Opinion ID: 1833843
Heading Depth: 1
Heading Rank: 4

Heading: Fisher's Breach-of-Duty Claims Against Speaks, Locators, and Thomas

Text: Fisher claims that Speaks, Locators, and Thomas owed him a fiduciary duty to fully inform him (1) that the appraisal presented to Fisher contained a $100,000 mistake and (2) that Thomas was both an owner of Comer Plantation and the owner of the real-estate firm charged with selling the property. [3] These allegations also form the basis for Fisher's claim regarding fraudulent suppression. [4] We first consider whether Speaks had a duty to disclose the appraisal mistake or to disclose Thomas's relationship with Locators, Speaks's employer. In deciding this question, we are bound by the common law as it existed before the enactment of the Real Estate Consumer's Agency and Disclosure Act (the Act)codified at §§ 34-27-80 through -88, Ala.Code 1975which became effective after the transactions that resulted in this lawsuit had occurred. [5] According to § 6-5-102, Ala.Code 1975, a duty to communicate, or disclose, can arise from (1) confidential relations of the parties and (2) the particular circumstances of the case. We conclude that, under Alabama's common law, an affirmative duty arose on the part of Speaks to disclose the nature of Thomas's interests as they related to Speaks. Before the Act was adopted, the well-established rule under Alabama common law was that a real-estate broker could not serve as the agent of a buyer and also of the seller unless both parties, with full knowledge, consented to the broker's dual representation. See Davis v. Brown, 513 So.2d 1001, 1001-03 (Ala.1987); Cashion v. Ahmadi, 345 So.2d 268, 271 (Ala.1977); First S. Fed. Sav. & Loan Ass'n v. Nicrosi, 333 So.2d 780, 784-85 (Ala.1976) (Jones, J., dissenting); and Finney v. Long, 216 Ala. 628, 631, 114 So. 200, 203 (1927); see also J. Clark Pendergrass, The Real Estate Consumer's Agency and Disclosure Act: The Case Against Dual Agency, 48 Ala. L.Rev. 277, 287-90 (1996) (discussing dual agency under Alabama common law). In the present case, Speaks's duty of disclosure depends on whether he was a dual agent. Cf. Cashion, 345 So.2d at 270-71 (where this Court refused to adopt the California case of Lingsch v. Savage, 213 Cal.App.2d 729, 29 Cal.Rptr. 201 (1963), which held that if a broker, even if he is an agent of the seller, has knowledge of defects not known to or readily ascertainable by the buyers, the broker is under a duty to disclose those defects, and the failure to do so results in liability to the buyer). Therefore, we are confronted with the precise question whether there was a genuine issue of material fact as to whether Thomas, who was obviously an agent for the sellers, was also an agent for Fisher. The question of agency in this case depends on whether a jury could have inferred that Fisher and Speaks consented to an agency relationship. See Harold Gill Reuschlein & William A. Gregory, The Law of Agency and Partnership, § 12 (2d ed. 1990) (Agency is a consensual relationship.). An agency relationship can arise in different ways: While the creation of an agency relationship, so far as the principal and agent are concerned, arises from their consent and usually as the result of a contract, it is not essential that any actual contract exist or that compensation be expected by the agent or agreed to by the parties. While the relationship, in its full sense, arises out of a contractual or gratuitous agreement between the parties, ... the agency and the assent of the parties thereto may be either express or implied.... An express agency is an actual agency created as a result of the oral or written agreement of the parties, and an implied agency is also an actual agency, the existence of which as a fact is proved by deductions or inferences from the other facts and circumstances of the particular case, including the words and conduct of the parties. 3 Am.Jur.2d Agency § 18 (1986). Fisher argues that Speaks's agency was implied from an amalgam of circumstances and conduct surrounding the negotiation of the purchase of Comer Plantation. During the negotiations, Speaks conducted himself as if he represented Fisher. He advised Fisher regarding what amount should be offered for the land and also negotiated on Fisher's behalf for the owners to provide culvert pipes to repair damaged roads on the property. The record suggests that Speaks thrust himself into the heart of the transaction on Fisher's behalf; therefore, we conclude that Fisher presented sufficient evidence for the question of Speaks's agency to be submitted to a jury. See Cashion, 345 So.2d at 271 (stating that the question whether a real-estate agent represents a buyer and a seller in the same transaction in a fiduciary capacity is a jury question). If a jury finds Speaks was Fisher's agent by an implied agency, then it also could infer that Speaks breached his fiduciary duty as Fisher's implied agentit could infer this from the evidence in the record suggesting that Speaks failed to disclose that his employer, Thomas, was also one of the owners of Comer Plantation, which was the subject of the agency relationship. Speaks's representation of a group of individuals that included Thomas naturally involved a personal interest in terms of an employee-employer relationship, which was contrary to his fiduciary duty to Fisher unless Fisher consented to the conflict of interest after full disclosure. A jury can reasonably conclude that Speaks's failure to disclose this conflict constituted a breach of his fiduciary duty owed to Fisher. Whether Speaks and the other defendants had a duty to disclose the error in the appraisal is potentially more complex than the question just answered, but we need not address this issue. Rather, we focus on the nature of the suppression that Fisher alleges. Specifically, he argues that Speaks should have disclosed that the report contained a mathematical error. In Cornelius v. Austin, 542 So.2d 1220, 1222 (Ala.1989), we stated: We carefully scrutinize the plaintiff's case in a fraud action because `it is the policy of courts not only to discourage fraud but also to discourage negligence and inattention to one's own interests.' Torres v. State Farm Fire & Casualty Co., 438 So.2d 757, 758-59 (Ala.1983). In Torres, we held that `[i]f the purchaser blindly trusts, where he should not, and closes his eyes where ordinary diligence requires him to see, he is willingly deceived, and the maxim applies, volunti non fit injuria.' 438 So.2d at 759 (quoting Munroe v. Pritchett, 16 Ala. 785, 789 (1849)). Considering the nature of the error in the appraisal report, we conclude that these principles apply here. The error in the appraisal report appears on the final page of the report. On that page, the appraiser added 10 figures, 1 from each category he had valued. These categories included the values of particular structures, such as the plantation house, as well as the values of specific uses, such as harvesting timber. These 10 figures were presented in a single column and were totaled at the end. Simple arithmetic performed in a moment's time would have revealed the error. The record indicates that parties who typically rely on appraisals, such as banks, always check the figures for mathematical accuracy to guard against the problem experienced by Fisher. Fisher, who is a lawyer with a degree of real-estate experience, surely knew that his reliance on the appraisal would complicate negotiations if there was a mathematical error in its total. Even if a jury found a fiduciary relationship between Speaks and Fisher, the jury could not find that Speaks violated his duty simply by failing to direct Fisher's attention to what Fisher admitted was an obvious error. We conclude that Fisher's inattention to his own interest precludes him from recovering on his claim alleging suppression of the mathematical error. We are therefore left with the claim regarding Speaks's failure to disclose Thomas's dual status as an owner of Comer Plantation and the employer of Speaks. We must now decide whether this failure gives Fisher an actionable claim, after considering whether he suffered a loss, and, if so, whether the alleged suppression proximately caused it. The primary loss Fisher claims is the $50,000 earnest money he forfeited by repudiating his contract to purchase Comer Plantation. He also claims, however, that he lost the benefit of an advantageous bargain he says he would have obtained by purchasing the property and using it for various purposes. In fraudulent-suppression cases, causation is often discussed in terms of reliance. When deciding whether the plaintiff relied on a misrepresentation, the fact-finder must consider whether the plaintiff would have chosen a different course but for the suppression of a material fact. Shades Ridge Holding Co. v. Cobbs, Allen & Hall Mortg. Co., 390 So.2d 601, 611 (Ala.1980). The contract for the sale of Comer Plantation included a liquidated-damages clause, which provided: Should the buyer fail to consummate the purchase of the property on or before the Closing Date, the conditions to Buyer's Obligations set forth in this Contract having been satisfied, and Seller not being in default hereunder, Seller may: (1) Retain the earnest money, and cancel this Contract with each party being relieved of any further obligation to the other hereunder.... After Fisher signed this contract, he sent Locators a check for $50,000 as earnest money. Once he discovered the error in the appraisal report, he repudiated the contract and demanded the return of his payment. The contract, however, unequivocally gave the sellers the right to keep the $50,000 as liquidated damages. [6] Therefore, his repudiation caused him to forfeit his earnest money. During the negotiations, Fisher was in constant contact with Speaks. Speaks advised him on offering prices, answered questions, and even negotiated a small part of the contract on Fisher's behalf. While Fisher was aware of Speaks's duties to the sellers as a group, he was unaware of Speaks's personal stake in the success of the transaction. In his deposition, Fisher stated that had he known that Thomas was an owner of Locators as well as a minority owner of Comer Plantation, he would have hired an independent personsomeone other than Speaksto advise him. Presumably, he might have hired a lawyer from the Barbour County area to represent him during the negotiations. Such a lawyer, with an independent perspective of the proposed contract, might have advised Fisher not to agree to purchase Comer Plantation, either under the terms of the contract or under any terms at all, and, in such a case, Fisher would not have been in a position to forfeit his $50,000 earnest money. Under the facts of this case, reasonable persons could conclude that Fisher was induced to enter the contract based on his ignorance of Speaks's personal interest in the consummation of the sale, and they could conclude that, but for this inducement, Fisher would not have suffered a loss. Consequently, we conclude that the summary judgment was improperly entered as to Fisher's claims against Speaks, Thomas, and Locators alleging suppression and breach of fiduciary duty (as those claims related to the failure to disclose the relationship between Thomas and Locators). As to those claims, the summary judgment is reversed.