Court of Appeals of Ohio, Eighth District, Cuyahoga
B&H RESOURCES, L.L.C. PLAINTIFF-APPELLEE/ CROSS-APPELLANT
28925 LORAIN INC., ET AL. DEFENDANTS Appeal By Resource Title National Agency, Inc. Defendant-Appellant/Cross-Appellee
Appeal from the Cuyahoga County Court of Common Pleas Case
ATTORNEY FOR APPELLANT/CROSS-APPELLEE David M. Cuppage
Climaco, Wilcox, Peca & Garofoli Co., L.P.A.
ATTORNEYS FOR APPELLEE/CROSS-APPELLANT Christopher A. Murray
28925 Lorain Inc., et al. John Chirayil Statutory Agent
BEFORE: Stewart, J., Kilbane, P.J., and Celebrezze, J.
JOURNAL ENTRY AND OPINION
J. STEWART, JUDGE
While conducting due diligence for the purchase of real
property, plaintiff-appellee/cross-appellant B&H
Resources, L.L.C. (through its sole shareholder, Tanios
Bougebrayel), learned that there were delinquent taxes
resulting from the seller's ongoing dispute with the
board of revision's decision to assign the property a
higher valuation than what the seller believed should be
assigned. Believing that the tax issues had been resolved,
Bougebrayel signed a purchase agreement that prorated taxes
and assessments based on the last available tax duplicate.
Unknown to Bougebrayel was that the ongoing tax appeals meant
that the board of revision's higher valuation of the
property had yet to be reflected on the tax duplicate
existing at the time of closing and used by
defendant-appellant/cross-appellee Resource Title National
Agency ("Resource National"), the escrow agent.
When the tax appeals were finally resolved, B&H received
a sizable tax bill.
B&H brought this action against Resource National,
alleging that it breached its contractual
and fiduciary duties, and that it negligently performed the
title exam by failing to provide information relating to
potential title issues and property tax liens. Resource
National counterclaimed, alleging that B&H and the seller
agreed to hold Resource National harmless for any loss or
damage resulting from the exercise of its services and that
B&H should compensate it for its costs of litigation.
Ruling without opinion on cross-motions for summary judgment,
the court found in favor of Resource National on
B&H's complaint and in favor of B&H on Resource
National's counterclaim. Both parties appeal.
The underlying facts are largely undisputed. The subject
property is used as a gas station. The seller purchased the
property in 2007 for $1.1 million, but claimed that only
$600, 000 of that price went to the property itself - the
remaining $500, 000 covered inventory, costs associated with
the gas station, and the purchase of a gas station in
When Cuyahoga County valued the property for tax purposes at
the $1.1 million price payed by the seller in 2007, the
seller objected on grounds that $1.1 million purchase price
had been artificially inflated. He contested the valuation to
the board of revision in two separate tax appeals: one appeal
covered tax years 2007 and 2008; the other appeal covered tax
As these tax appeals were progressing, Bougebrayel and the
seller began negotiations for the sale of the gas station.
Bougebrayel learned that there were delinquent taxes owed on
the property. He was referred to the seller's attorney
who told him that the matter had been "taken care of and
Bougebrayel only had to worry about future taxes because
"back taxes will be on [the seller]" and come out
of the seller's proceeds. Bougebrayel said that the
seller's attorney did not give him any "detail"
about the tax issue, and he conceded that he did not request
any documentation, nor did he make further inquiry into the
In fact, the tax appeals had been resolved adversely to the
seller prior to closing on the sale, with the board of
revision valuing the property at $1.1 million for all
relevant tax years. This valuation was not, however,
completely reflected in the tax duplicate available at the
time of closing: the tax duplicate showed only that the
property had been valued at $1.1 million for tax year 2011.
Consistent with the parties' agreement to adjust outside
of escrow any change in taxes resulting from a change in
property valuation as reflected on the last available tax
duplicate, the seller assumed the additional tax debt for tax
year 2011. After closing, the new valuation caused B&H to
incur tax liabilities of $53, 308.12 for tax years 2007 and
2008, and $55, 592.94 for tax years 2009 and 2010.
We first address the cross-appeal filed by B&H because
its resolution could potentially render Resource
National's appeal moot. Two issues are presented: (1)
that the court erred by finding that Resource National did
not breach its contract and (2) notwithstanding any alleged
breach of contract, B&H had a viable negligence claim
against Resource National for its failure to discover the
outstanding tax issues and make those issues known to
Breach of Contract
B&H chose Resource National to provide title exams,
settlement, and closing services. The "standard
conditions of appointment of settlement agent and acceptance
of escrow" stated that "prorations of taxes or
assessments shall be on the basis of the amount shown on the
last available Tax Duplicate/Municipal Tax Invoice when
required by the instructions ...