Title: Valley Properties, Inc. v. Strahan

State: alabama

Issuer: Alabama Supreme Court

Document:

565 So. 2d 571 (1990)
VALLEY PROPERTIES, INC., et al.
v.
Leon STRAHAN and Mary Sue Strahan.
88-480, 88-501.

Supreme Court of Alabama.
April 27, 1990.
Rehearing Denied June 22, 1990.
*573 Gerald R. Paulk of Livingston, Porter & Paulk, Scottsboro, for appellants.
Robert W. Hanson, Albertville, for appellees.
ALMON, Justice.
This appeal arises from a suit based on alleged fraud and interference with business relations filed by Leon and Mary Sue Strahan against Haden and Mary Tidmore and Valley Properties, Inc. A jury awarded the Strahans a total of $75,000 and denied relief to the Tidmores on their counter-claims for damages for breach of contract and for ejectment. The trial court entered judgment on those verdicts.
In 1986 the Strahans were operating a restaurant known as Val Monte Steak House on property they possessed under a lease with an option to purchase. The property was owned and leased by Vickie Robbins[1] and was subject to a mortgage held by the Tidmores.
In 1986, after some discussion and negotiation, the Tidmores offered to advance the Strahans funds to be used to complete improvements that they had begun on the property. The Tidmores entered into an agreement dated March 16, 1986, to lend the Strahans $30,000. In consideration for this loan, the Tidmores were to receive 2½% of the gross receipts from the Steak House business until the loan was repaid. The Strahans initially made some of these payments but thereafter ceased making payments.
On September 23, 1986, the parties entered into a second agreement under which the Tidmores lent the Strahans an additional $10,000. This second agreement required the Strahans to make the 2½% payments still due under the March agreement and to continue to pay the Tidmores 2½% of the gross receipts. The Strahans failed to make any of these payments following the execution of the September agreement.
Apparently because of problems between Robbins and the Tidmores, the Tidmores began foreclosure proceedings on their mortgage on the property. In January 1987, the Tidmores and the Strahans began discussing a plan by which the Tidmores would purchase the property from Robbins and lease it to the Strahans. The Tidmores proposed to the Strahans a lease with an option to purchase that was very similar to the Robbins lease. The proposed lease included an attachment, referred to by the parties and herein as "Exhibit B," adding a long list of conditions not present in the Strahans' lease with Robbins. Exhibit B would have given the Tidmores extensive power over the daily operation of the Steak House and specified the accounting and business practices in detail. For example, paragraph 12 directed the Strahans to provide the Tidmores, or their agent, a set of keys to the entire property, including the office, with complete access to all of the records. The Strahans contend that they never agreed to the inclusion of Exhibit B in the lease.
On January 30, 1987, the parties met in the office of Ralph Smith, the Tidmores' lawyer, and executed a lease/purchase *574 agreement. This agreement established a purchase price, gave credit to the Strahans for payments they had made to Robbins, and added the principal and interest on the funds that the Tidmores had advanced in 1986. Although it is undisputed that all the parties signed the agreement, there is considerable disagreement between the Tidmores and the Strahans as to whether Exhibit B was part of the executed lease/purchase agreement.
The Tidmores claim that the Strahans were given a copy of Exhibit B, prior to the meeting, and were advised to consult their lawyer. The Tidmores, Smith, and Smith's legal secretary, Deborah Pinson, all assert that the Strahans agreed to the inclusion of Exhibit B, that Exhibit B was present in the office with all of the other lease documents, and that it was later stapled to the executed lease that the Strahans signed. According to Smith, a reference to its inclusion was added in the main body of the lease at Paragraph 33.
Leon Strahan, in contrast, claims that Exhibit B was not attached to the copies that he and his wife signed and was not attached to the copy that they were given to take home. Strahan maintains that the Tidmores assured him that the provisions in Exhibit B would not be a part of the executed lease. He testified that he received a letter from Haden Tidmore, dated January 24, 1987, stating that "we will follow our two previous agreements." The January 24 letter states that the new agreement deleted several provisions previously required and would save the Strahans more money. For example, the letter states in part:
Following the execution of the lease/purchase agreement on January 30, the Strahans did not comply with the provisions of Exhibit B, nor did they submit payments of 2½% of the gross receipts as directed by the March 16 and September 23 agreements.
On February 21, 1987, the Tidmores received title to the property from Robbins. On that same day the Tidmores, through Smith, informed the Strahans that they were the new owners of the property. Smith's letter emphasized that Exhibit B was a part of the January 30 agreement and that any term or condition in Exhibit B that was not satisfied should be fulfilled immediately. The Strahans assert that it was only after they received this letter that they discovered the reference to Exhibit B in paragraph 33 of the lease, and, further, that this was their first notice that the Tidmores intended to enforce the conditions of Exhibit B. The Tidmores claim that, following this initial letter, they gave the Strahans timely notice to cure the default in regard to the conditions detailed in Exhibit B.
On March 10, 198717 days after they received title to the propertythe Tidmores executed a lease/purchase agreement for the property with Robert and Betty Bains from Georgia. This new agreement provided that the Bainses would pay the Tidmores $550,000 versus the original $310,000 that the Strahans had agreed to pay.
The Strahans insist that, following the agreement with the Bainses, the Tidmores began attempts to evict them from the property and they allege that the Tidmores were motivated by the lucrative offer from the Bainses. They charge that various inspectors, including the county health inspector, the fire marshal, and the city building inspector, came to the property at the insistence of the Tidmores. They also allege that the Tidmores hired off-duty policemen and deputies to watch the premises during and after business hours, and that the Tidmores tried to create problems by attempting to hire their employees and by *575 telling their employees "they were taking over" the business.
The Strahans filed an action in the circuit court against the Tidmores and Valley Properties, a corporation owned principally by the Tidmores and through which they purchased and leased the property, alleging fraud and interference with business and demanding compensatory and punitive damages. The Tidmores and Valley Properties counterclaimed, alleging a breach of the March 16 loan agreement, the September 23 loan agreement, and the January 30 lease/purchase agreement, and seeking damages for fraud. The Strahans amended their original complaint and added a count alleging breach of the January 30 lease and seeking specific performance of the purchase option contained in that lease.
During this same time, the Tidmores and Valley Properties filed an action for eviction against the Strahans in the District Court of Marshall County, Alabama. The district court entered a judgment in favor of Valley Properties, awarding it possession of the property. The Strahans appealed that judgment to the circuit court.
The Tidmores and Valley Properties filed a motion to consolidate the Strahans' appeal from the judgment of eviction with the Strahans' action against the Tidmores and Valley Properties, and the circuit court granted that motion.
The jury returned the following verdicts:
The Tidmores and Valley Properties filed a motion for judgment notwithstanding the verdict, or alternatively, for a new trial.
The Strahans filed an amended complaint asking the court to order the Tidmores to specifically perform their obligation to sell pursuant to the option to purchase contained in the lease and asking the court to establish the rights of the parties in regard to the option to purchase and to establish the purchase price of the property. The trial court denied the Tidmores' and Valley Properties' motions and the Strahans' claim for specific performance and declaratory relief. The Tidmores and Valley Properties appeal from the judgments in favor of the Strahans based on those verdicts.
The Tidmores argue six issues in their appeal to this Court. First, they assert that the verdict in favor of the Strahans on the fraud claim should be set aside because, they say, it is inconsistent with the jury finding that the Tidmores were not entitled to damages for breach of contract. The Strahans' fraud claim was based on alleged misrepresentations made by the Tidmores concerning the inclusion of Exhibit B in the January 30 agreement. The Tidmores argue that in order for the jury to return a verdict for the Strahans on that claim, it had to have found that Exhibit B was a part of the lease and that, under such a finding, the Tidmores were entitled to receive the 2½% of the Steak House gross receipts as specified in Exhibit B. The Tidmores also tender the proposition that the Strahans are arguing "attempted fraud," which the Tidmores argue is insufficient to support a claim of fraud because of the lack of reliance by the party on whom the fraud is attempted.
The Strahans counter with the argument that it was not necessary for the jury to find that Exhibit B was effectively included in the agreement for them to prevail on the fraud claim, but, rather, that the Tidmores' representations that Exhibit B would not be included in the lease and, thus, that they would not attempt to enforce it, together with their later oppressive attempts to enforce Exhibit B, provided a basis for the fraud verdict. The Strahans assert that there is no inconsistency in the verdict and *576 cite Ala.Code 1975, § 6-5-103,[2] and the trial court's charge to the jury to support their argument that the jury could have found fraud in the Tidmores' taking the position that Exhibit B was part of the agreement after having promised that it would not be. Section 6-5-103 states:
The pertinent portion of the trial court's charge to the jury on the issue of fraud reads:
In order for a promise to constitute "fraudulent misrepresentation" there must have been an intent not to do the act promised, and such a promise must have been given with the intent to deceive. Army Aviation Center Federal Credit Union v. Poston, 460 So. 2d 139 (Ala. 1984). Fraud in the legal sense is misrepresentation of a material fact of such a nature that would induce an injured party to take action. Reeves v. Porter, 521 So. 2d 963 (Ala. 1988). The Strahans argue that there was substantial evidence presented to support their fraud claim. First, they insist that the Tidmores fraudulently induced them to sign a lease in which they had deceptively attempted to include the provisions of Exhibit B while, at the same time, representing that Exhibit B was not part of the agreement and would not be enforced. Second, they contend that the Tidmores ventured to enforce these provisions and that, because of the Tidmores' actions, they suffered both injury to their business and personal injury. In support of their contentions, Mrs. Strahan testified to the following:
Even though the jury properly could find that Exhibit B was not part of the lease, the jury could also consistently find that the Tidmores promised not to treat Exhibit B as part of the lease, that the promise was fraudulent because made with intent not to perform and with intent to deceive, and that the Strahans were damaged thereby, because of the Tidmore's attempts to enforce Exhibit B.
As a subpart of their first issue, the Tidmores argue that the Strahans' complaint is defective because it does not allege specific facts that constitute fraud as required by Rule 9(b), Ala.R.Civ.P. However, the rule requiring that the circumstances of the fraud be stated with particularity does not require that every element be stated with particularity, but only that the pleader must use more than generalized, conclusionary statements setting out the fraud; the pleader must state the time, the place, the content or substance of the false representations, the fact misrepresented, and must give an identification of what has been obtained. Robinson v. Allstate Ins. Co., 399 So. 2d 288 (Ala.1981). In the case sub judice, the Strahans' complaint adequately set forth the facts that they contended constituted fraud. Paragraphs 9 and 10 of the complaint stated:
Count one, alleging fraud, stated:
This pleading was sufficient to give the Tidmores fair notice as to the nature and subject of the Strahans' claim in fraud. To the extent that more specificity might have been appropriate, the Tidmores' proper remedy would have been to file a Rule *579 12(e), Ala.R.Civ.P., motion for a more definite statment. The complaint was not subject to dismissal, however, so no reversible error is presented by this issue.
Second, the Tidmores argue that it was error to deny their motion for directed verdict and their j.n.o.v. motion on the fraud claim. In an action for fraud it is necessary for the plaintiff to prove the following elements: (1) a false representation (2) of a material existing fact (3) relied upon by the plaintiff, (4) who was damaged as a proximate result of the alleged misrepresentation. Russellville Production Credit Ass'n. v. Frost, 484 So. 2d 1084 (Ala. 1986). If the fraud is based upon a promise to perform or abstain from performing in the future, two additional elements must be proved: (1) the defendant's intention, at the time of the alleged misrepresentation, not to do the act promised, coupled with (2) an intent to deceive. Id.
The Tidmores contend that there was no evidence presented at trial to support the claim that a material misrepresentation was made. They argue that the record is devoid of evidence from which the jury could find that the lease did not include Exhibit B and that, even if the jury could find that the Tidmores misrepresented that Exhibit B would not be included, the Strahans' reliance on any such representation was not reasonable in light of the documents presented to them at the January 30 meeting. They cite testimony by Leon Strahan in support of their argument.
The Strahans in contrast maintain that there was substantial evidence presented showing that the Tidmores had attempted to include Exhibit B as a portion of the agreement, despite the fact that they (the Strahans) specifically objected to its inclusion. Mary Sue Strahan testified on direct examination as follows regarding the January 30 meeting:
Mrs. Strahan testified on cross-examination as follows:
Leon Strahan similarly testified as to discussions between the parties at the January 30 meeting concerning Exhibit B:
The Tidmores argue that the Strahans could not have reasonably relied on the alleged misrepresentation that Exhibit *581 B would not be included in the January 30 lease because paragraph 33 of that lease incorporated Exhibit B by reference. A party is ordinarily bound by the terms of a document he signs in spite of inconsistent oral statements. See, e.g., Alpine Bay Resorts, Inc. v. Wyatt, 539 So. 2d 160 (Ala. 1988).
If a party is lulled into a sense of security, however, by misrepresentations of the contents of a document by an agent of the other party, "the law inputes to him no knowledge of its contents." Southern Building & Loan Ass'n v. Dinsmore, 225 Ala. 550, 552, 144 So. 21, 23 (1932) (citations omitted); Taylor v. Dorough, 547 So. 2d 536, 541 (Ala.1989). In Arkel Land Co. v. Cagle, 445 So. 2d 858 (Ala.1983), an attorney for the defendant mineral lessee misrepresented to the plaintiff lessor that a certain portion of the plaintiff's property would not be included in the lease. This Court affirmed the plaintiff's fraud judgment. The diligence required of parties when initially contracting is greater than when the parties renew a contract. Woodlawn Fraternal Lodge No. 525, F. & A.M. v. Commercial Union Ins. Co., 510 So. 2d 162, 164 (Ala.1987).
In this case, as in Woodlawn Fraternal Lodge, the controversy does not involve an initial contract between the Strahans and the Tidmores, but is based upon an ongoing business relationship. The Strahans had been operating Val Monte Steak House for a substantial period of time under an agreement with Robbins. The Tidmores were familiar with this arrangement, had visited the restaurant often, and had at times socialized with the Strahans. Additionally, the Strahans and the Tidmores had an established contractual history as a result of the loans the Tidmores had advanced to the Strahans. The two leases executed by the Strahans for the property (the Robbins lease and the Tidmore lease) are almost identical in form and content.
Paragraph 33 is on the next to last page of the 14-page lease. It is headed "Time of the Essence," and in the Robbins lease it simply read, "Time is of the essence in all provisions of this lease." Into the Tidmore lease was typed, after those printed words, "and subject to the terms and conditions set forth in Exhibit `B,' attached." This addition would have been easily overlooked by the Strahans, who, being familiar with the Robbins lease, could reasonably have relied on the Tidmores' alleged representations that the new lease was the same as the Robbins lease except for certain financial terms.
The Strahans testified unequivocally that Exhibit B was not attached to the lease when they signed it, and the jury could have found from their testimony that the Tidmores' attorney induced them to sign the lease by representing that Exhibit B was not a part of the lease. Although there was a reference to Exhibit B in paragraph 33 of the lease, the jury could have found that the Tidmores' attorney lulled the Strahans into not examining the lease by telling them "not to worry about" Exhibit B, implying that it was not included in the lease and would not be enforced. In light of the relationship that existed between the Strahans and the Tidmores, together with the representations that the lease was the same as the Robbins lease and that Exhibit B would not be included, the jury could have found that it was not unreasonable for the Strahans to rely on the Tidmores' assertions that the lease did not contain Exhibit B and that the Strahans would not have to worry about it.
This Court stated the following in Super Value Stores, Inc. v. Peterson, 506 So. 2d 317 (Ala.1987), regarding proof of damages in a fraud action: "[I]f the plaintiff shows that he sustained actual damages as a result of the fraud, even though the exact amount may not be shown, the plaintiff is entitled to recover nominal damages, and, where appropriate, punitive damages." 506 So. 2d  at 334. Based on the evidence before this Court, we conclude that the Strahans have produced sufficient evidence to support the jury's verdict in their favor on the fraud issue. There is adequate evidence to support findings that the Tidmores tried to enforce the conditions of Exhibit B, contrary to their alleged representations that it would not be part of *582 the new lease, and that the Strahans were damaged by their actions. Furthermore, the presumption of correctness of a jury verdict is strengthened by the refusal of the trial court to grant a new trial. Lewis v. Ritch, 417 So. 2d 210 (Ala.Civ.App.1982). Therefore, we affirm the judgment on the fraud claim.
Next, the Tidmores argue that the trial court erred in overruling their motion for a directed verdict or j.n.o.v. on the claim alleging interference with a business relation. The Tidmores postulate, among other things, that this tort can be committed only by a party outside the contractual relationship. In other words, they argue that because a legal contractual relationship existed between them and the Strahans, they cannot be said to have interfered with the Strahans' Val Monte business. The Tidmores cite Hickman v. Winston County Hospital Board, 508 So. 2d 237 (Ala.1987), in support of this position. Hickman involved a suit by an employee against her employer for interference with business or contractual relations. The Court held that the employer's breach of his own contract with the employee was not a basis for the tort. Id. at 238. However, the Court stated that the tort could be applicable to individuals acting outside their scope of employment. The Tidmores argue that if there was any cause of action to be sued upon, which they dispute, it would have been one for trespass or breach of contract.
A claim of intentional interference with a business relation, to be actionable, requires: (1) The existence of a contract or business relation; (2) defendant's knowledge of the contract or business relation; (3) intentional interference by the defendant with the contract or business relation; (4) absence of justification for the defendant's interference; and (5) damage to the plaintiff as a result of the defendant's interference. Gross v. Lowder Realty Better Homes & Gardens, 494 So. 2d 590 (Ala. 1986). The Gross case outlined a new rule of law in Alabama. The purpose behind the creation of a single set of elements was to establish a framework broad enough to encompass both the tort of interference with business relations and that of interference with contractual relations.
Although the Tidmores and the Strahans were parties to a contract, the alleged interference by the Tidmores was not with that relationship. The Strahans' claim relates to the relationship between the Strahans and their employees and customers at the Val Monte Steak House business, not the relationship of landlord and tenant between the Tidmores and the Strahans. As to this issue, the record reveals sufficient evidence to support the jury's finding in favor of the Strahans. Leroy Strahan, Leon's brother, testified that many customers were dissatisfied and uncomfortable as a consequence of the presence of the various inspectors and deputies on the property:
The record reflects that the Tidmores hired former Steak House employees to watch the premises. Leroy testified that the Tidmores had confused other employees by telling them that they were going to take over the place:
Thus, the Strahans' claim is not barred by the rule that the tort of intentional interference applies only to acts by third parties as to the business relation, even though there were also business relations between the Tidmores and the Strahans. Because sufficient evidence was presented to sustain the jury's verdict on the claim of an intentional interference with business relations, we affirm the judgment as to this issue.
The Tidmores next claim that it was reversible error to allow the Strahans to present evidence to the jury of the Tidmores' financial condition. It appears that the trial court allowed the Strahans to cross-examine Mr. Tidmore after he made statements to the jury on direct examination by his attorney that he had told Leon Strahan that "we've mortgaged everything we've got. At my age we've got no retirement income or anything. We've got [sic] mortgaged everything we've got to put you in business...." The Tidmores attempt to draw a distinction between Mr. Tidmore's testifying to what he told Mr. Strahan and his testifying directly to the jury that he had mortgaged everything he had. They contend that, because the statements were made within the context of a conversation between him and Leon Strahan, Tidmore was not holding himself out to the jury as being in poor financial condition, and, therefore, that the testimony was irrelevant and prejudicial and should have been excluded. The trial court, however, properly found that the testimony had the effect of placing the Tidmores' financial condition before the jury.
The latitude and extent of cross-examination are matters within the discretion of the trial court and are revisable on appeal only for prejudicial abuse, and a party claiming such an abuse of discretion has the burden of persuasion. Hembree v. City of Birmingham, 381 So. 2d 664 (Ala. Crim.App.1980). Because the Tidmores put their financial condition before the jury, the Strahans were entitled to cross-examine them in regard to that matter; therefore, there was no abuse of discretion.
The Tidmores next argue that it was error for the trial court to deny their motions for summary judgment, directed verdict, and j.n.o.v., on their eviction action. Summary judgment is appropriate only if there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. McMullin v. AmSouth Bank, 512 So. 2d 1382 (Ala.Civ. App.1987). A directed verdict or j.n.o.v. is proper only where there is a complete absence of proof on a material issue as to the claim or defense. Ritch v. Waldrop, 428 So. 2d 1 (Ala.1982). Both the Tidmores and the Strahans offered plausible evidence to support their arguments. For instance, the Tidmores proffered documentation that the Strahans had defaulted on an agreement to make a security deposit and that they had allowed the property insurance to lapse. The Strahans countered with affidavits and testimony that the Tidmores had told them the security deposit was not necessary. *584 They also showed that a new insurance policy had been issued on the same day the old policy had lapsed, and that, therefore, the property was never without coverage. Clearly, the Strahans presented evidence as to issues in support of their defenses to the eviction claim, and the trial court was correct in denying the Tidmores' motions.
Last, the Tidmores argue that the trial court incorrectly charged the jury on their claim alleging breach of contract. They argue that the following statements by the trial judge, concerning when a lessor may recover property, were misstatements of the law: (1) that a lessor is required to allow a lessee a "reasonable time" within which to cure a default before the lessor can recover the premises; (2) that notice must be given in order to terminate possession; and (3) that a default must be a material one for the landlord to be entitled to regain possession of the property.
It is the duty of the trial judge to instruct jurors fully and correctly on the applicable law of the case and to guide, direct, and assist them toward an intelligent understanding of the legal and factual issues involved in the search for truth. Grayco Resources, Inc. v. Poole, 500 So. 2d 1030 (Ala.1986). However, it is within the province of the jury to apply the law as it is given to them to the facts of the case. Raines v. Williams, 397 So. 2d 86 (Ala. 1981).
The record reveals that the lease between the Tidmores and the Strahans specifically defines what conditions constitute default. It states that if a lessee fails to comply with any of those conditions then the lessor shall give notice to the lessee in writing, sent by registered mail, postage prepaid and return receipt requested. There was no evidence that the Tidmores complied with the notice requirements. Having failed to prove compliance, a landlord is not entitled to a reentry of the premises and a forfeiture. Noel Smith Dev. Co. v. National Filtronics, Inc., 360 So. 2d 338 (Ala.1978); Nelson v. Darling Shop of Birmingham, Inc., 275 Ala. 598, 157 So. 2d 23 (1963). Because the lease specifically required notice and there was no evidence that the Tidmores satisfied the notice requirement, the court correctly charged the jury that the Strahans had a reasonable time in which to cure any default.
No reversible error is presented by the Tidmores' contention that the trial judge's instruction that a default, to justify eviction, must be a material one held the Tidmores to a higher standard than is required by law. Since the lease itself required notice and the Tidmores did not give the Strahans notice of default and a reasonable opportunity to cure, the materiality of any defaults committed by the Strahans is irrelevant to the Tidmores' right to evict them, and any error in the instruction was harmless. Rule 45, Ala.R.App.P. Reversible error in the giving of an instruction occurs only where that error is prejudicial. Underwriters Nat. Assur. Co. v. Posey, 333 So. 2d 815 (Ala.1976). We find no prejudice in this instance.
A judgment based on the verdict of a jury is presumed to be correct and will not be reversed unless, after allowing all reasonable presumptions of its correctness, the preponderance of the evidence against the verdict is found to be so decided so as to clearly convince this Court that it is wrong and unjust. Shelby County v. Oldham, 264 Ala. 626, 89 So. 2d 106, 107 (1956).
Because we find no reversible error, the judgment of the trial court is due to be, and it hereby is, affirmed.
AFFIRMED.
HORNSBY, C.J., and MADDOX, ADAMS and STEAGALL, JJ., concur.
[1]  Robbins is not a party to this action.
[2]  Although the Strahans' brief actually refers to the section as § 6-5-10, because of the text quoted it is clear that they are referring to § 6-5-103.