COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 72072 ROBERT MANNING : : : Plaintiffs-Appellants : : : -vs- : JOURNAL ENTRY : AND DAVID A. HAMAMEY, ET AL. : OPINION Defendants-Appellees : : : DATE OF ANNOUNCEMENT : FEBRUARY 12, 1998 OF DECISION CHARACTER OF PROCEEDING Civil appeal from Common Pleas Court Case No. 182284 JUDGMENT: REVERSED. DATE OF JOURNALIZATION APPEARANCES: FOR PLAINTIFFS-APPELLANTS: FOR DEFENDANTS-APPELLEES: J. David Ingersoll, Esq. William L. Tomson, Jr., Esq. 401 Euclid Avenue - Suite 350 Nicholas M. Kemock, Esq. Cleveland, Ohio 44114 14400 Pearl Road Strongsville, Ohio 44136 -2- ROCCO, J.: Plaintiffs-appellants Robert and Pamela Manning appeal from the trial court orders that first denied their demand for specific performance of a real estate purchase agreement with defendants- appellees David and Wilma Hamamey and then granted judgment for appellees on appellants' subsequent request for damages. Appellants argue the first order was unreasonable and the second was against the manifest weight of the evidence. After a review of the record, this court agrees with appellants, finds the trial court erred when it determined that specific performance was an improper remedy, and finds the trial court's failure to award damages lacks an evidentiary basis. The orders of the trial court are, therefore, reversed, and this case is remanded for further proceedings consistent with this opinion. The salient facts of this case have been previously set forth in Manning v. Hamamey (Aug. 7, 1995), Cuyahoga App. No. 66082, unreported ( Manning 1 ) as follows: In April or May of 1988, Robert Manning, plaintiff-appellant, purchased a parcel of real estate situated at 16935 Hummel Road in Brookpark, Ohio from James White. The prop- erty had two underground tanks used to store diesel fuel which Mr. White used in his truck- ing business. It was plaintiffs-appellants' intention to use said parcel for his car rental business. Plaintiff-appellant did not intend on using the fuel storage tanks and/or fuel pumps as it was diesel fuel. As such, there was no inspection as to the condition of the fuel tanks prior to purchasing the prop- erty. * * * -3- Not long after entering the premises, Robert Manning, plaintiff-appellant, realized the property was too large for his business. Accordingly, he distributed fliers advertising and describing the property (the description included the existence of the fuel tanks). David Hamamey, defendant-appellee, received a flier and contacted his real estate agent to inquire about the property. Defendant-appellee inspected the property once with his agent. The real estate agent inspected the property a total of two times. Prior to entering into the purchasing agree- ment,David Hamamey, defendant-appellee, had a conversation with plaintiff-appellant in which he expressed the importance of the two under- ground fuel tanks. *** The purchase agreement was executed between the parties for $220,000 and had two conditions precedent: 1) the purchase was subject to buyer financing within 30 days *** and 2) approved (sic) by the city of Brookpark for the installation of a radio tower for business. The parties subsequently waived the first condition and the parties agreed to a new financing arrangement. Defendants-appellees paid off a promissory note totaling $158,304.81 whichplaintiffs-appellants owed to Mr. White. In return, David Hamamey and his wife, Wilma, defendants-appellees, received two promissory notes from Robert Manning and his wife, Pamela, plaintiffs-appellants, totalling said $158,304.81 which were secured by a mortgage deed for the property at issue. These notes were to be cancelled upon execution of the purchase of said property or to be paid in full on January 9, 1990. As for the second condition precedent, defendants-appellees received approval from the city of Brookpark for the installation of a radio tower for business. However, before defendants-appellees fulfilled the obligations of their purchase agreement and before applying for a building permit, the city of Brookpark's building inspector informed defendants-appel- leesthey could not build the radio tower until the underground fuel tanks had been tested. These tests revealed one of the fuel tanks leaked. Upon learning of the defect in the -4- fuel tank, defendants-appellees refused to proceed with the purchase agreement and de- manded payment in full of the two promissory notes made by plaintiffs-appellants. On January 10, 1990, Robert Manning, plaintiff- appellant, filed a complaint against David Hamamey, defendant-appellee, seeking specific performance of the contract [and/or damages for breach of contract] as the two condition prece- dents (sic) had been fulfilled and/or waived. Defendant-appellee timely answered, joined the parties' wives as additional parties and coun- terclaimed for monies due on the promissory notes. Defendants-appellees argued Robert Manning, plaintiff-appellant, made material misrepresentations concerning the condition of the underground fuel tanks and that, in its present condition, the premises is unsuitable for the purpose for which it was to be pur- chased. (Emphasis added.) The trial court, in Manning 1, initially found for appellees on both the complaint and on their counterclaim. Appellants appealed, arguing the evidence did not support the trial court's finding that appellants had breached the contract by fraudulently misrepresenting the condition of the property. In Manning 1, this court agreed with appellants and held appellants had not breached the purchase agreement. However, despite stating the financing of the purchase had been arranged and Brookpark had approved the radio tower installation, this court further held that questions remained concerning these issues. Thus, rather than address appellants' remaining assignment of error, viz., whether plaintiffs-appellants were entitled to specific performance of the purchase agreement, this case was remanded to the trial court on the issue of specific performance. On remand, the trial court permitted the parties to submit the -5- matter for trial on briefs. Thereafter, the trial court issued a judgment entry finding for appellants on their complaint since both conditions precedent to the purchasing agreement have been met. The trial court further stated, however, on the issue of specific performance, this court finds for [appellees] and holds that specific performance is not the proper remedy. In the same order, therefore, the trial court set a date for a hearing on the issue of damages. Appellees requested the trial court to reconsider its ruling, arguing appellants were foreclosed from pursuing that remedy since it had not been presented in their appeal from the original judgment in appellees' favor. The trial court denied appellees' motion to reconsider. Subsequently, at the damages hearing, appellant Manning testified in his own behalf and introduced into evidence his 1996 tax bill on the property. Appellees presented no testimony; how- ever, the trial court permitted appellees to introduce into evidence certified copies of valuation records of the property that were on file in the Cuyahoga County Auditor's Office. Thereafter, the trial court issued a judgment entry stating the parties stipulated to the notes on the counterclaim, finding appellant failed to present any credible evidence in re damage, and further finding for [appellees] at [appellants'] costs. Appellants have filed a timely appeal from the orders of the trial court; they present two assignments of error for review. Appellants' first assignment of error states: THE TRIAL COURT'S (SIC) ERRED IN HOLDING THAT APPELLANT WAS NOT ENTITLED TO SPECIFIC PERFOR- -6- MANCE AS A PROPER REMEDY IN THAT SAID HOLDING IS ARBITRARY, UNREASONABLE AND UNCONSCIONABLE. Appellants argue the trial court abused its discretion when it determined appellees breached the purchase agreement but specific performance was an inappropriate remedy for the breach. Appellants contend since mutuality exists, i.e., they have met all the re- quirements for appellees to demand conveyance of the property, it is inequitable to require appellants to continue owning it while still requiring them to pay the full amount on the notes due appellees. Appellants' argument is persuasive. The remedy of specific performance is governed by the same general rules which control the administration ofall other equitable remedies. The right to it depends upon elements, condi- tions, and incidents, which equity regards as essential to the administration of all its peculiar modes of relief. When all these ele- ments, conditions, and incidents exist, the remedial right is perfect in equity. These elements, conditions, and incidents, as col- lected from the cases, are the following: The contract must be concluded, certain, unambigu- ous, mutual, and upon a valuable consideration; it must be perfectly fair in all its parts; free from any misrepresentation or misapprehen- sion, fraud or mistake, imposition or surprise; not an unconscionable or hard bargain; and its performance not oppressive upon the defendant; and finally, it must be capable of specific execution through a decree of the court. * * * *** Various and sometimes very insufficient reasons have been given by judges for the *** rule, that the legal remedy is always to be regarded as inadequate in contracts relating to real estate, while on the other hand it is generally to be regarded as adequate in con- tracts relating to personal property. The distinction may, it would seem, be thus explained: In an agreement for the sale of land, the vendee, in addition to his legal -7- primary right also obtains *** an equitable estate in the land, an estate which equity regards as the real beneficial ownership ***. Being thus the holder of the equitable estate in the subject matter, the equitable owner of the land, he is entitled as a matter of course to the aid of a court of equity in protecting such estate and in clothing him with the legal title by means of a conveyance from the vendor. The exercise of the jurisdiction does not therefore depend,as it does when the jurisdic- tion is merely to confer equitable relief, upon the inadequacy of the legal remedy, but is rather a matter of equitable right in the vendee. HotelBurnet Co. v. V.C. Life Ins. Co. (1943), 72 Ohio App. 453 at 458-459. (Emphasis in original; underscoring added.) In discussing the standard of review when considering the grant or denial of specific performance, the supreme court set forth the relevant analysis as follows: *** In Spengler v. Sonnenberg (1913), 88 Ohio St. 192, 203, this court stated that: Specific performance of contracts is a matter resting in the sound discretion of the court, not arbitrary, but controlled by principles of equity, on full consider- ation of the circumstances of each partic- ular case. See, also, Huntington v. Rogers (1859), 9 Ohio St. 511, 515-516. The standard of review in a case such as this is whether the trial court, sitting as a court of equity, abused its discretion. The term abuse of discretion has been defined by this court as a decision which is arbitrary, unrea- sonable, or unconscionable. [Citations omit- ted.] In McGee, supra, we stated as follows: `The meaning of the term abuse of dis- cretion *** connotes more than an error of law or of judgment; it implies an unreasonable, arbitrary or unconscionable attitude ***.' [Citations omitted.] -8- `Arbitrary' means`without adequate deter- mining principle; ** not governed by any fixed rules or standard.' Black's Law Dictionary (5th Ed.). `Unreasonable' means `irrational.' *** Id. at 359. An abuse of discretion connotes more than an error of judgment, State v. Adams, supra, and results only when no reasonable man would take the view adopted by the trial court. Pembaur v. Leis (1982), 1 Ohio St.3d 89, 92. Sandusky Properties v. Aveni (1984), 15 Ohio St.3d 273 at 275. (Emphasis added.)We find the record in this case reveals an abuse of discretion within the principles enunciated above. As previously stated in Manning 1, appellees became interested in the property precisely because it contained the buried fuel tanks. Thus, the property was unique. Richards v. Hidden Valley (Dec. 17, 1981), Cuyahoga App. No. 43486, unreported. Moreover, appellees also had the opportunity to inspect the property prior to executing the purchase agreement. They had no objection to the condition of the property prior to the execution of the agreement. See, e.g., Layman v. Binns (1988), 35 Ohio St.3d 176. Furthermore, rather than provide for the contingency of inspecting the tanks prior to erecting any more structures on the property, the parties negotiated an agreement whereby the sale would be completeduponthe meeting of only the two conditions precedent. See, e.g., Longo v. Walter (1954), 99 Ohio App. 299. The trial court found these conditions had been met; this finding has not been challenged by appellees. R.C. 2505.22; See, also, Morgan v. Cincin- nati(1988), 25 Ohio St.3d 285 at 290. Appellees thus became obli- gated to perform their part of the bargain. Everett v. Reece (Feb. -9- 24, 1989), Lucas App. No. L-88-060, unreported; cf., Progress Properties, Inc. v. Baird (Oct. 23, 1997), Cuyahoga App. Nos. 70286, 70287, unreported. Mutuality had occurred: had appellants suddenly discovered the property contained a vein of gold, appellees still would be entitled to it. Clearly, therefore, appellees by this time had acquired an equitable estate in the property, which they exercised by beginning to pursue the legal formalities of obtaining a building permit to erect a tower on the premises. See, e.g., Sandusky Properties v. Aveni, supra at 276. The evidence before the trial court estab- lished appellees approached the city's building inspector. The building inspector informed appellees, not appellants, of a potential problem with leakage from the fuel tanks. The potential problem might not have been discovered but for appellees' action. Based upon this information which had been provided to them, however, appellees refused to perform under the agreement, despite appellants' desire to complete the sale. See, e.g., Recreational Lands, Inc. v. Conrad (May 7, 1981), Hocking App. No. 349, unre- ported; cf., Green, Inc. v. Smith (1974), 40 Ohio App.2d 30 at 39. On facts such as these, the supreme court has indicated the parties to a real estate purchase agreement are not excused from their obligations. G/GM Real Estate Corp. v. Susse Chalet Motor Lodge of Ohio, Inc. (1991), 61 Ohio St.3d 375. See, also, Layman v. Binns, supra. The contract did not require appellants to provide any sort of warranty with regard to the tanks. Recreational Lands, supra. Furthermore, since the tanks were germane to their desire -10- to purchase the property, appellees were on G/GM Real Estate Corp v.notic Susse Chalet Motor Lodge of Ohio, Inc., supra; Layman v. Binns, supra. Finally, although the property is now undesirable to appellees, appellants are required to repay the promissory notes in full. These notes were executed by appellants as a means to ensure appellees' interest in the property and are legally binding on appellants.1 In view of the unique nature of the property, appellees' desire to acquire the property precisely because of that unique nature, the fulfillment of the conditions precedent to the completion of the sale, appellees' subsequent exercise of their equitable estate in the property, and the hardship which has inured to appellants as a result of appellees' action, specific performance was a singularly appropriate remedy. Everett v. Reece, supra; Richards v. Hidden Valley, supra; Gleason v. Gleason (1991), 64 Ohio App.3d 667 at 672; Sandusky Properties v. Aveni (Oct. 28, 1983), Erie App. No. E-83-19, unreported; cf., Tiffin v. Shawhan (1885), 43 Ohio St. 178; Sandusky Properties v. Aveni, supra; Green, Inc.. v. Smith, supra; DeSantis v. Soller (1990), 70 Ohio App.3d 226; Progress Properties v. Baird, supra. Sinceequity requires specific performance, the trial court's denial of that remedy, without opinion and without a full consider- 1Appellees are not without a potential remedy in dealing with the possible environmental damage to the property. See In re Senders (1996), 110 Ohio App.3d 199. -11- ation of the circumstances of this case, was unreasonable. Therefore, appellants' first assignment of error is sustained. Appellants' second assignment of error states: THE TRIAL COURT'S (SIC) ERRED IN THAT ITS CALCULATION OF DAMAGES WAS AGAINST THE MANIFEST WEIGHT OF THE EVIDENCE AND UNSUPPORTED BY LAW. Appellants argue the trial court erred in determining that they had presented no credible evidence of damage. A review of the record compels agreement. *** It is without question that an action for specific performance, any accounting that might be ancillary to it, and the award of any dam- ages that may under the circumstances appear to be necessary, are matters in equity and may be determined by the trial court in its sound discretion. [Citations omitted.] * * * The general rule as to damages payable in specific performance actions *** is best stated as follows: When specific performance is granted of a contract to convey real property, the court will enforce the equities of the parties in such manner as to put them as nearly as possible in the position they would have occupied had the conveyance been made when required by the contract. It will compensate the purchaser for any loss of the use of the property during the delayby awarding him the rental value of it, or the net rents and profits of it, for the period. It will compensate the vendor for any loss of the use of the purchase money during the delay by award- ing him the appropriate interest for the proper period. To either party it will give credit for such expenditures in relation to the property, or otherwise occasioned by the delay, as should be borneby the other. *** [Citations omit- ted.] -12- This statement of law is an attempt to place the parties in the relative position that they would have been in had the sale of the real estate proceeded according to the agreement. The seller should be reimbursed for his added expenses, as well as the loss of his use of capital funds. Conversely, the purchaser should have the benefits of the property that he would have received had he been in posses- sion. [Citations omitted.] Sandusky Properties v. Aveni (1984), 15 Ohio St.3d 273. (Emphasis added.) Upon remand of this case following appellants' original appeal and upon appellees' motion, the trial court issued a total of four orders of sale of the property in an attempt to permit appellees to recoup their investment of money in the property, i.e., the loan to appellants. The offers took place on the following dates: May 16, 1994; August 15, 1994; December 19, 1994 ( set bid of $100,000); and July 12, 1995 ( fixed minimum bid of $66,666.66). However, despite these orders, the property remained unsold for lack of bidders on each occasion. Appellees acknowledged in their request for the orders of sale that the lack of interest in the property was due to the probable environmental damage caused by the leaking fuel storage tank. Moreover, at the damages hearing, appellant Robert Manning testified that in his opinion, based on a comparison with similar properties, the value of the property was at that time only somewhere between $30 and $40,000. He further testified that the cost of removing the fuel tanks would be a minimum of $10,000, and to remove any fuel contamination could be $50,000 or $350,000, depending upon the extent of the contamination. See, e.g., Oglebay -13- Norton Co. v. Armco, Inc. (1990), 52 Ohio St.3d 232 at 237. Appellant also testified that before the environmental problem was known, the value of the property had been $220,000 but that when appellees became aware of the problem, its value substan- tially decreased. However, appellants remained liable on the full amount of the promissory notes to appellees. Furthermore, the testimony adduced at the hearing reveals appellants have been assessed taxes on the property from the time of appellees' breach of the purchase agreement. From the foregoing, it is clear the trial court's determination that appellants had suffered no damages as a result of appellees' breach of the purchase agreement was against the manifest weight of the evidence. DeSantis v. Soller, supra; cf., Sandusky Properties v. Aveni, supra; Richards v. Hidden Valley, supra. Accordingly, appellants' second assignment of error is also sustained. The orders of the trial court are reversed. On the authority provided by Sandusky Properties v. Aveni, supra, this court will proceed to fashion the equitable remedy which should have been issued by the trial court in this case.2 This cause is remanded for an order which contains the following terms: 1) appellants are to pay appellees any balance due on the promissory notes, with interest at a rate of 10% per annum, said interest commenc- ing 60 days after the City of Brookpark 2This court is constrained to note it could have issued this remedy in Manning 1 but regrettably failed to do so. -14- approved the installation of a radio tower on the subject property; 2) appellees are to pay all back taxes and assessments against the subject property com- mencing 60 days after the city of Brookpark approved the installation of a radio tower on the subject property including but not limited to taxes, interests, penalties or levies assessed by Cuyahoga County or any other gov- ernmental agency; 3) appellants are ordered to transfer title to the property to appellees as provided in the purchase agreement; and 4) appellees are to bear the costs of the action. Judgment reversed. Cause remanded with instructions. -15- It is ordered that appellants recover of appellees their costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Cuyahoga County Common Pleas 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. JAMES M. PORTER, P.J., AND TIMOTHY MCMONAGLE, J., CONCUR JUDGE KENNETH A. ROCCO N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc. App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E), unless a motion for reconsideration with supporting brief,per App.R. 26(A) is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the .