Garris v. Smith's G&G, LLC
| Docket Number: | 2005-CA-01389-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 10-31-2006 Opinion Author: MYERS, P.J. Holding: Reversed and Remanded |
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| Additional Case Information: |
Topic: Contract - Fraudulent misrepresentation - Damages - Actual value of property Judge(s) Concurring: KING, C.J., LEE, P.J., SOUTHWICK, IRVING, CHANDLER, GRIFFIS, BARNES, ISHEE AND ROBERTS, JJ. Procedural History: Jury Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 04-21-2005 Appealed from: TATE COUNTY CIRCUIT COURT Judge: Andrew C. Baker Disposition: CIRCUIT COURT SET ASIDE JURY VERDICT ON APPELLANT’S COUNTERCLAIM, UPHELD APPELLEE’S VERDICT Case Number: CV-2004-65-B/T |
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| Party Name: | Attorney Name: | |||
| Appellant: | HAROLD F. GARRIS |
GERALD W. CHATHAM, SR. |
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| Appellee: | SMITH’S G&G, LLC | CHRISTIAN T. GOELDNER |
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Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Fraudulent misrepresentation - Damages - Actual value of property |
| Summary of the Facts: | Harold Garris and Smith’s G & G, LLC negotiated the sale and purchase of a business named “Donna’s Country Kitchen.” The business, consisting of commercial real estate and a country store, was purchased for a total price of $415,000, including a cash down payment of $85,000. Smith’s gave a first mortgage on the real property to Norman Smith and borrowed $100,000 from an investor, George Smith, executing a second mortgage on the property for the debt. Smith’s additional financing was in the form of a promissory note executed to Garris in the amount of $185,790.51 secured by a financing statement on the inventory and equipment. Less than six months after the closing date, Smith’s filed a complaint against Garris alleging several claims, including the claim that Garris had fraudulently misrepresented the income generated from the business in an amount of $30,000 per month. Upon the filing of the complaint, Smith’s discontinued making payments under the promissory note held by Garris. Garris then filed a counterclaim against Smith’s for the past due payments. The jury then found for both Smith’s on the fraudulent misrepresentation claim in the amount of $85,000, and for Garris on his counterclaim in the amount of $53,080 for past due payments. Smith’s award represented the total of her cash down payment for the property. Garris’ claimed amount represented the monthly amount due on the note for thirteen months, along with interest. A hearing was later held on the issue of punitive damages and the issue was submitted to the same jury. The jury did not award punitive damages. The trial court issued an order granting Smith’s motion for JNOV and setting aside the judgment for Garris. Garris appeals. |
| Summary of Opinion Analysis: | Garris argues that the judge erred when he granted Smith’s motion for JNOV, thereby taking away the damages the jury had previously awarded Garris on his counterclaim for non-payment under the contract. The trial court vacated Garris’ counterclaim judgment and the promissory note, reasoning that the verdict was inconsistent with the jury’s finding that Garris falsely misrepresented material facts during the negotiations of the contract. The law is clearly established that the jury’s finding of fraudulent misrepresentation allows Smith’s to make a choice to either rescind the contract and be restored to its’ former position before the store was purchased or to elect to keep the business and bring an action for damages. When rescission is impossible, such as in this situation where there exists an intervening lien holder that prohibits a rescission of the contract, the court is powerless to do anything except to accept the situation created by the fraud and award monetary damages upon the tort committed thereby. If the lower court’s judgment were allowed to stand, Smith’s would be able to keep the property at issue, retain the award of damages, and forgo further payments on the promissory note held by Garris. This remedy would be unjust. In a case such as this, a rescission of the contract would not be an appropriate remedy because there are intervening lien holders which would complicate the return of the store to Garris. Furthermore, Smith’s did not elect this option of rescission. Smith’s only remedy is to seek monetary damages incurred due to the fraud in the inducement of the contract. While it is true that the jury is the ultimate fact-finder in regard to valuation of damages, in this case, the jury was presented with no evidence as to the actual losses incurred by Smith’s due to Garris’ fraudulent misrepresentations. The jury awarded Garris an amount representative of the amount of the cash down payment, but nowhere in the record is there an indication supportive of this figure. In cases where during the negotiations there has been a material misrepresentation of a collateral characteristic of the property, such as misrepresentation concerning past rents or income from property, the proper measure of damages is the difference between the actual value of the property and the contract price. Because the jury was not presented evidence concerning the actual value of the property, the jury award of $85,000 to Smith’s is vacated and this portion of the case is remanded for a new trial so that a jury may consider evidence concerning the damages and award accordingly. |
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