Riehm v. Reindl

2023 Ohio 4611

• Court: Ohio Court of Appeals
• Decided: December 14, 2023
• Docket: 2023 CA 0024
• Status: Published

Opinion

[Cite as Riehm v. Reindl, 2023-Ohio-4611.]

COURT OF APPEALS RICHLAND COUNTY, OHIO FIFTH APPELLATE DISTRICT

JEREMY RIEHM, et al., : JUDGES: : Hon. W. Scott Gwin, P.J. Plaintiffs - Appellants : Hon. William B. Hoffman, J. : Hon. Craig R. Baldwin, J. -vs- : : THOMAS REINDL, et al., : Case No. 2023 CA 0024 : Defendants - Appellees : OPINION

CHARACTER OF PROCEEDING: Appeal from the Richland County Court of Common Pleas, Case No. 2021-CV-0466

JUDGMENT: Affirmed

DATE OF JUDGMENT: December 14, 2023

APPEARANCES:

For Plaintiffs-Appellants For Defendants-Appellees

J. JEFFREY HECK DAVID N. HARING The Heck Law Offices, LTD. Brown, Bemiller, Murray One Marion Avenue, Suite 215 & Haring, LLC Mansfield, Ohio 44903 99 Park Avenue West, Suite B Richland County, Case No. 2023 CA 0024 2

Baldwin, J.

{¶1} The appellants appeal the trial court’s decision granting summary judgment

in favor of the appellees. For the reasons that follow, we affirm the decision of the trial

court.

STATEMENT OF THE FACTS AND THE CASE

{¶2} In 1995, the appellees purchased four buildings located at 84 LaSalle

Street, 94 LaSalle Street, 103 LaSalle Street, and 113 LaSalle Street, Mansfield, Ohio

(“the Properties”). Each building consisted of three rental units, creating a twelve-unit

apartment complex. The appellees operated the Properties as owners/landlords as part

of their real estate rental business. They did not live at the Properties, and were only

aware of any routine maintenance or repairs if a tenant notified them about an issue or

they observed an issue while doing other routine maintenance.

{¶3} In February of 2021, the appellees listed the Properties for sale. They

completed a Residential Real Estate Disclosure Form (“the Form”), page 1 of which

provides:

Purpose of Disclosure Form: This a statement of certain conditions and

information concerning the property actually known by the Owner. An

Owner may or may not have lived at the property and unless the potential

purchaser is informed in writing, the owner has no more information about

the property than could be obtained by a careful inspection of the property

by a potential purchaser. Unless the potential purchaser is otherwise

informed, the owner has not conducted any inspection of generally Richland County, Case No. 2023 CA 0024 3

inaccessible areas of the property. This form is required by Ohio Revised

Code Section 5302.30.

THIS FORM IS NOT A WARRANTY OF ANY KIND BY THE OWNER OR

BY ANY AGENT OR SUBAGENT REPRESENTING THE OWNER. THIS

FORM IS NOT A SUBSTITUTE FOR ANY INSPECTIONS. POTENTIAL

PURCHASERS ARE ENCOURAGED TO OBTAIN THEIR OWN

PROFESSIONAL INSPECTION(S).

(Boldface original.)

{¶4} Section D of the Form provides:

WATER INTRUSION: Do you know of any previous or current water

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

property, including but not limited to any area below grade, basement or

crawl space?

* * *

Do you know of any water or moisture related damage to flooring, walls or

ceilings as a result of flooding, moisture seepage, moisture condensation,

ice damming, sewer, overflow/backup, or leaking pipe, plumbing fixtures or

appliances?

(Boldface original.) The appellees answered with an "X" in the "No" boxes for each

paragraph.

{¶5} Finally, Section (K) of the Form provides:

DRAINAGE/EROSION: Do you know of any previous or current flooding,

drainage, settling or grading or erosion problems affecting the property? Richland County, Case No. 2023 CA 0024 4

Again, the appellees answered with an "X" in the "No" box.

{¶6} According to the sworn testimony of appellee Thomas Reindl, water seeped

into the heating ducts/registers during a heavy rain on approximately three occasions in

the 26-year period the appellees owned the Properties. The appellees believed the water

seepage was due to a clogged or loose downspout which overflowed because once the

downspout was repaired, the water drained and the issue no longer remained. He also

stated that the last time a downspout clog caused a small amount of water in the heating

ducts was approximately seven to eight years prior to selling the Properties to the

appellants.

{¶7} The appellees’ sworn testimony indicated that there were also occasions

during the 26-year period they owned the Properties that a tenant's water heater, toilet,

or other appliance would leak, causing a small amount of water to accumulate. In

addition, during the appellees’ ownership of the Properties, the City of Mansfield's storm

sewer backed up on a few occasions causing water to enter an apartment. The City of

Mansfield was responsible for the sewage back-up, and remedied the same. These

problems were not, however, associated with any defect(s) in the Properties.

{¶8} The sworn testimony of appellant Jana Riehm established that she obtained

her real estate license for the sole purpose of investing in real estate with her husband

and that, while she did not actively list or show homes, she was a real estate agent with

The Holden Agency.

{¶9} In early March 2021, the appellants attended an open house for the

Properties, during which they walked around the inside and outside of the Properties and Richland County, Case No. 2023 CA 0024 5

went through almost every one of the 12 units. The appellants were provided with a copy

of the Form at the time they attended the open house.

{¶10} On or about March 7, 2021, the appellants made an offer to purchase the

Properties for $650,000.00. The Purchase Agreement was prepared utilizing a Holden

Agency residential real estate purchase agreement form, and states near the top that “[i]t

is recommended that all parties to this Agreement be represented by a REALTOR and

an Attorney.” The Purchase Agreement goes on to state:

The undersigned Purchaser offers to buy from the undersigned Seller the

property described below (the “Property”) on the terms and conditions

contained in this Agreement. Upon Acceptance by the Seller, as evidenced

by the Seller’s signature below, this signed Agreement (the “Agreement”)

will become a legally binding contract.

{¶11} The appellants checked the box at page 4 of the Purchase Agreement that

specifically provided:

With knowledge and against the advice of Broker, Purchaser waives all

inspections and tests of the Property and agrees to the take the property

“as is”.

(Boldface and underlining original.)

{¶12} The appellants thus chose to forego an inspection of the Properties, and

agreed to purchase the Properties in “AS IS” condition. Each page of the Purchase

Agreement was initialed by all parties, and was signed by all parties. The sale was closed

on May 3, 2021. Richland County, Case No. 2023 CA 0024 6

{¶13} On or about May 9, 2021, during a heavy rain which caused flooding in the

Richland County area, the appellants received a call from a tenant about water in a heat

vent. They went to the tenant’s apartment, where they observed some water in a heating

vent of one of the apartments. They subsequently hired a contractor, who ran a camera

underground through the drainage tile lines and discovered that some of the underground

drainage tiles were clogged or had collapsed. The appellants claim that the clogged

and/or collapsed drainage tile required extensive repair work. Between May and August,

2021, they began renovating and repairing the Properties, and claim to have incurred

damages in excess of $200,000.00 for losses connected to flooding issues related to the

rental units.

{¶14} On September 22, 2021, the appellants filed a Complaint asserting fraud,

misrepresentation, and breach of contract. The appellees filed a timely answer. The

parties engaged in discovery, and on January 22, 2023, the appellees filed a Motion for

Summary Judgment. On March 6, 2023, Appellants filed a response with supporting

affidavits and materials, and the appellees filed a reply on March 13, 2023.

{¶15} On April 13, 2023, the trial court granted summary judgment in favor of the

appellees. The appellants filed a timely appeal, raising the following sole assignment of

error:

{¶16} “I. THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT

TO APPELLEES BECAUSE GENUINE ISSUES OF MATERIAL FACT EXISTED AS TO

APPELLANTS’ CLAIMS AGAINST APPELLEES.” Richland County, Case No. 2023 CA 0024 7

STANDARD OF REVIEW

{¶17} 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, 506 N.E.2d 212. Accordingly, this

Court reviews a trial court’s award of summary judgment de novo. Grafton v. Ohio Edison

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

{¶18} Civ. R. 56(C) states in pertinent part: “Summary Judgment shall be

rendered forthwith if the pleadings, depositions, answers to interrogatories, written

admissions, affidavits, transcripts of evidence, 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 from

the evidence or stipulation, 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, that party being entitled to have the evidence or stipulation construed most

strongly in the party's favor." Thus, summary judgment may be granted only after the trial

court determines that: 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

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). Richland County, Case No. 2023 CA 0024 8

{¶19} As this Court recently stated in Infield v. Westfield Ins. Co., 5th Dist.

Muskingum No. CT2022-0055, 2023-Ohio-1199: “It is well established that the party

seeking summary judgment bears the burden of demonstrating 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).” Id.

at ¶ 21. Richland County, Case No. 2023 CA 0024 9

ANALYSIS

{¶20} The appellants assert that the appellees failed to disclose known issues of

previous water intrusion and flooding, contending that the evidence established that the

appellees had actual knowledge of previous water intrusion and flooding issues at the

Properties. The appellants argue further that the appellees’ failure to report the same on

the Form did not constitute "good faith" as required by R.C. 5302.30(A)(l).

{¶21} The appellants argue further that the appellees’ attempt to justify non-

disclosure of water issues because the incidents were the result of clogged or loose

downspouts which were "easily fixed" with minor maintenance is belied by the sworn

testimony of the appellees' tenants, who averred that there were consistent issues and

events of water intrusion and flooding with the Properties, and that appellee Thomas

Reindl came to their apartments with a shop vac and removed the water from the floors

and carpets but never fixed the underlying issue. Appellants submit that this creates a

genuine issue of material fact proscribing summary judgment.

{¶22} The appellants also presented evidence from the City Sewer Repair

Department, which showed calls from appellee Kathleen Reindl in 2013, 2015, 2017, and

2018, regarding issues with water/sewer backup and catch basin problems at the

Properties. The records from the Sewer Repair Department show calls regarding water

backup on June 17, 2019, the repair of which was completed on October 28, 2019, and

July 22, 2019. Most of these incidents occurred within the five-year period specified in

the Residential Property Disclosure Form. However, none of these incidents were due to

a defect in the Properties, but rather, were due to problems with the city sewer system. Richland County, Case No. 2023 CA 0024 10

{¶23} The appellants further maintain that the appellees’ claim there was no water

intrusion or flooding caused by a "material defect" is incorrect insofar as “material defect"

is defined in the Residential Property Disclosure Form as follows: “For purposes of this

section, material defects would include any nonobservable physical condition existing on

the property that could be dangerous to anyone occupying the property or any non-

observable physical condition that could inhibit a person's use of the property.” The

appellants submit that the flooding of the Properties could be both dangerous to tenants

and inhibit the use of their apartments, thereby creating a “material defect” with the

Properties. The appellants also argue that the appellees’ conduct constitutes fraudulent

misrepresentation.

{¶24} In order to prove fraud, a plaintiff must show proof of the following elements:

(1) a representation or, where there is a duty to disclose, omission of a fact; (2) which is

material to the transaction at hand; (3) 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; (4) with the intent of misleading another into relying upon it; (5) justifiable

reliance upon the representation or concealment; and (6) a resulting injury proximately

caused by the reliance. Armatas v. Haws, 2018-Ohio-1371, 110 N.E.3d 759, ¶ 12 (5th

Dist.).

{¶25} The pivotal element of the fraud analysis in this case lies in the “with

knowledge of its falsity” element. The appellants argue that the appellees never denied

knowledge of water intrusion, instead carefully skirting the issue in their affidavits, and

argue further that the appellees withheld the information requested on the Form and

falsely claimed that there was no previous water intrusion. Richland County, Case No. 2023 CA 0024 11

{¶26} The appellants’ arguments are not persuasive. The “defect” at issue in this

case is the collapsed and crumbling drain tiles. The appellants have not provided

evidentiary quality materials sufficient to create a genuine issue of material fact regarding

whether the appellees were aware of problems with the underground drainage tiles, let

alone that they intentionally misled the appellants about them.

{¶27} Further, the "as is" clause in the Purchase Agreement shields the appellees

from the appellants’ claims. Under Ohio law, an "AS IS" clause in a real estate contract

places the risk upon the purchaser as to the existence of defects, and relieves the seller

of any duty to disclose. Ohio courts have reasoned that when a buyer has the unimpeded

opportunity to inspect the property, he is charged with knowledge of the conditions a

reasonable inspection would have disclosed. As this Court noted in Jackson v. Stocker

Dev. Ltd., 5th Dist. Tuscarawas No. 2008 AP 04 0029, 2008-Ohio-5337:

As a general rule, “[t]he doctrine of caveat emptor applies to real estate

transactions in Ohio, and limits the ability of claimants to raise allegations

of fraud or misrepresentation related thereto.” Schmiedebusch v. Rako

Realty, Inc., Delaware App. No. 04CAE08062, 2005–Ohio–4884, ¶ 19. It is

a well-settled principle of contract law that the parties' intentions be

ascertained from the contractual language. If a contract is clear and

unambiguous, then its interpretation is a matter of law and there is no issue

of fact to be determined. Monotube Pile Corporation v. Union Metal

Corporation (1998), Stark App.No.1997CA00185. We have consistently

upheld the validity of properly drafted integration clauses in contracts. See,

e.g., Stults & Associates, Inc. v. Neidhart (Nov. 15, 1999), Delaware App. Richland County, Case No. 2023 CA 0024 12

Nos. 99 CA 11, 99 CA 17; Tippel v. R.C. Miller Refuse Service, Inc. (Feb.

14, 2000), Stark App.No.1999CA00244.

Id. at ¶15.

{¶28} The appellants herein had an unimpeded opportunity to inspect the

Properties themselves, and to hire a home inspector to conduct a formal inspection. They

chose to do neither, instead agreeing to purchase the Properties “as is.” In Ohio, when

a buyer has had the opportunity to inspect the property he is charged with knowledge of

the conditions that a reasonable inspection would have disclosed. Further, as set forth

above, the appellants have failed to establish that the appellees engaged in fraudulent

conduct with regard to the water intrusion caused by the damaged underground drainage

tiles.

{¶29} The appellees note they owned the Properties for 26 years during which

time it rained and snowed “thousands of times” and, in that time, they were notified of

water in the heat registers/vents only 3 times with the last time being approximately 7 to

8 years ago. Each time the problem was corrected by cleaning out a downspout or fixing

a loose one. Other instances of water intrusion involved leaking appliances or toilets and

when the City 's sewer drain backed up. The underground drainage tile issue was only

discovered when appellants hired a contractor, after their purchase of the Properties, who

ran an underground camera through the tile lines and discovered that some underground

drainage tile was clogged or had collapsed. There are simply no sufficient evidentiary

quality materials present herein to create a genuine issue of material fact regarding

whether the appellees were aware of the collapsed or crumbling underground drainage

tiles. Richland County, Case No. 2023 CA 0024 13

{¶30} A seller of real property is not required to speculate, and is charged only to

reveal the existence of conditions within his actual knowledge.” Decaestecker v.

Belluardo, 2d Dist. Montgomery No. 22218, 2008-Ohio-2077, 2008 WL 1921638, ¶ 45.

There is no evidence in the case sub judice that the appellees had actual knowledge of

the clogged or crushed drainage tiles. Mere maintenance in an area does not equate to

actual knowledge of a defect of the property. In order to demonstrate actual knowledge

of the defect for which damages are sought, the appellants are required to present more

than evidence that some work was completed in or around the area where a defect was

discovered, and more than speculation regarding what the appellees knew.

{¶31} The appellants must establish genuine issues of material fact regarding the

appellees’ actual knowledge of the specific defect. The clogged or collapsed drainage

tiles in this case were only discovered by running a camera underground, and there is no

evidence that the appellees were aware of the same. As such, there are no genuine

issues of material fact regarding whether the appellees fraudulently misrepresented the

integrity of the tile drainage system, and the trial court correctly granted the appellees’

motion for summary judgment.

{¶32} The trial court correctly found that the appellants failed to present evidence

of any representation or active concealment of fact by the appellees which was material

to the transaction and which was made falsely with the intent of misleading the appellants

and caused their reliance thereon. Further, the trial court correctly found that the

appellants failed to present sufficient evidence on their claims of breach of the Purchase

Agreement. The appellants’ sole assignment of error is without merit, and is therefore

overruled. Richland County, Case No. 2023 CA 0024 14

CONCLUSION

{¶33} Based upon the foregoing, the appellants’ sole assignment of error is

overruled, and the decision of the Richland Court of Common Pleas is affirmed.

By: Baldwin, J.

Gwin, P.J. and

Hoffman, J. concur.