Abroms v. Synergy Bldg. Sys. , 2011 Ohio 2180 ( 2011 )

[Cite as Abroms v. Synergy Bldg. Sys., 2011-Ohio-2180.]
IN THE COURT OF APPEALS FOR MONTGOMERY COUNTY, OHIO
HILLARD M. ABROMS, et al. :
Plaintiffs-Appellants : C.A. CASE NO. 23944
v. : T.C. NO. 08CV311
SYNERGY BUILDING SYSTEMS, et al. : (Civil appeal from
Common Pleas Court)
Defendants-Appellees :
:
..........
OPINION
Rendered on the 6th day of May , 2011.
..........
HILLARD M. ABROMS, Atty. Reg. No. 0008552, 753 South Front Street, Columbus, Ohio
43206
Attorney for Plaintiffs-Appellants
CHRISTOPHER F. JOHNSON, Atty. Reg. No. 0005240, 1 S. Main Street, Suite 1800,
Dayton, Ohio 45402
Attorney for Defendants-Appellees
..........
FROELICH, J.
{¶ 1} Hillard and Janet Abroms, dba Abroms Realty Company, appeal from a
judgment of the Montgomery County Court of Common Pleas which granted summary
judgment to Synergy Building Systems (“Synergy”) and Jerad Barnett, Vice President of
Synergy, on Counts Five and Six of the Abromses’ complaint. For the followings reasons,
2
the trial court’s judgment will be reversed and the matter will be remanded for further
proceedings.
I
{¶ 2} On November 14, 2003, Hillard Abroms (“Abroms”) executed a contract to
purchase the commercial real estate located at 3025 Governors Place in Kettering, Ohio,
from Synergy Development Ltd. for $1,350,000.1 During negotiation of the agreement, the
parties discussed problems with the building’s windows, which had resulted in water
leakage. Abroms had been made of aware of the water leakage in October 2003, when he
visited the building with Roger Chudde, Branch Manager of A.G. Edwards and Sons, the
building’s sole tenant.
{¶ 3} In the contract, Abroms agreed to purchase the property “in its ‘As-Is’
condition, subject to all improvements ***.” However, Paragraph Two of the agreement
provided Abroms with a 15-day inspection period during which he could, at his option and
expense, obtain inspections from qualified inspectors or contractors; Synergy agreed to have
any repairs satisfactorily completed at its own cost up to $5,000. The paragraph further
stated that “[t]he repairs referenced in this paragraph are in addition to those related to the
windows as set forth in paragraph 4(D) below.” Abroms did not have any inspections
conducted.
{¶ 4} Paragraph Four set forth six contingencies upon which the sale of the
1
Synergy Development Ltd. was not named in the complaint, and the relationship between Synergy Building Systems
(the defendant) and Synergy Development Ltd. is unclear. Although Synergy Building Systems argued that the Abromses had
sued the wrong company and that the court could dismiss Counts Five and Six on that basis alone, the trial court did not rule on
that issue.
3
property was conditioned, which included:
{¶ 5} “C. The Seller shall provide the Buyer with an assignment of all continuing
warranties relative to the building located on the Property (the ‘Building’).
{¶ 6} “D. The Seller shall provide to [Buyer] a certification stating that any repairs
regarding the existing window leakage in the Building, including resealing of the windows,
repair and replacement of the window sills, and wallpaper as required, will be completed by
Seller in a timely manner.”
{¶ 7} If any of the contingencies were not satisfied by closing, both the buyer and
the seller had the option to terminate the purchase contract.
{¶ 8} Paragraph Ten addressed the remedies available to the parties upon default.
Paragraph Twelve included an integration clause, indicating that the contract was a
“complete agreement” and that “all prior oral and written discussions, negotiations,
understandings and agreements between the parties have been incorporated or superseded by
this document.” The parties agreed that the contract could only be assigned, modified, or
amended in writing.
{¶ 9} The parties closed on the purchase on December 30, 2003.
{¶ 10} In 2006, Abroms became aware that mold had developed as a result of water
leakage. In the late summer of 2006, A.G. Edwards vacated the building due to the mold
problem.
{¶ 11} In January 2008, the Abromses brought suit against Synergy, Barnett, and
others (including Chudde), alleging breach of contract and various torts. The Abromses
alleged in their complaint that they learned after the discovery of the mold that, although the
4
water problem presented like a window issue, it was actually a brick and exterior insulation
finishing system (EIFS) issue that caused water to seep from the areas by the windows.
Synergy, in turn, filed a third-party complaint against Porter Contractors, with which
Synergy had contracted to erect the building. Porter Contractors filed a fourth-party
complaint against its subcontractors – Wallen Concept Glazing, Pudenz Masonry, and
Synthetic Stucco.
{¶ 12} Sixteen of the Abromses’ causes of action were directed against Synergy and
Barnett. Of relevance to this appeal, Count Five, entitled “Breach of Contract (Synergy –
Condition Subsequent)” alleged that Synergy breached the purchase contract by failing to
correct the window leakage. Count Six, entitled “Breach of Contract (Synergy – Repair
Work),” further alleged that “[a]ny and all attempts by Defendant Synergy to either repair
and or replace the windows were negligently accomplished. ***”
{¶ 13} Through a series of decisions, the trial court resolved the causes of action
with respect to each defendant, with the exception of Counts Five and Six of the complaint.
On September 22, 2009, the trial court dismissed Roger Chudde as a defendant. In five
separate decisions issued on December 28, 2009, the trial court granted summary judgment
in favor of Reichley Insurance Agency, Inc.; Cincinnati Financial Corporation; Porter
Contractors, Inc.; and Wallen Concept Glazing. The court also granted summary judgment
to Synergy and Barnett on all of the Abromses claims against them, with the exception of
Counts Five and Six, which were not addressed in Synergy and Barnett’s motion and for
which summary judgment had not been sought. The court certified each of the December
28, 2009, decisions as immediately appealable under Civ.R. 54(B). At the same time
5
(December 28), the court granted Chudde’s motion for Civ.R. 54(B) certification of the
September 22, 2009 judgment entry dismissing Chudde as a defendant.
{¶ 14} On January 5, 2010, the trial court entered an order vacating its determination
that the decisions filed on December 28, 2009 were final and appealable. The order
apparently resulted from the court’s becoming aware during a telephone conference between
all of the parties on January 4, 2010, that Counts Five and Six remained pending. The
court’s entry further ordered the Abromses, Synergy, and Barnett to address the following
issue:
{¶ 15} “In the above listed Decisions, this Court has ruled the Plaintiffs are barred
from recovery by their failure to mitigate damages; the Plaintiffs are unable to recover
economic damages in tort; and the Plaintiffs, [who] are no longer owners of the building,
lack standing to assert claims against Synergy and Barnett for property damage to the
building. How, if at all, do any and all of these findings impact the Plaintiffs’ remaining
breach of contract claims under Counts 5 and 6 of the Complaint.” (Emphasis in original.)
{¶ 16} In response to the trial court’s order, Synergy and Barnett argued that, given
the court’s prior rulings, “Counts 5 and 6 no longer provide the plaintiffs with any
mechanism for recovery.” They contended that Count Six sounded in negligence and was
therefore barred by the applicable statute of limitations. They further argued that Count
Five was barred due to the Abromses’ lack of standing and their failure to mitigate damages.
The Abromses responded that genuine issues of material fact existed, that they mitigated
their damages, and that they had standing as the property owners at the time of the breach.
The Abromses argued that the “negligence of Defendants Synergy and Barnett for the repairs
6
was intrinsically related to the overriding Breach of Contract claim.”
{¶ 17} On February 22, 2010, the trial court dismissed Counts Five and Six of the
complaint and granted summary judgment to Synergy and Barnett on those claims. The
court certified its judgment entry pursuant to Civ.R. 54(B). In separate entries, the trial
court designated its previous decisions, the Civ.R. 54(B) certification for which had been
vacated, as final and appealable orders.
{¶ 18} The Abromses filed notices of appeal on March 19, 2010 in Montgomery
App. Nos. 23940, 23941, 23942, 23943, and 23944. We consolidated those cases for
appeal. However, we subsequently dismissed the appeals in Montgomery App. Nos. 23940,
23941, 23942, and 23943 as untimely. We held that, once the trial court certified December
28, 2009, decisions under Civ.R. 54(B), it “was divested of its jurisdiction over the
underlying matter with respect to [those] claims” and, consequently, “the court lacked
jurisdiction over these orders to vacate each one’s Civ.R. 54(B) certification on January 5,
2010.”2
{¶ 19} The sole decision remaining on appeal is the February 22, 2010, decision
granting judgment to Synergy and Barnett on Counts Five and Six.
II
{¶ 20} The Abromses raise five assignments of error, as follows:
{¶ 21} I. “TRIAL COURT ABUSED ITS DISCRETION AND EXCEEDED ITS
2
Synergy and Barnett appealed from the trial court’s summary judgment decision in favor of Porter Contractors
(Montgomery App. No. 23951), and Porter Contractors appealed from the trial court’s granting of summary judgment to Wallen
Contract Glazing (Montgomery App. No. 23959). These appeals were also consolidated with the Abromses’ appeals and
dismissed as untimely.
7
AUTHORITY IN DENYING ABROMS DUE PROCESS OF THEIR CLAIMS.”
{¶ 22} II. “TRIAL COURT ABUSED ITS DISCRETION BY DECIDING
CLEARLY DISPUTED ISSUES OF FACT DEPRIVING ABROMS THE ABILITY TO
PROPERLY PLACE THEM BEFORE A JURY AS TRIER OF FACT.”
{¶ 23} III. “TRIAL COURT EXCEEDED, VIOLATED AND DEFEATED THE
PURPOSE OF SUMMARY JUDGMENT BY SUSTAINING SYNERGY AND
BARNETT’S MOTION FOR PARTIAL SUMMARY JUDGMENT DESPITE FAILING
TO HEAR EVIDENCE AS WHETHER THERE WAS A WRITTEN CONTRACT
BETWEEN THE PARTIES, WHETHER THE CONTRACT WAS BREACHED AND THE
REMEDIES FOR THE BREACH OF CONTRACT.”
{¶ 24} IV. “THE TRIAL COURT COMMITTED PREJUDICIAL ERROR WHEN
IT GRANTED SYNERGY AND BARNETT’S MOTION FOR PARTIAL SUMMARY
JUDGMENT AND DISMISSED COUNTS 5 AND 6 OF ABROMS’ COMPLAINT BY
DECIDING ABROMS FAILED TO MITIGATE DAMAGES, AND IN SO DOING
CONSTRUED EVIDENCE IN FAVOR OF SYNERGY AND BARNETT AND DECIDED
ISSUES OF FACT WITHOUT A HEARING OR TRIAL.”
{¶ 25} V. “TRIAL COURT’S DECISIONS, CONDUCT AND PRE-DISPOSITION
WAS UNCONSCIONABLE, UNREASONABLE AND REACHED A JUDICIALLY
IMPOSSIBLE CONCLUSION IN ITS DECISION DISMISSING COUNTS 5 AND 6 OF
ABROMS’ COMPLAINT BASED UPON SYNERGY AND BARNETT’S SUBMISSION
AND ABROMS’ RESPONSE.”
{¶ 26} Before turning to the issues before us, we must address several threshold
8
matters.
{¶ 27} First, the Abromses’ appellate brief was filed after the appeals were
consolidated, but prior to the dismissal of the Abromses’ four untimely appeals. Not
surprisingly, the brief raises several issues that are no longer properly before us. Thus, to
the extent that the Abromses’ assignments of error address the trial court’s prior summary
judgment rulings, including its decision striking various portions of Abroms’ affidavit, those
portions of the assignments of error are overruled as moot.
{¶ 28} Second, Synergy and Barnett argue that the trial court’s December 28, 2009,
rulings constitute the law of the case and control the outcome of this appeal. The law of the
case doctrine “holds that the decision of the reviewing court in a case remains the law of that
case on the questions of law involved for all subsequent proceedings at the trial and
appellate levels. Nolan v. Nolan (1984), 11 Ohio St.3d 1, ***.” Hardy v. Hardy,
Montgomery App. No. 22964, 2010-Ohio-561, ¶8. “The doctrine is necessary to ensure
consistency of results in a case, to avoid endless litigation by settling the issues, and to
preserve the structure of superior and inferior courts as designed by the Ohio Constitution.”
Hopkins v. Dyer, 104 Ohio St.3d 461, 2004-Ohio-6769, ¶15. It functions to compel trial
courts to follow the mandates of reviewing courts. Thatcher v. Sowards (2001), 143 Ohio
App.3d 137, 140-141. The law of the case doctrine is considered to be a rule of practice
rather than a binding rule of substantive law; it will not be applied so as to achieve unjust
results. Hubbard ex rel. Creed v. Sauline, 74 Ohio St.3d 402, 404, 1996-Ohio-174.
{¶ 29} The law of the case doctrine has been extended “to encompass a lower court’s
adherence to its own prior rulings or to the rulings of another judge or court in the same
9
case.” Olympic Title Ins. Co. v. Fifth Third Bank of Western Ohio, Montgomery App. No.
20145, 2004-Ohio-4795, ¶19, quoting Poluse v. Youngstown (1999), 135 Ohio App.3d 720,
725. However, the doctrine does not mean that an appellate court is likewise bound by final
orders of the trial court, in this case the December 28, 2009, decisions. To hold otherwise
would place a trial court’s rulings beyond the reach of appellate review.
{¶ 30} Although an appellate court is generally bound by its own prior rulings, our
prior ruling was the entry dismissing the appeals from the December 28 decisions. This
entry did not address any substantive issue decided by the trial court; we did not establish
any law of the case. Accordingly, the law of the case doctrine is inapplicable to this appeal.
{¶ 31} Third, the Abromses argue that the trial judge should have recused himself
due to a “conflict of interest.” Specifically, they emphasize that the same trial judge
presided over their declaratory judgment action against A.G. Edwards in Abroms v. A.G.
Edwards & Sons, Montgomery C.P. No. 07 CV 1370. The Abromses did not seek recusal
in the trial court and they have waived the issue for appeal. Further, absent even the
suggestion of any facts or law by the Abromses, we do not understand what interests
supposedly conflict. Perhaps they mean the judge was biased against them because he ruled
in another case involving one or more of the same parties. However, the grounds of any
such purported conflict or bias were known during this litigation and any bias was not even
insinuated by the Abromses at the trial level; and, again, they do not present any facts or law
to support their after-the-fact allegation of conflict/bias. Moreover, we find absolutely
nothing in this record to indicate a conflict of interest or bias on the part of the trial court.
{¶ 32} Fourth, we note that the parties have not argued that Counts Five and Six are
10
barred due to the “As Is” provision in the purchase contract. Generally, under the doctrine
of caveat emptor, a purchaser of real property cannot recover for a structural defect where
(1) the defect is open to observation or discoverable on reasonable inspection, (2) the
purchaser had an unimpeded opportunity to examine the property and (3) the vendor did not
engage in fraud. Layman v. Binns (1988), 35 Ohio St.3d 176, 177. However, Count Five
alleges breach of a separate and distinct term in the purchase contract which allegedly
required Synergy to correct the window leakage. Count Six alleges, in essence, that
Synergy breached the contract by performing repairs negligently. Neither claim falls within
the “As Is” provision and, accordingly, neither is barred by that provision.
{¶ 33} Finally, the Abromses repeatedly argue that they were denied due process and
“the ability to build a record at trial” due to the trial court’s granting of summary judgment
to Synergy and Barnett. They state that they should have been provided an opportunity to
present evidence through documents and witnesses at trial.
{¶ 34} The concept of summary judgment is probably rooted in nineteenth century
English practice. Bauman, The Evolution of the Summary Judgment Procedure (1956), 31
Ind. L.J. 329. Although its applicability to certain cases is debated, its constitutionality is
beyond question. Summers & Vargas Co. v. Abboud, Cuyahoga App. No. 94310,
2010-Ohio-5595, ¶19; Gordillo, Summary Judgment and Problems in Applying the Celotex
Trilogy Standard (1994), 42 Clev.St.L.Rev. 263. The purpose of a motion for summary
judgment is to test whether genuine issues of material fact exist such that a trial is necessary
to resolve those issues. Stated simply, if summary judgment were properly granted in
accordance with Civ.R. 56, due process would not be violated by the failure to hold a trial on
11
the Abromses’ claims. Summers & Vargas Co. at ¶19.
{¶ 35} With respect to the February 22, 2010 decision, the essence of the Abromses’
argument is that the trial court erred in dismissing Counts Five and Six and granting
summary judgment to Synergy and Barnett on those claims.
{¶ 36} Summary judgment should be granted only if no genuine issue of material
fact exists, the moving party is entitled to judgment as a matter of law, and reasonable minds
can come to but one conclusion, which is adverse to the nonmoving party. Civ.R. 56;
Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, 66. An appellate court
reviews summary judgments de novo, meaning that we review such judgments
independently and without deference to the trial court’s determinations. Koos v. Cent. Ohio
Cellular, Inc. (1994), 94 Ohio App.3d 579, 588.
{¶ 37} Upon a motion for summary judgment, the moving party bears the initial
burden of showing that no genuine issue of material fact exists for trial. Dresher v. Burt
(1996), 75 Ohio St.3d 280, 292-93. Once the moving party satisfies its burden, the
nonmoving party may not rest upon the mere allegations or denials of the party's pleadings.
Id.; Civ.R. 56(E). Rather, the burden then shifts to the non-moving party to respond, with
affidavits or as otherwise permitted by Civ.R. 56, setting forth specific facts which show that
there is a genuine issue of material fact for trial. Id. Throughout, the evidence must be
construed in favor of the non-moving party. Id.III
{¶ 38} Count Five of the complaint, entitled “Breach of Contract (Synergy –
Condition Subsequent),” alleged:
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{¶ 39} “Pursuant to the Agreement of Sale, Defendant Synergy was contractually
obligated to correct the window leakage on the Premises as promised in a timely manner,
which they failed to do, resulting in failure of condition subsequent, which was a breach of
the contract, and substantial economic damages to Plaintiffs.”
{¶ 40} In granting judgment to Synergy and Barnett on this claim, the trial court
made the following findings:
{¶ 41} “·Since the Plaintiffs lacks [sic] standing to pursue claims for property
damage to the building, they cannot seek recovery against Synergy under Count 5, which
alleges a claim [for] breach of contract.
{¶ 42} “·The Plaintiffs are precluded from *** recovery under Count 5 for failure to
mitigate damages.”
A. Count Five – Standing
{¶ 43} The trial court previously held in its decision granting partial summary
judgment to Synergy and Barnett that the Abromses lacked standing to assert claims against
those defendants for property damage to the building because they were no longer owners of
the building. (Tr. Doc. #141.) In so holding, the trial court adopted Porter Contractor’s
argument in its own summary judgment motion that the Abromses’ ownership interest in the
Governor’s Place building had ceased when the property was sold at a sheriff’s sale in a
foreclosure action concerning that property and, thus, the Abromses lacked standing. In
essence, the trial court held that since the Abromses’ property had been sold, they could not
claim they would be directly benefitted or injured by this claim.
{¶ 44} “Standing is a preliminary inquiry that must be made before a court may
13
consider the merits of a legal claim. *** To have standing, a party must have a personal
stake in the outcome of a legal controversy with an adversary. This holding is based upon
the principle that ‘it is the duty of every judicial tribunal to decide actual controversies
between parties legitimately affected by specific facts and to render judgments which can be
carried into effect. It has become settled judicial responsibility for courts to refrain from
giving opinions on abstract propositions and to avoid the imposition by judgment of
premature declarations or advice upon potential controversies.’ Fortner v. Thomas (1970),
22 Ohio St.2d 13, 14, 51 O.O.2d 35, 257 N.E.2d 371.
{¶ 45} “An actual controversy is a genuine dispute between adverse parties. It is
more than a disagreement; the parties must have adverse legal interests. ***” (Internal
citations omitted) Kincaid v. Erie Ins. Co., 128 Ohio St.3d 322, 2010-Ohio-6036, ¶9-10.
We review the issue of standing de novo. Id. at ¶9.
{¶ 46} Common-law standing is similar to Civ.R. 17(A)’s real-party-in-interest
requirement. The phrase “real party in interest” means “‘one who has a real interest in the
subject matter of the litigation, and not merely an interest in the action itself, i.e., one who is
directly benefitted or injured by the outcome of the case.’” Countrywide Home Loans, Inc. v.
Swayne, Greene App. No. 2009 CA 65, 2010-Ohio-3903, ¶28, quoting Shealy v. Campbell
(1985), 20 Ohio St.3d 23, 24 (emphasis in original). Indeed, one who has standing by
possessing a “personal stake” in a lawsuit undoubtedly also has a “real interest in the subject
matter of the litigation.” Thus, courts often conflate common-law standing and Civ.R. 17,
treating them as one and the same. See, e.g., State ex rel. Jones v. Suster, 84 Ohio St.3d 70,
77, 1998-Ohio-275 (“Although a court may have subject matter jurisdiction over an action,
14
if a claim is asserted by one who is not the real party in interest, then the party lacks standing
to prosecute the action.”); Sutton Funding, LLC v. Herres, 188 Ohio App.3d 686,
2010-Ohio-3645, ¶38.
{¶ 47} In his deposition, Abroms acknowledged that a foreclosure action was filed
concerning the Governor’s Place building in May 2007. A judgment and decree of
foreclosure was issued, and a sheriff’s sale occurred in December 2007. The building was
purchased by Park National Bank, the mortgagee.
{¶ 48} The Abromses’ complaint in this case was filed on January 10, 2008. The
court in the foreclosure case subsequently confirmed the sale of the Governor’s Place
property. Abroms acknowledged that the bank obtained a deficiency judgment and that a
satisfaction of judgment was filed in June 2008.
{¶ 49} Under foreclosure law, mortgagors have an equitable right of redemption,
which allows the mortgagor to pay the balance due and redeem the property. A
homeowner’s equity of redemption is foreclosed when a decree of foreclosure is issued,
although courts typically provide a three-day grace period following the decree to exercise
the equity of redemption. Hausman v. Dayton, 73 Ohio St.3d 671, 676, 1995-Ohio-277.
{¶ 50} Although the mortgagor’s equity of redemption is foreclosed at the time that a
judgment of foreclosure is entered, the General Assembly created a statutory right of
redemption, which exists independently of the equitable right. R.C. 2329.33. Under this
statutory right of redemption, at any time prior to the confirmation of the sale, a mortgagor
“may redeem it from sale by depositing in the hands of the clerk of the court of common
pleas to which such execution or order is returnable, the amount of the judgment or decree
15
upon which such lands were sold, with all costs, including poundage, and interest at the rate
of eight per cent per annum on the purchase money from the day of sale to the time of such
deposit, except where the judgment creditor is the purchaser, the interest at such rate on the
excess above his claim.” R.C. 2329.33. If a mortgagor exercises the statutory right of
redemption prior to the confirmation of the sale, the court must set aside the sale, apply the
deposit to the judgment, and award the interest to the purchaser. Id.{¶ 51} After the sale has been confirmed and a deed is issued, title in the property
relates back to the date of the sale. Jashenosky v. Volrath (1899), 59 Ohio St. 540. “Thus,
title is considered to have been passed as of the date of the sale, not the date the sale was
confirmed by the court. *** The rationale behind this rule is that the purchaser should have
the benefits from the use of the property during this period since the purchaser cannot escape
the sale, even though it has not yet been confirmed, interest is chargeable from the date of
the sale on borrowed monies, and the purchaser would be liable for loss to the property
during this period.” Hemmer v. Leigh (Mar. 17, 1995), Erie App. No. E-94-052, citing
Jashenosky, 59 Ohio St. at 545-46. The Supreme Court has held that, after confirmation of
the sale, a purchaser is entitled to rents accruing between the date of the judicial sale and
confirmation of the sale. Jashenosky, supra.
{¶ 52} However, a purchaser of foreclosed property has no vested right in the
property until the sale is confirmed by the trial court. Ohio Savings Bank v. Ambrose
(1990), 56 Ohio St.3d 53, syllabus. Indeed, “absent confirmation, a purchaser had no
actionable interest by virtue of the successful bid alone.” State ex rel. Midwest Pride IV,
Inc. v. Pontious (1996), 75 Ohio St.3d 565, 568; see Ambrose, supra.
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{¶ 53} In the present case, when the complaint was filed, the Governor’s Place
property had been sold at a sheriff’s sale, but the sale had not been confirmed. Accordingly,
at that time, the Abromses remained the owners of the property with a statutory right to
redemption; Park National Bank, the lender-purchaser of the property, had no actionable
interest in the property until (and unless) the sale was confirmed, since the Abromses could
have exercised their statutory right of redemption. As a result, the Abromses had standing
on January 10, 2008, to file an action for damages to the property.
{¶ 54} We appreciate the apparent paradox. The sellers (the Abromses) had
standing when suit was brought on January 10 (that is, they claimed an actual injury to
property to which they still had title and owned, since the sale had not been confirmed), but
once the sale was confirmed and the deed issued to the buyers (Park National Bank), the title
and ownership would relate back to the sale, thereby removing the interests of the Abromses
and arguably retroactively eradicating their standing. However, the issue on this appeal is
whether the trial court erred in finding there was no genuine issue of material fact that the
Abromses did not have standing on February 22, 2010; that is, did they still have a personal
stake in the outcome of the litigation.
{¶ 55} Count Five sought damages for breach of contract. The Abromses claimed
that Synergy’s breach of the purchase contract resulted in the loss of physical occupancy of
the building and economic use of the building. (Doc. #159, p.2.) In discussing mitigation
of damages, the Abromses explained that the breach of contract caused a loss of rental
income due to the tenant’s vacation of the building, a reduction in the property’s value due
to the mold, and the Abromses’ loss of possession of the building due to their inability to
17
make mortgage payments (caused by the loss of rental income). Abroms’ statements in his
deposition that the property was sold at foreclosure and that the bank obtained a deficiency
judgment indicates that Abroms’ losses were not negated or recouped through the sale of the
property. To the contrary, the evidence purports to indicate that, even after the sale of the
building in the foreclosure action, the Abromses continued to have damages caused by
Synergy and Barnett’s alleged breach of the purchase contract. Indeed, one component of
the Abromses’ damages might be that Synergy’s breach of contract adversely affected the
foreclosure sale price. Synergy and Barnett have offered no evidence to the contrary. In
other words, there is a genuine issue whether the Abromses continued to have a “personal
stake” in their claims for breach of contract.
{¶ 56} The trial court erred in concluding that Count Five was, as a matter of law,
barred for lack of standing.
B. Count Five – Duty to Mitigate Damages
{¶ 57} The trial court also granted judgment to Synergy and Barnett on the ground
that the Abromses did not mitigate their damages.
{¶ 58} As a general rule, “an injured party has a duty to mitigate and may not
recover for damages that could reasonably have been avoided.” Chicago Title Ins. Co. v.
Huntington Natl. Bank, 87 Ohio St.3d 270, 276, 1999-Ohio-62, citing S & D Mechanical
Contrs., Inc. v. Enting Water Conditioning Sys., Inc. (1991), 71 Ohio App.3d 228. The
injured party must use ordinary and reasonable effort to avoid or lessen the damages; such
efforts may include a reasonable expenditure of money. See Lucky Discount Lumber Co.,
Inc. v. Machine Tools of Am.,181 Ohio App.3d 64, 2009-Ohio-534, ¶12 (citations omitted).
18
{¶ 59} The obligation to mitigate damages does not require the injured party to incur
extraordinary expense and risk. Chicago Title Ins. Co. v. Huntington Natl. Bank, 87 Ohio
St.3d 270, 276, 1999-Ohio-62, citing S & D Mechanical Contrs., Inc. v. Enting Water
Conditioning Sys., Inc. (1991), 71 Ohio App.3d 228. The injured party need not do what is
impracticable or unreasonable. Lucky Discount Lumber at ¶12. A risk will be considered
extraordinary if the hazard it presents is substantially greater than would otherwise exist, due
to some particular and unusual circumstance. Id. at ¶16.
{¶ 60} The failure to mitigate does not necessarily result in the plaintiff’s
non-recovery. Kanistros v. Holeman, Montgomery App. No. 20528, 2005-Ohio-660, ¶35,
citing AB & B, Inc. v. Banfi Products, Inc. (1991), 71 Ohio App.3d 630; Van Beusecum v.
Continental Builders, Inc., Delaware App. No. 06CAE12-0095, 2008-Ohio-2141, ¶72.
Rather, the defendant cannot be held responsible for those damages that a plaintiff could
have avoided with reasonable effort and without undue risk or expense. Id. at ¶36.
{¶ 61} The defendant against whom the claim is made has the burden to demonstrate
the injured plaintiff’s failure to mitigate damages. Id. at ¶37.
{¶ 62} In arguing that Count Five was barred by the Abromses’ failure to mitigate
damages, Synergy and Barnett quoted Part G of Porter Contractor’s motion for summary
judgment, which the trial court had adopted in its December 28 decisions. That portion
stated, in part:
{¶ 63} “Abroms testified at the second of his depositions that he had money and/or
equity sufficient in the Governor’s Square building to pay for the repairs suggested to the
building, even after more extensive repairs and mold remediation were recommended. He
19
simply chose not to do them, hoping someone else would and he would not dig a ‘deeper
hole.’ In other words, he simply abdicated his responsibility to mitigate any damages
related to the building. He had the resources reasonably available to complete repairs as
recommended, which would have, in turn, avoided the loss of his tenant and the subsequent
loss of the building after the tenant’s lease payments terminated and he did not pay the
mortgage. The entirety of the damages now sought could and would have been avoided if
Abroms had used the resources admittedly available to him and repaired the building and
then simply filed suit, if he believed necessary, in a timely manner to recover those damages.
He did not do any of that and is now therefore precluded from the recovery sought.”
{¶ 64} In response to the trial court’s show cause order (and on appeal), the
Abromses argued that genuine issues of material fact existed as to whether they made
reasonable efforts to mitigate their damages. They stated that they paid $72,000 for mold
remediation. They emphasized that they had a second mortgage and loss of income due to
the loss of their tenant.
{¶ 65} According to Abroms’ affidavit, on November 3, 2006, Abroms hired a
forensic architect to review the building plans and to write a report for Greater Dayton
Construction Company, which was to be the general contractor for repairs and remediation.
On November 6, 2006, ATC Associates began the mold remediation portion of the
reconstruction project.
{¶ 66} In his deposition, Abroms testified that, in 2006, Park National Bank made
$100,000 available to him to address the problems with the building; he used those funds to
make mortgage payments to Park. (Dep. Vol. II at 49.) Abroms further testified that he
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hired Dan Woody of ATC to remove the mold from the building. In his response to Porter
Construction’s request for interrogatories, which was attached as Exhibit H to Abroms’
deposition, Abroms indicated that he ultimately paid $72,345.21 to ATC for interior mold
remediation.
{¶ 67} Abroms further stated that he had hired Greater Dayton Construction to
provide an estimate for repairing the building after the mold was removed. Abroms stated
that he could not afford to hire Greater Dayton Construction to do all of the work proposed.
Abroms believed that Greater Dayton Construction’s actual work on the building was
limited to removing a window and putting it back in place. (Id. at 116.) Abroms’
response to interrogatories indicated that $7,305.50 was paid to Greater Dayton
Construction. Abroms did not hire anyone else to perform work on the building. (Id.)
{¶ 68} During his deposition, Abroms was asked if he felt that he had enough equity
in the building that, if he could access that equity through financing, he would have had the
funds to pay for the repair of the building. Abroms responded affirmatively. (Dep. Vol. II
at 54.) However, Abroms further testified that he could not obtain financing for his equity
from another lender, considering the condition of the building and the mold (Id. at 53.)
And, he testified that Park National “refused to give me money” that had been promised to
repair the building; rather, the money would only assist Abroms in paying back the bank,
i.e., the existing mortgage.
{¶ 69} Viewing the evidence in the light most favorable to Abroms, we find that
genuine issues of material fact existed as to whether Abroms met his obligation to mitigate
his damages. Abroms indicated that he had hired ATC to perform mold remediation, and
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there was evidence that Abroms had paid over $72,000 for those services. Although there
was evidence that Abroms could have accessed his equity in the building with another loan
from Park National Bank, Abroms’ testimony indicated that he could not use those funds for
additional building remediation and that he lacked additional funds and sources of funds to
conduct further repairs. Abroms’ evidence, viewed in his favor, supported a conclusion that
he took reasonable steps to mitigate damages. The trial court erred in granting judgment to
Synergy and Barnett on Count Five for failure to mitigate damages.
{¶ 70} Abroms’ assignment of error with respect to Count Five is sustained.
IV
{¶ 71} Count Six, entitled “Breach of Contract (Synergy – Repair Work), alleged:
{¶ 72} “Any and all attempts by Defendant Synergy to either repair and or replace
the windows were negligently accomplished. The reference in the Purchase Agreement that
the windows were causing the leakage was an oversimplification of a latent
defect/construction defect as the water damage in part caused by the negligent
design/placement of the brick around the windows for which Defendant Synergy was
responsible as the builders of the premises. Defendant Synergy failed to provide Plaintiffs
professional service and use high quality construction during their attempted repairs.”
{¶ 73} The trial court granted judgment to Synergy and Barnett and dismissed Count
Six, finding: “Count 6 of the Plaintiffs’ Complaint sounds in negligence. Thus, it is barred
by the four-year statute of limitations for causes of action based on negligence.”
{¶ 74} Upon review of the complaint as a whole, we disagree with the trial court that
the Abromses brought a tort action in Count Six. The Abromses described the contractual
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relationship with Synergy as follows:
{¶ 75} “11. In the Purchase Agreement described in Agreement of Sale, paragraph
5, Defendant Synergy was to fix the pre-existing window condition in a timely manner. On
both January 21 and January 24, 2004, claims were made with Cincinnati Insurance
regarding such repairs, yet the repairs were never effectively completed and may have in fact
exacerbated the already disastrous situation with the windows.”
{¶ 76} The Abromses identified Count Six as a breach of contact claim, and they
comment on the terms of the purchase agreement in that count. Although the Abromses
assert that Synergy engaged in negligence, the essence of Count Six is that Synergy breached
the contractual requirement that it repair the leaking windows by performing such repairs
negligently. In short, Count Six is a breach of contract claim, not a tort claim.
{¶ 77} That Count Six was intended to be a contractual claim is further demonstrated
by contrasting Count Six with the language used in Count Two, entitled “Negligent Repair
(Synergy and Cincinnati Insurance).” Count Two reads, in relevant part:
{¶ 78} “26. On or about January 20, 2004 and January 24, 2004, Defendant
Synergy failed to exercise the standard of care that a reasonably prudent person would have
exercised in a similar situation and such conduct that fell below the legal standard
established to protect others against unreasonable risk of harm by negligently repairing the
defect. Thus, the defective repairs to the windows caused further damage when Defendant
Synergy plugged the weep holes, further not allowing for drainage of the water. The
aforementioned actions resulted in a willful disregard of the rights of the Plaintiffs as the
owners of the premises.”
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{¶ 79} Stated simply, Count Two alleges that Synergy violated their standard of care
and willfully disregarded the Abromses’ rights when it negligently repaired the windows,
whereas Count Six focuses on the purchase agreement and the negligent repair of the
windows, which Synergy allegedly was contractually obligated to repair.
{¶ 80} We understand the trial court’s difficulty in determining whether Count Six
stated a contractual or tort claim. Unlike the breach of contract claim in Count Five, which
expressly referenced Synergy’s alleged contractual obligation to correct the window leakage,
Count Six did not directly cite to a provision of the purchase agreement. Moreover, Count
Six alleged negligence on Synergy’s part. The inartfulness of the Abromses’ pleading
notwithstanding, based on the Abromses’ identification of Count Six as a breach of contract
claim and the reference to the window repair work required by the purchase agreement, we
conclude that Count Six alleges a breach of contract claim (albeit probably redundant to
Count Five).
{¶ 81} “[A] tort claim based upon the same actions as those upon which a
breach-of-contract claim is based will exist independently of the contract action ‘only if the
breaching party also breaches a duty owed separately from that created by the contract, that
is, a duty owed even if no contract existed.’” 425 Beecher, L.L.C. v. Unizan Bank, Natl.
Assn., 186 Ohio App.3d 214, 2010-Ohio-412, ¶51, quoting Textron Fin. Corp. v. Nationwide
Mut. Ins. Co. (1996), 115 Ohio App.3d 137, 151. Allegations of negligence, recklessness,
or intention do not “‘serve to transmogrify a cause of action ex contractu into a tort.’”
Paramount Parks, Inc. v. Admiral Ins. Co., Warren App. No. CA2007-05-066,
2008-Ohio-1351, ¶6 (quoting the magistrate’s decision in the underlying case). Here, the
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Abromses claim that a duty imposed by the contract (to repair the window condition) was
performed negligently; there was no independent duty imposed by law (ex delicto) to repair
the damage, let alone to repair it non-negligently. Thus, to the extent that the Abromses
were seeking relief both in contract and in tort for repairs that were required by the purchase
agreement, the Abromses would be limited to contractual remedies.
{¶ 82} R.C. 2305.06 sets forth the statute of limitations for breach of a written
contract. It provides: “Except as provided in sections 126.301 and 1302.98 of the Revised
Code, an action upon a specialty or an agreement, contract, or promise in writing shall be
brought within fifteen years after the cause thereof accrued.” The Abromses’ complaint
was filed in 2008, well within that fifteen-year period. Accordingly, Count Six was not
barred by the statute of limitations.
{¶ 83} The Abromses’ assignment of error with respect to Count Six is sustained.
V
{¶ 84} The trial court’s judgment will be reversed and the matter will be remanded
for further proceedings.
..........
FAIN, J. and DONOVAN, J., concur.
Copies mailed to:
Hillard M. Abroms
Christopher F. Johnson
Hon. Dennis J. Langer