Lake Breeze Condominium Homeowners' Assn. v. Eastlake Ohio Developers, L.L.C.

Citation: 2022 Ohio 3002Docket: 2021-L-124

Court: Ohio Court of Appeals; August 29, 2022; Ohio; State Appellate Court

Original Court Document: View Document

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Eastlake Ohio Developers, LLC (EOD) appealed a judgment from the Lake County Court of Common Pleas that awarded damages to the Lake Breeze Condominium Homeowners’ Association (Lake Breeze) for recoverable depreciation, interim road contribution fees, and attorney’s fees. Lake Breeze cross-appealed, seeking an increase in the damages awarded.

In 2016, EOD purchased property next to Lake Breeze to construct ten condominiums, which required Lake Breeze's consent per their governing Declaration. EOD began construction without this consent, leading to claims of trespass and property damage to Lake Breeze’s common areas. Following a lawsuit initiated by Lake Breeze, the parties entered a Memorandum of Understanding that mandated EOD to pay $5,000 in attorney’s fees and established a temporary easement for EOD to use Lake Breeze’s roads. Under this memorandum, EOD was obligated to pay road contribution fees and repair any damages caused during construction.

Despite the agreement, EOD failed to repair the damaged roads and grates and did not pay the required interim road contribution fees. Lake Breeze filed an insurance claim for the damaged grates, with State Farm estimating repair costs at $21,957 and providing coverage of $13,443.88, with a portion allocated for recoverable depreciation.

The appellate court’s decision affirmed some aspects of the trial court's judgment while reversing others and remanding the case for further proceedings.

In 2017, Lake Breeze initiated a lawsuit against EOD for compensatory and punitive damages, alleging breach of the Declaration of Condominium Ownership due to EOD's non-payment of assessments and fees, breach of a Memorandum of Understanding, unjust enrichment, and seeking specific performance. Lake Breeze requested compensation for damaged grates, concrete roads, assessment fees, interim road contributions, and $50,784.40 in attorney’s fees but later dropped the unjust enrichment and specific performance claims.

A three-day bench trial ensued, during which Lake Breeze’s counsel submitted exhibits detailing attorney costs, and an expert witness affirmed the reasonableness of the fees incurred. The trial court ruled in favor of Lake Breeze, awarding $5,000 for grates repair, $3,513.12 for 'recoverable depreciation' of the grates, and $11,107.39 for road contribution fees, while awarding $27,500 in attorney’s fees. The court determined that $17,360.45 of the attorney's fees were not reasonable as they were incurred during a prior lawsuit and declined to award damages for concrete roads, citing lack of evidence linking EOD to the damage.

EOD filed three assignments of error challenging the court's awards for grates depreciation, interim road fees, and attorney’s fees. In a cross-appeal, Lake Breeze contested the court's decisions not to award the full requested amounts for grates repair, attorney’s fees, and compensation for concrete roads.

Upon review, the court found that: 1) the award for 'recoverable depreciation' was erroneous since Lake Breeze had already received compensation from insurance; 2) the award for interim road contribution fees was incorrect as per the conditions of the temporary easement; 3) the trial court correctly found insufficient evidence linking EOD to damage of the concrete roads; and 4) the award of attorney’s fees was justified, as the trial court exercises discretion in determining the amount, affirming Lake Breeze as the prevailing party. EOD's error regarding depreciation was acknowledged, indicating improper compensation due to prior insurance recovery.

Lake Breeze claims the trial court erred by not awarding full damages of $17,200 for grates, while EOD contends Lake Breeze should not receive 'recoverable depreciation' since they are entitled to it from their insurance. Lake Breeze maintains that the court's award was correct, but it failed to give full damages for replacement. The standard for reviewing damage awards in breach of contract is based on the manifest weight of the evidence, with appellate courts presuming the factfinder's findings are correct unless evidence heavily contradicts the judgment. Lake Breeze sought both compensatory and punitive damages; however, punitive damages are generally not recoverable in breach of contract cases under Ohio law.

Lake Breeze filed a claim with State Farm for the grates, which estimated repair costs at $21,957, providing a payout of $13,443.88 after deductibles, and an additional $3,513.21 for 'recoverable depreciation.' The record is unclear on whether Lake Breeze accepted this depreciation. Lake Breeze argues that EOD was solely responsible for the repair costs and that filing an insurance claim was unnecessary. Since EOD did not fulfill its obligation, Lake Breeze asserts it incurred damages limited to the repair costs after accounting for insurance benefits. Consequently, with $16,957 recoverable from State Farm, Lake Breeze's actual out-of-pocket expense is only the $5,000 deductible. They spent $14,800 on repairs, indicating that any award over $5,000 from EOD would lead to 'double recovery.'

The court determined that awarding Lake Breeze $3,513.21 in 'recoverable depreciation' was against the manifest weight of the evidence, as the deductible allowed Lake Breeze to recover repair costs through insurance, making them 'whole.' Lake Breeze's claim for a 15% service fee was waived on appeal because it was not requested at trial; the only reference was a reading of the service fee clause without additional evidence of damages owed. EOD’s first assignment of error was upheld, leading to a reversal and remand to deduct the disputed amount. EOD also contended that the trial court wrongly imposed an interim road contribution fee before a certificate of occupancy was obtained, contradicting their agreement. The court emphasized that contract interpretation is a legal matter subject to de novo review, affirming that parties are bound by the clear terms of their contract.

The parties were bound by a temporary easement allowing EOD to use Lake Breeze’s roads for construction. EOD was obligated to pay an interim road contribution fee of $117 per New Unit for which a Certificate of Occupancy had been issued, but EOD did not have these certificates before adding the units to the Declaration and thus did not pay the fees. The trial court initially ruled in favor of Lake Breeze, but upon review, it was determined that EOD was not required to pay the fees for units lacking certificates of occupancy prior to their addition to the Declaration. Consequently, the appellate court reversed the trial court's decision and remanded the case to assess damages based on which units had certificates of occupancy before being added to the Declaration.

Lake Breeze also contended that the trial court erred in not awarding damages for damaged concrete roads, arguing that EOD breached a memorandum by failing to repair them. However, the trial court found insufficient evidence to establish that EOD caused the damage, agreeing that Lake Breeze's witnesses could not definitively link the damage to EOD's actions.

Additionally, EOD contested the trial court's ruling that Lake Breeze was the "Prevailing Party" entitled to attorney’s fees. The award of attorney fees is contingent upon a statute or enforceable contract provision, with the determination of the prevailing party subject to de novo review.

A 'prevailing party' is defined as the party in whose favor a judgment is rendered, regardless of the amount of damages awarded, as established by case law. In this case, Lake Breeze Homeowners’ Association was deemed the prevailing party after receiving a judgment against Eastlake Ohio Developers, LLC, despite only recovering approximately 53% of the damages requested. EOD’s claim that Lake Breeze was not the prevailing party because of the limited recovery was dismissed, as the critical factor is the entry of judgment in Lake Breeze's favor.

Lake Breeze sought $50,784.40 in attorney's fees, but the trial court awarded only $27,500, citing its discretion in determining reasonable fees. The court considered the attorney's itemized bills, expert testimony, and previous balances from a related case. Ultimately, the court found the lower amount reasonable and did not abuse its discretion in its decision. Lake Breeze's cross-assignment of error regarding attorney's fees was deemed without merit. The judgment of the Lake County Court of Common Pleas was reversed in part and affirmed in part.