Opinion ID: 1925065
Heading Depth: 1
Heading Rank: 2

Heading: Fraud by Silence

Text: Schilleci next argues that Daniel and CCB Montgomery committed fraud by silence by failing to disclose a February 1988 market report that revealed that Anheuser-Busch was dissatisfied with CCB Montgomery's facilities. In this report, Anheuser-Busch cited specific problems with the wholesale operation and directed CCB Montgomery to make expensive renovations in its equipment and operation to meet Anheuser-Busch standards. Schilleci alleges that he would have paid $1.5 million less for the business if he had known of Anheuser-Busch's dissatisfaction with the operation and the expense that would be involved in making the changes required. In its order, the trial court held that there was no material issue of fact as to whether Schilleci knew of the market report during negotiations for CCB Montgomery. The court noted that in deposition Schilleci testified that he had read the negative market report from Anheuser-Busch regarding CCB Montgomery before purchasing the business and had used the information contained therein to formulate his second market plan for Anheuser-Busch after the first one was rejected. However, in his affidavit opposing the summary judgment motion on this issue, Schilleci said that the document he saw was merely the general cover letter of the report, which did not greatly detail the problems Anheuser-Busch had with CCB Montgomery. Schilleci's attorney also gave an affidavit in which he stated that neither he nor Schilleci saw the full report during the negotiations to buy CCB Montgomery. When a party to an action has, in response to unambiguous questions, given clear answers that negate the existence of any genuine issue of fact, that party cannot later create an issue of fact by submitting an affidavit that directly contradicts, without explanation, that earlier testimony. Tittle v. Alabama Power Co., 570 So.2d 601 (Ala.1990). In this case, Schilleci has offered an explanation for the contradictions in his deposition testimony and his affidavit. Further, the record indicates that Daniel did not give Schilleci the report until after the closing, when he left a copy of it behind after cleaning out his desk at CCB Montgomery. The fact that Schilleci may not have seen the full market report before closing the sale does not, however, establish his claim of fraud by silence. The elements of this claim are 1) a duty to disclose the 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. Wilson v. Brown 496 So.2d 756 (Ala.1986). Silence is not actionable unless there is a confidential relationship or some special circumstance that imposes a duty to disclose. Wilson, supra. Whether there is a duty to speak depends upon the fiduciary, or other, relationship of the parties, the value of the particular fact, the relative knowledge of the parties, and other circumstances of the case. Ala.Code.1975, § 6-5-102. When the parties to a transaction deal with each other at arm's length, with no confidential relationship, no obligation to disclose arises when information is not requested. Norman v. Amoco Oil Co., 558 So.2d 903 (Ala.1990). Here, Schilleci has not established the existence of special circumstances or a confidential relationship between himself and Daniel that would give rise to a duty to disclose the market report. Both men were experienced wholesalers and were dealing at arm's length over the purchase of a business with which each was familiar. Schilleci admits that he had, at the very least, a copy of the market report's cover letter and that he had even used the information contained therein to bolster the second market plan he submitted for Anheuser-Busch's approval. The letter clearly indicated that CCB Montgomery had failed to meet Anheuser-Busch's standards of quality in several areas, but Schilleci did not choose to ask Daniel for more information or otherwise to investigate the matter. These circumstances did not impose on Daniel any duty to provide Schilleci with more information. Although it did so for different reasons, the trial court properly entered a summary judgment for Daniel on this issue. A correct decision will not be disturbed even if the court gives a wrong reason. Davison v. Lowery, 526 So.2d 2 (Ala.1988), cert. denied, 488 U.S. 854, 109 S.Ct. 140, 102 L.Ed.2d 113 (1988). Schilleci also argues that Anheuser-Busch committed fraud by silence by failing to provide him with a copy of the adverse market report. This argument is without merit. Anheuser-Busch was in no way involved in the negotiation process with Daniel and Schilleci for the purchase of CCB Montgomery. In fact, Anheuser-Busch was not notified of Daniel's intent to sell the business until two weeks after Schilleci had made his $5 million offer to Daniel. Because Anheuser-Busch had no duty to disclose the market report to Schilleci, the summary judgment was properly entered in its favor on this issue. Schilleci next contends that Daniel and CCB Montgomery committed fraud by silence in failing to disclose the fact that Horn Beverage was selling Anheuser-Busch products in south Montgomery and the fact that Horn and Daniel had an unwritten agreement authorizing Horn to do so. However, it is undisputed that, during the period of negotiation with Daniel, at least two individuals informed Schilleci that the 23 accounts were being serviced by Horn. Schilleci testified in deposition that he never discussed the south Montgomery accounts with Daniel before the closing of the deal and that he did not question Daniel about these accounts after learning that Horn serviced them. Instead, Schilleci continued to vigorously seek Anheuser-Busch's approval of the transfer. It is undisputed that Schilleci has been in the beer distributing business since 1972 and is experienced in this area. He was represented throughout the entire negotiation process by his attorneys and accountants, as well as experts who evaluated the worth of CCB Montgomery and CCB Selma as being in excess of $5 million, even without the value of the 23 south Montgomery accounts. In view of the foregoing, we conclude that Schilleci did not present sufficient evidence to establish the necessary elements of fraudulent suppression. Accordingly, the trial court properly entered the summary judgment on this claim.