Court Opinion

ID: 6768536
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:40:32.252654+00
Date Added: 2024-06-11T16:02:42.509046
License: Public Domain

Alice Robie Resnick, J.,
dissenting. I am troubled by the degree of control appellant Roark exercised in “negotiating” the lease at issue. Apparently, Roark (acting as lessor through a partnership he controlled) essentially negotiated a lease, covering the common commercial areas of the Belvedere, with himself (acting through a company he controlled) as lessee. It is not particularly surprising that the lease terms were very favorable to the lessee Roark, because *292the Association (not lessor Roark) was the owner of the common areas. What is surprising is that the majority apparently sees no problem with lessor Roark acting in this manner. Through this transaction, Roark’s conduct evinces violations of basic duties of good faith and fair dealing. Consequently, I dissent.
The relationship between a condominium association and a developer may not be a general fiduciary one (e.g., when a developer sells a condominium to a buyer, the sale is clearly an arm’s-length transaction); however, the developer does owe some fiduciary duty to purchasers of condominiums. To my mind, the leasing of common areas is one situation where a developer should not be able to take advantage of his or her status as a developer to negotiate one-sided terms. A condominium association should be able to expect that the condominium developer will not seek self-enrichment by exploiting the members of the association in this way. The law of caveat emptor, which applies to arm’s-length real estate transactions, should not apply to the lease of the common areas of a condominium development under the circumstances presented by this case. I cannot accept the majority’s determination that R.C. Chapter 5311 essentially gave appellants free rein to set the lease terms however they saw fit.
Although this case has aspects of fraud as well as violation of a fiduciary duty, it should not really be pigeonholed as either. It seems unnecessary to force appellee to prove all the elements of a common-law fraud. Likewise it seems unnecessary to force appellee to demonstrate that appellants owe the Association a strict general fiduciary duty before appellants can be found to have taken unfair advantage of appellee. I cannot believe that the legislature, when it allowed the condominium developer to take control of the owners’ association in the early stages of the development by enacting R.C. 5311.08, contemplated that the developer would self-deal in this way with impunity. Yet the majority holds that R.C. Chapter 5311 insulates appellants from common-law liability. Even if the majority is correct in its assertion that “R.C. 5311.08 essentially requires self-dealing by developers during the early years of the development” (emphasis sic), I cannot accept the premise that R.C. Chapter 5311 condones the type of self-dealing of this case.
Sufficient evidence was presented at trial to demonstrate that appellants violated some type of fiduciary duty owed to appellee, regardless of the label attached to that duty. Appellee, through expert witness testimony, established at trial that the terms of the lease were grossly unfair to appellee (particularly in light of the terms of the subleases subsequently negotiated by appellants). Moreover, a presumption of bad faith was raised, which appellants have not overcome. Thus, competent, credible evidence supported the trial court’s determination that (to use the trial judge’s words) “there is something ‘rotten in Denmark.’ ” The trial court also realized that the evidence indicated conclusively *293that Roark personally was responsible for creating the smell. The court of appeals recognized the patent unfairness engendered by Roark’s bad faith and affirmed the trial court’s judgment. I would affirm the judgment of the court of appeals.