ENGRAM v. ENGRAM

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Docket Number

S95A1000.

Attorney(S)

Bowles Bowles, Jesse G. Bowles, for appellant. Donaldson, Hall, Martin, Garvey Bell, George P. Donaldson III, Hodges, Erwin, Hedrick Coleman, William A. Erwin, for appellees.

Judges

Hugh P. Thompson

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Smart Summary

Factual and Procedural Background

Barbara and Sam Engram, divorced in 1974, entered a verbal agreement in October 1981 whereby Barbara and her minor children moved into a house jointly owned by Sam and his new wife Ann. Barbara agreed to pay monthly rent of $385, and she claims Sam orally promised that her rent payments would be applied toward purchasing the house, a claim Sam denies. Barbara made improvements to the property in 1984, constructing an additional bedroom with funds from her grandfather, despite Sam's reluctance and warnings. In 1992, Barbara became delinquent in rent payments, leading to a request by Sam for her to vacate the property in 1993. Barbara’s attorney then asserted her intention to exercise an alleged oral option to purchase. Sam and Ann filed a dispossessory claim, and Barbara filed suit seeking specific performance of the oral option agreement or, alternatively, damages for unjust enrichment due to her improvements. The trial court allowed Barbara to stay during litigation under certain conditions, but after she failed to keep current on rent, a writ of possession was issued, and summary judgment was granted to the defendants on the remaining claims.

Legal Issues Presented

Whether summary judgment was properly granted against Barbara's claim for specific performance of an alleged oral option contract to purchase real property, given the statute of frauds and the evidence of possession and improvements.
Whether Barbara's alternative claim for unjust enrichment based on improvements to the property was barred by the statute of limitations and whether she presented sufficient evidence to support recovery under that theory.
Whether the issuance of the writ of possession complied with statutory procedures.

Arguments of the Parties

Appellant's Arguments

Barbara contended that summary judgment was improper on her specific performance claim because a material factual dispute existed regarding the existence and enforceability of the oral option agreement.
She argued that her possession and improvements to the property constituted part performance sufficient to remove the alleged oral contract from the statute of frauds.
Barbara asserted that her unjust enrichment claim was not barred by the four-year statute of limitations because the cause of action accrued only when Sam refused to honor the option in 1993.
She maintained that she was entitled to recover for the improvements made, which enhanced the property, under an unjust enrichment theory.

Appellees' Arguments

Sam and Ann denied the existence of any oral option agreement to sell the property.
They contended that Barbara took possession under a lease, not in reliance on any option to purchase, and thus possession and improvements did not satisfy the statute of frauds exception.
They argued that the unjust enrichment claim was barred by the statute of limitations, which began when the improvements were made.
They asserted that the improvements were shoddy, required repairs at their expense, and did not confer a benefit warranting compensation.
They maintained that the writ of possession was properly issued under applicable law after Barbara failed to pay rent.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
OCGA § 13-5-30 (4)	Statute of Frauds requiring contracts for sale of land to be in writing.	Confirmed that the oral option contract must satisfy the statute of frauds unless an equitable exception applies.
OCGA § 23-2-131 (b)	Equitable exception allowing specific performance of oral contracts for sale of realty upon part performance.	Applied to assess whether Barbara’s possession and improvements constituted part performance removing the contract from the statute of frauds.
Grist v. Foster, 246 Ga. 565 (1980)	Possession must be in reliance on the oral option to purchase to support specific performance.	Used to reject Barbara’s claim because possession was under a lease, not in reliance on the option.
Smith v. Cox, 247 Ga. 563 (1981)	Written lease confirming rent applied to purchase money removes contract from statute of frauds.	Distinguished from the present case where no such writing existed.
Evans v. Evans, 237 Ga. 549 (1976)	Four-year statute of limitations applies to unjust enrichment claims.	Considered in evaluating accrual date of Barbara’s unjust enrichment claim.
Guill v. Guill, 60 Ga. 446 (1878)	Statute of limitations for unjust enrichment begins when money is spent under certain circumstances.	Interpreted to mean limitations begin when the right to sue accrues, not necessarily when improvements are made.
OCGA § 9-3-26	Accrual of cause of action for statute of limitations purposes.	Applied to determine when Barbara’s unjust enrichment claim accrued.
Hoffman v. Insurance Co. of N. America, 241 Ga. 328 (1978)	Definition of accrual date as when plaintiff could first maintain a successful action.	Used to support accrual date analysis for unjust enrichment claim.
Smith v. McClung, 215 Ga. App. 786 (1994)	Definition of unjust enrichment requiring benefit conferred and equitable obligation to compensate.	Applied to find Barbara failed to show benefit conferred or equitable obligation to compensate.
Lau's Corp. v. Haskins, 261 Ga. 491 (1991)	Summary judgment burden shifting and evidentiary standards.	Used to assess sufficiency of evidence supporting unjust enrichment claim.
Precise v. City of Rossville, 261 Ga. 210 (1991)	Judgment affirmed if right for any reason.	Supported affirmance of summary judgment on any proper grounds.
OCGA § 44-7-55	Procedures for issuing writ of possession.	Confirmed that the writ of possession was properly issued.

Court's Reasoning and Analysis

The court first addressed the specific performance claim, emphasizing the statute of frauds' requirement that contracts for the sale of land be in writing. It acknowledged an equitable exception allowing specific performance if there is part performance demonstrated by possession and improvements made in reliance on the oral contract. However, the court found that Barbara’s possession was under an oral lease agreement, not in reliance on an option to purchase, which precludes treating possession as part performance under Grist v. Foster. The court also rejected the argument that improvements constituted part performance, noting that such acts must unequivocally refer to the alleged contract to remove it from the statute of frauds, a showing Barbara failed to make.

Regarding the unjust enrichment claim, the court analyzed the statute of limitations, rejecting the trial court’s conclusion that the claim accrued at the time of the improvements. Instead, it held that the claim accrued only when Barbara knew or should have known of the breach—in this case, when Sam refused to honor the alleged option in 1993. Despite this, the court found no evidence that the improvements enhanced the value of the property or that the appellees were unjustly enriched, especially since the parties never intended that appellees bear the cost of the addition. As the appellees met their burden on summary judgment by showing absence of evidence on essential elements, and Barbara failed to produce contrary evidence, summary judgment was proper.

Finally, the court confirmed that the writ of possession was issued in accordance with statutory procedures under OCGA § 44-7-55.

Holding and Implications

Judgment affirmed. The court upheld the trial court’s grant of summary judgment in favor of the defendants on both the specific performance and unjust enrichment claims. The writ of possession was also properly issued and affirmed. The decision directly affects the parties by denying Barbara’s claims and confirming the defendants’ right to possession and dismissal of the claims. No new legal precedent was established beyond applying existing statute of frauds principles, limitations law, and unjust enrichment doctrine to the facts.

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ENGRAM v. ENGRAM et al.

THOMPSON, Justice.

This case is before the Court from the grant of summary judgment to the defendants on plaintiff's claims for specific performance of an alleged oral option agreement to purchase real property, and, alternatively, for unjust enrichment.

Barbara and Sam Engram were divorced in 1974. In October 1981, Barbara and the minor children of the parties moved into a house owned jointly by Sam and his new wife Ann. Barbara and Sam verbally agreed that she would pay rent to Sam of $385 per month. Barbara asserts that during the month she moved in, Sam told her that if in the future she wanted to purchase the house, her rent payments would be applied toward the purchase price. Barbara concedes "that was all that was said" concerning an alleged oral option to purchase, and that Ann was not a party to that conversation. Sam denies that any such discussion took place. Both children averred that at the time they moved into the residence, they heard their father tell their mother about such an option to purchase.

In 1984 Barbara told Sam that her elderly grandparents had moved into the house with her. She asked that Sam allow her to construct an additional bedroom, using funds from her grandfather. Barbara admits that she told Sam, "it won't cost you a dime, . . . my grand[parents] will be building the room." He reluctantly agreed and told her she was foolish to invest money in a house that did not belong to her. Barbara's testimony shows that approximately $12,000 was expended on this project. Sam claims that because the construction was shoddy, he was required to pay for repairs and maintenance of the addition.

In 1992, Barbara became delinquent in paying rent. Sam asked her to move out in July of 1993, when the pastdue rent amounted to $2,930. In response, Barbara's attorney notified Sam of her intention to exercise an oral option to purchase. Sam claims that this was the first assertion of the purported verbal option arrangement.

Sam and Ann subsequently filed a dispossessory claim in magistrate's court. In the same month, Barbara filed the present action against Sam and Ann for specific performance of the oral agreement, and, in the alternative damages for the unjust enrichment which would result from the loss of the improvements she made to the property if the court did not order specific performance. By way of counterclaim, Sam and Ann sought to remove Barbara from the premises and to collect past-due rent.

Initially, the complaint also sought a modification of alimony, but that count was later dismissed.

The court allowed Barbara to remain in the house during the litigation if she paid rent on time and deposited half of the rent arrearage with the court. She made that deposit and remained in possession but failed to make timely rent payments. The court then granted a writ of possession and distributed the deposit to the defendants. Barbara moved from the house. Summary judgment was awarded to the defendants as to the remaining counts.

1. Appellant contends that summary judgment was improperly granted with respect to her claim for specific performance because a material issue of fact remains as to the existence and enforceability of an oral option contract.

Every essential element of a contract for the sale of land must be in writing to satisfy the statute of frauds. OCGA § 13-5-30 (4). An equitable exception to the statute of frauds is contained in OCGA § 23-2-131 (b), which provides for specific performance of a parol contract for the sale of realty where there has been "partial payment accompanied with possession, or possession alone with valuable improvements, if clearly proved . . . to have been done with reference to the parol contract."

A party claiming specific performance of an alleged option agreement under OCGA § 23-2-131 (b), is required to "show that his possession is in reliance on the oral option to purchase." Grist v. Foster, 246 Ga. 565, 566 ( 272 S.E.2d 297) (1980).

[W]here a tenant takes possession under a contract for rent, he may not assert that possession was taken in reliance on seller's promise to convey the property. Here . . . [the tenant] is asserting additional rights as a result of certain previous oral promises. Since he is admittedly in possession under the lease, he cannot now claim that this possession takes on additional legal significance adverse to the interest of his lessor because of an alleged oral promise.

Id.

At best, the evidence showed that Barbara took occupancy of the house pursuant to an oral lease and that an option was given on the day she moved in. Given these facts, possession was not shown to have been in reliance on the purported option to purchase.

Compare Smith v. Cox, 247 Ga. 563 ( 277 S.E.2d 512) (1981), in which a written lease agreement provided that rent was to be applied "on down payment." The writing thus confirmed that the monthly payments were to be applied to the purchase money. Where there was partial payment of the purchase money, accompanied with possession, the contract was removed from the statute of frauds.

The principle of possession coupled with improvements is likewise inapplicable.

[I]t must be shown that the possession and improvement arose `by virtue of and in the faith of the oral contract or promise, so as to take the case out of the statute of frauds and constitute the equivalent of a writing by showing acts unequivocally referring to the alleged contract or promise.' [Cit.] inapplicable.

Grist, supra at 566.

As a matter of law, appellant has failed to demonstrate such part performance as would take the parol contract outside the statute of frauds and mandate specific performance.

2. Appellant submits that the trial court erred in determining that her alternative claim for unjust enrichment was barred by a four-year period of limitations. In reliance on Evans v. Evans, 237 Ga. 549 ( 228 S.E.2d 857) (1976), the court concluded that the claim for reimbursement ripened at the time that the improvements were made. While Evans, supra, acknowledges in dicta that a four-year period of limitations applies to a claim for unjust enrichment, it does not suggest that the claim accrues in all circumstances when the improvements are made. Evans, supra, cites Guill v. Guill, 60 Ga. 446 (1878), which holds that in the circumstances of that case, the statute of limitations began to run when improvements to the property were made. Guill involved a suit by one brother over money spent at the "insistence and request" of a second brother to improve a home they shared. Because the one brother was just advancing funds for the other, the court concluded that the money became "due and sueable when it was spent." Id. at 447. We construe Guill to mean that the four-year period of limitations in an action for unjust enrichment, based on improvements to real property, begins to run upon the accrual of a right of action. Cf. OCGA § 9-3-26. As this Court has held, the date of accrual is the "`time when the plaintiff could first have maintained his action to a successful result.' [Cit.]" Hoffman v. Insurance Co. of N. America, 241 Ga. 328, 329 ( 245 S.E.2d 287) (1978).

Barbara could not have known of the existence of a claim for unjust enrichment based on improvements to the property until 1993, when Sam refused to honor the alleged oral option. We thus accept her claim that any cause of action she may have for unjust enrichment was not barred by the applicable period of limitations.

Upon examining the merits of the claim, we nevertheless conclude as a matter of law, that there was an absence of evidence to authorize recovery for the improvements under a theory of unjust enrichment.

"`[U]njust enrichment applies when as a matter of fact there is no legal contract . . ., but when the party sought to be charged has been conferred a benefit by the party contending an unjust enrichment which the benefitted party equitably ought to return or compensate for.' [Cit.]"

Smith v. McClung, 215 Ga. App. 786, 789 (3) ( 452 S.E.2d 229) (1994). The only evidence offered to establish appellant's claim was her testimony concerning the cost of construction. It was not established that the addition enhanced the value of the property in any manner and thus conferred a benefit on the appellees. See generally Evans, supra at 553 (the claim lies "for enhancing the value of the estate to prevent unjust enrichment)." Nor was it shown that appellant equitably ought to be compensated. To the contrary, the undisputed evidence shows that the parties never intended that appellees be responsible for the cost of the bedroom addition.

As movants on summary judgment, appellees have demonstrated an absence of evidence to support an essential element of appellant's claim based on a theory of unjust enrichment. Lau's Corp. v. Haskins, 261 Ga. 491 (4) ( 405 S.E.2d 474) (1991). The burden then shifted to appellant to point to specific evidence giving rise to a triable issue. Id. She offered no evidence to substantiate her claim that restitution should be made for unjust enrichment.

Appellees were entitled to summary judgment as a matter of law. A judgment that is right for any reason will be affirmed. Precise v. City of Rossville, 261 Ga. 210 ( 403 S.E.2d 47) (1991).

3. The writ of possession was issued in accordance with the procedures set out in OCGA § 44-7-55.

Judgment affirmed. All the Justices concur.