AT & T Information Systems, Inc. v. Cobb Pontiac-Cadillac, Inc.

• Decision Date: 11 August 1989
• Docket Number: PONTIAC-CADILLA,INC
• Citation: 553 So.2d 529
• Court: Alabama Supreme Court
• Parties: AT & T INFORMATION SYSTEMS, INC. v. COBBCOBBv. AT & T INFORMATION SYSTEMS, INC., and Paul Roy. 87-624, 87-648.

Page 529

553 So.2d 529

AT & T INFORMATION SYSTEMS, INC. v. COBB PONTIAC-CADILLAC, INC.

COBB PONTIAC-CADILLAC, INC. v. AT & T INFORMATION SYSTEMS, INC., and Paul Roy.

87-624, 87-648.

Supreme Court of Alabama.

Aug. 11, 1989.

Rehearing Denied Nov. 9, 1989.

Sterling G. Culpepper, Jr. and W. Joseph McCorkle, Jr. of Balch & Bingham, Montgomery, for appellant/cross-appellee.

Roger S. Morrow and Joel H. Pearson of Morrow, Romine & Pearson, Montgomery, for appellee/cross-appellant.

HORNSBY, Chief Justice.

AT & T Information Systems, Inc. ("AT & T"), appeals from a judgment based on a jury verdict in the amount of $33,500 concerning its alleged fraudulent misrepresentations to Cobb Pontiac-Cadillac, Inc. ("Cobb"), with respect to a proposed sale and installation of a telephone system. Cobb cross-appeals, contending that the trial court erred in entering summary judgment in favor of AT & T and its agent, Paul Roy, on Cobb's breach of contract claim. We affirm both judgments.

In April 1985, Cobb approached AT & T regarding the possible purchase of a new telephone system, and was referred to Paul Roy, the AT & T account executive responsible for the Montgomery, Alabama, area. Roy was told that Cobb wanted to purchase a system that would connect two affiliated ventures with Cobb. Roy then recommended a system at a cost, including installation, of $98,000. Cobb declined.

Roy then consulted the AT & T "National Pricing Agreement Book" in his office and discovered that AT & T and General Motors ("GM") had previously entered into an agreement whereby GM was entitled to Roy then called the AT & T National Pricing Hotline, a telephone bank in New Jersey established to answer questions from AT & T account executives regarding discounts. Roy learned that the GM discounts were still available, but he failed to determine whether the discounts were available to GM dealerships, such as Cobb. It was later determined that the discounts were not applicable to dealerships.

volume discounts on certain purchases of telephone equipment. That agreement provided that GM would receive specified discounts, which, in the AT & T-Cobb transaction, apparently would have amounted to approximately $30,000.

In June 1985, Roy advised Cobb that, pursuant to the agreement between AT & T and GM, Cobb was entitled to approximately a 30% discount on the total price of the proposed telephone system. Cobb's owner then arranged a meeting with Roy, and, prior to the meeting, requested that Roy unqualifiedly confirm the applicability of the discount. At the meeting, Roy unqualifiedly assured Cobb's owner that the discounts applied to GM dealerships and provided him with an AT & T sales contract form that they discussed in detail. The following clauses appear in the "Terms and Conditions" section of that contract form:

"AT & T Information Systems, Inc. ('AT & T-IS') and Customer agree that the following terms and conditions will apply to any order for the provision and/or sale of products and services to Customer by AT & T-IS which is accepted by AT & T-IS on or after the date the Customer signs this Agreement....

"This Agreement will become effective when signed by Customer and accepted in writing by AT & T-IS. Any order will be effective when accepted by AT & T-IS...."

The following statement appeared at the bottom of the contract form above the signature lines:

"CUSTOMER'S SIGNATURE BELOW INDICATES CUSTOMER HAS READ AND AGREES WITH THE TERMS AND CONDITIONS ON THE REVERSE HEREOF...."

During the meeting, Cobb's owner signed the form in the space designated "Customer," and Roy signed in the space designated "Received By." The space designated "Accepted By" was left blank and remains unsigned. Although Roy and Cobb's owner mutually understood the discount to be approximately $30,000, the contract document included neither an amount to be paid by Cobb nor a description of the equipment to be furnished by AT & T.

AT & T then began ordering and constructing the equipment for the new system. Cobb, in reliance upon Roy's representations that the new system could not be installed until Cobb's existing system was paid off, discharged the amount owed for its existing system. Although Roy denied making these representations, Cobb's owner and general sales manager discussed the payoff of the existing system in Roy's presence, and he did nothing to dissuade them.

After the meeting, Roy returned to his office with the contract to calculate the specific discounts. After calculating them, he forwarded the contract to AT & T's contract administrator, who later informed Roy that the contract had not been accepted because the discount did not apply to GM dealerships. Roy then informed Cobb that the contract had not been accepted, and that he had been mistaken when he had stated that the discount applied to GM dealerships. Cobb demanded AT & T's performance in accordance with the "contract," i.e., that AT & T sell the telephone systems at the discounted price. Roy then stated that AT & T's position was that the "contract" had never been accepted by AT & T, and that it was merely a proposed agreement. Following this conversation, Cobb's owner and general sales manager discussed this matter with AT & T's sales manager, who restated AT & T's position and informed them that Cobb's two alternatives were either to pay full price for the systems or to call off the transaction.

Cobb then sued AT & T and Roy in Montgomery County Circuit Court, alleging fraud and breach of contract. AT & T answered the complaint by denying liability Evidence of damages adduced during the trial included evidence of the difference between the price Cobb actually paid for an inferior system--$68,860.25--and the estimated discounted price of the AT & T system, $65,052.25. Cobb also argued that it was entitled to compensatory damages that included costs incurred in the prepayment of the lease, including penalties associated therewith, on its existing telephone system. The jury returned a verdict exonerating Roy and assessing damages of $33,500 against AT & T in favor of Cobb. The trial court entered judgment accordingly. AT & T thereafter filed a motion for JNOV or, in the alternative, for a new trial. The trial court denied this motion, and these appeals followed.

and averring that Roy lacked authority to bind AT & T to the contract. The trial court entered summary judgment in favor of AT & T and Roy on the contract claim, and the case was tried on the fraud claim.

I.

AT & T argues that it was entitled to JNOV on the fraud claim for several reasons. We address each separately.

A. No misrepresentations

AT & T argues that all statements made by Roy and, thus, imputable to AT & T, were statements concerning acts to be done in the future. "Thus, in order to withstand a motion for judgment notwithstanding the verdict, Cobb must have adduced some evidence that [the statements made by Roy amounted to] promissory fraud." Brief of Appellant at 13. We agree with that characterization.

We stated in Padgett v. Hughes, 535 So.2d 140, 142 (Ala.1988):

"The elements of fraud are (1) a false representation (2) of a material existing fact (3) [justifiably] relied upon by the plaintiff (4) who suffered damage as a proximate consequence of the misrepresentation. To prevail on a promissory fraud claim such as that at issue here, that is, one based upon a promise to act or not to act in the future, two additional elements must be satisfied: (5) proof that at the time of the misrepresentation, the defendant had the intention not to perform the act promised, and (6) proof that the defendant had an intent to deceive."

In this case, it is undisputed that Roy, acting on behalf of AT & T, represented to Cobb that it was eligible for a substantial discount in connection with the purchase of a new system. That statement was untrue, and, if it mattered, nothing in the "contract" related that Cobb would not be entitled to a discount. We find that this constituted sufficient evidence of a false representation.

B. Unjustifiable reliance

AT & T next argues that, because Cobb would get no discount unless AT & T accepted the "contract," any reliance on Roy's misrepresentation was unjustifiable.

Whether reliance is justifiable in a given fraud action is a question of fact. E.g., Padgett v. Hughes, supra, 535 So.2d at 143. Consequently, where there is a scintilla of evidence that the reliance was justifiable, JNOV is improper. ¹

In the case at bar, Roy, on behalf of AT & T, approached Cobb with the offer of a discount and subsequently, upon Cobb's owner's specific request, unqualifiedly assured Cobb that the discount would apply. The "contract" on its face was silent as to the discount, and the record is barren of any evidence that, as a matter of law, would have made Cobb's reliance unjustifiable. We hold that the trial court correctly denied the motion for JNOV on this ground.

C. No present intent to deceive

AT & T next maintains that Cobb presented insufficient evidence that, at the time Roy represented that Cobb was eligible for the discount, AT & T intended not In Leisure American Resorts, Inc. v. Knutilla, 547 So.2d 424 (1989), we stated:

to perform in accordance with Roy's representations. We disagree.

"It is axiomatic that a corporate employee's individual defense of lack of intent does not of itself end the inquiry with respect to the corporation's requisite intent to defraud. The corporation is acting as a legal entity and, if an individual corporate agent's conduct, though not fraudulent of itself, combines with the conduct of other corporate agents so as to amount to corporate fraud, the corporation may not escape liability simply by pointing to one innocent link in the chain. (See the discussion of Bolton Ford, infra.)

"....

Alpine Bay mistakenly sets forth the promissory fraud issue as whether there is sufficient evidence to support the finding that Mr. Marlow or Ms. Nelson, acting for Alpine Bay,...