City Realty, Inc. v. Continental Cas. Co.

• Decision Date: 28 May 1993
• Citation: 623 So.2d 1039
• Parties: CITY REALTY, INC., and Martha Cochran v. CONTINENTAL CASUALTY COMPANY. CITY REALTY, INC. and Martha Cochran v. Morris Wayne FORBUS and Mary C. Forbus. Morris Wayne FORBUS and Mary C. Forbus v. CITY REALTY, INC., and Martha Cochran. 1911427, 1911599 and 1911687.
• Court: Alabama Supreme Court

Page 1039

623 So.2d 1039

CITY REALTY, INC., and Martha Cochran v. CONTINENTAL CASUALTY COMPANY.

CITY REALTY, INC. and Martha Cochran v. Morris Wayne FORBUS and Mary C. Forbus.

Morris Wayne FORBUS and Mary C. Forbus v. CITY REALTY, INC., and Martha Cochran.

1911427, 1911599 and 1911687.

Supreme Court of Alabama.

May 28, 1993.

Rehearing Denied July 16, 1993.

Euel A. Screws, Jr. of Copeland, Franco, Screws & Gill, P.A., Montgomery, and Tom Radney of Tom Radney & Associates, P.A., Alexander City, for City Realty, Inc. and Martha Cochran, in case 1911427.

John M. Laney, Jr. and Deborah Alley Smith of Rives & Peterson, Birmingham, and Larkin Radney of Barnes & Radney, P.C., Alexander City, for appellants, cross-appellees City Realty, Inc. and Martha Cochran, in cases 1911599 and 1911687.

Steven F. Schmitt of Schmitt & Harper, a professional corp., Tallassee, and Lee Sims of Oliver and Sims, Dadeville, for appellees, cross-appellants Morriss Wayne Forbus and Mary Forbus.

KENNEDY, Justice.

A jury awarded the plaintiffs, Morris Wayne ("Wayne") Forbus and Mary C. Forbus, $300,000 on fraud claims against the defendants, City Realty Company, Inc., and Martha Cochran.

Underlying this case are the Forbuses' attempts to purchase property "listed" for sale by the president/manager of City Realty, Martha Cochran. Ultimately, Cochran, along with her husband and son, bought the property. The Forbuses sued Cochran and City Realty, averring that Cochran had engaged in fraudulent behavior in order to obtain the property, and, the Forbuses alleged, to prevent them from purchasing the property.

In a separate lawsuit, City Realty's "errors and omissions" insurer, Continental Casualty Company (referred to hereinafter as "CNA") had sued the Forbuses and City Realty for a judgment declaring the extent of City Realty's insurance coverage in the event the Forbuses prevailed at trial. CNA argued that City Realty was not covered for the type of behavior alleged by the Forbuses. CNA obtained a summary judgment in its favor and from this judgment City Realty appeals (case 1911427).

Thus, these three appeals involve two related cases, one in which the Forbuses sued City Realty and Martha Cochran based on theories of fraud, and one in which City Realty's insurer sued the Forbuses and City Realty, arguing that it had no contractual obligation to pay any judgment that the Forbuses might obtain.

After the Forbus trial, the court held the jury verdict in favor of the Forbuses to be excessive by $45,000. The Forbuses appeal from the trial court's order of remittitur (case 1911687).

Also, the trial court denied City Realty and Cochran's motion for a j.n.o.v. They appeal from that denial (case 1911599) (in addition to appealing from the judgment in favor of City Realty's insurer, which left City Realty without coverage for the award).

In the spring of 1990, City Realty and Mrs. Eunice Mae Blair were parties to a "listing agreement" for the sale of a house and adjoining acreage owned by Mrs. Blair. In late May 1990, an acquaintance of Mrs. Blair, Russell Lawhorn, expressed an interest in buying the property. According to Mrs. Blair, her willingness to sell for $90,000 was conveyed to Lawhorn through her listing agent, Cochran. She testified that Lawhorn, however, did not agree to purchase her property. In contrast, Cochran testified that Lawhorn offered to purchase the property for $90,000 and that Mrs. Blair agreed to this price in Cochran's presence.

It is undisputed that Cochran did not undertake to prepare for a closing on a purported Lawhorn sale, nor was there ever any written contract for a sale to Lawhorn.

Approximately a month later, Wayne Forbus attempted to make an offer on the Blair property through City Realty agent Amanda Scoggins. Scoggins testified that client offers have to be submitted to the seller through the listing agent; here, that was Cochran. ¹ Scoggins stated, "I called Martha [Cochran] and told her I had an [oral] offer on the Blair house of $85,000 [from the Forbuses] and did I need to [do a written proposed] contract." According to Scoggins, Cochran said "[N]o, I've got a contract pending." At trial, Cochran denied suggesting that Scoggins not put the Forbus offer in writing, but conceded that she did tell Scoggins that a contract was "pending," meaning, she testified, her purported understanding that Lawhorn was buying the property. It is undisputed that there was no written contract for sale on the property "pending" a closing.

The Forbuses allege that Cochran discouraged a Blair-to-Forbus sale by suggesting that Scoggins not tender a written offer on the Blair property.

Unknown to the Forbuses, their interest in purchasing the Blair property for $85,000 was not related to Mrs. Blair. Mrs. Blair testified, without objection, that had she known the Forbuses were willing to pay $85,000 she would have been willing to sell them the property for that amount.

On June 25, 1990, Cochran received word through Mrs. Blair's daughter that Mrs. Blair was very anxious to sell. According to Cochran, she contacted Lawhorn, who told Cochran that he would not buy the property.

Cochran then telephoned Scoggins, and, according to Scoggins, told her to "get in touch with your people [the Forbuses]," and told her, "Mrs. Blair is awfully desperate to sell; she's anxious to sell. It's just urgent...." Scoggins stated that she told Cochran that she would get in touch with the Forbuses about making another offer. Scoggins then called Mary Forbus, who was, according to Scoggins, "excited" but wanted to see the property again and could not do so until the next day, June 26. Scoggins did not notify Cochran of this fact.

That evening, Cochran spoke by telephone with Mrs. Blair's daughter. Cochran testified that Mrs. Blair's daughter told her that she had previously received from Mary Forbus a note in which Mary Forbus offered to buy the Blair property for $70,000. ² According to Cochran, Mrs. Blair's daughter had concluded that the Forbuses would not offer more than $70,000. Cochran did not disclose the Forbuses' willingness to offer $85,000. Instead, Cochran stated that she herself was willing to purchase the property for $70,000.

The next afternoon, June 26, Amanda Scoggins went to City Realty to pick up the agency's key to the Blair house, so that she and Mary Forbus could look at it, as they had planned. Mary Forbus waited outside. Cochran, who was in the City Realty offices at the time, testified that she told Scoggins the property was sold.

The property was not, in fact, sold. Also, although Cochran testified at trial that "an agreement had been reached," it is undisputed that there was no written contract for sale at that time. This "agreement" apparently refers to either an oral understanding between Cochran and Mrs. Blair's daughter, or a written offer by Cochran that Mrs. Blair had not then accepted.

Cochran told Scoggins that she, her husband, and her son had bought the property for $70,000. Scoggins testified:

"I said, 'Well, why would she accept it [$70,000]?' and she said, 'Amanda, you just didn't understand the urgency of this sale....' I said, 'Well, I have Mary out here in the car ready to make an offer on the Blair house.' I said, 'I don't know what to do.' She said, 'Well, just explain to her that it's sold but don't tell her what it sold for.' "

As instructed, Scoggins told Mary Forbus that the property was sold. Scoggins also testified that she untruthfully told Mary that she did not know the sale price. According to Scoggins, upon hearing the news of the sale Mary "was in tears.... Mary just cried."

The next day, June 27, Cochran and her husband travelled to Georgia to meet Mrs. Blair to execute a contract for sale, back-dated to June 25, i.e., dated the day before Cochran told Scoggins the property was sold. At the same meeting the sale was closed, with Mrs. Blair unaware of the Forbuses' interest in purchasing the property for $85,000.

On June 28, Mary Forbus went to City Realty to confront Cochran. By this time, Mary had learned of the $70,000 sale price. She testified:

"I said, 'Martha, why did you buy the Blair house for $70,000 when you knew that Amanda was working with me for $85,000.' It was just--she never made a complete sentence, she just said something about 'urgency'.... And she asked me, why did I think she paid $70,000 for the house, and I said, 'Martha, I know exactly what you paid for the house.' I said, 'We have talked with the [Blair] family and I know all the details of it; I know what you paid for the house.' And she said, 'Wait a minute and let me call [my husband] Harold over here....'

"Well at first, Harold and I were just chit-chatting.... [Then] I asked Martha again why did she buy the house for $70,000 and didn't let me resubmit an offer of $85,000. I said, 'In fact, the family told us that they never received an offer of $85,000 from us; they never received the first offer.' And Harold got kind of upset and he said I was accusing his wife of unethical behavior."

According to Mary Forbus, she told Cochran that Cochran should remedy the situation by selling the Blair house to the Forbuses for what Cochran paid for it. Mary Forbus testified that Cochran promised to get back in touch with the Forbuses on the subject and indicated that she was leaving for Europe and did not then have time to discuss it further.

The Forbuses did not hear back from Cochran. Later they sued Cochran and City Realty, alleging several fraud theories. The Forbuses sought both compensatory and punitive damages.

Thereafter, City Realty's "errors and omissions" insurer, CNA, brought a declaratory judgment action against the Forbuses and City Realty. CNA sought to determine whether its policy with City Realty would cover the acts alleged by the Forbuses. CNA asserted that City Realty did not have coverage for "expected or intended" acts.

Directed Verdict or J.N.O.V. on Proximate Cause

In the...