[Cite as Coleman v. Galati, 2017-Ohio-8034.]
COURT OF APPEALS
STARK COUNTY, OHIO
FIFTH APPELLATE DISTRICT
RANDOLPH COLEMAN, ET AL. JUDGES:
Hon. W. Scott Gwin, P.J.
Plaintiffs-Appellants Hon. William B. Hoffman, J.
Hon. Earle E. Wise, Jr., J.
-vs-
Case No. 2017CA00026
GREGORY GALATI, ET AL.
Defendants-Appellees OPINION
CHARACTER OF PROCEEDING: Appeal from the Stark County Court of
Common Pleas, Case No. 2016CV01430
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: September 29, 2017
APPEARANCES:
Plaintiffs-Appellants Defendants-Appellees
DANIEL S. WHITE GORDON D. WOOLBERT, II.
34 Parmelee Drive MICHELLE R. REESE
Hudson, Ohio 44236 Day Ketterer Ltd.
200 Market Ave, North - Suite 300
Canton, Ohio 44702
Stark County, Case No. 2017CA00026 2
Hoffman, J.
{¶1} Plaintiffs-appellants Randolph and Joyce Coleman appeal the January 13,
2017 summary judgment of the Stark County Common Pleas Court dismissing their
complaint for fraudulent inducement, fraud, and mutual mistake of fact against
Defendants-appellees Gregory Galati and Elisa Keller.
STATEMENT OF THE FACTS AND CASE
{¶2} On October 4, 2012, Appellees, who are siblings, inherited a home located
at 1706 Harwick St., NW, in Canton, Ohio, by transfer-on-death deed from their mother.
The property was vacant beginning in September of 2012.
{¶3} Appellants entered into a Purchase Agreement for the home with Appellees
on November 5, 2014. The contract period was extended due to Appellants’ difficulties
obtaining financing, and Appellants did not take possession of the home until May 18,
2015. Appellants never communicated with Appellees directly, and communicated
exclusively to Jen Mucci, the real estate agent serving as dual agent for the buyers and
sellers in the transaction.
{¶4} The Purchase Agreement included an “as is” clause. Further, because
Appellees did not reside in the home within the year preceding the sale, they did not
complete a Residential Property Disclosure Form. Jen Mucci wrote on the top of each
page of the form, “Sellers do not live in property.” The disclosure form was initialed by all
parties. Appellants waived a general inspection of the home. Appellants had the home
inspected for wood destroying insects, and also had the HVAC, electric, and plumbing
systems inspected.
Stark County, Case No. 2017CA00026 3
{¶5} When Appellants entered the home after closing, their granddaughter
discovered water in the basement. Appellant Joyce Coleman discovered the area around
the back basement wall was soaked. A few days later after a rain storm, Appellants found
water running down the walls and through the windows in the basement. A carpet installer
later pulled back the thick carpet installed in the basement, and found mold build-up on
the underside of the carpet. Mold was also discovered on the basement wall.
{¶6} Appellant Joyce Coleman suffers from allergic rhinitis and a compromised
immune system. She is allergic to mold. Appellants visited the home several times from
November of 2014 through January of 2015. In January of 2015, Appellant Joyce
Coleman began having severe nosebleeds. She received nasal packing two or three
times, and was cauterized fifteen times.
{¶7} Appellants filed the instant action for fraud in the inducement, fraud, and
mutual mistake of fact on June 20, 2016. They sought damages as well as rescission of
the purchase agreement.
{¶8} Appellees moved for summary judgment. In support of their motion, they
filed the affidavits of Jen Mucci and Appellee Elisa Keller. In her affidavit, Jen Mucci
averred as a result of Joyce Coleman’s disclosure of her sensitivity to odors, she pointed
out mold issues around the chimney during several visits to the property. Elisa Keller
attested she and her brother only learned about alleged moisture issues when Appellants
filed the instant action.
{¶9} In response, Appellants filed their own affidavits, in which they averred they
asked Mucci if there were water problems in the home, and she showed them only a
water problem in the garage. They attested Mucci told them there were no problems with
Stark County, Case No. 2017CA00026 4
water damage, intrusion, or flooding. They further attested she never mentioned mold
and did not point out mold in the home.
{¶10} The trial court granted the motion for summary judgment on all counts,
dismissing the complaint. The court found Appellants arguments for fraudulent
inducement and fraud, based on Appellees’ failure to disclose water and mold issues on
the Residential Property Disclosure Form, to be without merit because Appellees had no
duty to complete the form pursuant to R.C. 5302.30(B)(2)(n). The court found no mutual
mistake of fact because Appellants were negligent in failing to conduct an inspection of
the property. The court further found Appellants’ claims barred by the “as is” clause in
the Purchase Agreement and by the doctrine of caveat emptor. Appellants prosecute
their appeal from this January 13, 2017 judgment of the court, assigning a single error:
{¶11} “THE TRIAL COURT’S DECISION TO GRANT THE APPELEES’ MOTION
FOR SUMMARY JUDGMENT CONSTITUTES REVERSIBLE ERROR.”
{¶12} Summary Judgment motions are to be resolved in light of the dictates of
Civ.R. 56. The rule was reaffirmed by the Supreme Court of Ohio in State ex rel.
Zimmerman v. Tompkins, 75 Ohio St.3d 447, 448, 1996–Ohio–211:
Civ.R. 56(C) provides that before summary judgment may be
granted, it must be determined that (1) no genuine issue as to any material
fact remains to be litigated, (2) the moving party is entitled to judgment as
a matter of law, and (3) it appears from the evidence that reasonable minds
can come to but one conclusion, and viewing such evidence most strongly
in favor of the nonmoving party, that conclusion is adverse to the party
Stark County, Case No. 2017CA00026 5
against whom the motion for summary judgment is made. State ex. rel.
Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511, 628 N.E.2d 1377, 1379,
citing Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327, 4 O.O3d
466, 472, 364 N.E.2d 267, 274.
{¶13} As an appellate court reviewing summary judgment motions, we must stand
in the shoes of the trial court and review summary judgments on the same standard and
evidence as the trial court. Smiddy v. The Wedding Party, Inc., 30 Ohio St.3d 35 (1987).
{¶14} As explained by this court in Leech v. Schumaker, 5th Dist. Richland No.
15CA56, 2015–Ohio–4444, ¶ 13:
It is well established the party seeking summary judgment bears the
burden of demonstrating that no issues of material fact exist for trial. Celotex
Corp. v. Catrett (1986), 477 U.S. 317, 330, 106 S.Ct. 2548, 91 L.Ed.2d
265(1986). The standard for granting summary judgment is delineated in
Dresher v. Burt (1996), 75 Ohio St.3d 280 at 293: “ * * *a party seeking
summary judgment, on the ground that the nonmoving party cannot prove
its case, bears the initial burden of informing the trial court of the basis for
the motion, and identifying those portions of the record that demonstrate the
absence of a genuine issue of material fact on the essential element(s) of
the nonmoving party's claims. The moving party cannot discharge its initial
burden under Civ.R. 56 simply by making a conclusory assertion the
nonmoving party has no evidence to prove its case. Rather, the moving
Stark County, Case No. 2017CA00026 6
party must be able to specifically point to some evidence of the type listed
in Civ.R. 56(C) which affirmatively demonstrates the nonmoving party has
no evidence to support the nonmoving party's claims. If the moving party
fails to satisfy its initial burden, the motion for summary judgment must be
denied. However, if the moving party has satisfied its initial burden, the
nonmoving party then has a reciprocal burden outlined in Civ.R. 56(E) to
set forth specific facts showing there is a genuine issue for trial and, if the
nonmovant does not so respond, summary judgment, if appropriate, shall
be entered against the nonmoving party.” The record on summary judgment
must be viewed in the light most favorable to the opposing party. Williams
v. First United Church of Christ (1974), 37 Ohio St.2d 150.
{¶15} Fraud requires proof of the following elements: (1) a representation or,
where there is a duty to disclose, omission 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 upon it, (5) justifiable reliance upon the
representation or concealment, and (6) a resulting injury proximately caused by the
reliance. Cohen v. Lamko, Inc., 10 Ohio St.3d 167, 462 N.E.2d 407(1984). In all
averments of fraud, the circumstances constituting fraud must be stated with particularity.
Civ.R. 9(B).
Stark County, Case No. 2017CA00026 7
There are usually three reasons cited for the requirement of
particularity. First, particularity is required to protect defendants from the
potential harm to their reputations which may attend general accusations of
acts involving moral turpitude. Second, particularity ensures that the
obligations are concrete and specific so as to provide defendants notice of
what conduct is being challenged. Finally, the particularity requirement
inhibits the filing of complaints as a pretext for discovery of unknown
wrongs.” Korodi v. Minot (1987), 40 Ohio App.3d 1, 4, 531 N.E.2d 318.
Typically, the requirement of particularity includes “the time, place and
content of the false representation, the fact misrepresented, and the nature
of what was obtained or given as a consequence of the fraud.” Baker v.
Conlan (1990), 66 Ohio App.3d 454, 458, 585 N.E.2d 543.
Carter–Jones Lumber Co. v. Denune, 132 Ohio App.3d 430, 433, 725 N.E.2d
330(10th Dist. Franklin 1999).
{¶16} A claim of fraud in the inducement arises when a party is induced to enter
into an agreement through fraud or misrepresentation. “The fraud relates not to the nature
or purport of the [contract], but to the facts inducing its execution * * *.” Haller v. Borror
Corp., 50 Ohio St.3d 10, 14, 552 N.E.2d 207(1990). In order to prove fraud in the
inducement, a plaintiff must prove the defendant made a knowing, material
misrepresentation with the intent of inducing the plaintiff's reliance, and the plaintiff relied
upon that misrepresentation to his or her detriment. ABM Farms v. Woods, 81 Ohio St.3d
498, 502, 692 N.E.2d 574(1998).
Stark County, Case No. 2017CA00026 8
{¶17} Appellants argue Jen Mucci knew of mold in the house yet failed to disclose
its existence, the water and mold issues in the basement developed over time and
Appellees therefore should have been aware of their existence, and Appellees undertook
repairs to hide the existence of water damage in the basement and to cover the smell of
dampness and mold. However, they failed to plead these actions as fraudulent in their
complaint. Appellants’ particular allegations of fraud in the inducement as required to be
pled by Civ. R. 9(B) are stated in paragraph 4 of the complaint:
For the purpose of inducing the Plaintiffs’ purchase of the above-
described property, the Defendants failed to acknowledge to the Plaintiffs
problems concerning the property. Specifically the Defendants failed to
acknowledge the following: On Item D of the disclosure statement, having
any knowledge of “any previous or current water leakage, water
accumulation, excess moisture or other defects to the property, including
but not limited to any area below grade, basement, or crawl space.” The
Defendants further failed to acknowledge having any knowledge of “any
water or moisture related damage to floors, walls or ceilings as a result of
flooding; moisture seepage; moisture condensation; ice damming; sewer
overflow/backup; or leaking pipes, plumbing fixtures, or appliances.” On
Item E of the disclosure statement, the Defendants failed to acknowledge
having any knowledge of “any previous or current movement, shifting,
deterioration, material cracks/settling (other than visible minor cracks or
blemishes) or other material problems with the foundation, basement/crawl
Stark County, Case No. 2017CA00026 9
space, floors, or interior/exterior walls.” On Item K of the disclosure
statement, the Defendants failed to acknowledge having any knowledge of
“any previous or current flooding, drainage, settling or grading or erosion
problems affecting the property.”
{¶18} Appellants’ particular allegations of fraud in Count Two of the complaint are
set forth in paragraph 15:
On Item D of the disclosure statement, the Defendants failed to
acknowledge any knowledge of “any previous or current water leakage,
water accumulation, excess moisture or other defects to the property,
including but not limited to any area below grade, basement, or crawl
space.” The Defendants further failed to acknowledge having any
knowledge of “any water or moisture related damage to floors, walls or
ceilings as a result of flooding; moisture seepage; moisture condensation;
ice damming; sewer overflow/backup; or leaking pipes, plumbing fixtures,
or appliances.” On Item E of the disclosure statement, the Defendants
failed to acknowledge having any knowledge of “any previous or current
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.” On Item K of the
disclosure statement, the Defendants failed to acknowledge having any
Stark County, Case No. 2017CA00026 10
knowledge of “any previous or current flooding, drainage, settling or grading
or erosion problems affecting the property.”
{¶19} Appellants’ claims for fraud and fraud in the inducement were therefore
wholly predicated on the failure to disclose water problems with the house in the
disclosure statement. Because Civ. R. 9(B) requires fraud to be pled with particularity,
Appellants cannot at this juncture raise other claims of fraud which they failed to set forth
in their complaint. See, e.g., Mar Jul LLC v. Hurst, 4th Dist. Washington No. 12CA6,
2013-Ohio-479, ¶42; Goddard v. Stabile, 185 Ohio App.3d 485, 924 N.E.2d 868, 2009 -
Ohio- 6375 (11th Dist. Trumbull); Barnes v. Res. Energy Exploration, 7th Dist. Belmont
No. 14 BE 0013, 2016-Ohio-4805, ¶25.
{¶20} Because Appellees did not reside in the home within the year preceding the
sale, they did not complete a Residential Property Disclosure Form. Jen Mucci wrote on
the top of each page of the form, “Sellers do not live in property.” Appellees had no duty
to complete the form pursuant to R.C. 5302.30(B), which provides in pertinent part:
(B)(1) Except as provided in division (B)(2) of this section, this
section applies to any transfer of residential real property that occurs on or
after July 1, 1993, by sale, land installment contract, lease with option to
purchase, exchange, or lease for a term of ninety-nine years and renewable
forever. For purposes of this section, a transfer occurs when the initial
contract for transfer is executed, regardless of when legal title is transferred,
Stark County, Case No. 2017CA00026 11
and references in this section to transfer offers and transfer agreements
refer to offers and agreements in respect of the initial contract for transfer.
(2) This section does not apply to any transfer of residential real
property that is any of the following:
(n) A transfer from a transferor who both has not occupied the
property as a personal residence within one year immediately prior to the
transfer and has acquired the property through inheritance or devise.
{¶21} Appellee Elisa Keller’s affidavit avers she and her brother, Appellee Gregory
Galati, inherited the home via a transfer-on-death deed from their mother, and neither of
them lived on the property during the one year period preceding the sale. Keller Affidavit,
¶¶2,13. This evidence is undisputed. The trial court therefore did not err in entering
summary judgment on Appellants’ claims for fraud and fraud in the inducement which
were predicated on Appellees’ failure to acknowledge items in the Residential Property
Disclosure Form, as they were exempt by statute from filling out the form.
{¶22} Appellants’ claim for mutual mistake of fact is based on Appellees’ failure to
acknowledge the items cited above in the Residential Property Disclosure Form.
{¶23} In Reilley v. Richards, the Ohio Supreme Court held the doctrine of mutual
mistake entitles a buyer to rescission of a real estate purchase contract where there is a
mutual mistake as to a material part of the contract and where the complaining party is
not negligent in failing to discover the mistake. 69 Ohio St.3d 352, 352–353, 1994–Ohio–
528, 632 N.E.2d 507 (1994). A mistake is material to a contract when it is “a mistake * *
* as to a basic assumption on which the contract was made [that] has a material effect on
Stark County, Case No. 2017CA00026 12
the agreed exchange of performances.” Id., citing 1 Restatement of the Law 2d, Contracts
(1981) 385, Mistake, Section 152(1). Further, “the intention of the parties must have been
frustrated by the mutual mistake.” Id.
{¶24} There was no evidence presented to demonstrate the parties were mutually
mistaken at the time they entered the purchase agreement as to the existence of water
problems and/or mold in the basement, or such mistake was material to the agreement.
Appellants initialed the disclosure form, which Appellees failed to complete pursuant to
R.C. 5302.30, and which stated on the top of each page, “Sellers do not live in property.”
Appellants did not conduct a general home inspection nor an inspection for water intrusion
and mold, although they conducted other inspections on the home.
{¶25} Appellants signed the purchase agreement which included an “as is” clause.
Summary judgment is appropriate on a claim for mutual mistake of fact concerning water
intrusion in a basement where the buyer was afforded an opportunity for a general
inspection and purchased the property subject to an “as is” clause. See Novotny v. Fierle,
11th Dist. Lake No. 2011-L-148, 2012-Ohio-4007, ¶29, citing Wallington v. Hageman, 8th
Dist. Cuyahoga No. 94763, 2010–Ohio–6181, ¶27 (buyers who signed “as is” clause
“cannot argue absence of water problems in the basement was a basic assumption upon
the contract was made). The trial court did not err in granting summary judgment on
Appellants’ claim for mutual mistake of fact.
Stark County, Case No. 2017CA00026 13
{¶26} The assignment of error is overruled. The judgment of the Stark County
Common Pleas Court is affirmed.
By: Hoffman, J.
Gwin, P.J. and
Wise, Earle, J. concur
Coleman v. Galati
Combined Opinion