Keller v. Henderson

• Decision Date: 09 March 2001
• Docket Number: No. A00A1779.,A00A1779.
• Citation: 248 Ga. App. 526,545 S.E.2d 705
• Parties: KELLER et al. v. HENDERSON et al.
• Court: Georgia Court of Appeals

545 S.E.2d 705

248 Ga. App. 526

KELLER et al. v. HENDERSON et al.

No. A00A1779.

Court of Appeals of Georgia.

March 9, 2001.

William F. Brogden, for appellants.

Calvin M. McMullen, for appellees.

BARNES, Judge.

This appeal arises from an action for fraud filed by Franklin and Petra Henderson, the purchasers of a house, against Darnell Phillips Keller and Alva Lionel Phillips, Jr., the sellers (collectively "Keller"), as executors of the estate of Alva L. Phillips, Sr. The Hendersons allege that Keller, with intent to deceive and induce them to buy the property, failed to disclose that a sunroom heater was defective and that the basement floods when it rains. Later, the Hendersons amended their complaint to allege that, even though asked directly, Keller failed to disclose that the property was on a septic tank.

Subsequently, Keller moved for summary judgment, contending that the Hendersons were not fraudulently induced to enter into the agreement because no false representations were made, Keller did not know of any defects in the house, Keller had no intention to induce the Hendersons to act, the Hendersons did not justifiably rely on any representations by Keller, and the Hendersons did not incur any damages. Keller also contended they were not liable because the Hendersons bought a vacant, older house, they affirmed the sales contract, and the condition of the property was the result of an act of God.

After the trial court denied Keller's motion for summary judgment and they obtained permission to file an interlocutory appeal, this appeal followed. Keller contends the trial court erred by denying their motion on the issues about disclosure of the water heater, the septic tank, and the flooding.

1. The standards applicable to motions for summary judgment are announced in Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991). When ruling on a motion for summary judgment, the trial court should give the party opposing the motion the benefit of all reasonable doubt and should construe the evidence and all inferences and conclusions therefrom most favorably toward that party. Moore v. Goldome Credit Corp., 187 Ga.App. 594, 595-596, 370 S.E.2d 843 (1988). When appellate courts review the grant or denial of a motion for summary judgment, we conduct a de novo review of the law and the evidence. Desai v. Silver Dollar City, 229 Ga.App. 160, 163(1), 493 S.E.2d 540 (1997).

2. In this state, the five elements of fraud and deceit are: "(1) false representation made by defendant; (2) scienter; (3) intention to induce plaintiff to act or refrain from acting in reliance by plaintiff; (4) justifiable reliance by plaintiff; and (5) damage to plaintiff." (Citation omitted.) Butler v. Terminix Intl., 175 Ga.App. 816, 817 (2), 334 S.E.2d 865 (1985). Further, in an action for fraudulent concealment, "the allegedly defrauded party must prove that the alleged defrauder had actual, not merely constructive, knowledge of the fact concealed." (Citations, punctuation and emphasis omitted.) Webb v. Rushing, 194 Ga.App. 732, 733 (1), 391 S.E.2d 709 (1990).

Giving the Hendersons the benefit of all reasonable doubt and construing the evidence and all inferences and conclusions in their favor, the record shows that the Hendersons agreed to buy and Keller agreed to sell a house formerly owned by Alva L. Phillips, Sr. Shortly after closing on the house and taking possession, the Hendersons noticed that the basement flooded during rains. Subsequently, they also learned that, contrary to representations made to them, the house was on a septic tank, not on the city sewer line.

In addition to the clauses directly related to the sale, the contract signed by the parties contains certain clauses important to this case. The "Seller's Property Disclosure" clause stated that a "Seller's Property Disclosure Statement is attached hereto and incorporated herein." The Seller's Property Disclosure Statement, however, was not attached to the contract when it was signed because it was not completed until over a month later.

The contract also contains a clause providing that the

Agreement constitutes the sole and entire agreement between the parties hereto and no modification or assignment of this Agreement shall be binding unless signed by all parties to this Agreement. No representation, promise, or inducement not included in this Agreement shall be binding upon any party hereto.

In another clause, the sellers and buyers acknowledged that they had not relied on any "advice, representations or statements" made by the brokers.

A purchaser claiming he was fraudulently induced to enter into a sales contract has an election of remedies:

(1) promptly after discovering the fraud he may rescind the contract and sue in tort for recovery of the purchase price and for any additional damages resulting from the alleged fraud; [or] (2) he may affirm the contract and sue for damages resulting from the fraud. This second suit, however, is not one for breach of contract, but one in tort. As these suits involve affirmance of the contract, the defrauded party may keep the benefits of the contract and still maintain an action for damages suffered because of the fraud. Although the action is in tort, it is based on the affirmance of the contract and seeks damages resulting from fraud arising from the contract. Because the allegedly defrauded party elected to affirm the contract, that party is bound by the contract's terms and is subject to any defenses which may be based on the contract.

(Citation omitted.) Hightower v. Century 21 Farish Realty, 214 Ga.App. 522, 523-524(1), 448 S.E.2d 271 (1994). To rescind one must return or offer to return the subject matter of the contract to place the seller in the same situation in which he was before the sale. Garrett v. Diamond, 144 Ga.App. 428, 430(2), 240 S.E.2d 912 (1977). As the records show no effort to rescind the contract, the Hendersons have elected to seek the second remedy discussed above. Consequently, they are bound by the terms of the contract, including the clauses specified above.

3. Keller claims the trial court erred by denying their motion for summary judgment on the Hendersons' claim that the sellers failed to disclose that a water heater was improperly vented. Keller contends only that the...