Rivers v. BMW of North America, Inc.

• Citation: 214 Ga.App. 880,449 S.E.2d 337
• Decision Date: 06 October 1994
• Docket Number: No. A94A1859,A94A1859
• Parties: RIVERS v. BMW OF NORTH AMERICA, INC. et al.
• Court: United States Court of Appeals (Georgia)

Page 337

449 S.E.2d 337

214 Ga.App. 880

RIVERS v. BMW OF NORTH AMERICA, INC. et al.

No. A94A1859.

Court of Appeals of Georgia.

Oct. 6, 1994.

Reconsideration Denied Oct. 19, 1994.

Certiorari Denied Feb. 10, 1995.

Bird, Ballard & Still, William Q. Bird, Atlanta, for appellant.

Powell, Goldstein, Frazer & Murphy, E.A. Simpson, Jr., Linda G. Birchall, Christopher P. Galanek, Atlanta, for appellees.

McMURRAY, Judge.

Pennelope Rivers (plaintiff) brought this tort action against defendants BMW of North America, Inc. ("BMW-NA"), Charles Evans BMW, Inc. ("Charles Evans"), and others, alleging intentional fraud and deceit, reckless misrepresentation, and suppression of material facts, ¹ for selling her a new car which had been damaged by acid rain and repainted. Specifically, the complaint alleged that in "February, 1990, Plaintiff purchased a 1990 BMW 535i automobile ... from the Defendant Charles Evans BMW, Inc. ... [which vehicle was] distributed by the Defendant BMW of North America, Inc. [; that at] all times prior to the sale of the vehicle to the Plaintiff, the Defendants represented that the vehicle was a brand new vehicle ... [but that such] ... representations by the Defendants were false and the Defendants knew them to be false at the time of their making." Alternatively, defendants made false statements "without knowledge of the true facts ... [and] recklessly without regard to ascertaining the truth or falsity of those representations." ² Defendants "failed to disclose the fact that this vehicle had been damaged [in transit by acid rain] and repainted prior to selling it to [her]." As a result of defendants' failure to disclose this material fact, plaintiff "financed the purchase price of approximately $30,000...." She claimed as damages the "[d]iminution in value of the car," as well as punitive damages, attorney fees, and the costs of litigation. In their respective answers, defendants admitted only that BMW-NA distributed the vehicle plaintiff purchased from Charles Evans and denied all other allegations. After discovery, defendants jointly moved for summary judgment "on all remaining counts of Plaintiff's complaint[, ... contending that they were] entitled to judgment as a matter of law both by the merger clause and by the transit and/or storage damage disclosure contained in the Buyer's Order and Bill of Sale."

In support of their motion, defendants relied on the following undisputed facts: when the car plaintiff purchased as "new" arrived in the United States its exterior paint and finish had been marred "by exposure to environmental conditions during transit and/or storage[; that, at the direction of BMW-NA,] the affected surfaces were refinished according to factory specifications by BMW trained technicians, using BMW approved and installed equipment [at the BMW-NA Vehicle Preparation Center in Brunswick, Georgia, before shipment to a dealership; and that plaintiff] did not ask anyone at Charles Evans whether any repairs were performed on the Automobile, despite the fact that the possibility of transit and/or storage damage was expressly disclosed in the Buyer's Order." Defendants argued that plaintiff had affirmed the contract after knowledge of the alleged fraud by failing to rescind the contract. Plaintiff responded, urging that factual issues existed "as to whether the disclaimer and the buyer's order negates Defendants' affirmations that the car was new, whether the Plaintiff failed to exercise due diligence as a matter of law and whether the Plaintiff adopted the disclaimer."

The trial court granted defendants' motion for summary judgment, concluding that plaintiff had failed to dispute the factual assertions of the defendants and that due to the disclosure of the possibility of transit damage contained in the Buyer's sales order "no misrepresentation occurred as a matter of law." The trial court further concluded that plaintiff "failed to exercise due diligence in ascertaining the alleged falsity ..." of the description of the car. This appeal followed. Held:

1. In related enumerations, plaintiff contends the trial court erred in "ruling as a matter of law that [her claims] are barred ... [and that she] failed to exercise due diligence."

Traditionally, where a buyer is induced to enter into a contract for the sale of goods by the fraud of the seller, upon discovery of the fraud he has an election of remedies. See Bill Spreen Toyota v. Jenquin, 163 Ga.App. 855, 856(1), 294 S.E.2d 533. "One of such remedies is to rescind the contract, and another is to affirm the contract and sue for damages for the fraud. [Cits.]" Tuttle v. Stovall, 134 Ga. 325, 326(1), 328, 67 S.E. 806. The General Assembly did not intend "to erase the tort remedy for fraud and deceit with the adoption of the Uniform Commercial Code in Georgia." City Dodge v. Gardner, 232 Ga. 766, 769, 208 S.E.2d 794. Generally, such "tort cases cannot be determined by the provisions of the contract sought to be rescinded but must be determined as a question of fact by the jury. It is inconsistent to apply a disclaimer provision of a contract in a tort action brought to determine whether the entire contract is invalid because of alleged prior fraud which induced the execution of the contract. If the contract is invalid because of the antecedent fraud, then the disclaimer provision therein is ineffectual since, in legal contemplation, there is no contract between the parties." City Dodge v. Gardner, 232 Ga. 766, 770, 208 S.E.2d 794, supra.

In the case sub judice, BMW-NA and Charles Evans each relied on the following language contained in the sales agreement signed by plaintiff to show that no misrepresentation was made at all because no material fact was concealed: "5. Purchaser acknowledges that there may have been certain transit and or storage damage to the vehicle sold by the Seller herein [defendant Charles Evans] and Purchaser hereby releases the Seller for any and all claims arising out of such transit damage and or storage damage. Exceptions are noted on front of order under SPECIAL NOTICE." Applying Gen. Motors Corp. v. Green, 173 Ga.App. 188, 191(2), 325 S.E.2d 794 by analogy, the trial court concluded that no fraudulent misrepresentation occurred because the possibility of transit-related damage was expressly disclosed. In Green, "the manufacturer-defendant's 'new' car warranty specifically disclosed the possible existence of factory damage and factory repairs." (Emphasis in original.) Macon Chrysler-Plymouth v. Sentell, 179 Ga.App. 754(1), 755, 347 S.E.2d 639. That is, in Green, the defendant manufacturer was providing a new car warranty but limiting the definition of "new" so that a breach of warranty would not arise out of the bare circumstance that a manufacturing flaw had been noticed and corrected before the vehicle entered the stream of commerce. In Green, "uncorrected factory defects and damage, including defective factory-repairs to the damaged parts, would be covered by the terms of [the manufacturer's] express repair warranty...." 173 Ga.App. 188(1), 190, 325 S.E.2d 794, supra.

In the case sub judice, however, neither the defendant dealership Charles Evans nor the defendant distributor BMW-NA sought to disclose the fact that BMW-NA had actually repaired transit damage while at the same time extending a warranty which covered negligence in those repairs. Instead, this sales agreement sought to disclaim all warranties, express or implied, employing in bold text the language "SOLD AS IS." Nevertheless, defendants submit as conclusive proof that no material fact was concealed the circumstance that this sales agreement mentions on the reverse side in the least conspicuous print employed the bare possibility that transit or storage damage might have been sustained. However, unlike the provision in Gen. Motors Corp. v. Green, 173 Ga.App. 188(1), 325 S.E.2d 794, supra, this clause does not warrant that if there had been such damage it would have been repaired by authorized entities according to factory standards. This disclaimer does not mention the distinct possibility of damage from acid rain fallout or "exposure to environmental conditions," although there is evidence of record that such damage was foreseen. According to a 1986 Service Information Bulletin: "Paint spotting as a result of [acid rain] fallout is not related to a defect in paint materials or workmanship. For this reason, claims arising from this condition are not considered to be warranty-related." As the only warranty extended in the case sub judice is the express warranty created by the description of the car as "new" versus "demo" or "used," the case of Gen. Motors Corp. v. Green, 173 Ga.App. 188, 191(2), 325 S.E.2d 794, supra, is distinguishable in material respects. That case does not demand a finding that plaintiff in this case has no actionable claim of fraud for the misrepresentation of her car as "new" when in fact it had undergone repairs to correct acid rain damage to the factory finish. Whether the disclaimer relied on here is sufficient to excite the attention of a buyer of ordinary prudence "must be determined as a question of fact by the jury." City Dodge v. Gardner, 232 Ga. 766, 770, 208 S.E.2d 794, supra. See also OCGA § 23-1-17; Dollar v. Dollar, 214 Ga. 499, 105 S.E.2d 736. The trial court erred in concluding that the disclaimer in this sales contract was sufficient disclosure of the acid rain damage actually sustained and actually...