SHAWN A. HERHOLD, et al. Appellees
THE SMITH LAND COMPANY, et al. Appellants
FROM JUDGMENT ENTERED IN THE COURT OF COMMON PLEAS COUNTY OF
SUMMIT, OHIO CASE No. CV 2008 05 3634
MENDENHALL, Attorney at Law, for Appellants.
A. SKIDMORE, Attorney at Law, for Appellees.
DECISION AND JOURNAL ENTRY
J. CARR JUDGE.
Defendants-Appellants Smith Land Company, LLC ("Smith
Land") and Robert G. Smith appeal from the judgments of
the Summit County Court of Common Pleas. This Court affirms.
This appeal stems from the sale of a vacant lot on Brunsdorf
Road ("the Property") in Fairlawn. In July 2002,
then husband and wife, Plaintiffs-Appellees Shawn Herhold and
Malavanh Herhold, nka Rassavong (collectively "the
Herholds") purchased the Property from Smith Land and
its president and sole shareholder, Robert Smith
(collectively, "the Defendants"). The deed for the
Property was recorded in September 2002. According to the
Herholds, the Defendants represented to them that they would
be able to build a home on the Property. Later, however, when
the Herholds attempted to sell the Property, they discovered
that the City of Fairlawn would not issue a building permit
for the Property absent permission from the Ohio
Environmental Protection Agency ("Ohio EPA"). In
order to satisfy Ohio EPA, the Herholds removed numerous
truckloads of fill dirt from the north boundary of the
Property in order to restore the wetlands that were
previously there. Such action created a ditch and decreased
the buildable surface area of the Property. After the
alterations to the Property, the Herholds were unable to sell
The Herholds brought suit against the Defendants, and others
who are not relevant to this appeal, for breach of contract,
breach of the warranty of title, fraud, misrepresentation,
and fraudulent concealment/inducement. The Herholds sought
compensatory damages, punitive damages, interest, and
Ultimately, the matter proceeded to a jury trial. The jury
found in favor of the Herholds and awarded them $55, 000 on
their breach of contract claim, $65, 000 on their fraud
claims, and $35, 000 in punitive damages. Additionally, the
jury determined that the Herholds should be awarded their
attorney fees. The Herholds were awarded $39, 744 in attorney
fees, $32, 407.82 in prejudgment interest on their contract
claim, and $36, 854.91 in prejudgment interest on their fraud
The Defendants filed a motion for judgment notwithstanding
the verdict, or in the alternate, a motion for new trial. In
the end, a new trial was ordered on all of the Herholds'
The Defendants then moved to reopen discovery, however, the
request was denied. The matter proceeded to a second jury
trial. The jury again found in favor of the Herholds. The
Herholds were awarded $36, 700 on the breach of contract
claim, $26, 485.07 in prejudgment interest on the breach of
contract claim, $5, 300 on the fraud claim, $3, 341.66 in
prejudgment interest on the fraud claim, $165, 000 in
punitive damages, and $48, 062.55 in attorney fees.
Subsequently, the Defendants filed a motion for judgment
notwithstanding the verdict, or, in the alternate, a motion
for a new trial. The trial court denied the motions.
The Defendants have appealed, raising seven assignments of
error, which will be addressed out of sequence to facilitate
OF ERROR IV
THE TRIAL COURT ERRED AS A MATTER OF LAW IN DENYING SMITH
LAND COMPANY AND ROBERT SMITH'S MOTIONS FOR DIRECTED
VERDICT AND JUDGMENT NOTWITHSTANDING THE VERDICT PURSUANT TO
CIV.[R] 58 ON THE HERHOLDS['] BREACH OF CONTRACT CLAIM.
The Defendants assert in their fourth assignment of error
that the trial court erred in denying their motion for
directed verdict and for judgment notwithstanding the verdict
on the Herholds' breach of contract claim.
The test to be applied by a trial court in ruling on a motion
for judgment notwithstanding the verdict is the same test to
be applied on a motion for a directed verdict. The evidence
adduced at trial and the facts established by admissions in
the pleadings and in the record must be construed most
strongly in favor of the party against whom the motion is
made, and, where there is substantial evidence to support his
side of the case, upon which reasonable minds may reach
different conclusions, the motion must be denied. Neither the
weight of the evidence nor the credibility of the witnesses
is for the court's determination in ruling upon either of
the above motions.
quotations and citations omitted.) Jackovic v. Webb,
9th Dist. Summit No. 26555, 2013-Ohio-2520, ¶ 15. Both
rulings are reviewed by this Court de novo. Id.
"Generally, a breach of contract occurs when a party
demonstrates the existence of a binding contract or
agreement; the non-breaching party performed its contractual
obligations; the other party failed to fulfill its
contractual obligations without legal excuse; and the
non-breaching party suffered damages as a result of the
breach." (Internal quotations and citations omitted.)
Envision Waste Servs, LLC v. Cty. of Medina, 9th
Dist. Medina Nos. 15CA0104-M, 15CA0106-M 2017-Ohio-351,
The Herholds presented evidence supporting the following
narrative. The Defendants did not present any witnesses on
Woodbury Estates, where the Property is located, was platted
in November 1999. Smith Land was the proponent of the plat
map and the owner of the land. The allotment originally
contained 10 lots. They were numbered 1 through 9 and an
additional lot was labeled as block A. Ultimately, block A
would be later split into lots, one of which is the Property.
Earlier in 1999, Smith Land, through a consultant, submitted
a report delineating the wetlands in the land for
verification by the United States Army Corps of Engineers.
The report identified 5.54 acres of jurisdictional wetlands.
Lee Robinette with the United States Army Corps of Engineers
went out to the area to field verify the presence and
location of wetlands. She then sent a verification letter to
Smith Land's consultant.
The plat was reviewed by the zoning and engineering
departments of the City of Fairlawn. Before the plat was
approved, the city engineer requested that certain
restrictions be placed on the map. One of those restrictions
stated that, "[t]he lands delineated on this plat as
wetlands are jurisdictional waters of the United States under
the Federal Clean Water Act, and in order to fill any of the
delineated wetlands, not shown on this plat as to be filled,
a permit must be obtained from the U.S. Army Corps of
Engineers." Once effective, those restrictions
"run with the land" and "future development
has to adhere to those restrictions." If at some point,
someone desired to change or remove a restriction, that
person would have to contact the planning commission and fill
out an application to have the plat updated. No one has ever
asked that any of the restrictions be removed. Christopher
Randles with the Building and Zoning Commission for the City
of Fairlawn was of the opinion that, until the restrictions
are removed, they must be followed.
Notably, block A, where the Property would ultimately be, was
composed of wetlands that were not designated as "to be
filled[.]" Thus, Mr. Randles opined that if someone was
going to put fill in block A, that person would need a
permit. Lot 5, however, did contain the designation that a
portion was "to be filled[.]" At one of the
planning commission meetings in November 1999, Karen-Edwards
Smith, Mr. Smith's wife, the vice-president of Smith
Land, and also an attorney, appeared on behalf of Smith Land.
Ms. Edwards-Smith told the commission that the lots will only
appeal to certain individuals. Those people "would be
ones that are interested in having a wetlands surrounding
because the contracts that are signed as to purchasing these,
as well as the plats, reflect that they do not have the right
to go in and fill the wetlands without Army Corps of
Engineers' permits." Ms. Smith told the commission
that, "if the city does grant the lot splits as
indicated that no way are we making any representations of
building ability of the land itself."
In February 2000, Ms. Robinette's office received a
report of a potential unauthorized wetland fill project on
Smith Land's property. Employees of the United States
Army Corps of Engineers visited the site and discovered that
.5 acre of wetland had been filled. Under what was known as a
Nationwide Permit or NWP number 26, any impact to wetlands
over one-third of an acre and up to three acres required
prior notification and mitigation planning. Mitigation
planning involves the purchase and, thus preservation, of
other wetlands so that there is not a net loss of wetlands.
Smith Land did not notify the United States Army Corps of
Engineers about the fill and did not mitigate for the
impacted wetlands. Accordingly, United States Army Corps of
Engineers determined the project was not in compliance with
NWP number 26.
Subsequently, Smith Land applied to the United States Army
Corps of Engineers to fill .945 acre of jurisdictional
wetland and to mitigate the impact by purchasing 2 acres of
wetlands elsewhere. In submitting the application, Smith Land
included a map of the proposed fill that included the
restriction about wetlands that was on the previous plat map.
The proposed fill area included a portion of what would
become the Property.
In April 2000, Smith Land received a letter from the United
States Army Corps of Engineers authorizing the work under NWP
number 26. The permit was valid until February 11, 2002,
unless activity commenced or was contracted to commence prior
to that date, in which case Smith Land would have an
additional 12 months to complete activity under the permit.
The letter concluded by noting that "[a]ny impacts to
the remaining 4.609 acres of jurisdictional wetlands on the
subject property would require authorization from this
office. Please be aware that the nationwide permit
authorization does not obviate the requirement to obtain
state or local assent required by law for the activity."
The City of Fairlawn was never notified of a violation of the
permit. Further, Ms. Robinette was unaware of her office
issuing any violation of the permit but she also noted that
she was unaware of the United States Army Corps of Engineers
being asked to evaluate the land as to whether there was a
Around that time, Smith Land also requested that the city
planning commission split block A into three lots. The letter
from the United States Army Corps of Engineers was referenced
during the planning commission meeting and it and the
attachments were considered by the commission. Block A was
ultimately split into three lots, one of which became the
The plat map that designates the splitting of block A
includes what is labeled a "Note" that specifies
that "[t]he lands delineated on this plat as wetlands
are jurisdictional waters of the United States under the
Federal Clean Water Act and in order to fill any of the
delineated wetlands, not shown on this plat as to be filled,
a permit must be obtained from the U.S. Army Corps of
Engineers." In May 2000, a deed was issued from Smith
Land to Smith Land to address the splitting of the lots of
block A. That deed did not contain the notation concerning
the wetlands that was on the plat map.
In 2002, the Herholds were looking for a vacant lot upon
which to build a home. Mr. Herhold first came across the
Property and noticed that it was level and freshly graded
with woods in the backyard. He observed that it appeared to
have fresh dirt as "it was graded, so you could tell
that it had just been recently worked up because it was like
nice, flat, level." After showing the Property to Ms.
Rassavong, Mr. Herhold met Mr. Smith at the Property.
Mr. Smith told Mr. Herhold that Mr. Smith had purchased the
land in the area and divided it up into lots. Mr. Smith
informed Mr. Herhold that Mr. Smith was building a house on a
lot further down, lot 5, and the lot was very similar to the
Property. Mr. Herhold said that Mr. Smith used lot 5 as an
example of what Mr. Herhold would be able to do. Mr. Smith
"was being very encouraging, * * * he was showing [Mr.
Herhold] the house he [was] doing just down the road, saying
that it is a buildable lot." Mr. Smith did advise Mr.
Herhold that he would need a little bit of extra stone for
the foundation and that would cost about $5, 000 extra as
compared to an average house. Additionally, Mr. Smith told
Mr. Herhold that there was some fill dirt on the Property
that he had brought in and that "he was allowed to bring
fill dirt in there." Mr. Smith indicated that there were
wetlands at the back of the Property and showed Mr. Herhold
how far back the Property went into the wetlands. However,
Mr. Smith did not tell them that the Property had been filled
Thereafter, Mr. Herhold brought family members and his wife
out to the Property several times. He estimated that he had
been out to the Property at least 10 times at the point he
made an offer. In making the offer, Mr. Herhold informed Mr.
Smith that he "wanted to make sure that everything was
okay with the piece of property, like [Mr. Smith] had said,
that it was a buildable lot. * * * [Mr. Herhold] wanted
something in [the agreement] to state that it was a buildable
lot, and [Mr. Smith] said that was not a problem." Ms.
Rassavong added that, due to the visible wetlands in the
back, they wanted some assurance that the Property was
The top of the "Real Estate Purchase Agreement"
included a handwritten notation that the "Seller to
provide documentation that lot is buildable with fill
dirt." There is also an asterisk near the notation which
states "See Addendum A[.]" The handwritten notation
appears to be initialed by Mr. Smith and the Herholds. The
Herholds understood that this notation meant that, with the
fill dirt already on the Property, the lot was a buildable
The Real Estate Purchase Agreement also included an
"'AS IS' Clause[, ]" which was part of the
form agreement. It stated:
Buyer agrees and acknowledges that the property is being
conveyed "AS IS" and that neither Seller, Broker,
nor Agent have made any representations or warranties, either
expressed or implied, regarding the property including, but
not limited to, soil conditions, environmental conditions,
flooding or flood zone, availability of septic or sewer,
availability or condition of well or city water, availability
of public utilities, feasibility for construction, zoning,
easements, surveying or boundaries, and deed restrictions.
Buyer has the sole responsibility to inspect the property
before signing this Agreement. Broker or Agent assume no
liability for the condition of the property at any time
before or after delivery of the deed.
This Agreement is contingent upon an inspection of the
property for its suitability for Buyer's intended
purpose, including septic/sewer permits and preliminary title
search, within sixty (60) days form the date of acceptance of
this Agreement. Inspections to be performed by Buyer at
Buyer's expense. If Buyer is not satisfied with the
condition of the property then Buyer shall notify Seller
within the inspection period and Seller may either correct
the unsatisfactory condition or void this Agreement in which
case all monies held in trust shall be returned to Buyer
without further liability between Seller, Buyer, or Broker.
If Buyer does not inspect, then the inspection is waived and
Buyer takes the property in its present "AS IS"
condition. After inspection and correction, if any, and
delivery of deed Buyer accepts the property "AS
IS". Buyer shall be responsible for the repair and
restoration of any damage to the property which may be caused
by the inspections.
The Real Estate Purchase Agreement was signed by the Herholds
and Mr. Smith, whose signature was followed by "Pres[,
]" under which appeared "Smith Land Co. Inc."
Mr. Herhold acknowledged that he did not have any inspections
done nor did he contact the City of Fairlawn or Ohio EPA.
The "Addendum to Sales Contract" provides that
"[t]he subject site will be required to be engineered by
a company such as Messmore Engineering or Summit Testing. As
with sub lot 5 * * * Messmore required a base of 1's and
2's (stone) in the construction area under the footer and
basement floor. The fill used on sub lot 5 is approximately
the same level of fill used on the subject lot." The
addendum was signed by the Herholds and Mr. Smith on July 11,
Mr. Smith also completed a disclosure form. That document
lists "Smith Land" as the seller but it is signed
by Mr. Smith and the Herholds. With respect to the question,
"Are you aware of any violation of either Federal or
State Environmental Protection Agency rules or regulations?[,
]" the "NO" box is checked. The disclosure
form also reflects, inter alia, that the seller did not know
of any flooding, drainage, or grading problems on the
Property, did know that the Property was designated as a
wetland by a federal or state governmental agency, did not
know of any violations of local, state or federal laws,
building codes and/or zoning ordinances affecting the
Property, and did not know of any excessive settling,
slippage, sliding erosion, or other soil stability problems
on the Property. The end of the form states "[t]he above
information is true and correct to the best of my knowledge
and, except as set forth herein, no material problems exist
with respect to the property as of the date below. I further
agree to notify Purchase[r] of any additional items which may
become known to me prior to the recording of the deed."
Mr. Herhold testified that he relied on the disclosure form
when he made an offer on the Property.
The Herholds purchased the Property for $55, 000. Mr. Herhold
averred that when he did so he believed that he purchased a
buildable lot. Based on the representations made to him, Mr.
Herhold believed that all he had to do to build on the lot
was to add some extra stone for the foundation as specified
in the Addendum. The deed was filed September 4, 2002.
Shortly after purchasing the Property, in November 2002, Mr.
Herhold, who was in the United States Navy Reserve, was
deployed to Japan for nearly a year. When Mr. Herhold
returned almost a year later, the couple ...