Stephen Dev. Co. v. DTB Land Dev., L.L.C. , 2012 Ohio 1493 ( 2012 )

[Cite as Stephen Dev. Co. vs. DTB Land Dev., LLC, 2012-Ohio-1493.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STEPHEN DEVELOPMENT COMPANY JUDGES:
Hon. Sheila G. Farmer, P.J.
Plaintiff-Appellant Hon. John W. Wise, J.
Hon. Julie A. Edwards, J.
-vs-
DTB LAND DEVELOPMENT, LLC Case No. 2011CA00153
Defendant-Appellee OPINION
CHARACTER OF PROCEEDING: Appeal from the Court of Common
Pleas, Case No. 2010CV00740
JUDGMENT: Affirmed
DATE OF JUDGMENT: March 26, 2012
APPEARANCES:
For Plaintiff-Appellant For Defendant-Appellee
JOHN A. MURPHY, JR. OWEN J. RARRIC
KRISTEN S. MOORE 4775 Munson Street, NW
Millennium Centre, Suite 300 P.O. Box 36963
Stark County, Case No. 2011CA00153 2
200 Market Avenue North Canton, OH 44735
P.O. Box 24213
Canton, OH 44701
Farmer, J.
{¶1} On September 17, 2008, appellee, DTB Land Development, LLC, entered
into a purchase agreement to purchase a commercial real estate building named the
Renaissance Centre, from appellant, Stephen Development Company. The agreement
listed the "amount to be financed" was "to be determined."
{¶2} In December of 2008, appellee terminated its agreement with appellant.
{¶3} On February 22, 2010, appellant filed a complaint against appellee for
breach of contract. Appellee filed a counterclaim for return of its $25,000.00 deposit.
Both parties filed motions for summary judgment. By judgment entry filed June 13,
2011, the trial court concluded the agreement was not enforceable, finding the
agreement's failure to include an essential term "manifested a lack of intention by the
parties and a failure of a meeting of the minds." The trial court denied appellant's
motion and granted appellee's motion, awarding appellee $25,000.00 plus interest and
costs.
{¶4} Appellant filed an appeal and this matter is now before this court for
consideration. Assignments of error are as follows:
I
{¶5} "THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN
DETERMINING THAT THE PURCHASE AGREEMENT WAS NOT A LEGALLY
ENFORCEABLE CONTRACT."
II
Stark County, Case No. 2011CA00153 3
{¶6} "THE TRIAL COURT ERRED, AS A MATTER OF LAW, IN
DETERMINING THAT APPELLEE WAS EXCUSED FROM PERFORMANCE UNDER
THE PURCHASE AGREEMENT DUE TO THE FINANCING PROVISION WHEN THAT
PROVISION GAVE ONLY STEPHEN DEVELOPMENT THE RIGHT TO VOID THE
PURCHASE AGREEMENT."
III
{¶7} "THE TRIAL COURT ERRED IN DENYING STEPHEN DEVELOPMENT'S
MOTION FOR SUMMARY JUDGMENT WHEN THE UNDISPUTED FACTS
DEMONSTRATE THAT APPELLEE WAS ABLE TO ARRANGE FINANCING."
IV
{¶8} "IN THE ALTERNATIVE, THE TRIAL COURT ERRED IN GRANTING
APPELLEE'S MOTION FOR SUMMARY JUDGMENT WHEN GENUINE ISSUES OF
MATERIAL FACT REMAIN."
{¶9} Appellant's four assignments of error challenge the trial court's granting of
summary judgment to appellee.
{¶10} Summary Judgment motions are to be resolved in light of the dictates of
Civ.R. 56. Said rule was reaffirmed by the Supreme Court of Ohio in State ex rel.
Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996-Ohio-211:
{¶11} "Civ.R. 56(C) provides that before summary judgment may be granted, it
must be determined that (1) no genuine issue as to any material fact remains 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 nonmoving party, that conclusion is
Stark County, Case No. 2011CA00153 4
adverse to the party against whom the motion for summary judgment is made. State
ex. rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d 466, 472,
364 N.E.2d 267, 274."
{¶12} As an appellate court reviewing summary judgment motions, we must
stand in the shoes of the trial court and review summary judgments on the same
standard and evidence as the trial court. Smiddy v. The Wedding Party, Inc. (1987), 30
Ohio St.3d 35.
{¶13} The trial court based its decision on two points. First, the purchase
agreement was not enforceable as a matter of law because the agreement failed to
include a specific amount to be financed. The trial court found such a failure
demonstrated a lack of intention by the parties resulting in a failure of a meeting of the
minds. The trial court concluded the "amount to be financed" was an essential term of
the agreement.
{¶14} The second issue involved the financing contingency in the agreement.
The trial court concluded the lack of specificity as to the financing granted appellee "the
right to determine what financing was appropriate and to ultimately decide that the
proposed financing was unacceptable." See, Judgment Entry filed June 13, 2011.
I
{¶15} Appellant claims the trial court erred as a matter of law in determining the
purchase agreement was not enforceable. Specifically, appellant claims the trial court
failed to analyze the parties' intent or reasonableness in filling in the missing terms
(amount of financing). We disagree.
Stark County, Case No. 2011CA00153 5
{¶16} Appellant argues the purchase agreement was legally enforceable and
binding upon the parties. In support, appellant cites this court's opinion in Miller v.
Murday (1989), Licking App. No. CA-3398, wherein this court noted:
{¶17} "Generally, a liberal construction should be put upon written instruments
so as to uphold them, if possible, and carry into effect the intention of the parties.
Courts are required, by applying known rules of law, to enforce valid and reasonable
contracts of parties, with the view of carrying out their clear intent, rather than, by
resorting to technical construction, to render such contracts void. A contract should be
given that construction that will uphold it and preserve to the parties thereto their rights,
if the same can be done without doing violence to the language of the contract.
Whenever the language of a contract will permit, it should be so construed as to support
rather than to destroy legal obligation or as it is sometimes stated, 'ut res magis valeat
quam pereat.' Wherever possible, such a construction will be given as to render the
contract legal and effective rather than one which renders it void."
{¶18} It is appellant's position that the absence of the "amount to be financed"
was not an essential term of the contract:
{¶19} "As a general rule, parties cannot enter into an enforceable contract
unless they come to a meeting of the minds on the essential terms of the contract.
Alligood v. Proctor & Gamble Co. (1991), 72 Ohio App.3d 309. The essential terms of a
contract have been identified as 'the identity of the parties to be bound, the subject
matter of the contract, consideration, a quantity term and a price term.' Id." Fairfax
Homes, Inc. v. Blue Belle, Inc., Licking App. No. 2007CA00077, 2008-Ohio-2400, ¶19.
Stark County, Case No. 2011CA00153 6
{¶20} Appellee argues the specific omission of the "amount to be financed" with
the language "to be determined" establishes there was not a meeting of the minds. In
support, appellee cites the case of Anchor v. Jones (1992), Lorain App. No.
91CA005109, wherein our brethren from the Ninth District stated the following:
{¶21} "An agreement is enforceable if it encompasses the essential elements of
the bargain and if it provides a basis for determining the existence of a breach and for
giving an appropriate remedy. Mr. Mark Corp. v. Rush, Inc. (1983), 11 Ohio App.3d
167. A court will give an effect to a contract's words; it will not delete words or use
words not used. Cleveland Elec. Illuminating Co. v. Cleveland, 37 Ohio St.3d 50,
paragraph three of the syllabus, rehearing denied (1988), 38 Ohio St.3d 704. The fact
that one or more terms of a proposed bargain are left open or uncertain may show that
a manifestation of intent is not intended to be understood as an offer or acceptance.
Mr. Mark Corp., supra at 169, citing Restatement of the Law 2d, Contracts (1981) 92,
Section 33(3). Based upon these principles, the court could properly hold that there
was not a meeting of the minds on the amount to be financed, an essential term of the
agreement."
{¶22} This conclusion bears upon the facts in this case. The specific negotiated
language of the agreement sub judice states the "amount to be financed" is "to be
determined" and lists the following contingences at ¶6:
{¶23} "(a) ENVIRONMENTAL INSPECTION: Owner agrees to permit the
Purchaser, the Purchaser's lender and the qualified professional environmental
consultant of either of them to enter the Premises to conduct, at the expense of the
Purchaser, an environmental site assessment. This Assessment report must be
Stark County, Case No. 2011CA00153 7
completed within 30 days of the execution of this Agreement. Purchaser agrees if such
assessment is obtained and the consultant recommends further inspection to determine
the extent of suspected contamination or recommends remedial action, the Purchaser,
at Purchaser's option, may notify the Owner in writing, with a copy of the report
attached, within five (5) business days after receipt by Purchaser of a copy of the
environmental site assessment report, that the Contract is null and void. Does Apply
[Marked & Initialed] Does Not Apply ___________
{¶24} "(b) FINANCING CONTINGENCY: Purchaser agrees to use his best
efforts to obtain above loan, including complying with lender's requests. Purchaser will
make loan application within 21 days after date of receipt by Purchaser of fully executed
copy of this Agreement, and Purchaser shall obtain a written loan commitment within 60
days after date of such receipt. If Purchaser has failed either to make loan application
or obtain a written loan commitment within the time periods set forth above, this
agreement, at Seller's written election, shall be deemed null and void and all monies in
trust shall be returned to Purchaser without further liability by, between and among
Seller, Purchaser and REALTOR. If financing cannot be arranged, all monies shall be
returned to Purchaser." See, Commercial/Industrial Real Estate Purchase Agreement,
attached to Ross Deposition as Defendant's Exhibit Ross I.
{¶25} Appellant's manager, William Ross, stated the financing was to be a
conventional commercial lending arrangement of 70 or 80%, but it was not included in
the terms of the agreement. Ross depo. at 108-109. Mr. Ross further acknowledged
the October 27, 2008 communication between James Powers, the loan officer for
Stark County, Case No. 2011CA00153 8
Huntington Bank, and Thomas Lazarides, appellant's real estate agent, did not include
the amount of financing offered by Huntington Bank to appellee. Id. at 111; Exhibit L.
{¶26} The undisputed fact was that appellant received financing, but found the
financing unacceptable, thereby resulting in a termination of the agreement by appellee
in December of 2008, some three months after the signing of the agreement.
{¶27} The specific terms of the financing contingency paragraph in the
agreement refers to "best efforts" to obtain financing. We conclude from this language
and the inclusion of financing as a contingency that as in Anchor, supra, financing was
an essential element of the contract and the trial court did not err in finding the contract
was not enforceable.
{¶28} Assignment of Error I is denied.
II, III
{¶29} Appellant claims the trial court erred in finding appellee was excused from
performance due to the financing issue. We disagree.
{¶30} Appellant argues the agreement gave the seller the sole right to terminate
the contract as cited in ¶6, supra. However, the specific caveats to the financing
contingency are the purchaser's "best efforts" and purchaser to make a loan application
and receive a written loan commitment within certain time periods as set forth in the
agreement, notwithstanding the fact that ¶6 provides that the seller may declare the
agreement null and void because of a failure to obtain financing and shall return all
monies to purchaser.
{¶31} Theodore Sanders, one of appellee's owners, testified prior to the
agreement, an on-going discussion was held with Huntington Bank relative to the
Stark County, Case No. 2011CA00153 9
purchase of the Renaissance Centre and financing. Sanders depo. at 141-143. The
first negotiation was for 100% financing by Huntington which was not formalized. Id. at
150. This 100% negotiation continued throughout the dealings with the bank. Id. at
156. Also involved was the need to increase by one million dollars a line of credit to one
of appellee's businesses, Atlantic Financial Company, which the bank rejected. Id. at
154, 164. Eventually, the Atlantic line of credit went to Wells Fargo. Id. at 178. From
the beginning, appellee wanted 100% financing. Id. at 174. Financing was available for
a one year note which would require refinancing in one year. Id. at 177. Huntington
refused 100% financing and offered 80/20%. without funds for improvements. Id. at
182, 188-191. Appellee did not have the money for the 20%. Id. at 192-193, 195. Mr.
Sanders signed the agreement with the intention of securing 100% financing as 80/20%
was not possible. Id. at 195.
{¶32} It is clear that ¶6 gives both appellant and appellee the right to terminate
the agreement. The evidence is also clear that appellee was wedded to 100%
financing, there was a downturn in the climate of appellee's businesses (automobile
sales), and Huntington denied increasing the line of credit for Atlantic, one of appellee's
businesses and a would-be renter in the Renaissance Centre.
{¶33} All these factors lead to financing for appellee being unavailable. One
might argue that appellant's position is that once any financing is available, regardless
of its costs, appellee was bound to fulfill the agreement. Without the inclusion of an
"amount to be financed" in the purchase agreement, this argument is without merit.
{¶34} Assignments of Error II and III are denied.
Stark County, Case No. 2011CA00153 10
IV
{¶35} Appellant claims genuine issues of material fact exist regarding the
fulfillment of ¶6 and therefore summary judgment was not appropriate. We disagree.
{¶36} Appellant argues there are questions of fact as to whether appellee made
a loan application within twenty-one days or received a written commitment within sixty-
days, whether appellee made "best efforts," and whether Huntington's terms were such
that appellee had financing.
{¶37} Because the financing terms of the agreement were left open to the
discretion of appellee, appellant was bound by appellee's decision to reject the
Huntington financing. As demonstrated by Mr. Sander's deposition testimony at 173,
Atlantic's line of credit and the real estate purchase were intertwined. The rejection of
one part, Atlantic's line of credit increase, and the switch to Wells Fargo created a
financial climate that appellee found to be unacceptable.
{¶38} Although one could interpret the independent facts differently, the
conclusion does not change. As Mr. Sander's stated in his deposition, appellee
required a 100% financing deal only.
{¶39} Upon review, we find the trial court did not err in granting summary
judgment to appellee.
{¶40} Assignment of Error IV is denied.
Stark County, Case No. 2011CA00153 11
{¶41} The judgment of the Court of Common Pleas of Stark County, Ohio is
hereby affirmed.
By Farmer, P.J.
Wise, J. concur and
Edwards, J. concurs separately.
_s/Sheila G. Farmer______________
_s/ John W. Wise_________________
_______________________________
JUDGES
SGF/sg 201
Stark County, Case No. 2011CA00153 12
EDWARDS, J., CONCURRING OPINION
{¶42} I concur with the majority except regarding the analysis of the second,
third and fourth assignments of error.
{¶43} I do not find as the majority does, that it is clear that either the buyer or
seller have the right to terminate the agreement. If I were to find that this is an
enforceable contract, despite the missing financial terms, I would interpret the financing
contingency to require the buyer to use his best efforts to obtain the loan, and, if
reasonable financing cannot be arranged, all monies shall be returned to purchaser.
{¶44} Appellant, in its brief, indicates that if this is the conclusion reached by the
court, then a jury should decide whether the buyer used his best efforts to obtain a
reasonable financing deal. While I agree that that would generally be a jury decision,
the information presented to the trial court so clearly points to the conclusion that
reasonable financing was not available that I find no error in the granting of the
summary judgment on this ground.
_______________________________________
Judge Julie A. Edwards
JAE/rmn
[Cite as Stephen Dev. Co. vs. DTB Land Dev., LLC, 2012-Ohio-1493.]
IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STEPHEN DEVELOPMENT COMPANY :
:
Plaintiff-Appellant :
:
-vs- : JUDGMENT ENTRY
:
DTB LAND DEVELOPMENT, LLC :
:
Defendant-Appellee : CASE NO. 2011CA00153
For the reasons stated in our accompanying Memorandum-Opinion, the
judgment of the Court of Common Pleas of Stark County, Ohio is affirmed. Costs to
appellant.
_s/Sheila G. Farmer______________
_s/ John W. Wise_________________
s/ Julie A. Edwards________________
JUDGES