327 Ga. App. 213
Ga. Ct. App.2014Background
- In August 2011 Johnson bought a used BMW from Krayev/Elite Motor Sports, paid $10,000 down and signed a contract with a merger clause. Krayev gave a July 2011 emissions report and promised to deliver the title next day.
- Shortly after purchase the BMW failed an emissions test, suffered major transmission and catalytic-converter problems, and the July emissions report was shown at trial to be fraudulent (surrogate VIN used).
- Johnson repeatedly offered to return the car in exchange for a refund; Krayev refused to accept return or refund. Johnson made one monthly payment, then stopped paying and ultimately filed suit alleging fraud, rescission, warranties, FBPA, and other claims; some claims were later dismissed or resulted in zero damages.
- Jury found Johnson had validly rescinded the contract for fraud, awarded $10,000 actual and $12,500 punitive damages, and found Krayev acted in bad faith so attorney fees were warranted. The trial court later awarded $63,702.53 in attorney fees after a separate evidentiary hearing.
- Krayev appealed, arguing the trial court should have directed verdicts on (1) rescission because Johnson affirmed the contract and waived rescission, (2) attorney-fee entitlement/amount because Johnson presented no fee evidence to the jury, and (3) that fees were not properly apportioned to the successful rescission claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Johnson waived rescission / election to affirm the contract | Johnson promptly offered to return car in exchange for refund; seller refused, so offer-to-restore satisfied rescission statute | Johnson’s continued use, repairs, and a monthly payment constituted affirmation and waiver of rescission; merger clause bars fraud reliance | Jury properly resolved; directed verdict denied. Offer-to-restore evidence supported rescission and waiver was for jury to decide |
| Whether failure to plead rescission earlier waived claim | Johnson’s pro se magistrate filing sufficiently alleged a failed transaction/refund request; later amended to plead rescission after counsel | Rescission was not timely pleaded and therefore waived | Not waived: original filing construed as lay attempt to rescind; amendment timely after counsel retained |
| Whether the jury (not the court) had to determine amount of attorney fees | Johnson: bifurcated procedure acceptable; parties agreed (during trial) court would determine amount after jury found entitlement | Krayev: jury had to determine amount and Johnson offered no fee evidence to jury | Trial court did not abuse discretion; incomplete record presumed trial-court finding that parties agreed court would decide amount; issue waived on appeal |
| Whether attorney fees award improperly included time for unsuccessful/other claims | Johnson: trial court apportioned fees, excluded time solely for FBPA/dismissed claims, and found remaining claims were inextricably intertwined so allocation unnecessary | Krayev: fees must be apportioned to successful claim (rescission); Johnson failed to segregate time | Affirmed. Trial court appropriately reduced requested fees and reasonably found claims interwoven so further segregation was not required |
Key Cases Cited
- Moore v. Stewart, 315 Ga. App. 388 (appellate standard: view evidence for prevailing party)
- Lee v. Swain, 291 Ga. 799 (directed verdict standard and construing evidence for prevailing party)
- Novare Group v. Sarif, 290 Ga. 186 (merger clause bars reliance on out-of-contract representations)
- Mitchell v. Backus Cadillac-Pontiac, 274 Ga. App. 330 (rescission: offer to restore not required when seller refuses; jury question on timeliness)
- Campbell v. Beak, 256 Ga. App. 493 (attorney-fee apportionment exception where claims are too intertwined to separate)
- Fowler’s Holdings, LLLP v. CLP Family Investments, L.P., 318 Ga. App. 73 (fees must be apportioned to prevailing claims absent intertwined claims)