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Beverage Holdings, L.L.C. v. 5701 Lombardo, L.L.C.

Court of Appeals of Ohio, Eighth District, Cuyahoga

May 25, 2017

BEVERAGE HOLDINGS, L.L.C. PLAINTIFF-APPELLEE
v.
5701 LOMBARDO, L.L.C. D.B.A. VALENTINO-VAL L.L.C. DEFENDANT-APPELLANT

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-15-846163

          ATTORNEYS FOR APPELLANT J. Reid Yoder Benjamin R. Sorber Dicaudo Pitchford and Yoder.

          ATTORNEYS FOR APPELLEE James D. Romer Joseph T. Burke Ashley E. Loyke Polito, Rodstrom & Burke, L.L.P.

          BEFORE: Kilbane, P.J., Stewart, J., and S. Gallagher, J.

          JOURNAL ENTRY AND OPINION

          MARY EILEEN KILBANE, PRESIDING JUDGE.

         {¶1} Defendant-appellant, 5701 Lombardo, L.L.C., d.b.a . Valentino-Val, L.L.C. ("Lombardo"), appeals from the trial court's decision granting partial summary judgment in favor of plaintiff-appellee, Beverage Holdings, L.L.C. ("Beverage"). For the reasons set forth below, we affirm.

         {¶2} On April 29, 2011, Lombardo and Beverage entered into an agreement in which Beverage purchased from Lombardo a preschool/daycare business known as the Goddard School and the property upon which it was located for $1, 726, 000. Lombardo was not able to sell the building at the time of the sale because of outstanding debt it had on its mortgage. As a result, Lombardo and Beverage, through related entities, entered into a sale of the business itself and a lease agreement for Beverage, through its related company, PRB Development, L.L.C. The lease agreement provided that Beverage would lease the property and continue to run the Goddard School until Lombardo was able to sell the real property. The real property purchase agreement permitted closing of the sale of the real property to occur sometime in the future, with an anticipated closing being several years from the date the agreement was signed. The agreement provided Beverage with the right to notify Lombardo when it wanted to close the transaction.

         {¶3} In the interim, the parties agreed that Beverage would make monthly rental payments to Lombardo in the amount of $12, 500 until the parties closed on the transaction. Beverage also paid the real property taxes, assessments, property and fire insurance, all utilities, all use and occupancy taxes, and all maintenance and repairs. Under section 3 of the agreement, the calculation of the purchase price was subject to several adjustments. Section 3 provides in pertinent part:

3. Adjustments to Purchase Price. At closing, the purchase price shall be adjusted by providing [Beverage] a credit for the following:
a) The Purchase Price shall be decreased by:
ii) Rents received by Seller from the tenant of the Premises, prorated to date of closing.

         {¶4} On March 12, 2015, Beverage sent Lombardo a notice of its intent to purchase the property. On May 19, 2015, Lombardo responded by notifying Beverage that it was revoking the agreement and disputed Beverage's interpretation of the section 3(a)(ii), which adjusted the final purchase price for the rents paid by Beverage. Beverage then filed a complaint against Lombardo for declaratory judgment, damages, injunction, specific performance, and other legal and equitable relief. Beverage alleges that Lombardo breached the agreement when it unilaterally revoked and repudiated on the purchase agreement when Beverage exercised its "notice of intent to close transaction." Beverage sought to purchase the premises for $1, 202, 110.09, which included adjustments for principal payments, prepayment fee, $462, 500 in rent credits, and the security deposit. Lombardo refused to accept the final purchase price, alleging that Beverage failed to close within 180 days of signing the purchase agreement. Lombardo further alleged that the agreement intended to provide credits only for rents received for the period following the date of closing, prorated to the date of closing. Relevant to this appeal, Beverage sought a declaratory judgment

a)As to the calculation of the final purchase price pursuant to the terms and conditions stated in the Purchase Agreement; and
b) The interpretation of how much in rent is subject to the reduction noted in Section 3 of the Purchase Agreement where it states that the purchase price will be reduced by: "Rents received by Seller from the tenant of the Premises, prorated to date of Closing."

         {¶5} Both parties filed motions for summary judgment. After reviewing both motions, the trial court denied Lombardo's motion for summary judgment and granted Beverage's motion in part. In a thoughtful opinion, the court stated:

[Beverage] seeks a declaratory judgment interpreting Section 3(a)(ii) of the Agreement. Section 3(a)(ii) states the purchase price for the property shall be adjusted by providing [Beverage] a credit for "Rents received by [Lombardo] from [Beverage] of the Premises, prorated to date of closing." Both parties agree there is a credit for rents received. [Beverage] believes the credit applies to all rents received from the date of the Agreement. [Lombardo] ...

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