B & M Homes, Inc. v. Hogan

• Decision Date: 14 September 1979
• Citation: 376 So.2d 667
• Court: Alabama Supreme Court
• Parties: B & M HOMES, INC., a corp. v. Thomas J. HOGAN et al. Kenneth R. MORROW v. Thomas J. HOGAN et al. 77-797, 77-804.

Page 667

376 So.2d 667

7 A.L.R.4th 1162

B & M HOMES, INC., a corp. v. Thomas J. HOGAN et al.

Kenneth R. MORROW v. Thomas J. HOGAN et al.

77-797, 77-804.

Supreme Court of Alabama.

Sept. 14, 1979.

As Modified on Denial of Rehearing Nov. 2, 1979.

Ray G. Riley, Jr. of McFadden, Riley & Parker, Mobile, for appellant B & M Homes, Inc.

Irvin J. Langford for Howell, Johnston, Langford, Finkbohner & Lawler, Mobile, for appellant Kenneth R. Morrow.

Fred W. Killion, Jr. and Stephen J. Flynn, Mobile, for appellees Thomas J. Hogan and Carol Ann Hogan.

EMBRY, Justice.

These appeals, consolidated pursuant to Rule 3(b) by stipulation of appellants/defendants B & M Homes, Inc. and Kenneth R. Morrow, are from a judgment in favor of appellees/plaintiffs Thomas J. Hogan and Carol Ann Hogan. The judgment was entered on a jury verdict for $75,000 reduced by remittitur to $50,000. Although the Hogans accepted the remittitur, B & M and Morrow appeal and the Hogans urge reinstatement of the original verdict. See Rule 59(f), ARCP.

We affirm but reinstate the verdict in the full amount of $75,000.

The Hogans' action was submitted to the jury on two theories: (1) breach of a covenant, implied within their written purchase contract, to build their home in a workmanlike manner using first class materials; and (2) breach of an express warranty to build their home in substantial conformity to plans and specifications approved by the FHA (Federal Housing Administration) or the VA (Veterans Administration).

The issues are: (1) whether damages for mental anguish may be recovered in an action for breach of contract or breach of warranty to construct a house; (2) whether the trial court committed reversible error by admitting in evidence, over objection, certain hearsay testimony; (3) whether the trial court committed reversible error by failing to grant a directed verdict in favor of appellants on grounds of variance between appellees' pleadings and proof; (4) whether the trial court erred by admitting parol evidence as to B & M Homes' liability on the purchase contract; (5) whether the trial court committed reversible error by admitting evidence regarding appellees' VA financing; (6) whether the trial court erred by not entering summary judgment in behalf of, or directing a verdict for, appellant Morrow; and (7) whether the original jury verdict should be reinstated.

This is the second appeal to this court of this case. See B & M Homes, Inc. v. Hogan, 347 So.2d 1331 (Ala.1977). On the first appeal we reversed on the sole basis that a remittitur was ordered without affording the Hogans an opportunity to choose it or a new trial.

On remand a corrected order of remittitur was entered and the remitted judgment was accepted by the Hogans. Nonetheless, B & M Homes and Morrow each perfected their appeal.

The Hogans entered into a written agreement to buy both a lot and a house to be constructed on that lot. Both of them signed the agreement as purchasers, and appellant, Morrow, later signed as seller without any indication he was acting in a representative capacity. The agreed purchase price was $37,500. At the time of the execution of the contract, Morrow was secretary of B & M Homes, Inc., and acting as its agent. All negotiations by the Hogans were conducted with Morrow. The Hogans testified they thought they were buying the lot from Morrow because he indicated to them that he owned the lot. The evidence is undisputed that title to the lot in question was actually held by B & M Homes, Inc., when the purchase agreement was executed. There is also evidence there was a B & M Homes sign on the lot; but there is no evidence the Hogans saw such a sign, and Mrs. Hogan testified she did not recall seeing such a sign. The evidence shows that after the contract was executed the Hogans were made aware of the fact that B & M Homes was the builder of their home; however, they continued to direct all communications, complaints, and inquiries concerning it to Morrow. The evidence is undisputed that Morrow had actual authority to represent B & M Homes.

During the construction of the house, Mrs. Hogan discovered a hairline crack in the concrete slab that extended from the front porch through the den and informed Morrow of this. He informed her that such cracks were common and told her not to worry about it. B & M Homes completed construction of the house and the Hogans received a warranty of completion of construction signed by Morrow on behalf of B & M Homes. The Hogans then moved into the house. After they moved in they reported several defects in the house to Morrow and repairmen were sent to fix those defects. After a couple of months the crack in the slab widened and extended through the house causing severe damage.

Again, Morrow was notified. He sent a man to repair some of the damage caused by the crack in the slab; however, nothing was done to repair the slab itself. There is expert testimony to the effect the slab probably could not be permanently repaired. There is also testimony the defective slab seriously decreased the value of the house; the Hogans' expert witness testified

the defective slab made the house worthless. Evidence of what caused the crack in the slab is in conflict.

I

Appellants contend the trial court erred by failing to grant their motion to strike mental anguish as an element of damages from the Hogans' complaint. We find mental anguish a proper element of damages in this case.

As noted at the outset, the Hogans' case was submitted to the jury on two theories stated in separate counts: one for breach of an implied covenant, to their written purchase contract, to build their home in a workmanlike manner using first class materials; and one for breach of express warranty. In both counts, appellees alleged damages for mental anguish as follows:

" * * * the plaintiffs have suffered mental anguish and are still suffering mental anguish with regard to the condition of such home in that they fear for their safety in the house not being structurally sound; * * * ."

At the close of the trial, B & M Homes filed a motion to strike the above allegation from both causes of action. The motion was denied. It can be assumed the jury awarded damages for mental anguish since the verdict was for $75,000 and the highest appraisal of the value of the house had it been built without defects was $42,500.

Evidence was introduced, over appellants' objection, that the Hogans were worried and concerned for their safety due to these facts: (1) the house was structurally defective and they believed its defective condition might cause the gas and water lines to burst; and (2) they were forced to live in the defective house because they could not afford to move.

In Alabama the general rule is that mental anguish is not a recoverable element of damages arising from breach of contract. Sanford v. Western Life Insurance Co., 368 So.2d 260 (Ala.1979); Stead v. Blue Cross-Blue Shield of Alabama, 346 So.2d 1140 (Ala.1977). This court, however, has traditionally recognized exceptions to this rule in certain cases. Sanford v. Western Life Insurance Co., supra; Stead v. Blue Cross-Blue Shield of Alabama, supra; Alabama Water Service Co. v. Wakefield, 231 Ala. 112, 163 So. 626 (1935); Becker Roofing Co. v. Pike, 230 Ala. 289, 160 So. 692 (1935); F. Becker Asphaltum Roofing Co. v. Murphy, 224 Ala. 655, 141 So. 630 (1932); Birmingham Water Works Co. v. Ferguson, 164 Ala. 494, 51 So. 150 (1909). The exceptions are stated in the following excerpt from F. Becker Asphaltum Roofing Co. v. Murphy, supra, which was quoted in Stead v. Blue Cross-Blue Shield of Alabama, supra:

"The general rule is that damages cannot be recovered for mental anguish in an action of assumpsit. Birmingham Water Works Co. v. Vinter, 164 Ala. 490, 51 So. 356. The ground on which the right to recover such damages is denied, is that they are too remote, were not within the contemplation of the parties, and that the breach of the contract is not such as will naturally cause mental anguish. Westesen v. Olathe State Bank, 78 Colo. 217, 240 P. 689, 44 A.L.R. 1484. 'Yet where the contractual duty or obligation is so coupled with matters of mental concern or solicitude, or with the feelings of the party to whom the duty is owed, that a breach of that duty will necessarily or reasonably result in mental anguish or suffering, it is just that damages therefor be taken into consideration and awarded.' 8 R.C.L. p. 529, § 83; Southern Ry. Co. v. Rowe, 198 Ala. 353, 73 So. 634; McConnell v. United States Express Co., 179 Mich. 522, 146 N.W. 428, Ann.Cas. 1915D, 80; Westesen v. Olathe State Bank, 78 Colo. 217, 240 P. 689, 44 A.L.R. 1484; Burrus v. Nevada-California-Oregon Ry. Co., 38 Nev. 156, 145 P. 926, L.R.A. 1917D, 750.

"Another exception is where the breach of the contract is tortious, or attended with personal injury, damages for mental anguish may be awarded. Vinson v. Southern Bell Tel. & Tel. Co., 188 Ala. 292, 66 So. 100, L.R.A. 1915C, 450.

"The facts of this case, if the plaintiff's evidence was believed, brings the case within these two exceptions.

"The contract related to placing a roof on the plaintiff's residence, her 'castle,' the habitation which she had provided to protect her against the elements, and to shelter her belongings that she thought essential to her comfort and well-being, the very things against which she made the contract to protect herself and her property, and as a result of the breach of the obligation which defendants assumed, the roof leaked to such extent that she was disturbed in her comfort, her household belongings were soaked with water, her house was made damp, she was made sick, as the jury were authorized to find. And the defendants, though repeatedly notified, took no steps to meet their obligation, were not only guilty of a breach of the contract, but were negligent in respect to the performance of the duty which it imposed on them. Charge 12 was...