Estate of Ryan v. Shuman, A07A0833.

• Decision Date: 29 November 2007
• Docket Number: No. A07A0833.,A07A0833.
• Citation: Estate of Ryan v. Shuman, 655 S.E.2d 644, 288 Ga.App. 868 (Ga. App. 2007)
• Parties: ESTATE OF RYAN v. SHUMAN.
• Court: Georgia Court of Appeals

288 Ga. App. 868

655 S.E.2d 644

288 Ga.App. 868

ESTATE OF RYAN v. SHUMAN.

No. A07A0833.

Court of Appeals of Georgia.

November 29, 2007.

Reconsideration Denied December 14, 2007.

Callaway, Braun, Riddle & Hughes, Edward M. Hughes, Savannah, for appellant.

Gannam & Gnann, J. Hamrick Gnann Jr., Savannah, for appellee.

MILLER, Judge.

The estate of Anthony V. Ryan, Sr. (the "Estate") appeals from a grant of summary judgment entered against it on an alleged lease-purchase agreement (the "Agreement") between Brad Shuman and the Estate. The Estate contends that the trial court erred in finding that the Agreement was enforceable and that Shuman was entitled to specific performance of the purchase option contained therein. We agree and reverse, and further find that the Estate is entitled to judgment as a matter of law on each of these issues.

"On appeal from a grant of summary judgment, we conduct a de novo review of the evidence to determine if there exists a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, entitle the movant to judgment as a matter of law. [Cit.]" Smith v. Atlantic Mut. Cos., 283 Ga. App. 349, 350, 641 S.E.2d 586 (2007).

So viewed, the evidence shows that Shuman was a friend of Anthony Ryan, Jr., who served as the initial executor of the Estate. Under the terms of Ryan, Sr.'s will, his widow, Porter Ryan, was to receive all income generated from assets held by the Estate during her lifetime. One of those assets is the former Ryan family home, located on Whitfield Avenue in Chatham County (the "Property").

In approximately August 2002, Shuman approached Ryan, Jr. about the possibility of leasing or purchasing the Property, and Ryan, Jr. responded that he would inquire as to that possibility. Shuman again inquired about the Property sometime between September and December 2002. Ryan, Jr. indicated that he had consulted with an attorney about the possibility of leasing or selling the Property to Shuman, and told Shuman to have the Property surveyed and appraised. That appraisal was sent to Shuman by letter dated February 10, 2003, and valued the land, absent the residence thereon, at $300,000. That same month, Ryan, Jr. consulted with the Estate's attorney, who told him that any sale of the Property at less than fair market value would constitute a breach of his fiduciary duties to the Estate. The attorney also told Ryan, Jr. that, because his sister was the "ultimate beneficiary" of the Property (in that she would receive the Property following her mother's death), she should be given the opportunity to purchase it at the appraised price. On February 19, 2003, the Estate wrote to Ryan's sister, Fran Tuttle, and offered to sell her the Property for $300,000. On February 21, 2003, Tuttle responded that, based on a previous appraisal, the Property was worth at least $375,000, and should not be sold to anyone for less than that amount.

According to the Estate's attorney, he spoke with both Ryan, Jr. and Shuman several times in February 2003 about the possibility of the Estate either leasing or selling the Property to Shuman, or entering into a lease/purchase agreement with him. The attorney testified that the parties eventually agreed, by late February or early March 2003, that Shuman would lease the property for three years, that Shuman would perform certain work on the Property in exchange for part of the rent, and that the lease would not contain an option to purchase. The attorney last discussed the matter with both men on March 12, 2003, and he thereafter finalized a draft of a proposed lease. Ryan, Jr. died unexpectedly on March 20, 2003, and that lease was never executed. ¹

In anticipation of leasing the Property, Shuman began "cleaning it up" sometime in late 2002 or early 2003. Such work included yard work and some interior cleaning of the residence. Shuman began interior renovations at the house located on the Property sometime after February 15, 2003, and in April 2003, following Ryan, Jr.'s death, Shuman moved into that residence.

Following her brother's death, Tuttle became the administratrix of the Estate and on April 26, 2003 she met with Shuman to discuss his occupancy of the Property. Specifically, Tuttle told Shuman that she understood he had no lease for the Property and that if he was to remain there the parties would need to enter into a written agreement. Shuman responded that he had entered into a "handwritten" lease with Ryan, Jr., although he has never produced such a document. Shuman eventually produced the Agreement that is the subject of the current litigation, and his is the only known copy thereof. The Agreement provides:

I, Anthony V. Ryan, Jr., as the Executor of the Estate of Anthony V. Ryan, Sr. hereby lease to Brad Shuman all the property including improvements located thereon known as 9219 Whitfield Avenue, Savannah Georgia for the term of ninety-nine (99) years or until my Mother, Porter M. Ryan, dies, whichever event comes first; As consideration for this lease Brad Shuman agrees to pay all taxes on the property when due and keep property and flood insurance on the property current and in force until one of the above events occurs; At the end of ninety-nine years or the death of my Mother, whichever comes first, Brad Shuman will pay the Estate of Anthony V. Ryan. Sr., or the beneficiaries thereof if the estate is closed, the sum of One Hundred Fifty Thousand ($150,000.00) and the Executor of the Estate or beneficiary and/or their issue shall convey marketable title to this property to Brad Shuman immediately upon the payment of said sum.

This document represents the entirety of the agreement between the parties, and acknowledges the fact that the property needs extensive repairs which affects the fair market value of the property.

The Agreement is dated February 15, 2003, at or about the time the Estate's attorney testified that he began discussing a proposed lease or lease/purchase of the Property with Ryan, Jr. and Shuman, and one month before the attorney last spoke with such men about a proposed lease.

On April 29, 2003, Tuttle told Shuman to cease all work at the Property, and asked him for receipts evidencing any monies he had spent in repairing and improving the same. On September 8, 2003, Tuttle, in her capacity as administratrix of the Estate, initiated the current action against Shuman, seeking to have him evicted from the Property and requesting back rent, a declaratory judgment that no valid agreement existed between the Estate and Shuman for either the lease or the sale of the Property, and any damages caused by Shuman's work on the property that had been performed by unlicensed contractors and in violation of the applicable building codes. Shuman filed an answer and counterclaim, seeking a declaration that the Agreement was valid and requesting reimbursement for amounts spent on improving the Property. Following the death of Porter Ryan, Shuman amended his counterclaim to seek specific performance of the Agreement.

The Estate moved for summary judgment on its claim for declaratory relief, arguing that the Agreement was unenforceable for failure to satisfy the Statute of Frauds. The trial court denied that motion and found that the Agreement was enforceable. Additionally, acting sua sponte, the trial court granted summary judgment in favor of Shuman on his claim for specific performance. This appeal followed.

1. The trial court found that the Agreement satisfied the Statute of Frauds and was therefore enforceable. While we concur that the Agreement satisfies the Statute of Frauds, we nevertheless find it is unenforceable for failure of consideration.

Under the Statute of Frauds, a contract conveying an interest in real property, including options to purchase land and leases, must be in writing. See, e.g., Walden v. Smith, 249 Ga.App. 32, 34(1), 546 S.E.2d 808 (2001); Pettit v. Gray, 211 Ga.App. 439, 439 S.E.2d 673 (1993). Such a writing must include every essential element of the contract, including the identity of the parties, a legally adequate description of the property, the consideration, and the terms of payment. A.S. Reeves & Co. v. McMickle, 270 Ga.App. 132, 133, 605 S.E.2d 857 (2004). The Agreement contains each of these essential elements, and the trial court therefore correctly found that it satisfied the Statute of Frauds.

The Agreement is nevertheless unenforceable because of failure of consideration. The Agreement specified that, as consideration for his lease of the premises, Shuman would "pay all taxes on the property when due and keep property and flood insurance on the property current and in force." Shuman testified, however, that he had neither paid taxes on nor maintained insurance on the Property.

Shuman attempted to explain this failure by asserting that he and Ryan, Jr. had agreed that Shuman would pay monthly rent in the amount of $600, and it was his understanding that these amounts would approximate the annual cost of the insurance and taxes. Presumably, Ryan, Jr. was to use these funds to pay the taxes and insurance on the Property. Assuming arguendo that evidence of this "oral understanding" is admissible to explain whether Shuman complied with the terms of the Agreement,² Shuman testified that he did not, in fact, pay rent as required by the "oral understanding." Specifically, Shuman deposed that he made no such rental payments until after the Estate initiated the current action. Thus, by Shuman's own admission, he failed to pay the consideration called for under the Agreement, and this "[t]otal failure of consideration . . . renders [the Agreement] null and void." (Citation omitted.) McDuffie v. Criterion Cas. Co., 214 Ga.App. 818, 821, 449 S.E.2d 133 (1994). See also Clark's Super Gas v. Tri-State Systems, 129 Ga.App. 650, 651, 200 S.E.2d 472 (1973) (it is incumbent upon one seeking to enforce a contract "to establish...