Summary
In Latina v. Woodpath Development Co., 57 Ohio St.3d 212, 567 N.E.2d 262 (1991), the court was required to decide whether a contract between a real estate developer and a home builder was ambiguous in its reference to the home builder having "the first right to purchase (or refuse to purchase) lots" in the project.
Summary of this case from Construction Interior v. Marriott Family RestOpinion
No. 90-53
Submitted December 19, 1990 —
Decided February 27, 1991.
Contracts — Real property — "First right to purchase," construed.
APPEAL from the Court of Appeals for Cuyahoga County, No. 56224.
In 1979, Woodpath Development Company ("Woodpath") began development of a residential real estate subdivision that became known as Woodpath Phase I. In furtherance of developing Phase I, Woodpath granted Hickory Hills Building Company, operated by home builder Anthony Latina, a "first right of refusal" to purchase property in the subdivision. A "first right of refusal," also known as a "right of first refusal," is a promise to present offers to buy property made by third parties to the promisee in order to afford the promisee the opportunity to match the offer. Latina subsequently took part in the successful development of Phase I.
Woodpath Phase II followed shortly thereafter. Woodpath developed Phase II without the use of a right of first refusal. Again, Latina took part in the successful development of Phase II.
Woodpath next began plans for Woodpath Phase III. In furtherance of this endeavor, George Turney, one of Woodpath's two principals, discussed with Latina the possibility of retaining Latina's assistance in obtaining financing to purchase the land for Phase III and in obtaining municipal approval for Phase III. Subsequently, in October 1984, Turney sent the following letter to Latina:
"Mr. Latina:
"The Woodpath Development Co. is currently planning the development of a third phase of building lots (to be known as Phase III) in the Rosewood Estates Subdivision; Westlake, Ohio. Details of the Phase III plan are not firm at this time. However, Woodpath Development Co. is currently negotiating with both the City of Westlake and one or more land owners in this area in an attempt to define an attractive plan for the Phase III development.
"When these matters are resolved and a preliminary plat is prepared, the Woodpath Development Co. shall present the plat for Phase III to Mr. Tony Latina for his review. At that time, Woodpath Development Co. will offer to sell part or all of the Phase III development to Mr. Latina and/or his assigns. In this regard, Mr. Latina shall have the first right to purchase (or refusal to purchase) lots in the Phase III development. Details of the offer to sell (including the number of lots, price, terms and conditions) will be presented to Mr. Latina at that time.
"The above offer by Woodpath Development Co. is a conditional offer to sell and shall not be construed to represent a specific promise on the part of Woodpath Development Co. to initiate and complete the proposed Phase III development. Unforeseen conditions could arise (such as failure to obtain approvals from the City of Westlake) which would preclude the Woodpath Development Co. from developing the proposed Phase III subdivision."
Development of Phase III went forward and in 1986 Turney met with Latina and offered him the opportunity to purchase lots in Phase III for $42,000 per lot. Initially, Latina countered by offering $35,000 per lot, eventually offering as much as $40,000 per lot. Latina would go no higher without seeing another builder's offer to buy at $42,000. Woodpath subsequently accepted another builder's offer for $42,000 per lot without presenting the offer to Latina.
Latina then brought this action for breach of contract, alleging that Latina and Woodpath had entered a contract, evidenced by the October 1984 letter, whereby Woodpath promised Latina a right of first refusal to purchase Phase III lots. A jury returned a verdict for Latina in the Court of Common Pleas of Cuyahoga County. The verdict found that Woodpath had promised Latina a right of first refusal to purchase an indeterminate number of lots in Phase III and awarded $250,000 in damages.
Woodpath appealed the judgment of the trial court to the court of appeals. The appeal asserted that the trial court erred in not granting a directed verdict for Woodpath on the grounds that either there was no contract or, that if there was a contract, Woodpath performed all that was required of it under the contract. Woodpath also asserted that the trial court erred in not entering judgment against Latina based upon the Statute of Frauds, in admitting an expert's opinion on whether the October 1984 letter promised a right of first refusal, and in admitting speculative testimony concerning loss of profits.
The court of appeals reversed the trial court and entered judgment for Woodpath. The court of appeals ruled that the letter, as a matter of law, did not promise a right of first refusal but merely the initial right to buy lots, which opportunity Woodpath provided at the 1986 meeting. The appellate court further held that the supposed contract failed for lack of certainty, that the Statute of Frauds would bar recovery for more than one lot, that Latina failed to prove damages with the requisite certainty, and that the verdict was not supported by the evidence.
This cause comes before this court upon the allowance of a motion to certify the record.
William T. Neubert and Jon R. Burney, for appellant.
Mansour, Gavin, Gerlack Manos Co., L.P.A., Michael T. Gavin, Eli Manos, Gareau Dubelko and Michael R. Gareau, for appellee.
Although this appeal presents several issues for our consideration, we resolve this appeal on the basis of the October 1984 letter described above.
This court has had many opportunities to interpret memorialized contracts. Our past decisions provide us with salutary rules of contract interpretation relevant to the present dispute. "The agreement of parties to a written contract is to be ascertained from the language of the instrument, and there can be no intendment or implication inconsistent with the express terms thereof." Blosser v. Enderlin (1925), 113 Ohio St. 121, 148 N.E. 393, paragraph one of the syllabus. It is incumbent upon the court to interpret such writings: "The construction of written contracts and instruments of conveyance is a matter of law." Alexander v. Buckeye Pipe Line Co. (1978), 53 Ohio St.2d 241, 7 O.O. 3d 403, 374 N.E.2d 146, paragraph one of the syllabus. Further, "* * * except where the reformation of a written contract is sought in equity, evidence can not be introduced to show an agreement between the parties materially different from that expressed by clear and unambiguous language of the instrument." Blosser, supra, at paragraph two of the syllabus.
As the court of appeals correctly held, the language used in the October 1984 letter is not ambiguous. Woodpath offered Latina the first opportunity to purchase lots in Phase III and not a right of first refusal. Woodpath afforded this opportunity to Latina at their 1986 meeting, thereby completing performance.
Nevertheless, the trial court accepted expert testimony to demonstrate that the October 1984 letter had a different meaning within the real estate development industry. Parol evidence, which in this case came in the form of expert testimony, is admissible to provide special meaning given by the industry to language employed in a contract. Alexander, supra, at paragraph three of the syllabus. Latina's expert opined, however, that the words "right to purchase" had no meaning particular to the real estate development industry. Therefore, the words "first right to purchase" must be given their ordinary meaning as was done by the court of appeals.
In contrast, Latina's expert also opined that the words "right of first refusal" have special meaning in the real estate industry — the right to match a third-party offer. Therefore, had the October 1984 letter employed the phrase "right of first refusal," then parol evidence such as Latina's expert's testimony would have been admissible to provide the meaning of the phrase in the real estate industry.
Accordingly, the judgment of the court of appeals is affirmed.
Judgment affirmed.
MOYER, C.J., SWEENEY, HOLMES, DOUGLAS, H. BROWN and RESNICK, JJ., concur.