Buchanan v. Improved Properties, L.L.C. , 2014 Ohio 263 ( 2014 )

[Cite as Buchanan v. Improved Properties, L.L.C., 2014-Ohio-263.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
ALLEN COUNTY
ASHTON BUCHANAN,
PLAINTIFF-APPELLANT, CASE NO. 1-13-38
v.
IMPROVED PROPERTIES, LLC, ET. AL.,
OPINION
DEFENDANTS-APPELLEES.
Appeal from Allen County Common Pleas Court
Trial Court No. CV2012 0552
Judgment Affirmed
Date of Decision: January 27, 2014
APPEARANCES:
Gregory A. Grimslid for Appellant
R.C. Wiesenmayer for Appellees
Case No. 1-13-38
WILLAMOWSKI, P.J.
{¶1} Plaintiff-appellant Ashton Buchanan (“Buchanan”) brings this appeal
from the judgment of the Court of Common Pleas of Allen County granting
summary judgment to defendants-appellees Improved Properties, LLC.
(“Improved”), Richard Kantner (“Kantner”), Moulton Transportation, Ltd.
(“Moulton”), and Rick Kantner Construction (“RKC”), collectively identified as
“Appellees”. For the reasons set forth below, the judgment is affirmed.
{¶2} On July 3, 2012, Buchanan filed a complaint with a jury demand.
Doc. 1. Buchanan made the following claims in the complaint. First, Kantner dba
Improved had fraudulently induced her to purchase the real property located at 316
S. Westminster Street, Waynesfield, Ohio. Second, Kantner had misrepresented
the condition of the property. Third, Kantner had intentionally made material
omissions and fraudulent concealments to the property. Fourth, Kantner had
negligently or recklessly misrepresented the condition of the property. Fifth, that
Improved dissolved soon after the sale of the property and Kantner and Volney L.
Wright, II (“Wright”), dba as Improved, were unjustly enriched. Sixth, Donald
Faulkner (“Faulkner”) had breached his contract to inspect the home by failing to
disclose the issues of the home. Seventh, Faulkner was negligent in conducting
the home inspection. Eighth, Faulkner made verbal representations that the home
was suitable which Buchanan relied upon to her detriment. Doc. 1. On July 19,
-2-
Case No. 1-13-38
2012, Buchanan voluntarily dismissed without prejudice the complaint against
Wright. Doc.6. Also on July 19, 2012, Buchanan filed an amended complaint
adding defendants Moulton and RKC. Doc. 7. The amended complaint alleged
the following claims: 1) Kantner fraudulently induced Buchanan to purchase the
home; 2) Kantner intentionally or fraudulently misrepresented the condition of the
home; 3) Kantner intentionally made material omissions and/or fraudulent
concealments of the known condition of the home; 4) Kantner intentionally or
fraudulently failed to disclose known conditions; 5) Kantner, Moulton, and RKC
have been unjustly enriched; 6) Faulkner breached the home inspection contract;
7) Faulkner was negligent in his inspection; and 8) Faulkner intentionally or
negligently made verbal representations of the home’s suitability upon which
Buchanan relied. Id.{¶3} On August13, 2012, Appellees filed an answer denying the allegations
and raising affirmative defenses. Doc. 16. Faulkner also filed his answer on
August 13, 2012. Doc. 17. Appellees filed a joint motion for summary judgment
on June 3, 2013. Doc. 25. Buchanan filed a response to the motion for summary
judgment along with supporting affidavits on June 28, 2013. Doc. 26. On July 10,
2013, Appellees filed their memorandum in support of the motion for summary
judgment. Doc. 28. The trial court entered its judgment granting Appellees’
motion for summary judgment on July 16, 2013. Doc. 30. On August 8, 2013,
-3-
Case No. 1-13-38
Buchanan voluntarily dismissed without prejudice its claims against Faulkner.
Doc.33. The notice of appeal was timely filed on August 14, 2013. Doc. 34.
Buchanan raises the following assignment of error on appeal.
The trial court abused its discretion in the Entry dated July [16],
2013 wherein it granted [Appellees’] motion for summary
judgment.
{¶4} The sole assignment of error in this case claims that the trial court’s
erred by granting Appellee’s motion for summary judgment.
An appellate court reviews a trial court’s summary judgment
decision de novo, independently and without deference to the
trial court’s decision. Ohio Govt. Risk Mgt. Plan v. Harrison,
115 Ohio St.3d 241, 2007-Ohio-4948, 874 N.E.2d 1155, at ¶ 5,
citing Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833
N.E.2d 712, at ¶ 8. Summary judgment is appropriate only
“when the requirements of Civ.R. 56(C) are met.” Adkins v.
Chief Supermarket, 3d Dist. No. 11-06-07, 2007-Ohio-772, at ¶ 7.
The party moving for summary judgment must establish: (1)
that there are no genuine issues of material fact; (2) that the
moving party is entitled to judgment as a matter of law; and (3)
that reasonable minds can come to but one conclusion and that
conclusion is adverse to the nonmoving party, said party being
entitled to have the evidence construed most strongly in his
favor. Id., citing Civ.R. 56(C); Horton v. Harwick Chem. Corp.
(1995), 73 Ohio St.3d 679, 653 N.E.2d 1196, at paragraph three
of the syllabus. In ruling on a motion for summary judgment, a
court may not “weigh evidence or choose among reasonable
inferences * * *.” Id., at ¶ 8, 653 N.E.2d 1196, citing Jacobs v.
Racevskis (1995), 105 Ohio App.3d 1, 7, 663 N.E.2d 653. Rather,
the court must consider the above standard while construing all
evidence in favor of the non-movant. Jacobs, at 7, 663 N.E.2d
653.
The party moving for summary judgment must identify the
basis of the motion to allow the non-movant a “meaningful
-4-
Case No. 1-13-38
opportunity to respond.” Mitseff v. Wheeler (1988), 38 Ohio
St.3d 112, 116, 526 N.E.2d 798. In its motion, the moving party
“must state specifically which areas of the opponent’s claim raise
no genuine issue of material fact and such assertion may be
supported by affidavits or otherwise as allowed by Civ.R.
56(C).” Id. at 115, 526 N.E.2d 798, citing Harless v. Willis Day
Warehousing Co. (1978), 54 Ohio St.2d 64, 66, 375 N.E.2d 46,
citing Hamlin v. McAlpin Co. (1964), 175 Ohio St. 517, 519-520,
196 N.E.2d 781; Dresher v. Burt (1996), 75 Ohio St.3d 280, 293,
662 N.E.2d 264. If the moving party fails to meet its burden,
summary judgment is inappropriate; however, if the moving
party meets its initial burden, the non-moving party has a
“reciprocal burden outlined in Civ.R. 56(E) to set forth specific
facts showing that there is a genuine issue for trial * * *.”
Dresher, at 294, 662 N.E.2d 264.
Lillie v. Meachem, 3d Dist. Allen No. 1-09-09, 2009-Ohio-4934, ¶21-22.
{¶5} Here, Appellees moved for summary judgment claiming right to
judgment as a matter of law because Buchanan had received the residential
disclosure form, had been permitted to have a home inspection, and had signed a
contract that she was accepting the home in the condition she had seen. Buchanan
responded that Appellees had failed to disclose all conditions that were known or
should have been known and that Appellees actively concealed problems. Doc.
26. In support of the claim, Buchanan points out that Appellees admitted that they
had installed new floor joists and subfloor in the kitchen, and the damaged section
was “directly adjacent” to the area replaced. Id. at 3. Thus, Buchanan claims they
either knew or should have known of the problems. Buchanan also points to the
fact that “the siding on the exterior of the home and the metal flashing were
-5-
Case No. 1-13-38
installed in an abnormal manner very close to the ground to conceal the problems
with the foundation.” Id.
{¶6} Attached to Buchanan’s responses were two affidavits in support of
her argument. The first affidavit was that of Buchanan in which she stated that she
relied upon the disclosure of Kantner as to structural components that there was a
problem with the kitchen floor that had been fixed. Doc. 26, Ex. A. No other
information was noted on the Residential Property Disclosure Form. Ex. A. The
affidavit also stated that within a couple of months, they discovered that there
were extensive problems in the crawl space related to moisture. Doc. 26. To
correct the problems, Buchanan was required to replace the foundation (at a cost
of $4,000.00), remove all rotten wood from the crawlspace, replace all heating
ducts and install a vapor barrier (at a cost of $1,300.00) as a first stage. Id. at
attached bills. These repairs had been completed. Id. The second stage would
require all rotten floor joists be replaced, the main beams needed to be replaced,
the sawdust, used for insulation, would need to be removed, a concrete support
pier would need to be added, and a sump pump would need to be installed (at a
cost of $5,000.00). Id. This stage had not yet been completed. Id. Finally, they
would need to adjust the crawlspace to have the water flowing into the sump pit
for removal of any water that flows into it (at a cost of $5,500.00). Id.
-6-
Case No. 1-13-38
{¶7} Also attached to Buchanan’s response was an affidavit from her
father, Mark Buchanan (“M. Buchanan”). Doc. 26, M. Buchanan Affidavit. M.
Buchanan stated in his affidavit that he had reviewed the Residential Property
Disclosure Form and that there was no disclosure as to the rotting floor joists or
support beams. Id. at 1. Appellees had been working in the crawl space on the
floor adjacent to the damaged area. Id. at 2. He also stated that Appellees actively
concealed the problems and their extent by installing siding and flashing very low
to the ground. Id. at 3. M. Buchanan also stated that Appellees “actively
concealed the crawl space access with carpet on the interior of the home.” Id.
{¶8} An affidavit in support of the motion was filed by Appellees. Doc. 27,
Kantner Affidavit. In his affidavit, Kantner stated that RKC made certain repairs
to the property and provided a list of the repairs. Id. at 2. Kantner also claims that
the purchase price paid by Improved for the property was $31,000 and that there
were expenses of $43,987.23 for improvements, but the house sold for $50,000.
Id. As a result, Improved lost more than $25,000 and the company was liquidated.
Id. The attached list of renovations indicated that RKC installed new kitchen floor
joists and sub floor and installed 100% new floor covering. Id.
{¶9} Attached to the amended complaint as Exhibit A was the residential
property disclosure form. The form was completed by Kantner. Ex. A. The
information on the form identifies two problems with the residence. The first is
-7-
Case No. 1-13-38
that there has been water intrusion and Kantner wrote “I have seen up to 1/2”
water in crawlspace.” Ex. A, 2. Kantner also identified a problem with the
structural component.
E) STRUCTURAL COMPONENTS (FOUNDATION,
BASEMENT/CRAWLSPACE, FLOORS, INTERIOR AND
EXTERIOR WALLS): Do you know of any movement, shifting,
deterioration, material cracks/settling (other than visible minor
cracks or blemishes or other material problems with the
foundation, basement/crawl space, floors, or interior/exterior
walls?
Yes * * * If “Yes”, please describe: Floor have (sic) moved from
age of home. I have fixed kitchen floor & have seen no
movement.
Id.
{¶10} Exhibit B, which was attached to the amended complaint, is the
contract to purchase the home. The contract contained the following clause.
15. INSPECTION AND ACCESS: During the inspection
performance period as defined in Paragraph 14, Buyer and
Buyer’s inspectors and contractors shall be permitted access to
the Property at reasonable times and upon reasonable advance
notice to Seller. * * * If the inspections disclose any defects
(including adverse environmental conditions) in the Property,
Buyer shall notify Seller in writing of the defects prior to the
expiration of the inspection performance period. For purposes
of this paragraph, defects do not include (a) minor routine
maintenance or repair items not affecting habitability or (b)
matters disclosed to Buyer in writing by Seller before Buyer’s
execution of this Agreement.
THE FAILURE OF BUYER TO NOTIFY SELLER OF ANY
DEFECTS BEFORE THE EXPIRATION OF THE
INSPECTION PERIOD SHALL CONSTITUTE A WAIVER
-8-
Case No. 1-13-38
OF SUCH DEFECTS AND BUYER SHALL TAKE THE
PROPERTY “AS IS” WITH RESPECT TO SUCH DEFECTS.
At the end of each inspection performance period, Buyer shall
have three (3) days to elect one of the following:
(a) Remove the inspection contingency and accept the property
in its “AS IS” present physical condition;
(b) Accept the property subject to the Seller agreeing to have
specific items, that were either previously disclosed in writing by
the seller or in a written inspection report, repaired by a
qualified contractor in a professional manner at Seller’s
expense;
(c) Accept the property subject to the Seller crediting the
Buyer the cost of repairs of specific items at the time of
settlement, providing the credit amount has been agreed to by
both Buyer and Seller;
(d) Terminate this agreement if written inspection report(s)
identify material latent defects NOT previously disclosed in
writing by the Seller.
If the property is accepted in its “AS IS” present physical
condition, Buyer agrees to sign an Amendment to the Purchase
Agreement removing the inspection contingency and this
agreement will proceed in full force and effect.
Ex. B, 2-3.
{¶11} Exhibit D attached to the amended complaint was a copy of the home
inspection. The Home evaluation stated as follows:
4. Crawl Space: Needs vapor barrier, sump possibly, check
for mold & mildew, suggest down spout & fill dirt to divert
outside water.
-9-
Case No. 1-13-38
Ex. D, 1. The report noted no additional concerns with the crawlspace or with the
foundation. Ex. D, 2.
{¶12} The amended complaint alleged eight claims. The last three claims
were made against Faulkner and were not dismissed pursuant to the motion for
summary judgment.1 Thus, this court need not consider them. The first four
claims all allege that Kantner engaged in fraudulent behavior with the fifth
claiming that Appellees were all unjustly enriched by the fraud. In the interests of
clarity, we will address the claims out of order. As a general rule, a party may not
recover for structural defects of a purchased home when 1) the condition forming
the basis of the complaint is discoverable upon reasonable inspection, 2) the
purchaser had the opportunity to inspect the premises, and 3) there is no fraud on
the part of the vendor. Layman v. Binns, 35 Ohio St.3d 176, 519 N.E.2d 642(1988) and Kimball v. Duy, 11th Dist. Lake No. 2002-L-046, 2002-Ohio-7279,
¶21.
{¶13} The fourth claim focused on Kantner’s failure to disclose the
additional problems in the residential disclosure form. “An ‘as is’ clause in a real
estate agreement relieves the seller from the duty to disclose latent defects.” Id. at
¶19. There is no dispute that Kantner did not fully disclose that they had installed
new kitchen floor joists and sub floor, instead choosing merely to state that there
1
There was a voluntary dismissal without prejudice of those claims after summary judgment was granted.
-10-
Case No. 1-13-38
was movement due to the age of the home and that the problem had been repaired.
Doc. 7, Ex. A. However, there is also no dispute that Buchanan had made the
purchase contingent upon an inspection and had an inspection done. Doc. 7, Ex.
B, Ex. C. Kantner put Buchanan on notice that there had been water in the
basement at a prior time. Doc. 7, Ex. A. After learning of this and having the
property inspected, Buchanan accepted the property “as is”. Doc. B. This “as is”
clause, as a matter of law, relieves Appellees from disclosing latent defects.
Kimball, supra and Goddard v. Stabile, 185 Ohio App.3d 485, 2009-Ohio-6375,
¶28, 924 N.E.2d 868. Although in this case there may be questions of fact as to
whether Appellees had knowledge of the problems with the floor joists since there
had been problems with the floor joists in the kitchen, which was not fully
disclosed, these questions are not material due to the “as is” clause and the
inspection. The fourth claim fails as a matter of law.
{¶14} Although the “as is” clause bars the claim for failure to disclose, it
does not bar, as a matter of law, a claim for either fraudulent concealment or
fraudulent representation. Goddard, supra at ¶29 and Williams v. Brown, 5th Dist.
Muskingum Nos. CT2004-0048, CT2004-0051, 2005-Ohio-5301, ¶31. The
second and third claims in the amended complaint dealt with fraudulent
misrepresentation and fraudulent concealment respectively.
The elements which constitute the basis for a claim of fraudulent
misrepresentation are: “(1) a representation, or where there is a
-11-
Case No. 1-13-38
duty to disclose, concealment 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 on it, (5)
justifiable reliance upon the representation or concealment, and
(6) a resulting injury proximately cause by the reliance.” Cardi v.
Gump (1997), 121 Ohio App.3d 16-22, 698 N.E.2d 1018.
Kimball, supra at ¶23. See Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d
407 (1984). “When a plaintiff claiming fraud in the sale of property has had the
opportunity to inspect the property, he is charged with knowledge of the
conditions that a reasonable inspection would have disclosed.” Wallington v.
Hageman, 8th Dist. Cuyahoga No. 94763, 2010-Ohio-6181, ¶18 (quoting Pedone
v. Demarchi, 8th Dist. Cuyahoga No. 88667, 2007-Ohio-6809, ¶31). Here,
Buchanan had the opportunity and completed a home inspection. Although the
inspection report, along with the interrogatories provided by Faulkner, are
inconsistent about whether the crawl space was inspected, the fact remains that the
residential disclosure form and the home inspection report both indicated that
there was a problem with water in the crawl space. Ex. A, Ex. C. This is
sufficient to put Buchanan on notice of the potential issues. A buyer cannot
justifiably rely upon any representations of the seller when the purchase is
contingent upon an inspection. Kimball, supra at ¶24. Buchanan thus could not
justifiably rely on any alleged misrepresentations by Kantner. For this reason, the
second claim fails as a matter of law.
-12-
Case No. 1-13-38
{¶15} In the third claim, Buchanan claims that Appellees engaged in
fraudulent concealment. The elements that need to be proven to support a claim
for fraudulent concealment are that 1) there was an actual concealment, 2) of a
material fact, 3) with knowledge of the concealment, 4) with the intent to mislead
another into relying, 5) which causes justifiable reliance by a party with a right to
rely, and 6) the relying party suffers damages as a result. Gaines v. Preterm-
Cleveland, Inc., 33 Ohio St.3d 54, 55, 514 N.E.2d 709 (1987). In this case, the
only evidence of active concealment is the claim in both Buchanan and M.
Buchanan’s affidavits that the flashing and siding were very near the ground and
the statement by M. Buchanan that Appellees had installed carpeting over the
access to the crawlspace. However, Kantner admitted that there had been water in
the crawlspace and Faulkner also told Buchanan that there was a moisture problem
in the crawlspace. Thus, even assuming that Appellees had attempted to actively
conceal the water issues and foundation issues by use of the siding and flashing,
there was still ample evidence to put Buchanan on notice of the issues. Any
reliance would not be justifiable. As to covering the access to the crawlspace, the
record lacks any evidence that this action actually prevented Buchanan from
gaining access to the crawlspace. To the contrary, the inspection report appears to
indicate that the crawlspace was accessed. Thus, even if Appellees intended to
conceal the problems, there was no evidence of actual concealment presented to
-13-
Case No. 1-13-38
the trial court. Lacking this evidence, the third claim in the amended complaint
would also fail.
{¶16} The first claim raised in the amended complaint was that Kantner had
fraudulently induced Buchanan to enter into the contract. To prevail upon a claim
for fraudulent inducement, one must show
(1) a false representation concerning a fact or, in the face of a
duty to disclose, concealment of a fact, material to the
transaction; (2) knowledge of the falsity of the representation or
utter disregard for its truthfulness; (3) intent to induce reliance
on the representation; (4) justifiable reliance upon the
representation under circumstances manifesting a right to rely;
and (5) injury proximately caused by the reliance.
Lepera v. Fuson, 83 Ohio App.3d 17, 23, 613 N.E.2d 1060 (1992). See Mussivand
v. David, 45 Ohio St.3d 314, 544 N.E.2d 265 (1989) and Gaines, supra. As
discussed above, Buchanan had the opportunity and took the opportunity to
inspect the property before purchasing it. “[A] party has no right to rely on certain
representations regarding the property to be transferred when the true facts are
equally open to both parties.” Gentile v. Ristas, 160 Ohio App.3d 765, 2005-
Ohio-2197, ¶50, 828 N.E.2d 1021 (10th Dist.). Since the fact that there was water
damage was open for Buchanan to discover, she could not justifiably rely on the
representations of Kantner. Thus, there was no fraudulent inducement to purchase
the property and the first claim of the amended complaint fails as a matter of law.
-14-
Case No. 1-13-38
{¶17} The fifth and final claim of the amended complaint at issue in this
appeal is that Appellees were unjustly enriched by the misrepresentations and
actions of Kantner. Unjust enrichment is a quasicontractual theory for recovery.
Dailey v. Craigmyle & Son Farms, L.L.C., 177 Ohio App.3d 439, 2008-Ohio-
4034, ¶20, 894 N.E.2d 1301. “In order to recover on a claim of unjust enrichment,
the party asserting the claim must demonstrate ‘1) a benefit conferred by a
plaintiff upon a defendant; (2) knowledge by the defendant of the benefit; and (3)
retention of the benefit by the defendant under circumstances where it would be
unjust to do so without payment.’” Id. (quoting Hambleton v. R.G. Barry Corp.,
12 Ohio St.3d 179, 183, 465 N.E.2d 1298 (1984)). Here, there is no evidence
presented to the trial court to show that Appellees did anything that would result in
them unjustly keeping the payment for the home. Kantner put Buchanan on notice
about water intrusion by disclosing it in the residential disclosure form. The
contract was contingent upon an inspection. The inspection form notified
Buchanan that there was a problem with water in the crawlspace. Although
neither of the above notified Buchanan of the full extent of the problem, Buchanan
was provided notice of potential problems and had the right to ask more questions.
Instead, Buchanan proceeded to purchase the home in an “as is” condition. Given
these facts, there is no evidence to show that Appellees were unjustly enriched.
The result is that the fifth claim of the amended complaint fails as a matter of law.
-15-
Case No. 1-13-38
{¶18} Having reviewed all five counts of the amended complaint brought
against Appellees, this court has determined that there are no genuine issues of
material fact and that as a matter of law, Appellees are entitled to summary
judgment. The assignment of error is overruled.
{¶19} Having found no error prejudicial to the appellant in the particulars
assigned and argued, the judgment of the Court of Common Pleas of Allen County
is affirmed.
Judgment Affirmed
ROGERS and SHAW, J.J., concur.
/jlr
-16-