Buchanan v. Improved Properties, L.L.C.

[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,

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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,

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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

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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

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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.

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{¶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

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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

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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.

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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.

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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

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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.

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{¶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

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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.

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{¶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.

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{¶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

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