Boaz v. Latson, No. A02A1663.

• Decision Date: 07 March 2003
• Docket Number: No. A02A1663.
• Citation: 580 S.E.2d 572,260 Ga. App. 752
• Parties: BOAZ et al. v. LATSON.
• Court: Georgia Court of Appeals

580 S.E.2d 572

260 Ga. App. 752

BOAZ et al. v. LATSON.

No. A02A1663.

Court of Appeals of Georgia.

March 7, 2003.

Reconsideration Denied April 8, 2003.

Roberts Law Firm, John A. Roberts, Atlanta, Brandy C. Snyder, for appellants.

Albert B. Wallace, Stephen B. Wallace II, Jonesboro, for appellee.

William R. Latson, pro se.

RUFFIN, Presiding Judge.

Darrell and Carolyn Boaz sued attorney William Latson for fraud, fraudulent foreclosure, and slander of title. Latson moved for summary judgment on all claims, and the trial court granted his motion. For reasons that follow, we affirm the trial court's ruling as to the fraud claim, but reverse as to the fraudulent foreclosure and slander of title claims.

We review the trial court's summary judgment ruling de novo, construing the evidence and all reasonable inferences in the light most favorable to the nonmoving party.¹ So viewed, the evidence shows that, in 1994, Darrell Boaz retained Latson to represent him in a legal matter. On or about August 1, 1994, an individual named Ronnie Street told Darrell that Latson needed Darrell's signature for an affidavit to be used in the legal proceeding. Street then presented Darrell with a piece of paper containing only a signature line and a blank notary public stamp. Darrell signed the paper and gave it to Street.

The Boazes allege that Latson used that signature to create a fraudulent $20,246.44 promissory note from Darrell to Latson that pledged as security property jointly owned by the Boazes ("the property"). According to the Boazes, Latson recorded the fraudulent note in Spalding County on March 9, 1995, even though Darrell owed him no debt. They contend that they did not learn about the note until 2001, when Latson sought payment and commenced foreclosure proceedings on the secured property. The Boazes also presented evidence that Latson failed to notify Carolyn Boaz about the foreclosure.

Latson testified by affidavit, disputing the fraud allegations. According to Latson,

[Darrell] was unable to continue to fund [Latson's] representation of [Darrell] in pending criminal matters, and had outstanding sums due from past criminal and civil litigation. It was decided that in order to secure [Latson's] fees [Darrell would] execute[ ] a Deed to Secure Debt to induce [Latson] to continue his representation in the prolonged litigation. This document was presented to [Darrell] who was in complete agreement to executing same.

Latson further testified that the property description in the security deed "was obtained by Boaz from previous deeds and given to [Latson] for inclusion in the deed." Although Darrell Boaz purportedly signed the deed on August 1, 1994, Latson did not see Darrell sign it. Latson subsequently recorded the security deed on March 9, 1995.

Latson attached a copy of the security deed to his affidavit. The deed, which is dated August 1, 1994, provides: "Borrower [Darrell Boaz] is indebted to lender [Latson] in the sum of ... $20,246.44 ... evidenced by principal note signed by Borrower, dated this day, payable to Lender or order." The deed further states that it is "evidenced by a Note signed by Darrell L. Boaz and dated August 1, 1994."

The Boazes sued Latson on July 18, 2001, alleging that he fraudulently created the August 1, 1994 promissory note. They also asserted that the pending foreclosure proceedings were based on a nonexistent debt, that Latson failed to properly notify Carolyn Boaz of the foreclosure, and that Latson had slandered the title to their property by, among other things, publishing the foreclosure notice in the newspaper. Less than one month after the Boazes filed suit, Latson foreclosed on the property.

Latson subsequently moved for summary judgment on various grounds. The trial court granted the motion, finding that the applicable statutes of limitation bar Darrell Boaz's claims and that no questions of fact remain as to Carolyn Boaz's claims because she was not involved in the allegedly fraudulent transaction on August 1, 1994.

1. Fraud. (a) The trial court did not err in finding that fraud's four-year statute of limitation precludes Darrell Boaz's fraud claim.² His allegations revolve around Latson's alleged activities in obtaining his signature on August 1, 1994, creating a fraudulent promissory note with that signature, and recording the note in March 1995. Each of these activities occurred well over four years before the Boazes filed their complaint in July 2001.

To avoid the statutory bar, Darrell argues that OCGA § 9-3-96 tolled the limitation period until he discovered the fraud in March 2001. Under OCGA § 9-3-96:

If the defendant or those under whom he claims are guilty of a fraud by which the plaintiff has been debarred or deterred from bringing an action, the period of limitation shall run only from the time of the plaintiff's discovery of the fraud.

When the underlying cause of action is for actual fraud, "the limitation period [generally] is tolled until such fraud is discovered, or could have been discovered by the exercise of ordinary care and diligence."³ But where, as here, a confidential relationship exists, that relationship "lessens the plaintiff's obligation to discover the fraud and also heightens the duty of the defendant to disclose what should be revealed."⁴

Darrell argues that a factual question remains as to whether Latson prevented him from discovering the promissory note.⁵ He further claims that he had no reason to know about the note before 2001. We disagree.

The Boazes offered evidence that Latson fabricated the promissory note. But they do not raise a similar claim regarding the August 1, 1994 security deed, and they do not dispute Latson's testimony that the deed "was presented to [Darrell]" and that Darrell provided information to be used in the deed's property description. At the summary judgment hearing, Latson noted without objection that the Boazes "never challenged the validity of the security instrument." Furthermore, they admitted in discovery responses that the note forms the basis of their fraud allegations.

The Boazes caution us on appeal not to be "sidetrack[ed]" by the security deed, when the "crux of [their] complaint is th[e] `[n]ote.'" But we cannot ignore the security deed. Even if the record lacks clear evidence that Darrell signed the deed,⁶ Latson testified without contradiction that it was presented to Darrell at some point before March 9, 1995. Furthermore, the deed refers directly to the note and the $20,246.44 indebtedness, and it specifically states that Darrell executed a promissory note to Latson on August 1, 1994. Under these circumstances, Darrell should have known about the allegedly fraudulent promissory note and the attendant indebtedness prior to March 9, 1995, when he saw the security deed.

We recognize that, given his confidential relationship with Latson, Darrell had a "lessened duty ... to discover [fraud that] should be discoverable through the exercise of ordinary care."⁷ The record shows, however, that Darrell failed to meet even this lessened duty.⁸ To conclude otherwise would impose on plaintiffs in a confidential relationship no duty to discover fraud.

In light of the security deed, no reasonable jury could find that Latson "debarred or deterred" Darrell Boaz from filing suit.⁹ Accordingly, OCGA § 9-3-96 did not toll the limitation period on his fraud claim, and the trial court properly granted Latson summary judgment.

(b) Moreover, even if the security deed did not similarly put Carolyn Boaz on notice of the promissory note, the trial court properly granted Latson summary judgment on her fraud claim. "Fraud has five essential elements: (1) a false representation or omission of material fact; (2) scienter; (3) an intent to induce the party alleging fraud to act or refrain from acting; (4) justifiable reliance; and (5) damages."¹⁰ We need not address each of these elements because the record undoubtedly fails to raise a factual question regarding reliance. As Latson noted below, Carolyn did not participate in "the alleged [fraudulent] transactions between [Darrell] and [Latson]." She stated in discovery responses that she lacked "knowledge of the facts surrounding the alleged [n]ote." And she never asserted that she had a confidential relationship with Latson or that she relied on him in any way. Because the record contains no evidence that Carolyn relied on Latson, the trial court properly granted him summary judgment on this claim.¹¹

(c) The Boazes argue that the trial court improperly entered summary judgment before the discovery period expired and without ruling on several outstanding motions. A defendant, however, may move for summary judgment "at any time."¹² If the record shows that no material issues of fact remain, judgment must be entered "forthwith."¹³ Thus, the trial court "clearly had authority to entertain [Latson's] motion."¹⁴

Furthermore, although the Boazes contend that additional discovery would have produced new evidence regarding the promissory note, this claimed evidence does not involve the security deed or Carolyn Boaz's reliance allegations. Accordingly, the evidence would not preclude summary judgment.¹⁵

2. "Fraudulent" or Wrongful Foreclosure. The trial court, however, erred in granting Latson summary judgment on the fraudulent foreclosure allegations. In seeking summary judgment, Latson argued that no cause of action for fraudulent foreclosure exists under Georgia law; that Carolyn Boaz's claim fails because she was not involved in the allegedly fraudulent transaction on August 1, 1994; that the Boazes neglected to join party defendants; that the foreclosure proceedings were based on the security deed, rather than the allegedly fraudulent promissory note; and that the statute of limitation bars the claim. These arguments do not merit summary judgment.

( a) Georgia recognizes the tort of wrongful foreclosure. As we have noted, "[t...