International Resorts, Inc. v. Lambert

• Decision Date: 30 September 1977
• Parties: INTERNATIONAL RESORTS, INC., et al. v. Wesley C. LAMBERT et al. SC 2121.
• Court: Alabama Supreme Court

Page 391

350 So.2d 391

INTERNATIONAL RESORTS, INC., et al. v. Wesley C. LAMBERT et al.

SC 2121.

Supreme Court of Alabama.

Sept. 30, 1977.

B. Clark Carpenter, Jr. and Barry N. McCrary of Dixon, Wooten, Boyett, McCrary & Thornton, Talladega, for appellants.

Betty C. Love of Love, Love, Lawrence & Burton, Talladega, for appellees.

SHORES, Justice.

This is an appeal from a judgment for the plaintiffs based upon a jury award of $100,000 which was reduced to $50,000 in a remittitur required by the trial court.

Prior to and on July 5, 1971, the defendants, International Resorts, Inc., were the owners and developers of certain real estate known as Point Aquarius which is located on Lake Logan Martin in Talladega County. The development was divided into lots according to a Master Plan prepared by Robert Trent Jones, a golf course architect. This Master Plan was not based upon a survey; however, but rather upon a general rendition of the subdivision. On July 5, 1971, the plaintiffs, Mr. and Mrs. Wesley C. Lambert, Jr., physically inspected the lot marked S-4 with Mr. Johnny Ray and Mr. Bill Beckham, who were representatives of the defendants. The defendants represented to the plaintiffs that this lot was Lot S-4 Golf East (hereinafter Lot S-4) which they had chosen from the Master Plan. The lot was staked with tall white stakes, one of which was marked Lot S-4, and the plaintiffs walked off the lot as presented by the defendants. Thereafter, Mr. Lambert signed an installment sales contract for that lot. Following this, a sign with Mr. Lambert's name on it was placed on Lot S-4.

On July 16, 1971, the defendants mortgaged Lot S-4 to the Commonwealth Financial Corporation. After the plaintiffs were told on August 17, 1971, that the lot was available, they made a down payment of $839.50 according to the contract.

Meanwhile, on July 31, 1971, Mr. and Mrs. Reuel Fick had executed an installment sales contract for the lot designated on the Master Plan as S-9 Golf East.

During the summer of 1972, Moody Ray of the survey firm of Ray, Peoples, and White met with the defendants' project coordinator to determine where to locate the country club parking lot which had not been provided for in the Master Plan. The parking lot was designed in such a manner as to encroach into an area directly adjoining plaintiffs' Lot S-4 and the Ficks' Lot S-9 Golf East. This caused the lots in plaintiffs' area, called Block 4 after the survey, to be shifted northward. The net effect of this shift was that the lot designated S-4 was re-assigned to a location outside Block 4. Although the record is not clear, apparently the plaintiffs were given equity in a lot designated on the Master Plan as J-2 by someone prior to February, 1975. The lot designated J-2 was some distance from the original location of Lot S-4.

In response to their request of July 10, 1972, the plaintiffs received a copy of the original contract. While the record is not clear on this point, either just prior to July 10, or about six months later, the plaintiffs apparently received a notice that their interest, for income tax purposes, was being applied to Lot J-2. The record is clear, however, that the plaintiffs contacted the defendants after the first notice and they were sent a photostatic copy of their original contract. About a year after the plaintiffs received the first notice, they received a similar notice.

The property was surveyed in 1972 or 1973 and the lot originally designed S-4 was re-named by Moody Ray (or by someone in his firm) as Lot 75, Block 4.

Sometime in 1974, Mr. Lambert discovered that the sign with his name on it, which had been placed on Lot S-4, had been removed from the lot.

On February 25, 1975, Mr. Lambert received a telephone call from Mr. Jim Pihakis who informed him there had been a mistake and that Mr. Lambert no longer owned Lot S-4. Thereafter, the plaintiffs traveled to Point Aquarius. When they arrived, they met Mr. Bud Abbott. They inspected their Lot S-4 and discovered that the stakes which had originally been placed on the property had been moved, reducing the size of that original lot. The plaintiffs were also told by Mr. Abbott that they could have Lot J-2 but they could not have their money refunded. When the Lamberts inspected Lot J-2, they found their sign had been placed on it. The plaintiffs were then shown a document that disclosed the lot originally designated S-4 had been deleted and that a smaller lot designated S-9 was now in its place. Further, the plaintiffs were told that Lot S-9 was owned by Mr. Fick. Although the Ficks were re-assigned to a portion of the lot originally designated Lot S-4, now Lot 75 in Block 4, they refused to accept it.

The plaintiffs then filed this action on July 29, 1975, alleging fraud and breach of contract; and, following a judgment in their favor, the defendants appealed, raising, among others, the following issues:

1. That the allegations of fraud and breach of contract are not supported by the evidence;

2. That the statute of limitations bars plaintiffs' action for fraud; and

3. The verdict was excessive.

The first issue presented is whether a prima facie case of fraud was established by the plaintiffs. The relevant portions of plaintiffs' original complaint are as follows:

"COUNT ONE

"1. On or about July 5, 1971, the defendants showed to plaintiffs a certain parcel of land and, along with plaintiffs, stepped off said parcel of land. Defendants represented to plaintiffs that, by entering into an installment sales contract, plaintiffs were purchasing the parcel of land that had been shown to and stepped off by plaintiffs.

"2. The representations made by the defendants were false and the defendants knew they were false.

"3. Plaintiffs believed the representations and in reliance upon them entered into an installment sales contract (a copy of which is attached hereto and marked Exhibit A) as purchaser of the aforementioned parcel of land.

"4. Plaintiffs first became aware that defendants representations were false on April 28, 1975.

"COUNT TWO

"1. Plaintiffs reallege Paragraph 1 of Count One.

"2. The representations made by defendants were false and defendants, without knowledge of the true facts, recklessly misrepresented them.

"3. Plaintiffs reallege Paragraph 3 of Count One.

"4. Plaintiffs reallege Paragraph 4 of Count One.

"COUNT THREE

"1. Plaintiffs reallege Paragraph 1 of Count One.

"2. The representations made by defendants were false and were made by mistake, but with the intention that Plaintiffs should rely upon them.

"3. Plaintiffs reallege Paragraph 3 of Count One.

"4. Plaintiffs reallege Paragraph 4 of Count One."

The original complaint was amended by adding two counts. Count Five, relevant here, follows:

"COUNT FIVE

"1. On or about July 5, 1971, the defendants showed to plaintiffs a certain parcel of land and, along with plaintiffs, stepped off said parcel of land. Defendants represented to plaintiffs that by entering into an installment sales contract plaintiffs were purchasing the parcel of land shown to and stepped off by plaintiffs.

On to-wit: July 5, 1971, in reliance upon said representation by defendants, the plaintiff, Wesley C. Lambert, Jr., signed an installment sales contract to purchase Lot S-4 which had been stepped off and shown to plaintiffs by defendants. On to-wit: August 17, 1971, the plaintiff paid to the defendants the sum of $839.52 upon defendants falsely representing to plaintiffs that said Lot S-4 was free and clear and could be purchased by plaintiffs.

"2. The representations made by defendants on to-wit: August 17, 1971, at a dinner meeting in Mobile, Alabama, by the defendants, were false and the defendants knew they were false when made.

"3. Plaintiffs believed the representations and in reliance upon them paid to defendants the sum of $839.52 as a down payment on Lot S-4 Golf East, a copy of which is attached to the original Complaint and marked Exhibit A.

"4. Plaintiffs first became aware that the defendants' representations were false on or about to-wit: February 26, 1975."

The definition of "legal fraud" is found in Title 7, § 108, Alabama Code:

"Misrepresentations of a material fact, made wilfully to deceive, or recklessly without knowledge, and acted on by the opposite party, or if made by mistake and innocently, and acted on by the opposite party, constitute legal fraud."

Regardless of whether the representations were made wilfully, recklessly or mistakenly, it has been held that there must be (1) a false representation, (2) the false representation must concern a material existing fact, (3) the plaintiff must rely upon that false representation, and (4) the plaintiff must be damaged as a proximate result. Shafer v. Timmons, 51 Ala.App. 157, 283 So.2d 609 (1973); Pihakis v. Cottrell, 286 Ala. 579, 243 So.2d 685 (1971).

The defendants argue that the plaintiffs have not proved the allegations of their complaint. They also argue that, inasmuch as the plaintiffs have been offered a lot of equal value for the lot for which they contracted, they should not have been awarded punitive damages. We disagree with both of these contentions.

It is argued that, to recover, the plaintiffs must prove that the defendants had an intention to deceive the plaintiffs at the time they sold Lot S-4 to them. The defendants contend that, inasmuch as they did not know that a parking lot would be built which would require the plaintiffs to be shifted to another lot, they should be exonerated from liability. As a general rule, an intent to deceive is an indispensable element to the successful maintenance of a tort action for fraud and deceit. 37 Am.Jur.2d, Fraud and Deceit, § 188. However, it is equally well-established that an action for damages will lie when one makes representations relied upon by another without knowing or caring whether they are true or false. Cooper v. Schlesinger, 111 U.S. 148, 4 S.Ct. 360, 28 L.Ed. 382 (1884); Mid-State Homes,...