SUPREME COURT CASE NO.:

IN THE SUPREME COURT OF OHIO

JON HARMON ENTERPRISES LTD, et al., Plaintiff/Appellant

vs.

DAVID KINSEY, et al., DefendantlAppel lee

MEMORANDUM IN SUPPORT OF JURISDICTION OF APPELLANT JON HARMON ENTERPRISES LTD

ON APPEAL FROM'THE TUSCARAWAS COUNTY COURT OT APPEALS COUR'T OF APPEALS CASE NO. 2008 AP 12 0074

Thomas W. Hardin (#0012770) Richard W. Hinig, Esq. HARDIN & ASSOCIATES, LLC 217 Broadway 134 2NB Street N.W. New Philadelphia, OH 44663 New Philadelphia, OH 44663 (330) 364-6665 (330) 364-1112 COUNSEL FOR APPELLEE COUNSEL FOR APPELLANT DAVID KINSEY JON HARMON ENTERPRISES LTD TABLE OF CONTENTS

EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREAT GENERAL INTEREST ...... I

STATEMENT OF THE CASE ...... 2

STATEMENT OF THEFACTS ...... 3

ARGUMENT IN SUPPORT OF PROPOSITIONS OF ...... 6

Proposition of Law No. 1 Pursuant to Ohio Rules of Civil Procedure 52, the trial court must make findings of fact regarding all facts material to the claims when has been presented in support of these material facts.: ...... 6

CONCLUSION ...... 8

PROOF OF SERVICE ...... 8

APPENDIX ...... 9

Opinion of the 'I'uscarawas County Court of Appeals (October 20, 2009)

Judgment Entry of the Tuscarawas County Court of Appeals (October 20, 2009)

Judgment Entry of Tuscarawas County Court of Common Pleas (December 15, 2008) EXPLANATION OF WHY THIS CASE IS A CASE OF PUBLIC OR GREA'I' GENERAL INTEREST

Generally speaking, Ohio Rule of Civil Procedure 52 provides each litigant the right to

specific findings of fact and conclusions of law. Practice throughout the various trial courts in Ohio,

however, varies considerably. It is irnportant that the practice in the trial courts be regulated by this court so that judgments are entered consistently, and without ainbiguity. Accordingly, trial courts

should make findings of fact witli respect to each elenient of the claims or defenses presented. By way of an exainple, in this case a claim of quantum meruit was presented. As the discussion will indicate in the body of this memorandum, this court has long held that the measure of damages for a claim in quanhnn meruit is the reasonable value of the services provided. Indeed, the Court of

Appeals in this admitted as much in its opinion. There is not, however, a single finding of fact made by the trial court regarding the reasonable value of the services rendered by the Appellant/builder in this case, even though two (2) witnesses presented expert testimonyregarding the reasonable value of the services for the home in question.

In order to see to make practice consistent, the trial court should be required to make findings of fact as to each element of the claim presented, just like experienced trial counsel prepares to offer evidence in support of each element of the claim that he or she is presenting. The failure to malce a finding of fact on an essential element of a claim leads to confusion and renders the judgment unreviewable upon appeal. STATEMENT OF THE CASE

This Appeal is taken from the Fifth District Court of Appeals' Opinion and Judgnient Entry

of October 20, 2009; copies of those docwnents are attached to the Appendix hereto.

This action was commenced on November 15, 2007 when Plaintiffs filed a Complaiut against

Defendants/Appellees stating a claim for quantum meruit. Shortly after the filing of a Complaint

by Plaintiffs, the Defendants also filed a Complaint alleging breach of . A motion to

consolidate the two cases was filed on December 17, 2007. On January 4, 2008, both cases were

consolidated into Case No. 2007 CV 11 0871. The matter was tried to the Court on November 6,

2008 and the Court issued Findings of Fact and Conclusions of Law on December 15, 2008.

PlaintifF.s filed a timely Notice of Appeal froin this matter. A cross-appeal was filed by the

Defendants. The Court of Appeals for the Fifth District entered its judgment affirming the trial court's judgment on October 20, 2009. STATEMENT OF THF. FACTS

'I'his case involves the construction of an executive home in Tuscarawas County. The house, as constructed, consists of a finished upper level of 3,800 square feet and a finished lower level including a full kitchen and honle entertainment center of 3,800 square feet, as well as a detached garage with 4,5000 square feet of space.

The parties agree that the construction of this house stai-ted as a partnership between Jon

Harmon and David Kinsey. The original intention, was to build a"spec" home for sale to a third party.(1'r. 38) Sometime in late Fall of 2006, the Appellees, Mr. & Mrs. Kinsey, indicated that they wished to build this house for their own use. (Tr. 45) At that point, multiple custom changes were made to the design ineluding custom cabinet.s, decision to finish the lower level (which was not to have been finished with the "spec" home) and several other changes occurred.(Tr. 48, 53, 54, 56,

57) In the end, the Kinseys were in possession of a home of 7,600 square feet of finished space.

In addition, there was constructed a detached garage, which was not part of the original plan, of over

4,500 square feet. (Tr. 59)

At the trial of this matter, there was substantial testimony about whether a contract existed between Appellants and Appellees. Judge O'Farrell found that there was not credible evidence of a contract to construct this home for $350,000.00, and determined that Appellants were entitled to damages pursuant to a quantum meruit theory.

The Appellants offered the testiinony of Robert McKenzie, a local home builder. Mr.

McKenzie testified that he had built over 400 homes in his carcer.(Tr. 9) He testified that he has estimated costs for homes of comparable size and quality to the Kuisey home.(Tr. 11, 12) Indeed, he testified that he had just finished a home of comparable quality to the Kinsey home.(Tr. 11) He testified that the reasonable value of consh•uetion services forthe main floor ofthe Kinsey house was

-3- $155.00 per square foot. (Tr. 12) He based that on the value of his services in constructing the

similar home in Tuscarawas County. (Tr. 11)

Mr. McKenzie toured the Kinsey home in the Spruig of 2008 along with the parties.

Following the tour, he provided an estimate for the reasonable charges, in a competitive bidding

situation, for his services to construct the house and detached garage which he liad inspected. He

estimated that the value of hotne building services to construct the garage, finish the basement and

finish the house was $857,000.00. (Tr. 11) He also testified that it was not possible to build the

Kinsey home and detached garage for $350,000.00 as the Kinseys liad insisted Mr. Harmon had

agreed to do. (Tr. 19)

Mr. Harmon also testified that he built between 16 or 17 houses in the past few years.(Tr.

33) Prior to that he had worked for a local builder for several years. He testified that in the Fall of

2006, the Kinseys ii-i{ormed him thatthcy would like to have the hoine for themselves. At that point,

according to Mr. Harmon's testimony, the house became a custom built house. In his testimony he

explained the difference between a"spec" house and a custom built house.(Tr. 34-37) In a"sped' house, the builder picks his price point and constructs accordingly. In a custom house, the house is

built according to the customer's taste, desires, and means.(Tr. 34) Mr. Harrnon indicated that it

became clear to him that the house was becoming a custom home because of the incorporation of custom cabinets, high grade hardwood trim and finish, high grade ceramic floors and plumbing for two (2) bathrooms in the basement.(Tr. 45-47) None of these upgrades had been anticipated for the

"spec" house. He indicated that the materials were picked and ordered by Mr. Kinsey on the

Appellants' various charge accounts for him to use in the construction of the house. He indicated that the finished house contained an upper floor with hardwood trim and finish, ceramic floors, and custom cabinets throughout the house.(Tr. 48, 53, 54, 55, and 56) The basement was finished with

-4- two (2) rooms that could be used as a bedroom, one and one-half (1 %z) baths, a recreation room with a home entertainment center and a full kitchen. He also indicated that he built a detached garage of over 4,500 square feet.("i'r. 59) Mr. Harmon testified that he believcd the reasonable value of his services to construct the main floor of the liouse was, the exterior and traming of the house was approximately $155.00 per square foot.(Tr. 57) I Ie estimated the value of his services for finishing the basement was approximately $35.00 per square foot.(Tr. 57) He also indicated that the reasonable value of the construction services for constructing the garage was approxiinately $40.00 per square foot. He estimated that the reasonable value=of his services in constructing the house and attached garage was in excess of $700,000.00. (Tr. 60, 63). He also indicated that in conversations with Mr. Kinsey, Mr. Kinsey indicated that lie believed that the liouse was worth $750,000.00.

After hearing the evidence, the Court issued Findings of Fact and Conclusions of Law on

December 15,2008. In the Findings of Fact, the Court concluded that there was no contract between

Harmon and Kinseys to construct the home at a fixed price. As a result, the Court concluded that the fair market value of the house, which it estimated to be $450,000.00, was the measure of damages pttrsuant to a quantum meruit theory. After deducting amounts advanced by the Kinseys, or on their behalf by their bank, the Court concluded that Jon Harmon Enterprises Ltd. and Jon

Harmon were entitled to a judgment for $5,791.79. ARGUMENT IN SUPPORT OF PROPOSITION OF LAW

Proposition of Law No. 1:

Pursuant to Ohio Rules of Civil Procedure 52, the trial court must make findings of fact regarding all facts material to the claims when evidence has been presented in support of these material facts.

Ohio Rules of Civil Procedure 52 provides in part, "the court shall state in writing the

conclusions of fact linmd separately from the conclusions of law." Ohio appellate courts have held

that it was prejudicial error when the trial court fails to inake a finding of fact regarding a fact

essential to a claim or defense of party when evidence has been presented which is probative of that

essential or material fact. E.a. Inre: Mown, (2007) 2007 Ohio 4219,2007 Ohio App. Lexis 3816.

The trial court concluded that there was no contract between the parties to construct the home

for a fixed price, and he concluded that, under a quantum meruit theory, the fair market value of the house, $450,000.00, was the measure of damages. The trial court made no finding on the reasonable values of Appellant's services in its finding of fact.

Plaintiffs seek to recover on a quantum meruit basis. "The equitable doctrine of quantum meruit is based on an implied promise on the part of the Defendants to pay the Plaintiffs as much as he reasonably deserved to have to pay for his labor. "Reid, Johnson, Downes, et al. V.

Lansberry, 68 Ohio St. 3d 570, 573 (1994). "Quantum meruit is generally awarded when one party confers some benefit upon another without receiving just compensation for the reasonable value of the services rendered." Aultman Hospital Association v. Community Mutual Insurance Company,

46 Ohio St. 3d 51, 55 (1989). The measure of damages under quantum meniit is the "reasonable value of the services rendered." Reid, Johnson, Downes, supra at 574. In this instance, the trial court disregarded the testimony of two builders regarding the

reasonable value of the construction services involved in building this house and detached garage

and substituted the court's opinion of fair market value of the home and garage.'

Quantuin meruit like its cousin unjust enricbment, is an equitable remedy which will lie

"when a party retains money or benefits and equity or justice belongs to another." Everman v. Mary

Kay Cosmetics, Inc., 967 T. 2"' 213, 222 (6 Cir. 1992). Indeed, "[q] quantum meruit `contains the

same elements as required for recovery under . The difference is the manner in

which damages are computed. In unjust enrichment, damages are conferred in the amount

the defendant benefitted. In quantum meruit, damages are the measure of the value of the

plaintiff's services."' Hartley v. Dayton Computer Supply, 106 F. Supp. 2d 976, 984 (S.D. Ohio).

Indeed Ohio courts have also found that the difference between unjust enricliment and quantum

meruit is the measure of the value of the damages. See U.S. Health Practices, Inc. V Blake, 2001

Ohio App. 1291, at 2(10"Dis. 2001) "For unjust enrichment damages are conferred in the amount

the Defendant benefitted, for quantum meruit damages are the measure of the value of Plaintiff s

services."

In this case, the trial court completely failed to make any iindings regarding the reasonable value of the Appellant's services.

As case make clear, the correct mea.sure of damages for quantum meruit is the reasonable value of the builder's services in the construction of the home and garage, not the value of the benefit conferred on the Defendants.

' In custom homes it is not uncommon for the cost of construction to exceed the fair market value of the honie on resale. This is because the home has been constructed to the tastes and standards of the person who commissioned the horne, and may include luxuries that have little or no value to a prospective buyer.

-7- CONCLUSION

Accordingly, the judgment in this matter should be vacated and this matter should be

remanded to the trial court with instructions that the trial court determine the reasonable value of

Appellants' services.

Respectfully submitted,

c ^ t l^- T oinas W. Hardu 0012770) HARDIN & ASSOCIATES, LLC 134 2"d Street N.W. New Philadelphia, Ohio 44663 (330) 364-1112

PROOF OF SERVICE

A copy of the foregoing was served by ordinary U.S. Mail this' day of December, 2009 to Richard W. Hinig, Esq., 217 N. Broadway, New Philad Iphi ;f^1)^i 44663. ^^°. r ^ APPENDIX

Opinion of the Tuscarawas County Court of Appeals (October 20, 2009)

Judgment Entry of the Tuscarawas County Court of Appeals (October 20, 2009)

Judgment Entry of Tuscarawas County Court of Common Pleas (December 15, 2008) COURT OF APPEALS TUSCARAWAS COUNTY, OHIO FIFTH APPELLATE DISTRICT

JUDGES: JON HARMON ENTERPRISES LTD, : Hon. W. Scott Gwin, P.J. ET AL : Hon. Julie A. Edwards, J. Hon. Patricia A. Delaney, J. Plaintiffs-Appellants/ Cross-Appellees Case No. 2008 AP 12 0074 -vs-

DAVID KINSEY, ET AL 0 P INION

Defendant-Appellee/ Cross-Appellants

CHARACTER OF PROCEEDING: Civil appeal from the Tuscarawas County Court of Common Pleas, Case No. 2007CV110871

JUDGMENT: ;tbs^ILP-D Districtt;ourtowIrmad TuscaraM-s Ca.

THOMAS W. HARDIN RICHARD W. HINIG 134 Second St. N.W. 217 N. Broadway New Philadelphia, OH 44663 New Philadelphia, OH 44663 Tuscarawas County, Case No. 2008 AP 12 0074 2

Gwin, P.J.

{11} Plaintiffs-appellants Jon Harmon Enterprises, Ltd. and Jon Harmon,

hereinafter referred to collectively as Harmon, appeal a judgment of the Court of

Common Pleas of Tuscarawas County, Ohio, entered on their claim for money due and

owing for construction of a home. Harmon assigns a single error:

{12} °i. THE TRIAL COURT EMPLOYED AN IMPROPER MEASURE OF

DAMAGES TO APPELLANTS' CLAIM OF QUANTUM MERUIT."

{13} Defendants-appellees David and Linda Kinsey cross appeal, assigning a

single error:

{14} "I. THE TRIAL COURT ERRED AS A MATTER OF LAW IN FAILING TO

AWARD DAMAGES TO DEFENDANTS/APPELLEES AND IN AWARDING DAMAGES

TO PLAINTIFF/APPELLANT BY USING THE WRONG AMOUNTS IN ITS

CALCULATIONS."

{15} The trial court conducted a bench trial, and its judgment entry of December

15, 2008, set out the background of the case. In the fall of 2006 Harmon and the

Kinseys embarked on a joint venture of sorts, to build a residential home in Tuscarawas

County, Ohio. The initial agreement between Harmon and the Kinseys was to build a

"spec" house and seli it for a profit. It appears the margin of profit would be in the

$25,000 to $50,000 range. Shortly after beginning construction of the home, the

Kinseys expressed their intention to purchase the finished home. The construction thus evolved into a "custom" home rather than a "spec" home.

{1f6} The parties borrowed $233,000 and $100,000 from First Federal

Community Bank, for a total of $333,000 for the construction of this home. Although the Tuscarawas County, Case No. 2008 AP 12 0074 3

Kinseys state Harmon borrowed the second loan of $100,000 individually, the judgment

entry confirming the foreclosure sale lists both loans in all parties' names

{17} Differences arose between Harmon and the Kinseys and Harmon ceased

work on the home. The Kinseys then invested considerable additional funds to continue

work on the home. Before the work was completed, the parties defaulted on the loans

from First Federal Community Bank, and the property was sold at public auction. The

Kinseys purchased the home in the foreclosure action for $353,000.

{18} Harmon initially sued the Kinseys for additional monies for materials and

labor he alleges he invested in the construction of the home up to the point where his

involvement in the construction ceased. In turn, Kinseys sued Harmon seeking

repayment of monies they have invested in the construction of the home over and

above the time and material Harmon invested as contractor/builder. They included as

damages the cost of purchasing the home in the foreclosure action.

{18} Based upon this background, the trial court made findings of fact. The court found the testimony and other evidence presented by the parties relative to an alleged contract between them to construct the home in question and purchased by the

Kinsey's cannot be reconciled on any of the fundamental aspects of such a contract, i.e. cost of construction, time period for completion, etc. The court found the actual cost of construction is essential to the issues implicated by the litigation, but the cost cannot be ascertained or determined with any specificity based on the evidence presented by the parties. Because of its inability to come to a factual conclusion as to the actual cost of construction, the court found the fairest barometer of the cost of construction should be Tuscarawas County, Case No. 2008 AP 12 0074 4

the fair market value of the home and free standing garage. The court found the fair

market value to be $450,000.

{710} The court found Harmon received $225,947.39 from the proceeds of the

loans from First Federal Community Bank. The parties submitted a copy of the final

entry from the foreclosure action. It shows First Federal Community Bank received

$344,383.78, in discharge of its two mortgages which totaled $333,000.00. The record

does not show how the remainder of the loan funds was dispersed. Kinseys invested

$215,260.82 of their own money over and above the money Harmon put into the

construction. Kinseys also paid Harmon an additional $3,000.00 at some point. The

court found Harmon was the principal contractor in the construction of the home and

garage.

{111} The trial court made conclusions of law. The court found the parties never

entered into a legally binding contract for the construction of the home because there

was no "" between the parties on the fundamental terms of the

proposed agreement. The court found because it could not ascertain with any

specificity the terms of any agreement between the parties, the cost of construction is the fair market value of the structures and land at the time Harmon ceased participation

in the construction. The cost of construction is therefore $450,000.00, the fair market value of the property at the time of the sale of property in the foreclosure action, notwithstanding the fact that the Kinseys purchased the property for $353,000.00.

{112} Using the fair market value of the property as the starting point, the court subtracted the $225,947.39 received by Harmon from the two loans from the First

Federal Community Bank. The court also subtracted the $3,000.00 payment Kinseys Tuscarawas County, Case No. 2008 AP 12 0074 5

made to Harmon. The court subtracted the $215,260.82 invested by the Kinseys. The

court concluded a balance of $5,791.79 remains owed by the Kinseys to Harmon.

{113} Harmon alleged he had $40,873.61 out-of-pocket expenses, expended in

addition to the draws from the two loans. He also claimed he had earned but not been

paid wages of $25,980. The trial court made no findings of fact regarding these

expenses, but did not include these amounts in its calculations.

{1114} The Kinseys claimed an additional $353,000.00 as damages due from

Harmon, which is the final purchase price at the foreclosure sale. The trial court did not

include the $353,000.00, but rather, based its decision on the value of the home at the

time the joint venture dissolved, which was prior to the foreclosure.

(1115} Both parties dispute the court's calculations. We will address Harmon's

of error first.

(1116} Essentially, Harmon argues the measure of damages should not have

been based on the fair market value of the buildings, but rather on the reasonable value

of Harmon's labor. Harmon correctly cites Reid Johnson Downes v. Lansberry (1994),

68 Ohio St. 3d 570, for the proposition the equitable doctrine of quantum meruit is

based on an implied promise on the part of the defendants to pay the plaintiffs as much as they reasonably deserve to be paid. Quantum meruit is generally awarded when one party confers a benefit upon another without receiving just compensation for the value of the services rendered. Aultman Hospital Association v. Community Mutual Insurance

Company (1989), 46 Ohio St. 3d 51.

{¶17} The trial court found the most equitable value was the fair market value of the home because it could not ascertain the construction cost from the evidence Tuscarawas County, Case No. 2008 AP 12 0074 6

presented. Harmon testified at some length about his services, and his expenses. The

trial court included only $228,947.39, which represents the money expended from the

two construction loans. According to Joint Exhibit AA, Harmon's claimed expenses

were $214,617.51, but he had receipts for only $111,272.51.

{118} Janice S. Roseberry, a Certified Residential Real Appraiser and

Licensed Real Estate Broker, testified regarding the appraisal she prepared for the

foreclosure action. In Roseberry's opinion, the fair market value of the property was

$400,000.00, and the cost of building the house and garage was $552,004.00, including

the price of the land and the improvements to the site. She further testified because

there are many considerations there is no set price per square foot, but generally, the

price is $88.74. Roseberry adjusted the rate to $98.09 per square foot for the property in question. Harmon testified he believed the cost per square foot was $150.

(1119} Our standard of reviewing a trial court's decision is the abuse of discretion standard. Sandusky Properties v. Aveni (1984), 15 Ohio St. 3d 273, 473 N.E. 2d 798.

The Supreme Court has defined the term "abuse of discretion" as demonstrating the court was unreasonable, arbitrary, or unconscionable, see, e.g., Blakemore v.

Blakemore (1983), 5 Ohio St. 3d 217, 219, 450 N.E. 2d 1140, citations deleted.

{120} The trial court was finder of fact in this bench trial, and was free to accept or reject any of the figures submitted, either because it found the evidence insufficient or not credible. The testimony of Harmon, the Kinseys, and Roseberry varied widely. We find the trial court did not err in using the fair market value of the property as its starting point. Tuscarawas County, Case No. 2008 AP 12 0074 7

{121} Harmon had the burden of proving his damages in quantum meruit and

the trial court found it could not make a determination based upon the evidence before

it. The trial court was not required to accept alf of Hannon's figures as being accurate,

particularly in light of the fact he could not produce receipts for everything. The trial

court elected to fashion an equitable remedy, and this court cannot say on the record

before us the trial court's judgment was unreasonable, arbitrary or unconscionable.

{122} Harmon's assignment of error is overruled.

{123} We will address the Kinseys' cross-assignment of error, which challenges

the trial court's award of damages. Essentially, Kinseys argue the trial court should

have included the $353,000.00 they paid at the foreclosure sale as part of their

expenditures for the house.

{124} The issue before the court was to determine the result of the parties'

actions in constructing of the home and garage. The foreclosure action is essentially

outside the construction of the home. The Kinseys were not obligated to purchase the

property at the foreclosure sale, but when they did, they acquired the property free of the construction loans and the various liens filed against it. We conclude the trial court was correct in not including the purchase price at the foreclosure sale as part of

Kinseys' damages in the construction of the home.

{125} The cross assignment of error is overruled. Tuscarawas County, Case No. 2008 AP 12 0074 8

{126} For the foregoing reasons, the judgment of the Court of Common Pleas of

Tuscarawas County, Ohio, is affirmed.

By Gwin, P.J.,

Edwards, J., and

Delaney, J., concur

HON. W. SCOTT GWlN

A. EDWARDS

HON. PATRICIA A. DELANEY

WSG:clw 0911 IN THE COURT OF APPEALS FOR TUSCARAWAS COUNTY, OHIO

FIFTH APPELLATE DISTRICT

JON HARMON ENTERPRISES E°i1.ED LTD, ET AL 5tt l7iStrict Coaart of Appeals Tuscarrari:s Co.. Ohi-o PlaintifPs-Appellants/ OCT 2 0 2009 Cross-Appellees ROCKNE W. CLARKE Clerk Of Courts -vs- JUDGMENT ENTRY DAVID KINSEY, ETAL

Defendants-Appellees/. Cross-Appellants CASE NO. 2008 AP 12 0074

For the reasons stated in our accompanying Memorandum-Opinion, the judgment of the Court of Common Pleas of Tuscarawas County, Ohio, is affirmed. Costs to be split between the parties.

: JULIE A. EDWARDS

DELANEY IN THE COURT OF COMMON PLEAS

TCJSCARAWAS COUNTY, OHIO

GENERAL "I'R.IAL DIVISION

JON RARMON ENTERPRISES, LTD., : CASE NO. 2007 CV 11 0871 et al., PLAINTIFF'S JUDGE EDWARD EMMETT O'FARRELL

JUDGMENT ENTRY-FURT'IIER NON'-ORAL vs. CONDUCTED ON 12/11/2008 CONSISTENT WITH ORDERS CONTAINED IN JUDGME-NtT ENTRY FILED 11/10/2008-POST-TRIAL LEGAL MEMORANDA CONTAINING LEGAL ARGUMENTT'S, PROPOSED FINDINGS i OF FACT AND PROPOSEI? CONCLUSIONSOF LAW CONSIDERED- FINAL FINDINGS OF FACT DAVID ICINSEY, et al., . CONCLUSIONS OF LAW AND VERDICT ISSUED-ORDERS EN'I'ERED DEFENDANTS

This matter was further considered by Edward Einmett. O'Farrell, Judge, CourC of

Common Pleas, Tusearawas County, Ohio, General Trial Division, on 12/11/2008 i-elative to the following:

® Bench T'rial conducted on 11/6/2008 petaining to the Complaint filed 11/15/2007 by 1on Harnion Enteprises Ltd_, and Jon Harmon against David Kinsey and Linda Kinsey in Case No. 2007 CV 11 0871.

Amended Complaint filed 12/20/2007 in CaseNo. 2007 CV 11 0871.

Page 1 of 6 11/27/2007 Complaint filed by David Kinsey against Jon Harmon, Jon Haniion Enterprises, Ltd., and Diana L. Harnzon in Case No. 2007 CV 11 0888.

Consolidation Order fFiled 1/412008 consolidating cases into Case No. 2007 CV 11 0871.

11/10/2008 Judgment Entry Ordering the filing of Post- Trial Legal Memoranda containing Final Legal Arguments, Proposed Findings of Fact and Proposed Conclusions of Law.

1211l2008 Post-Hearing Trial Legal Memoranda fiied by Jon Harinon Enterprises Ltd., and Jon Harmon as well as David and Linda Kinsey.

BACKGROUND

Plaintiffs (hereafter Harmon) and Defendants (hereafter Kinseys) embarked upon a

1o st venture, of sorts, in the fall of 2006 in the bnilding of a residential home in Tuscarawas Cotimty,

Ohio. The initial "agreement" between Harmon and Kinseys was to build a "spec" house and to sell

it for a profit. It appears that i:he niargin of profit would be iui the $25,000.00 to $50,000_00 range.

Shortly after the commencement of the construction ofthe home, Kinse.ys verbalized their intentioi

to ultimately purchase the constructed home and the construction of the Irome evolved into a I! cus1.o3,n" home as opposed to a "spec" horne. A total of $333,000.00 was borrowed from First

Federal Comrnunify Banlc relative to the construction of this home. Differences arose betwcen

Harmon and Kinseys leading to a dissolution of the "joint venture," the cessation of work on the

home by Harmon, the investment of considerable amounts in the finishing of the home by the

Page 2 of 6 Kinseys, the default upon the loans to First Federal Connnunity Bank and the pLU-chase of the home

in a Foreclosure Action Public Auction by the Kinsevs for the amount of Tliree HLU7ch-ed Fifty-Three

Thousand Dollars ($353,000.00).

Harmon initially sued Kinseys and seeks additional monies for materials and labor

he alleges he invested in the construction of' the home to the point where his involvement in the

home construction ceased. Kinseys have sued Harmon seeking repayment of monies they have

1i invested in the construction of the home (over and above the time and material IIarmon invested as

contractor/builder) as well as in the ptu-chase ofthelioine in the Foreclosure Action Public Auction.

FINDINGS OF FACT

l The testimony and the other evidence presented by the parties relative to an alleged contract between them to construct the home in question and its purehase by the Kinseys is not able to be reeonciled on any of the fundamental aspects of such a contract, i.e. cost of consti-uction, time period for completion, etc.

?. The actual cost of construction, so essential to the issues implicated by this litigation, cannot be ascertained or determined with any speci:ficit.y based on the evidence presented by the parties.

Given the inability of the Trier of the Fact to come to a factual conclusion, based on the evidence presented, as to al actual "cost of const ruction" amount, the fairest barontetei- of the "cost of construction" in this case should be the fair marlcet value of the structures constructed (home and free standing garage) whi ch the undersigned concludes, from all of the expert testimony and other evidence, is Four Hundred Fifly Thousand Dollars ($450,000.00).

I-Iarmon received 1'wo Hundred Twenty-Five Thousand Nine. Hunctred For-ty-Seven Dollars and 39/100 Cents ($250,947.39) frorn the proceeds of the loans at First Fedcral Community Bank.

Page 3 of 6 Kinseys invested Two IIundred Fifteen Thousand Two Hundred Sixty Dollars and 82/100 Cent.s ($215,260.82) of their own money to the constrnetion cost of Four Hundred Fifty Thousand Dollars ($450,000.00).

Kinseys paid Harnlon Th-ee Tliousand ($3,000.00) adclitional Dollars (Joint Stipulation).

7. Harmon was the principal contractor in the construction of the structures in question.

CONCLUSIONS OF LAW

1. No legally binding eontract for the construction of the honse in question was entered into between Harmon and Kinseys because there was no "nieeting of the minds" between the parties on the fundamental terms of their proposed agi-eement.

2. Given the inability of the Court to ascertain with any specificity the terms of the agreement between Harmon and Kinseys vis-rf-vis the constiuction of the home in question, the "cost of construction" should be declared to be the fair market value of the struetures and land at the time Harmon ceased participation in the construction.

3. The "cost of construction" is Four Hundred Fifty Thousand Dollars ($450,000.00) which the Court concludes is the fair market value of the property in question at the time of the sale of the property in the Foreclosure Action notwithstanding the fact that Kinseys purchased the properlyfor Three Hm1di-ed Fifty Three Thousand Dollars ($353,000.00).

After subtracting the Two Hunclred Twenty-Five Thousand Nine Hundred Forty- Seven Dollars and 39/100 Cents ($225,947.39) received by IIarmon from the loan proceeds from First Federal Community Bank and, further, si.ibtracting the Three Thousand Dollar ($3,000.00) payment by ICinseys to Harmon, frn• a total of Two I-Iundred Twenty-Light Thousand Nine Il .indred Forty-Scvcn Dollars and 39/100 Cents ($228,94739) and further subtracting the Two I-lundred Fifteen Thousand Two Hundred Sixty Dollars and 82/100 Cents ($215,260.82) invested by Kinseys in the home and fi-ee-standing garage, a balance of Five Thousand SevenFlundred Ninety- One Dollars and 79/100 Cents ($5,791.79) remains owed by ICinseys to HarITlon for the eonst.ruction costs of the home in qucstion.

Page 4 of 6 5. Judgment should be awarded to Jon Harmon Enterprises Ltd., and Jon Harmon, and against David and Linda Kinsey, jointly and severally, in the amount of Five Thousand Seven Hundred Ninety-dne Dollars and 79/100 Cents ($5,791.79).

6. All Court costs should be assessed against the Kinseys for payment.

7. There is no iust reason for delay under Civ. R. 54 (B).

It is tlierefore

ORDERED that judgment is awarded to Jon Harmon and Jon Ha vson Enterprises, Ltd., and against

David and Linda Kinsey, jointly and severally, in the amount of Five Thousand Seven Hundred

Ninety-One Dollars and 79/100 Cents ($5,791.79) to bear interest at tlie legal rate from 11/15/2007.

®RDERED that all Court costs are assessed against David and Linda Kinsey for paynent-

ORDERED that there is no just reason for delay imdcr Civ. R. 54 (B).

ORDERED that the Clerk of Courts shall close this case file and remove it from the pending case docket.

Edward Eminett O'E

Date Copies to: Court Adminisri•ator's Office Atty. Thomas W. IIardin Atty. Richard W. Hinig SHO'F/Irb

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