         [Cite as Washburn v. Gvozdanovic, 2017-Ohio-2954.]

                          IN THE COURT OF APPEALS
                 FIRST APPELLATE DISTRICT OF OHIO
                           HAMILTON COUNTY, OHIO




STEPHEN J. WASHBURN,                            :         APPEAL NO. C-160590
                                                          TRIAL NO. A-1502783
        Plaintiff-Appellant,                    :
                                                              O P I N I O N.
  vs.                                           :

MARINKO GVOZDANOVIC,                            :

    Defendant-Appellee.                         :




Civil Appeal From: Hamilton County Court of Common Pleas

Judgment Appealed From Is: Affirmed

Date of Judgment Entry on Appeal: May 24, 2017



The Matre Law Group, Co., LPA and Kerrie K. Matre, for Plaintiff-Appellant,

Finney Law Firm, LLC, Christopher P. Finney and Bradley M. Gibson, for
Defendant-Appellee.
                      OHIO FIRST DISTRICT COURT OF APPEALS




MYERS, Judge.

       {¶1}     Plaintiff-appellant Stephen J. Washburn has appealed from the trial

court’s entry granting summary judgment to defendant-appellee Marinko

Gvozdanovic on Washburn’s claims for fraud, breach of contract, and a violation of

R.C. 5302.30.

       {¶2}     Washburn has raised three assignments of error for our review. In the

first two assignments of error, he challenges the trial court’s entry of summary

judgment on his claim for fraud. In the third assignment of error, Washburn argues

that the trial court erred in striking the affidavit of his expert witness. We affirm.

                         Factual and Procedural Background


       {¶3}     On October 25, 2009, Washburn and Gvozdanovic entered into a

contract for Washburn to purchase the property located at 622 Fleming Road from

Gvozdanovic for $92,000. The contract provided that the property was being sold

“as is.” Gvozdanovic had executed a “Residential Property Disclosure Form,” which

Washburn signed and acknowledged on the date that the contract was entered into.

Section E of the disclosure form was titled “STRUCTURAL COMPONENTS,” and it

contained the following language:        “Do you know of any movement, shifting,

deterioration, material cracks/settling (other than visible minor cracks or blemishes)

or other material problems with the foundation, basement/crawl space, floors, or

interior/exterior walls?” In response to this question, Gvozdanovic checked a box

marked yes and wrote that “there has been ground movement in the area.”

       {¶4}     Prior to closing on the property, Washburn visited it multiple times

and had several inspections conducted. Washburn had noticed a small amount of



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mold on his first visit to the property, and he hired Tencon, Inc., a technical

environmental consulting company, to inspect the property for water issues. On

December 30, 2009, Tencon sent Washburn a report indicating that it had found

visible mold growth in the basement of the home, and that “ground water appears to

be entering the basement via the cement block wall through the block structure,

through minor cracks and/or where the blocks join the footer and basement floor.”

       {¶5}   On February 11, 2010, Truman P. Young & Associates conducted a

structural inspection on the property. The report issued following that inspection

indicated that “[t]he basement floor and first floor are noticeably tilted towards the

front of the house, indicating probable settlement of the foundation.” The report

further stated that “[i]t is likely that moisture is penetrating the basement walls

through cracks, however, the extent and severity of any cracking cannot be

determined without removing the gypsum board wall finish and wood furring.” The

report noted that the inspection did not involve the removal of any finishes to view

concealed conditions. Washburn did not remove the gypsum board prior to closing.

       {¶6}   Washburn closed on the property on March 19, 2010.                 TKS

Construction Services then performed construction and remodeling work on the

home. TKS invoiced Washburn for its work on May 20, 2010. Sometime prior to

sending the invoice, TKS informed Washburn that it had discovered cracked

foundation walls after damaged drywall had been removed during mold remediation.

       {¶7}   Approximately one year after taking possession of the property,

Washburn noticed that his asphalted driveway had begun to crumble and heave, that

horizontal cracks were forming on the front porch, and that new cracks were forming

in the basement walls. Washburn hired Quentin Gorton, a geotechnical engineer, to




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inspect the property. After his inspection on May 25, 2011, Gorton told Washburn

that the property sat on an active landslide. He additionally informed Washburn

that he had previously been hired by Gvozdanovic to inspect the property, and that

he had told Gvozdanovic that the property sat on an active landslide.

       {¶8}   On May 22, 2015, Washburn filed suit against Gvozdanovic, asserting

claims for breach of contract, fraud, and a violation of R.C. 5302.30. With respect to

the fraud claim, Washburn’s complaint alleged that Gvozdanovic had committed

fraud by misrepresenting the condition of the property in the disclosure form and by

concealing the damage caused by the landslide with new drywall and asphalt.

       {¶9}   The trial court issued a case management order on July 30, 2015. The

order provided that Washburn’s experts had to be identified in writing by December

14, 2015. The order further stated that “[e]xperts not named by the dates set forth

herein shall not be permitted to testify. Expert reports shall be provided to opposing

counsel within 30 days after the expert has been identified unless counsel otherwise

agrees.” In his responses to Gvozdanovic’s interrogatories, which were served upon

Gvozdanovic’s counsel on December 3, 2015, Washburn named Gorton as an expert

witness. Washburn’s discovery responses further indicated that he had received only

an oral report from Gorton. Washburn did not provide a written report by the

specified deadline.

       {¶10} Gvozdanovic moved for summary judgment on Washburn’s claims.

Along with his memorandum in opposition to Gvozdanovic’s motion for summary

judgment, Washburn filed both his own affidavit and an affidavit from Gorton.

Attached to Gorton’s affidavit was a letter from Gorton to Washburn’s counsel




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stating that the damage to Washburn’s property had been caused by a landslide.

This letter is a written report of the expert’s opinions.

       {¶11} Gvozdanovic filed a motion to strike Gorton’s affidavit because

Washburn had failed to timely provide an expert report from Gorton.

       {¶12} In the same entry, the trial court granted both Gvozdanovic’s motions

to strike Gorton’s affidavit and for summary judgment. With respect to the motion

to strike, the trial court mistakenly found that Washburn had failed to identify

Gorton as an expert prior to the deadline set in the case.

       {¶13} The trial court provided numerous reasons in support of its grant of

summary judgment. As relevant to this appeal, it found that Washburn’s claim for

fraud was filed outside of the applicable statute of limitations. And with respect to

the merits of the claim for fraud, the trial court found that summary judgment was

appropriate because Washburn failed to establish that Gvozdanovic fraudulently

concealed the existence of a landslide or that he had justifiably relied on a

misrepresentation made by Gvozdanovic.

       {¶14} Washburn has appealed from the trial court’s entry. His assignments

of error challenge the trial court’s grant of summary judgment on his claim for fraud

and the trial court’s striking of Gorton’s affidavit. Washburn raises no challenge to

the trial court’s entry of summary judgment on his claims for breach of contract and

for a violation of R.C. 5302.30.

                             Fraud Claim Not Timely Filed


       {¶15} We consider Washburn’s second assignment of error first, as it is

dispositive of this appeal. In his second assignment of error, Washburn argues that




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the trial court erred in determining that his claim for fraud was time-barred because

it was filed past the applicable statute of limitations.

                                  1. Standard of Review


       {¶16} We review a trial court’s grant of summary judgment de novo. Grafton

v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). Summary

judgment is appropriately granted when there exist no genuine issues of material

fact, the party moving for summary judgment is entitled to judgment as a matter of

law, and the evidence, when viewed in favor of the nonmoving party, permits only

one reasonable conclusion that is adverse to that party. State ex rel. Howard v.

Ferreri, 70 Ohio St.3d 587, 589, 639 N.E.2d 1189 (1994).

                                     2. Discovery Rule


       {¶17} An action for fraud must be brought within four years of the accrual of

the action. R.C. 2305.09(C). The four-year limitations period begins to run “when

the complainant has discovered, or should have discovered in the exercise of

reasonable diligence, the alleged fraud.” Vanderlaan v. Pavlik, 1st Dist. Hamilton

No. C-150060, 2015-Ohio-5349, ¶ 13, citing Investors REIT One v. Jacobs, 46 Ohio

St.3d 176, 546 N.E.2d 206 (1989), paragraph 2b of the syllabus. A person should be

aware that a fraud has occurred when the facts that she or he possesses would alert a

reasonable person to the possibility of fraud. Palm Beach Co. v. Dun & Bradstreet,

Inc., 106 Ohio App.3d 167, 171, 665 N.E.2d 718 (1st Dist.1995).

       {¶18} As both this court and the Supreme Court of Ohio have explained,

“[c]onstructive knowledge of facts, rather than actual knowledge of their legal

significance, is enough to start the statute of limitations running under the discovery




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rule.” Vanderlaan at ¶ 13, quoting Cundall v. U.S. Bank, 122 Ohio St.3d 188, 2009-

Ohio-2523, 909 N.E.2d 1244, ¶ 30.

       {¶19} Washburn’s fraud claim is based on two allegations: that Gvozdanovic

misrepresented that the property sat on an active landslide by writing on the

property disclosure form that “there has been ground movement in the area,” and

that Gvozdanovic concealed the effects of the landslide by putting new asphalt on the

driveway and new drywall over the cracks in the basement.

       {¶20} Washburn argues that he first discovered the fraud on May 25, 2011,

when Gorton informed him, after inspecting the property, that it sat on an active

landslide and that he had previously inspected the property for Gvozdanovic and had

conveyed to him the same information. Using this date of discovery, Washburn

contends that his complaint filed on May 22, 2015, was filed within the four-year

limitations period.

       {¶21} Gvozdanovic contends that, based on an accumulation of facts,

Washburn had notice of the alleged fraud no later than May 20, 2010, the date that

TKS informed Washburn of cracked foundation walls. Using that date, Gvozdanovic

argues that Washburn’s complaint was filed outside of the four-year limitations

period. The trial court found that Washburn “should have been aware through the

exercise of reasonable diligence, of all of the alleged defects, namely the landslide, no

later than May 20, 2010.” Consequently, it held that the limitations period began to

run on that date and that the cause of action for fraud was time-barred.

       {¶22} Following our review of the record, we agree with the trial court’s

determination. We find that the following facts, when considered together, would

have alerted a reasonable person to the possibility of fraud.




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                     OHIO FIRST DISTRICT COURT OF APPEALS



       {¶23} On October 25, 2009, Washburn signed the “Residential Property

Disclosure Form” indicating that “there has been ground movement in the area.”

With respect to this statement, Washburn argues that a reference to ground

movement “in the area” referred to area around the property, but not the property

itself. Washburn’s argument is flawed. He ignores the fact that the disclosure was

made in the “structural components” section of the disclosure form, and that it was

provided in response to a direct question about the structural integrity of 622

Fleming Road.

       {¶24} After being made aware of ground movement in the area, Washburn

received the Tencon report in December of 2009 indicating that water had been

entering the basement through minor cracks. Shortly thereafter, in February of

2010, Washburn received the report from Truman P. Young & Associates stating that

“[t]he basement floor and first floor are noticeably tilted towards the front of the

house, indicating probable settlement of the foundation.”          The report further

informed Washburn that moisture was penetrating through cracks, but that the

extent of the cracking could not be determined without removing certain finishes

from the wall. Despite receiving this information, Washburn, at that time, did not

remove any of the gypsum board wall finish or wood furring to determine the extent

of the cracking.

       {¶25} After closing on the property on March 19, 2010, Washburn was

informed by TKS, no later than May 20, 2010, that TKS had found cracked

foundation walls in the basement after damaged drywall had been removed.

       {¶26} We find that, as of May 20, 2010, Washburn possessed facts sufficient

to alert a reasonable person to the possibility of fraud. At that point, he: 1) had been




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informed of ground movement in the area affecting his property (listed under the

“Structural Components” section of the disclosure form); 2) had been given two

reports stating that moisture was entering the basement through cracks; 3) was

aware that the basement and first floor were noticeably tilted toward the front of the

house; and 4) had been told of cracked foundation walls in the basement that had

been previously covered by drywall. A reasonable person, in possession of these

facts, would have been alerted to the possibility that Gvozdanovic’s statement on the

disclosure form was a potential misrepresentation and that Gvozdanovic had

possibly concealed damage caused by the ground movement or landslide. See Palm

Beach Co., 106 Ohio App.3d at 171, 665 N.E.2d 718.

       {¶27} Consequently, the limitations period for Washburn’s fraud claim

began to run on May 20, 2010, and his claim filed on May 22, 2015, was untimely.

Because Washburn’s claim was filed outside of the limitations period, we hold that

the trial court did not err in granting summary judgment to Gvozdanovic. The

second assignment of error is overruled.

       {¶28} Our resolution of Washburn’s second assignment of error has

rendered his first assignment of error concerning the merits of the fraud claim and

his third assignment of error, in which he challenges the trial court’s striking of

Gorton’s affidavit, moot. The judgment of the trial court is, accordingly, affirmed.

                                                                   Judgment affirmed.
CUNNINGHAM, P.J., concurs.
MILLER, J., dissents.




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                      OHIO FIRST DISTRICT COURT OF APPEALS



MILLER, J., dissenting.

       {¶29} Respectfully, I dissent. First, when the factual question of

commencement is close, as in this case, the law requires a jury to decide what event

triggered the statute of limitations.    Second, the trial court erred in excluding

Washburn’s expert geotechnical engineer on the basis of nondisclosure where the

expert was timely disclosed as an expert in Washburn’s discovery response, was

mentioned by name in Gvozdanovic’s discovery requests, whose opinions were

summarized in Washburn’s discovery responses, and who was identified in

Washburn’s complaint. Finally, I would reverse the trial court’s granting of summary

judgment on the merits of Washburn’s fraud claim, as there remain genuine issues of

material fact to be resolved.

             A Close Question on the Discovery Rule Goes to the Jury


       {¶30} Some cases simply must be tried. This is one. The question of when a

party should have discovered a fraud for the purposes of commencing the running of

the statute of limitations is a question of fact. Hamilton v. Ohio Savs. Bank, 70 Ohio

St.3d 137, 140, 637 N.E.2d 887 (1994). The court below erred by not construing the

facts in favor of the nonmoving party when it decided that Washburn should have

discovered the fraud earlier than he did. Accordingly, summary judgment on the

basis of the running of the statute of limitations should not have been granted.

       {¶31} The majority recites the facts with a lawyer’s eye and with perfect

hindsight to conclude that an ambiguous statement that “there has been ground

movement in the area,” combined with knowledge of a leaky basement, a sloped

basement floor, and a cracked basement wall, meant that Washburn should have

discovered the alleged fraud prior to being told of the fraud by Gorton, the geo-



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technical engineer. Maybe Washburn should have been more alert to signs of fraud.

But this case is a close call. Close calls go to the jury.

       {¶32} Construing the facts in favor of Washburn, the use of the passive voice

and present perfect progressive tense in the disclosure that “there has been ground

movement in the area” could be reasonably understood to mean that at some time in

the recent past, minor ground movement occurred somewhere near the property. It

would also be reasonable to conclude based upon Gvozdanovic’s prior litigation over

his sale of the adjoining property, and his testimony in that case to the effect that he

would not purchase a property that he knew was the subject of an active landslide,

that the disclosure was intentionally and artfully written to deceive, and thus did not

provide notice of the fraud—the statement itself was the fraud.

       {¶33} Further, wet basements, uneven floors, and cracked foundation walls

are common in older homes. These facts do not necessarily rise to the level of

constructive notice of an active landslide—and certainly are not notice that

Washburn should have suspected that Gvozdanovic knew of the active landslide.

Water intrudes into basements regularly. The evidence was that the walls were

cracked, not shifted, bowed, or angled. There was no evidence submitted regarding

the extent of cracking to indicate something significant should have been expected.

       {¶34} None of the several experts Washburn hired prior to Gorton stated

that an active, or for that matter, past landslide, had caused the leaky basement,

sloped floors, and cracked walls.         The stated cause of the uneven floor was

settlement. The source of what was characterized as “moisture” in the basement was

never identified. Critically, no one linked these particular issues to the landslide

before Washburn spoke with Gorton. On this record, it would be reasonable to




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                     OHIO FIRST DISTRICT COURT OF APPEALS



conclude that the first indication of a landslide on the property occurred a year after

closing when Washburn’s driveway began to crumble and heave, and new cracks

formed. It was then that Washburn hired Gorton and Gorton informed Washburn

both of the existence of the active landslide and of Gvozdanovic’s knowledge of the

landslide. Gorton was the key to Washburn’s discovery of Gvozdanovic’s alleged

fraudulent behavior. A reasonable jury could conclude that the statute of limitations

did not commence until Washburn had spoken with Gorton. Accordingly, summary

judgment on the basis that the statute of limitations had run on Washburn’s fraud

claim was inappropriate.

       {¶35} Because I would not affirm the trial court’s granting of summary

judgment on the basis of the statute of limitations, I address the remaining

assignments of error.

                     Gorton was Timely Disclosed as an Expert


       {¶36} The trial court excluded Gorton as an expert because “Plaintiff failed to

identify Mr. Gorton as an expert at any time prior to the deadline in this case.”

(Emphasis in original.) This was flatly wrong.

       {¶37} The trial court set a case-management order requiring Washburn to

disclose any expert witnesses by December 14, 2015. On December 3, 2015,

Washburn specifically identified Gorton in response to Gvozdanovic’s Interrogatory

#3, which sought the identity of expert witnesses. The answer also described the

scope of Gorton’s work, “Mr. Gorton identified the existence of a rotational slip fault

and scarp-line surrounding the house.” In response to Interrogatory #15 requesting

an identification of opinions, Washburn answered, “Mr. Gorton verbally stated that

in his opinion stabilizing the structure would require the installation of 36” diameter



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                      OHIO FIRST DISTRICT COURT OF APPEALS



concrete piers extending down to bedrock at each corner of the house. He also

estimated at that time that it could cost up to $150,000 to install such piers.

Defendant may have a written report in his possession from this same expert

obtained prior to selling the property to Plaintiff.”

       {¶38} As further proof that Gvozdanovic had actual knowledge of Gorton, it

is necessary to look no further than Washburn’s complaint in which he stated that

“Plaintiff learned of the fraud perpetrated upon him by the Defendant on May 25,

2011 when he hired Quentin A. Gorton, P.E. to examine the cracking foundation

walls … and learned that this same engineer informed the Defendant of the landslide

conditions a few years earlier.” Also, Gvozdanovic’s discovery requests sought the

production of documents “sent to or received from Quentin A. Gorton, P.E.,

regarding the Property.”

       {¶39} In sum, Gvozdanovic had clear notice of Gorton being an expert

witness, and that Gorton did not prepare an expert report. At that point, it became

incumbent upon Gvozdanovic to pursue additional discovery of Gorton via

deposition.

       {¶40} Despite all of this, the trial court excluded Gorton as undisclosed. This

error should be reversed.        Moreover, even if Gorton’s expert opinions were

excludable, he would still remain a viable fact witness regarding Gvozdanovic’s prior

knowledge of the landslide. The trial court therefore should have, at a minimum,

considered his affidavit for these facts alone.

      There Is Sufficient Evidence of Fraud to Withstand Summary Judgment


       {¶41} Construed most favorably to Washburn, there are sufficient indicia of

fraud for the claim to survive summary judgment. See Burr v. Cty Comms. of Stark



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                     OHIO FIRST DISTRICT COURT OF APPEALS



Cty., 23 Ohio St.3d 69, 491 N.E.2d 1101 (1986), syllabus (setting forth the elements

of fraud).

       {¶42} There is evidence that Gvozdanovic was aware of the active landslide,

both through the prior litigation regarding Gvozdanovic’s sale of the adjoining

property and from Gorton’s affidavit that Gorton had told Gvozdanovic about the

landslide on the property.

       {¶43} Gvozdanovic completed a standardized, state mandated, “Residential

Property Disclosure Form.” That form’s instructions require a seller to “Identify any

material matters in the property that are actually known.” It was on this form under

the “Structural Components” disclosure that Gvozdanovic checked a box indicating

that he was aware of “movement, shifting, deterioration, material cracks/settling …

or other material problems with the foundation, basement/crawl space, floors or

interior/exterior walls.”    The form then reads, “If ‘Yes’, please describe:” Here,

Gvozdanovic wrote “There has been ground movement in the area.” Arguably, this

statement was nonresponsive to the question and was evasive. Gvozdanovic did not

disclose any movement of the foundation, floors, or walls in his response. There was

no relation of the ground movement in the area to the structure.

       {¶44} Gvozdanovic circled the word “No” in answer to the question whether

there was any current settling, grading or erosion issues affecting the property,

despite allegedly being aware of the landslide. Gvozdanovic left blank the space

where he was to identify “any repairs, modifications, or alterations to the property”

in response to “drainage, settling, grading or erosion problems since owning the

property” despite the fact that he recently resurfaced the driveway to repair cracks

allegedly caused by the landslide.




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                      OHIO FIRST DISTRICT COURT OF APPEALS



       {¶45} Gvozdanovic also left blank the catchall section that required him to

disclose “other known material defects in or on the property” where “material

defects” was defined as including “any non-observable physical condition existing on

the property that could be dangerous to anyone occupying the property or any non-

observable physical condition that could inhibit a person’s use of the property.”

       {¶46} Despite having several prompts to disclose the landslide on the

property, Gvozdanovic could be found by a reasonable jury not to have done so.

Gvozdanovic certified that “Owner represents that the statements contained in this

form are made in good faith based on his/her actual knowledge as of the date signed

by the Owner.” A jury could reasonably conclude that Gvozdanovic fraudulently

violated this provision.

       {¶47} The acts of drywalling over the cracked foundation walls and

resurfacing the driveway could reasonably be construed as acts done to hide damage

allegedly caused by the landslide. A jury could reasonably find that these acts hid a

latent defect and lulled Washburn into a false state of comfort regarding the status of

the property.

       {¶48} Accordingly, there was evidence of actionable fraud that, if believed,

could result in a jury verdict in Washburn’s favor. Summary judgment on the merits

of the fraud claim was therefore inappropriate.

                                     Conclusion


       {¶49} The trial court erred in finding the fraud claim barred by the statute of

limitations when a jury could have reasonably concluded that Washburn did not

have cause to discover the alleged misrepresentation until alerted to it by Gorton.

The court also improperly excluded Washburn’s expert witness as undisclosed.



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Finally, the trial court should have allowed Washburn’s fraud claim to proceed on the

merits, as there were genuine issues of material fact left to be resolved.

       {¶50} For these reasons, I would reverse the trial court’s judgment, and

remand the cause for further proceedings.



Please note:
       The court has recorded its own entry on the date of the release of this opinion.




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