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D & L Ferguson LLC v. Thompson

Court of Appeals of Ohio, Fifth District, Stark

June 25, 2018

D & L FERGUSON LLC Plaintiff-Appellee
v.
MICHAEL THOMPSON, As Trustee of the MICHAEL W. THOMPSON LIVING TRUST, et al. Defendants-Appellants

          Civil Appeal from the Court of Common Pleas, Case No. 2017 CV 00563

          For Plaintiff-Appellee LISA K. FERGUSON

          For Defendant-Appellant Montrose JOSEPH T. DATTILO

          For Defendant-Appellant Thompson CLAIR E. DICKINSON IRVING B. SUGERMAN CHRISTOPHER T. TEODOSIO BROUSE MCDOWELL LPA

          JUDGES: Hon. John W. Wise, P. J. Hon. W. Scott Gwin, J. Hon. William B. Hoffman, J.

          OPINION

          WISE, P. J.

         {¶1} Defendants-Appellants Michael Thompson, as Trustee of the Michael W. Thompson Living Trust, and Stars of Cleveland, Inc., dba Montrose Ford Lincoln, appeal the September 25, 2017 judgment entry of the Stark County Court of Common Pleas, which found enforceable a deed restriction affecting a parcel of commercial property in Alliance, Ohio, owned by Appellant Thompson. Plaintiff-Appellee is D & L Ferguson LLC, the owner of an adjoining mall property. The relevant facts leading to this appeal are as follows.

         {¶2} The focus of the present dispute is a 1.0-acre parcel of real property, owned by the Michael W. Thompson Living Trust, located at 2490 West State Street (also known as Route 62) in Alliance, Ohio. This parcel (hereinafter the "Thompson" property) fronts a busy commercial strip leading to Mount Union University and downtown Alliance. Said parcel also adjoins a larger parcel at 2500 West State Street, better known as the Carnation Mall, an indoor retail facility, and the parking lot for the mall. The mall itself sits back somewhat from West State, with a McDonald's restaurant, a Tractor Supply store, and a Kay Jewelers store sharing the street frontage alongside the Thompson property.

         Historical Background - 2500 West State Street

         {¶3} Prior to 1981, Midland Service Corporation ("Midland") owned both the Thompson property (2490 West State) and the larger "mall" property upon which Carnation Mall now stands (2500 West State).[1] In April 1983, R.G. Sproul and Associates, in the name of the Alliance Mall Company, exercised an option to purchase some of the properties in the present area of the mall. Midland maintained a repurchase option concerning what is now the Thompson property, as further detailed infra.

         {¶4} On December 26, 1990, the Alliance Mall Company conveyed the mall property, 2500 West State Street, to AllOhio Holding, Inc.

         {¶5} On February 28, 2001, AllOhio Holding, Inc. conveyed 2500 West State Street to Carnation Mall, LLC.

         {¶6} On April 17, 2008, Carnation Mall, LLC conveyed 2500 West State Street to Appellee D & L Ferguson, LLC by quit claim deed. It is thus undisputed that as to the present property issues, Appellee D & L Ferguson is the successor of the Alliance Mall Company.

         Historical Background - 2490 West State Street

         {¶7} In the meantime, in September 1983, the Alliance Mall Company conveyed 2490 West State Street back to Midland Service Corporation by general warranty deed.

         The deed contains the following restrictive covenant:

In accepting this conveyance and as part of the consideration therefor, the Grantee, its successors and assigns, covenants with the Grantor [the Alliance Mall Company], its successors and assigns, that it will not use the above described premises for any purpose other than a saving and loan branch office and that said branch office structure shall not exceed 750 square feet. This covenant shall run with the land herein conveyed and shall be binding on the Grantee, its successors and assigns, unless this covenant is subsequently modified in writing by the Grantor, its successors and assigns.

         {¶8} Thus, the deed restriction purports to prohibit use of property at 2490 West State Street, for anything other than as a branch office of a savings and loan institution.

         {¶9} As indicated previously, the property at 2490 West State abuts the parking lot for Carnation Mall. There is presently a one-story building, styled as a bank branch facility, approximately 750 square feet in size on the property.

         {¶10} At some point after the above September 1983 conveyance, Midland Service Corporation conveyed the Thompson property to Midland Buckeye Federal Savings and Loan Bank, which later became Sky Bank. Although the exact time frames have faded, these entities used the Thompson property as a savings and loan branch. Sky Bank was thereafter purchased by Huntington National Bank.

         {¶11} In June 2000, Huntington National Bank leased the property to the Alliance Area Development Foundation, a non-profit organization that promotes the economic development of Alliance. Said foundation is not a savings and loan institution. It appears undisputed that there was never a written modification to the aforementioned restrictive covenant to allow the foundation to operate at the property.

         {¶12} In November 2013, Appellant Thompson, as trustee, purchased the Thompson property from Huntington National Bank.

         Prior Litigation

         {¶13} On August 11, 2014, Stars of Cleveland, Inc., seeking to utilize the Thompson property for a retail truck lot, filed a complaint in the Stark County Court of Common Pleas for tortious interference of business relationships, slander of title, and injunctive relief. The trial court subsequently dismissed some of the claims for tortious interference with business relationships and the claim for slander of title.

         {¶14} On March 30, 2015, Stars of Cleveland filed a first amended complaint to add a claim for declaratory judgment. Stars of Cleveland included in this claim a request for the trial court to determine the enforceability of the restrictive covenant, i.e., a declaration that the restrictive covenant did not prevent it from operating a car dealership on the property because D & L had waived the restrictive covenant.

         {¶15} Stars of Cleveland and D & L thereafter filed motions for summary judgment on the claim for declaratory judgment. Stars of Cleveland dismissed without prejudice its claim for tortious interference with a business relationship.

         {¶16} On September 30, 2015, the trial court issued its decision granting summary judgment in favor of D & L, essentially determining that the restrictive covenant was enforceable against Stars of Cleveland.

         {¶17} Stars of Cleveland then appealed. See Stars of Cleveland, Inc. v. D & L Ferguson, LLC, 5th Dist. Stark No. 2015CA00190, 2016-Ohio-4625. On June 13, 2016, in a 2 - 1 decision, this Court reversed the grant of summary judgment and remanded the matter to the trial court for further proceedings. Id. at ¶ 46.

         {¶18} However, Stars of Cleveland and Thompson (plaintiffs in that instance) ...


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