Opinion ID: 416545
Heading Depth: 1
Heading Rank: 10

Heading: Brown-Marx's tort claims

Text: 56 a. The fraud claim 57 Brown-Marx's fraud claim is based on the representations that it maintains were made by the bank via Mulcahy in the last few weeks before the abortive closing day: (1) that the bank was preparing for and would be ready to close the loan on November 1; (2) that the documents Brown-Marx had submitted were satisfactory and nothing more was required for closing; (3) that the loan would close on November 1. The court granted the bank's motion for directed verdict on this claim at the close of Brown-Marx's case in chief. Reviewing the evidence under Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969), standards we hold that the directed verdict was correct. Fraud in Alabama is defined as: 58 Misrepresentations of a material fact made willfully to deceive, or recklessly without knowledge, and acted on by the opposite party. 59 2975 Code of Ala. Sec. 6-5-101. International Resorts, Inc. v. Lambert, 350 So.2d 391 (Ala.1977), sets out the four elements of a cause of action for legal fraud: false representation, materiality, reliance, and damage. 60 The district court found that the bank did not adequately prepare to close the loan on November 1. But under Alabama law failure to fulfill promises does not give rise to actionable fraud unless it is alleged and proved that the representations were made with intent to deceive and with no intent at the time the representations were made to carry them out. Evans v. Adam's Rib, Inc., 289 Ala. 377, 267 So.2d 448, 450 (Ala.1972); Bracewell v. Bryan, 57 Ala.App. 494, 329 So.2d 552 (Ala.Civ.App.1976). Failure to perform a promise is not of itself adequate evidence of intent to support an action for fraud. Id. A mere breach of a contractual provision is not sufficient to support a charge of fraud. See McAdory v. Jones, 260 Ala. 547, 71 So.2d 526, 528 (Ala.1954). There was evidence that the bank because of changes in the prevailing interest rates no longer considered the loan desirable, but there was no substantial evidence that the bank did not intend to honor the commitment if its terms were met. 6 61 b. The tort of bad faith 62 After the trial, Brown-Marx was granted leave to amend to add a new claim for breach of implied duty to deal in good faith. This claim is grounded on the same conduct complained of in the fraud claim. Brown-Marx maintains that the bank was subject to an implied covenant to deal in good faith to prepare for closing and to close the loan and that the bank intentionally and maliciously breached this duty. The court dismissed this claim with prejudice, reasoning that it was an attempt by Brown-Marx to state a claim for the tort of bad faith, a newly recognized Alabama theory of recovery. 7 The court concluded, after examining the history of this new theory, that it is limited in application to bad faith by insurers failing to pay insurance claims. 63 It is possible for a tort to arise in Alabama out of a breach of a duty implied by or arising out of a contract, 8 but the Alabama Supreme Court has stated that an ordinary breach of contract will not give rise to a tort. Bentley-Beale v. Wesson Oil & Snowdrift Sales Co., 231 Ala. 562, 165 So. 830, 832 (Ala.1936). Here there is no wrong independent of the contract. The gravamen of Brown-Marx's claim is the bank's failure to close on the appointed day, an obligation plainly set out in the contract itself. From our examination of the Alabama law, and giving deference to the interpretation by a federal district judge sitting in that state, see Alabama Electric Cooperative, Inc. v. First National Bank, 684 F.2d 789, 792 (11th Cir.1982); we hold that Brown-Marx has failed to set out an actionable tort for breach of the duty of good faith. 64 c. Remaining tort claims 65 About a week after the district court dismissed the claim for the tort of bad faith, Brown-Marx moved for leave to amend to add three more claims. The district court denied leave on the grounds of untimeliness, that the facts developed in the earlier trial did not support the proposed claims, and for the reasons stated in dismissing the bad faith claim. Each proposed new claim was based on the same conduct relied on in the dismissed bad faith claim. The motion was presented two years after the initial complaint was filed and only days before final judgment was entered. Among the factors that may justify denial of leave to amend are prejudice, undue delay, dilatory motive by movant, and repeated failure to cure deficiencies by amendments previously allowed. See Foman v. Davis, 371 U.S. 178, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962). The denial of leave to amend was not an abuse of discretion. 66 AFFIRMED.