McCauley v. Layacona

2013 Ohio 3320

• Court: Ohio Court of Appeals
• Decided: July 26, 2013
• Docket: 12-COA-047
• Status: Published

Opinion

[Cite as McCauley v. Layacona, 2013-Ohio-3320.]

COURT OF APPEALS ASHLAND COUNTY, OHIO FIFTH APPELLATE DISTRICT

ROBERT J. McCAULEY, et al. JUDGES: Hon. W. Scott Gwin, P. J. Plaintiffs-Appellants Hon. Sheila G. Farmer, J. Hon. John W. Wise, J. -vs- Case No. 12-COA-047 MARK J. LaYACONA, et al.

Defendants-Appellees OPINION

CHARACTER OF PROCEEDING: Civil Appeal from the Court of Common Pleas, Case No. 11-CIV-250

JUDGMENT: Affirmed in Part; Reversed in Part and Remanded

DATE OF JUDGMENT ENTRY: July 26, 2013

APPEARANCES:

For Plaintiffs-Appellants For Defendant-Appellee Layacona

CHARLES A. KENNEDY TIMOTHY E. POTTS KENNEDY, CICCONETTI, KNOWLTON GOOD & POTTS & BUYTENDYK 10 East Main Street 558 North Market Street Ashland, Ohio 44805 Wooster, Ohio 44691

For Defendants-Appellees Meyers

ANDREW A. KABAT HABER POLK KABAT 737 Bolivar Road, Suite 440 Cleveland, Ohio 44115 Ashland County, Case No. 12-COA-047 2

Wise, J.

{¶1} Plaintiffs-Appellants Robert J. McCauley and Cynthia L. McCauley appeal

the decision entered in the Ashland Common Pleas Court granting summary judgment

in favor of Appellees Mark LaYacona, Tiffany Meyer and J.C. Meyer Co., Inc.

STATEMENT OF THE CASE

{¶2} Mark J. LaYacona ("LaYacona") was the owner of certain real property

located at 819 Twp. Road 2414, Loudonville, Ashland County, Ohio (“the Property”).

The Property included an updated farmhouse built in 1920 with approximately 2904

square feet, 201 acres, a bank barn, a horse barn, and a shop with an attached pole

barn.

{¶3} Tiffany Meyer (“Meyer”) is a licensed real estate broker with her own

personal company, J.C. Meyer Realtors. In January of 2007, she franchised with

Howard Hanna.

{¶4} In the Spring of 2007, Meyer listed LaYacona's property for sale. She had

previously listed the same property in about 2004 and still had information about the

property in her files, including a survey. Meyer used the information from her files to

prepare a brochure about the property, along with tax records and information she

received directly from LaYacona. She also sent a professional photographer for up-to-

date photographs. Additionally, she did a walk-through of the house and took nine room

measurements herself.

{¶5} On December 13, 2007, Robert and Cynthia McCauley purchased the

property “as-is” for $1,060,000.00 cash, and waived all relevant inspections. The Ashland County, Case No. 12-COA-047 3

McCauleys were represented in this real estate transaction by real estate agent, Shirley

Dillon of Landes & Landes.

{¶6} Prior to purchasing the property, Mr. McCauley visited the Property on five

separate occasions, spending approximately 15 to 20 hours examining the subject

property during these visits. (R. McCauley depo. at 30-31). Mr. McCauley walked the

property and looked throughout the home and out buildings. (Id. at 31). Mr. McCauley

testified that some "conditions and circumstances" prevented him from examining

certain parts of the subject property but further stated that no one from Meyer prevented

him from fully examining same. (R. McCauley Depo. at 35). The McCauleys never

spoke directly with Meyer or LaYacona.

{¶7} Appellants contend that after the transaction closed, they learned from Ron

Flickinger, the farmer who had been farming/leasing portions of the tillable land from Mr.

LaYacona, that only 38 acres of the land was currently being farmed. (R. McCauley

Depo. at 50). Appellants also contend that they learned from Mr. LaYacona that the

barn did not have a separate, operational septic system, only a tank in the ground

placed there without a permit. (Id. at 44). Appellants further contend that they

discovered defects relative to the condition of the home and barn. (Id. at 138-144).

Appellants claim the roof has a leak, the basement has an issue with water backing up

into it because of a drain line connecting it to a pond, and further that the bank barn has

a hole in the floor.

{¶8} Appellants filed a Complaint alleging a claim of fraud against Appellees

J.C. Meyer Co., Inc. and Tiffany Meyer. Ashland County, Case No. 12-COA-047 4

{¶9} Specifically, Appellants contend that Meyer made the following

misrepresentations:

{¶10} 1. The property had "60 acres being farmed at $65 per acre.”

{¶11} 2. The barn floor was in good shape.

{¶12} 3. There was a septic system for the workshop/pole building.

{¶13} 4. The residence of the property did not leak, no water intrusion or any

water problems.

{¶14} On August 31, 2012, LaYacona and Meyer both separately moved the trial

court for summary judgment on Appellants' claims.

{¶15} Meyer filed a Supplemental Motion for Summary Judgment on September

14, 2012, wherein the deposition testimony of Appellants' expert, Anthony Race, was

specifically referenced and attached.

{¶16} Appellants then filed a Memorandum in Opposition to the Motions for

Summary Judgment.

{¶17} On November 14, 2012, after briefing was completed, the trial court issued

a Judgment Entry, granting summary judgment in favor of Meyer and LaYacona and

against Appellants on the fraud claims. Two claims remained pending against Mark

LaYacona after the trial court granted summary judgment on the fraud claims.

{¶18} On or about November 16, 2012, Appellants filed a Motion to Withdraw the

Second and Third Causes of Action.

{¶19} On November 27, 2012, the trial court issued a Judgment Entry, granting

Appellants' Motion to Withdraw and declaring that a final, appealable order existed.

{¶20} Appellants now appeal, assigning the following errors for review: Ashland County, Case No. 12-COA-047 5

ASSIGNMENTS OF ERROR

{¶21} “I. THE TRIAL COURT ERRED AS A MATTER OF LAW BY GRANTING

SUMMARY JUDGMENT TO DEFENDANTS ON THE FRAUD CLAIMS FOR THE

REASON THAT MATERIAL QUESTIONS OF FACT EXISTED FOR A JURY'S

DETERMINATION.

{¶22} “II. THE TRIAL COURT ERRED AS A MATTER OF LAW BY GRANTING

SUMMARY JUDGMENT TO DEFENDANTS ON THE ISSUE OF DAMAGES FOR

FRAUD.”

“Summary Judgment Standard”

{¶23} 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. (1987), 30 Ohio St.3d 35, 36. Civ.R. 56(C) provides,

in pertinent part:

{¶24} “Summary judgment shall be rendered forthwith if the pleadings,

depositions, answers to interrogatories, written admissions, affidavits, transcripts of

evidence in the pending case, and written stipulations of fact, if any, timely filed in the

action, show that there is no genuine issue as to any material fact and that the moving

party is entitled to judgment as a matter of law. * * * A summary judgment shall not be

rendered unless it appears from such evidence or stipulation and only therefrom, that

reasonable minds can come to but one conclusion and that conclusion is adverse to the

party against whom the motion for summary judgment is made, such party being

entitled to have the evidence or stipulation construed most strongly in his favor.” Ashland County, Case No. 12-COA-047 6

{¶25} Pursuant to the above rule, a trial court may not enter a summary judgment

if it appears a material fact is genuinely disputed. The party moving for summary

judgment bears the initial burden of informing the trial court of the basis for its motion

and identifying those portions of the record that demonstrate the absence of a genuine

issue of material fact. The moving party may not make a conclusory assertion that the

non-moving party has no evidence to prove its case. The moving party must specifically

point to some evidence which demonstrates the non-moving party cannot support its

claim. If the moving party satisfies this requirement, the burden shifts to the non-moving

party to set forth specific facts demonstrating there is a genuine issue of material fact for

trial. Vahila v. Hall, 77 Ohio St.3d 421, 429, 1997-Ohio-259, citing Dresher v. Burt, 75

Ohio St.3d 280, 1996-Ohio-107.

{¶26} It is based upon this standard that we review Appellant’s assignments of

error.

I.

{¶27} In their First Assignment of Error, Appellants argue the trial court erred in

granting summary judgment on their fraud claims. We agree.

{¶28} 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).

{¶29} Appellants contend that the doctrine does not apply in this case because

Appellees fraudulently misrepresented the number of acres being farmed, the existence Ashland County, Case No. 12-COA-047 7

of a septic system, the extent to which the house had issues with water intrusion

problems in the basement, and the condition of the roof and the condition of the barn

floor.

{¶30} “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 (1986), paragraph two of the syllabus.

{¶31} Regarding fraudulent concealment or nondisclosure, the Supreme Court of

Ohio has held that “a vendor has a duty to disclose material facts which are latent, not

readily observable or discoverable through a purchaser's reasonable inspection.” Binns,

35 Ohio St.3d at 178. “Fraudulent concealment exists where a vendor fails to disclose

sources of peril of which he is aware, if such a source is not discoverable by the

vendee.” 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. A

patent defect will not give rise to a claim of fraud against a seller. Kramer v. Raterman,

161 Ohio App.3d 363, 2005–Ohio–2742, ¶ 13 (1st.Dist.).

{¶32} To properly plead a claim for fraud, the plaintiff must: (1) specify the

statement(s) claimed to be false; (2) state in the complaint the time and place where the

statement(s) were made; and (3) identify the defendant claimed to have made the Ashland County, Case No. 12-COA-047 8

statement(s). Korodi v. Minot, 40 Ohio App.3d 1, 4, 531 N.E.2d 318 (10th Dist.1987)

citing Goldman v. Belden, 754 F.2d 1059, 1069–1070 (2d Cir.1985). These

requirements are intended to place potential defendants on notice of the precise

statement(s) being alleged as fraudulent, which is all that Civ.R. 9(B) requires. Id.

{¶33} The doctrine of caveat emptor, as embodied in an “as is” clause, “only

applies * * * to patent defects: those which are readily discoverable to prospective

purchasers on inspection. The purchaser does not likewise assume the risk of latent

defects: those which are not readily discoverable. However, neither does the seller have

a duty to disclose the existence of latent defects unless he knows of them.”

Decaestecker v. Belluardo, 2d Dist. Montgomery No. 22218, 2008–Ohio–2077, ¶ 37.

{¶34} The “As Is” clause in the purchase agreement in this case expressly

provides that “Buyer acknowledges and agrees that the Property is conveyed ‘AS IS,

WHERE IS WITH ALL FAULTS AND VIRTUES”, and that neither Seller, nor any Broker

or REALTORS, has made any representations or warranties, either oral, written,

expressed or implied, regarding the Property, including but not limited to: the condition

of the roof, basement (structural or water seepage), furnace, air conditioning, well or

septic system, electrical, plumbing and appliances. ***”

{¶35} Caveat emptor as reflected in “As Is” clauses does not apply if the seller

engaged in fraudulent misrepresentation. See Loya v. Howard Hanna Smyth, Cramer

Co., 9th Dist. No. 24378, 2009-Ohio-448, ¶12-13. Furthermore, because a seller of real

property in Ohio must complete a statutorily required form, disclosing “material matters

relating to the physical condition of the property and any material defect relating to the

physical condition of the property that is within the actual knowledge of the seller,” an Ashland County, Case No. 12-COA-047 9

“as is” clause may not shield a seller from liability for nondisclosure of a material, latent

defect that is actually known to him. Graber v. Emch, 6th Dist. Sandusky No. S-11-018,

2012-Ohio-1395, ¶ 24-25, citing Abrogast v. Werley, 6th Dist. Lucas No. L-09-1131,

2010-Ohio-2249, ¶ 37-38.

{¶36} In this case, the only representation concerning the 60 acres being farmed

was made in the marketing brochure prepared by Appellee Meyer. Appellee LaYacona

never made any representations to Appellants concerning same and further stated in

his deposition that when he reviewed the brochure in the Spring of 2007, he advised

Appellee Meyer that there were not 60 acres being farmed at $65 per acre. (LaYacona

Depo. at 15-17). He stated that in 2007, he received rent from Ron Flickinger for “either

30 acres at $65 or 35 acres at $60.” (Id. at 11, 13).

{¶37} While Appellee Meyer argues that their expert determined that the property

contains 68.13 acres of tillable land. While such may be the case, the representations

made in the marketing brochure stated that the property had “60 acres being farmed at

$65 per acre.” It did not state that 60 acres of the land was tillable. We find this to be a

material distinction as one is an actuality and one is a possibility.

{¶38} With regard to the shop/pole barn containing a “separate septic system for

barn”, such representation was also only made in the marketing brochure by Appellee

Meyer. Again, Appellee LaYacona stated in his deposition that upon reviewing the

brochure he advised Appellee Meyer that the brochure should not include anything

about the barn’s septic system because there was only a septic tank installed, and he

had never applied for a permit for it. (LaYacona Depo. at 16-17). Ashland County, Case No. 12-COA-047 10

{¶39} Concerning the hole in the barn floor, we find that such was readily

observable through reasonable investigation. Appellants were never limited in their

access to the residence or the out buildings. Appellants chose to forego their right to

have the property inspected and proceeded with an “As Is” real estate purchase.

{¶40} We find that the same holds true as to the water intrusion issues in the

basement and the roof. Appellee LaYacona stated on the Ohio Residential Disclosure

Form that he had no knowledge as to “any current leaks or other material problems with

the roof or rain gutters” and likewise had no knowledge of “any previous or current water

leakage, water accumulation, excess moisture or other defects to the property, including

but not limited to any below grade, basement or crawl space.”

{¶41} While Appellants claim that they discovered a “water leak somewhere in

that area (main parts of the house over top of the hallway) it cannot be determined

exactly because there is a roof underneath the roof” (McCauley Depo. at 116-117).

There is no evidence that Appellee LaYacona had any knowledge of such condition.

{¶42} Appellants also claim they have an issue with water backing up into the

basement when the water level in the pond rises because the basement drain pipe,

which empties into the pond, allows water to flow back into the house. However, no

evidence exists to rebut Appellee LaYacona’s statements, both in his deposition and on

the Disclosure form, that he had no knowledge of this problem or that such had ever

happened while he lived in the house.

{¶43} Appellants claim that prior to purchasing the property, they observed a

water sediment ring on the basement floor but further admit that they assumed it was

from a bucket of water having been dumped on the floor. (McCauley Depo. at 93-94). Ashland County, Case No. 12-COA-047 11

Appellee LaYacona, in his deposition, supported that explanation by stating that he

mopped the floor and hosed out the basement, which likely left such water marks on the

basement floor. (LaYacona Depo. at 23-24). He further denied that the drain which ran

from the house basement to the pond had ever caused water to back up into the

basement.

{¶44} Again, Appellants had the opportunity to have any number or inspections

performed and chose to go forward with the “As Is” sale, even having seen the water

marks on the basement floor.

{¶45} Based on the foregoing, we find that summary judgment was not

appropriate as to Appellants’ claims against Appellees Tiffany Meyer and J.C. Meyer

Co., Inc. as to the representations made in the marketing brochure stating the number

of acres being farmed at $65 per acre and the existence of a separate septic system for

the barn/shop building as questions of material fact exist as to whether Appellants

justifiably relied on same. We find that summary judgment was appropriate as to the

claims against Appellee Mark LaYacona as to the condition of the barn floor and water

intrusion problems with the basement drain and the roof.

{¶46} Based on the foregoing, we sustain Appellants’ First Assignment of Error

as the claims against Appellee Meyer and overrule as to the claims against Appellee

LaYacona.

II.

{¶47} In their Second Assignment of Error, Appellant argues the trial court erred

in granting summary judgment on the issue of damages. We disagree. Ashland County, Case No. 12-COA-047 12

{¶48} In the case sub judice, the trial court granted summary judgment in favor

of Appellees on the issue of damages, finding:

{¶49} “While Mr. McCauley makes a self-serving statement of opinion that the

property, in its present condition, possesses a fair market value substantially less than

what plaintiffs paid for the property, an independent appraiser retained by plaintiffs

indicates that the property, in its present condition, possesses a fair market value well in

excess of what plaintiffs paid for the property.”

{¶50} In his affidavit, Appellant Robert McCauley stated his opinion that the

difference in the fair market value of the property from what he paid to the value after

the sale, with all conditions known, was $104,150.

{¶51} We find that the trial court’s holding that Appellant McCauley’s opinion as

to valuation was “self-serving” is in error. “Under the owner-opinion rule, an owner of

real property, by virtue of his ownership and without qualification as an expert, is

competent to testify to his property's fair market value. * * * The rule is based on the

presumption that ‘the owner of real estate * * * possess[es] sufficient acquaintance with

it to estimate the value of the property, and his estimate is therefore received although

his knowledge on the subject is not such as would qualify him to testify if he were not

the owner.’ ” (Citations omitted.) Cincinnati v. Banks, 143 Ohio App.3d 272, 291, 757

N.E.2d1205, Greig v. Wallick, Tusc. County App. 2010AP090036, 2012-Ohio-77;

Rapport v. Kochovski , 185 Ohio App.3d 309, 315-316.

{¶52} Further, “Evid.R. 701 permits a lay witness to testify in the form of an

opinion if the opinion is ‘rationally based on the perception of the witness' and is ‘helpful Ashland County, Case No. 12-COA-047 13

to a clear understanding of his testimony or the determination of a fact in issue.’ ”

Rapport v. Kochovski 185 Ohio App.3d 309, 315-316.

{¶53} “The measure of damages resulting from a sale induced by a vendor's

fraudulent representation is the difference between the actual value of the property at

the time of the purchase and its value, had it been as represented.” Molnar v. Beriswell

(1930), 122 Ohio St. 348.

{¶54} In considering Appellants’ affidavit as to the value of the subject property,

we find that a question of fact exists as to the measure of damages.

{¶55} Appellants’ Second Assignment of Error is sustained.

{¶56} For the foregoing reasons, the decision of the Court of Common Pleas of

Ashland County, Ohio, is affirmed in part, reversed in part and remanded for further

proceedings consistent with the law and this opinion.

By: Wise, J.

Gwin, J., and

Farmer, J., concur.

___________________________________ HON. JOHN W. WISE

___________________________________ HON. W. SCOTT GWIN

___________________________________ HON. SHEILA G. FARMER

JWW/d 0716 Ashland County, Case No. 12-COA-047 14

IN THE COURT OF APPEALS FOR ASHLAND COUNTY, OHIO FIFTH APPELLATE DISTRICT

ROBERT J. McCAULEY, et al. : : Plaintiffs-Appellants : : -vs- : JUDGMENT ENTRY : MARK J. LaYACONA, et al. : : Defendants-Appellees : Case No. 12-COA-047

For the reasons stated in our accompanying Memorandum-Opinion, the

judgment of the Court of Common Pleas of Ashland County, Ohio, is affirmed in part,

reversed in part and remanded for further proceedings consistent with this opinion.

Costs to be split among the parties.