Dan Guardo Constr., Inc. v. Taus (In re Taus), Case No. 17-52446
| Decision Date | 02 January 2019 |
| Docket Number | Case No. 17-52446,Adv. Pro. No. 17-05080 |
| Parties | In Re: Kathryn G. Taus, Debtor. Dan Guardo Construction, Inc. Plaintiff, v. Kathryn G. Taus, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Ohio |
The court incorporates by reference in this paragraph and adopts as the findings and analysis of this court the document set forth below. This document has been entered electronically in the record of the United States Bankruptcy Court for the Northern District of Ohio.
MEMORANDUM OF DECISION AND ORDER REGARDING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
This Adversary Proceeding comes before the court on Plaintiff Dan Guardo Construction, Inc.'s ("Plaintiff") Motion for Summary Judgment ("Motion"). [Adv. Doc. 57].1 Defendant-Debtor Kathryn G. Taus ("Defendant-Debtor") filed a Response [Adv. Doc. #64] and Plaintifffiled a Reply to Defendant-Debtor's Response. [Adv. Doc. #65]. In its Motion, Plaintiff seeks an order of specific performance mandating that Defendant-Debtor convey her and her husband's interest in real property pursuant to a Purchase Agreement ("Purchase Agreement") entered into by the parties on July 1, 2013, and a Mutual Release and Settlement ("Mutual Release") entered into by the parties in late March of 2015. [Adv. Doc. #57, p. 5; Adv. Doc. #65-2]. In her Response, Defendant-Debtor argues that genuine issues of material fact surrounding the Purchase Agreement/Mutual Release and the status of the parties preclude entry of an order for specific performance. [Adv. Doc. #64, p. 3]. Defendant-Debtor argues that these issues require that the court hold a trial on the Complaint. [Id.].
This Adversary Proceeding was transferred to this Western Division court on September 20, 2018 from its Eastern Division counterpart. [Adv. Doc. #61]. The court has jurisdiction over this proceeding pursuant to 28 U.S.C. §§ 1334,2 157(a), and General Order 2012-7 of the United States District Court for the Northern District of Ohio.
Because Plaintiff has demonstrated that it is able, ready, and willing to receive the real property in question, and that the equities of the case weigh in Plaintiff's favor as contemplated by the test for specific performance under Ohio law, Plaintiff's Motion for Summary Judgment will be granted.
On July 1, 2013, Plaintiff and Defendant-Debtor3 entered into a Purchase Agreement("Purchase Agreement") through which Defendant-Debtor agreed to convey and Plaintiff agreed to purchase real property located at 31 E. Lods Street, Akron, Ohio ("the Property"). [Adv. Doc. #57, p. 1; Adv. Doc. #58, p. 1]. The parties executed two addendums to the Purchase Agreement that extended the closing date to October 4, 2013. [Adv. Doc. #57, pp. 5-6]. The parties agreed that Plaintiff would take pre-closure possession of the real property on November 1, 2013 in exchange for Plaintiff's payment of a $2,500.00 pre-possession fee. [Adv. Doc. #59, p. 1; Adv. Doc. #64, p. 18].
Plaintiff's president and owner asserts that the building had been unoccupied for a considerable amount of time and that, upon taking possession, he had to perform maintenance, cleaning, and make necessary improvements that cost a total of $65,491.00.4 [Adv. Doc. #58, p. 2; Adv. Doc. #65-3, p. 2]. Defendant-Debtor alleges that Plaintiff's improvements actually lowered the value of the property and were unnecessary. [Adv. Doc. #64, p. 2].
Two events are important to the specific performance issue before the court: (1) the Summit County Court of Common Pleas' trial/decision ("State Court Action" or "State Court Decision"), and (2) the parties' entry into a Mutual Release and Settlement ("Mutual Release").
Due to an outstanding IRS tax lien issue, the specifics of which the parties dispute,5 a closing on the Purchase Agreement did not occur. Defendant-Debtor subsequently initiated the State Court Action against Plaintiff, alleging that Plaintiff was in breach of the Purchase Agreement and should be evicted from the Property. After a bench trial that took place on March 25, 2015, a Summit County magistrate issued a decision that found Defendant-Debtor in breach of the Purchase Agreement. [Adv. Doc. #57].
Specifically, the State Court Decision included the following findings of fact and conclusions of law that are relevant to the specific performance issue before this court: (1) the Purchase Agreement and its two addendums constituted a valid contract through which Defendant-Debtor agreed to convey to Plaintiff the Property [Adv. Doc. #57, pp. 5, 9-10]; (2) by failing to close on the conveyance by October 4, 2013, Defendant-Debtor breached the Purchase Agreement[Id., p. 10]; (3) Defendant-Debtor's breach was the cause of the lengthy delay in the conveyance and Plaintiff thus did not owe Defendant-Debtor any rent related to its early possession of the Property [Id., pp. 10-11] ; and (4) Defendant-Debtor and Plaintiff neither reached an agreement that superseded the Purchase Agreement, nor did either party act to terminate it. [Id., p. 10]. Additionally, the State Court Decision noted that the parties had entered into the Mutual Release prior to trial and held that the State Court Decision thus only dealt with the time period between the Defendant-Debtor's initial breach on November 1, 2013 and the date of trial (March 25, 2015). [Id., p. 9].
The Summit County Court of Common Pleas adopted the magistrate's State Court Decision without objection or alteration. [Adv. Doc. #65-1].
Shortly before the State Court Action went to trial in March of 2015, the parties entered into a Mutual Release that outlined their agreement to continue working towards a closing pursuant to the terms of the Purchase Agreement. The Mutual Release provided that: (1) Defendant-Debtor would place the executed deed to the Property in escrow for a period of 120 days; (2) Plaintiff would pay Defendant-Debtor a purchase price of $185,000.00 within 120 days of the Mutual Release's execution; (3) Plaintiff would pay Defendant-Debtor two installments of rent of $1,500.00 on April 1, 2015, and May 1, 2015; (4) Plaintiff would only be responsible for payment of rent accruing from May 1, 2015 onwards if the closing did not occur due to Plaintiff's fault. [Adv. Doc. #65-2, pp. 2-3].
The parties do not appear to dispute that Plaintiff paid Defendant-Debtor the rent owed under the Mutual Release. [Adv. Doc. #65-3, p. 4]. However, Defendant-Debtor did not place the executed deed to the Property in escrow within the 120 day period contemplated by the Mutual Release. [Id.; Adv. Doc. #64, p. 18]. Plaintiff avers that Defendant-Debtor did not place the executed deed in escrow because Defendant-Debtor objected to use of the title company's standard title guarantee form. [Adv. Doc. #65-3, p. 4]. Plaintiff provided an affidavit from the title company's office manager in support. [Adv. Doc. #65-4]. Defendant-Debtor, on the other hand, avers that the deed was not placed in escrow because "it took until November to get an agreement with IRS...." [Adv. Doc. #64, p. 18]. Notably, the Mutual Release makes no mention of an IRS agreement contingency, nor does it mention a contingency related to title company issues. [Adv. Doc. #65-2].
Although the parties switched title companies and Plaintiff agreed to pay Defendant-Debtor additional rent during the delay, the executed deed to the property was never placed in escrow by Defendant-Debtor. [Adv. Doc. #65-3, pp. 4-5].
Defendant-Debtor filed the underlying Chapter 13 case on October 12, 2017 [Doc. #1], and amended her Schedules to include Plaintiff as an unsecured creditor on November 7, 2017. [Doc. #14, p. 3]. While the original Petition did not list the Property, Defendant-Debtor amended her Schedule A/B to include it on May 10, 2018. [Doc. #62, p. 3]. On her amended Schedule A/B, Defendant-Debtor valued the Property at $185,000.00 and listed it as "Commercial Property."6 [Id.].
Defendant-Debtor filed a Third Amended Chapter 13 Plan on May 14, 2018, calling for monthly payments to the trustee of $450.00 and two lumpsum payments of $135,000.00 and $150,000.00, to be made at 12 and 48 months into the Plan respectively. [Doc. #67, p. 6]. Plaintiff objected to Defendant-Debtor's Third Amended Chapter 13 Plan on June 6, 2018, arguing that it was not proposed in good faith due to the uncertainty created by the unresolved dispute underlying the failed conveyance of the Property. [Doc. #82]. The court sustained Plaintiff's Objection on November 2, 2018 [Doc. #105], and Defendant-Debtor's Chapter 13 case remains without a confirmed plan.
Plaintiff initiated this adversary proceeding on November 15, 2017 [Adv. Doc. #1], and filed an Amended Complaint on May 24, 2018. [Adv. Doc. #35]. Defendant-Debtor filed an Amended Motion for Rent on January 8, 2018, arguing that Plaintiff owed her rent for occupying the Property prior to its formal conveyance. [Doc. #14]. The court granted Defendant-Debtor's Amended Motion for Rent on May 10, 2018, finding that, given the condition of the property, temporary rent payments of $1,000.00 were warranted. [Doc. #33].
After all defendants except for Defendant-Debtor were dismissed from the adversary case on August 13, 2018 [Adv. Doc. #54], Plaintiff filed its Motion for Summary Judgment on August 28, 2018. [Adv. Doc. #57]. In support, Plaintiff attached a copy of the magistrate's State CourtDecision and filed affidavits from its president/owner and its company controller. [Adv. Doc. ##58, 59].
This adversary proceeding was then reassigned to the undersigned judge on September 20, 2018. [Adv. Doc. #61]. Defendant-Debtor filed a Response that included various emails and an affidavit from Defendant-Debtor. [Adv. Doc. #64]. In her Response, Defendant-Debtor argues that a trial is necessary because material facts are in dispute regarding whether: (1) Plaintiff has...
To continue reading
Request your trial