Opinion ID: 1144419
Heading Depth: 2
Heading Rank: 2

Heading: Whether the Garmon Letter Induced Bosarge to Transition from Shipbuilder to Operator

Text: The plaintiffs next argue that they detrimentally relied upon the Garmon letter because, they argue, in reliance on that letter Bosarge made the transition from a shipbuilder to an operator. In the hearing on the motion for a JML, the plaintiffs argued that Bosarge showed [the letter] to other people, such as past customers, thus burning bridges and irretrievably damaging business relationships that had been lucrative during Bosarge's career as a shipbuilder. As the plaintiffs characterize the situation on appeal, for the first time, [Bosarge] announced to the marketplace that he was stepping into competition with the companies which formerly comprised his customer base. The only specific evidence indicating that Bosarge announced to the marketplace his intent to compete with others through Offshore, however, is Bosarge's testimony that he contacted four named operators in an effort to find an operator willing to put Offshore's vessel in its fleet. In making their argument during the hearing on the motion for a JML, the plaintiffs advanced a novel legal theory. As counsel for the plaintiffs explained to the trial court: I don't think [reliance] has to be necessarily linked with the damage. Whether [Bosarge] was damaged by the fraud is a different question than whether he relied on it to his detriment. If we prove detrimental reliance, . . . we've proven fraud. The damage question is what damage has flowed? Granted, the element of reliance per se is disconnected from damage, a separate element. The lumping of the concept of reliance with damage or detriment whence comes detrimental relianceis simply another way of referring to the combined elements of reliance and damage. The notion that detrimental reliance is untethered to damage, however, is completely unfounded. As we have recently noted, a fraud claim fully accrues once any legally cognizable damage has proximately resulted, i.e., once the plaintiff has `detrimentally' relied on the fraud. Ex parte Haynes Downard Andra & Jones, LLP, 924 So.2d 687, 694 (Ala.2005). Or as Justice Houston recently explained: Fraud, as a cause of action, requires some damage stemming from reliance on a misrepresentation or suppression intended to induce that reliance. . . . Hunt Petroleum Corp. v. State, 901 So.2d 1, 12 (Ala.2004) (Houston, J., concurring specially)(emphasis added). Thus it is critical that a plaintiff prove that his reliance on the fraud proximately caused the damage that forms the basis of his action. The plaintiffs' argument as to how they relied to their detriment lacks merit for three reasons. First, Bosarge's testimony, put in context, describes his decision to incorporate Offshore in January 2003 and further describes his decision, which was made  about that time [,] to put into play this plan to be an operator (emphasis added); his plan entailed informing his former customers of his intent to compete with them as an operator. Such evidence indicates that he did not wait for the February 21 notification by Garmon that temporary financing had been approved but rather began informing his former customers before that event. Second, Bosarge offered no evidence indicating that his intended transition actually harmed him. His only evidence indicating harm was his personal conjecture that his former customers would not use his business should he return to the shipbuilding trade. This speculation does not rise to the level of substantial evidence indicating detrimental reliance. See Nelson v. University of Alabama Sys., 594 So.2d 632, 635 (Ala.1992). Finally, and perhaps most importantly, Bosarge was asked whether Compass's alleged misrepresentation had damaged [his] reputation or [his] ability to ply [his] trade in the boat building business. Counsel for Compass objected, and after a short colloquy, the trial court stated: Well, I'm going to not allow the testimony from [Bosarge] about any impact that's been had on him personally. . . . If I allow you to, I'll allow you to call him back up and pursue it. The plaintiffs never subsequently sought permission to, or attempted to, pursue this line of questioning and no evidence was presented with respect to whether or how Bosarge individually was hindered by a diminished reputation or lost business. [3] The plaintiffs have not attacked the court's order excluding such evidence; thus, they have acquiesced in that decision by the court. With no concrete evidence indicating that Bosarge's transition from shipbuilder to vessel operator harmed him, this basis for attacking the trial court's order is meritless.