Court of Appeals of Ohio, Eleventh District, Geauga
JAMES P. PSARRAS, et al., Plaintiff-Appellant,
SARAH M. RAYBURN, TRUSTEE, Defendant-Appellee.
Appeal from the Geauga County Court of Common Pleas, Case No.
2013 M 000943.
Jonathan P. Blakely, (For Plaintiff-Appellant).
Tassi, (For Defendant-Appellee).
JANE TRAPP, J.
Appellant, James P. Psarras, M.D., appeals from the judgment
of the Geauga County Court of Common Pleas, which found that
he breached a combined lease and residential real estate
purchase agreement with appellee, Sarah M. Rayburn, trustee,
by not completing the purchase of the property at issue.
During the summary judgment phase of this matter, the court
found Ms. Rayburn violated the lease and Ohio's Landlord
Tenant Law, Chapter 5321, by failing to make necessary
repairs to prevent flooding in the residence. After the
trial, however, the court found Dr. Psarras failed to offer
sufficient evidence to support his damage claim. The court
also awarded Dr. Psarras interest on the security deposit and
Ms. Rayburn damages for the breached purchase agreement by
subtracting the eventual sale price from the contracted
Dr. Psarras now appeals, arguing flooding issues on the
property negated his obligation to purchase the property. We
disagree and affirm the trial court's judgment. Dr.
Psarras signed a residential disclosure form, which disclosed
the past flooding issue. He then waived his right to any
inspection of the property even though he saw sump pumps in
the basement of the residence before he signed the lease
agreement with a purchase addendum and a separate residential
real estate purchase agreement that contained an "as
and Procedural History
Ms. Rayburn, as trustee, and Dr. Psarras, together with his
now deceased wife, Elaine Psarras, M.D. (collectively
"Dr. Psarras"), entered into a lease agreement with
a purchase addendum and a separate purchase agreement to
purchase real property located at 3063 Forest Drive, Pepper
Pike, Ohio. In order to allow Dr. Psarras sufficient time to
sell their Shaker Heights home and have the funds needed to
purchase the Pepper Pike home, the parties agreed Dr.
Psarras, his wife, as well as their daughter and son-in-law
would lease the property beginning December 16, 2009 to
August 15, 2010. The purchase agreement provided that the
sale of the property would close on August 15, 2010.
Prior to signing either agreement, Dr. Psarras received a
residential disclosure form, which Ms. Rayburns' parents,
the beneficiaries of the trust, completed and signed on July
8, 2008. Ms. Rayburns' parents disclosed a previous water
intrusion, describing the water leakage as follows:
"basement flooded after rain - repaired new pumps in
place, outdoor and indoor piping replaced new grates placed
in front yard." Dr. Psarras waived his right to an
inspection of the water intrusion and signed the residential
disclosure form on October 8, 2009.
Approximately a month later, on November 3, 2009, Dr. Psarras
signed the lease/purchase and residential real estate
purchase agreements. He testified he was being advised by
counsel, but counsel did not negotiate the terms. Although
the record is unclear, it appears Dr. Psarras did not have or
does not recall having any of the documents at issue reviewed
by his attorney before execution.
Both the lease/purchase and purchase agreements contained
integration clauses. The lease agreement required rent of
$20, 000 for the lease term, or $2, 500 per month, including
the payment of the last monthly installment upon the
execution of the lease agreement as a deposit. The
pre-printed lease agreement form at paragraph 3, "Damage
Deposit," called for "ZERO DOLLARS." The lease
further provided via a handwritten interlineation that
"[t]enant accepts premises 'as is.'"
Pursuant to paragraph 20, "Default," if Dr. Psarras
failed to pay rent for seven days, Ms. Rayburn was entitled
to "declare the entire balance of rent due and
payable" and to "exercise all rights/remedies
available to the landlord at law or equity", or could
"elect to terminate" the lease, "the
purchase agreement and retain all amounts paid"
(Emphasis added to show the handwritten addition by
In the lease addendum Dr. Psarras agreed to pay $510, 000 for
the purchase of the home. In the separate purchase agreement,
the purchase price of $510, 000 was restated, and that
agreement also required earnest money of $51, 000 to be paid
in two payments. The first payment, $25, 000, was due upon
signing. The second payment, $26, 000, was due January 31,
2010, leaving a balance of $459, 000 to be paid on or before
the closing date. Dr. Psarras timely paid both deposits.
The purchase agreement contained a waiver of inspection, in
which Dr. Psarras waived his rights to general home, septic,
water potability, well flow rate, radon, and mold
inspections. The agreement also contained an "as
is" clause, which stated as follows:
"BUYER has examined the property and agrees that the
property is being purchased in its "AS IS" PRESENT
PHYSICAL CONDITION including any defects disclosed by the
SELLER on the State of Ohio residential Property Disclosure
Form, identified by any inspections requested by either party
or on any other forms or addenda made a part of this
Agreement or identified by any other source. SELLER warrants
to BUYER that SELLER has completed the State of Ohio
residential Property Disclosure Form accurately and
thoroughly and that no additional items of disclosure have
occurred since the SELLER'S completion of that form.
SELLER agrees to notify BUYER in writing of any additional
disclosure items that arise between the date of acceptance
and December 15, 2009. BUYER has not relied upon any
representations, warranties or statements about the property
(including but not limited to its condition or use) unless
otherwise disclosed on this AGREEMENT or on the Residential
Agreement Disclosure Form." Dr. Psarras initialed that
he received a residential disclosure form and that he did not
rely on any verbal representations made by brokers or their
Under "additional terms" in the purchase agreement,
it is handwritten that "[i]f tenant defaults under this
agreement, the lease, or the lease addendum, all amounts paid
by tenant to landlord shall become nonrefundable and shall be
the sole property of seller."
The Psarras family started to remodel the interior of the
home, which included new kitchen cabinets and installing
carpet in the basement and furnishing a portion of it as a
The basement flooded on Memorial Day of 2010 and on
approximately July 4, 2010. Dr. Psarras testified that both
floodings were significant, resulting in several inches of
Dr. Psarras was alerted to the flood on Memorial Day when the
sump pump alarm went off. After the Memorial Day flood, the
carpet was irreparable, and both the carpet and furniture
were removed. They discontinued using the basement and called
a clean-up crew and their real estate agent, Patty Munro.
Approximately one week after the first flooding, Dr. Psarras
called Ms. Rayburn. He informed her of the flooding and that
he had spoken with the city building inspector. Apparently,
the flooding issue was an ongoing problem that had involved
the building inspector and the mayor of Pepper Pike, because
the adjacent neighbor had previously not allowed piping to go
through his property to fix the problem. Ms. Rayburn offered
to pay for the carpeting. While she sympathized with the
problem, she did not offer to go to the city and/or neighbor
meetings called to address the flooding problem that were to
One month later, around July 4, 2010, Dr. Psarras learned
from his daughter and son-in-law that the basement had
flooded again with several inches of water.
On August 9, 2010, Dr. Psarras sent Ms. Rayburn a letter to
notify her that they "will exercise the option in the
agreement to delay closing. We plan to move the date to a
finalized October 15, 2010." He went on to write that he
appreciated "her responsibility" with the water
problem; they love the house, look forward to "many
years there," and this "problem has been
Per the lease agreement, at the expiration of the term, a new
holdover tenancy from month-to-month was created with an
increase in monthly rent of $5, 000.
The following day Dr. Psarras received a letter from Ms.
Rayburn's attorney, William P. Gibbons ("Mr.
Gibbons") in which Mr. Gibbons informed Dr. Psarras
there was no "option to continue rent," and that
the residential property disclosure form Dr. Psarras signed
plainly disclosed that the basement flooded and that a new
pump was installed to correct the situation. The letter
further informed Dr. Psarras that he had agreed to accept the
property "as is present physical condition."
Finally, Mr. Gibbons warned that if Dr. Psarras failed to
close the transaction on August 15, 2010, he would be in
breach of the agreement, Ms. Rayburn would seek specific
performance as well as damages, and that he would "no
longer be entitled to occupy the premises." The letter
then listed several conditions under which Ms. Rayburn would
consider extending the lease and closing date until October
15, 2010. This included paying $25, 000 by August 13, 2010, a
nonrefundable amount, of which only half would be credited
towards the purchase price.
Dr. Psarras emailed his counsel, John P. Blakely ("Mr.
Blakely"), regarding the August 10, 2010 letter the
following day. Dr. Psarras wanted to share the details of the
flooding and expressed that neither he, his wife, or the
realtor were previously aware of any flooding problem. He
then listed step-by-step the details of the flooding problem
and what he was doing to resolve it, including the issues
with the ...