Wehagen, Inc. v. U.S.A. Management & Development Co.

5 Ohio App. Unrep. 328
CourtOhio Court of Appeals
DecidedJuly 13, 1990
DocketCase No. 89-L-14-050
StatusPublished

This text of 5 Ohio App. Unrep. 328 (Wehagen, Inc. v. U.S.A. Management & Development Co.) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wehagen, Inc. v. U.S.A. Management & Development Co., 5 Ohio App. Unrep. 328 (Ohio Ct. App. 1990).

Opinion

FORD, J.

The facts of this case are essentially not in disputa

Appellant/cross-appellee, Wehagen, Incorpo- , rated (Wehagen) was the owner of leasehold interest in a Sunoco gas station property, located at 36099 Euclid Avenue, in Willoughby, Ohio.

Under the terms of the lease, Wehagen was given a right of first refusal on any offer to purchase the property. This lease provision, paragraph 7(g), states:

"[I]n the event [appellee, cross-appellant Willo Arms Associate^ Ltd. (Willo)] desires to sell the within demised premises or other property owned by [Willo] of which this is a part at any time during the term hereof *** and receives therefor [sic] a bona fide offer to purchase acceptable to [Willo], [Willo] shall notify [Wehagen] in writing of said offer to purchase, and [Wehagen] shall have the right to meet said bona fide offer by giving [Willo] notice in writing of its intention so to do within thirty (30) days after receipt of said offer in writing ***"

The Sunoco gas station property constituted a small portion of the original tract of land owned by the original fee owners, Frank and Mary Mavec The evidence indicates that this particular tract of land was subdivided into eight separate parcels, with the Sunoco property being separated from an adjacent property, containing the Willo Medical Building, in 1980. The two parcels have remained separate and separately alienable ever since

On August 10, 1983, Willo informed Wehagen, pursuant to the first refusal clause, of an offer by appellee/cross-appellant, U.S.A. Management and Development, Inc (U.S.A.), to purchase the Sunoco gas station property, along with the adjacent medical building, for 1.36 million dollars. After consideration of the offer, Wehagen replied, through counsel, that it was obligated to meet purchase offers only for the separate Sunoco gas station property.

Willo's counsel replied to Wehagen, by letter, on September 14, 1983, stating:

"*** where the offer is conditioned upon all such property being conveyed, that the lease must meet 'said bona fide offer' in order to exercise its right of first refusal." (PL Exhibit 10, Emphasis in original.)

On September 23, 1983, after concluding Wehagen's right to first refusal had expired unexercised, Willo sold the Sunoco property and the medical building. However, the consummated sales transactions between Willo and U.S.A. differed substantially from the sales transaction described to Wehagen. Rather than selling both the Sunoco gas station property and the medical building to U.S.A., Willo entered into the following transactions:

[329]*329a land contract between Willo and U.S.A. to purchase the medical building for 1.3 million dollars and a real estate purchase agreement between Willo and Charles Andrews (an attorney in this case) and Urban Cornacchione (the principle stockholders of U.S.A.) to purchase the Sunoco properly for $60,000. The record indicates that the fair market value of the Sunoco property, in 1983, was approximately $200,000.

The record further reflects that Willo never informed Wehagen that a separate offer was made on the Sunoco parcel by Andrews and Cornacchione until after suit was filed in this case, despite the fact that Willo, U.S.A., Andrews, and Cornacchione were aware of the first refusal contract right.

Wehagen did make a separate request that Willo segregate the properties to allow it to exercise its rights under the leasehold agreement. Following Willo's denial of this request and the ultimate sale of the properties, Wehagen filed suit, in a declaratory judgment action, commenced on October 21,1983.

The case was initially heard on December 16, 1985. In the August 19, 1986 judgment entry, the trial court denied equitable relief to Wehagen and limited recovery, if any, to damages not yet determined. The court did determine that Willo failed to comply with the right of first refusal, contained in paragraph 7(g) of the lease agreement.

Willo and Wehagen appealed to this court. However, in this court's February 22, 1988 opinion, this court dismissed the actions for lack of a final appeal able order. This author, in dissent, stated that he felt that a final appealable order was present in this casa Further, after providing a detailed examination of the facts contained in the record, the dissent concluded that the trial court erred in failing to grant specific performance of the right of first refusal to Wehagen.

On remand, the trial court, limiting review of the case to original trial testimony and all filed briefs, vacated its interlocutory judgment and substantially conformed its opinion to the dissent. The trial court held that specific performance of the right of first refusal should be granted to Wehagen because of the constructive fraud of Willo, U.S.A., and Andrews and Cornacchione This constructive fraud was sufficient to permit rescission of the prior deed transfer of the Sunoco property. Fehrman v. Ellison (1971), 32 Ohio App. 2d 258. However, rather than permit Wehagen to purchase the Sunoco property for a price of $60,000, the court stated that Wehagen would be permitted to purchase the land for the fair market value of $200,000.

Wehagen now timely appeals the trial court's ruling that stated that the purchase price of the property be $200,000. Willo and U.S.A. have also filed various cross-appeals.

Wehagen's assignment of error states:

"The trial court erred in failing to grant the appellant its right of refusal at the sale price of sixty thousand dollars ($60,000.00)."

Willo, in its cross-assignments of error, states:

"1. The court below erred to the prejudice of defendants, cross-appellants, Charles M. Andrews, Urban Cornacchione, and U.S.A. Management and Development Corporation in finding said cross-appellants engaged in unconscionable conduct that constitutes constructive fraud.
"2. The court below erred to the prejudice of defendants, cross-appellants, Charles M. Andrews, Urban Cornacchione and U.S.A. Management and Development in granting contract rescission and ordering specific performance in lieu of damages."

U.S.A., Charles M. Andrews, and Urban Cornacchione in their joint cross-assignments of error, state:

"1. The court below erred to the prejudice of defendant, cross-appellant Willo Arms Associates, Ltd. in holding that said Willo Arms breached plaintiff Wehagen's right of first refusal (Opinion and Judgment Entry, 3/24/89).
"2. The court erred to the prejudice of defendant, cross-appellant Willo Arms Associate^ Ltd., in finding Willo Arms engaged in unconscionable conductconstitutingconstructive fraud (Opinion & Judgment Entry, 3/24/89)."

While this morass of assignments may, at first, resemble the Gordian knot, discussion of the various issues can be simplified through joint temporal analysis of the issues. The nature of the legal argument raised by appellant, in its assignment of error, and those raised by cross-appellants, in their cross-assignments of error, are substantially intertwined so that these arguments will be construed concurrently. Appellant's assignment, addressing the consideration required to exercise the right of first refusal, will be addressed separately.

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