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Rumsey v. Gillis

Court of Appeals of Georgia

November 6, 2014

RUMSEY
v.
GILLIS et al

Page 666

Lease. Gwinnett Superior Court. Before Judge Hamil.

Perry A. Phillips, for appellant.

Carothers & Mitchell, Richard A. Carothers, Thomas M. Mitchell, Angela C. Couch, for appellees.

ANDREWS, Presiding Judge. McFadden and Ray, JJ., concur.

OPINION

Page 667

Andrews, Presiding Judge.

Peter Rumsey sued Ray and Nancy Gillis for damages for breach of a " Lease/Purchase Agreement" (the Agreement) by which the Gillises agreed to lease and then purchase Rumsey's residence. We consider Rumsey's appeal from the trial court's grant of summary judgment in favor of the Gillises on all of his claims. For the following reasons, we affirm in part and reverse in part.

In April 2011 the Gillises and Rumsey entered into the Agreement, which provided that the Gillises agreed to purchase the residence from Rumsey for the sum of $550,000; that the closing would occur on or before April 30, 2014; that, commencing in May 2011 until the closing date, the Gillises would lease the residence from Rumsey pursuant to a lease attached as an exhibit to the Agreement; and that, when the Agreement was entered into by the parties, the Gillises paid earnest money in the amount of $10,000 held by Rumsey. The Agreement also contained a liquidated damages clause providing that earnest money retained in the event of default constitutes liquidated damages in full settlement of all claims. The Agreement provided that, if the lease was terminated before the closing date by default of the Gillises, that was considered a default of the Agreement entitling Rumsey to pursue available remedies. The attached lease provided for payment of rent in the amount of $3,500 per month for a lease term commencing on May 3, 2011, and ending on the closing date of the purchase. The Gillises did not purchase the residence pursuant to the Agreement; rather, the Gillises vacated the residence and ceased paying rent in November 2011, and Rumsey retained the $10,000 in earnest money and subsequently sold the residence to a third party.

After retaining the $10,000 in earnest money paid by the Gillises, Rumsey sued the Gillises in December 2011 for breach of the Agreement seeking damages allegedly caused by the Gillises' failure to purchase the residence and pay rent due under the lease. After Rumsey sold the residence in March 2012 to a third party for $437,000, he sought damages for breach of the purchase agreement in the amount of $113,000 (the difference between the third party sales price and the $550,000 sales price in the Agreement). As to damages under the lease agreement, Rumsey sought unpaid rent from November 2011 (when the Gillises vacated the residence and ceased rent payments) to the date he sold the residence to a third party in March 2012, plus late fees and interest associated with the unpaid rent for that period.

[329 Ga.App. 489] The Gillises answered and counterclaimed against Rumsey. In their amended answer, the Gillises asserted various defenses including (1) the defense that the Agreement was unenforceable, and (2) the alternative defense that, if an enforceable Agreement existed, it contained an enforceable liquidated damages clause under which Rumsey retained the $10,000 in earnest money as damages in full settlement of any breach of the Agreement, and that this barred Rumsey's claims. In two counterclaims against Rumsey, the Gillises asserted: (1) that, because the Agreement was unenforceable, they were entitled to return of the $10,000 they paid as earnest money, and (2) that, during the period they occupied the residence and paid rent under the lease, they suffered damage as a result of Rumsey's breach of his duty to keep the residence in good repair.

The Gillises moved pursuant to OCGA § 9-11-56 for summary judgment on all of Rumsey's damage claims under the Agreement. The summary judgment motion was based on the same alternative defense asserted in the amended answer -- that all of Rumsey's claims were barred by an enforceable

Page 668

liquidated damages clause in the Agreement. Accordingly, for purposes of the motion, the Gillises conceded that the Agreement was enforceable and that they breached it by terminating the lease and refusing to purchase the residence. The Gillises asserted they were entitled to summary judgment because, pursuant to the liquidated damages clause, Rumsey retained the $10,000 in earnest money as damages in full settlement of all his claims that they breached the Agreement. The trial court granted the motion ruling that the liquidated damages clause was enforceable; that Rumsey retained the earnest money in ...


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