## Facts

- The Livelys (plaintiffs) contracted to purchase a newly constructed home from the Garnicks (defendants), who built and sold the house.
- After construction was completed and the Livelys moved in, problems appeared, including a leaky chimney, a roof problem, and a broken air conditioner.
- The defects were not established at trial as having been known to the Garnicks at the time of sale; the record showed that the problems were discovered after the sale.
- The Livelys sued the Garnicks in tort for fraud and deceit based on nondisclosure/concealment of defects and related statements, rather than suing for negligent construction, breach of warranty, or breach of contract.
- A jury returned a verdict for the Livelys, and judgment was entered on the verdict.
- The Garnicks appealed, arguing primarily that the evidence did not support a finding of fraud; they also raised complaints about evidentiary rulings.

## Issues

1. Whether the trial evidence was legally sufficient to support a verdict for fraud and deceit based on alleged concealment of defects when the plaintiffs did not show the defendants’ actual knowledge of the defects at the time of sale.
2. Whether statements about future repairs or future performance can support fraud absent proof that, when made, the defendants then intended not to perform.

## Decision

- The Court of Appeals of Georgia reversed the judgment for the Livelys.
- The court held that fraud by concealment requires proof that the seller had actual knowledge of the defect at the time of sale and concealed it with intent to deceive; the evidence did not meet that standard.
- The court rejected the argument that the jury could infer actual knowledge and intent to deceive merely because the defendants were the builders and defects later appeared.
- The court also held that promises or assurances about future repairs are not actionable as fraud without evidence of a present intent not to perform when the statements were made.

## Legal Principles

- Fraud and deceit are not established by defective construction alone; the claim requires intentional wrongdoing—described by Georgia courts as “actual moral guilt.”
- In an action based on concealment, intent to deceive is required, and “knowledge of the falsehood” is an essential element; the plaintiff must show the defendant’s actual knowledge of the concealed fact.
- Constructive knowledge (that a seller “should have known”) does not satisfy the scienter element for fraudulent concealment; actual knowledge at the time of the sale must be supported by evidence.
- A seller may have a duty to disclose facts when the seller has special knowledge not apparent to the buyer and knows the buyer is acting under a mistake about an important fact, but tort liability still depends on proof of fraudulent intent and actual knowledge.
- A promise of future performance (such as an agreement to repair after closing) is not fraud unless the plaintiff proves that, when the promise was made, the promisor had a present intention not to perform.

## Conclusion

Lively v. Garnick reversed a jury verdict for home buyers on a fraud-and-deceit theory because the record did not show that the seller-builders actually knew of the latent defects at the time of sale or concealed them with intent to deceive, and the buyers also failed to prove that any statements about future repairs were made with a present intent not to perform.


Lively v. Garnick, 287 S.E.2d 553 (1981)