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REAL ESTATE CASES
Equitable subrogation does not apply to benefit party
that failed to discover mortgage interest.
IndyMac Bank, FSB v. Bridges (10th
Dist. 2006), 169 Ohio App. 3d 389. A property owner,
Key, granted a mortgage in favor of International
Mortgage on January 12, 2000. Key then granted a balloon
mortgage in favor of Goss on January 25, 2000, which was
re-recorded on February 17, 2000. In January 2001, Key
sold the property to her son, Bridges. Bridges granted a
mortgage in favor of IndyMac on February 7, 2001. At the
closing, the closing agent disbursed funds to
International Mortgage to pay off the first mortgage
loan, and the remaining amounts were distributed to
Key. Goss did not receive any proceeds from the sale,
apparently because IndyMac's title examiner failed to
discover his mortgage.
Bridges subsequently defaulted on the loan, and IndyMac
received the entire proceeds from the sheriff's sale.
After the trial court confirmed the sale, Goss sought to
set aside the order of distribution. IndyMac argued that
since Goss originally bargained for second mortgage
position, he remained in the same position and therefore
suffered no prejudice by application of the doctrine of
equitable subrogation. The trial court agreed. The
court of appeals reversed, and held that equitable
subrogation was not applicable in the circumstances
because the fact that Goss did not receive any
distribution from the sale was due to IndyMac’s title
examiner's error. IndyMac was in the best position to
discover Goss's mortgage interest at the time of the
sale, and it failed to do so. Therefore, the equities
were not in IndyMac's favor.
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Intent to claim title not
required to establish adverse possession.
Evanich v. Bridge, 9th Dist.
No. 05 CA 008824, 2007 Ohio 1349. Bridge appealed the
trial court’s determination that his neighbor, Evanich,
adversely possessed his property because the trial court
did not require the Evanich to prove intent to claim
title. The appellate court rejected this argument and
held that the doctrine of adverse possession protects
one who has honestly entered and held possession in the
belief that the land was his own, as well as one who
knowingly appropriates the land of others for the
purpose of acquiring title.
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The tenant sought a declaratory judgment that the lessor
could not terminate her tenancy if she complied with two
settlement agreements. The trial court granted the
tenant's summary judgment motion, and the lessor
appealed.
Regency
Plaza, LLC v. Morantz, 2007 Ohio 2594 (Ohio Ct.
App. 2007). Appellant lessor sought a declaratory
judgment in the Franklin County Court of Common Pleas
(Ohio) that appellee tenant's lease was not indefinitely
renewable by her and that the lessor could terminate it
on 30 days notice. The tenant sought a declaratory
judgment that the lessor could not terminate her tenancy
if she complied with two settlement agreements. The
trial court granted the tenant's summary judgment
motion, and the lessor appealed. The parties
entered into two settlements. The appellate court held
the first agreed not to terminate the tenancy unless one
of three events made the lease void. Neither the lease
or settlement gave the tenant all rights to terminate
the tenancy, so no perpetual lease was created, and this
did not make the lease terminable at the lessor's will.
A presumption that a lease at the will of one party was
at the will of both did not apply because the parties'
intent was clearly stated. A provision that the lease
was void on a change in ownership was not triggered on
the property's transfer to the lessors' partnership or
limited liability company, as (1) they agreed the
transfer to the partnership did not void the first
settlement, (2) a lessor said neither transfer was done
to avoid the settlements, and (3) the lessors controlled
all entities with title to the property. If the lease
was defectively executed, under R.C. § 5301.01, it
created an equitable leasehold, as it was treated as
enforceable despite any deficiencies. The second
settlement agreed the lease was in full force and
effect. The first settlement leased no interest in
realty, so it did not have to comply with § 5301.01.
The trial court's judgment was affirmed.
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Appellant lessees sought review of the judgment of the
Lake County Common Pleas Court (Ohio), which awarded
judgment to appellee lessor for holdover rentals and
other expenses as compensatory damages along with
attorney fees as the result of the lessees' failure to
vacate the leased premises upon the conclusion of the
lease.
Brunswick Ltd. P'ship v. Feudo, 2007 Ohio 2163
(Ohio Ct. App. 2007). Appellant lessees sought
review of the judgment of the Lake County Common Pleas
Court (Ohio), which awarded judgment to appellee lessor
for holdover rentals and other expenses as compensatory
damages along with attorney fees as the result of the
lessees' failure to vacate the leased premises upon the
conclusion of the lease. The lessees entered into
a five-year lease with the lessor. Although attempts
were made to renew the lease at a stated rental of $
1,900 per month, the parties were unable to reach an
agreement. After the expiration of the lease, the
lessees remained in the rental premises for four months,
during which time they paid $ 2,206 per month to the
lessor. The lessor, then, filed suit against the
lessees. The trial court found that, pursuant to a
provision in the parties' lease, the lessor was owed
double rent for the four months of holding over. On
appeal, the lessees contended that the trial court erred
by ignoring binding precedent holding that a "hold over"
clause providing for double rent was unconscionable and
unenforceable. However, the court reviewed the precedent
cited by the lessees and concluded that the case did not
support the argument that holdover provisions containing
double-rent terms were illegal; instead, the decision
accepted the legality of such a provision as long as it
bore some relation to the landlord's actual damages. The
court concluded that a double-rent provision for a
holdover tenant in a commercial lease was not, without
more, an illegal penalty provision. The court
affirmed the judgment of the trial court.
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The Stark County Court of Common Pleas (Ohio) granted
the bank's motion for summary judgment and entered a
decree in foreclosure and reformation. The parents
appealed.
JP
Morgan Chase Bank, NA v. Qualls, 170 Ohio App.
3d 128 (Ohio Ct. App. 2007). Plaintiff bank filed
a complaint against defendant property owners (a son and
his parents) seeking foreclosure, deed reformation, and
quiet title. It sought to have the deed reformed to
transfer the parents' entire interest in the property to
the son, who was the sole debtor. The Stark County Court
of Common Pleas (Ohio) granted the bank's motion for
summary judgment and entered a decree in foreclosure and
reformation. The parents appealed. The parents
argued that the trial court erred in granting summary
judgment to the bank, including reformation of the deed,
and erred in denying their motion for partial summary
judgment. The appellate court held that the trial court
erred in granting summary judgment. The trial court
found that the deed contained a scrivener's error and
that the parents had intended to convey the entire
property to the son, rather than a one-third undivided
interest. As the record stood, the deed transferred to
the son an undivided one-third interest only, and the
note and mortgage identified him as the sole borrower
based upon the pledge of that undivided one-third
interest. Although the bank might be entitled to
equitable relief and/or recovery from a third party
after resolving the factual issues, the current extent
of the record under a summary judgment standard was
insufficient to support the trial court's "finding" of
scrivener's error. Construing the evidence in favor of
the non-moving party required a reversal on the issue of
the clear language of the deed and mortgage. The
judgment of the trial court was reversed and the cause
was remanded.
CONSTRUCTION CASES
Removal of the scaffolding and
the installation of guardrail not “active participation”
under Cafferkey.
Rockett v. Newark Builders Supply, Inc.
(5th Dist. 2006), 169 Ohio App. 3d 379.
Arrow Home Services, LLC was constructing a
residential home, and hired Newark Builders Supply,
Inc., to perform drywall work. Newark hired independent
contractors, Rockett and Hastings to sand the drywall.
Rockett, fell to the basement floor and died. His father
filed a complaint claiming negligence and wrongful
death. He argued that Arrow and Newark owed his son a
duty because the removal of scaffolding and a guardrail
constituted "active participation." The trial court
disagreed and granted summary judgment in favor of Arrow
and Newark. The appellate court affirmed finding that
removal of the guardrail and installation of the
scaffolding by the subcontractor and the removal of the
scaffolding and the installation of the guardrail by the
general contractor, as well as the absence of defendants
on the job site on the day of the incident, did not
equate to "active participation." Specifically, there
was no evidence the general contractor directed any of
the activity of the independent contractors or that it
gave or denied permission for critical acts that led to
the injury.
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No unjust enrichment where
property owner entitled to maintenance pursuant to lease
agreement.
Am. R.R. Constr. v. Columbiana County Port Auth.,
7th Dist. No. 06 CO 14, 2007, 2007 Ohio 1568.
The Columbiana County Port Authority owned a
railroad right of way. It leased the right to operate
the railway to a railway operator. The Port Authority
made improvements to the line and the operator agreed to
maintain the track. When a train derailed, the operator
entered into a verbal agreement with American Railroad
to repair the tracks. American Railroad was not paid for
work performed because of the operator's bankruptcy.
American Railroad then billed the Port Authority, which
refused to pay. American Railroad filed suit for unjust
enrichment and the trial court entered judgment in favor
of the Port Authority. The court of appeals upheld the
trial court's determination that the Port Authority was
not unjustly enriched by the work performed by American
Railroad. The Port Authority did not enter into the
contract with American Railroad, and it did not receive
a benefit to which it was not entitled, based on the
operator's lease obligations to maintain the track. The
court held it would not have been equitable to hold the
Port Authority liable for the operator's obligation.
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Appellants, an oil and gas producer and its parent
company, sued appellees, a landowner, a contractor, and
an insurer, in the Franklin County Court of Common Pleas
(Ohio) for negligence.
Ohio
Energy Assets, Inc. v. Grange Ins., 2007 Ohio
2732 (Ohio Ct. App. 2007). Appellants, an oil and
gas producer and its parent company, sued appellees, a
landowner, a contractor, and an insurer, in the Franklin
County Court of Common Pleas (Ohio) for negligence. The
trial court granted summary judgment in favor of the
landowner, and appellants sought review. The
landowner hired the contractor to clear a creek on the
landowner's property without telling the contractor the
producer's pipeline ran under the creek. The contractor
ruptured the pipeline. The appellate court held the
producer's claim that injury was foreseeable ignored the
contractor's possible common law duty to independently
find the pipeline, if he was an excavator. The landowner
could assume the contractor would observe any such duty,
so a reasonable, prudent person would not anticipate the
landowner's silence would lead to injury to the
pipelines, as a reasonable, prudent person would expect
an excavator's performance of his duty would prevent
such injury. Absent a foreseeable injury, the landowner
owed the producer no duty. Conflict on whether the
contractor was an excavator created a genuine fact
issue, so it was error to grant summary judgment. The
producer was not an invitee to whom the landowner owed a
duty because only the contractor was invited onto the
property and exposed to a danger while there, but
because the landowner could owe a duty to the producer
based on the foreseeability of the injuries, summary
judgment was improper. The trial court's judgment
was reversed, and the matter was remanded to the trial
court.
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