Opinion ID: 475510
Heading Depth: 3
Heading Rank: 2

Heading: Fraudulent Misrepresentation With Respect to Continued Employment With Amoco

Text: 16 The employees allege that Amoco continued to represent to them that they would be employed for life with Amoco's Alabama LPG operations even as Amoco negotiated the sale of the business to Norgas. They believe that Amoco fraudulently induced them to remain employed with Amoco in order to make the business a more attractive going-concern to Norgas. The district court granted summary judgment with respect to this claim on the ground it was barred by a one-year statute of limitations, holding that the employees' cause of action accrued when they learned that Amoco would sell the business and terminate their employment contracts, in August, 1979. 17 The issue on appeal is whether the district court correctly determined that the employees' cause of action accrued, and the period of limitations began to run, when they learned that Amoco was to sell the business. There is no dispute that all the employees learned that the LPG operations would be sold no later than August 21, 1979. They did not file their suit until September 4, 1980. They insist that their cause of action did not accrue until their employment with Amoco was actually terminated on September 4, 1979, but have cited no case that supports this statement of the law. 18 The employees' attorney insisted repeatedly at oral argument that the injury associated with this type of claim occurs upon actual termination and that the cause of action does not therefore accrue until that point, relying on Brotherhood of Locomotive Firemen & Enginemen v. Hammett, 273 Ala. 397, 140 So.2d 832 (1962). That case, however, was not a fraud case but involved malicious interference with employment, a cause of action that obviously does not arise until the actual interference or termination occurs. 19 In contrast, the employees' cause of action sounds in fraud and their injury was by definition the detrimental reliance that occurred prior to their discovery that they had been victims of misrepresentation. According to Alabama law, a fraud cause of action accrues, and the one year statute of limitations begins to run, at the discovery of the facts constituting the fraud. Such discovery occurs when the plaintiff should have discovered facts that would provoke a person of ordinary prudence to inquiry. Colafrancesco v. Crown Pontiac-GMC, Inc., 485 So.2d 1131 (Ala.1986). In this case, discovery took place no later than August 21, 1979. 20 That the employment contracts did not actually terminate until September 4, 1979, makes no difference. The statute of limitations begins to run when the plaintiff knows or should know that the employer does not intend to perform as promised. Retail, Wholesale and Department Store Employees Union, Local 453 v. McGriff, 398 So.2d 249, 252 (Ala.1981). McGriff involved, as does the instant case, the claim that the employee was induced to work for the employer by a promise of pension benefits upon having remained on the payroll for a certain number of years. The Alabama Supreme Court held that the employee's fraud cause of action arose when he knew or should have known that the employer did not intend to provide the promised benefits, not at the point he was actually denied the benefits. The district court correctly granted summary judgment in favor of Amoco on the ground that this particular fraud claim is barred by the statute of limitations. 21