Consulting Const. Corp. v. Edwards, A92A1996

• Decision Date: 22 January 1993
• Docket Number: No. A92A1996,A92A1996
• Citation: 427 S.E.2d 789,207 Ga.App. 296
• Parties: CONSULTING CONSTRUCTION CORPORATION, et al. v. EDWARDS.
• Court: Georgia Court of Appeals

Page 789

427 S.E.2d 789

207 Ga.App. 296

CONSULTING CONSTRUCTION CORPORATION, et al. v. EDWARDS.

No. A92A1996.

Court of Appeals of Georgia.

Jan. 22, 1993.

Reconsideration Denied Feb. 9, 1993.

B. Dean Grindle, Jr., Dahlonega, for appellants.

Jackson & Tyler, Michael A. Dominy, Atlanta, for appellee.

BLACKBURN, Judge.

Marilyn Edwards brought suit on a note against Consulting Construction Corporation ("the corporation") and its president, Judson Breedlove, as guarantor. The defendants answered and counterclaimed, alleging fraud and deceit. After discovery was commenced, the plaintiff moved the court for summary judgment on both the note and counterclaim. The defendants subsequently moved to compel the discovery of various business records and other documents. The trial court denied defendants' motion to compel discovery, but granted plaintiff's motion for summary judgment on the note and the counterclaim, from which both defendants appeal.

The record reveals that the appellee operated a secretarial service and at one time subleased an office to the corporation and Breedlove. When Breedlove learned that the appellee desired to sell her business and move to Florida, he expressed an interest in purchasing certain assets of the business. The parties entered into negotiations concerning the sale of the equipment and inventory in addition to the secretarial service consulting portion of the business. The appellee submitted a proposal on the intangibles associated with the business, including the name of the business and client list. On March 8, 1990, the parties executed a "Sale of Assets Agreement" pursuant to which the corporation simultaneously signed a note and Breedlove signed a personal guaranty. The agreement represented "the entire agreement and understanding between the parties," superseding "any prior agreement or understanding relating to the subject matter of [the] agreement." The corporation made payment pursuant to the agreement during the months of March, April, May, and June of 1990. The corporation subsequently failed to make payments as they became due, and appellee, through counsel, exercised her right to accelerate the loan, demanding the entire balance. The appellants offered to negotiate the terms of the agreement by providing a cash repayment and returning some equipment. However, the parties were unable to resolve the appellants' default and this action ensued.

1. The appellants contend that the trial court erred by granting summary judgment to appellee on appellants' counterclaim when genuine issues of fact remained to be decided concerning fraud and rescission. During the negotiations leading to the sale of assets, appellee proposed as a basis for the sale price of the business a sum that she represented as corresponding to one-twelfth of the business' yearly gross receipts. The figure given by appellee was accepted by appellants, and the sale proceeded based thereon. Appellants now argue that the figure disclosed by appellee, which they claim induced them to purchase the business, was false.

A party opposing a motion for summary judgment is to be given the benefit of all favorable inferences that may be drawn from the evidence. Georgia Intl. Life Ins. Co. v. Huckabee, 175 Ga.App. 343, 345, 333 S.E.2d 618 (1985). Although the appellants assert that there is an issue of fact as to whether the contract was rescinded, the record shows that the appellants attempted to rescind the contract on December 2, 1991, in an averment in Breedlove's affidavit proffered in opposition to appellee's motion for summary judgment. Rescission must occur prior to and " 'as a condition precedent to the bringing of the action ....' (Emphasis supplied.) [Cit.]" Nexus Svcs. v. Manning Tronics, 201 Ga.App. 255, 256(2), 410 S.E.2d 810 (1991). The appellants' attempt to rescind the contract in response to the appellee's motion for summary judgment was untimely and not sufficient to authorize their recovery. As a result, the appellants affirmed a contract which contained a merger clause. " '(W)here the purchaser affirms a contract which contains a merger or disclaimer provision and retains the purchased articles, he is estopped from asserting that he relied upon the seller's misrepresentation and his action for fraud must fail. (Cit.)' [Cit.]" Roth v. Bill Heard Chevrolet, 166 Ga.App. 583, 584, 305 S.E.2d 31 (1983). The appellants have affirmed the contract and are bound by its terms, which include a merger and entireties clause, providing that the contract constituted "the entire agreement and understanding between the parties and supersede any prior agreement and understanding relating to the subject matter of [the] agreement." Construing the evidence in the light most favorable to the appellants, we hold that the trial court properly granted the appellee's motion for summary judgment on the appellants' counterclaim as a matter of law.

Even assuming, arguendo, that a question of fact exists as to whether appellants affirmed the contract and consequently whether their counterclaim sounds in tort rather than in contract, an...