Villalobos v. Atlanta Motorsports Sales, LLC.

Decision Date03 June 2020
Docket NumberA20A0645
CourtGeorgia Court of Appeals

T. Michael Flinn, Carrollton, for Appellant.

Williams Teusink, Nicolas D. Bohorquez, R. Lawton Jordan III, for appellee.

Miller, Presiding Judge.

Soon after Jenry Villalobos bought a used pickup truck from Atlanta Motorsports Sales, LLC, the vehicle experienced mechanical issues, leading Villalobos to bring this lawsuit alleging fraud, rescission, revocation of acceptance, and violations of multiple Georgia statutes. Villalobos appeals from the trial court's entry of a judgment on the pleadings, arguing that the trial court erred in concluding that his claims were precluded by the sales contract's merger clause and a contractual disclaimer that he was purchasing the truck "as is." We agree with the trial court that judgment on the pleadings was proper on Villalobos’ claims for rescission and fraud because he could not justifiably rely on oral misrepresentations that contradicted the terms of the contract. We also determine, however, that Villalobos properly stated a claim for revocation of acceptance, and so the entry of judgment on the pleadings was improper on this claim. We therefore affirm in part and reverse in part.

On appeal from a grant of judgment on the pleadings, we conduct a de novo review of the trial court's order to determine whether the undisputed facts appearing from the pleadings entitle the movant to judgment as a matter of law. The grant of a motion for judgment on the pleadings under OCGA § 9-11-12 (c) is proper only where there is a complete failure to state a cause of action or defense. For purposes of the motion, all well-pleaded material allegations by the nonmovant are taken as true, and all denials by the movant are taken as false. But the trial court need not adopt a party's legal conclusions based on these facts. Moreover, in considering a motion for judgment on the pleadings, a trial court may consider exhibits attached to and incorporated into the pleadings, including exhibits attached to the complaint or the answer. Nevertheless, we are mindful that a motion for judgment on the pleadings should be granted only if the moving party is clearly entitled to judgment.

(Citations and punctuation omitted.) BCM Constr. Group v. Williams , 353 Ga. App. 811, 811-812, 840 S.E.2d 51 (2020).

According to Villalobos’ complaint, he purchased a 2008 Ford F-150 from Atlanta Motorsports in January 2019. While at the dealership, Villalobos "made [a] direct inquiry about the [truck's] history," the salesman represented that the pickup truck "was in good condition," and when Villalobos went on a test drive, "it was represented to him as a good running truck with no problems." After Villalobos purchased the truck, Atlanta Motorsports informed him that the truck had an oil leak, and Villalobos noticed a "major oil puddle" in his driveway on the day he took the truck home. Villalobos took the truck to a mechanic who informed him that the cost of the repairs exceeded the value of the truck. Villalobos attempted to return the truck to Atlanta Motorsports, which refused. Villalobos also revoked his acceptance by oral communication and by letter, but Atlanta Motorsports refused to honor his revocation.

Villalobos brought the instant lawsuit, raising claims of fraud, rescission of the contract, revocation of his acceptance, and violations of the Georgia Fair Business Practices Act ( OCGA § 10-1-391 et seq. ) ("FBPA") and the Georgia Used Motor Vehicle Dealers’ and Used Motor Vehicle Parts Dealers’ Registration (‘‘Used Car Dealer’’) Act ( OCGA § 43-47-1 et seq. ). Atlanta Motorsports answered the complaint and attached to its answer a copy of the contract and bill of sale. The contract contained the following clause, which Villalobos separately signed:

Page one and page two of this agreement, together with any installment sale agreement, arbitration agreement and any other documents signed in connection with this transaction, shall constitute the entire agreement between the parties pertaining to the subject matter hereof and supersede all prior agreements, undertakings, negotiations and discussions, whether oral or written, of the parties. This agreement cannot be modified except by a written instrument executed by the parties. Buyer acknowledges that Buyer is not relying on any representation that is not contained in this Agreement.

The contract also provided the following disclaimer in capital letters and boldface type:

Unless a limited warranty is provided in writing to Buyer, the vehicle is sold "as is" with no warranty. The only warranties applying to this vehicle are those supplied by the manufacturer, if any. The seller hereby expressly disclaims all warranties, either express or implied, including any implied warranties of merchantability or fitness for a particular purpose....

The contract further provided that the truck was subject to a "buyer's guide." The buyer's guide also noted in large typeface that the truck was being bought "as is - no dealer warranty." The buyer's guide contained the statement, "Ask the dealer if your mechanic can inspect the vehicle on or off the lot," and it included a list of "some major defects that may occur in used vehicles," which included oil leakage.

Atlanta Motorsports then moved for a judgment on the pleadings, arguing in part that the merger clause and the disclaimer in the contract prevented Villalobos from justifiably relying on any oral representations that did not become part of the written contract, and all of his claims therefore failed as a matter of law. The trial court granted Atlanta Motorsports’ motion and dismissed all of Villalobos’ claims. The trial court concluded that the terms of the contract, particularly the merger clause and the acknowledgment that Villalobos was purchasing the vehicle "as is," precluded Villalobos from arguing that he justifiably relied on any alleged extracontractual misrepresentations. This appeal followed.

1. In three related enumerations of error, Villalobos argues that the trial court erred in determining that the terms of the contract could defeat his claims for fraud, rescission, and fraud under the FBPA. In particular, Villalobos argues at length that the trial court's decision runs afoul of the Supreme Court of Georgia's decision in City Dodge v. Gardner , 232 Ga. 766, 770, 208 S.E.2d 794 (1974), and its progeny. Upon a close review of the requisite case law, we conclude that Villalobo's fraud and rescission claims failed as a matter of law because there was no evidence that he could justifiably relied on the precontractual oral representations, and thus the trial court properly granted judgment on the pleadings on these claims.

"In general, a party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud." (Citation, punctuation and emphasis omitted.) Lehman v. Keller , 297 Ga. App. 371, 373 (2), 677 S.E.2d 415 (2009). Here, Villalobos alleged in his complaint that he unsuccessfully attempted to return the truck, and his complaint clearly indicates that he has chosen to rescind the contract and sue for fraud.

Having elected to seek rescission and pursue a claim for fraud, [Villalobos is] required to prove that [Atlanta Motorsports] through misrepresentation, act, or artifice intentionally induced [him] to sign the Agreement and that [he] justifiably relied on the misrepresentation, act, or artifice, being reasonably diligent in the use of the facilities at [his] command.

(Citation and punctuation omitted.) Legacy Academy v. Mamilove, LLC , 297 Ga. 15, 17 (1), 771 S.E.2d 868 (2015).

Whether it was reasonable for one to rely upon a certain misrepresentation is generally a question for a jury, although in some cases, the answer may appear so clearly that the question can be decided by a court as a matter of law. For instance, when one has entered a contract with a binding and comprehensive merger clause, any reliance upon precontractual representations is, generally speaking, unreasonable as a matter of law. Likewise, when one is bound by a contract that includes terms that expressly, conspicuously, unambiguously, and squarely contradict precontractual representations, any reliance upon those precontractual representations may be deemed unreasonable as a matter of law.

(Citations omitted.) Raysoni v. Payless Auto Deals , 296 Ga. 156, 157, 766 S.E.2d 24 (2014).

To understand Villalobos’ argument, we must provide a brief history of our case law in this area. In City Dodge , the main case relied upon by Villalobos, the Supreme Court of Georgia upheld a jury verdict concluding that a used car dealer had made a fraudulent oral misrepresentation that the car being sold "had never been wrecked." 232 Ga. at 767, 208 S.E.2d 794. The contract between the parties had a comprehensive merger clause and a clause that the buyer was purchasing the car "as is." Id. In response to the seller's argument that these clauses precluded the buyer's fraudulent misrepresentation claim, the Supreme Court held that "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." Id. at 770, 208 S.E.2d 794. The Supreme Court explained further:

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.

Id. See also, e.g., Akins v. Couch , 271 Ga. 276, 278 (3) (a), 518 S.E.2d 674 (1999) (relying on ...

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2 cases
  • Atlanta Partners Realty, LLC v. Dennis
    • United States
    • Georgia Court of Appeals
    • September 20, 2022
    ...justifiable reliance would be fatal to her claim for rescission as well as to her claims for fraud. Villalobos v. Atlanta Motorsports Sales , 355 Ga. App. 339, 346 (1), 844 S.E.2d 212 (2020).11 Wohlgemuth also argues that the Dennises should have known the repairs were not completed properl......
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