On July 29, 1994, John and Patricia Ann Wallace Appellants entered into a contract to buy a new house from Bock Homes. The closing was postponed twice because the house was not complete. At the rescheduled closing on October 3, Appellants noted that work still remained to be done. The closing attorney prepared an escrow agreement which provided that $10,000 would be held until October 14, 1994, by which time the escrow agent “must be tendered” a “clear final inspection.” All parties signed the agreement, and the sale of the property closed on October 3. Work on the house was not finished by October 14. However, Appellants later learned that the escrow funds were released to Bock Homes without their knowledge or consent. They demanded completion of the work, but it was never finished. Six years and a day after the closing, Appellants brought suit against Bock Homes and associated entities, alleging breach of the purchase agreement, breach of the escrow agreement, and fraud. The trial court granted summary judgment in favor of Bock Homes and the other defendants and, on appeal, the Court of Appeals affirmed. Wallace v. Bock , 271 Ga. App. 833 611 SE2d 62 2005. With regard to the escrow agreement, the Court of Appeals agreed with the trial court’s conclusion that “Bock Homes had nothing left to perform as to that agreement after it placed into escrow the initial funds that were the subject of the agreement, and thus could not breach it as a matter of law. Cit.” Emphasis omitted. Wallace v. Bock , supra at 835 1. As for Appellants’ claim for breach of the original purchase agreement, the Court of Appeals held that, where the parties execute two successive agreements embodying completed negotiations “on the same subject,” the doctrine of merger applies, and the second agreement supercedes the first. Cits. Here, the purchase agreement specified that only Bock Homes’s obligation to complete the house would survive the closing —precisely the subject of the separate escrow agreement executed there. Thus Appellants’ claim for breach of the purchase agreement based on Bock Homes’s failure to complete its work merges into their claim under the escrow agreement. Cit. As explained in Division 1, Appellants’ claim under the escrow agreement fails as a matter of law. As a result, their merged action under the purchase agreement must also fail. Wallace v. Bock , supra at 836 2.
This Court granted Appellants’ petition for a writ of certiorari, in order to address the Court of Appeals’ reliance on the doctrine of contractual merger in Division 2 of its opinion.
