Sarif v. Novare Group Inc.

• Decision Date: 18 April 2011
• Docket Number: No. A10A0972.,A10A0972.
• Citation: 703 S.E.2d 348,306 Ga.App. 741
• Parties: SARIF et al.v.NOVARE GROUP, INC. et al.
• Court: Georgia Court of Appeals

306 Ga.App. 741
703 S.E.2d 348
10 FCDR 3709

SARIF et al.
v.
NOVARE GROUP, INC. et al.

No. A10A0972.

Court of Appeals of Georgia.

Nov. 10, 2010.Certiorari Granted April 18, 2011.

[703 S.E.2d 349]

Weinstock & Scavo, Wallace H. Ehrenclou, James R. Fletcher II, Atlanta, for appellants.Troutman Sanders, William N. Withrow, Jr., Thomas E. Reilly, Brian P. Watt, Atlanta, for appellees.

[703 S.E.2d 350]

MILLER, Chief Judge.

[306 Ga.App. 741] In this action arising from the sale of individual condominium units in the Twelve Atlantic Station Hotel and Residences building (“TWELVE”), David Sarif, Les Retter, Jay Baker, Ron Agami, Jonathan Samuels, Donna Wong, Sean Warren, and Shaun Weinstock[306 Ga.App. 742] (“Appellants”) sued Novare Group, Inc., WN Atlantic Properties, LLC, Atlantic WN Properties, Inc., Twelve Hotels and Residences, LLC, Novare Group Holdings, LLC, Novare Realty, LLC, Michael Everly, and James Borders (“Appellees”), alleging fraud in the inducement, negligent misrepresentation, negligent supervision, negligence (by Everly and Borders) and violation of the Georgia Fair Business Practices Act. The trial court granted Appellees' motion for judgment on the pleadings on Appellants' claims and denied Appellants' motion for summary judgment. Appellants appeal from the order granting Appellees' motion for judgment on the pleadings, arguing that the trial court's findings were in error. Appellants also contend that the trial court erred in staying Borders's deposition, denying their motion for summary judgment and failing to rule on their motion to compel.

We affirm in part on the claims of fraud in the inducement by passive concealment and negligence (by Everly and Borders) and reverse in part on claims of fraud in the inducement by active concealment, negligent misrepresentation, negligent supervision, and violation of the Georgia Fair Business Practices Act. Discerning no other error, we affirm the trial court's rulings on discovery and summary judgment.

“On appeal, we review de novo the trial court's decision on a motion for judgment on the pleadings, and we construe the complaint in a light most favorable to the appellant, drawing all reasonable inferences in his favor.” (Punctuation and footnote omitted.) Ameris Bancorp. v. Ackerman, 296 Ga.App. 295, 674 S.E.2d 358 (2009). “[A]ll well-pleaded material allegations of the opposing party's pleading are to be taken as true, and all allegations of the moving party which have been denied are taken as false.” (Punctuation omitted.) Rolling Pin Kitchen Emporium v. Kaas, 241 Ga.App. 577, 578(2), 527 S.E.2d 248 (1999).

So viewed, the record shows that, in 2005 and 2006, Appellees marketed and advertised condominiums at the TWELVE to the general public and Appellants as having “spectacular city views” of downtown Atlanta and provided written materials regarding same. Appellees also promised and represented to Appellants that any future development directly opposite the TWELVE would be a low to mid-rise office building which would not obstruct Appellants' city views and would not be built for at least five years. In doing so, Appellees knew these representations were false and concealed from Appellants their planned development of the Atlantic, a 46–story tower, directly across from the TWELVE. Between August and November 2005, each of the Appellants entered into agreements with WN Atlantic Properties, LLC to purchase a condominium unit at the TWELVE.

[306 Ga.App. 743] All the purchase agreements contain a comprehensive merger clause:

24. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties hereto. No agent, representative, salesman or officer of the parties hereto has authority to make, or has made, any statements, agreements, or representations, either oral or in writing, in connection herewith, modifying, adding to, or changing the terms and conditions hereof and neither party has relied upon any representation or warranty not set forth in this Agreement. No dealings between the parties or customs shall be permitted to contradict, vary, add to, or modify the terms hereof.

The purchase agreements also contain an express disclaimer stating that Appellants have not relied upon any “advice, representations or statements of [b]rokers and waive and shall not assert any claims against [b]rokers involving the same.... [Appellants] agree that [b]rokers shall not be responsible to advise ... them on any matter, including ... any condition(s) existing off the Condominium that may affect the Condominium[.]”

Additionally, each of the purchase agreements contains a disclosure provision, in

[703 S.E.2d 351]

which Appellants acknowledge and understand that “[t]he views from ... the Unit may change over time due to, among other circumstances, additional development and the removal or addition of landscaping.”

In September 2008, it became apparent to Appellants that construction of the Atlantic would block their views and result in decreased property values. On December 31, 2008, Appellants notified Appellees of their intent to rescind the purchases and to file claims under the Fair Business Practices Act. This lawsuit followed.

1. Appellants argue that the trial court erred in granting Appellees' motion for judgment on the pleadings on each of their claims.

(a) Fraudulent inducement via active concealment. A plaintiff who claims that he was fraudulently induced into entering a contract may elect one of two remedies: “affirm the contract and sue to recover damages for its breach or rescind the contract and sue in tort to recover damages for fraud.” (Footnote omitted.) Dyer v. Honea, 252 Ga.App. 735, 739(3)(a), 557 S.E.2d 20 (2001). If a party “elects to affirm the contract, the merger clause estops him from asserting [306 Ga.App. 744] that he relied upon antecedent oral representations.” (Footnote omitted.) Id. On the other hand, “the question of reliance on the alleged fraudulent misrepresentation in 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.” (Citation and punctuation omitted.) Crews v. Cisco Bros. Ford–Mercury, 201 Ga.App. 589, 591(2), 411 S.E.2d 518 (1991).

Construing the pleadings favorably to Appellants ( Rolling Pin, supra, 241 Ga.App. at 578(2), 527 S.E.2d 248), Appellants notified Appellees that they were rescinding their purchases before they filed the instant action. See Consulting Constr. Corp. v. Edwards, 207 Ga.App. 296, 298(1), 427 S.E.2d 789 (1993) (generally, rescission “must occur prior to, and as a condition precedent to the bringing of the action.”) (citations and punctuation omitted; emphasis in original). Although the first amended complaint does not contain a separate claim for rescission, it also does not express “a clear election to affirm the purchase and sale agreement[,]” as no breach of contract claim is alleged. Conway v. Romarion, 252 Ga.App. 528, 531–532(1), 557 S.E.2d 54 (2001) (where purchaser did not express a clear intent to affirm the purchase and sale agreement and there was no separate claim for rescission, allegations of fraud in complaint could support a rescission claim). Thus, the trial court erred in finding that Appellants affirmed the purchase...