Atlanta Partners Realty, LLC v. Wohlgemuth

365 Ga.App. 386

878 S.E.2d 615

ATLANTA PARTNERS REALTY, LLC et al.

v.WOHLGEMUTH.

Dennis et al.

v.Wohlgemuth.

A22A0634, A22A0635

Court of Appeals of Georgia.

September 20, 2022

Leigh Martin Wilco, Weisman PC, Atlanta, for Appellant.

Gary Douglas Hooper, Hooper Law Partners, Andrea Edwards Martin, Kennesaw, for Appellee.

Markle, Judge.

In 2018, Stefanie Wohlgemuth purchased a home from Rodney and Bernadette Dennis. The following year, Wohlgemuth discovered significant structural issues with the home and learned the cost of repairs would exceed the purchase price. Wohlgemuth sought to rescind the purchase and, when that was unsuccessful, she filed suit against the Dennises, their real estate agent, Kathy Coots, and the company with which Coots was affiliated, Atlanta Partners Realty, LLC d/b/a Keller Williams Realty ("APR").¹ In her complaint, she sought rescission of the purchase agreement and alleged breach of contract, fraud, negligence, and violations of the Brokerage Relationships in Real Estate Transactions Act, OCGA § 10-6A-1 et seq. ("BRRETA"), arising from the failure to disclose the structural defects.² The Dennises and the Coots defendants filed motions for summary judgment, both of which the trial court denied. The trial court issued a certificate of immediate review, and we granted the interlocutory appeal. The Dennises and the Coots defendants now appeal, arguing that the trial court erred by denying their motions for summary judgment. For the reasons that follow, we reverse.

Summary judgment is warranted when there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. See D'Elia v. Phillips Edison & Co. , 354 Ga. App. 696, 697, 839 S.E.2d 721 (2020). We review de novo the denial of a motion for summary judgment, and we construe the evidence in the light most favorable to the nonmovant. See id.

So viewed, the record shows that in early 2018, the Dennises decided to sell their home in Gwinnett County, and they contacted Kathy Coots, an independent realtor affiliated with APR, to act as their real estate agent. When Coots met with the Dennises at their home to discuss the potential sale, she noticed a slope in the kitchen floor. She recommended that the Dennises obtain a pre-listing inspection, which they did. The inspector noted water damage under the sink cabinet, moisture and mold in the crawl space, and broken floor joists under the kitchen, leaving the area without sufficient structural support. The inspector recommended repairs be made, including the installation of additional support beams, by a licensed structural and foundation contractor.

Coots gave the Dennises the names of some contractors and mold remediators. However, the Dennises hired a handyman affiliated with APR to complete the repairs, and the handyman added a support beam and some concrete pillars to address the structural issues. Coots never asked about the repairs and did not monitor the work or verify the repairs were done. The Dennises believed the handyman fixed the issues and, after the work was finished, they met with Coots again and signed the listing agreement to put the house on the market.

Wohlgemuth made an offer above the asking price to purchase the house and signed a Purchase and Sale Agreement ("the Agreement"). Per the terms of the Agreement, (1) the Coots defendants did not owe Wohlgemuth any duty except as set forth in BRRETA; (2) neither party had relied on any representations by the Coots defendants; (3) Coots had no obligation to alert Wohlgemuth to any issue with the property if it "could have been revealed through ... inspection by a professional home inspector or construction expert"; and (4) "[n]o representation, promise or inducement not included in this Agreement shall be binding upon any party[.]" The Agreement also included a clause stating that the Dennises’ representations about the property would survive the closing. The parties added a stipulation that the seller's disclosures were not attached to the Agreement, but that they would be provided, and that if Wohlgemuth found the property to be unacceptable after receiving the seller's disclosures, she could terminate the sale.

Shortly thereafter, the Dennises completed the required seller's disclosures, which expressly advised Wohlgemuth that "[i]f an inspection of the Property reveals problems or areas of concern that would cause a reasonable Buyer to investigate further, Buyer should investigate further." In these disclosures, the Dennises noted that they had repaired water damage along the front walls of the house; added structural reinforcement to support a weakened beam in the crawl space; and replaced the kitchen subfloor due to a water leak inside the wall behind the kitchen sink.³ They also marked "no" when asked if there had been any work done without a required building permit and whether there were any building code violations. After receiving the seller's disclosures, Wohlgemuth did not ask the Dennises or Coots for any additional information about the structural reinforcement, the water issues, or the repairs.

Wohlgemuth hired an inspector to conduct a home inspection prior to closing, but she did not give the inspector a copy of the seller's disclosures, and she was not present during the inspection. When the inspector accessed the crawl space, he noted water staining on the frames and main beams. Although he did not observe any areas with inadequate structural support, he was unable to access the entire crawl space, including the area under the kitchen. In his report, the inspector graded the property as "fair," and noted "cracking and settling" around the foundation and that additional structural pier supports had been installed. He advised "consult with seller about nature of this, monitor and repair as needed." The report also contained a photo of the new structural supports in the crawl space.

Wohlgemuth reviewed the report prior to closing, but never discussed the report with the inspector, nor did she contact him with any questions about his findings. Additionally, Wohlgemuth never asked the Dennises for additional information about the structural supports, despite the inspector's recommendation to do so. Instead, Wohlgemuth informed the Dennises that some minor repairs needed to be completed, and they agreed to lower the sale price to account for those costs.

About eight months after the closing, Wohlgemuth discovered that a massive water leak had caused significant damage and rotting under the kitchen sink. She also discovered that there were major structural issues in the crawl space and subfloor that had not been repaired properly, leading to catastrophic structural damage to the house. Wohlgemuth retained a construction company to review the damage and necessary repairs, and it determined that the previous repairs were defective and did not comply with building codes. The construction company reported that the damage in the crawl space was "clearly evident," and it was visually obvious that the prior repairs had not been done properly.⁴ According to its estimate, the cost to repair the home exceeded the purchase price.

After Wohlgemuth unsuccessfully sought to rescind the home purchase, she filed the instant suit, alleging rescission and breach of contract against the Dennises; and fraud, fraud in the inducement, constructive fraud, negligence, gross negligence, and violations of BRRETA as to the Dennises and the Coots defendants. In her complaint, Wohlgemuth alleged that the Dennises and Coots concealed and failed to disclose the extent of the structural damage; misrepresented the repair work that was performed without adherence to building codes; omitted information related to the damage and repair work; and failed to disclose the pre-listing inspection report. She also sought attorney fees under OCGA § 13-6-11.

Both the Dennises and the Coots defendants filed motions for summary judgment. Following a hearing, the trial court denied the motions, but issued a certificate of immediate review. We granted the Coots defendants’ interlocutory appeal, and both the Coots defendants and the Dennises now appeal.

To begin, we note that,

[g]enerally speaking, caveat emptor ("Let the buyer beware") is a common-law doctrine which serves as the general rule with regard to the purchase of realty. The long-standing recognition of the existence of an exception to the application of caveat emptor where the seller's fraud induced a purchaser of realty to buy the land makes caveat emptor unavailable as a defense to a seller, whether a builder or non-builder, when the seller engages in fraud, whether it be "active fraud" or "passive concealment fraud." Thus, where the seller of a house knows the house has serious defects and fails to disclose the defects to the buyer who is unaware of the defects and could not have discovered them in the exercise of due diligence, the suppression of the facts constitutes fraud to which caveat emptor is not a viable defense.

(Citation and punctuation omitted.) Reininger v. O'Neill , 316 Ga. App. 477, 480, 729 S.E.2d 587 (2012) ; Southern v. Floyd , 89 Ga. App. 602 (1), 80 S.E.2d 490 (1954). With this framework in mind, we turn to the issues on appeal.⁵

Case No. A22A0634

In this appeal, the Coots defendants argue that the trial court erred by denying their motion for summary judgment because the claims for fraud, negligence, and BRRETA violations fail as a matter of law, and that, in the absence of a viable cause of action, the claim for attorney fees fails as well. We consider each of these causes of action in turn and agree that these defendants were entitled to summary judgment.

1. Fraud claims.

The Coots defendants first argue that the fraud, constructive fraud, and fraud in the inducement claims fail because they did not have actual knowledge of any defect beyond what was identified in the disclosure; they did not make any false statements or omissions; and Wohlgemuth...