Whipple v. Froehlich

2014 Ohio 658

• Court: Ohio Court of Appeals
• Decided: February 21, 2014
• Docket: 13 CAE 04 0033
• Status: Published

Opinion

[Cite as Whipple v. Froehlich, 2014-Ohio-658.]

COURT OF APPEALS DELAWARE COUNTY, OHIO FIFTH APPELLATE DISTRICT

STEPHEN A. WHIPPLE : JUDGES: : Hon. W. Scott Gwin, P.J. Plaintiff-Appellee : Hon. Sheila G. Farmer, J. : Hon. Patricia A. Delaney, J. -vs- : : DAVID E. FROEHLICH, JR. : Case No. 13 CAE 04 0033 : Defendant-Appellant : OPINION

CHARACTER OF PROCEEDING: Appeal from the Court of Common Pleas, Case No. 11 CVH 07 0912

JUDGMENT: Affirmed

DATE OF JUDGMENT: February 21, 2014

APPEARANCES:

For Plaintiff-Appellee For Defendant-Appellant

CHAD A. HEALD SCOTT A. WOLF 125 North Sandusky Street 15 West Winter Street Delaware, OH 43015 Delaware, OH 43015 Delaware County, Case No. 13 CAE 04 0033 2

Farmer, J.

{¶1} Appellee, Stephen Whipple, owned two parcels of real estate and a

business thereon in Ashley, Ohio. The business consisted of a grocery store and a

drive-thru with an Ohio liquor license. In July of 2010, appellee met with Larry Wigton, a

local auctioneer, to discuss selling the parcels and business. Appellee chose an

auction as opposed to a traditional listing.

{¶2} An auction was held on August 12, 2010. Appellant, David Froehlich, Jr.,

was the successful bidder in the amount of $222,000.00. A real estate purchase

contract was executed and the closing date was set for November 12, 2010. Because

appellant was unable to obtain financing within a timely manner, the sale was never

closed.

{¶3} Mr. Wigton contacted the other bidders to see if any of them were still

interested in purchasing the parcels and business. Appellee sold the parcels and

business in December 2010 to Brent Stooksbury for $155,000.00.

{¶4} On July 28, 2011, appellee filed a complaint against appellant for breach

of contract and fraud. Appellant filed a counterclaim alleging the same. A bench trial

commenced on March 12, 2013. By final judgment filed March 29, 2013, the trial court

found in favor of appellee on his complaint in the amount of $64,000.00 and found in

favor of appellee on appellant's counterclaim. The trial court further awarded appellee

the $5,000.00 deposit paid by appellant. Findings of fact and conclusions of law were

filed contemporaneously with the final judgment.

{¶5} Appellant filed an appeal and this matter is now before this court for

consideration. Assignments of error are as follows: Delaware County, Case No. 13 CAE 04 0033 3

I

{¶6} "THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY APPLYING

AN IMPROPER MEASURE OF DAMAGES."

II

{¶7} "THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY

DETERMINING AN AMOUNT OF DAMAGES AGAINST THE MANIFEST WEIGHT OF

THE EVIDENCE."

III

{¶8} "THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY

DETERMINING AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE THAT THE

PLAINTIFF-APPELLEE SUFFICIENTLY MITIGATED HIS DAMAGES."

{¶9} Appellant claims the trial court erred in applying an incorrect measure of

damages. We disagree.

{¶10} It is appellant's position that the trial court used the accepted formula for

determining damages in a breach of contract case involving a real estate sale

(difference between the contract price and the fair market value), but the contract sub

judice involved not only the sale of real estate, but also non-real property i.e., liquor

license, equipment, and good will.

{¶11} In its findings of fact and conclusions of law filed March 29, 2013, the trial

court found Mr. Stooksbury spent approximately $100,000.00 for renovations to the

property, the auditor's valuation of the two parcels at $109,100.00 did not include the

liquor license or any equipment, and the fair market value of the property at the time of Delaware County, Case No. 13 CAE 04 0033 4

the second sale in December 2010 was $155,000.00 (Findings of Fact Nos. 35, 36, and

38). At Findings of Fact No. 40, the trial court found: "The plaintiff’s net loss from the

failed transaction was $69,000.00. He received $153,000.00 after paying his broker’s

revised commission, and the defendant had contracted to pay $222,000.00 plus the

broker’s commission. Mr. Wigton retains the defendant’s $5,000 deposit and awaits this

Court’s instructions for its disposition." Clearly in fashioning the damages award, the

trial court subtracted the realized amount, $153,000.00, from the real estate purchase

contract price of the first sale, $222,000.00. Appellant is correct that the trial court used

the measure of damages as if the contract sub judice was a real estate contract.

{¶12} Each of the sales included the same items: the two parcels of real estate,

the business, certain equipment, and the liquor license. T. at 103. Mr. Wigton testified

that none of the prospective bidders, including appellant, were interested in the

business records (T. at 40), thereby negating that good will or business viability was

sold. The equipment of the business was delineated as to which were sold as a fixture

vis-á-vis which were not sold. T. at 46; Plaintiff’s Exhibits 2, 3, and 5G. There is no

evidence in the record of the value to be assigned to the liquor license. The minimum

bid which would be accepted for the sale, including all equipment listed and the liquor

license, was $150,000.00. T. at 21.

{¶13} From the evidence presented, there was no other method of measuring

damages for the breach. The evidence supports the approach employed by the trial

court. Appellant's own proposed findings of fact and conclusions of law filed March 22,

2013 set forth that the proper measure of damages should be the method that was in

fact utilized by the trial court. See, Proposed Conclusions of Law Nos. E, F, and M. Delaware County, Case No. 13 CAE 04 0033 5

{¶14} Assignment of Error I is denied.

{¶15} Appellant claims the amount of damages awarded is against the manifest

weight of the evidence. We disagree.

{¶16} On review for manifest weight, the standard in a civil case is identical to

the standard in a criminal case: a reviewing court is to examine the entire record, weigh

the evidence and all reasonable inferences, consider the credibility of witnesses and

determine "whether in resolving conflicts in the evidence, the jury [or finder of fact]

clearly lost its way and created such a manifest miscarriage of justice that the conviction

must be reversed and a new trial ordered." State v. Martin, 20 Ohio App.3d 172, 175

(1983). See also, State v. Thompkins, 78 Ohio St.3d 380, 1997-Ohio-52; Eastley v.

Volkman, 132 Ohio St.3d 328, 2012-Ohio-2179.

{¶17} In this case, appellee bears the burden of proving damages by a

preponderance of the evidence. When a purchaser defaults on a real estate purchase

contract, the seller may recover the difference between the contract price and the fair

market value of the real estate at the time of the breach. E.K. Investments v. Kleckner,

1st Dist. Hamilton Nos. C-900364, C-900427, C-900461, 1991 WL 249974 (November

27, 1991). "It has been held that when the sale of real estate after a breach of contract

is made '***within a reasonable time and at the highest price obtainable after the

breach, [it] is evidence of the market value on the date of the breach. (Citation

omitted.)' " Roesch v. Bray, 46 Ohio App.3d 49, 50 (6th Dist.1988).

{¶18} Appellant argues the actual value of the two parcels and the business vis-

á-vis the final sale price has not been established by the evidence. The basis of this Delaware County, Case No. 13 CAE 04 0033 6

argument is that the bids from the first sale were higher than the final sale price of

$155,000.00. Appellant also argues appellee did not attempt to obtain a higher price by

negotiating further with the original bidders.

{¶19} Appellee testified he would have accepted a bid as low as $150,000.00 at

the first sale as is evidenced by the minimum bid amount. T. at 21. He believed it was

the fair market value. T. at 90. He also opined the value of the property at the time of

the breach was $150,000.00 to $155,000.00 given the economic climate in Ashley and

the volume of business at that time. T. at 102-103,108.

{¶20} Mr. Wigton testified as to the attempts to get the previous bidders to re-

offer. T. at 29-30, 42-43. It was his opinion that subsequent auctions tend not to do as

well the second time around. T. at 41. Mr. Wigton contacted the other bidders and

gave them until the end of the week to make an offer. T. at 43. There were no efforts to

pit the bidders against each other. Id. Mr. Stooksbury bid $155,000.00 and signed the

purchase agreement on December 13, 2010. T. at 103-104; Plaintiff's Exhibit 12.

{¶21} Mr. Stooksbury testified that although the property was "run-down," he

thought he "could get it back up and back on its feet." T. at 63. Although at the auction

he had bid higher than $155,000.00, somewhere in the "low 170s," his threshold had

been $160,000.00, but he got caught up in the process. T. at 64. The HUD-1

settlement statement listed the real estate at $130,000.00 and the personal property at

$25,000.00. T. at 70; Plaintiff's Exhibit 14. Since the purchase of the parcels and the

business, Mr. Stookbury has spent approximately $100,000.00 in improvements. T. at

72. He opined the price he paid was what it was worth given the amount of repairs

needed, and it was "worth what I paid." T. at 72-73. Delaware County, Case No. 13 CAE 04 0033 7

{¶22} Appellant's witness, Myron Ed Turner, was a licensed real estate

agent/broker but not an appraiser. T. at 209, 216, 224. He testified to two comparables

in Delaware County and one in Marion County. T. at 228. All the comparables sold in

2012, one located on U.S. Highway 23 for $165,000.00, another on land contract for

$224,900.00, and the third was a vacant fast food restaurant/drive-thru that "was not all

that comparable." T. at 229, 233-236. He opined the fair market value of the two

parcels sub judice in 2010 was $195,000.00 to $210,000.00. T. at 230.

{¶23} We note the weight to be given to the evidence and the credibility of the

witnesses are issues for the trier of fact. State v. Jamison, 49 Ohio St.3d 182 (1990).

The trier of fact "has the best opportunity to view the demeanor, attitude, and credibility

of each witness, something that does not translate well on the written page." Davis v.

Flickinger, 77 Ohio St.3d 415, 418, 1997-Ohio-260.

{¶24} In its Findings of Fact No. 37, the trial court specifically pointed to the

weaknesses in Mr. Turner's valuation: "The defendant's expert witness failed to show

that the property's fair market value exceeded $155,000 when he relied on purportedly

comparable sales that were not comparable."

{¶25} We find the trial court did not err in finding the fair market value of the

property to be $155,000.00 given the testimony and the trial court's determination on the

credibility of the witnesses.

{¶26} Assignment of Error II is denied.

{¶27} Appellant claims the trial court erred in determining appellee significantly

mitigated his damages because appellee failed to provide business records, refused to Delaware County, Case No. 13 CAE 04 0033 8

grant an extension of the closing date, and failed to get the best possible price on the

second sale. We disagree.

{¶28} As our brethren from the Tenth District explained in Aurora Loan Services

v. Sansom-Jones, 10th Dist. Franklin No. 12AP-258, 2012-Ohio-5477, ¶ 25:

The duty to mitigate, when it applies, requires an injured party to

make reasonable efforts, not extraordinary ones, to limit the damages that

result from the breach. UAP–Columbus JV326132 v. O. Valeria Stores,

Inc., 10th Dist. No. 07AP–614, 2008–Ohio–588, ¶ 17. Because failure to

mitigate is an affirmative defense, the burden to prove it lies with the party

raising it. Baird v. Crop Prod. Servs., 12th Dist. No. CA2011–03–003,

2012–Ohio–4022, ¶ 43.

{¶29} Two of the three alternatives required the lengthening of the time for the

sale. The trial court specifically found time was of the essence (Findings of Fact No.

34). Appellee testified a December sale was necessary because he had scheduled

surgery and therefore would be unable to care for his business. T. at 86-87, 101. His

recovery time was expected to be three to four months and his business would not have

survived that long without him. T. at 101. Mr. Wigton also testified time was critical to

the sale and that is why he chose to contact the other bidders with a December 6th cut-

off date. T. at 29, 41.

{¶30} Appellant argues if the business records had been provided, he might

have been able to obtain financing faster and could have closed within time. Earlene Delaware County, Case No. 13 CAE 04 0033 9

Whipple, appellee's mother and bookkeeper, testified appellant requested financial

records after the sale. T. at 322. However, financial records did not exist, just "daily

balances and so forth. So we didn't have a financial statement on record." Id. Ms.

Whipple stated she offered to show appellant how the records were kept, "how we did

our, like our weekly thing and how we kept records and every three months, we took it

to our accountant to do taxes, workmen's comp and all these type of things." T. at 323.

However, appellant never took her up on her offer. Id.

{¶31} We find the evidence supports the trial court's conclusion that failure of

mitigation had not been proven (Conclusions of Law Nos. 43-45):

The defendant has the burden of proof to show by the

preponderance of the evidence (a) that the plaintiff failed to exercise

reasonable care to mitigate the plaintiff's damages, and (b) the amount of

the damages that the plaintiff would have avoided by taking those

measures. The defendant failed to satisfy his burden of proof for either of

those elements.

The plaintiff exercised reasonable care in deciding how to pursue a

prompt sale after the failed transaction by consulting and accepting the

advice of both a lawyer and a well qualified real estate sales agent. He

likewise exercised reasonable care by accepting the offer that his real

estate agent represented was the best offer he could obtain in his

circumstances. Delaware County, Case No. 13 CAE 04 0033 10

The defendant did not sufficiently rebut the legal presumption that

an arms length sale shows a property's fair market value.

{¶32} Assignment of Error III is denied.

{¶33} The judgment of the Court of Common Pleas of Delaware County, Ohio is

hereby affirmed.

By Farmer, J.

Gwin, P.J. and

Delaney, J. concur.

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