Kaye v. Ryland Group, Inc., A97A1138

• Decision Date: 07 October 1997
• Docket Number: No. A97A1138,A97A1138
• Citation: 228 Ga.App. 742,492 S.E.2d 729
• Parties: , 98 FCDR 256 KAYE et al. v. RYLAND GROUP, INC.
• Court: Georgia Court of Appeals

Page 729

492 S.E.2d 729

228 Ga.App. 742, 98 FCDR 256

KAYE et al. v. RYLAND GROUP, INC.

No. A97A1138.

Court of Appeals of Georgia.

Oct. 7, 1997.

Weinstock & Scavo, Steven M. Winter, Louis R. Cohan, Atlanta, for appellants.

Bovis, Kyle & Burch, William B. Barrickman, Atlanta, for appellee.

McMURRAY, Presiding Judge.

Mark Kaye and Brenda Kaye instituted an action against the Ryland Group, Inc. ("Ryland"), claiming Ryland's agent committed fraud by selling them a house while concealing the fact that a nearby road was scheduled to be moved closer to the house. According to the complaint, the agent led the Kayes to believe the road "might" be moved, but only by a few feet. Ryland moved for summary judgment based on a "merger" or "entire agreement" clause in the sales contract, which stated in part: "There are no oral or other written agreements or representations directly or indirectly, connected with this agreement. We make no representations concerning any land adjacent to or near the property. We will not be bound by any other representations made by any salesperson or other person." The trial court, finding the Kayes had affirmed the contract and had made no effort to rescind it, found this contract provision barred the Kayes' claims. The Kayes appeal the trial court's grant of summary judgment based on those findings. Held:

On appeal of this grant of summary judgment, we review the trial court's rulings de novo, construing the evidence strongly in favor of the non-movants, the Kayes. As movant, Ryland was entitled to summary judgment only if it showed, by undisputed facts, a lack of evidence to support an essential element of the Kayes' claim. Gentile v. Bower, 222 Ga.App. 736, 477 S.E.2d 130 (1996).

A party claiming he or she was fraudulently induced to enter a contract has two possible remedies: (1) to promptly rescind the contract after discovering the fraud and sue in tort for the recovery of the contract's consideration, as well as any other damages resulting from the fraud; or (2) affirm the contract and sue for damages resulting from the fraud. Hightower v. Century 21 Farish Realty, 214 Ga.App. 522, 523(1), 448 S.E.2d 271 (1994). Where the party elects the second option and affirms the contract, however, he or she is bound by its terms. In this case, the contract's "merger" provision would estop a party bound by the terms of the contract from arguing that he or she relied on representations other than those contained in the contract. See Rampey v. Jay Pontiac GMC Truck, 211 Ga.App. 632, 633, 440 S.E.2d 52 (1993); Carpenter v. Curtis, 196 Ga.App. 234, 236-237, 395 S.E.2d 653 (1990). The crucial question in this case, therefore, is whether the Kayes are bound by the terms of the sales contract.

" 'Where a party who is entitled to rescind a contract on ground of fraud or false representations, and who has full knowledge of the material circumstances of the case, freely and advisedly does anything which amounts to a recognition of the transaction, or acts in a manner inconsistent with a repudiation of the contract, such conduct amounts to acquiescence, and, though originally impeachable, the contract becomes unimpeachable in equity....' [Cit.]" Roller-Ice v. Skating Clubs of Ga., 192 Ga.App. 140, 142, 384 S.E.2d 235 (1989) (physical precedent); see also Flair Fashions v. SW CR Eisenhower Drive, Inc., 207 Ga.App. 78, 79, 427 S.E.2d 56 (1993).

Here, the affidavit of plaintiff Mark Kaye states that he and Brenda Kaye purchased their home from Ryland in September 1994. After they purchased the home, the Georgia Department of Transportation ("DOT") condemned part of the property for an easement. The affidavit does not clearly state how or when the DOT obtained this easement. Pleadings the plaintiffs submitted in response to Ryland's motion for summary judgment state the Kayes "negotiated a settlement" with DOT for this easement. In their appellate brief, the plaintiffs state this settlement was entered a year after the purchase. There is no question that at the time the Kayes negotiated the easement with DOT, they knew of the alleged concealment or misrepresentation made by Ryland's agent. By transferring an interest in the property to DOT,...