COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 68303 JAMES D. HARRIS, ET AL., : : Plaintiffs-Appellants : : JOURNAL ENTRY vs. : and : OPINION RICHARD H. BURGER, ET AL., : : Defendants-Appellees : DATE OF ANNOUNCEMENT OF DECISION : AUGUST 24, 1995 CHARACTER OF PROCEEDING : Civil appeal from : Common Pleas Court : Case No. 248222 JUDGMENT : REVERSED AND REMANDED. DATE OF JOURNALIZATION : _______________________ APPEARANCES: For plaintiffs-appellants: Gerald J. Patronite GERALD J. PATRONITE CO., L.P.A. 34950 Chardon Road Suite 210 Cleveland, Ohio 44094-9103 For defendants-appellees: Frank J. Groh-Wargo Mark Fusco WARGO & WARGO 30 Park Drive P.O. Box 332 Berea, Ohio 44017 -2- NAHRA, J.: Appellants, James D. Harris and Hyeon Suk Harris, are appealing the trial court's grant of summary judgment in favor of appellees, Richard H. Burger and Louise A. Burger. For the following reasons, we reverse. Appellees desired to sell their home of fourteen years, located at 17072 Racoon Trail in Strongsville, Ohio. Appellants were interested in purchasing the home. Mr. Burger told appellants the home was in very good condition and required no major repairs. The Burgers gave appellants a handwritten document describing the home as in "excellent condition." Hyeon Suk Harris asked Mrs. Burger why so many homes in the area were for sale. Mrs. Burger replied it was a "transient neighborhood." Appellants toured the home. Mr. Harris observed a small crack, two cement blocks wide, on the rear basement wall. Mr. Burger stated the wall had been repaired and there were no problems with the wall or foundation. Harris did not notice the wall was bowed one inch inward. Appellants and appellees entered into a purchase agreement for the home. As to the condition of the property, the purchase agreement stated: (1) the property was to be delivered in its "AS IS" condition, (2) the purchaser has relied on representations of the seller, (3) the seller represents, to his knowledge, the property has no latent, structural or other significant defects, and (4) the purchaser has relied upon a property description completed by the seller. The property description stated a new -3- patio was installed and a rear foundation wall leak was repaired, but no leakage subsequent to the repair occurred. Except for a roof repair and ant extermination, there were no other problems or repairs. All repairs were made with the necessary permits. The purchasers could terminate the purchase agreement if they were not satisfied with the home inspection. The inspector hired by appellants informed appellants that there was a one inch bow in the rear basement wall, which could be a problem in the future. Insulation and pegboard concealed much of the wall. The inspector suggested appellants obtain further information from the seller or patio installer or remove the wall finishings and have a structural engineer examine the wall. The inspection report stated that buyer uncertainty should be resolved by a structural engineer. Via the real estate broker, appellants obtained documentation of the work done on the patio and wall by Semall Construction and Repair Company. Mr. Harris phoned Mr. Semall. Semall said when the repairs were made six months ago, the walls did not need further shoring up. Harris did not ask Semall if the wall was bowed at that time. Harris did not know if the Burgers knew of the bow. Appellants decided not to hire a structural engineer because Mr. Burger had assured them the wall had been repaired. The sale was completed and a general warranty deed transferred to appellants. -4- Subsequently, the basement of the house flooded. Mr. Harris removed paneling and insulation from the basement walls, revealing cracks in the walls and separation of the mortar joints. On both the inside and outside of the wall, cracks became visible that had been covered by caulk and paint. Appellants hired a contractor to estimate the cost of repairing the foundation walls. The contractor also identified cracks in the garage walls that had been caulked and painted. The garage slab was cracked, possibly caused by street shifting. The streets in the development were improperly constructed in the 1970s and caused damage to many homes in the area over a period of years. Appellants submitted two newspaper articles documenting the problem, one dated April 25, 1993, the other not dated. Mr. Harris also discovered that wallpaper, drywall, plaster and paint were used to cover stress fractures in the kitchen, second floor foyer and master bedroom. The house settled, causing voids between door jambs and the floor. The contractor opined these problems were caused by settling of the concrete slab, because of defects in the backfill or original excavation of the slab area. Upon inquiry to the city, Harris discovered the required building permits for the patio and foundation repair were never obtained. Semall was not a licensed contractor in the city of Strongsville, contrary to appellees' representations. -5- Appellants' complaint states causes of action for fraudulent misrepresentation, nondisclosure, and concealment; as well as breach of contract. Appellants assert two assignments of error, which are interrelated and will be discussed together. These assignments of error state: ASSIGNMENT OF ERROR: THE TRIAL COURT ERRED BY GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON ALL ISSUES AND CAUSES OF ACTION WHEN DISPUTED ISSUES AND FACTS EXIST ON CAUSES BOTH CONSIDERED AND NOT CONSIDERED BY THE COURT. ASSIGNMENT OF ERROR: THE TRIAL COURT ERRED BY GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT WHEN DEFENDANTS FAILED TO ESTABLISH THAT THEY WERE ENTITLED TO JUDGMENT AS A MATTER OF LAW. Summary judgment is proper if: (1) there is no genuine issue of material fact, (2) the moving party is entitled to judgment as a matter of law, and (3) construing the evidence and the inferences to be drawn therefrom in favor of the non-moving party, reasonable minds can come to but one conclusion, and that conclusion is adverse to the non-movant. Civ.R. 56(C), Harless v. Willis Day Warehousing Co. (1978), 54 Ohio St.2d 64, Turner v. Turner (1993), 63 Ohio St.3d 337, 341. If the movant asserts a lack of evidence of an essential element of the non-movant's case, the non-movant must come forward with evidence of the element in order to prevent summary judgment. Wing v. Anchor Media (1991), 59 Ohio St.3d 108, Celotex v. Catrett (1986), 477 U.S. 317, 91 L.Ed.2d 265, 106 S.Ct. 2548. Summary judgment can only be granted if the entire record demonstrates no genuine issue of material fact, and the movant is entitled to judgment as a matter of law. Civ. R. 56, Harless, -6- supra. In this case, summary judgment may have been proper as to the defects in the basement wall, but there were genuine issues of material fact concerning the defects in the garage slab and foundation slab. The sellers had no duty to disclose the defects in the basement wall, because the defects were discoverable upon reasonable inspection, the buyers had the unimpeded opportunity to examine the premises and there was no fraud shown concerning these defects. Layman v. Binns (1988), 35 Ohio St.3d 176, syllabus. The defects were discoverable because the cracks in the wall, inspection report and previous repair put appellants on notice to inquire further or obtain an expert inspection. Tiptum v. Nuzum (1992), 84 Ohio App.3d 33. Even if the defects in the basement wall were latent and not discoverable, absent fraud, the seller had no duty to disclose the defects because the purchase agreement stated the buyer accepted the property in its "as is" condition. Kaye v. Buehrle (1983), 8 Ohio App.3d 381, Dennison v. Koba (1993), 86 Ohio App.3d 605. Appellants did not set forth sufficient facts showing fraudulent misrepresentation or concealment of the defects in the basement wall. An essential element of fraudulent misrepresentation is the speaker knew or should have known the statement was false. Dennison, supra, Kossutich v. Krann (Aug. 16, 1990), Cuyahoga App. No. 57225, unreported, at 6-7, Van Camp v. Bradford (1993), 63 Ohio Misc.2d 245. There was no evidence appellees knew that problems existed in the basement wall after the -7- wall was repaired. No facts indicated the cracks in the wall were caulked for the purpose of concealment, rather than repair. See Cope v. Dellinger (March 31, 1988), Sandusky App. No. 5-87-27, unreported, Lorenc v. Sciborowski (March 16, 1995), Cuyahoga App. No. 66945, unreported. Additionally, appellants could not have reasonably relied on appellants statements about the wall, because the inspection report indicated a problem with the wall. See Dennison, supra. Thus, summary judgment may have been proper if the basement wall was the only defective condition alleged. However, appellants also complained of defects in the garage slab and foundation slab. There was some evidence as to each essential element of fraudulent misrepresentation and concealment concerning these defects. A reasonable person could infer that appellees knew or should have known of the defects in the garage slab and foundation slab. Dennison, supra. Numerous cracks in the garage, second floor and kitchen were covered by plaster, caulk, paint, wallpaper, etc. Appellees lived in the house fourteen years and had to have known about the cracks and what was done to cover them. From the extensive nature of the cracks, it can be inferred appellees knew or should have known of the structural problems. Appellants reasonably relied on appellees' statements that there were no structural defects in the house. Thus, there was evidence from which a reasonable trier of fact could find fraudulent misrepresentation. See Dennison, supra. It can also be inferred from the extensive nature of the cracks that appellees covered the -8- cracks to conceal them, not to merely repair them. See Condo. Assn. v. Arbor Village (1994), 95 Ohio App.3d 499, 510. If fraud was committed, appellees then had the duty to disclose the defects. Layman, supra, Kaye, supra. Thus, summary judgment was not proper on the issues of fraudulent non- disclosure, fraudulent misrepresentation and fraudulent concealment. Summary judgment was also improper on the breach of contract claim. Appellees contend any action on the purchase agreement is barred by the doctrine of merger by deed. In general, if a deed is delivered and accepted without qualification, no cause of action on the purchase agreement exists. Fuller v. Drenberg (1965), 3 Ohio St.2d 109, 111. An exception to this rule applies when transfer of title is only one of many obligations in the purchase agreement. See McGovern Builders, Inc. v. Davis (1983), 12 Ohio App.3d 153. A party does not give up the right to enforce covenants which are not performed or satisfied by transfer of the deed. Id. A promise that a dwelling is free from latent defects is a collateral stipulation not satisfied by transfer of the deed. I n t h e purchase agreement, the appellees promised that to their knowledge there were no significant defects. There was some evidence appellees knew of defects in the garage slab and foundation slab, and thus breached the purchase agreement. We note that summary judgment may have been proper as to the representations and contractual promises that a licensed contractor performed all repairs with the proper permits. It was not shown -9- how these representations proximately caused any damages to appellants. See Dennison, supra, MacMillan v. Brune-Harpenau- Torbeck Builders, Inc. (1983), 8 Ohio St.3d 3. In conclusion, while summary judgment may have been proper as to some of the issues in this case, there were genuine issues of material fact as to fraudulent misrepresentation and concealment of the defective garage slab and foundation slab. Therefore, summary judgment in favor of appellees was improper. Accordingly, appellants' assignments of error are sustained. The decision of the trial court is reversed and remanded for further proceedings. -10- This cause is reversed and remanded for further proceedings consistent with this opinion. It is, therefore, considered that said appellants recover of said appellees their costs herein. It is ordered that a special mandate be sent to said court to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. SWEENEY, JAMES D., P.J., and *PRYATEL, J., CONCUR. (*SITTING BY ASSIGNMENT: Judge August Pryatel, Retired, Eighth District Court of Appeals.) JOSEPH J. NAHRA JUDGE N.B. This entry is made pursuant to the third sentence of Rule 22(D), Ohio Rules of Appellate Procedure. This is an announcement of decision (see Rule 26). Ten (10) days from the date hereof this document will be stamped to indicate journalization, at which time .