Court Opinion

ID: 3704733
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:41:57.164986+00
Date Added: 2024-06-11T14:10:08.771438
License: Public Domain

OPINION
{¶ 1} This is an appeal from a ruling by the Common Pleas Court of Muskingum County which sustained Appellees' Motion for Summary Judgment:
 {¶ 2} Appellant's raise two Assignments of Error:
 ASSIGNMENTS OF ERROR {¶ 3} "I. THE TRIAL COURT ERRED IN GRANTING DEFENDANTS-APPELLEES' [SIC] SELLERS SUMMARY JUDGMENT BECAUSE THE DISCLOSURES DEFENDANTS-APPELLEES-SELLERS MADE TO PLAINTIFFS-APPELLANTS-BUYERS WERE KNOWN BY DEFENDANTS-APPELLEES-SELLERS NOT TO BE TRUE. *Page 101
 {¶ 4} "II. THE TRIAL COURT ERRED IN GRANTING DEFENDANTS-APPELLEES-SELLERS SUMMARY JUDGMENT BECAUSE DEFENDANTS-APPELLEES-SELLERS HAD A DUTY TO DISCLOSE THE WATER PROBLEMS WITH THE HOME AND THEY DID NOT DO SO.
 STATEMENT OF THE FACTS AND CASE {¶ 5} Appellees had a new home constructed by Third Party Defendant, Terrence Grywalski dba Terrence Homes which they occupied in November, 1997.
 {¶ 6} Some basement water problems occurred prior to such property being listed for sale in early 1999.
 {¶ 7} Appellants examined the property on three separate occasions prior to purchasing such home. They were not limited in such examination. While they chose not to have the home professionally inspected as such, they were accompanied on one inspection by a family friend who had begun a home inspection business.
 {¶ 8} Appellants observed indication of prior basement water problems on walls, carpet and sill.
 {¶ 9} Appellees and Appellees met only on the third inspection. On inquiry, Appellants stated that on one occasion, water entered the home due to an ice storm and on another occasion because of a blocked drain. The facts presented by Appellants and accepted as accurate by Appellees are that water problems occurred seven times during Appellees ownership. The real estate disclosure form did not accurately list all occasions of water leakage. Appellants were aware, however, of the inaccuracy of such disclosure. (Stacy Funk, Deposition, Page 40, Lines 13-18). Appellees offered no additional information as to water problems.
 {¶ 10} The contract of sale, which contained an "as is" clause, provided for a $330,000.00 purchase price. As the bank appraisal did not meet such sale price, it was re-negotiated to $320,000.00 and an extension was granted to coincide with the sale of Appellant's prior home.
 {¶ 11} On the third day after moving into the home, a thunderstorm of several hours duration occurred. The patio drain could not handle the excessive water and a backup occurred. Appellants have experienced dampness on the basement walls on several occasions since that episode, although it has not reached the basement floor.
 {¶ 12} After unsuccessful attempts to resolve the problem with Appellees, Appellants filed suit asserting several causes of action, to-wit: Verbal and written representations which were false and misleading, fraud, misrepresentation, non-disclosure, breach of express warranty and of habitability and of good faith and fair dealing. Appellees responded and brought their builder into the action. *Page 102 
 {¶ 13} Appellees filed a motion for summary judgment which the court sustained. As a result of this action, the court also dismissed the third party action involving the builder.
 {¶ 14} We shall review each Assignment of Error simultaneously as each deals with the applicability of the Civil Rule 56 decision.
 SUMMARY JUDGMENT STANDARD {¶ 15} Summary judgment proceedings present the appellate court with the unique opportunity of reviewing the evidence in the same manner as the trial court. Smiddy v. The Wedding Party, Inc. (1987),30 Ohio St.3d 35, 36. Civ.R. 56(C) states, in pertinent part:
 {¶ 16} "Summary Judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, written admissions, affidavits, transcripts of evidence in the pending case, and written stipulations of fact, if any, timely filed in the action, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. . . . A summary judgment shall not be rendered unless it appears from such evidence or stipulation and only therefrom, that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, such party being entitled to have the evidence or stipulation construed most strongly in his favor."
 {¶ 17} Pursuant to the above rule, a trial court may not enter a summary judgment if it appears a material fact is genuinely disputed. The party moving for summary judgment bears the initial burden of informing the trial court of the basis for its motion and identifying those portions of the record that demonstrate the absence of a genuine issue of material fact. The moving party may not make a conclusory assertion that the non-moving party has no evidence to prove its case. The moving party must specifically point to some evidence which demonstrates the non-moving party cannot support its claim. If the moving party satisfies this requirement, the burden shifts to the non-moving party to set forth specific facts demonstrating there is a genuine issue of material fact for trial. Vahila v. Hall (1997), 77 Ohio St.3d 421, 429, citing Dresher v.Burt (1996), 75 Ohio St.3d 280.
 {¶ 18} It is based upon this standard we review each of Appellant=s Assignments of Error.
 {¶ 19} Each Assignment is essentially predicated upon fraudulent misrepresentations or conduct asserted as to Appellees, either by false disclosures or failure to disclose. *Page 103 
 {¶ 20} The elements of fraud or fraudulent misrepresentation are (1) a representation or, where there is a 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 upon it; (5) followed by justifiable reliance upon the representation or concealment by the other party and (6) a resulting injury proximately caused by the reliance. See Friedland v. Lipman (1980), 68 Ohio App.2d 255.
 {¶ 21} On the other hand, the doctrine of caveat emptor must be considered relative to the data before the court in making its ruling on the Appellee's Summary Judgment Motion.
 {¶ 22} The Ohio Supreme Court in Layman v. Binns (1988),35 Ohio St.3d 176, 519 N.E.2d 642, set forth the doctrine of caveat emptor in the syllabus wherein it stated:
 {¶ 23} The doctrine of caveat emptor precludes recovery in an action by the purchaser where: (1) the condition complained of is open to observation or discernable upon reasonable inspection; (2) the purchaser had the unimpeded opportunity to examine the premises; and (3) there is no fraud on the part of the vendor.
 {¶ 24} Under the rule of caveat emptor, buyers are responsible for discerning patent defects. Layman, supra. If a purchase agreement states that the buyer purchases real property in its "as is" physical condition, the vendor has no duty to disclose latent defects. Kossutichv. Krann (Aug. 19, 1990), Cuyahoga App. No. 57255, unreported, citingKlott v. Associates Real Estates (1974), 41 Ohio App.2d 118,322 N.E.2d 690. A seller may be liable for non-disclosure of a latent defect when he is under a duty to disclose facts and fails to do so. Layman, supra.
 {¶ 25} The Court in Kaye v. Buehrle (1983), 8 Ohio App.3d 381, addressed the "as is" clause in the home sale contract before it and stated:
 {¶ 26} "The `as is' contract provision cannot be relied upon, however, to relieve the defendants of liability on a claim for fraudulent misrepresentation. See, also, Mancini v. Gorick (1987), 41 Ohio App.3d 373. The basic elements of a cause of action for fraudulent misrepresentation include an actual or implied misrepresentation which is material to the transaction, made with knowledge that the statement is false, with the intent to mislead another who relies on the misrepresentation with resulting injury." Klott, supra. See also: Sanfillipo v. Rarden (1985),24 Ohio App.3d 164. *Page 104 
 {¶ 27} Even though such clause does not provide a defense to fraudulent misrepresentations, it does relieve a seller from any duty to disclose. Yuricek. v. Dye, (Dec. 15, 2000), Trumbull App. No. 99-T-0093.
 {¶ 28} The materials before the court in considering the Motion were the pleadings, depositions of Appellants, affidavits of William Scott Funk and the realtor, Jan Tanner Thompson and the matters contained within the briefs in support of and in response to Appellees' Motion. The affidavit of Mr. Funk and the deposition of Mrs. Funk differ, and the realtor's affidavit is inconsistent in that she asserts Appellee stated "no basement water problems" and later called stating the problem was fixed by the contractor.
 {¶ 29} While the response and this appeal include copies of purported excerpts from Appellees' deposition, such deposition has not been filed of record and the excerpts provided were not in affidavit form, and therefore, as required by Civil Rule 56, such transcripts are not of record to have been considered by the trial judge or this Court.
 {¶ 30} The portions of the Complaint which assert written representations which were false or misleading and express warranty essentially rely on the inaccurate, or at least incomplete, statements in the disclosure form.
 {¶ 31} R.C. 5302.30 provides with respect to such required disclosure: "that the statement is not a warranty of any kind by the transferor or by any agent or subagent representing the transferor in this transaction; that the statement is not a substitute for any inspections; that the transferee is encouraged to obtain his/her own professional inspection;".
 {¶ 32} R.C. 5302.30(J) states:
 {¶ 33} "The specification of items of information that must be disclosed in the property disclosure form as prescribed under division (D) of this section does not limit or abridge, and shall not be construed as limiting or abridging, any obligation to disclose any items of information that is created by any other provision of the Revised Code or the common law of this state or that may exist in order to preclude fraud, either by misrepresentation, concealment, or nondisclosure in a transaction involving the transfer of residential real property. The disclosure requirements of this section do not bar, and shall not be construed as barring, the application of any legal or equitable defense that a transferor of residential real property may assert in a civil action commenced against the transferor by a prospective or actual transferee of that property."
 {¶ 34} Essentially, such Code provision as stated in Belluardov. Blankenship, June 4, 1998, Eighth App. District, #72601. "does not effectively negate prior law relating to "as is" residential home purchase agreements." Rather it *Page 105 
"codifies the common law doctrine of caveat emptor by requiring homeowners to disclose all known latent defects." Thus, where plaintiff conducted an inspection of the property and learned that problems existed in the past but chose not to undertake further investigation, the "as is" disclaimer removed the agent's duty to disclose information relating to the basement: "
 {¶ 35} While R.C. 5302.30 specifically states that the disclosure form it requires is not a warranty, it can form the basis for false representations contained therein if such form a basis for reliance,Teter v. Rossi, (Sept. 13, 2002), Trumbull App. No. 2001-T-0103, 2002 Ohio 4818.
 {¶ 36} Essentially, a seller entering into a contract of sale with an "as is" clause, even though relieved from a duty to disclose, cannot make affirmative false statements to a buyer, a realtor or in a disclosure form if such is relied upon by a buyer.
 {¶ 37} This Court considered such in Ataya v. Beckerl, (January 28, 1998) Stark App. No. 1997 CA 00191, in which a summary judgment decision was reversed premised upon the conclusion that an affirmative statement as to the complete waterproofing of a basement when only 15% had been waterproofed presented a material fact requiring determination of reliance by the trier of fact: Affirmative, contrary to fact statements have also been considered in Schlecht v. Helton, (January 16, 1997) Cuyahoga App. No. 70582, and Kossutich v. Krann (August 19, 1990), Cuyahoga App. No. 57255.
 {¶ 38} Applying these standards to the case sub judice, we have open and obvious evidence of basement water problems putting the Appellants upon notice. They had the opportunity to have an inspection made, which is encouraged by R.C. 5302.30 and to an extent they did this by utilization of their home inspector friend who also observed such evidence.
 {¶ 39} Appellants were clearly aware, therefore, of prior problems. Their respective depositions indicate this. (See Stacy Funk Deposition, Pages 34, 35, 50, 63, 64, 65 and 81. Also, W.S. Funk Deposition, Pages 43, 52, 54, 58 and 62.)
 {¶ 40} No false, affirmative statements were made by Appellants, although additional events were not disclosed. As the realtor's affidavit is inconsistent and Mr. Funk's differs from that of his wife's deposition, the Court could reasonably place more reliance on the latter's deposition as to observations, lack of statements and non-reliance on the disclosure form.
 {¶ 41} Appellants knew the non-disclosure statements were inaccurate, (Stacy Funk Deposition, Page 40, Lines 13-18), and therefore, cannot meet the requirements of affirmative false statements in a contract containing an "as is" clause, nor the burden of reliance. *Page 106 
 {¶ 42} We, therefore, disagree with each of the two Assignments of Error and affirm the decision of trial court.