COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA No. 72368 SHAWN PAUL, ET AL. : : JOURNAL ENTRY Plaintiff-appellants: : AND vs. : : OPINION MARGARET COSTELLO : : Defendant-appellee : : : FEBRUARY 19, 1998 DATE OF ANNOUNCEMENT : OF DECISION : : CHARACTER OF PROCEEDINGS : Civil appeal from : Court of Common Pleas : Case No. CV-296150 : JUDGMENT : REVERSED DATE OF JOURNALIZATION : APPEARANCES: For plaintiff-appellants: For defendant-appellee: LEWIS A. ZIPKIN, ESQ. ROBERT A. DIXON, ESQ. Zipkin, Fink & Whiting 1280 West Third Street Two Commerce Park Square Suite 100 23200 Chagrin Boulevard, #106 Cleveland, OH 44113 Beachwood, OH 44122 PATTON, J. Plaintiff-appellants Shawn and Alla Paul ( plaintiffs ) appeal the judgment of the trial court granting defendant- -2- appellee Margaret Costello's ( defendant ) motion for summary judgment. The plaintiffs complain defendant concealed and failed to disclose a known latent defect in her home prior to a sale of the home. Specifically, plaintiffs complain there were undisclosed cracks and leakage in the basement. Prior to purchase, plaintiffs visited the house on two occasions and conducted personal inspections. Plaintiffs claim defendant made oral representations during these inspections that the basement was dry and did not leak. Plaintiffs also had a private inspection service inspect the house. The private inspector warned plaintiffs about two conditions which might result in leakage in the basement. Nonetheless, plaintiffs entered into a purchase agreement with defendant and bought the house. Plaintiffs allege water leakage, flooding, and dampness occurred in the basement as soon as they moved into the house. They complain their basement floods with each rainfall. Subsequent to these leakage problems, plaintiffs had several basement repairmen inspect the basement and estimate the cost of repair. One of these inspectors informed plaintiffs it appeared one corner of the basement, where there was leakage, had been painted over. He estimated the paint had been applied within the last six months to a year. On October 2, 1995 plaintiffs filed a complaint which contained two counts. The first count claimed defendant breached her contract with plaintiffs by failing to disclose a known -3- latent defect in the house. In the second count, plaintiffs alleged defendant intentionally misrepresented to them the basement was dry. Plaintiffs then filed an amended complaint which was a duplicate of the first complaint except for an allegation that one of the walls which leaked was freshly painted. Defendant filed a motion for summary judgment and in response plaintiffs filed a motion in opposition to summary judgment and their own summary judgment motion. The trial court granted defendant's motion and plaintiffs now appeal. On appeal, plaintiffs submits a single assignment of error. In their sole assignment, plaintiffs argue as follows: THE TRIAL COURT COMMITTED REVERSIBLE ERROR WHEN IT GRANTED DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AS GENUINE ISSUES OF MATERIAL FACT REMAIN AND PLAINTIFF IS ENTITLED TO A TRIAL BY JURY. Plaintiffs argue, under Ohio law, the doctrine of caveat emptor and an otherwise valid as is clause will not bar a plaintiff's claim for damages where there is evidence of fraud. They contend defendant concealed the cracks and leakage in her basement and committed a fraud by painting over the defective area. Moreover, plaintiffs claim defendant has failed under Ohio law to establish that she was entitled to judgment as a matter of law. Defendant counter-argues that plaintiffs had an unimpeded opportunity to examine the premises, they employed a private home inspector who revealed there was evidence of leakage problem, and were not in any way restricted when making inspections. -4- Consequently, plaintiffs have no evidence to substantiate their claim that she breached the contract or intentionally misrepresented any material facts. Thus, the trial court properly granted the motion for summary judgment. Pursuant to Civ.R. 56(C), summary judgment shall only be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The burden of establishing the absence of a genuine issue of material fact is on the party seeking summary judgment. Turner v. Turner (1993), 67 Ohio St.3d 337, 340. If the moving party meets this burden, the nonmoving party must come forward to produce evidence on all issues for which that party bears the burden of production at trial. Wing v. Anchor Media Ltd. of Texas (1991), 59 Ohio St.3d 108, paragraph three of the syllabus. The Ohio Supreme Court in Layman v. Binns (1988), 35 Ohio St.3d 176, set forth the doctrine of caveat emptor in the syllabus: The doctrine of caveat emptor precludes recovery in an action by the purchaser where: 1) the conditions complained of is open to observation or discoverable upon reasonable inspection; 2) the purchaser had the unimpeded opportunity to examine the premises; and 3) there is no fraud on the part of the vendor. Under the rule of caveat emptor, buyer are responsible for discerning patent defects. Layman, supra. If a purchase agreement states that the buyer purchases real property in its as is physical condition, the vendor has no duty to disclose latent defects. Kossutich v. Krann (Aug. 19, 1990), Cuyahoga -5- App. No. 57255, unreported, citing Klott v. Associates Real Estate (1974), 41 Ohio App. 2d. 118. A vendor may be liable for non-disclosure of a latent defect when he is under a duty to disclose facts and fails to do so. Layman, supra. In the present case, plaintiffs inspected the house on two occasions. During the second inspection plaintiff Alla Paul asked defendant if there were any water problems in the basement. Alla stated defendant responded that there was a flood in 1989, but that it was an isolated incident and there were no other problems. Next, defendants had an inspector inspect the house. In his report the inspector indicated, Foundation walls cracked but not shifted or buckled. Need to remove source of pressure on exterior-driveway concrete and slope of back yard. In another portion of the report specifically relating to the basement, the inspector noted a very limited view of foundation walls * * * cracked but serviceable no lifting noted * * * efflorescence and stains present rear wall. No signs of run in water. The inspector also indicated in the report there were some signs of dampness in the basement. These facts reveal plaintiffs inspected the house on three different occasions. The next question is whether the defect was open and obvious or discoverable upon reasonable inspection. It is clear defendant did not inform plaintiffs of any defect. However, plaintiffs' inspector noticed the foundation was cracked, the rear wall was effloresced and stained, there were some signs of dampness, and there was pressure on the foundation -6- walls from both the driveway and sloping of the back yard. At his deposition, plaintiff Shawn Paul admitted the inspector brought these problems to his attention. He stated he was aware of these problems but purchased the house anyway. The inspector's report in conjunction with plaintiff Shawn Paul's depositional testimony clearly shows the defect was obvious and discoverable upon a reasonable inspection. See, also, Cardi v. Gump (May 22, 1997), Cuyahoga App. No. 71278, unreported. The final issue is whether the paint in the corner of the basement indicates defendant committed a fraud by attempting to conceal latent defects. The doctrine of caveat emptor cannot be used to protect a vendor if the buyer can prove fraud. Layman, supra. Likewise, courts have held that an as is clause cannot be relied upon to bar a claim for fraudulent misrepresentation or concealment. Tipton v. Nuzum (1992), 84 Ohio App.3d 33. In order to prove fraud, a buyer must establish each of the following elements: (1) a representation, or where there is a duty to disclose, a concealment of a fact, (2) which is material to the transaction at hand, (3) made falsely, with knowledge of its falsity, or with such utter disregard and recklessness as to whether it is true or false that knowledge may be inferred, (4) with the intent of misleading another into relying on it, (5) justifiable reliance upon the representation or concealment, and (6) a resulting injury proximately caused by the reliance. Cohen v. Lamko, Inc. (1984), 10 Ohio St.3d 167, 169. -7- Here, defendant made oral representations there were no water problems in the basement. Defendant also indicated on a disclosure form that there were no problems with water dampness or leakage in the basement. The depositional testimony of plaintiff Shawn Paul indicates he believed the area in the basement which was leaking had been freshly painted. In addition, the deposition testimony of the basement repairman reveals he believed the area had been freshly painted within the last 6 months to a year. He stated he noticed the fresh paint on his first visit to the house on June 20, 1995 but did not notice the stains in this freshly painted area until his second visit on October 4, 1996. Construing the evidence most strongly in favor of plaintiffs, we believe there is a genuine issue of material fact regarding the issue of fraud and the freshly painted area. However, we limit this holding only to the issue of fraud and the allegedly freshly painted area. All other defects in the basement were discovered by plaintiffs' inspector and therefore were obvious to plaintiffs. We reverse the judgment of the trial court on this claim and remand the matter for further proceedings consistent with this opinion. Judgment reversed and remanded. -8- This cause is reversed and remanded to the lower court for further proceedings consistent with this opinion. It is, therefore, considered that said appellants recover of said appellee 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. DYKE, P.J. TIMOTHY E. McMONAGLE, J., CONCURS. JUDGE JOHN T. PATTON 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 journalization of this court's announcement of decision by the .