ARCHER LLC v. DMC CAMERON AT CLARKESVILLE LLC (2026)

After the sale of an apartment complex fell through, the intended buyer, Archer I, LLC, brought this action for breach of contract, fraud, and negligent misrepresentation against property owner DMC Cameron at Clarkesville, LLC, its sole owner, DeMarre Carroll, and its agent, Yoni Noy (collectively, “the defendants”). Archer then purchased another property to preserve a tax benefit.

DMC Cameron moved for partial summary judgment. The trial court granted the motion in part. The ruling on appeal prevents Archer “from seeking damages at trial arising from the transaction it conducted to acquire [that other] property[.]”¹

We agree with Archer that the trial court erred by limiting Archer's damages in that way. We are also unpersuaded by the defendants’ arguments that we should affirm the trial court's order for other reasons. So we reverse the grant of partial summary judgment to the defendants on damages.

1. Facts and procedural background

Viewed in the light most favorable to nonmovant Archer, see Cowart v. Widener, 287 Ga. 622, 624(1)(a), 697 S.E.2d 779 (2010), the record shows that Archer entered into a contract to buy real property from DMC Cameron for more than $5.6 million. Pertinent to the issues in this appeal, the contract included the following representations by DMC Cameron, which Archer alleges to have been false:

7.13 Value. Seller has no notice of any proposed change in the assessed valuation of all or any portion of the Real Property, other than what has been disclosed to Purchaser in Seller's Submittals.

7. 16 Improvements. To the best of Seller's knowledge and except as may be disclosed in Seller's Submittals, the Improvements are structurally sound and weather-tight, are in compliance with all Legal Requirements, and said Improvements, the fixtures therein or thereon and the Personal Property is in good condition and working order.

7.17 Insurance. There are no defects or inadequacies in the Assets which would adversely affect the insurability of the same or cause the imposition of extraordinary premiums therefor[ ] or create or be likely to create a hazard, excessive maintenance cost or material operating deficiencies.

The contract also required DMC Cameron to provide Archer with certain tax forms, which Archer alleges to not have been provided. And it included a provision governing available remedies in the case of a default by DMC Cameron:

13.1 Seller's Default. If Seller defaults in any of its obligations to be performed on or before the Closing Date, Purchaser as its sole remedy by reason thereof (in lieu of prosecuting an action for damages or proceeding with any other legal course of conduct, the right to bring such actions or proceedings being expressly and voluntarily waived by Purchaser) shall have the right, subject to the other provisions of this Section 13.1 (i) to seek specific performance of Seller's obligations hereunder (it being expressly acknowledged by Purchaser that the remedy of specific performance is an appropriate remedy in the event of a default by Seller under this Agreement) ․, or (ii) to receive a return of the Earnest Money. ․ Provided, however, in the case where the Purchaser elects to receive a refund of its Earnest Money, if the Seller[’s] uncured default was due to an intentional or willful act of Seller, Purchaser shall be entitled to reimbursement of its actual, substantiated and actual out-of-pocket costs incurred by Purchaser in connection with this transaction[.]

Archer subsequently terminated the contract and brought this action. It asserted a claim for breach of contract against DMC Cameron, alleging that DMC Cameron's representations regarding value (¶ 7.13), improvements (¶ 7.16), and insurance (¶ 7.17) were false and that DMC Cameron had not provided the required tax forms. It also asserted claims for fraud and negligent misrepresentation against all of the defendants based on the alleged misrepresentations regarding value, improvements, and insurance. Archer alleged that it had relied upon the alleged misrepresentations to its detriment by entering into the contract and incurring the cost of due diligence, and Archer alleged that after terminating the contract it was forced to purchase another property to obtain the tax benefit it had intended to obtain through the purchase from DMC Cameron (the avoidance of capital gains tax liability). The defendants answered and asserted counterclaims.

In earlier summary judgment proceedings, the trial court granted summary judgment to Archer on its claim that DMC Cameron breached the contract by failing to provide the tax documents, and it granted summary judgment to the individual defendants on the tort claims. The trial court denied summary judgment to DMC Cameron on the tort claims and to Archer on DMC Cameron's counterclaims. We reversed the grant of summary judgment to the individual defendants in an unpublished opinion. Archer I v. Carroll, A23A0702, slip op. at 3-11 (Ga. App. Nov. 3, 2023) (unpublished).

The defendants then moved for partial summary judgment on one of their counterclaims and on the issue of damages. As to the damages ruling which is now before us, they argued that the contract limited Archer's damages to its actual out-of-pocket costs for due diligence in connection with the failed sale, and they argued that as a matter of law Archer was not entitled to recover for damages for its potential tax liabilities or lower investment returns associated with the property Archer wound up buying.

In the order on appeal, the trial court denied the summary judgment motion as to the defendants’ counterclaim, and that ruling is not challenged in this appeal. The trial court granted the motion as to the defendants’ request to limit Archer's damages, holding that Archer was “precluded from seeking damages at trial arising from the transaction it conducted to acquire the [other] property.”

2. Available tort damages

Archer argues that the trial court erred by limiting the damages it may recover on its tort claims by “precluding [Archer] from seeking damages at trial arising from the transaction it conducted to acquire the [other] property.” We agree.

“In general, a party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud.” Novare Group v. Sarif, 290 Ga. 186, 188(1), 718 S.E.2d 304 (2011) (quotation marks omitted). Here, Archer chose to affirm the contract and sue for damages resulting from the fraud, and its fraud claim “is not a suit for the violation of the contract, but is one for a tort[.]” Ben Farmer Realty Co. v. Woodard, 212 Ga. App. 74, 441 S.E.2d 421 (1994). The tort claim coexists with Archer's right to affirm the contract, and Archer “may keep the fruits of the contract and maintain an action for the damages suffered by reason of the fraud.” Id. See Reininger v. O'Neill, 316 Ga. App. 477, 482(2), 729 S.E.2d 587 (2012) (“It can not be said that merely affirming the contract by the defrauded party will necessarily deprive him of the right to sue for damages for the fraud inducing him to make the contract, as the right to affirm the contract and the right to sue for damages for the fraud coexist.”).

As we recognized in our earlier unpublished decision in this case, the merger clause in the parties’ contract does not preclude Archer's fraudulent inducement claim because the allegedly fraudulent misrepresentations were within the contract itself. Archer I, A23A0702, slip. op. at 4 n. 2. See Woodhull Corp. v. Saibaba Corp., 234 Ga. App. 707, 711-12(2), 507 S.E.2d 493 (1998) (“Generally, false representations that induce the party to enter into the contract are merged through the contract merger language, but since the same misrepresentations were made as part of the contract, there was no merger.”).

And the terms of the contract do not limit the damages that Archer can recover for fraudulent inducement. By affirming the contract, Archer agreed to accept the damages set forth in Paragraph 13.1 (as described above, either specific performance or a return of earnest money, as well as out-of-pocket costs), and it cannot recover “for the same damages in either contract or tort.” Goldsmith v. Peterson, 307 Ga. App. 26, 28(1), 703 S.E.2d 694 (2010) (quotation marks omitted). But Archer can recover for damages “other than the same actual damages which were recoverable in a contract action and which were satisfied under the contract by [the damages described in Paragraph 13.1].” Woodhull Corp., 234 Ga. App. at 713(2), 507 S.E.2d 493.

“[G]eneral damages awarded on a fraud claim may cover a broader range of damages than those awarded on contract claims. This broader range of damages is not necessarily limited to pecuniary losses and includes inconvenience.” Stephen A. Wheat Trust v. Sparks, 325 Ga. App. 673, 680(5), 754 S.E.2d 640 (2014) (citation modified). The damages at issue here — those arising from the real estate purchase that Archer entered into to preserve its tax benefit after the sale between the parties fell through — are in the nature of consequential damages. See Legacy Acad. v. Doles-Smith Enters., 337 Ga. App. 575, 580 (1)(a), 789 S.E.2d 194 (2016) (defining consequential damages as “losses that do not flow directly and immediately from the injurious act but that result indirectly from the act” (citation modified)). Such “consequential damages ․, not recoverable in a contract action, would be authorized in [the] tort action if proven.” Woodhull Corp., 234 Ga. App. at 713(2), 507 S.E.2d 493. The trial court erred in holding that Archer could not seek to prove them at the trial in this case.

3. Other grounds for summary judgment

The defendants propose that we affirm the judgment below as right for any reason. We have the “discretion to apply the right for any reason rule on de novo review and consider alternative legal theories or analysis not relied on by the trial court on summary judgment.” Hardin v. Hardin, 301 Ga. 532, 537, 801 S.E.2d 774 (2017). We are not persuaded to do so here.

The defendants argue that they are entitled to partial summary judgment because the parol evidence rule bars reference to Archer's stated purpose of avoiding tax liability. While it is true that parol evidence cannot be used to contradict or change the terms of an unambiguous contract, Fabian v. Pontikakis, 327 Ga. App. 392, 396(1), 759 S.E.2d 295 (2014), the evidence that Archer intended to use the transaction to avoid tax liability does not contradict or change the terms of the parties’ contract; it explains why Archer claims to have incurred non-contractual consequential damages on account of the defendants’ misrepresentations within the contract.

The defendants also argue that they are entitled to partial summary judgment because Archer relies solely on hearsay to show it sustained damages in connection with buying the other property. But earlier rulings have already established the existence of jury issues regarding the merits of Archer's tort claims, as described above. Allowing the trial court to decide in the first instance, on a pretrial motion, the issue of the admissibility of Archer's damages evidence will maximize judicial efficiency. See Maynard v. Snapchat, Inc., 346 Ga. App. 131, 137(2), 816 S.E.2d 77 (2018) (identifying judicial economy as a factor in determining whether to invoke the right-for-any-reason rule). See also Forest City Gun Club v. Chatham County, 280 Ga. App. 219, 222, 633 S.E.2d 623 (2006) (holding that “rulings regarding only the method of calculation and the appropriate evidence that could be presented to the jury” on the issue of consequential damages “were not judgments on the merits of any element of damage” and determinations regarding the admissibility of such evidence were “more akin to a motion in limine”).

Judgment reversed in part.

FOOTNOTES

1.   The order on appeal also denies summary judgment to DMC Cameron on a counterclaim. That ruling has not been challenged, and we do not address it.

McFadden, Presiding Judge.

Watkins and Padgett, JJ., concur.