Garcia v. Unique Realty & Property Management Co.

424 S.E.2d 14, 205 Ga. App. 876, 1992 Ga. App. LEXIS 1519

• Court: Court of Appeals of Georgia
• Decided: September 23, 1992
• Docket: A92A0768
• Status: Published

Opinions

Sognier, Chief Judge.

Darlena Garcia brought suit against Unique Realty & Property Management Company and its agent Sandra Robertson to recover damages for alleged fraud and breach of fiduciary duty arising from the performance of a residential real estate listing contract. Garcia appeals from the entry of summary judgment for the defendants.

On March 26, 1988, appellant entered into an exclusive listing contract with Unique Realty as broker and Robertson as agent for the sale of a residence owned by appellant. The listing contract provided that appellees would “use [their] best efforts to procure a person ready, willing, and able to purchase the Property at the price and on the terms specified herein” (although no terms and conditions other than the price were set forth in the listing contract). Appellant contends that in contract negotiations the parties also agreed that appellees would present offers only from “pre-qualified potential purchasers” whose income and credit history had been evaluated to determine whether the prospective buyer could obtain a mortgage and make the necessary payments.

After the listing contract was extended several times, Robertson presented an offer that appellant accepted. This sales contract provided that the buyers would assume appellant’s existing mortgage and make a down payment of $6,500 and that appellant would finance the balance of the purchase price, with $5,000 due appellant 90 days after closing and the balance of $25,000 due one year later. Before she accepted the offer, appellant discussed the buyers’ financial status with Robertson, who informed appellant that she believed the buyers’ annual income was sufficient to support the payments and that their ability to make a down payment in the amount contemplated by the contract indicated their financial strength. Robertson did explain to appellant that owner financing was necessary because the buyers had lived in Atlanta less than a year and had just started a new business, and that because of these short-term circumstances they likely would not qualify for a new mortgage. The parties disagree whether Robertson assured appellant that if the buyers defaulted on the first mortgage appellant would be notified.

The buyers paid the requisite down payment at closing but were unable to pay the $5,000 installment on time. After negotiations, appellant agreed to allow them an additional 30 days, which they met. However, when appellant contacted the buyers a month before the final payment was due, they informed her they would not be able to make that payment. Upon investigation, she learned that they were in default on the first mortgage and that foreclosure was scheduled to occur in a few weeks. Appellant attended the foreclosure sale with the intention of buying the property but was unable to locate the foreclosure attorney before the sale occurred.

1. In her complaint appellant first alleged that appellees negligently or wilfully misrepresented the financial status and creditworthiness of the buyers and that she relied on their representations to her detriment in deciding to accept the buyers’ offer and extend owner financing. The essential elements of an action for fraud are as follows: “(1) the defendant made the representation; (2) he knew the representation was false at the time; (3) he made it with the intention and purpose of deceiving the plaintiff; (4) the plaintiff reasonably relied upon the representation; (5) the plaintiff sustained the alleged loss and damage as a proximate result of the defendant’s representation.” Morrison v. Hayes, 176 Ga. App. 128, 130 (335 SE2d 596) (1985).

We hold the trial court properly granted summary judgment to appellees on the fraud claim because appellees pierced appellant’s allegations on the essential element of knowingly misrepresenting or failing to disclose the buyers’ financial status and ability to perform the contract. Contrary to appellant’s assertions, appellees did deliver what the listing contract required — a buyer “ready, willing, and able to purchase” the subject property — as the buyers appeared at closing and paid the down payment, executed the documents necessary to assume the first mortgage and create the second, and purchased the property. See Stewart v. Sisk, 29 Ga. App. 17 (1) (114 SE 71) (1922); compare Morrison v. Hayes, supra at 129-130 (2). The representations appellant challenges concerned appellees’ assessment of the buyers’ ability to perform the further requirements of the sales contract after closing. These statements constituted an expression of opinion, which cannot form the basis for a fraud claim. Buckner v. Mallett, 245 Ga. 245-246 (1) (264 SE2d 182) (1980). Appellees likewise cannot be held liable for their failure to foretell accurately the buyers’ future behavior after the closing because there is no evidence appellees knew of or could have predicted in advance any subsequent change in the buyers’ financial condition, the buyers’ later default, or even whether the buyers would make the future payments regardless of their financial ability. See Cobb v. Kennon Realty Svcs., 191 Ga. App. 740-741, 742 (3) (382 SE2d 697) (1989).

2. Appellant also alleged that appellees breached their fiduciary duty owed to appellant. Appellees, as agents, were obligated to exercise toward appellant diligence, loyalty, and absolute good faith, see Clyde Chester Realty Co. v. Stansell, 151 Ga. App. 357, 359 (1) (259 SE2d 639) (1979), and any failure of appellees, as agent, to disclose what should be disclosed to appellant, the principal, “ ‘is as much a fraud in law as an actual affirmative false representation. [Cit.]’ [Cit.]” Sutlive v. Hackney, 164 Ga. App. 740, 742 (297 SE2d 515) (1982). Here, however, there is no evidence appellees knew the buyers subsequently would experience financial difficulties or default on their obligations. Thus, appellees’ lack of knowledge of and inability to predict the buyers’ future performance also precludes appellant’s claim for breach of fiduciary duty, for appellees cannot be held liable for failing to disclose what they did not know and could not have foretold. Compare Scott v. Lumpkin, 153 Ga. App. 17-19 (264 SE2d 514) (1980). Appellees’ duty of diligence and good faith cannot be held to include an obligation to predict accurately or guaranty the future financial condition or performance of a third party. Accordingly, the trial court correctly granted summary judgment to appellees on the claim for breach of fiduciary duty.

3. To the extent that Count 3 of appellant’s complaint can be construed to state a claim for breach of a contractual obligation to investigate the buyers’ financial condition and creditworthiness, appellees likewise are entitled to summary judgment on that claim. The listing contract between the parties is silent as to any such obligation on the part of appellees. This contract being complete on its face, appellant’s parol evidence of additional terms is not admissible to add to or vary from the written contract. OCGA § 13-2-2 (1); see American Cyanamid Co. v. Ring, 248 Ga. 673, 674 (286 SE2d 1) (1982). “All previous negotiations are merged in the subsequent written contract, and an additional obligation can not be grafted thereon by parol testimony.” (Citations and punctuation omitted.) Simmons v. Wooten, 241 Ga. 518, 519 (246 SE2d 639) (1978). Thus, appellees have pierced appellant’s allegations of breach of contract.

Judgment affirmed.

Birdsong, P. J., Carley, P. J., Andrews and Johnson, JJ., concur. McMurray, P. J., Pope, Beasley and Cooper, JJ., dissent.