American Demolition Inc. v. Hapeville Hotel Ltd. Partnership, A91A1385

• Citation: 202 Ga.App. 107,413 S.E.2d 749
• Decision Date: 14 November 1991
• Docket Number: No. A91A1385,A91A1385
• Parties: AMERICAN DEMOLITION, INC. v. HAPEVILLE HOTEL LIMITED PARTNERSHIP et al.
• Court: United States Court of Appeals (Georgia)

Page 749

413 S.E.2d 749

202 Ga.App. 107

AMERICAN DEMOLITION, INC. v. HAPEVILLE HOTEL LIMITED PARTNERSHIP et al.

No. A91A1385.

Court of Appeals of Georgia.

Nov. 14, 1991.

Reconsideration Denied Dec. 2, 1991.

Certiorari Denied Jan. 17, 1992.

Peterson, Dillard, Young, Self & Asselin, James B. Vance, Thomas O. Marshall, Atlanta, for appellant.

Porter & Doster, J. Alexander Porter, Sidney R. Barrett, Jr., Atlanta, McGinn, Webb & Warner, Douglas B. Warner, Peachtree City, for appellees.

ANDREWS, Judge.

After submitting a successful bid proposal, American Demolition contracted with Hapeville Hotel Limited Partnership ("Hapeville") to demolish the old Atlanta Airport Hilton Hotel owned by appellee Hilton Hotel, to remove all asbestos and underground foundations, to backfill all holes and to recompact the soil. The contract between the parties was based on the American Institute of Architects' form contract, although many provisions of the form document were deleted and a 19 page addendum of "supplementary general conditions" was included.

The contract defined the work to be performed, the demolition of the project site and asbestos abatement, as follows: "[t]he work comprises the completed construction required by the Contract Documents and includes all labor necessary to produce such construction, and all materials and equipment incorporated or to be incorporated in such construction." The contract further provided that the amount to be paid was a stipulated sum "without extra compensation" and that "[t]he intent of the Contract Documents is to include all of the work for the Stipulated Contract Sum and within the Contract Time.... any work which is obviously necessary to complete the work within the limits established by the Drawings and Specifications, shall be considered as part of the Contract and shall be executed by the Contractor in the same manner and with the same character of material as other portions of the Contract without extra compensation." (Emphasis supplied.) Although the original contract form contained a "concealed conditions" provision, which provided for an equitable adjustment of the contract price in the event that unusual conditions were encountered, the parties struck this provision from their contract and no similar clause was substituted. The contract did include a "site inspection" clause which provided the "contractor hereby acknowledges that it has visited the site, examined all conditions affecting the Work, is fully familiar with all of the conditions thereon and affecting the same...." Finally, the contract contained two "merger" clauses, one of which stated: "[t]he Contract documents form the Contract for Construction. This Contract represents the entire and integrated agreement between the parties hereto and supersedes all prior negotiations, representations, or agreements, either written or oral."

American Demolition encountered unforeseen problems during the demolition of one of the buildings. The problem stemmed from the fact that the building's foundation was more extensive than American Demolition had anticipated and that the subsurface soil was wet due to a drainage problem. American Demolition did not complete the contract requirements, Hapeville did not pay for some of the work and American Demolition filed a complaint to recover payment for both the contract balance and additional costs incurred during the performance of the contract.

The complaint was in Five Counts--the first two counts were for breach of contract, the third count sought damages for fraud, count four set forth claims for extra-contractual and quantum meruit damages and count five was for the foreclosure of a mechanics lien. The trial court granted summary judgment against American Demolition on counts three and four and American Demolition appeals.

1. In its first three enumerations of error, American Demolition claims that the trial court erred in granting summary judgment as to its claims of fraudulent concealment. That count alleged that defendants fraudulently misrepresented and concealed the site conditions, particularly the wet condition of the subsurface soils, the extensive nature of the foundation system, and the existence of the drainage problem. American Demolition's claim is based in large part on the nondisclosure of two engineering reports which had been performed for appellees, which revealed these problems. American Demolition also claimed that during one pre-contract site visit, a representative had inquired generally of other relevant facts and neither the existence of the reports nor the unusual subsurface conditions were revealed. According to two affidavits which American Demolition filed in opposition to the motion for summary judgment, the subsurface conditions were not apparent during the investigations they made of the site prior to contracting.

The trial court's grant of summary judgment on the fraudulent concealment claim was based on several grounds. First, the trial court held that because American Demolition elected not to rescind the contract, the merger clause of that contract barred the fraud claim. We agree.

In an action for fraud, "[i]f the defrauded party has not rescinded but has elected to affirm the contract, he is relegated to a recovery in contract and the merger clause will prevent his recovery....