Court Opinion

ID: 2703581
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:11:46.052237+00
Date Added: 2024-06-11T13:14:17.002971
License: Public Domain

[Cite as Anzalaco v. Graber, 2012-Ohio-2057.]

                 Court of Appeals of Ohio
                               EIGHTH APPELLATE DISTRICT
                                  COUNTY OF CUYAHOGA

                              JOURNAL ENTRY AND OPINION
                                  Nos. 96761 and 96787

                               WILLIAM ANZALACO
                                                PLAINTIFF-APPELLANT

                                                 and

                       [MICHAEL LEE, INTERVENOR
                        CROSS-CLAIM DEFENDANT-APPELLANT]

                                                 vs.

                     KATHERINE M. GRABER, ET AL.
                                                DEFENDANTS-APPELLEES

                                           JUDGMENT:
                                            AFFIRMED

                              Civil Appeal from the
                   Cuyahoga County Court of Common Pleas
                               Case No. CV-735502
        BEFORE: Kilbane, J., Stewart, P.J., and Keough, J.
        RELEASED AND JOURNALIZED: May 10, 2012
ATTORNEYS FOR APPELLANTS

For William Anzalaco

Eric T. Deighton
William T. Rini
Carlisle, McNellie, Rini, Kramer & Elric
24755 Chagrin Boulevard
Suite 200
Cleveland, Ohio 44122

For Michael Lee

Jack P. Mills, Jr.
John J. Wargo, Jr.
Wargo & Wargo
30 Park Drive
P.O. Box 332
Berea, Ohio 44017

ATTORNEYS FOR APPELLEES

Donald P. McFadden
Monica E. Russell
McFadden & Freeburg Co., LPA
1370 Ontario Street - Suite 600
Cleveland, Ohio 44113-1726
MARY EILEEN KILBANE, J.:

      {¶1} In these consolidated appeals, intervenor cross-claim defendant-appellant,

Michael Lee, challenges the order of the trial court that awarded summary judgment to

defendants Katherine Graber (“Katherine”) and Steve M. Graber (“Steve”) (collectively

referred to as “the Grabers”) in Lee’s action for specific performance of a real estate

purchase agreement. Plaintiff-appellant, William Anzalaco, appeals from the order of

the trial court that awarded summary judgment to the Grabers in Anzalaco’s action for

breach of a secondary contract to purchase the same parcel. For the reasons set forth

below, we affirm both orders.

      {¶2} On July 14, 2010, the Grabers, represented by Joseph Keller (“Keller”) of

Howard Hanna, entered into a purchase agreement with Lee for the sale of their property

located at 14599 Bennett Road, in North Royalton for $325,000. Under the terms of this

agreement, Lee was entitled to obtain a general inspection and radon and mold

inspections of the property. Within three days after completion of such inspections,

      BUYER [Lee] shall elect one of the following:

      (A) Remove the inspection contingency and accept the property in its “AS
      IS” present physical condition. If the property is accepted in its “AS IS”
      present physical condition, then BUYER agrees to sign an
      Amendment/Removal of Contingency. (Emphasis added.)
        (B) Accept the property subject to SELLER agreeing to have specific
        material defects, that were either previously disclosed in writing by the
        SELLER or identified in a written inspection report, repaired by a qualified
        contractor in a professional manner at SELLER’s expense; BUYER agrees
        to provide SELLER with a copy of all inspection reports and to sign an
        Amendment to Purchase Agreement removing the inspection contingency
        and identifying those specific material defects which are to be repaired.
        SELLER and BUYER shall have three (3) days from SELLER’s receipt of
        BUYER’s written request and copies of inspection reports to agree in
        writing which material defect(s), if any, shall be corrected by the SELLER
        at SELLER’s expense. If BUYER and SELLER do not agree in writing
        within those three (3) days, then this AGREEMENT shall be null and void,
        and SELLER and BUYER agree to sign a mutual release, whereupon the
        earnest money shall be returned to the BUYER. * * *. (Emphasis added.)

        (C) Terminate this Agreement if BUYER’s written inspection report(s) or
        any other source(s) identify material defects NOT previously disclosed in
        writing by SELLER. If BUYER elects to terminate, BUYER agrees to
        provide a copy of the written inspection report(s) to SELLER and both
        parties agree to promptly sign a mutual release, whereupon the earnest
        money shall be returned to BUYER.

        {¶3} The record further discloses that on July 9, 2010, after Lee had the property

inspected, Lee invoked option (B). On that date, Lee’s realtor sent the Grabers an email

in which he identified eight items that he wanted the Grabers to repair or remove. The

Grabers refused to make any of the claimed repairs, and on July 21, 2010, Lee presented a

counterproposal seeking a $10,000 reduction in the purchase price.          According to

Katherine, she and her husband refused to reduce the price of the home and determined

that by operation of provision (B) of the purchase agreement, the contract was null and

void.
      {¶4} On July 21, 2010, the Grabers entered into a purchase agreement with

Anzalaco. Both the Grabers and Anzalaco were represented by Keller. In relevant part,

this agreement provided as follows:

             This X is           is not a secondary offer. This secondary offer, if
      applicable, shall become a primary contract upon BUYER’s receipt of a
      signed copy of the release of the primary contract on or before 7-23-10
      (Date). BUYER shall have the right to terminate this secondary offer at
      any time prior to BUYER’s receipt of said copy of the release of the
      primary contract by delivering written notice to the SELLER or SELLER’s
      agent. Upon the receipt of the release of the primary contract, BUYER
      shall deposit earnest money within four (4) days and BUYER and SELLER
      agree to sign an addendum listing the date for loan application, loan
      approval, deposit of funds and documents, title transfer and possession.

             ***

             [I]f a defect in title appears, SELLER shall have thirty (30) days

      after notice from BUYER to remove such defect and, if unable to do so,

      BUYER may either (1) accept title subject to such defect without any

      reduction in the purchase price or (2) terminate this Agreement, in which

      case neither BUYER, SELLER[,] nor any REALTOR(S) shall have any

      further liability to each other, and both BUYER and SELLER agree to sign

      a mutual release, whereupon the earnest money shall be returned to

      BUYER.

      {¶5} On July 22, 2010, the Grabers executed a mutual release and sent it to Lee

for his signature. Lee did not execute the release of his purchase agreement with the

Grabers. Instead, on July 23, 2010, Lee executed an Amendment to Offer to Purchase

and Removal of Contingency, in which he waived his right to a general inspection.
       {¶6} Anzalaco deposited earnest money and the purchase price into escrow, and

the Grabers deposited an executed warranty deed for the property. However, the prior

purchase agreement with Lee was subsequently deemed a cloud upon the title, and the

title company for the transaction refused to issue title insurance without “taking exception

to the case.”

       {¶7} Steve Graber died on August 3, 2010, and Katherine did not enter into a

purchase agreement with Lee. On August 25, 2010, Lee’s counsel sent Katherine a

proposed complaint for specific performance of his purchase agreement.

       {¶8} On August 31, 2010, Anzalaco filed suit for breach of contract and specific

performance against Katherine, and also set forth claims against Howard Hanna Real

Estate Services Co. (“Howard Hanna”) and real estate agent Joseph A. Keller. Anzalaco

alleged that Katherine breached the purchase agreement, and that Howard Hanna and

Keller committed fraud and breached their fiduciary duties in this matter.

       {¶9} On October 7, 2010, the trial court granted Lee’s motion to intervene in the

action as a defendant. He filed a counterclaim against Anzalaco and cross-claim against

Katherine, seeking specific performance of the July 14, 2010 purchase agreement. Lee

asserted that Katherine had breached the contract with him, and that his claim to the

property was superior to that of Anzalaco.

       {¶10} Lee moved for summary judgment and maintained that option (B) of the

inspection clause did not apply because this provision required both parties to “agree” to
the repairs. According to Lee, he waived the contingency, and by operation of option

(A), the purchase agreement remained in effect.

       {¶11} Katherine moved for summary judgment and maintained that the purchase

agreement with Lee terminated under option (B) upon her refusal to make the requested

repairs or to lower the purchase price.

       {¶12} Anzalaco also moved for summary judgment and maintained that Lee’s

purchase agreement was terminated under option (B) and that his [Anzalaco’s] secondary

offer is now binding. He further alleged that Keller, Howard Hanna, and the Grabers

negligently and fraudulently misrepresented that the prior contract had terminated and

was void, that all contingencies had been removed, and that a written release was not

necessary.

       {¶13} The trial court entered summary judgment against Lee and against Anzalaco

on their claims for breach of contract and specific performance. With regard to Lee, the

court concluded that there were no genuine issues of material fact and that, following his

inspection, Lee “clearly elected option (B),” that this option did not, as Lee asserted,

require the Grabers to “agree in principle to undertake repairs,” and that the agreement

became null and void after Lee and the Grabers could not agree about the repairs.

       {¶14} With regard to Anzalaco, the trial court concluded that by the express terms

of the secondary offer provision, in the absence of a signed release from Lee, Anzalaco’s

purchase agreement never became a valid and binding purchase agreement. The trial

court further concluded that Anzalaco could not show, through parole evidence, that
Katherine, Howard Hanna, or Keller informed him that there was no need for a signed

release from Lee because the agreement was unambiguous. The court did not rule on

those causes of action, but certified under Civ.R. 54(B) that there was no just cause for

delay. Lee and Anzalaco both appeal herein.

      {¶15} A reviewing court reviews an award of summary judgment de novo. Grafton

v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 1996-Ohio-336, 671 N.E.2d 241; Mitnaul v.

Fairmount Presbyterian Church, 149 Ohio App.3d 769, 2002-Ohio-5833, 778 N.E.2d

1093 (8th Dist.2002). Therefore, this court applies the same standard as the trial court,

viewing the facts in the case in the light most favorable to the nonmoving party and

resolving any doubt in favor of the nonmoving party. Viock v. Stowe-Woodward Co., 13

Ohio App.3d 7, 12, 467 N.E.2d 1378 (6th Dist.1983).

      {¶16} Pursuant to Civ.R. 56(C), summary judgment is proper if:

      (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 party against whom
      the motion for summary judgment is made, that conclusion is adverse to
      that party. Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364
      N.E.2d 267 (1977).

      {¶17} Once a moving party satisfies its burden of supporting its motion for

summary judgment with sufficient and acceptable evidence pursuant to Civ.R. 56(C), the

nonmoving party must set forth specific facts, demonstrating that a “genuine triable issue”

exists to be litigated for trial. State ex rel. Zimmerman v. Tompkins, 75 Ohio St.3d 447,

449, 1996-Ohio-211, 663 N.E.2d 639.
       {¶18} Generally, the elements for a breach of contract are that a plaintiff must

demonstrate by a preponderance of the evidence that (1) a contract existed, (2) the

plaintiff fulfilled his obligations, (3) the defendant failed to fulfill his obligations, and (4)

damages resulted from this failure. Lawrence v. Lorain Cty. Community College, 127

Ohio App.3d 546, 549, 713 N.E.2d 478 (9th Dist.1998).

       {¶19} The primary objective in contract interpretation is to give effect to the intent

of the parties as expressed in the language they chose to employ in their agreement.

Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 53, 544 N.E.2d 920

(1989). The intent of the parties to a contract is presumed to reside in the language they

chose to employ in the agreement. Kelly v. Med. Life Ins. Co., 31 Ohio St.3d 130, 132,

509 N.E.2d 411 (1987), paragraph one of the syllabus. Common words appearing in a

written instrument will be given their ordinary meaning unless manifest absurdity results,

or unless some other meaning is clearly evidenced from the face or overall contents of the

instrument. Foster Wheeler Enviresponse v. Franklin Cty. Convention Facilities Auth.,

78 Ohio St.3d 353, 361, 1997-Ohio-202, 678 N.E.2d 519.

       {¶20} In general, a contract to purchase real estate may be enforced by specific

performance. Ferraro v. Cristiano, 2d Dist. No. 23146, 2009-Ohio-4789, ¶ 72. This

equitable remedy is available when the promissor’s failure to perform constitutes a breach

of contract and money damages or other legal remedies will not afford the promisee

adequate relief. Id.
       {¶21} Where, however, the formation of a contract is dependent upon a condition

precedent, such condition must be performed before the agreement becomes effective.

Militiev v. McGee, 8th Dist. No. 94779, 2010-Ohio-6481, ¶ 27. A condition precedent

calls for the happening of some event or the performance of some act after the terms of

the contract have been agreed on before the contract shall be binding on the parties. Id.

In connection with this, we note that a secondary offer generally requires the fulfillment

of various stated conditions before becoming an enforceable contract. Sutton v. Bloom,

710 F.2d 1188 (6th Cir.1983).

       {¶22} Applying the foregoing to this matter, we conclude that the trial court

properly determined that there were no genuine issues of material fact and that Katherine

is entitled to judgment as a matter of law on intervener Lee’s claims for breach of contract

and specific performance. By application of the ordinary meaning of the common words

appearing in the parties’ July 14, 2010 purchase agreement, the Buyer was to make an

election from options (A), (B), or (C) following the inspection. It is undisputed that Lee

did not remove the inspection contingency and accept the property in its “AS IS” present

physical condition under option (A), and did not immediately terminate the agreement

under option (C).     Rather, the record establishes that Lee elected option (B).        As

explained in the trial court’s opinion:

       On July 16, 2010, Mr. Lee had a home inspection completed. After the
       inspection, Mr. Lee elected to choose option B. On July 19, 2010, Mr.
       Lee’s realtor sent an email to Ms. Graber’s realtor listing eight items that
       Mr. Lee wanted her to repair. Ms. Graber did not agree to fix any of the
       items listed by Mr. Lee. In response to Ms. Graber’s refusal, Mr. Lee
       demanded a $10,000 price reduction, which was refused by Ms. Graber as
       well.

       {¶23} Therefore, under the plain language of this provision, “If BUYER and

SELLER do not agree in writing within those three (3) days, then this AGREEMENT

shall be null and void, and SELLER and BUYER agree to sign a mutual release,

whereupon the earnest money shall be returned to the BUYER.” This provision operated

as a condition precedent to the formation of an agreement once the buyer elected this

option.

       {¶24} Moreover, the clear language of this provision does not support Lee’s claim

that option (B) required the seller to agree in principle to undertake repairs in order for

this option to be exercised. Rather, the Buyer was simply permitted, at his discretion, to

elect this option.

       {¶25} Although the plain language of option (B) states that, “If BUYER and

SELLER do not agree in writing within those three (3) days, then this AGREEMENT

shall be null and void,” Lee insists that this provision is not effective until the buyer and

seller agree in principal that it is necessary to repair specific material defects, and then

negotiate the repair of those defects. In rejecting this argument below, the trial court

correctly analyzed the issue as follows:

       There is nothing in the agreement that required Ms. Graber to agree in
       principal to undertake repairs before actually receiving a list of repairs from
       Mr. Lee. It would not make any sense to have a seller agree to do repairs,
       then receive the actual list of repairs from the buyer in order to negotiate
       what repairs would be done at the seller’s expense.
              * * * Rather, [the language in option (B) pertaining to an agreement

       regarding the repair of defects] spells out the method in which the buyer

       and seller would negotiate as to what repairs the seller would undertake at

       her expense. The agreement became null and void once the buyer and

       seller could not agree on the repairs, which is what happened here.

       {¶26} Lee also insists that the purchase agreement did not terminate through the

July 9, 2010 exercise of option (B) because the contract gave him until July 24, 2010 to

exercise the inspection provision, and that prior to that deadline, on July 23, 2010, he

invoked option (A), and accepted the property “as is.” Again, as cogently stated by the

trial court, “There is no mechanism under the language of the agreement to allow Mr. Lee

to elect a different option once option B became an impossibility.” Rather, the July 24,

2010 date is simply the last date for the buyer to obtain an inspection and does not extend

the contract once the buyer does so.

       {¶27} Lee also complains that the Grabers acted in bad faith in connection with his

purchase agreement by promptly entering into the contract with Anzalaco. The record

clearly establishes, however, that the Grabers gave Anzalaco a secondary offer that would

only mature into a primary contract upon the release of Lee’s purchase agreement. This

claim is without merit.

       {¶28} From the foregoing, the trial court properly determined that there were no

genuine issues of material fact and that Katherine is entitled to judgment as a matter of

law, by application of the ordinary meaning of the common words appearing in the
agreement. The refusal of the Grabers to make the repairs identified by Lee resulted in

the failure of a condition precedent that prevented the parties from entering into an

enforceable agreement. Lee’s claim for breach of contract lacked merit as a matter of

law, and absent an enforceable agreement, Lee’s claim for specific performance was

likewise without merit.

       {¶29} Further, with regard to Anzalaco’s claims for breach of contract and specific

performance, the trial court properly determined that there were no genuine issues of

material fact and that Katherine is entitled to judgment as a matter of law. The trial court

explained:

       Because Mr. Lee refused to sign the release [of the primary purchase
       agreement], the buyer [sic] could not get a signed copy of that release as
       required under the time frame established by the Anzalaco agreement.
       Pursuant to this language, the secondary contract could not become the
       primary contract without the release of the Lee agreement being signed by
       all parties to that agreement on or before July 23, 2010. As such, there is
       no valid contract between the parties, and Ms. Graber is entitled to
       judgment as a matter of law[.]

       {¶30} We concur with this analysis. By application of the ordinary meaning of

the common words appearing in the parties’ July 21, 2010 purchase agreement, Anzalaco

made a “secondary offer.” The undisputed facts demonstrate that Lee did not execute a

release of the primary contract, so the secondary offer never became a primary contract

upon the failure of that condition precedent.

       {¶31} Anzalaco insists, however, that parole evidence is admissible to demonstrate

that his offer became a primary offer. He relies upon Katherine’s July 26, 2010 affidavit

that she prepared “for the purpose of inducing [the title agency] to issue a title insurance
policy or other title evidence” in which she avers that “[t]here are no other contracts,

options, or rights to purchase the Property except for the contract being closed.”

       {¶32} As noted by the trial court, however, parole evidence is barred because the

terms of “the Anzalaco agreement [are] unambiguous on its face.”             See     Kelley v.

Ferraro, 188 Ohio App.3d 734, 2010-Ohio-2771, 936 N.E.2d 986, ¶ 28 (8th Dist.). That

is, a “secondary offer” generally requires the fulfillment of various stated conditions

before becoming an enforceable contract. Bloom, 710 F.2d 1188. The parole affidavit

does not alter the unambiguous provisions of Anzalaco’s purchase agreement that

required “BUYER’s [Anzalaco’s] receipt of a signed copy of the release of the primary

contract on or before 7-23-10,” in order to convert Anzalaco’s secondary offer to a

primary contract. Absent that release, Anzalaco’s secondary offer did not mature into a

primary contract.

       {¶33} Further, Katherine’s ability to deliver clear, marketable title is itself a

condition precedent. See St. Paul’s Lutheran Church v. Brooks, 6th Dist. No. H-07-022,

2008-Ohio-2481 (“[I]f St. Paul’s could not fulfill the condition precedent [i.e., clear and

marketable title], Lyons had the option to either accept title with the possible reversionary

cloud, or negate the purchase agreement.”). Under the terms of the parties’ agreement,

Katherine could not obtain title insurance and Anzalaco had the option to either accept

title with the possible reversionary cloud or negate the purchase agreement. Anzalaco

offered no evidence that he accepted title subject to that defect as required to proceed

with the transaction under the marketable title provision of the agreement.            To the
contrary, in his response to Katherine’s request for admissions, Anzalaco admitted that he

would “not accept a general warranty deed from Katherine M. Graber that takes exception

for Michael Lee’s claims arising from the purchase agreement he entered into with

Katherine and Steve Graber.”

      {¶34} In light of the foregoing, the trial court properly determined that no

enforceable contract was created, so Anzalaco’s claim for breach of contract was without

merit as a matter of law.      Absent an enforceable contract, his claim for specific

performance was also without merit.

      {¶35} The trial court’s April 14, 2011 order granting summary judgment to

Katherine on Lee’s cross-claim for breach of contract and specific performance and on

Anzalaco’s claims for breach of contract and specific performance is affirmed.

      It is ordered that appellee recover from appellants costs herein taxed.

      The court finds there were reasonable grounds for this appeal.

      It is ordered that a special mandate be sent to said 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.

MARY EILEEN KILBANE, JUDGE

MELODY J. STEWART, P.J., and
KATHLEEN ANN KEOUGH, J., CONCUR