Opinion ID: 1769612
Heading Depth: 1
Heading Rank: 1

Heading: Whether the Hilleys' fraud claims are supported by the evidence and the law.

Text: Allstate contends that neither the evidence nor the law supports the Hilleys' fraud claims. Allstate primarily argues that the alleged fraud is in the nature of promissory fraud, and, therefore, that the trial court erred in instructing the jury as to the elements of legal fraud, but not promissory fraud. Initially, we note that because this action was pending on June 11, 1987, the scintilla rule is applicable. [T]he scintilla rule requires that issues in civil cases must go to the jury if the evidence, or a reasonable inference therefrom, furnishes a glimmer or trace in support of an issue. Alabama Farm Bureau Mut. Casualty Ins. Co. v. Haynes, 497 So.2d 82, 85 (Ala.1986). Because we believe that this rule was satisfied in this case, we cannot say that the trial court erred in submitting the Hilleys' fraud claims to the jury. In General Motors Acceptance Corp. v. Covington, 586 So.2d 178 (Ala.1991), this Court enumerated the elements that must be satisfied in order to prove a claim of fraud: (1) a false representation; (2) of a material existing fact; (3) that [the plaintiff] justifiably relied upon; and (4) that [the plaintiff] was damaged as a proximate result. Id. at 181. We further stated: If a fraud claim is based upon a promise to do some act in the future, ... then [the plaintiff] has the added burden of proving the additional elements that[:] (1) the promisor, at the time of the alleged misrepresentation, did not intend to do the act promised; and (2) that the promisor, at that time, had an intent to deceive. Id. Allstate contends that the Hilleys failed to prove the additional elements of promissory fraud. We do not believe the Hilleys were required to do so. A promissory fraud claim is one based upon a promise to act or not to act in the future. Padgett v. Hughes, 535 So.2d 140, 142 (Ala.1988). The Hilleys' fraud claim arises from the Allstate agent's representation that, in the event their house was destroyed by fire, Allstate would either rebuild the house, replace the house, or pay the Hilleys the $38,000 that Allstate assessed as the market value of their house. [1] This statement is a representation of the insurance coverage that the Hilleys were purchasing. The statement was not a promise to act in the future. It was, rather, represented to the Hilleys as a present fact of Allstate's obligations under the insurance policy. Therefore, the trial court did not err in refusing to instruct the jury as to the additional elements of promissory fraud. The only argument with regard to legal fraud that Allstate makes concerns the element of justifiable reliance. Allstate argues that the Hilleys failed to produce any evidence that they justifiably relied on the agent's representation that the market value of their house was $38,000. We disagree. In Hickox v. Stover, 551 So.2d 259 (Ala.1989), we stated: In light of modern society's recognition of a standard of business ethics that demands that factual statements be made carefully and honestly, `[r]eliance should be assessed by the following standard: A plaintiff, given the particular facts of his knowledge, understanding, and present ability to fully comprehend the nature of the subject transaction and its ramifications, has not justifiably relied on the defendant's representation if that representation is one so patently and obviously false that he must have closed his eyes to avoid the discovery of the truth.' Id. at 263 (quoting Southern States Ford, Inc. v. Proctor, 541 So.2d 1081, 1091-92 (Ala.1989) (Hornsby, C.J., concurring specially)). We do not believe that the Allstate agent's representation at issue was one so patently and obviously false that [the Hilleys] must have closed [their] eyes to avoid the discovery of the truth, and we, therefore, hold that the jury could have reasonably found that the Hilleys justifiably relied on the agent's representation. In effect, Allstate is asking how the Hilleys could have believed their house was worth as much as Allstate's own agent represented. The Hilleys were entitled to rely, and justifiably, on the assumption that the agent was using his knowledge of the real estate market in the Gadsden area in assessing the market value of the Hilleys' house. Moreover, there was evidence that the year before the Hilleys purchased the house, the property had been appraised at $21,000. Thereafter, but before the Allstate agent assessed the market value of the house, Mr. Hilley made $8,000 to $10,000 worth of improvements. Finally, Mr. Hilley testified that the agent told him that his house was one of the nicer houses in the neighborhood. We believe that these factors are of such a character that the Hilleys could have justifiably relied on the agent's representation as to the market value of their house.