Gantt v. Bennett , 231 Ga. App. 238 ( 1998 )

BLACKBURN, Judge,

dissenting.

The trial court erred in denying defendants’ motions for directed verdict, therefore, I dissent from the judgments in Case Nos. A97A1998 and A97A1999 and the analysis contained in Divisions 1, 2, 4, 5, and 8.1 concur with the analysis in Divisions 3, 6, 7, and 9-12, and the judgment in Case No. A97A2000.

The Bennetts failed to present evidence that Jake Gantt had actual knowledge that the septic system was defective. “Fraud unlike negligence, breach of warranty or breach of contract, is premised upon the ‘actual moral guilt’ of the defrauding party. Mere concealment of a material fact, unless done in such a manner as to deceive and mislead, will not support an action. In all cases of deceit, knowledge of the falsehood constitutes an essential element. The element of intention to deceive is as necessary in an action based on concealment as one based on wilful misrepresentation. An action for fraud and deceit must be based upon a representation or concealment which was made with the intention and purpose of deceiving the opposite party, and for the purpose of injuring him.” (Citations and punctuation omitted.) Lively v. Garnick, 160 Ga. App. 591, 592 (287 SE2d 553) (1981).

In Case No. A97A1998, a careful review of the trial transcript did not reveal any evidence from which the jury could infer that Jake Gantt had actual knowledge that the septic system was defective as installed. Although the Bennetts cite to their expert testimony that Jake Gantt “should have known” the system would not work, such evidence is not enough to show actual knowledge, but merely constructive knowledge. “It is clear, however, that in a fraudulent concealment action the allegedly defrauded party must prove that the alleged defrauder had actual, not merely constructive, knowledge of the fact concealed. . . . An assertion that one ‘should have known’ of a defect alleges at most a constructive knowledge.” (Punctuation omitted.) Id. at 593-594.

The majority asserts that the fact that a french drain was installed around the septic system showed Gantt’s knowledge of a high water problem. However, no evidence was produced at trial indicating that Gantt knew that the installation of a french drain was not a proper way to handle any problem with high ground water. The testimony indicated that french drains were used to lower the water table. Although the majority points to other facts including ground water in the line and expert testimony regarding soil conditions, the plaintiffs failed to present any evidence that Gantt was aware of this information. Furthermore, we have previously held that “it is not a ‘reasonable or logical’ inference from the mere fact that a builder-seller has constructed a house subsequently discovered to be ‘defective’ that he knowingly concealed those defects and thereby deceived and defrauded the purchaser.” Id. at 594.

In the present case, the plaintiffs failed to present any evidence regarding the actual installation of the septic system. Although the evidence indicated that Bobby Gantt installed the Bennetts’ septic system, he did not testify at trial. The evidence in this case may have supported a cause of action in negligent construction, however, that is not the issue before us. Absent some evidence of Jake Gantt’s “ ‘moral guilt’ in effectuating the sale with actual knowledge of the [septic system’s] defects, a recovery and judgment predicated upon [Jake Gantt’s] fraud . . . cannot stand.” Id. at 594-595. The trial court erred in denying Jake Gantt’s motion for directed verdict.

In Case No. A97A1999, Terry Propes and Forsyth County Board of Health contend that the trial court erred in denying their directed verdict on the Bennetts’ fraud claim and claim for attorney fees.

The Bennetts contend that Propes and the Board of Health are liable in fraud because Propes, the county inspector, failed to comply with county regulations and did not complete an on-site inspection of the septic system before it was covered up with dirt. County regulations required that “[n]o person may cover or use an on-site sewage management system until final inspection is made by the. County Board of Health to determine compliance of the provisions of the construction permit issued under Section 290-5-26.033 and written approval has been issued by the County Board of Health.” Propes signed the inspection report for the permit on the plaintiffs’ septic system. Propes circled the word “Approved” next to the indication for the sewage disposal system and also drew a line to his written notation “contractor’s drawing.” Testimony by more than one inspector at trial indicated that around the time this permit was issued, if the inspectors were unable to do an on-site inspection due to time constraints, they would review the contractor’s drawing of the septic system and approve or reject the system based on such drawing. Although the evidence was in conflict as to whether this procedure was in fact approved by their supervisors, the evidence was not conflicting as to whether the inspectors themselves believed that the procedure was approved. Each inspector testified that the procedure was the unofficial policy of the office. Furthermore, evidence that the inspectors may have been later reprimanded for such procedures does not negate the inspector’s lack of knowledge of the impropriety of their actions at the time they were performed.

“The elements essential to an action in tort for damages resulting from a material misrepresentation constituting fraud are: (1) that the defendant made the representations; (2) that at the time he knew they were false (or what the law regards as the equivalent of knowledge); (3) that he made them with the intention and purpose of deceiving the plaintiff-, (4) that the plaintiff relied on such representations; (5) that the plaintiff sustained the alleged loss and damage as the proximate result of their having been made.” (Punctuation omitted; emphasis supplied.) Lister v. Scriver, 216 Ga. App. 741, 745 (456 SE2d 83) (1995). In the present case, the uncontroverted testimony at trial shows that Propes did not intend to mislead anyone when he approved the septic system pursuant to the contractor’s drawing. He noted on the face of the form that the approval was on the contractor’s drawing. As an intention to mislead is a necessary element of a cause of action in fraud, and the Bennetts failed to introduce any evidence that Propes intended to mislead them, I would find that the trial court erred in denying Propes’ motion for directed verdict on the Bennetts’ claim of fraud.

The Bennetts’ claims against the Board of Health are derivative of their claims against Propes. Therefore, the trial court should have also granted the Board of Health’s motion for directed verdict. See cf. Crow v. Evans, 183 Ga. App. 581, 582 (359 SE2d 446) (1987) (“respondeat superior prohibits a finding against the master when there has been a judgment on the merits in favor of the servant on whom the master’s liability was predicated”). Based upon such a finding, the trial court also erred in assessing attorney fees against Propes and the Board of Health.

Decided February 25, 1998 Reconsideration denied March 17, 1998 Richardson & Chenggis, George G. Chenggis, for Gantt. Van Gerpen & Associates, Earl J. Van Gerpen, Terry L. Strawser, for Propes. Dreger & McClelland, Richard J. Dreger, for Bennett et al. Gary R Bunch, for Forsyth County Board of Health.

While the evidence presented in this case may support a claim for negligent construction, it does not support the Bennetts’ claims for fraud. I would find that the trial court erred in denying the defendants’ motions for directed verdict and in granting the Bennetts’ claims for attorney fees.

I am authorized to state that Chief Judge Andrews joins in this dissent.