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1 Ne Jn t^[^e ^u^rrme (nnur^ af (^1^tn M4 C ffo^ RISA DUNN-HALPERN, Y. nn Plaintiff-Appellant, iq LAIr af s+l ON DISCRETIONARY APPEAL FROM THE Defendants-Appellees. COURT OF APPEALS, EIGHTH APPELLATE DIST T CUYAHOGA COUNTY, OHIO CASE Ns CA F C^ JUN ^IARCIA J. MENGEL, REME CUUF'tT OF UIiIU MEMORANDUM OF APPELLEES STEVEN DERIN AND DEBORAH DERIN IN OPPOSITION TO JURISDICTION HARVEY B. BRUNER (# ) HARVEY B. BRUNER & ASSOC Illuminating Building 55 Public Square. Cleveland, Ohio Tel: (216) Fax: (216) hbbdef@aol.com Counsel for Plaintiff-Appellant, Risa DunlV_F&Ipern r-- /7 ^' JUN 13 Zi?U7 TIMOTHY J. FITZGERALD (# ) [COUNSEL OF RECORD] TODD M. HAEMMERLE (# ) GALLAGHER SHARP Bulkley Building, Sixth Floor 1501 Euclid Avenue Cleveland, OH Tel: (216) Fax: (216) tfitzgerald@gallaghersharp.com thaemmerle@gallaghersharp.com Counsel for Defendants Appellees, Steven Derin and Deborah Derin A4AP i upr Liui. ; ;UF

2 TABLE OF CONTENTS page: EXPLANATION OF WHY THE ISSUES RAISED IN THIS APPEAL ARE NOT OF PUBLIC OR GREAT GENERAL INTEREST STATEMENT OF FACTS ARGUMENT OPPOSING APPELLANT'S PROPOSITIONS OF LAW S- Counter-Prouositions of Law Nos. 1 and 3: Summary judgment is appropriate on a complaint for fraudulent concealment of a latent defect in the sale of residential real estate when there is no genuine issue of material fact from which the jury could find that the seller had knowledge of the defective condition in the property Counter-Proposition of Law No. 2: In Ohio real estate transactions, the caveat ernptordoctrine precludes recovery by the buyer for defects in the property if the following apply: (1) the condition complained of is open to observation or discoverable upon reasonable inspection; (2) the purchaser had the full and unimpeded opportunity to examine the premises; and (3) there is no evidence of fraud on the part of the vendor. (Layman v. Binns [1988], 35 Ohio St. 3d 176, applied and followed) CONCLUSION CERTIFICATE OF SERVICE

3 I. EXPLANATION OF WHY THE ISSUES RAISED IN THIS APPEAL ARE NOT OF PUBLIC OR GREAT GENERAL INTEREST Section 2(B)(2)(e) of Article IV of the Ohio Constitution dictates that the Supreme Court of Ohio's discretionary jurisdiction is reserved for "cases of public or great general interest." Cases presenting questions and issues of public or great general interest are to be distinguished from cases where the outcome is primarily of interest to the parties in a particular piece of litigation. Williamson v. Ru.bich (1960), 171 Ohio St. 253, 254. While undoubtedly important to the parties here, this appeal falls into the latter category of cases referenced in Wilhamson. Because this case does not present issues of public or great general interest, jurisdiction over this appeal should be declined. This appeal arises out of a civil complaint filed by Plaintiff-Appellant, Risa Dunn-Halpern ("Dunn-Halpern"), which involves claims stemming from the purchase of residential real estate located in Pepper Pike, Ohio, a suburb of Cleveland. The property was purchased by Dunn-Halpern and her husband, Scott Halpern, in July of 2002 from the Defendants-Appellees, Steven and Deborah Derin (collectively "the Derins"). The purchase price was $579,000. Subsequent to taking possession of the property, Dunn-Halpern's complaint alleges that mold was discovered in a number of locations throughout the house. As a result, Dunn-Halpern filed suit against, among others, the Derins, alleging that they "intentionally, recklessly and/or negligently" failed to disclose "latent defects" in the property prior to the sale of the home. Because existing law in Ohio covering fraud in the sale of resideritial real estate will not support the claim being made here, the Appellants have tried to creatively -1-

4 recharacterize their claims and arguments. Adoption of Appellant's propositions of law would exempt these types of cases from the scrutiny given to all other civil causes of action under Civ. R. 56. In essence, as long as a plaintiff could get beyond a Civ.R 12(B)(6) motion, summary judgment could never be granted in a fraud case involving the sale of real estate because the knowledge elements would, as a matter of law, be a question of fact for the jury to decide. This case is a perfect example of why such a standard cannot be the law in Ohio. Here there is no evidence, and Appellant has so conceded, to establish knowledge on the part of the sellers. Regardless of how Appellant might try to portray and recast the claims being made in this appeal to avail herself of a different legal theory, the evidence in the record does not satisfy the only recognized claim in Ohio arising out of the alleged fraudulent concealment of latent defects in the sale of residential real estate. Quite simply, this discretionary appeal has been filed in order to advocate that the Court of Appeals came to the wrong (or at least less desirable) holding. By seeking review in this Court, Appellant hopes that a different outcome might be achieved and a new theory for loss of evidence created. That self-interest notwithstanding, this Court's discretionary jurisdiction does not encompass error correction. See, Ba ughman v. State Farm MutualAutomobile Insurance Company(2000), 88 Ohio St. 3d 480, 492 (Cook, J., concur). There is nothing unique or distinctive about this case. Appellant has cited no case in conflict with the Eighth District's decision here. There is no suggestion that this Court needs to resolve an emerging divergence in legal holdings from different appellate districts. Nothing of public or great general interest warrants the Court accepting jurisdiction over this appeal. The Court should decline to exercise jurisdiction over this -2-

5 appeal. II. STATEMENT OF FACTS Dunn-Halpern and her husband, Scott Halpern, began their property search about a year before they ultimately decided to buy the subject property on Bryce Road in Pepper Pike, Ohio. Both were sophisticated buyers. Dunn-Halpern is a board certified arliningict_ Scott Halnern is a salafi manager for a flooring outlet. Their search for a home was intensive, and included dozens and dozens of homes before they ultimately decided to purchase the one in Pepper Pike. They had a specific idea as to the type of home they were seeking. Specifically, they were interested in the location, size of the house, and situation of the home on the particular street. Conversely, they were not at all interested in the cosmetics or decor of the home. In fact, Scott Halpern commented, in terms of the cosmetics of the home, "the uglier the better" because the plan was to gut and reinodel the home. Dunn-Halpern and her husband first saw the Bryce Road home in May or June of Both had extensive and multiple opportunities to look at, inspect, and walk through this house before the contract for sale was finalized, and before title transferred. Scott Halpern's first visit to the house lasted approximately 15 minutes. He had the opportunity to walk through the entire house. On his second visit to the home, he was present for another minutes. Again, he had the opportunity to walk through the entire house. He noticed no problems with water or mold during either of his first two visits. When Scott Halpern visited the home yet a third time, he again spent minutes in the home, and once again had the opportunity to walk through the entire -3-

6 house. During his third visit, he noticed no problems with water or mold. These three visits all occurred before execution of the contract for the sale of the home. Likewise, Dunn-Halpern made multiple visits to the home before the contract for its purchase was executed. During Dunn-Halpern's first visit, she also testified that she had the opportunity to walk the entire house unimpeded. During her second visit, she again had the opportunity to walk into every room of the house. These would have accounted for Dunn-Halpern's two visits to the home before the contract for its purchase was executed. Ultimately, Dunn-Halpern and her husband executed a contract to purchase the subject property. In addition to multiple visits to the home prior to making their offer to purchase, Dunn-Halpern and her husband retained the services of a professional home inspector to inspect the home and property per the terms of the purchase contract. The inspector had access to every part of the home. Nobody limited his opportunity to look at anything in the home. Scott Halpern actually accompanied the inspector throughout the inspection, which lasted approximately four hours, and he observed nothing regarding water, mold, or otherwise. The inspector also did not comment about any problems with water or mold in the home. The professional inspector issued a report which made no mention of problems with water or mold. After the contract for the sale of the home was executed, both Dunn-Halpern and her husband had further opportunity to go through the home on additional occasions before title was transferred to them. Again, no problems with water, moisture, or mold were observed. -4-

7 The home was purchased with the intent of doing substantial and major remodeling. Dunn-Halpern and her husband had no plans to move into the home until the substantial renovation was completed. The intent was that the renovation would take 5-6 months. The parameters of this large-scale renovation, at a cost of $250,000, included, but were not necessarily limited to the following: 1. Stripping wallpaper throughout the home. 2. Removal and replacement of flooring throughout the house. 3. Removal and replacement of door frames, baseboards, window frames and doors. 4. Removal of multiple non-support walls. 5. Installation of a skylight in the second floor master bedroom. 6. Removal and replacement of plumbing fixtures, including bathtubs, toilets, and sinks throughout the house. 7. Complete and total renovation of the kitchen, including new cabinets, appliances, countertops, flooring, etc. 8. Removal and replacement of all lighting, fans, fixtures, etc. 9. Refacing of the fireplace 10. Removal and replacement of appliances in laundry room. 11. Installation of new bookcases in the living room. 12. Installation of a new staircase and banisters. There was a 3-4 week window between the time Dunn-Halpern and her husband took title to this home and the date the substantial renovation began. In that 3 or 4 week window, Dunn-Halpern and her husband were in the house almost every day for the purpose of looking at every room in the house, making renovation plans, etc. By this -5-

8 point, the house was empty of furnishings and personal property, and they had extensive opportunity to view every part of the home. As with past occasions, they made no observation regarding problems with water or mold. It wasn't until after the renovation was underway at the home that mold was allegedly discovered in various locations in the home, which included the following areas: 1. In the attic area of the home during installation of the master bedroom skylight; 3. At an area in the addition basement along the baseboard. 4. In a closet on the first floor adjacent to a bathroom. 5. In the bar area of the first floor. 6. In the living room between the window and the baseboard. In each instance, it has been conceded that there is no evidence or indication that the Derins knew of a problem with water, moisture or mold, which they failed to disclose to Dunn-Halpern and/or her husband before sale of this property. Dunn-Halpern herself testified: Q: Do you have any evidence, indication, or knowledge of any problems with water, moisture or mold that the Derins had knowledge of before closing but failed to disclose to you? A: No. Scott Halpern gave similar testimony. It is logical that the Derins would have no such knowledge of these problems. In each case, the problem was discovered only after substantial renovation work had been undertaken and the mold was found in areas that were otherwise inaccessible, covered -6-

9 by wallpaper, obstructed from view by permanent furnishings, woodwork, etc. Take, for example, the mold allegedly discovered in the attic. The attic mold was discovered only after the contractors had cut a hole in the roof for skylights. The attic was otherwise accessed by a hole in one of the upstairs bedroom closets. It was not living space, and the Derins had not used it for storage. Scott Halpern conceded that there was no reason to go into the attic. There is no evidence or indication that either of the Derins ever went up into the attic area, as there was no reason to go there. The other areas where mold was allegedly discovered were similarly remote. For example, Dunn-Halpern conceded that the mold in the living room between the window and the baseboard was discovered only after wallpaper was removed during the renovation process. The mold along the baseboard at only a couple of places in the basement was found only after renovation had started, and only after furniture and carpeting had been removed. In summary, this mold was discovered only after the house had been cleared of all personal property and after wallpaper, carpeting, baseboards, etc. had been removed. The mold was found in spots that were previously obstructed from view or otherwise in areas not accessible during normal living conditions. The mold of which Dunn-Halpern now complains was not discovered to any extent by either her or her husband, Scott Halpern, during their multiple visits to the home both before purchase and after purchase (but before renovation). Further, the mold was not discovered by their professional home inspector, even though he had complete, unlimited, and unimpeded access to all parts of the home. Without evidence, or other indication that the Derins knew of a problem with moisture or mold in this home, and failed to disclose it prior to the sale, the Derins were -7-

10 entitled to judgment in their favor as a matter of law. The Court of Appeals correctly affirmed the trial court's summary judgment. There is nothing about this case that would warrant further appellate review by this Court. There is no confusion in the courts below on the applicable law. There are no conflicting appellate court opinions on the law. There is no issue of public or great general interest that would justify this Court exercising its discretionary jurisdiction over this case. The Court should decline to accept this appeal. ARGUMENT OPPOSING APPELLANT'S PROPOSITIONS OF LAW Counter-Propositions of Law Nos. 1 and 3: Summary judgment is appropriate on a complaint for fraudulent concealment of a latent defect in the sale of residential real estate when there is no genuine issue of material fact from which the jury could find that the seller had knowledge of the defective condition in the property. In the trial court's entry granting summary judgment, the court stated that there was no genuine issue of material fact to establish knowledge by the Derins of a defect in the property (i.e., water/mold) which the Derins concealed with the intent to induce Dunn-Halpern's reliance and purchase of the Bryce Road property. In affirming summary judgment, the Court of Appeals agreed. Dunn-Halpern v. MAC Home Inspectors, Inc., 8 h Dist. No , 2007-Ohio-1853, at Under Ohio law, a plaintiff in a fraud case is required to prove each of the following elements: (1) a representation or, where there is a duty to disclose, concealment of a fact; (2) which is material to the transaction at hand; S-

11 (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) justifiable reliance upon the representation or concealment; and (6) a resulting injury proximately caused by the reliance. Burr v. Board of County Commissioners (1986), 23 Ohio St.3d 69, paragraph two of the syllabus. Failure to establish any of one of these elements precludes recovery. Mathias v. America Online, Inc., 8 h Dist. No , 2002 Ohio-814, 38; Burrat paragraph two of syllabus. A plaintiff in a real estate transaction, like Dunn-Halpern, cannot establish fraud when there is no evidence to establish that the seller had knowledge of a material fact which is allegedly concealed from the purchaser. Li v. Stanek, 8`h Dist. No , 2005-Ohio-4168, 13: To survive summary judgment, Dunn-Halpern was required to demonstrate that the Derins had actual knowledge of the mold problems in the house. See, e.g., Liotta v. Eckley(Jan. 13, 2000), 8th Dist. No , 2000 Ohio App. LEXIS 68, *7-9 (reversing judgment in favor of the buyer because there was no evidence in the record to demonstrate that the sellers knew of water problems in the basement). She failed to do so in the trial court. She failed to carry her burden to convince the Court of Appeals that the trial court had erred in this regard. As the Court of Appeals correctly noted, the evidence fails to create a genuine issue of material fact from which a jury could reasonably conclude that the Derins had knowledge of the mold and moisture problem. Dunn-Halpern, at 18. Furthermore, as the trial court aptly noted, Dunn-Halpern did not justifiably rely on -9-

12 any alleged misrepresentations or concealment and, as a result, cannot establish fraud. A buyer who seeks damages for fraudulent concealment or fraudulent misrepresentations must establish justifiable reliance on the concealed defect or misrepresentation. Gaines v. Preterm-Cleveland, Inc. (1987), 33 Ohio St.3d 54, 55. But, a buyer cannot be found to have justifiably relied upon an alleged concealment or representation attributable to the seller where the buyer exercises the right to have an inspection done of the property by a professional inspector of the buyer's choosing. See, Liotta, supra, at *10; see also, Kimball v. Duy, 11t'' Dist. No L-046, 2002-Ohio-7279, 24. In Liotta, like here, the purchase agreement gave the purchaser the right to have an inspection done of the property before closing. The Liotta plaintiff exercised his option to inspect the property and "hired a construction worker to perform the inspection on the home." Id. at *10. As a result, this Court noted that the plaintiff could not have relied on any misrepresentations or concealment as a matter of law. Id. This rationale comes from the fact that a buyer should not be able to complain about a defect that an inspection should have revealed. See e.g., Belluardo v. Blankenship (June 4, 1998), 8th Dist. No , 1998 Ohio App. LEXIS 2409, *14. Here, like the purchaser in Liotta, Dunn-Halpern and her husband exercised the right to have the property inspected as the purchase agreement permitted them to do. The inspector along with Scott Halpern inspected the home and property. In the case at bar, there is simply no evidence to support a claim of fraud against the Derins. Dunn-Halpern has conceded that there is no evidence or indication that the Derins knew about the mold and water problems but failed to disclose them. Further, the problems were discovered only after all furnishings had been removed, and -10-

13 substantial renovation of the home had begun. For example, the alleged attic mold was discovered only after a hole was cut in the roof to install a new skylight. The mold in the living room was discovered only after wallpaper and furnishings had been removed. Other mold in small quantities was discovered only after wallpaper had been removed, personal belongings of the sellers had been removed, etc. There is simply no evidence that the Derins had knowledge of mold and intentionally concealed that knowledge from Dunn-Halpern and her husband. Counter-Proposition of Law No. 2: In Ohio real estate transactions, the caveat emptor doctrine precludes recovery by the buyer for defects in the property if the following apply: (1) the condition complained of is open to observation or discoverable upon reasonable inspection; (2) the purchaser had the full and unimpeded opportunity to examine the premises; and (3) there is no evidence of fraud on the part of the vendor. (Layman v. Binns [1988], 35 Ohio St. 3d 176, applied and followed). The doctrine of caveat emptor is designed to finalize real estate transactions by preventing disappointed real estate buyers from litigating every imperfection existing in residential property. Layman v. Binns(1988), 35 Ohio St. 3d 176, 177. In real estate transactions, the caveat emptordoctrine precludes recovery by the buyer for defects in the property if the following apply: (1) the condition complained of is open to observation or discoverable upon reasonable inspection; (2) the purchaser had the full and unimpeded opportunity to examine the premises; and (3) there is no evidence of fraud on the part of 58, 17. In order to avoid operation of caveat emptor, the buyer has the burden of proof under each of the three elements. See Layman at 179 (reversing a.bench trial damages award because the plaintiffs failed to establish the third element). Here, the record demonstrates that Dunn-Halpern failed to produce evidence to the vendor. Layman at ; McClintock v. Fluellen, 8th Dist. No , 2004-Oliio- -11-

14 overcome application of caveat emptor. That is, Dunn-Halpern failed to establish that the Derins engaged in fraud. The third prong of this test, i.e., the fraud element, has been thoroughly briefed above. The Derins did not engage in fraud given that they did not knowingly make any affirmative misrepresentation or actively conceal with the intent of misleading Dunn-Halpern. As long as a seller does not engage in fraud, the principle of caveat emptorbars any claims brought by a buyer. See, e.g., Moreland v.` Ksiazek, 8h1i Dist. No , 2004-Ohio The doctrine of caveat emptorprecludes the claims made here against the Derins and thus summary judgment was appropriately entered in their favor. This Court should decline to accept jurisdiction over this appeal as the Eighth District's decision here is a correct statement and application of the law of fraud in the sale of residential real estate. N CONCLUSION WHEREFORE, Defendants-Appellees, Steven Derin and Deborah Derin respectfully request that the Supreme Court of Ohio decline jurisdiction over this appeal because the issues presented in this case are not of public and great general interest. The Eighth Appellate District's decision in this case applies the law correctly such that the outcome is entirely consistent with the settled law announced by this Court relating to the duty to make disclosure of hidden defects in the sale of residential real estate. Date: June 12, 2007

15 Respectfully submitted, TIMO VIT ALD (# ) [COUNSEL OF RECORD] TODD M. HAEMMERLE (# ) GALLAGHER SHARP Bulkley Building, Sixth Floor 1501 Euclid Avenue eve an, Tel: (216) Fax: (216) Counsel for Defendants-Appellees, Steven Derin and Deborah Derin CERTIFICATE OF SERVICE A copy of the foregoing Memorandum ofappellees Steven Derin and Deborah Derin in Opposition to Jurisdiction has been served by regular U.S. Mail, this 12t'' day of June, 2007 to the following: Harvey B. Bruner, Esq. HARVEY B. BRUNER & Assoc Illuminating Building 55 Public Square Cleveland, Ohio Co unsel for Plain tiff Appellan t, Risa Dunn -Halpern TiMOTHIkJMTZQfKD (# ) [COUNSEL OF RECORD] TODD M. HAEMMERLE (# )

IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT LAKE COUNTY, OHIO. Civil Appeal from the Lake County Court of Common Pleas, Case No. 14 CV

[Cite as Muruschak v. Schafer, 2015-Ohio-5340.] IN THE COURT OF APPEALS ELEVENTH APPELLATE DISTRICT LAKE COUNTY, OHIO RYAN S. MARUSCHAK, et al., : O P I N I O N Plaintiffs-Appellants, : - vs - : CASE NO.