John Burke and Burke Properties v. Alexander Athens, et al.

Fraud - Breach of Contract - Since 1983, the Athenses had owned a business in Medina known as Medina Car and Van Wash, Inc. The business consisted of a car wash, a beverage carryout, and a point of sale for Ohio Lottery tickets. In the fall of 1989, the Athenses entered into negotiations to sell the business to Burke. The sale was executed on January 17, 1990, by three separate written agreements and a secured discount note given to the Athenses by Burke. The first payment on the note was to be made in 1998.

One of the written agreements was a management agreement between the parties. Because Burke did not yet have a liquor license or a license to sell lottery tickets when the sale was consummated, Burke agreed to sell liquor and lottery tickets at the business as the Athenses' employee, under their licenses. This arrangement was to continue until the licenses were either transferred into Burke's name or Burke obtained his own licenses. In addition, the arrangement would allow Burke to take the Athenses' place on a waiting list for obtaining a lucrative Super Lotto license from the Ohio Lottery Commission.

Thereafter, the parties encountered various problems. Burke claimed that the Athenses had misrepresented the value of the business before the sale took place. There were also two disputes over the sale of lottery tickets, only one of which is relevant to this appeal. The dispute began when the lottery commission demanded from the Athenses at least $1,200 in lottery ticket sales that had not been put into an account used to hold sales proceeds. In turn, the Athenses demanded that Burke pay them the money, which he refused to do. After all the parties met with an official from the lottery commission, it was determined that Burke owed the money. However, Burke still refused to pay the money to the Athenses, who were forced to pay the money themselves. As a result, the Athenses' lottery license was canceled, and the business lost its place on the Super Lotto waiting list.

Burke filed suit against the Athenses for fraud in the sale of the business. The Athenses counterclaimed for breach of contract and later added a supplemental counterclaim for anticipatory repudiation of the secured discount note. The case was tried to a jury in July 1996. During the trial, each side produced testimony as to the amount that Burke owed the Athenses' from the lottery ticket sales, with the figures ranging between $1,200 and $1,284.

Burke moved for a directed verdict on the Athenses' anticipatory-repudiation counterclaim, which the trial court granted. The jury returned a verdict against Burke on his claim,granted. The jury returned a verdict against Burke on his claim, and found for the Athenses on their breach-of-contract counterclaim. The jury assessed damages at $70,000. anticipatory-repudiation counterclaim, which the trial court granted. The jury returned a verdict against Burke on his claim, and found for the Athenses on their breach-of-contract counterclaim. The jury assessed damages at $70,000.

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Affirmed in part and reversed in part by the Court of Appeals of Ohio, Ninth District, Medina County. See: 703 N.E.2d 804 (OhioApp. 9Dist. 1997). The above date reflects the appellate court date, not the original trial date. Reported by kkm.