified Appellant of its intent to exercise

its right to purchase the Premises pursuant to Section V of the Lease Option. Each

party obtained an appraisal of the Premises. Because the two appraisals were not

within ten percent of each other, Section V required the two appraisers “select a third

independent MAl appraiser whose determination regarding fair market value shall be

the purchase price paid for the premises.” The two appraisers did not select the third

appraiser within the sixty-day time frames set forth in Section V.

{¶4} Appellee made efforts to assist in the joint selection of the third appraiser.

Appellee proposed a method for the selection process, however, Appellant rejected the Tuscarawas County, Case No. 2014 AP 02 0006 5

proposal. In addition to monthly base rent, Appellee also pays Appellant a percentage

of its profits as overage rent. The overage rent represents significant income for

Appellant. Appellee would not have owed any overage rent had the purchase been

completed in a timely fashion.

{¶5} On November 15, 2012, Appellee filed a complaint against Appellant for

specific performance, declaratory judgment, unjust enrichment, and breach of contract.

Appellee sought equitable relief as well as money damages. Appellee filed an amended

complaint on December 31, 2012. Appellant filed a timely answer to the amended

complaint.

{¶6} On September 13, 2012, upon completion of discovery, Appellee filed a

motion for summary judgment. On January 8, 2014, Appellant filed its own motion for

summary judgment as well as a response in opposition to Appellee’s motion for

summary judgment. Appellee filed a motion to strike, asking to court to strike

Appellant’s motion for summary judgment as said motion was filed approximately four

months past the dispositive motion deadline.

{¶7} Via Judgment Entry filed January 23, 2014, the trial court granted

Appellee’s motion to strike and awarded summary judgment in Appellee’s favor. The

trial court ordered specific performance of the Lease Option and instructed the parties to

select an appraiser as required by the terms of the Lease Option. The appraiser’s

opinion alone would determine the amount which Appellee could pay to purchase the

Premises. The trial court also awarded Appellee a credit for rental payments made to

Appellant from January 3, 2012, until the date of the parties’ receipt of the third

appraisal. Tuscarawas County, Case No. 2014 AP 02 0006 6

{¶8} It is from this judgment entry Appellant appeals, raising as error:

{¶9} "I. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION

FOR SUMMARY JUDGMENT AND ISSUING A DECREE OF SPECIFIC

PERFORMANCE.

{¶10} "II. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION

FOR SUMMARY JUDGMENT AS GENUINE ISSUES OF MATERIAL FACT EXISTED

AS WHETHER APPELLANT VIOLATED THE TERMS OF THE LEASE OPTION

NECESSITATING A TRIAL ON THE MERITS.

{¶11} "III. THE TRIAL COURT ERRED BY GRANTING APPELLEE'S MOTION

FOR SUMMARY JUDGMENT IN AWARDING APPELLEE A RENT CREDIT FOR

BASE AND OVERAGE RENT AGAINST THE PURCHASE PRICE TO BE

DETERMINED BY THIRD APPRAISER."

STANDARD OF REVIEW

{¶12} Summary judgment proceedings present the appellate court with the

unique opportunity of reviewing the evidence in the same manner as the trial court.

Smiddy v. The Wedding Party, Inc., 30 Ohio St.3d 35, 36, 506 N.E.2d 212 (1987). As

such, this Court reviews an award of summary judgment de novo. Grafton v. Ohio

Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996).

{¶13} Civ.R. 56 provides summary judgment may be granted only after the trial

court determines: 1) no genuine issues as to any material fact remain to be litigated; 2)

the moving party is entitled to judgment as a matter of law; and 3) it appears from the

evidence that reasonable minds can come to but one conclusion and viewing such

evidence most strongly in favor of the party against whom the motion for summary Tuscarawas County, Case No. 2014 AP 02 0006 7

judgment is made, that conclusion is adverse to that party. Temple v. Wean United, Inc.,

50 Ohio St.2d 317, 364 N.E.2d 267 (1977).

{¶14} It is well established the party seeking summary judgment bears the

burden of demonstrating that no issues of material fact exist for trial. Celotex Corp. v.

Catrett, 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986). The standard for

granting summary judgment is delineated in Dresher v. Burt, 75 Ohio St.3d 280 at 293,

662 N.E.2d 264 (1996): “ * * * a party seeking summary judgment, on the ground that

the nonmoving party cannot prove its case, bears the initial burden of informing the trial

court of the basis for the motion, and identifying those portions of the record that

demonstrate the absence of a genuine issue of material fact on the essential element(s)

of the nonmoving party's claims. The moving party cannot discharge its initial burden

under Civ.R. 56 simply by making a conclusory assertion the nonmoving party has no

evidence to prove its case. Rather, the moving party must be able to specifically point to

some evidence of the type listed in Civ.R. 56(C) which affirmatively demonstrates the

nonmoving party has no evidence to support the nonmoving party's claims. If the

moving party fails to satisfy its initial burden, the motion for summary judgment must be

denied. However, if the moving party has satisfied its initial burden, the nonmoving party

then has a reciprocal burden outlined in Civ.R. 56(E) to set forth specific facts showing

there is a genuine issue for trial and, if the nonmovant does not so respond, summary

judgment, if appropriate, shall be entered against the nonmoving party.” The record on

summary judgment must be viewed in the light most favorable to the opposing party.

Williams v. First United Church of Christ, 37 Ohio St.2d 150, 309 N.E.2d 924 (1974). Tuscarawas County, Case No. 2014 AP 02 0006 8

I, II

{¶15} In its first assignment of error, Appellant contends the trial court erred in

granting summary judgment in favor of Appellee and issuing a decree of specific

performance. In its second assignment of error, Appellant argues the trial court erred in

granting summary judgment in favor of Appellee as genuine issues of material fact

existed as to whether Appellant violated the terms of the Lease Option. Specifically,

Appellant maintains the failure to select the third appraiser was not occasioned by any

fault of Appellant or its selected appraiser, but rather was merely the result of the two

appraisers reaching an impasse regarding the third appraiser.

{¶16} Specific performance as a remedy for breach of contract is a matter

resting in the sound discretion of the court, not arbitrary, but controlled by principles of

equity, on full consideration of the circumstances of each particular case. Roth v.

Habansky, Cuyahoga App. No. 82027, 2003-Ohio-5378. The standard of review in such

a case is whether the trial court, sitting as a court of equity, abused its discretion. Id.,

citing Manning v. Hamamey (Feb. 12, 1998), Cuyahoga App. No. 72072.

{¶17} “The remedy of specific performance is governed by the same general

rules which control the administration of all other equitable remedies. The right to it

depends upon elements, conditions, and incidents which equity regards as essential to

the administration of all its peculiar modes of relief. When all these elements,

conditions, and incidents exist, the remedial right is perfected in equity. These elements,

conditions, and incidents, as collected from the cases, are the following: The contract

must be concluded, certain, unambiguous, mutual, and based upon a valuable

consideration; it must be perfectly fair in all its parts; it must be free from any Tuscarawas County, Case No. 2014 AP 02 0006 9

misrepresentation or misapprehension, fraud or mistake, imposition or surprise; it

cannot be an unconscionable or hard bargain; its performance must not be oppressive

upon the defendant; and, finally, it must be capable of specific execution through a

decree of the court.” Id.

{¶18} The Lease Option sets forth the specific procedure to be followed if the

two appraisals were not within ten percent (10%) of each other:

In the event that the two appraisals formulated by the two MAl

appraisers are not within ten percent (10%) of each other, then the two

MAl appraisers shall select a third independent MAl appraiser whose

determination regarding fair market value shall be the purchase price paid

for the premises.

***

The appraisal process outlined above shall be completed by the

parties within sixty (60) days. (Emphasis added.)

{¶19} Pursuant to this provision, because the appraisals were not within ten

percent (10%) of each other, the parties’ appraisers, Jeff Smith for Appellee and

Charles Snyder for Appellant, were obligated to choose the third appraiser. For

whatever reason, Smith and Snyder were unable to agree on a third appraiser within the

requisite time frame. Appellee moved the trial court for an order of specific

performance. We find the trial court did not abuse its discretion in ordering specific

performance – instructing Smith and Snyder to choose the third appraiser – as such

remedy was necessary to effectuate the intent of the parties. Tuscarawas County, Case No. 2014 AP 02 0006 10

{¶20} Appellant also challenges the trial court’s finding it breached the Lease

Option. Assuming, arguendo, such finding was erroneous, we find such error to be

harmless as the trial court’s award of specific performance was not predicated upon the

breach.

{¶21} Appellant’s first and second assignments of error are overruled.

III

{¶22} In its final assignment of error, Appellant submits the trial court erred in

granting Appellee’s motion for summary judgment and awarding Appellee rent credit

against the purchase price to be determined by the third appraiser as set off for base

and overage rent paid during the period of the impasse. We disagree.

{¶23} “ ‘[W]hen a decree for specific performance in the sale of real estate is

granted to the purchaser he is entitled to be put in the position he would have been in

had the contract of sale and purchase been carried out on the date agreed upon.’ “

Sandusky Properties v. Aveni (1984), 15 Ohio St.3d 273, 274, 473 N.E.2d 798 (quoting

Hellkamp v. Boiman (1970), 25 Ohio App.2d 117, 122, 267 N.E.2d 323).

{¶24} The trial court's award accomplishes this result. Accordingly, we find the

trial court did not abuse its discretion by awarding Appellee the rent and overage rent

paid during the period of the impasse.

{¶25} Appellant’s third assignment of error is overruled. Tuscarawas County, Case No. 2014 AP 02 0006 11

{¶26} Judgment of the Tuscarawas County Court of Common Pleas is affirmed.

By: Hoffman, P.J.

Farmer, J. and

Delaney, J. concur