Opinion ID: 599224
Heading Depth: 2
Heading Rank: 2

Heading: Fraudulent Suppression Claim

Text: 28 Oxford claimed at trial that Drexel had engaged in fraudulent suppression by failing to disclose McLeod's threats to sue Drexel, Masco and Oxford, to flood the Birmingham market with Birmingham Wholesale's excess Drexel furniture, and to bury Chew if Drexel proceeded with its termination of Birmingham Wholesale. The district court rejected Drexel's motion for a directed verdict. We review the denial of a motion for a directed verdict under the standard discussed above. 29 Under Alabama law, a plaintiff must establish four elements to support a fraudulent suppression claim: (1) a duty to disclose facts, (2) concealment or nondisclosure of material facts by the defendant, (3) inducement of the plaintiff to act, and (4) action by the plaintiff to his injury. Norman v. Amoco Oil Co., 558 So.2d 903, 905 (Ala.1990). See Ala.Code § 6-5-102 (1975). Drexel argues that Oxford failed to satisfy its burden to establish each of these elements. 30 The first element, the duty to disclose, may arise from the confidential relations of the parties or from the particular circumstances of the case. Ala.Code § 6-5-102. In determining whether a duty arises under this section, the relation of the parties, the value of the particular fact suppressed, the relative knowledge of the parties, and other circumstances are to be weighed. Bank of Red Bay v. King, 482 So.2d 274, 285 (Ala.1985). The question of the existence of a duty to communicate is generally for the jury to decide. Lowder Realty, Inc. v. Odom, 495 So.2d 23, 26 (Ala.1986). 31 In 1986, Drexel and Oxford discussed a proposal for the opening of a Drexel showcase store. The proposal, however, never materialized because Drexel was not able to provide Oxford with exclusivity in the Birmingham market. Therefore, when Drexel approached Oxford in 1988, Drexel was aware that Oxford had previously requested market exclusivity. Following the January meeting between Oxford and Drexel, McLeod questioned Drexel's dealings with Oxford in various correspondence. McLeod balked at being terminated as a Drexel dealer at the April market when Drexel informed him of its plans with Oxford. Drexel's McClain also testified that McLeod stated he would bury Chew if Drexel carried out its plan. Following Drexel's confrontation with McLeod, Drexel met with Oxford and assured it that Birmingham Wholesale had been terminated. Oxford, however, was not informed of McLeod's statements. Later in April, McLeod renewed his threats of litigation and a disruption of the Birmingham market. 32 We find that there was a question as to whether the particular facts of this case created a duty on the part of Drexel to communicate McLeod's threats to Oxford. There was a history of relevant prior dealings between the two parties. Further, the exact date of the formation of the contract is uncertain and some of McLeod's threats may have occurred before Drexel contracted with Oxford and after Drexel informed Oxford that Birmingham Wholesale had been terminated. This, coupled with Alabama's preference that the jury resolve the question of duty to communicate, persuades us that the district court properly allowed the jury to reach that decision. 33 The second element of a fraudulent suppression claim is the nondisclosure of a material fact. According to Chew's testimony, Oxford did not learn of McLeod's statements to Drexel until May 19, 1989, several weeks after McLeod's threats. Hence, the district court properly allowed the jury to determine if the length of time between McLeod's threats and disclosure to Oxford amounted to nondisclosure. The Alabama courts have defined materiality as a fact of such a nature as to induce action on the part of the complaining party. Bank of Red Bay, 482 So.2d at 282. Materiality is generally a question for the jury. Id. at 282; Jim Walter Homes, Inc. v. Waldrop, 448 So.2d 301, 305 (Ala.1983). In Bama Budweiser v. Anheuser-Busch, Inc., 611 So.2d 238, 244 (Ala.1992), the Alabama Supreme Court held that a representation that causes a person to do nothing more than he was already contractually obligated to do before the representation was made is not material and therefore cannot support a fraud action. In the present case, however, it is uncertain when the contract was formed. Indeed, under Drexel's version of events, the contract was not formed until the April market meeting. This meeting occurred after Oxford was advised that McLeod had been terminated and that everything was proceeding, despite McLeod's communication of serious threats. Therefore, we find that the district court properly allowed the jury to determine if McLeod's threats were material. 34 As to the third element of the fraudulent suppression claim, inducement, the evidence conflicted as to whether Oxford was persuaded to contract with Drexel because it was unaware of McLeod's threats. Thus, the jury was properly allowed to determine whether Drexel induced Oxford into taking action it would otherwise not have pursued. 35 As to the fourth element, damages, Drexel argues that any damages arising from a claim of fraudulent suppression must necessarily be subsumed within the breach of contract claim. Therefore, there can be no fraudulent suppression damages where contract damages are awarded. Under Alabama law, however, a single transaction can support an award of damages for both breach of contract and fraud as long as the judge instructs the jury that there can be no double recovery. Deupree v. Butner, 522 So.2d 242, 244-45 (Ala.1988). In this case, the district court, with agreement of the parties, instructed the jury that any damages awarded under the fraudulent suppression claim would be included in the damages awarded under the contract claim. The jury awarded $1,473,000, all of which was included in the award on the contract claim. This instruction prevented any double recovery by Oxford and satisfied the requirements of Deupree. Accordingly, the district court properly allowed the jury to determine the damages Oxford had sustained. 36 In summary, we find that Oxford presented sufficient evidence to allow reasonable persons to reach different conclusions on whether Drexel had engaged in fraudulent suppression. Therefore, we find that the district court properly denied Drexel's motion for a directed verdict on this claim.