Appellant-defendant (the “Seller”) entered into a valid contract to sell her ice cream store franchise to Appellees-plaintiffs (the “Purchasers”). Transfer of the franchise was never consummated, however, and the Purchasers brought suit against the Seller for rescission, fraud, and termination of the contract. Following a jury trial, a verdict was returned in favor of the Purchasers on both their rescission and fraud claims.
In reviewing the denial of a . . . motion for a [judgment notwithstanding the verdict] or motion for new trial, this Court must affirm if there is any evidence to support the jury’s verdict, and in making this determination, we must construe the evidence in the light most favorable to the prevailing party.
(Citation and punctuation omitted.) Ferman v. Bailey,
Examining the record in the light most favorable to the Purchasers, the evidence shows that the Seller was a party to a franchise agreement with Bruster’s Ice Cream, Inc. (“Bruster’s”), pursuant to which she operated a Bruster’s ice cream store in Duluth, Georgia. The Seller met the Purchasers in late 2006, at which time the parties first discussed the Purchasers’ interest in acquiring the Bruster’s franchise owned and operated by the Seller. In February 2007, the Purchasers submitted to Bruster’s an application for the right to operate a franchise store. The Purchasers thereafter attended a Bruster’s franchising seminar, as well as multiple meetings with Bruster’s vice president of sales. At a meeting on May 26, 2007, the Purchasers signed a franchise agreement (although it was not signed by Bruster’s) and paid Bruster’s a franchise transfer and training fee.
The parties eventually entered into an amended stock purchase agreement
The closing of the transactions contemplated hereby (the “Closing”) shall take place ... on the earlier of July 31, 2007 (the “Closing Date”), provided that the closing is conditioned upon the obtaining of (i) Landlord’s Consent, (ii) Franchisor’s Consent.
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Consents. The execution, delivery and performance by the Seller of the Seller Agreements, [6 ] and the consummation of the transactions contemplated herein do not require the consent, approval or action of, or any filing with or notice to, any government or other person, except (1) the consent and approval of Bruster’s, a Pennsylvania limited partnership, regarding the Franchise Agreement (“Franchisor’s Consent”)-, and (2) the consent and approval of [the landlord], regarding the [l]ease . . . [of] . . . the [p]rem-ises ....
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Termination for Certain Reasons. Notwithstanding anything in this Agreement to the contrary, this Agreement may be terminated prior to the Closing Date as follows: (a) by either party, if the Franchisor’s Consent cannot be obtained....
The Purchaser knew that as of June 13, 2007, Bruster’s had not yet consented to the transfer or otherwise approved them as franchisees; nevertheless, they proceeded to execute the Agreement and pay the Seller $230,000.
The very next day, June 14, 2007, the Purchasers took possession of the ice cream store and operated it continuously until December 1, 2007.
The Purchasers subsequently brought suit against the Seller for rescission, fraud, and termination of the contract. The parties’ claims were tried before a jury, which returned a verdict in favor of the Purchasers for both their fraud and rescission claims and awarded the Purchasers general damages ($265,172.37), attorney fees and costs ($86,057.06), and punitive damages ($200,000). The trial court entered a judgment upon the jury’s verdict. Thereafter, the Seller filed a motion for judgment notwithstanding the verdict, or in the alternative, for a new trial. Finding that there was insufficient evidence to support the Purchasers’ fraud claim, the trial court entered an order purporting to grant the Seller’s motion for new trial as to the fraud claim.
On appeal, the Seller asserts that the trial court erred by denying her motion for judgment notwithstanding the verdict on the Purchasers’ rescission claim because such claim was improper in this case.
“A party may rescind a contract without the consent of the
In setting forth a rescission claim for nonperformance in this case, the Purchasers premised their claim upon the failure of a contingency that acted as a condition precedent in the Purchase Agreement. See OCGA § 13-3-4 (“A condition precedent must be performed before the contract becomes absolute and obligatory upon the other party.”). Notably, the Purchase Agreement expressly provided that the Seller’s obligations to execute, deliver, and perform under the Agreement were conditioned upon the consent and approval of Bruster’s, as the franchisor.
“Even though the failure to meet such a contingency is not a condition precedent to the existence of a valid contract, it is reasonable to hold that the obtaining of [Bruster’s consent] was a condition precedent to the duty of both parties to render their promised performances.” (Citation and punctuation omitted.) Desmear Systems v. Vines,
Thus, the trial evidence did not support the remedy of rescission for nonperformance under OCGA § 13-4-62.
Judgment reversed with direction.
Notes
The Purchasers’ claim for termination of the contract was not before the jury because the trial court granted the Seller’s motion for directed verdict as to that claim.
In an alternative claim of error, the Seller also contends that the trial court erred by entering an amended judgment on the Purchasers’ rescission claim and requests this Court to grant a new trial on such claim. Because we conclude that the evidence does not support a claim for rescission, however, we need not address the Seller’s alternative argument.
This agreement amended the parties’ original May 25, 2007, agreement only with respect to the purchase price and the manner of payment.
The payment terms of the Purchase Agreement provided for $230,000 to be paid by the Purchasers at the time of execution, and the remaining $70,000 to be financed by the Seller and repaid by the Purchasers in 24 monthly installment payments.
The parties testified that Eastern Source Investment Inc. was a company doing business as Bruster’s, and that the Seller had to sell the Purchasers her shares of this company in order to transfer her Bruster’s franchise.
The Purchase Agreement defined “Seller Agreements” as the Agreement itself “and all of the other documents and agreements contemplated herein to which the Seller is a party
Although the Purchase Agreement contemplated that closing of the transaction would take place on July 31, 2007, the Seller’s position is that on the same day the parties executed the Agreement, they also closed their transaction. The Purchasers, however, although conceding that no closing took place on July 31, 2007, argue that closing could not have occurred because Bruster’s never provided its consent to the transfer.
The Purchasers ceased operations as of December 1, 2007, pursuant to Bruster’s policy permitting closure of its ice cream stores during the winter months.
Financial concerns regarding the volume of the store versus the proposed purchase price were ultimately the basis upon which Bruster’s decided to deny the transfer.
Although not an issue on this appeal, we nevertheless note that a trial court cannot state that the evidence presented by the Purchasers on the matter of fraud was insufficient and then purport to grant the Seller’s motion for new trial on the matter. See Diegert v. Cedarbrook Homes,
In omitting the Purchasers’ fraud claim, the amended judgment also excluded the punitive damages that were awarded by the jury as such were claimed only in connection with the Purchasers’ dismissed fraud claim.
As an initial matter, we note that this Court is constrained by what the law says we can review, which in this case, is the question of whether there was any evidence to support the Purchasers’ claim for rescission of the contract. See Forrest Cambridge Apartments v. Redi-Floors, Inc.,
Given our conclusion, we need not address the Seller’s additional arguments as to why rescission was improper.