Kruse v. Holzer

Tyack, J. On January 9, 1984, John and Sandra Kruse, plaintiffs-appellants herein, entered into a contract for the purchase of a condominium owned and built by Summertree Homes, Inc. Before entering into the contract, the Kruses apparently inquired of Holzer-Wollam Realtors, Inc. (“Holzer-Wollam”), the brokerage firm representing the seller, as to the solvency of Summertree Homes, Inc. and its ability to convey clear title. The Kruses purportedly were told that the builder/seller was solvent, that no liens were attached to the property, and that no lawsuits were pending against Summertree. The Kruses paid a deposit of $2,500. Under the contract the Kruses were to lease the condominium for a period of up to twelve months before closing. Upon moving into the condominium they discovered a number of *357 things not to their liking, including the fact that Summertree was none too solvent and that Max W. Holzer of Holzer-Wollam was initiating a lawsuit against Summertree and others to foreclose on mortgages owned by him. John and Sandra Kruse then hired counsel and began attempting to negotiate a rescission of the contract and reimbursement of their expenses, including the value of certain improvements they had made to the condominium. While these negotiations were in progress, Holzer-Wollam apparently attempted to comply for the first time with certain portions of R.C. Chapter 5311 related to “Condominium Property.” After the Kruses hired new counsel an agreement rescinding the contract and allowing return of most of the deposit was negotiated. The agreement reserved to the Kruses any claims they otherwise had against Holzer-Wollam and Max Holzer. On March 26, 1985, the Kruses filed an action in the Court of Common Pleas of Franklin County against Max W. Holzer, Holzer-Wollam and Sum-mertree Homes, Inc., defendants-ap-pellees herein. The action included claims under R.C. Chapter 5311, breach of express warranty, breach of contract, and fraud. The complaint was later amended to add a claim related to the failure to return the balance of the security deposit for the lease period in which the Kruses occupied the condominium. The defendants ultimately filed a motion for summary judgment. The trial court granted summary judgment in a decision which only addressed its interpretation of R.C. 5311.27. After journalization of the trial court’s decision, the plaintiffs appealed, assigning two errors for consideration: “I. The trial court erred in granting summary judgment to the ap-pellees by holding that the remedies set forth in section 5311.27(B) of the Ohio Revised Code were available only to actual purchasers and were not available to prospective condominium purchasers. “II. The trial court erred in granting summary judgment to the ap-pellees without giving consideration to plaintiffs-appellants’ cause of action for fraud and misrepresentation.” The first assignment of error asks this court to interpret R.C. 5311.27, which reads in pertinent part: “(A) In addition to any other remedy available, a contract or agreement for the sale of a condominium ownership interest that is executed in violation of section 5311.25 or 5311.26 of the Revised Code shall be voidable by the purchaser for a period of fifteen days after the date of sale of the condominium ownership interest or fifteen days after the date upon which the purchaser executes a document evidencing receipt of the information required by section 5311.26 of the Revised Code, whichever occurs later. Upon exercise of this right to void the contract or agreement, the developer or his agent shall refund fully and promptly to the purchaser any deposit or other prepaid fee or item and any amount paid on the purchase price, and shall pay all closing costs paid by the purchaser or for which he is liable in connection with the void sale. “(B) Any developer or agent who sells a condominium ownership interest in violation of section 5311.25 or 5311.26 of the Revised Code shall.be liable to the purchaser in an amount equal to the difference between the amount paid for the interest and the least of the following amounts: “(1) The fair market value of the interest as of the time the suit is brought; “(2) The price at which the interest is disposed of in a bona fide market transaction before suit; “(3) The price at which the unit is *358 disposed of after suit in a bona fide market transaction, but before judgment. In no case shall the amount recoverable under this division be less than the sum of five hundred dollars for each violation against each purchaser bringing an action under this division, together with court costs and reasonable attorneys’ fees. If the purchaser complaining of the violation of section 5311.25 or 5311.26 of the Revised Code has brought or maintained an action he knew to be groundless or in bad faith and the developer or agent prevails, the court shall award reasonable attorneys’ fees to the developer or agent.” R.C. 5311.27(A) gives the purchaser of a condominium ownership interest which is executed in violation of R.C. 5311.25 or 5311.26 the later of fifteen days after closing or fifteen days after the purchaser acknowledges receipt of the mandated information in writing in which to void the sales contract or agreement. “Purchaser” is defined in R.C. 5311.01(0) as follows: “ ‘Purchaser’ includes both an actual and a prospective purchaser of a condominium ownership interest.” “Sale of a condominium ownership interest” is also defined by statute. R.C. 5311.01(N) states: “ ‘Sale of a condominium ownership interest’ means the execution by both parties of an agreement for the conveyance or transfer for consideration of a condominium ownership interest, except ‘sale of a condominium ownership interest’ for purposes of this chapter shall not include a transfer of two or more units from the developer to another developer, a subsidiary of the developer, or a financial institution for the purpose of facilitating the sale of or the development of the remaining or unsold portion of the property.” The trial court, upon review of the above statutory provisions, ruled that the legislature intended the remedy in R.C. 5311.27(B) to be limited to actual purchases. The trial court relied on the theory that damages are defined as the difference between the amount paid and (1) fair market value as of date of suit; (2) fair market value as of date of sale if sold before the suit; or (3) fair market value after the suit, if sold after the suit is filed. If the legislature had ended the statute at this point, the trial court’s theory might be persuasive. But since the legislature continued and indicated that in no case shall the amount recoverable be less than $500 together with attorney fees and costs, the legislature apparently intended to ensure that purchasers and prospective purchasers who are treated illegally in the course of a transaction concerning the sale of a condominium interest should not have to bear the financial burden of remedying the illegal conduct, but the burden should fall on the wrongdoer; and the party seeking to vindicate his or her rights should have some minimal compensation for his or her time and effort. Thus interpreting the statute, the trial court was mistaken in granting summary judgment for the defendants. The first assignment of error is sustained. The second assignment of error is likewise sustained. The trial court’s decision on the summary judgment motion nowhere addresses four of the five claims set forth in the amended complaint. This court is not willing to affirm a ruling in a summary judgment motion which may dismiss all claims when only one claim is specifically addressed. The judgment of the trial court is vacated and this cause is remanded for further proceedings. Judgment vacated and cause remanded. *359 Feighan, J., concurs. Whiteside, J., dissents. Feighan, J., of the Cuyahoga County Court of Common Pleas, sitting by assignment in the Tenth Appellate District.