Petrona Pinnock v. Kings Carlyle Club Apartments, LLC

FIRST DIVISION
BARNES, P. J.,
MCMILLIAN and REESE, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
September 20, 2018
In the Court of Appeals of Georgia
A18A0994. PINNOCK v. KINGS CARLYLE CLUB
APARTMENTS, LLC et al.
REESE, Judge.
Petrona Pinnock filed a fraud complaint against both Kings Carlyle Club
Apartments, LLC, the owner of an apartment complex where she and her husband
rented an apartment in October 2014, and LATPM, LLC, the company that managed
the complex at that time (collectively, the “Appellees”). She appeals from the trial
court’s grant of summary judgment to the Appellees, arguing, inter alia, that the court
erred in ruling that the merger clause in the lease precluded her from prevailing on
her fraud claim. For the reasons set forth, infra, we affirm.
Viewed in the light most favorable to the Appellant, as the non-movant,1 the
record shows the following facts. On October 14, 2014, the Appellant and her
husband (hereinafter, “Mr. Pinnock”) went to the “Richmond on the Fairway”
apartment complex to lease an apartment. The Appellant and Mr. Pinnock provided
their personal information to a leasing agent for the apartment complex so the
management company could conduct a background check on both of them. Because
the Appellant had filed for bankruptcy, the leasing agent informed her that she could
not be named on the lease. Before signing the lease, Mr. Pinnock asked the agent if
there had been any crime at the apartment complex, such as someone breaking into
residents’ cars, because he was looking for a “safe environment” for his family.
According to the Appellant, the agent stated that, as far as she knew, the apartment
complex was very safe, that she had not heard of any crimes being committed on the
property, and that no one had complained about crime at the complex. Both the
Appellant and Mr. Pinnock read the lease before Mr. Pinnock signed it, and neither
of them expressed any concern about the lease’s provisions. The Appellant and her
family moved into an apartment in the complex on or about October 24, 2014.
1
See Benton v. Benton, 280 Ga. 468, 470 (629 SE2d 204) (2006).
2
On December 1, 2014, Kings Carlyle Club Apartments, LLC, sold the
apartment complex to Richmond Apartment Holdings, LLC.2 After that date, neither
of the Appellees had a possessory or ownership interest in the property, nor did they
retain any supervisory authority over it.
On December 26, 2014, the Appellant was standing in the kitchen of her
apartment when two men in the parking lot fired numerous gunshots through the wall
and into the apartment. One of the bullets struck the Appellant in her right thigh. The
men were arrested for the crime. The Appellant and her family continued to live in
the apartment for about two months before they moved into a different apartment
complex nearby.
In September 2015, the Appellant sued the Appellees, asserting that their agent
or employee had knowingly made false statements about the safety of the apartment
complex and that such statements had induced the Appellant and Mr. Pinnock to rent
2
The Appellant’s original suit also asserted claims against Richmond
Apartment Holdings, LLC, the company that purchased the apartment complex on
December 1, 2014, and First Communities Management, Inc., the company that took
over the management of the complex at that time. The Appellant dismissed her claims
against these companies in August 2017.
3
an apartment there.3 The Appellees filed a motion for summary judgment, which the
trial court granted after conducting a hearing. This appeal followed.
To prevail at summary judgment under OCGA § 9-11-56, the
moving party must demonstrate that there is no genuine issue of material
fact and that the undisputed facts, viewed in the light most favorable to
the nonmoving party, warrant judgment as a matter of law. A defendant
may do this by showing the court that the documents, affidavits,
depositions and other evidence in the record reveal that there is no
evidence sufficient to create a jury issue on at least one essential element
of plaintiff’s case. If there is no evidence sufficient to create a genuine
issue as to any essential element of plaintiff’s claim, that claim tumbles
like a house of cards. All of the other disputes of fact are rendered
immaterial. A defendant who will not bear the burden of proof at trial
need not affirmatively disprove the nonmoving party’s case; instead, the
burden on the moving party may be discharged by pointing out by
reference to the affidavits, depositions and other documents in the
record that there is an absence of evidence to support the nonmoving
party’s case. If the moving party discharges this burden, the nonmoving
party cannot rest on its pleadings, but rather must point to specific
evidence giving rise to a triable issue.4
3
Although the Appellant’s complaint also asserted claims for negligence and
nuisance, she abandoned those claims against the Appellees in the court below, so
that the only remaining claim was for fraud. Further, Mr. Pinnock voluntarily
dismissed his loss of consortium claim in November 2016.
4
Lau’s Corp. v. Haskins, 261 Ga. 491 (405 SE2d 474) (1991) (citations
omitted).
4
We review the grant of summary judgment de novo.5 With these guiding principles
in mind, we turn now to the Appellant’s specific claims of error.6
1. The Appellant contends that the trial court erred in granting summary
judgment to the Appellees, arguing that disputed factual issues existed for the jury’s
resolution. Regardless whether this is true, the Appellees were entitled to summary
judgment for the following reasons.
Parties claiming fraudulent inducement have two remedies:
rescind the contract as voidable or affirm the contract and sue for
damages. A party that rescinds is not limited by the contract terms. If,
however, the party decides to affirm and sue on the contract, the contract
terms control, and the party is bound by any merger clause or
disclaimer.7
5
See Benton, 280 Ga. at 470.
6
We note that the Appellant’s brief fails to comply with Court of Appeals Rule
25 (c) (1), which requires that “[t]he sequence of arguments in the briefs shall follow
the order of the enumeration of errors, and shall be numbered accordingly.” Even so,
we have considered each of the Appellant’s alleged errors, so she has not been
prejudiced by counsel’s failure.
7
Sudler v. Campbell, 250 Ga. App. 537, 540 (1) (550 SE2d 711) (2001)
(footnotes omitted).
5
“Where a party elects to rescind the contract, he must do so prior to filing the
lawsuit.”8 If, instead, the plaintiff affirms the contract and sues for fraudulent
inducement, he or she must prove five elements in order to establish the fraud: (1) a
false representation made by the defendant; (2) scienter; (3) an intention to induce the
plaintiff to enter into a contract based upon the false representation; (4) justifiable
reliance by the plaintiff; and (5) damage to the plaintiff as a result of the fraud.9 The
plaintiff’s failure to establish even one of these elements entitles the defendant to
summary adjudication.10
(a) Pretermitting whether the Appellant is able to establish the other elements
of her fraud claim, she is unable to demonstrate that she justifiably relied on the
verbal statements at issue, because the written lease contained a “merger” or “entire
agreement” clause. The language of the clause was as follows: “This lease, any
8
Novare Group, Inc. v. Sarif, 290 Ga. 186, 188 (1) (718 SE2d 304) (2011)
(citation omitted).
9
See Scarbrough v. Hallam, 240 Ga. App. 829, 832 (3) (525 SE2d 377) (1999).
10
See id. (Because the plaintiffs failed to present any evidence that the
defendants made allegedly false representations to them with the intent to deceive
them and induce them into entering into the contract at issue, the plaintiffs failed to
prove at least one element of their fraudulent inducement claim. As a result, the trial
court properly granted summary judgment to the defendants on that claim.).
6
referenced addenda, and any addenda separately signed or referring to the lease or
apartment shall constitute the entire agreement between the parties, and no prior
negotiations, representations, or oral statements are binding.”11
It is axiomatic that a merger or entire agreement clause “operates as a
disclaimer, establishing that the written agreement completely and comprehensively
represents all the parties’ agreement. Thus, if the contract contains a merger clause,
a party cannot argue they relied upon representations other than those contained in
the contract.”12
Because the allegedly fraudulent statements in this case were made before the
lease was executed, the merger clause barred the Appellant from relying on the
statements to support her fraudulent inducement claim.13 It necessarily follows that
11
This “merger” or “entire agreement” clause is substantially similar to that
addressed in Ainsworth v. Perreault, 254 Ga. App. 470, 472 (1) (563 SE2d 135)
(2002), which stated as follows: “‘This Agreement constitutes the sole and entire
agreement between the parties hereto and no modification of this Agreement shall be
binding unless signed by all parties to this Agreement. No representation, promise,
or inducement not included in this Agreement shall be binding upon any party
hereto.’”
12
Authentic Architectural Millworks v. SCM Group USA, 262 Ga. App. 826,
828 (2) (586 SE2d 726) (2003) (citations and punctuation omitted).
13
See id.; see also Novare Group, 290 Ga. at 190 (3) (“Where a purchaser
affirms a contract that contains a merger or disclaimer provision, he is estopped from
7
she cannot prevail on her fraud claim as a matter of law, and the trial court did not err
in granting summary judgment to the Appellees.14
(b) The Appellant argues, however, that she is not bound by the merger clause
because she did not sign the lease agreement.15 We disagree.
The Appellant appears to be arguing that she was fraudulently induced to enter
into the lease, while also arguing that she is not bound by the unambiguous terms of
asserting reliance on a representation that is not part of the contract.”) (citation
omitted); Garcia v. Charles Evans BMW, 222 Ga. App. 121, 122 (473 SE2d 588)
(1996) (A plaintiff’s failure to rescind a lease containing a merger clause defeated his
claim of justifiable reliance on the defendant’s verbal representations and was “fatal
to his claim in tort for fraud.”) (citation omitted).
14
See Sudler, 250 Ga. App. at 541 (1) (The appellants were bound by the
statement in a covenant not to sue that, in entering the agreement, they did not “rely
on any inducements, promises, or representations not hereinabove expressly set forth
in writing.” “The presence of this merger clause [was] determinative and preclude[d]
any reliance on oral representations.” Accordingly, the trial court properly awarded
the appellees summary judgment.) (punctuation and footnote omitted); Post
Properties v. Doe, 230 Ga. App. 34, 37-39 (495 SE2d 573) (1997) (physical
precedent only) (Although a tenant claimed that she moved into a ground floor
apartment based on the assurances of the landlord’s agent that ground floor
apartments were safe, the tenant conceded that the lease contained a merger clause
stating that it and any attached addenda constituted “the entire agreement between the
parties and no oral statements shall be binding.” Consequently, the tenant could not
recover on her fraud claim.).
15
As noted above, only the Appellant’s husband signed the lease, as the leasing
agent told the Appellant that she was precluded from being named on or signing the
lease because she had previously filed for bankruptcy.
8
that lease. She has failed, however, to cite to any legal authority that supports this
inconsistent position. While the Appellant relies on Ragland v. Rooker16 in arguing
that it is “well settled that indemnifying and exculpatory provisions in leases in
Georgia are not operative as against nonsignatories,”17 such reliance is misplaced.
First, the “nonsignatories” to which Ragland referred were third parties who were
temporary guests or invitees of the tenant and did not reside full-time on the property,
unlike the Appellant in this case.18 Second, the merger clause at issue in the instant
case is neither an “indemnifying” nor an “exculpatory” provision, i.e., a provision
which would have relieved the Appellees of financial liability for damages resulting
from the negligence of the Appellees or a third party, or from a hazardous condition
16
124 Ga. App. 361 (183 SE2d 579) (1971).
17
Id. at 365 (2). Ragland was overruled in part by the Supreme Court of
Georgia in Country Club Apts. v. Scott, 246 Ga. 443, 444-445 (271 SE2d 841) (1980),
in which the Supreme Court held that, under former Ga. Code Ann. § 20-504,
indemnification and exculpatory clauses in lease contracts violated public policy and
were void and unenforceable per se. See OCGA § 13-8-2 (b) (providing that, under
specified circumstances, contract provisions that require one party to “indemnify,
hold harmless, insure, or defend” the other party from liability for certain damages
are against public policy and, thus, void and unenforceable).
18
See Ragland, 124 Ga. App. at 364-366 (2).
9
on the property.19 Thus, Ragland does not support the Appellant’s attempt to rely
upon the lease while simultaneously arguing that she is not bound by it.20
Moreover, even though the Appellant did not personally sign the lease, her
husband signed it for the sole purpose of securing a residence for himself, the
Appellant, and their family.21 The Appellant then ratified his signing of the lease by
moving into the apartment and taking possession of it, which she would not have
19
See, e.g., id. at 366-368 (3); see also Those Certain Underwriters at Lloyds,
London v. DTI Logistics, 300 Ga. App. 715, 718 (1) (686 SE2d 333) (2009) (“Black’s
[Law Dictionary] defines ‘indemnify’ as ‘to reimburse (another) for a loss suffered
because of a third party’s or one’s own act or default[.]’”) (citation omitted); Moclaire
v. State, 215 Ga. App. 360 (1) (451 SE2d 68) (1994) (“Black’s Law Dictionary
defines exculpatory as clearing or tending to clear from alleged fault or guilt;
excusing.”) (citation omitted).
20
See generally LaSonde v. CitiFinancial Mtg. Co., 273 Ga. App. 113, 115 (1)
(614 SE2d 224) (2005) (“[A] party cannot have it both ways; it cannot rely on the
contract when it works to its advantage and then repute it when it works to its
disadvantage.”) (punctuation and footnote omitted).
21
See generally Lankford v. Orkin Exterminating Co., 266 Ga. App. 228, 229
(1) (597 SE2d 470) (2004) (“The general law provides that a beneficiary need not be
specifically named in a contract, so long as the contract shows that it was intended for
the third[ ]party’s benefit. Third-party beneficiaries under the contract are bound by
any valid and enforceable provisions of the contract in seeking to enforce their
claims.”) (citations and punctuation omitted).
10
been authorized to do if Mr. Pinnock had not executed the lease.22 And it is
undisputed that the Appellant’s right to live in the apartment resulted exclusively
from and was dependent upon her compliance with the terms of the lease. In her
deposition, she specifically admitted to this, as follows:
Q. Now, even though you did not sign the lease agreement, did you
consider yourself a resident?
A. Yes.
Q. Did you . . . believe that you needed to follow all the rules and
regulations of the complex?
A. Yes.
Q. And that’s because you were a resident?
A. Yes.
In fact, the Appellant and her family continued to live in the apartment for at
least two months after she was shot, i.e., after she knew or should have known that
the apartment complex was not as safe as she claimed the agent misled her to believe.
“Ordinarily[,] one who knowingly accepts and retains any benefit under a contract
which [s]he has been induced to make by fraud, after [s]he has knowledge of such
fraud, affirms the validity of the contract and will not be heard thereafter to repudiate
22
See id. (By accepting the benefits of the contract and making payments under
the contract, the appellants ratified the contract, even if the signature was irregular.).
11
it.”23 Finally, even if the Appellant had not ratified Mr. Pinnock’s execution of the
lease before she was shot, she clearly did so when she sued the Appellees, claiming
that their agent fraudulently induced her to enter into the lease.24
Consequently, we conclude that the Appellant was bound by the written terms
of the lease, including the merger clause, even though she did not personally sign the
lease.25
2. Given our ruling in Division 1, supra, the Appellant’s remaining enumerated
errors are moot.
Judgment affirmed. Barnes, P. J., and McMillian, J., concur in judgment only.*
* THIS OPINION IS PHYSICAL PRECEDENT ONLY. COURT OF APPEALS
RULE 33.2 (A).
23
G. Mansour, Inc. v. Mansour’s, Inc., 233 Ga. App. 7, 9 (1) (503 SE2d 304)
(1998) (citations and punctuation omitted).
24
See Lankford, 266 Ga. App. at 229-230 (1); see also OCGA § 10-6-1 (“The
relation of principal and agent arises whenever one person, expressly or by
implication, authorizes another to act for him or subsequently ratifies the acts of
another in his behalf.”).
25
See generally LaSonde, 273 Ga. App. at 115 (1) (Because the appellant’s
claims arose from and were dependent upon the existence of a contract containing an
arbitration clause, she was estopped from avoiding arbitration. “To find otherwise
would permit [the appellant] to sue for breach of the [contract] without subjecting
herself to all of the [contract’s] provisions.”).
12
A18A0994. PINNOCK v. KINGS CARLYLE CLUB
APARTMENTS, LLC et al.
MCMILLIAN, Judge, concurring in judgment only.
While I concur with the result reached by the majority in this case, I do not
agree with all that is said. Accordingly, I concur in the judgment only, and as a result,
the majority’s opinion is not binding precedent. See Court of Appeals Rule 33.2 (a)
(1).