Opinion ID: 1675551
Heading Depth: 1
Heading Rank: 1

Heading: Rumford v. Rawlins and Dinges (1911624)

Text: Dinges and the Rawlinses argue that the trial court properly entered the summary judgment on the claims against them because, they argue, the Rumfords' claims are barred by the statute of limitations. One count in the Rumfords' complaint sought damages for negligence and wantonness by the Rawlinses; and one count alleged negligence by the Rawlinses. These claims are governed by the two-year statute of limitations provided in § 6-2-38, Ala.Code 1975. Generally, a cause of action for injury or damage to property accrues, so as to start the running of limitations, on the date of the injury or damage, and not upon the occurrence of the negligence itself, or the last known negligent act. 54 C.J.S. Limitations of Actions, § 176 (1987) (citing Alabama Power Co. v. Cummings, 466 So.2d 99 (Ala. 1985) (footnotes omitted) (emphasis added). [T]he cause of action `accrues,' and the statute of limitations begins to run, `when, and only when, the damages are sustained.' McWilliams v. Union Pacific Resources Co., 569 So.2d 702, 704 (Ala.1990). As expressed with more particularity, an action for damage to land accrues, for limitations purposes, upon discovery of the first actionable injury. See McWilliams v. Union Pacific Resources Co., 569 So.2d 702, 706 (Ala.1990) (Maddox, J., concurring specially) (emphasis added). This rule is applicable not only to causes of action involving damage to the land itself but also to causes of action involving damage to appurtenant structures. In Home Insurance Co. v. Stuart-McCorkle, Inc., 291 Ala. 601, 285 So.2d 468 (1973), this Court held that the limitations period began to run on the date that ice was discovered inside the walls of an improperly constructed building. 291 Ala. at 609, 285 So.2d at 473. The Rumfords discovered the live termites and termite damage on October 14, 1990. Before that date, the Rumfords had suffered no deprivation of the use or enjoyment of their home. We find McWilliams, supra, to be controlling in the present case. Thus their cause of action accrued within the two-year period immediately before January 22, 1991. We further conclude that the Rawlinses failed to make a prima facie showing that there was no genuine issue of material fact with regard to the Rumfords' negligence and wantonness claims against them. Accordingly, the summary judgment on those claims is reversed. Ex parte Head, 572 So.2d 1276 (Ala.1990). In Count XII of their amended complaint, the Rumfords allege that Valley, Dinges, and the Rawlinses conspired to produce a false termite letter at closing. This cause of action is also governed by the two-year statute of limitations. § 6-2-38( l ). However, like the negligence and wantonness claims, this cause of action did not accrue until the Rumfords discovered the damage to their house. Moreover, we conclude that the Rumfords produced substantial evidence of a conspiracy between Valley and the Rawlinses to produce a false termite letter. Accordingly, the summary judgment in favor of Valley and the Rawlinses is reversed as to the conspiracy count. We conclude, however, that the trial court properly held that there was no genuine issue of material fact with regard to the conspiracy count against Dinges. Therefore, that portion of the summary judgment is affirmed. In Counts IX, X, and XI of their amended complaint, the Rumfords sought damages from Valley, Dinges, and the Rawlinses for fraudulent concealment, suppression, and fraud. Count II alleged that Valley and the Rawlinses were liable for suppression; and Count VII alleged fraud by Valley and the Rawlinses. Counts I and III alleged fraud by the Rawlinses alone; and Count VIII of the amended complaint sought rescission of the sale contract based on the Rawlinses' alleged fraud. We note that fraud claims are also governed by the general two-year statute of limitations set out in § 6-2-38( 1 ). However, because that provision would create a bar to the Rumfords' fraud claims, the saving provision set out in § 6-2-3 is invoked. Section 6-2-3 provides: In actions seeking relief on the ground of fraud where the statute has created a bar, the claim must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have two years within which to prosecute his action. [D]iscovery is made when facts become known `which provoke an inquiry in the mind of a man of reasonable prudence, and which, if followed up, would have led to a discovery of the fraud'; therefore, `fraud is deemed to have been discovered when it ought to have been discovered.' Ryan v. Charles Townsend Ford, Inc., 409 So.2d 784, 786 (Ala.1981) (quoting Johnson v. Shenandoah Life Ins. Co., 291 Ala. 389, 281 So.2d 636 (1972)). That is, the statutory period of limitations begins to run when the plaintiff, in the exercise of ordinary care, should have discovered the misrepresentation. Haines v. Tonning, 579 So.2d 1308, 1309-10 (Ala.1991). The burden is on the plaintiffs to show that their claim comes within § 6-2-3. Miller v. Mobile County Board of Health, 409 So.2d 420, 422 (Ala.1982); Amason v. First State Bank of Lineville, 369 So.2d 547 (Ala.1979). Our task is to determine whether the trial court properly decided that, as a matter of law, the Rumfords should have discovered the alleged misrepresentations at some point more than two years before they commenced this action. The question of when a party discovered or should have discovered the existence of a fraud is ordinarily one for the trier of fact. Davis v. Brown, 513 So.2d 1001, 1003 (Ala.1987) (citing Sims v. Lewis, 374 So.2d 298 (Ala.1979)). In this case, the summary judgment can properly be based on the statute of limitations only if the Rumfords actually knew of facts that would have put a reasonable person on notice of the fraud. We have held that [t]he question of when a plaintiff should have discovered fraud should be taken away from the jury and decided as a matter of law only in cases where the plaintiff actually knew of facts that would have put a reasonable person on notice of fraud. Hicks v. Globe Life & Accident Insurance Co., 584 So.2d 458, 462 (Ala.1991) (emphasis in Hicks ). The record shows that the Rumfords knew before the closing that the house had been inspected for termites. The letter prepared by Valley and presented at closing affirmatively states that during its inspection Valley had not detected any present termite infestation. [1] The record also shows that the Rumfords knew that a French drain had been installed under the house. They were told, however, that this was done to bring the house up to code. We note that the Rumfords thoroughly inspected the accessible areas of the house several times before closing. In fact, the record shows that the Rumfords prepared a list of repairs for the Rawlinses to make before the closing. While the Rumfords did not inspect the crawl space under the house, they were told by the Rawlinses that there were no problems with moisture in that area. We conclude that the summary judgment in favor of Dinges and the Rawlinses cannot properly be based on the statute of limitations. While a jury may well conclude, based on all of the evidence, that the Rumfords should have discovered the possible fraud at a point more than two years before they filed their action, we cannot so hold as a matter of law. The defendants also argue that because the Rumfords were in possession of the house for over two years before commencing this action, they should have discovered the alleged fraud at a point more than two years before they sued. We disagree. In Hicks, supra, the defendant insurance company argued that the plaintiff should have discovered an alleged fraud when she received her insurance policy. We concluded, however, that the time at which she should have discovered the fraud was a question for the jury. Hicks, 584 So.2d at 462. Just as the plaintiff in Hicks was in possession of a document that may have contained evidence of the alleged fraud, in this case the Rumfords were in possession of the house. In Thompson v. Vaughn, 592 So.2d 585 (Ala.1992), we held that the buyer's fraud claim against the seller was barred by the statute of limitations. In that case, the buyer lived in the house for over eight years before filing his claim. Significantly, the buyer also stated that he knew of the defect approximately seven years before he filed his claim against the seller. Id., 592 So.2d at 587. In the present case, we cannot conclude that merely because the Rumfords lived in the house for two years before commencing this action, they necessarily should have detected the presence of excessive moisture, fungus, mildew, and termites sooner than they say they did. Dinges and the Rawlinses also argue that the Rumfords failed to present substantial evidence to support their allegations of fraud. Specifically, the defendants argue that they did not affirmatively misrepresent any facts about the house and that, because the Rumfords did not specifically ask about previous termite infestation or the presence of fungus or mildew, they were under no obligation to furnish such information. In other words, they claim that the doctrine of caveat emptor is a good defense to the Rumfords' fraud claims. In Fennell Realty Co. v. Martin, 529 So.2d 1003 (Ala.1988), the purchasers of a house sued a realtor, alleging that the realtor had fraudulently misrepresented the condition of the heating system in the house. The heating system had several defects that created a dangerous condition in the home. 529 So.2d at 1004. In that case, we held that Alabama retains the doctrine of caveat emptor with regard to the sale of a used residence. We further held, however, that if an agent has knowledge of a material defect or condition that affects health or safety and the defect is not known to or readily observable by the buyer, the agent is under a duty to disclose the defect and is liable for damages caused by nondisclosure. Fennell, 529 So.2d at 1005. This duty of disclosure is also placed on the seller. Id. The Rumfords' expert stated in his affidavit that the termite damage and moisture problems as they existed in March, 1988, are material defects in the home that could affect the structural integrity of a house, and can affect the health and safety of its occupants. Based on this testimony, and in light of our holding in Fennell, we conclude that whether the Rawlinses were under an obligation to disclose the moisture problems and the previous termite infestation is a question for the jury. Accordingly, we hold that the summary judgment in favor of the Rawlinses cannot properly be based on the doctrine of caveat emptor. After reviewing the record and considering the arguments of the Rumfords and the Rawlinses, we find no other ground upon which the summary judgment on the Rumfords' fraud claim could properly be based. Accordingly, we reverse the summary judgment with regard to the Rumfords' fraud claims against the Rawlinses. While it is undisputed that the Rawlinses knew, at a minimum, that the house had previously been infested with termites and that there had been fungus and mildew under the house, the Rumfords have not presented substantial evidence that Dinges was aware of these potential problems with the house. Assuming that Dinges had a duty to disclose any material defects of which she had knowledge, she, nonetheless, cannot be held liable for failing to disclose that which she did not know. Cornelius v. Austin, 542 So.2d 1220, 1224 (Ala.1989). See also, Rosenbaum v. Texas Energies, Inc., 241 Kan. 295, 736 P.2d 888 (1987). Accordingly, the summary judgment in favor of Dinges on the fraud claims is affirmed. The Rumfords' final claim against the Rawlinses alleged that the Rawlinses breached their contract with the Rumfords for the sale of the house. The contract provides, in relevant part, The Seller will furnish a letter from a licensed exterminating company certifying that the improvements are free of termites and damage caused by termites or other wood destroying insect infestation. The Rawlinses argue that the summary judgment on this claim should be affirmed because, they argue, they fully complied with the requirements of the contract. That is, they assert that the March 14 letter, which stated that Valley did not detect any active termite infestation, fulfilled the terms of the contract. While the contract did not expressly so provide, we conclude that the above-quoted provision must be read to require, at a minimum, that the sellers furnish a letter that, to the best of their knowledge, accurately describes the condition of the house. Because there is evidence that the Rawlinses knew about damage from termite infestation, we conclude that the Rumfords presented substantial evidence to support their claim that the Rawlinses breached the sale contract and to create a genuine issue of material fact. Accordingly, we reverse the summary judgment with regard to the breach of contract claim against the Rawlinses.