U.S. Bank v. Amir , 2012 Ohio 2772 ( 2012 )

[Cite as U.S. Bank v. Amir, 2012-Ohio-2772.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 97438
U.S. BANK, ETC., ET AL.
PLAINTIFFS-APPELLEES
vs.
CYNTHIA AMIR, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Civil Appeal from the
Cuyahoga County Common Pleas Court
Case No. CV-594212
BEFORE: S. Gallagher, J., Stewart, P.J., and Sweeney, J.
RELEASED AND JOURNALIZED: June 21, 2012
ATTORNEYS FOR APPELLANTS
Darryl E. Pittman
James Alexander, Jr.
Pittman, Alexander Attorneys
2490 Lee Boulevard, Suite 115
Cleveland Heights, OH 44118
Michael Aten
The Leader Building
526 Superior Avenue, East
Suite 455
Cleveland, OH 44114
ATTORNEYS FOR APPELLEES
For Anthony Capuozzo
Anthony Capuozzo, pro se
35401 Euclid Avenue, #215
Willoughby, OH 44094
For Family Title Services, Inc., et al.
Family Title Services, Inc.
35401 Euclid Avenue #215
Willoughby, OH 44094
For Robert J. Hudak and Hudak Appraisal Services
Thomas J. Connick
James P. Sammon
Anthony J. Trzaska
Dubyak, Connick, Thompson & Bloom, LLC
3401 Enterprise Parkway, Suite 205
Cleveland, OH 44122
Also listed:
For Simon Zeller
William T. Zaffiro, Jr.
5495 Mayfield Road
Lyndhurst, OH 44124
SEAN C. GALLAGHER, J.:
{¶1} Appellants, Cynthia Amir and Yohance Amir, appeal the rulings of the
Cuyahoga County Court of Common Pleas that excluded certain testimony and evidence
from trial and that granted a directed verdict against appellants on the claims presented at
trial. For the reasons stated herein, we affirm.
{¶2} This case began as a foreclosure action brought against the Amirs by U.S.
Bank in 2006. The action pertained to property located at 1415 E. 80th Street in
Cleveland (hereafter “the property” or “the home”). The Amirs purchased the property
on or about February 17, 2005, from Simon Zeller.
{¶3} The Amirs filed an amended answer, counterclaim, and third-party complaint,
naming various third parties to the action, including the appellees, Robert J. Hudak and
Hudak Appraisal Services (collectively “Hudak”) and Anthony Capuozzo and Family
Title Services (collectively “Capuozzo”). The Amirs claimed that they were the victims
of a property-flipping scheme. They alleged that the appellees conspired with other
parties and induced them to purchase the property through fraudulent misrepresentations
and the use of false loan documents and a fraudulent appraisal.
{¶4} The claims between U.S. Bank and the Amirs were settled, and the parties
entered a stipulated dismissal. Multiple other third-party defendants were dismissed over
the course of proceedings. The court eventually instructed all remaining parties to file a
notice of intent to proceed on pending claims. The Amirs filed a notice of intent to
proceed with their outstanding claims against Robert Hudak, Anthony Capuozzo, and
Family Title Services, as well as their claims for damages against Simon Zeller, against
whom summary judgment as to liability had been granted.1 The court issued an order
recognizing these claims remained and dismissed any other pending claims.
{¶5} Among other motions, Hudak filed a motion in limine to exclude the
testimony of the Amirs’ proposed expert Donald Durrah on the basis that he failed to
establish an opinion of the property’s value to a reasonable degree of appraisal certainty.
Hudak also filed a motion in limine to exclude the proffer of any evidence or testimony of
any criminal convictions or pleas of any other present or former party to the case in an
attempt to infer liability against Hudak. These motions were granted by the trial court.
{¶6} The Amirs’ case against Hudak and Capuozzo proceeded to trial on
appellants’ claims of fraud, civil conspiracy, violation of the Ohio Corrupt Practices Act,
and violation of the Ohio Consumer Sales Practices Act (“CSPA”). The Amirs only filed
a partial transcript of proceedings for review by this court, which is permitted by the
appellate rules. See App.R. 9(B). However, we are mindful that an appellant bears the
burden of demonstrating error and, in the absence of such an affirmative showing, this
court must presume the regularity of the trial court’s proceedings. See Weir v. Krystie’s
Dance Academy, 11th Dist. No. 2007-T-0050, 2007-Ohio-5910, ¶ 16; McEwen v. Doyle,
5th Dist. No. CA-8939, 1992 WL 330310 (Nov. 9, 1992).
1
The court later entered a judgment granting damages against Zeller.
{¶7} Yohance Amir testified that when he first saw the home, it was under
renovation and had been freshly painted. It had seven bedrooms and one kitchen and
was represented as a single-family home. Each time he went into the home, he observed
workers in the house, and he described the house as looking “better and better.”
{¶8} While meeting with Nick Myles of Central National Mortgage for financing,
Yohance observed comparables being faxed to Myles, who purportedly was on the phone
with Hudak. Yohance testified that Myles indicated the comparables reflected what the
home was worth. Yohance understood that the appraisal would have to support the
amount of the loan request. Yohance never met or spoke to Hudak. He claimed he
provided Myles with $400 for the cost of the appraisal.
{¶9} Eventually, Myles informed Yohance that he could not get financed and his
wife’s credit would need to be used. Cynthia Amir signed the purchase agreement on
February 17, 2005.
{¶10} Before closing, Yohance spoke with Capuozzo of Family Title, which
handled the title work for the home. Yohance was left with the impression that it was a
good deal. Yohance conceded his monthly payment would be less than he was currently
paying for rent. He also claimed he viewed a HUD statement that showed Hudak was to
be paid upon the settlement of the house.
{¶11} Hudak viewed the home for the appraisal on or about March 10, 2005. He
issued an appraisal report on March 17, 2005, in which he valued the home at $100,000.
In his appraisal, Hudak indicated that the property was zoned two-family and that the
property had been converted to a single-family dwelling. He further indicated that the
property had been renovated throughout “in a very professional manner.” Hudak
indicated in his deposition that he is not a home inspector or a construction expert.
Yohance did not see the appraisal until after moving into the house.
{¶12} Yohance testified that ongoing work was being performed on the home right
up until the Amirs moved in on March 22, 2005. At one point, he viewed workers
cutting joists in the upstairs bathroom. The Amirs never obtained an inspector to inspect
the quality of work prior to purchasing the home.
{¶13} After moving in, the Amirs encountered many problems with the
workmanship in the house, including the drywall work, plumbing work, flooring work,
and electrical work. They discovered that the home previously had two furnaces and that
one of the furnaces was removed. The Amirs made numerous repairs to the home and
claimed their energy bills increased dramatically. They did not offer evidence as to the
amount expended on repairs or produce any energy bills reflecting the increased costs.
{¶14} Because the Amirs were unable to make their payments on the home, a
foreclosure action was brought against them. The Amirs were eventually relieved of the
debt on the home. At the time of trial, they were still residing in the home.
{¶15} Angelo Michael Amato, who is a real estate investor and is in the
construction business, testified that he viewed the home in 2010 in connection with the
review of the property by Donald Durrah, who was the Amirs’ expert. Amato indicated
that the property was a two-family home that was not properly converted into a
single-family home and that it had multiple code violations. He testified to various
problems throughout the entire home and to his belief that the home had not been
properly renovated. He also testified to his belief that the home should be reconstructed
as a two-family home and estimated a cost of $85,000. He conceded that he did not view
the home in 2005, he was not aware of the condition of the home in 2005, and he was not
aware of what conditions may have changed in the home between 2005 and 2010. With
regard to Capuozzo and Family Title Services, Amato acknowledged that a title company
does not determine a value of property.
{¶16} Ultimately, the trial court granted a directed verdict against the Amirs on all
claims. This appeal followed.2
{¶17} The Amirs raise seven assignments of error for our review. Their first
assignment of error provides as follows: “1. The trial court abused its discretion when
it excluded the testimony of appellants’ expert witness Donald Durrah.”
{¶18} A trial court’s decision concerning the admissibility of expert testimony is
reviewed for an abuse of discretion. Valentine v. Conrad, 110 Ohio St.3d 42,
2006-Ohio-3561, 850 N.E.2d 683, ¶ 9. Likewise, a trial court’s ruling on a motion in
limine is reviewed for an abuse of discretion. Sokolovic v. Hamilton, 195 Ohio App.3d
406, 2011-Ohio-4638, 960 N.E.2d 510, ¶ 13 (8th Dist.). An abuse of discretion suggests
2
We note that Capuozzo and Family Title Services have not filed an
appellate brief.
unreasonableness, arbitrariness, or unconscionability in the trial court’s decision.
Valentine at ¶ 9.
{¶19} An appraisal is defined as “a valuation of property by the estimate of an
authorized person.” Merriam-Webster Online Dictionary,
http://www.merriam-webster.com/dictionary/appraisal (accessed May 29, 2012).
Hudak’s appraisal valued the subject property at $100,000.
{¶20} The Amirs sought to use their appraisal expert, Donald Durrah, to attack the
credibility of the appraisal performed by Hudak. In his report, Durrah identified several
purported misleading and incorrect statements in Hudak’s appraisal. He opined that the
appraisal was not performed in conformance with the Uniform Standards of Professional
Appraisal Practice.3 One of his primary concerns, as expressed in his deposition, was his
belief that the property had not actually been converted to a single-family home.
However, he had no evidence that Hudak intentionally misled anyone. He offers no
opinion as to what the value of the property should have been in March 2005 and
nowhere states that the value established by Hudak was incorrect. Further, he references
no other comparable homes from the relevant time to establish that the appraisal was
overinflated. Rather, as he expressed during his deposition, he would only be testifying
at trial to the alleged errors he found in Hudak’s report and how that affected the
credibility of the appraisal.
3
The applicable USPAP standards were not filed with the lower court and
are not in the record for review.
{¶21} Insofar as the Amirs contend that Hudak made misrepresentations as to the
characteristics of the dwelling, the record reflects that the Amirs did not view the
appraisal report until after they moved into the home.4 As discussed later, the Amirs
failed to establish that they justifiably relied on the appraisal or were otherwise misled by
Hudak. Further, we are unpersuaded by the Amirs’ reliance on a Maryland case that
found evidence to support a claim of indirect reliance on the appraised value of property.
See Hoffman v. Stamper, 385 Md. 1, 867 A.2d 276 (Md.2005). The expert in that case
provided evidence of overinflated values by identifying comparable sales from the time of
the appraisal that were ignored. Id. Here, even accepting the argument that an
appraised value may be inherently relied upon in the purchase of property, there remains
no evidence that the appraised value was overinflated in this matter. In the absence of an
opinion on the property’s value at the time the appraisal was made, Durrah’s testimony
and his report were devoid of any evidentiary value in this case. See Urbanek v. All State
Home Mtge. Co., 178 Ohio App.3d 493, 2008-Ohio-4871, 898 N.E.2d 1015, ¶ 18 (8th
Dist.) (finding expert report that offered no opinion as to value failed to substantiate a
claim that appraisals were overinflated). Accordingly, we find no abuse of discretion by
the trial court in excluding this evidence.
4
This case is distinguishable from Natl. City Mtge. Co. v. Gingo Appraisal
Servs., Inc., 9th Dist. No. 24123, 2008-Ohio-4074. In Gingo, a lending institution
was in possession of an alleged negligent appraisal that was relied upon in lending
money against a property that went into foreclosure and resulted in an uninsured
loss.
{¶22} The Amirs also claim that the trial court improperly excluded evidence of
the value of the property through the Cuyahoga County Fiscal Office. The Amirs
intended to introduce evidence of the appraisal value through the county auditor. Neither
the witness nor this evidence was disclosed prior to trial, and Hudak had no opportunity
to depose the county’s appraiser. Because the admission of the evidence would have
resulted in an unfair surprise and been prejudicial to Hudak, the trial court’s decision to
exclude it was not an abuse of discretion.
{¶23} Finding no abuse of discretion by the trial court, appellants’ first assignment
of error is overruled.
{¶24} The Amirs’ second assignment of error provides as follows: “The trial court
abused its discretion in excluding the statements of Anthony Capuozzo and Nicholas
Myles detailing appellees’ participation in an enterprise engaged in property flipping and
mortgage fraud.”
{¶25} The Amirs contend that statements from Capuozzo and Myles were
improperly excluded by the trial court. They sought to introduce these statements to
support their claim of a conspiracy.
{¶26} There is nothing in the record before us that shows Capuozzo’s statement
was proffered into evidence at trial. A trial court’s ruling on a motion in limine is
tentative and precautionary in nature because the trial court is at liberty to change its
ruling on the disputed evidence at trial. State v. Edwards, 107 Ohio St.3d 169,
2005-Ohio-6180, 837 N.E.2d 752, ¶ 17. As such, a ruling on a motion in limine may not
be appealed unless the claimed error is preserved by an objection made during trial. See
Gable v. Gates Mills, 103 Ohio St.3d 449, 2004-Ohio-5719, 816 N.E.2d 1049, ¶ 34.
Because the Amirs failed to proffer Capuozzo’s statement or object to its exclusion
during trial, they failed to preserve this challenge for appeal.
{¶27} With regard to Myles’s statement, it is conceded that this evidence was
proffered at trial. A review of Myles’s statement reflects that it does not mention Hudak
or implicate him in the fraudulent scheme to which Myles confessed. Further, the sale of
the property to the Amirs was outside of the date range and not included in the properties
that were subject to the admitted scheme. The statement reflects that the first properties
involved in the scheme were purchased in March or April 2005, which was after the sale
of the property to the Amirs. Additionally, the consent judgment entry that was entered
in this case by Central National Mortgage and Nick Myles was ordered to have “no effect
on the Amirs’ claims against any other Third-Party Defendant.” Even if this evidence
were admissible and relevant to the conspiracy claim as argued by the appellants, the trial
court properly excluded it because its probative value was substantially outweighed by the
danger of unfair prejudice. See Evid.R. 403(A). Therefore, appellants’ second
assignment of error is overruled.
{¶28} The Amirs’ third assignment of error provides as follows: “The trial court
erred when it granted appellees’ motion for directed verdict on all of appellants’ claims.”
{¶29} We employ a de novo standard of review in evaluating the grant or denial of
a motion for directed verdict. Groob v. KeyBank, 108 Ohio St.3d 348, 2006-Ohio-1189,
843 N.E.2d 1170, ¶ 14. A motion for directed verdict is properly granted if “the trial
court, after construing the evidence most strongly in favor of the party against whom the
motion is directed, finds that upon any determinative issue reasonable minds could come
to but one conclusion upon the evidence submitted and that conclusion is adverse to such
party.” Civ.R. 50(A)(4).
{¶30} Under this assignment of error, the appellants make a conclusive assertion
that the trial court failed to adhere to the standards for determining directed verdicts and
erroneously granted verdicts to appellees. Because they fail to develop their argument
and do not cite to error in the record, we may disregard this assignment of error. App.R.
12(A)(2) and 16(A)(7). Further, we reiterate that our review is de novo.
{¶31} The Amirs’ fourth assignment of error provides as follows: “The trial court
erred when it granted appellees’ motion for directed verdict on appellant’s fraud claim.”
{¶32} To succeed on a fraud claim, a plaintiff must show
(1) a representation (or concealment of a fact when there is a duty to
disclose), (2) that 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, and (4) with
intent to mislead another into relying upon it, (5) justifiable reliance, and (6)
resulting injury proximately caused by the reliance.
Volbers-Klarich v. Middletown Mgt., Inc., 125 Ohio St.3d 494, 2010-Ohio-2057, 929
N.E.2d 434, ¶ 27, citing Burr v. Bd. of Commrs. of Stark Cty., 23 Ohio St.3d 69, 73, 491
N.E.2d 1101 (1986).
{¶33} Ohio appellate courts have recognized that an appraiser can be held liable in
tort for a negligently or fraudulently prepared appraisal despite the absence of privity.
E.g., Rece v. Dominion Homes, Inc., 10th Dist. No. 07-AP-295, 2008-Ohio-24;
Washington Mut. Bank v. Smith, 11th Dist. No. 2001-L-238, 2002-Ohio-6910; Perpetual
Fed. S. & L. Assn. v. Porter & Peck, Inc., 80 Ohio App.3d 569, 572, 609 N.E.2d 1324(10th Dist.1992); but see Trustcorp Mtge. Co. v. Zajac, 1st Dist. No. C-060119,
2006-Ohio-6621 (declining to extend this view to appraisers). While the Ohio Supreme
Court has not examined the issue with respect to appraisers, it has found that “an
accountant may be held liable by a third party for professional negligence when that third
party is a member of a limited class whose reliance on the accountant’s representation is
specifically foreseen.” Haddon View Invest. Co. v. Coopers & Lybrand, 70 Ohio St.2d
154, 157, 436 N.E.2d 212 (1982) (applying Restatement of Torts 2d, 126-127 Section
552). The appellate courts have applied these same considerations to appraisers.
{¶34} In Washington Mut., the court found that “an appraiser preparing a report for
a lending institution should foresee that the purchaser of the property listed on the
appraisal form could be within the limited class of persons who would rely on the
appraisal.” Id. at ¶ 26. The court recognized that purchasers have an obligation to
exercise their independent judgment when determining the value of the home they intend
to purchase. Id. at ¶ 27. However, the court noted that it “can foresee circumstances
where an unsophisticated consumer could be duped into the purchase of an overpriced
property acting in reliance on an appraisal that was negligently or fraudulently prepared.”
Id. The court determined that “[u]nder this narrow set of circumstances, where the
purchaser can demonstrate reliance on the appraisal, recovery from the appraiser may be
appropriate.” Recognizing that reliance on the appraisal must be shown, the court
averred that “[e]vidence that appellants executed the purchase agreement before receiving
a copy of the appraisal would strongly suggest * * * that the appellants did not rely on the
appraisal.” Id. at ¶ 29; see also Rece at ¶ 34-38 (evidence showed a lack of justifiable
reliance where appraisal was performed after the purchase contract was entered and the
appraisal was not read before closing on the home).
{¶35} In this case, the appraised value of the property was predicated on the
home’s conversion to a single-family home. There was no evidence that the appraisal
was made with an intent to mislead the Amirs. Further, Cynthia Amir signed the
purchase agreement before the appraisal was performed and Yohance testified that they
did not look at the appraisal until after they moved into the home. The fact that Yohance
observed comparables being faxed to Myles from Hudak was simply insufficient to
establish justifiable reliance on the appraisal or the representations contained therein.
The Amirs had ample opportunity to view the home and the work being performed
therein. They chose not to have an independent inspection performed upon the home.
Further, while the Amirs sought to undermine the credibility of the appraisal, they failed
to offer admissible evidence to establish that the house was not worth the appraised value.
{¶36} Likewise, there was a lack of evidence to support any claim of justifiable
reliance on the documents prepared by Capuozzo. Capuozzo’s testimony was not
included in the record for our review. While the Amirs claim there was evidence that
showed Capuozzo prepared multiple closing statements that misrepresented the amount of
closing costs and the amounts paid to the Amirs, there is no evidence that the Amirs
justifiably relied on these documents when making the decision to purchase the home.
Further, Capuozzo did not value the home.
{¶37} Because there was a lack of evidence upon which reasonable minds could
find in favor of the Amirs, the appellees were entitled to a directed verdict on the fraud
claim. Appellants’ fourth assignment of error is overruled.
{¶38} The Amirs’ fifth assignment of error provides, “The trial court erred when
it granted appellees’ motion for directed verdict on appellant’s civil conspiracy claim.”
Their sixth assignment of error provides, “The trial court erred when it granted appellees’
motion for directed verdict on appellants’ Corrupt Practices Act claims.”
{¶39} To establish a civil-conspiracy claim, the plaintiff must prove: (1) a
malicious combination, (2) involving two or more persons, (3) causing injury to person or
property, and (4) the existence of an unlawful act independent from the conspiracy itself.
Urbanek, 178 Ohio App.3d 493, 2008-Ohio-4871, 898 N.E.2d 1015, ¶ 19 (8th Dist.),
citing Universal Coach, Inc. v. New York City Transit Auth., Inc., 90 Ohio App.3d 284,
292, 629 N.E.2d 28 (8th Dist.1993); see also Williams v. Aetna Fin. Co., 83 Ohio St.3d
464, 475, 1998-Ohio-294, 700 N.E.2d 859. To prevail on a claim under the Ohio
Corrupt Practices Act for engaging in a pattern in corrupt activity, as defined under R.C.
2923.32(A)(1), a plaintiff must establish that the defendant was employed by or
associated with an enterprise and that the defendant directed or participated in the
enterprise’s affairs through a pattern of corrupt activity. Morrow v. Reminger &
Reminger Co., L.P.A., 183 Ohio App.3d 40, 2009-Ohio-2665, 915 N.E.2d 696, ¶ 36 (10th
Dist.). “Corrupt activity” means “engaging in, attempting to engage in, conspiring to
engage in, or soliciting, coercing, or intimidating another person to engage in” certain
criminal offenses listed under R.C. 2923.31(I).
{¶40} When construed in a light most favorable to appellants, we find the
evidence in the limited record before us fails to show that appellees were involved in a
conspiracy or associated with an illegal enterprise. Further, the evidence fails to show
appellees were involved in an underlying fraud or engaged in any unlawful act.
Accordingly, appellees were entitled to a directed verdict on these claims, and we
overrule the fifth and sixth assignments of error.
{¶41} The Amirs’ seventh assignment of error provides as follows: “The trial
court erred when it granted appellees’ motion for directed verdict on appellants’
Consumer Sales Practices Act claim.”
{¶42} “The CSPA, which is contained in R.C. Chapter 1345, prohibits unfair or
deceptive acts and unconscionable acts or practices by suppliers in consumer
transactions.” Colburn v. Baier Realty & Auctioneers, 11th Dist. No. 02-T-0161,
2003-Ohio-6694, ¶ 13. The Ohio Supreme Court has recognized that the CSPA has “no
application in a ‘pure’ real estate transaction.” Brown v. Liberty Clubs, Inc., 45 Ohio
St.3d 191, 193, 543 N.E.2d 783 (1989). However, the CSPA “is applicable to the
personal property or services portion of a mixed transaction involving both the transfer of
personal property or services and the transfer of real property.” Id. at syllabus. With
regard to collateral services that are solely associated with the sale of real estate and are
necessary to effectuate a “pure” real estate transaction, the CSPA does not apply. Hurst
v. Ent. Title Agency, 157 Ohio App.3d 133, 2004-Ohio-2307, 808 N.E.2d 689, ¶ 34-35
(11th Dist.); Colburn at ¶ 16.
{¶43} The appraisal services performed by Hudak and the title services performed
by Capuozzo were collateral services solely associated with the sale of real estate.
Therefore, the claims involve a pure real estate transaction and the CSPA is not
applicable. The trial court properly granted a directed verdict on this claim. Appellants’
seventh assignment of error is overruled.
{¶44} Judgment affirmed.
It is ordered that appellees recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the common
pleas court to carry this judgment into execution.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
SEAN C. GALLAGHER, JUDGE
MELODY J. STEWART, P.J., and
JAMES J. SWEENEY, J., CONCUR