Krayev v. Johnson

• Decision Date: 21 April 2014
• Docket Number: No. A14A0233.,A14A0233.
• Citation: 757 S.E.2d 872,327 Ga.App. 213
• Parties: KRAYEV et al. v. JOHNSON.
• Court: Georgia Court of Appeals

327 Ga.App. 213

757 S.E.2d 872

KRAYEV et al.

v.JOHNSON.

No. A14A0233.

Court of Appeals of Georgia.

April 21, 2014.

Cohen Pollock Merlin & Small, Elizabeth Bloom Hodges, Atlanta, for Appellants.

Green & Sapp, Daniel Joseph Moriarty, for Appellee.

BARNES, Presiding Judge.

This dispute over the purchase of a used car went to trial, and the jury returned a verdict in favor of the purchaser, David J. Johnson, Jr., and against the sellers, Sergey Krayev and Elite Motor Sports, LLC (collectively, “Krayev”). Among other things, the jury found that Johnson had rescinded the purchase agreement for fraud and awarded him $10,500 in actual damages and $12,500 in punitive damages. After the jury reached its verdict, the trial court conducted an evidentiary hearing and found that Johnson was entitled to $63,702.53 in attorney fees and expenses. Krayev now appeals from the trial court's entry of final judgment, contending that the court erred in denying his motion for a directed verdict on Johnson's claims for rescission and attorney fees. Krayev further contends that the trial court's award of attorney fees was improper because Johnson failed to show which fees were attributable solely to his rescission claim. For the reasons stated below, we affirm.

Following a jury verdict, we view the evidence “in a light most favorable to the prevailing party with every presumption and inference in favor of sustaining the verdict.” (Citation omitted.) Moore v. Stewart, 315 Ga.App. 388, 727 S.E.2d 159 (2012). So viewed, the evidence shows that on August 26, 2011, Johnson purchased a used BMW from Krayev. The purchase agreement signed by the parties provided that Johnson would make a down payment of $10,000 and 20 monthly payments of $753.61 beginning in October 2011. The purchase agreement also included a merger clause that stated: “This Agreement constitutes the entire agreement and understanding between the parties and there are no other representations, agreements or understandings by or between the parties.”

Before the parties signed the purchase agreement, Krayev told Johnson that he owned Elite Motor Sports, which he said “dealt in high end cars.” Krayev also gave Johnson an emissions inspection report for the BMW from July 2011 that showed that the car had passed its most recent emissions test. Krayev assured Johnson that the BMW was in “great condition” and discouraged him from consulting with an independent mechanic because he “had just had the car checked out.” Krayev further assured Johnson that although he did not have the certificate of title to the BMW with him, he would deliver it to Johnson the next day. Based on his conversation with Krayev, Johnson signed the purchase agreement, paid the $10,000 down payment to him, and took possession of the BMW.

Immediately following the sale, Johnson bought new tires and rims for the BMW. Hours later, the BMW broke down, and Johnson had the car towed to his house. The next day, Johnson had an emissions inspection performed on the BMW and had two automobile repair shops inspect the car. The BMW failed the emissions test and was diagnosed with a defective transmission and catalytic converter. Johnson obtained an estimate from one of the repair shops indicating that it would cost between $4,500 and $6,000 for a transmission “overhaul.” Moreover, Krayev failed to deliver the certificate of title to Johnson that day as he had promised.

Johnson called Krayev to discuss the problems with the BMW, but Krayev did not answer the phone or return his voice message. Unable to reach Krayev by phone, Johnson wrote a letter to Krayev and Elite Motor Sports on August 28, 2011 that described the problems with the BMW and requested that Krayev agree to pay for all of the necessary repairs. Johnson's letter further stated: “If I can't have all [of] these problems corrected, I want a full refund of my down payment and would like to terminate our contract[.]” Johnson also hired an attorney, who wrote a second letter to Krayev regarding the BMW. Additionally, Johnson tried to stop payment on the check for $10,000 that he had written to Krayev, but the check had already cleared.

Krayev called Johnson in response to the two letters. Johnson “asked him to take the car back” and return his down payment of $10,000 if he would not repair the car, but Krayev refused. Krayev was upset that Johnson had hired an attorney and told him, “This is not Wal–Mart, so you can't just return things, you know, if they don't work properly.” Consequently, Johnson continued driving the BMW.

During September 2011, the BMW would drive normally for a few days before breaking down. Johnson had the car towed three times that month and paid for several additional repairs, but not the expensive repairs needed to correct the transmission and catalytic converter. Furthermore, because Krayev never provided him with the certificate of title, Johnson was unable to get a permanent license tag for the car or obtain insurance during this time period. Finally, in late September 2011, Johnson stopped driving the BMW altogether. He made the first monthly payment of $753.61 in October 2011 but then refused to make any additional payments in light of the problems with the car.

Johnson had several conversations with Krayev about the problems with the BMW in an effort to resolve the matter before the instant lawsuit was filed. During these conversations, Johnson offered to return the BMW in exchange for a refund of his money. But Krayev refused to give Johnson his money back while at the same time refusing to pay for any repairs to the car. Instead, Krayev demanded that Johnson unconditionally return the BMW to him because Johnson had stopped making the monthly payments, but Johnson refused to return the car until Krayev refunded his purchase money.

In December 2011, Johnson, who was no longer represented by counsel, filed suit pro se in the Fulton County Magistrate Court against Krayev, alleging in his Statement of Claim that the purchase agreement was “illegal,” that the parties had engaged in a “failed transaction,” and that Krayev had improperly refused to refund his $10,000 down payment. Krayev removed the case to superior court and asserted counterclaims against Johnson for trover, conversion, breach of the purchase agreement, trespass to chattel, unjust enrichment, attorney fees, and punitive damages and asked the court to issue a writ of possession. In August 2012, the superior court issued a writ of possession against Johnson, who then returned the car to Krayev.

In October 2012, Johnson retained new counsel to represent him in the litigation, and the following month, his counsel filed an amended complaint that added Elite Motor Sports as a defendant and added several claims, including claims for breach of implied and express warranties, fraud, negligent misrepresentation, violation of the Fair Business Practices Act (the “FBPA”), attorney fees and expenses under OCGA § 13–6–11, and punitive damages. ¹ In December 2012, Johnson's counsel filed a second amended complaint, formally adding claims for breach of the purchase agreement and, alternatively, for rescission of the agreement based on fraud.

The case subsequently was tried before a jury, and Johnson testified to the events as discussed above. Johnson also introduced evidence reflecting that the July 2011 emissions inspection report provided to him by Krayev was fraudulent. Specifically, Johnson presented evidence that Krayev obtained the report by paying an emissions station to hook up a “surrogate vehicle” to the emissions machine and manually enter the BMW's vehicle identification number (“VIN”) into the database. As a result, the report showed the surrogate car's passing emissions results, but contained the BMW's VIN. The emissions station used by Krayev was later shut down for issuing 44 similar fraudulent reports in little more than a month.

After Johnson presented his case-in-chief, Krayev moved for a directed verdict on, among other things, Johnson's fraud claim for rescission and his claim for attorney fees and expenses under OCGA § 13–6–11. The trial court denied the motion. The trial court further ruled that the issue of attorney fees would be addressed in two phases: if the jury found in the first phase of the trial that attorney fees should be awarded for bad faith, stubborn litigiousness, or causing unnecessary trouble and expense, the amount of fees would then be determined in a separate phase either by the jury or by the court.

After the trial court denied his motion for a directed verdict, Krayev testified and denied obtaining a fraudulent July 2011 emissions inspection report for the BMW, denied making any misrepresentations to Johnson about the condition of the car, and denied knowing of the major mechanical problems with the BMW before selling the car to Johnson. However, Krayev testified that “he didn't really have a company” called Elite Motor Sports, which had simply been “created through a website” and was “never an actual dealership or anything of that nature” and had never sold any cars. Krayev also testified that he had owned the BMW personally, that he had kept the certificate of title to the BMW, and that the title in fact had a prior lien on it at the time he sold the car to Johnson. While denying that he knew the July 2011 emissions inspection report was fraudulent, Krayev conceded that he had obtained the report and had driven 40 miles from his house to get it, even though there was another emissions station only 3.3 miles from where he lived. Additionally, despite testifying that he never had a problem with the transmission before the sale date, Krayev testified at another point that he “vaguely” remembered reimbursing someone to have part of the transmission worked on before the BMW was sold to Johnson.

After hearing all of the evidence, the jury found in a special verdict form that Johnson had “rescinded the sales contract for...