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contractlawsuittrialsummary judgmenttrust
contractattorneyappealtrialsummary judgmentfiduciary

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Arko v. Cirou, 305 Ga.App. 790, 700 S.E.2d 604, 10 FCDR 2722

Facts

Robert Arko, a successful businessman, had a close friendship with Martin and Gail Cirou, who ran a construction business. Arko loaned the Cirous significant amounts of money for their construction projects, and after a series of transactions, he executed a discharge of a security deed on one property without reading the documents presented to him. Following a series of events, including the death of his wife and a growing distrust of the Cirous, Arko filed a lawsuit seeking to rescind the discharge document and the amendment agreement related to the loans.

On September 21, 2005, Arko loaned the Cirous $1 million to finance their constructing a house on Spalding Drive. The debt instruments included a $1 million note (with interest at one over prime) and a security deed on the Spalding property.

Issue

Did the trial court err in granting summary judgment in favor of the Cirous, and was Arko's claim of a confidential relationship sufficient to rescind the agreements he signed?

Arko first contends that the trial court erred in granting summary judgment on his claims (i) to rescind the February 2008 document discharging the September 2005 security deed and declaring as paid in full the September 2005 note, (ii) to rescind the October 2008 agreement amending the February 2008 $1.2 million note to be nonrecourse and to be secured by the Garrison Oaks property only, and (iii) to seek an equitable lien on the Bell Park property if the October 2008 agreement only were cancelled.

Rule

A party to a contract who can read must read, or show a legal excuse for not doing so. A confidential relationship must be proven to exist to excuse a party from reading a contract.

The rule in this state is that where one who can read signs a contract without reading it, he is bound by the terms thereof, unless he can show that an emergency existed at the time of signing that would excuse his failure to read it, or that the opposite party misled him by an artifice or device which prevented him from reading it, or that a fiduciary or confidential relationship existed between the parties upon which he relied in not reading the contract.

Analysis

The court found that Arko, being an experienced businessman, had the capacity and opportunity to read the documents he signed. The court determined that no emergency existed that would excuse his failure to read the documents, and that the Cirous did not prevent him from doing so. Arko's argument that his friendship with the Cirous established a confidential relationship was rejected, as the court held that mere friendship does not create such a relationship.

It is undisputed that Arko, a successful businessman, could have read the documents, that no emergency existed at the time he executed the documents, and that the Cirous did nothing to prevent him from reading the documents.

Conclusion

The court affirmed the trial court's summary judgment in favor of the Cirous, concluding that Arko was bound by the terms of the agreements he signed.

Thus, Arko's primary argument on appeal is that his close, personal friendship with the Cirous established a confidential relationship which excused his not reading the documents.

Who won?

The Cirous prevailed in the case because the court found that Arko had not established a confidential relationship that would excuse his failure to read the documents he signed.

We cannot agree with Arko that the fact that the same attorney prepared the September 2005 documents and the October 2008 documents was relevant to showing a confidential relationship between Arko and the Cirous.

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