110 Hampton Point, LLC v. Thurman Ross, III

• Court: Court of Appeals of Georgia
• Decided: June 21, 2023
• Docket: A23A0471
• Status: Published

Opinion

FIFTH DIVISION MCFADDEN, P. J., BROWN and MARKLE, 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. https://www.gaappeals.us/rules

June 21, 2023

In the Court of Appeals of Georgia A23A0471. 110 HAMPTON POINT, LLC v. ROSS.

MCFADDEN, Presiding Judge.

110 Hampton Point, LLC purchased a house from Thurman Ross, III. Eleven

months later, Hampton Point sued Ross for fraud, breach of contract, and negligent

misrepresentation, alleging that Ross had failed to disclose and had actively

concealed defects in the house. Ross moved to dismiss the complaint under OCGA

§ 9-11-12 (b) (6) for failure to state a claim. The trial court granted the motion and

Hampton Point filed this appeal. We hold that at this stage of the proceedings, “it

cannot be said that the allegations of the complaint disclose with certainty that

[Hampton Point] would not be entitled to relief under any state of provable facts

asserted in support.” Austin v. Clark, 294 Ga. 773, 775 (755 SE2d 796) (2014)

(emphasis in original). So we reverse. [T]he well-established test that must be satisfied before a motion to dismiss can be granted is a demanding one: A motion to dismiss for failure to state a claim upon which relief may be granted should not be sustained unless (1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought.

Norman v. Xytex Corp., 310 Ga. 127, 130-131 (2) (848 SE2d 835) (2020) (citation,

punctuation, and footnote omitted). We review de novo the trial court’s order granting

a motion to dismiss for failure to state a claim. Babalola v. HSBC Bank, USA, 324 Ga.

App. 750, 750 (751 SE2d 545) (2013).”[W]e take the allegations in the complaint as

true and resolve all doubts in favor of [the plaintiff].” Norman, 310 Ga. at 128 (1). In

our de novo review, we may consider “exhibits attached to and incorporated into the

complaint and answer.” Love v. Fulton County Bd. of Tax Assessors, 311 Ga. 682,

683 (859 SE2d 33) (2021).

So viewed, Hampton Point’s complaint alleged and the exhibits attached to

Ross’s answer show that Hampton Point and Ross entered a purchase and sale

2 agreement for Hampton Point to purchase a residence from Ross.1 The agreement

granted Hampton Point the right “to inspect, examine, test, appraise and survey” the

property. It provided that the property was “being sold subject to a [d]ue [d]iligence

[p]eriod of 14 days” from the date the agreement became binding, and that during the

due diligence period, Hampton Point could decide whether or not to proceed with the

purchase.

Hampton Point had the property inspected and proceeded with the sale, which

closed on March 8, 2021.

After the closing, “destructive testing” of the stucco exterior of the house

revealed prior stucco repairs. The testing showed that the original tabby stucco had

been removed for the purpose of installing new flashing tape around all of the house’s

windows and that new stucco had been installed over the tape to conceal it. Infrared

thermography imaging performed after the closing showed active water intrusion

inside the second- and third-floor drywall ceilings. Hampton Point also discovered

1 We observe that the purchase and sale agreement and the seller’s property disclosure statement name as the buyer “Mary Hart Wilheit as trustee of Mary Hart Wilheit Trust.” Neither party explains the discrepancy between the listed name of the buyer and the plaintiff’s name. But in its complaint, Hampton Point alleged that it purchased the residence from Ross, and in his answer, Ross admitted this allegation. And Hampton Point does not argue that the documents do not apply to it.

3 that the waterproof membrane in the roof had failed, allowing water to intrude into

the roof deck. The issues with the roof were so extensive that the entire roof had to

be removed and replaced. Hampton Point discovered that canvas canopy fasteners

had not been properly sealed; that the house’s windows had not been correctly

installed; and that wood trim throughout the house had been exposed to water

intrusion.

Because of inadequate waterproofing measures, water had intruded through the

brick wythe wall on the front and sides of the house, resulting in water damage and

flooding in the garage. The water intrusion and high moisture levels in the house

caused the presence of a dangerous level of Stachybotrys chartarum (or black mold),

and decayed the house’s rim joists and load-bearing beams.

Hampton Point discovered evidence that, in the month before the parties

entered the sales contract, Ross had replaced water-damaged drywall, wood, and

caulking in order to conceal evidence of past and ongoing water intrusion. He also

had the stucco replaced to conceal water damage. Ross actively concealed the defects

for the purpose of inducing Hampton Point to purchase the property. He failed to

make repairs that he contractually had agreed to make.

4 The trial court granted Ross’s motion to dismiss. The court ruled that the

inspection report commissioned by Hampton Point put Hampton Point on notice of

the defects in the house. So, the court concluded, Hampton Point did not justifiably

rely on Ross’s representations, active concealment of the house’s defects, or

omissions and it failed to state claims for fraud and negligent misrepresentation. The

court also ruled that Hampton Point had not alleged facts supporting a claim for

breach of contract.

We hold that the trial court erred in granting the motion to dismiss. The

inspection report does recommend further evaluation of the stucco exterior and the

roof. But it says little about water intrusion, at least explicitly. In the section about

“garage ceilings,” the report states that “[t]here are a dozen or so stain/discolored

areas on garage level ceilings. All stains tested dry/normal on the moisture except for

one stain that tested raised for moisture content at middle garage vehicle door area

over window. Recommend a further evaluation by a licensed contractor.” (Emphasis

in original.)

In the section of the report concerning interior windows, the inspector wrote,

“Jack & Jill middle bedroom windows stick on the sides and had some moisture

stains. Tested dry normal with a moisture meter.” And the report says nothing about

5 the brick wythe wall on the front and sides of the house or the improperly sealed

canvas canopy fasteners.

We cannot definitively say at this stage of the proceedings that the inspection

report placed Hampton Point on notice so that, as a matter of law, it did not act with

reasonable diligence when it proceeded with the closing. For example, there

conceivably could be evidence that Ross’s efforts to conceal the house’s defects

would have prevented their discovery even upon further inspection. See Bickerstaff

Real Estate Mgmt. v. Hanners, 292 Ga. App. 554, 559 (2) (665 SE2d 705) (2008)

(plaintiff can prove justifiable reliance by showing that it could not have discovered

defect in the exercise of due diligence in the purchase of the property). There could

be evidence that the type of further inspection recommended in the inspection report

would not have been sufficiently in depth to have discovered the defects. “This is

factual evidence which may or may not be developed during discovery and can be

considered on a subsequent motion for summary judgment.” Austin, 294 Ga. at 775.

See also Brown v. Techdata Corp., 238 Ga. 622, 625 (234 SE2d 787) (1977)

(“Questions of fraud . . . and whether the plaintiff could have protected himself by the

exercise of proper diligence are, except in plain and indisputable cases, questions for

the jury.”).

6 “At this time, it cannot be said that the allegations of the complaint disclose

with certainty that [Hampton Point] would not be entitled to relief under any state of

provable facts asserted in support.” Austin, 294 Ga. at 775.

Judgment reversed. Brown and Markle, JJ., concur.