[Cite as Cronkelton v. Guaranteed Constr. Servs., 2013-Ohio-328.]




                      IN THE COURT OF APPEALS OF OHIO
                          THIRD APPELLATE DISTRICT
                               LOGAN COUNTY




CLIFFORD A. CRONKELTON,
TRUSTEE OF THE CLIFFORD A.
CRONKELTON TRUST DATED
APRIL 8, 1994,

        PLAINTIFF-APPELLEE,                                         CASE NO. 8-12-01

        v.

GUARANTEED CONSTRUCTION
SERVICES, LLC, DBA GUARANTEED
ASSET MANAGEMENT, ET AL.,                                           OPINION

        DEFENDANTS-APPELLANTS.




                  Appeal from Logan County Common Pleas Court
                           Trial Court No. CV-10-12-0605

                                     Judgment Affirmed

                           Date of Decision: February 4, 2013




APPEARANCES:

        James S. Savage and Douglas J. Segerman for Appellants

        Terrence G. Stolly and John D. Bodin for Appellee
Case No. 8-12-01



PRESTON, P.J.

         {¶1} Defendants-appellants, Guaranteed Construction Services, LLC, d.b.a.

Guaranteed Asset Management, and Patrick Shivley, appeal the Logan County

Court of Common Pleas’ jury verdict finding that they committed fraud and

awarding compensatory damages, punitive damages, and attorney fees to plaintiff-

appellee, Clifford Cronkelton.       Appellants contend the jury’s verdict was

erroneous because Cronkelton’s fraud claim was barred by the parol evidence rule,

that Cronkelton unjustifiably relied on Shivley’s statements, and that the award of

punitive damages and attorney fees was unwarranted. For the reasons that follow,

we affirm.

         {¶2} The case before this Court stems from a real estate transaction for a

foreclosed car wash in Bellefontaine, Ohio. (Doc. No. 1). On December 3, 2010,

Cronkelton filed a complaint against appellants in the Logan County Court of

Common Pleas following his purchase of the car wash. (Id.). Cronkelton asserted

three causes of action: breach of contract, negligent misrepresentation, and fraud.

(Id.).     Cronkelton claimed that he had reasonably relied on Shivley’s

misrepresentations that the car wash had been properly winterized and sought

compensatory damages, punitive damages, and attorney fees. (Id.). Appellants

filed their answer on January 5, 2011. (Doc. No. 12).



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       {¶3} On March 21, 2011, appellants filed a motion for summary judgment.

(Doc. No. 21). On April 29, 2011, Cronkelton filed his response. (Doc. No. 31).

The trial court granted appellants summary judgment on the breach of contract and

negligent misrepresentation claims, but denied appellants’ motion for summary

judgment on the fraud claim. (Doc. No. 33).

       {¶4} On October 25-27, 2011, the trial court held a jury trial on the fraud

claim. The jury returned a verdict for Cronkelton, awarding him compensatory

damages of $43,671, punitive damages of $66,000, and found that the trial court

should award Cronkelton attorney fees. (Doc. No. 73).

       {¶5} On November 8, 2011, the parties filed a stipulation for attorney fees

for the amount of $30,000. (Doc. No. 83). On November 10, 2011, the trial court

filed its judgment entry recording the jury’s verdict for Cronkelton and awarding

Cronkelton $43,671 in compensatory damages, $66,000 in punitive damages, and

$30,000 for attorney fees. (Doc. No. 86).

       {¶6} On November 23, 2011, appellants filed a motion for judgment

notwithstanding the verdict, and in the alternative, for a new trial or a remittitur of

the punitive damages. (Doc. No. 104). On December 14, 2011, Cronkelton filed

his motion in opposition. (Doc. No. 115). On January 20, 2012, the trial court

filed its judgment entry denying appellants’ motion. (Doc. No. 158).




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       {¶7} On February 17, 2012, appellants filed a notice of appeal. (Doc. No.

171). Appellants now raise three assignments of error for our review.

                            Assignment of Error No. I

       The fraud claim is barred under the parol evidence rule.

       {¶8} In their first assignment of error, appellants argue the trial court erred

by admitting evidence regarding Shivley’s statements that the car wash would be

winterized. Appellants contend that the parol evidence rule barred this evidence

because it was contrary to the “as is” term of the purchase agreement.

       {¶9} “The parol evidence rule states that ‘absent fraud, mistake or other

invalidating cause, the parties’ final written integration of their agreement may not

be varied, contradicted or supplemented by evidence of prior or contemporaneous

oral agreements, or prior written agreements.’” Galmish v. Cicchini, 90 Ohio

St.3d 22, 27 (2000), quoting 11 Williston on Contracts, Section 33:4, at 569-570

(4th Ed.1999). The parol evidence rule is a rule of substantive law that excludes

extrinsic evidence to prove the content of an agreement. Id. “‘The rule comes

into operation when there is a single and final memorial of the understanding of

the parties. When that takes place, prior and contemporaneous negotiations, oral

or written, are excluded; or, as it is sometimes said, the written memorial

supersedes these prior or contemporaneous negotiations.’”         Id., quoting In re

Gaines’ Estate, 15 Cal.2d 255, 264-265 (1940). The parol evidence rule thus


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protects the integrity of final, written agreements. Paragon Networks Internatl. v.

Macola, Inc., 3d Dist. No. 9-99-2, *4 (Apr. 28, 1999).

       {¶10} However, one exception to the parol evidence rule applies when a

party seeks to prove fraud in the execution or inducement of an agreement. Id. In

the case of fraudulent inducement, the party will often claim that facts outside of

the contract induced the party to enter into the agreement. Id. “‘Parties may not,

however, prove fraud by claiming that the inducement to enter into an agreement

was a promise that was within the scope of the integrated agreement but was

ultimately not included in it.’” Id., quoting Busler v. D & H Mfg., Inc., 81 Ohio

App.3d 385, 390 (10th Dist.1992). Thus, “the parol evidence rule does apply ‘to

such promissory fraud if the evidence in question is offered to show a promise

which contradicts an integrated written agreement. Unless the false promise is

either independent of or consistent with the written instrument, evidence thereof is

inadmissible.’”    Galmish at 28, quoting Alling v. Universal Mfg. Corp., 5

Cal.App.4th 1412, 1436 (1992). “‘Thus, parol evidence can only be introduced to

challenge a written contract when the alleged oral misrepresentations are

consistent with the written contract.’” D & H Autobath, LLC v. PJCS Properties I,

Inc., 12th Dist. No. CA2012-05-018, 2012-Ohio-5845, ¶ 18, quoting Westwinds

Dev. Corp. v. Outcalt, 11th Dist. No. 2008-G-2863, 2009-Ohio-2948, ¶ 58

(emphasis in original). Furthermore, an integration clause does not prevent a trial


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court from admitting the evidence in the case of fraud because “the presence of an

integration provision does not vitiate the principle that parol evidence is

admissible to prove fraud.” Galmish at 28.

       {¶11} The application of the parol evidence rule is an issue of substantive

law that is reviewed de novo on appeal. Rice v. Rice, 7th Dist. No. 2001-CO-28,

2002-Ohio-3459, ¶ 38.      As a result, we review the application of the parol

evidence rule without deference to the trial court’s decision. Arnett v. Precision

Strip, Inc., 3d Dist. No. 2-11-25, 2012-Ohio-2693, ¶ 10.

       {¶12} In the present case, the trial court admitted evidence regarding

Shivley’s representation that the property would be winterized.          Cronkelton

testified that he first inspected the foreclosed car wash at the end of November

2009. (Oct. 25, 2011 Tr. at 33). At that time, Cronkelton tested the equipment

and knew that some of the pieces of equipment were fully functioning and some

were not. (Id. at 34-35). Cronkelton made an offer on the property on December

1, 2009. (Id. at 36). Shortly thereafter, Cronkelton called Shivley to discuss the

winterization of the property. (Id. at 37). Cronkelton testified:

       so I called him, said, hey, it’s going to freeze here this week. I knew

       like December 10th or after it was going to freeze because I watch

       the weather pretty closely. It’s supposed to get down to like ten

       degrees, have you got it winterized, you know. If it’s not winterized,


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       I’m not interested in the property. If it freezes, I’m not interested in

       the property at all. And he guaranteed me. He said, no, it will be

       taken care of. We don’t have a problem. That’s my job as receiver.

       I’ll take care of it.

(Id.). After the phone call, Shivley sent Cronkelton an email dated December 7,

2009 that stated:

       As per our phone conversation Guaranteed Asset Management will

       winterize the Car Wash with the anticipation of reopening the wash

       in the near future. Within this Winterization we will put antifreeze

       and secure floor heating as well as blow water out of all lines in self

       serve bays as well as empty tanks, etc. We will leave the heat on at

       a minimal level in the pump room. We will take all brushes, wands

       and hoses off and leave in the storage facility. We will leave the

       Vac units attached and cut off all electric to the Vacs. We will clean

       up lot, including cutting bushes, trees, etc. where necessary and pick

       up all trash and empty cans on lot. We will lastly place a Chain at

       the entrance of the wash preventing cars, etc. into the parking lot.

       Please let me know if there is anything else you would like us to do.

       We will complete all of this on Wednesday, December 9, 2009.




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(Plaintiff’s Ex. 3). After Huntington Bank had not accepted Cronkelton’s offer for

several months, Cronkelton withdrew the offer. (Oct. 25, 2011 Tr. at 39-40).

Shivley then contacted Cronkelton and indicated that Huntington Bank was open

to another offer from him. (Id. at 40). Cronkelton testified, “I just asked him, I

said was it all in good shape? It’s still- you’ve got it winterized, everything is like

it was? Yeah, nothing’s changed. We had it all winterized. We took care of it-

just as his e-mail says.” (Id. at 40-41). Huntington Bank rejected Cronkelton’s

second offer, but finally accepted his third offer of $110,000. (Defendant’s Ex. 1).

Cronkelton testified that throughout the negotiations, he repeatedly asked Shivley

about the winterization of the property, stating “[i]t just said everything still the

same? We’re good to go? You know the property’s- you know, he said the

property’s good.” (Oct. 25, 2011 Tr. at 42). Cronkelton testified that Shivley

specifically told him the property had been winterized, “[t]hat’s part of it. You’ve

got it all winterized. We’ve got it take[n] care of, no problem.” (Id.).

       {¶13} Cronkelton testified that they closed on the property in June and he

received the keys at that time.        (Id. at 44).    Cronkelton testified that he

immediately went to the property:

       I opened the door, and the huge canisters that I was telling you about

       were all busted. The tops had been exploded off the top of them. At

       first when I opened the door I thought it had been vandalized. I


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      thought, wow, what happened to this property, you know. And then

      I close looked at it, seeing the tops exploded off and the side of one

      of the conditioners was broke, and all the- all the mineral that they

      use inside was all laying on the floor and it was tipped over and

      turned around and looked at the- the R/O, which is the other water

      conditioner, to keep it from spot free, it was all busted and the side

      was exploded on it. And I have pictures. I took my camera and took

      detail pictures. You could see pipes that were bursted, you know,

      had big old, you know, copper exploded. It gets big old holes in it

      and pops. So it was clear at that time that this whole thing had froze

      up, and the extent of the damage could not even be, you know,

      detailed at that point- until we would have turned the water on and

      got everything up. Which was not going to happen because there

      was so much explosion in there.

(Id. at 45). Cronkelton immediately contacted Shivley, and “[a]t that time he told

me that can’t be possible, or if it is I’m upset because I hired Strayer Company to

winterization [sic] this property. And you know what, they were supposed to do

their job and so forth.” (Id. at 48). Cronkelton then contacted Keith Strayer, the

owner of Strayer Company, who came to inspect the damage.             (Id. at 49).

Cronkelton testified that this was the first time he received a memorandum that


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Strayer had sent informing Shivley that the company was unable to properly

winterize the building. (Id. at 49-50).

       {¶14} Strayer testified that his company was unable to properly winterize

the building because it was not designed or plumbed to be winterized. Strayer

further testified that his company sent Guaranteed Asset Management a

memorandum to that effect on December 10, 2009. (Id. at 197-199); (Plaintiff’s

Ex. 5). The memorandum stated:

       I believe we did everything we could to winterize the building but I

       can not [sic] guarantee there will not be problems when the building

       is put back into service.     The simple fact of the matter is this

       building was not designed or plumbed to be winterized. The only

       way to ensure you won’t have any problems would be to disconnect

       and remove all the equipment or install an electric heater to maintain

       an above freezing temperature.

(Plaintiff’s Ex. 5).

       {¶15} Shivley testified that he did not give Cronkelton the memorandum

from Strayer. (Id. at 145). According to Shivley, he made an inspection of the

property after November 28, 2009. (Id. at 147). At that time, Huntington Bank

decided not to pay for the improvements to the property and not to maintain the

property because it would not generate any income, “and they elected [to]


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basically keep it closed and move forward the way we did.” (Id.). On December

1, 2009, Shivley submitted an analysis and evaluation of the car wash to

Huntington Bank where he stated, “[i]n the current condition of [the] Car Wash

and Real Estate, if nothing would be done except turning of [sic] water and

utilities, the Car Wash and pipes would burst through the winter and the value of

the Car Wash/Real Estate would be for land value only less cost to dispose of Car

Wash.” (Id. at 158); (Plaintiff’s Ex. 6). Shivley admitted he sent the email to

Cronkelton representing that they would put antifreeze in the water lines, secure

the floor heating, blow the water out of all the lines, and keep the heat at a

minimal level, and that they would complete the work by December 9, 2009. (Id.

at 149-150).    In a memorandum to Huntington Bank dated March 29, 2010,

Shivley wrote, “for the wash in question, on 11/28/09, we did go in and winterize

the wash. It was evident that it was too late and that much damage, freezing of

pipes, as well as Vandalism had occurred.” (Id. at 163-164); (Plaintiff’s Ex. 11).

Shivley repeatedly testified that he did not believe he had any obligation to inform

Cronkelton of the problems with the winterization, “[a]s a receiver, I’m not

obligated to inform any defects. That’s- that’s what it is, an as is purchase

contract,” and “He had- as is, again, it’s open for him to do his due diligence. It’s

not obligated for me to tell him the condition of the property.” (Oct. 25, 2011 Tr.

at 174, 185).


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      {¶16} We agree with the trial court that the evidence regarding Shivley’s

representations was admissible in this case.      Here, the representations were

consistent with the written agreement and thus not barred by the parol evidence

rule when admitted to prove fraudulent inducement. Galmish, 90 Ohio St.3d at

28. The evidence demonstrates that Cronkelton intended to purchase the car wash

in the condition he observed in November 2009. (Oct. 25, 2011 Tr. at 40-41).

Cronkelton was aware that he would have to repair some of the equipment, and

thus was purchasing the property “as is.” (Id. at 34-35). However, Cronkelton

also believed that Shivley, as the receiver, would prevent further damage to the

property by appropriately winterizing it. (Id. at 79-80). Shivley’s representations

to Cronkelton that he had winterized the property and that it was in the same

condition as when Cronkelton inspected it in November 2009 were consistent with

Cronkelton’s interpretation of the contract, as well as the plain language of the

purchase agreement, which simply stated that he was purchasing the property “as

is.” (Defendant’s Ex. 1). Thus, the evidence regarding Shivley’s representations

was not contrary to the language of the contract. Cronkelton knew that some of

the equipment was functioning and some was not, but believed that Shivley, as the

receiver, would properly winterize the property to prevent further damage based

on the representations he had made.




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      {¶17} Furthermore, the present case is similar to the Supreme Court of

Ohio’s decision in Galmish. In that case, the Court stated, “‘[t]he rule excluding

parol evidence of collateral promises to vary a written contract does not apply

where such contract is induced by promises fraudulently made, with no * * *

intention of keeping them * * *.’” In Galmish, the plaintiff sold property to the

defendant, who represented that he would then sell the property to a developer and

pay the plaintiff one half of the proceeds, as long as he sold the property within

one year. Galmish at 23. The plaintiff alleged that the defendant intentionally

delayed completing the sale of the property to prevent paying her a share of the

proceeds, and that the defendant never intended to fulfill the promise that induced

her to enter into the contract. Id. The Supreme Court of Ohio held that evidence

of the defendant’s promise to the plaintiff was admissible to prove the plaintiff’s

claim of fraudulent inducement, stating:

      [i]t was never intended that the parol evidence rule could be used as

      a shield to prevent the proof of fraud, or that a person could arrange

      to have an agreement which was obtained by him through fraud

      exercised upon the other contracting party reduced to writing and

      formally executed, and thereby depriving the courts of the power to

      prevent him from reaping the benefits of his deception or chicanery.




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Id. at 28, quoting 37 American Jurisprudence 2d, Fraud and Deceit, Section 451, at

621-622 (1968). The Court thus determined that the evidence of the defendant’s

representations did not contradict the contract, were admissible to show the

circumstances surrounding the finalized written agreement, and were admissible to

demonstrate that the defendant never intended to fulfill the promise he made to

induce the plaintiff to enter into the contract. Galmish at 31.

       {¶18} Similarly, in the present case, Shivley made representations to

Cronkelton that he never intended to keep. Those representations were made to

induce Cronkelton to purchase the property.             Specifically, the evidence

demonstrates that Strayer sent Guaranteed Construction a memorandum notifying

the company that Strayer had been unable to fully winterize the property and that

Guaranteed Construction needed to keep the heat on at a minimal level to prevent

damage. (Oct. 25, 2011 Tr. at 197-199).          Strayer sent this memorandum to

Shivley before Cronkelton made his second and third offers on the property, offers

made at Shivley’s request. (Id. at 40-42). Thus, Shivley had been notified that he

needed to heat the property to prevent damage at the time that he represented to

Cronkelton that the car wash had been fully winterized in accordance with the

email he sent Cronkelton in December 2009. (Id. at 197-199); (Plaintiff’s Ex. 3).

Furthermore, the evidence demonstrated that at the time Cronkelton made his

offers, Shivley knew Huntington Bank had elected to shut off the utilities because


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the property was not generating income. (Oct. 25, 2011 Tr. at 147). Shivley did

not intend to have Guaranteed Asset heat the property because of substantial

unpaid balances on prior heating bills that he viewed as Huntington Bank’s

responsibility. (Id.). In March 2010, before Cronkelton signed the purchase

agreement in June 2010, Shivley sent a report to Huntington Bank informing them

of damage to the property, comprising of damage that was the result of freezing.

(Id. at 163-164). However, Shivley consistently represented to Cronkelton that the

property had been appropriately winterized, including maintaining the heat at a

minimal level, although he had no intention of heating the property and knew the

car wash had been damaged from freezing. As in Galmish, this evidence was

admissible to show the circumstances surrounding the finalized written agreement,

to demonstrate that Shivley never intended to fulfill the promises he made to

Cronkelton, and to prove Shivley induced Cronkelton to enter into the contract.

      {¶19} The dissent argues that admitting this evidence disregards the parol

evidence rule. We disagree. Rather, the evidence is admissible as an exception to

the parol evidence rule in the case of fraudulent inducement because the

representations are consistent with the contract’s language. Galmish, 90 Ohio

St.3d at 28. Given the circumstances of this case, the trial court did not err by

admitting Shivley’s representations to prove Cronkelton’s claim of fraudulent

inducement.


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       {¶20} Appellants’ first assignment of error is, therefore, overruled.

                           Assignment of Error No. II

       As a matter of law, appellee’s reliance on Mr. Shivley’s
       statements about the condition of the car wash was not justified

       {¶21} In their second assignment of error, appellants argue Cronkelton

unjustifiably relied on Shivley’s statements about the car wash’s condition because

Cronkelton had the opportunity to inspect the property prior to closing.

       {¶22} The doctrine of caveat emptor places a duty on the buyer of real

estate to make an inquiry or investigation into a property’s potential defects.

Findlay Ford Lincoln-Mercury v. Huffman, 3d Dist. No. 5-02-67, 2004-Ohio-541,

¶ 14. A seller is not obligated to disclose everything he or she knows about the

property to the buyer. Id. However, caveat emptor “has never shielded deliberate

fraud by the seller.” Id. In order for the doctrine of caveat emptor to apply, “(1)

the defect must be open to observation or discoverable on reasonable inspection,

(2) the purchaser must have an unimpeded opportunity to examine the property,

and (3) the vendor may not engage in fraud.” Id. ¶ 15, citing Boehringer v. Miller,

3d Dist. No. 2-88-18 (Jan. 29, 1990).

       {¶23} As an initial matter, we note that appellants argue whether

Cronkelton justifiably relied on Shivley’s representations is a question of law.

However, this Court has previously stated that “[w]hether or not reliance on a

material misrepresentation was justified under the facts of a case is a question for

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the trier of fact.” Simon Property Group v. Kill, 3d Dist. No. 1-09-30, 2010-Ohio-

1492, ¶ 26. Consequently, we must determine whether the jury’s decision is

supported by competent, credible evidence. Id. at ¶ 31.

      {¶24} In the present case, it is undisputed that the damage caused by

freezing was open and obvious upon inspection, that Cronkelton did inspect the

property in November 2009, and that he could have inspected the property again

before signing the purchase agreement. Cronkelton testified regarding why he did

not inspect the property after November 2009:

      Because I was guaranteed by- by- in writing and several

      conversations that everything- the only thing I was worried about

      was it not freezing.     I wasn’t worried about the state of the

      equipment, whether it was repairable because I had already looked at

      that and made my assessment on that. I was just mainly concerned

      about the freezing. Wrote me this e-mail, guaranteed me it was

      taken care of in detail what he was going to do, so I had no reason.

      And because I relied on him being professional, he’s got a real estate

      license, he was appointed by the Court, I don’t know how much

      more I could have done to know that I could trust him.

(Oct. 25, 2011 Tr. at 79-80). In response to an interrogatory, the jury found that

Cronkelton had reasonably relied on Shivley’s representations. (Doc. No. 73).


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       {¶25} The jury’s finding was supported by competent, credible evidence.

This Court has previously stated that when determining whether reliance is

justifiable:

       courts consider the various circumstances involved, such as the

       nature of the transaction, the form and materiality of the transaction,

       the form and materiality of the representation, the relationship of the

       parties, the respective intelligence, experience, age, and mental and

       physical condition of the parties, and their respective knowledge and

       means of knowledge.

Findlay Ford, 2004-Ohio-541 at ¶ 22.

       {¶26} Cronkelton relied on representations made by Shivley, who was a

receiver. (Oct. 25, 2011 Tr. at 79-80). Shivley was appointed as a receiver

pursuant to R.C. 2735.01 and had taken an oath to faithfully discharge his duties

and obey the trial court’s orders. R.C. 2735.03. As a receiver, Shivley had a

fiduciary duty to the assets under his control. Hummer v. Hummer, 3d Dist. No.

96132, 2011-Ohio-3767, ¶ 18. Under the circumstances of this case, Cronkelton

had a reasonable basis to believe that Shivley, who was acting as an arm of the

court, would take the promised steps to winterize the property.

       {¶27} Appellants cite several cases where this Court has previously held

that the doctrine of caveat emptor barred a party from recovering damages for


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undisclosed defects. See Van Horn v. Peoples Banking Co., 64 Ohio App.3d 745

(3d Dist.1990); Findlay Ford, 2004-Ohio-541.            However, those cases are

distinguishable from the instant case. In each of those cases, the plaintiff failed to

take affirmative actions to discover the defect. Id.; Id. Furthermore, although the

plaintiffs in those cases alleged the defendants had made misrepresentations, the

misrepresentations did not rise to the level of fraud. Id.; Id. In the case currently

before this Court, Cronkelton did take affirmative steps to discover the defect by

inspecting the property in November 2009 and repeatedly confirming with Shivley

that Shivley had taken the steps necessary to winterize the property. (Oct. 25,

2011 Tr. at 33-36, 40-43). In addition, Shivley’s misrepresentations that he had

taken the appropriate steps to winterize the property rose to the level of fraud

because his statements were: (1) actual misrepresentations, (2) made while

knowing their falsity, (3) with the intent to mislead, (4) justifiably relied upon by

Cronkelton, and (5) caused damage to Cronkelton.            Findlay Ford at ¶ 20.

Therefore, Cronkelton’s fraud claim is not barred by the doctrine of caveat emptor.

       {¶28} Appellants’ second assignment of error is, therefore, overruled.

                           Assignment of Error No. III

       The additional egregious conduct necessary to justify an award
       of punitive damages and attorney’s fees is not present in this
       case.




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       {¶29} In their final assignment of error, appellants argue the trial court

erred by awarding Cronkelton punitive damages and attorney fees because

Cronkelton failed to demonstrate that the fraud was aggravated by malice or that

the wrongdoing was especially egregious.

       {¶30} “Punitive damages are awarded to punish the guilty party and deter

tortious conduct by others.” Digital & Analog Design Corp. v. North Supply Co.,

63 Ohio St.3d 657, 664 (1992). However, punitive damages are not appropriate in

every case of fraud. S.H.Y., Inc. v. D. Garman, 3d Dist. No. 14-04-04, 2004-Ohio-

7040, ¶ 43. “In cases alleging fraud, in order to be awarded punitive damages, the

plaintiff must establish not only the elements of the tort itself, but must also show

that either the fraud is aggravated by the existence of malice or ill will or must

demonstrate that the wrongdoing is particularly gross or egregious.” Id. As a

general rule, it is reasonable to award attorney fees in an action where punitive

damages have been awarded, although this issue is in the sound discretion of the

trial court. Digital & Analog at 664, citing Columbus Finance, Inc. v. Howard, 42

Ohio St.2d 178, 183 (1975). “The trial judge is in the best position to determine

whether an award is so excessive as to be deemed a product of passion or

prejudice, and the trial court’s determination on that issue will not be disturbed

absent an abuse of discretion.” Burns v. Prudential Securities, 3d Dist. No. 9-03-




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49, 2006-Ohio-3550, ¶ 78, citing Fromson & Davis Co. v. Reider, 127 Ohio St.

564, 569 (1934).

       {¶31} We cannot find that the jury abused its discretion by awarding

punitive damages in this case. The evidence presented at trial demonstrates that

not only was Shivley dishonest with Cronkelton, but that he was dishonest with

the court. Shivley’s actions were particularly egregious in light of his role as a

receiver, who was appointed by the court and had a duty to faithfully fulfill his

responsibilities. Shivley received the memorandum indicating Strayer had been

unable to fully winterize the property on December 10, 2009, and forwarded the

memorandum to Huntington Bank by email. (Oct. 25, 2011 Tr. at 152-154).

However, in his deposition in this case, Shivley claimed he had not previously

seen the memorandum. (Id. at 152). In his November 28, 2009 report, Shivley

stated that the property’s utilities were still turned on. (Id. at 172). However, in

an affidavit filed with the trial court, Shivley averred that “at the time Guaranteed

took control of the subject premises, the water and electricity had been shut off

and, therefore, Guaranteed never tested or inspected the equipment at the

property.” (Doc. No. 22); (Plaintiff’s Ex. 21). Shivley also averred that neither he

nor any of his employees had any actual knowledge as to the condition of the

equipment on the premises, although in a March 29, 2010 letter, he stated “we did

go in and winterize the wash. It was evident that it was too late and that much


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damage, freezing of pipes as well and vandalism had occurred.” (Oct. 25, 2011

Tr. at 163-164).    Shivley also filed a report with the court stating, “we did

winterize the facility with a professional plumber and did general maintenance to

the facility back in November.” (Id. at 182). This evidence shows that Shivley

continually represented to the trial court that he was fulfilling his responsibility as

a receiver and was unaware of the damage to the premises, although the Strayer

memorandum and report to Huntington Bank demonstrate that Shivley knew the

car wash had not been properly winterized and was damaged from freezing. In

light of the foregoing, we cannot find that the jury abused its discretion by

determining Shivley’s conduct was particularly egregious. Since the punitive

damages were appropriate in this case, the trial court also did not err by awarding

attorney fees.

       {¶32} Appellants’ third assignment of error is, therefore, overruled.

       {¶33} Having found no error prejudicial to the appellant herein in the

particulars assigned and argued, we affirm the judgment of the trial court.

                                                                 Judgment Affirmed

WILLAMOWSKI, J., concurs.

/jlr




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ROGERS J., Dissenting.

       {¶34} I must respectfully dissent from the majority’s opinion. I would first

find that the parol evidence rule would exclude the admission of Shivley’s pre-

contract representations, and further, that even if permitted, Cronkelton could not

claim justifiable reliance on such representations.

       {¶35} I first disagree with the majority’s disregard of the parol evidence

rule. The application of the parol evidence rule was aptly set forth in Busler v. D

& H Mfg., Inc., 81 Ohio App.3d 385 (10th Dist. 1992). The court of appeals

explained:

       This misnamed and often misunderstood rule is not really a rule of
       evidence but instead is a rule of substantive law designed to protect
       the integrity of final, written agreements. Charles A. Burton, Inc. v.
       Durkee (1952), 158 Ohio St. 313, paragraph one of the syllabus. If
       contracting parties integrate their negotiations and promises into an
       unambiguous, final, written agreement, then evidence of prior or
       contemporaneous         negotiations,   understandings,    promises,
       representations, or the like pertaining to the terms of the final
       agreement are generally excluded from consideration by the court.
       Id. at paragraph two of the syllabus; Yoder v. Columbus & S. Elec.
       Co. (1974), 39 Ohio App.2d 113. This rule is not confined to
       excluding merely parol communications; it excludes contrary written
       communications as well.

       Notwithstanding, many Ohio cases have held that a party may offer
       evidence of prior or contemporaneous representations to prove fraud
       in the execution or inducement of an agreement. See, e.g.,
       Stegawski v. Cleveland Anesthesia Group, Inc. (1987), 37 Ohio
       App.3d 78, 84. Indeed, without such evidence it would be difficult
       if not impossible to prove fraud. However, it is important to realize
       that the law has not allowed parties to prove fraud by claiming that
       the inducement to enter into an agreement was a promise within the

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       scope of the integrated agreement but which was not ultimately
       included in it. Id. at 84; AmeriTrust Co. v. Murray (1984), 20 Ohio
       App.3d 333, 335. Hence, if there is a binding and integrated
       agreement, then evidence of prior or contemporaneous
       representations is not admissible to contradict the unambiguous,
       express terms of the writing. Restatement, supra, at 136, Section
       215. (Emphasis added.) Busler at 390-391. Accord Paragon
       Networks Intl. v. Macola, Inc., 3d Dist. No. 9-99-2 (April 28, 1999).

       {¶36} Here the purchase agreement, prepared by Cronkelton, stated that the

property was being purchased “in its ‘as is’ condition without any representations

and warranties from Seller regarding the condition of the Real Property.”

(Defendant’s Exhibit 1, p. 1).       Any representations by Shivley as to the

winterization of the property were within the scope of the integrated agreement but

not ultimately included in it. Therefore, the parol evidence rule requires that

evidence of prior representations to the contrary be excluded.

       {¶37} In addition, I would also find that, as a matter of law, Cronkelton

could not claim justifiable reliance upon any of Shivley’s representations

concerning winterization of the property. The majority places much weight on the

fact that Cronkelton inspected the property in late November 2009 when he made

his first offer on the property. This then becomes the basis which they argue

justified his later reliance on Shivley’s representations. However, Cronkelton

revoked that offer. A second verbal offer was made and refused. Finally, in

March 2010, a third offer was made and accepted, resulting in the purchase

agreement at issue in this matter.

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Case No. 8-12-01


       {¶38} What the majority fails to discuss is that the final written purchase

agreement was drafted by Cronkelton. In the agreement, Cronkelton, as discussed

above, acknowledged that he was purchasing the property “in its ‘as is’ condition

without any representations and warranties from Seller regarding the condition of

the Real Property.” (Defendant’s Exhibit 1, p. 1). In addition, Cronkelton gave

himself an unlimited right to inspect the property, a right he failed to exercise

immediately before entering the purchase agreement.

       {¶39} Apparently the majority is convinced that Cronkelton’s inspection of

the property in November 2009, coupled with Shively’s representations

concerning the property’s winterization, relieved Cronkelton of any obligation of

due diligence or actual inspection. I strongly disagree.

       {¶40} First, Cronkelton’s inspection in November 2009 was in conjunction

with an offer that he withdrew. It is therefore irrelevant to the purchase agreement

at issue in this matter.

       {¶41} Second, the November inspection was too remote in time to be relied

upon and occurred prior to the time period and weather conditions that were the

subject of Cronkelton’s concerns.      It is therefore immaterial to the purchase

agreement at issue in this matter.

       {¶42} Third, Cronkelton failed to take advantage of his right to inspect the

property which he had included in the purchase agreement that he drafted.


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Case No. 8-12-01


Cronkelton claims that his only concern when making a new offer on the property

was whether the property had survived the winter months in substantially the same

condition as it was in when he inspected it in November 2009. If that was the

case, then a cursory inspection by Cronkelton would have removed any question

of the property’s condition. In fact, his testimony suggests that after the closing all

he had to do was open the door to enter the property and the damage was obvious.

       {¶43} At most, Shivley’s representations may have induced a new offer

from Cronkelton. I fail to see any justification for allowing Cronkelton to claim

he was induced to purchase the subject property by Shivley’s representations when

he had the right, the opportunity, and the duty to inspect the property within a

reasonable time before entering into the purchase agreement.

       {¶44} Again,     the   purchase    agreement,    prepared     by   Cronkelton,

unequivocally stated that the property was being purchased in “as is” condition.

Any representations by Shivley as to the winterization of the property were within

the scope of the integrated agreement but not ultimately included in it. The

representations were not even as to the condition of the property, but rather as to

the winterization of the property. Even if winterization had been accomplished,

common sense tells one that events may have occurred to cause damage not

present when an inspection took place four months earlier.                Under these




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circumstances Cronkelton should be estopped from asserting that his reliance on

Shivley’s representations was reasonable.

       {¶45} Finally, the majority argues that an exception to the parole evidence

rule applies in this case because the representations were consistent with the

contract’s language. I fail to see any consistency between representations of

winterization and acceptance of the property in its “as is” condition.

       {¶46} For all the reasons stated above, I dissent from the majority’s opinion

and would reverse the judgment of the trial court.

/jlr




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