Ex parte Lumpkin

• Decision Date: 13 June 1997
• Citation: 702 So.2d 462
• Parties: Ex parte Greg LUMPKIN, M.B. Hagedorn, and Ina Black Realty. (Re Jodi Lynn GREEN, et al. v. Greg LUMPKIN, et al.). 1960443.
• Court: Alabama Supreme Court

Page 462

702 So.2d 462

Ex parte Greg LUMPKIN, M.B. Hagedorn, and Ina Black Realty (Re Jodi Lynn GREEN, et al. v. Greg LUMPKIN, et al.).

1960443.

Supreme Court of Alabama.

June 13, 1997.

Jack W. Torbert of Torbert & Torbert, P.A., Gadsden; and L. Graves Stiff III and Sharon A. Woodard of Starnes & Atchison, Birmingham, for petitioners.

Valerie L. Palmedo, Anniston, for respondents.

MADDOX, Justice.

The plaintiffs alleged that the defendants were guilty of fraud in connection with a lease of property in Gadsden on which the plaintiffs had intended to operate a bar.

The plaintiffs claim that, during lease negotiations, the defendants fraudulently promised that the defendants could acquire for the plaintiffs a lease on property adjacent to the leased premises; that adjacent property was needed in order for the plaintiffs to meet zoning requirements of the City of Gadsden for the operation of a bar. More specifically, the plaintiffs alleged that the failure of the defendants to acquire the adjacent property on their behalf caused the City to deny their application for a lounge retail liquor license and that they had relied upon the defendants' promise to their detriment. They asked for compensatory and punitive damages.

The trial court, based upon the pleadings and the evidence submitted in support of the defendants' motion for summary judgment, entered a summary judgment in favor of the defendants. The plaintiffs appealed. This Court, pursuant to Ala.Code 1975, 12-2-7(6), transferred the appeal to the Court of Civil Appeals. That Court, with one Judge dissenting, reversed and remanded, writing in its opinion:

"When the plaintiffs were presented the lease, they asked why the adjacent property was not included, and one of the defendants stated that he 'would have gotten it three months ago, but was just told that morning that they [the plaintiffs] needed it.' The defendants further stated that 'the owner was good for his word'; 'we'll be your witnesses'; and 'don't worry about it, because we'll have the property by the end of the week.' The plaintiffs stated that they relied upon these representations and that they would not have otherwise signed the lease agreement. Based on the plaintiffs' statements and the conflicting evidence regarding the defendants' representations, we conclude that the plaintiffs presented substantial evidence creating genuine issues of material fact regarding whether the defendants intended to commit fraud and fraud in the inducement; therefore, the summary judgment was inappropriate."

Green v. Lumpkin, 702 So.2d 459, 460-461 (Ala.Civ.App.1996). We granted the defendants' petition for certiorari review to consider the holding of the Court of Civil Appeals, especially in view of the fact that the lease contained the following clause: "Lessor has made no representations or promises with respect to said premises except as herein expressly set forth; and lessee agrees that he has examined the premises as fully as desired and is satisfied with the condition thereof as of the commencement of the term of this Lease." (C.R. 30.)

We have reviewed the record that was before the trial court and before the Court of Civil Appeals, and we conclude that the trial court properly entered the summary judgment for the defendants. Therefore, we reverse the judgment of the Court of Civil Appeals and remand the cause for an order or proceedings consistent with this opinion.

The basic facts necessary for a resolution of this case are not disputed. Jodi L. Green and Terri L. Cranford, after negotiating, ¹ entered into a lease agreement on March 4, 1993, with Fred Sington, the owner of the building and lot located at 825 South 4th Street in Gadsden. That lot accommodated 14 parking spaces.

The plaintiffs applied for a license to operate a bar on the leased premises, but on April 27, 1993, the Gadsden City Council denied their application, with the following resolution:

"Whereas, Jodi Lynn Green and Terri Lynn Cranford, doing business as Club 22, have applied for a lounge retail liquor license for 825 South 4th Street; and

"Whereas, Police Chief John Morris has recommended disapproval because of the conviction of applicant Terri Lynn Cranford of third degree larceny in February 1988 in Rainbow City Municipal Court; and

"Whereas, Building Official Brian Harbison has recommended disapproval because the location provides only 14 off-street parking spaces when Section VI.A.4 of Ordinance No. 0-02-82 (the zoning ordinance) requires 1 space per 50 square feet of gross floor area or 180 parking spaces;

"Now, therefore, BE IT RESOLVED BY THE CITY COUNCIL OF GADSDEN, that the City of Gadsden disapproves and denies the issuance of such license for the reasons stated above." ²

(C.R. 90.)

During the interim between the signing of the lease and the failure of the defendants to obtain the adjacent property, which was owned by another party, the plaintiffs performed a partial renovation of the building that was located on the leased premises.

On May 12, 1994, the plaintiffs filed this action against Greg Lumpkin and M.B. Hagedorn, the real estate agents who had negotiated the lease agreement, and their employer, Ina Black Realty. Their complaint alleged that the defendants had fraudulently promised during the negotiations for the lease that the defendants would get the owner of the adjacent property ³ to lease the plaintiffs that additional property, thereby allowing them to satisfy the zoning requirements of the city. They alleged that but for this promise by the defendants they would not have signed the lease agreement on March 4, 1993.

The plaintiffs claim that the defendants initially represented to them that the lot adjacent to the leased property accompanied the leased building and could be used for parking and that it was owned by Fred Sington, but that, when it came time to sign the lease, defendant Hagedorn informed them that the adjacent property did not go with the property and, further, that Fred Sington did not own the adjacent property.

The plaintiffs maintain that at the signing they informed Hagedorn that under the zoning regulations they needed more than the 14 parking spaces in order to meet the requirements of the Gadsden zoning ordinance, and that Hagedorn then told them that he could get the adjacent property owner to lease that property to them within a week.

In reversing the judgment of the Court of Civil Appeals in this case, we have applied the principle that "[i]n reviewing the disposition of a motion for summary judgment, we utilize the same standard as ... the trial court in determining whether the evidence before [it] made out a genuine issue of material fact" and whether the movant was entitled to a judgment as a matter of law. Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988) (citing Chiniche v. Smith, 374 So.2d 872 (Ala.1979)); see Rule 56(c), Ala. R. Civ. P. The movant has the burden of "showing material facts, which, if uncontested, entitle the movant to [a] judgment as a matter of law." Berner v. Caldwell, 543 So.2d 686, 688 (Ala.1989); Woodham v. Nationwide Life Ins. Co., 349 So.2d 1110, 1111 (Ala.1977). Once the movant has made this showing, the opposing party then has the burden of presenting evidence creating a genuine issue of material fact. Danford v. Arnold, 582 So.2d 545, 546 (Ala.1991); Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989).

This action was filed after June 11, 1987; therefore, the nonmovant must meet the burden of establishing the existence of a genuine issue of material fact by presenting substantial evidence. Ala.Code 1975, § 12-21-12; Bass v. SouthTrust Bank of Baldwin County, supra. "Substantial evidence" is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990); Harrell v. Reynolds Metals Co., 495 So.2d 1381, 1383 (Ala.1986); Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986).

The gravamen of the plaintiffs' claim is that the defendants are guilty of promissory fraud, specifically, that the defendants promised to acquire the adjacent property for parking, and that they did so as a condition precedent to the plaintiffs' signing the lease, and that their promise constituted actionable fraud.

To recover in a fraud action, the plaintiff must establish certain elements. This Court has written:

"The cause of action for fraud and misrepresentation is granted by Code 1975, § 6-5-100, et seq. In construing the cause of action created by § 6-5-100, the courts have required the following as the critical elements of an action for fraud:

" '(a) [A] false representation [usually] concerning an existing material fact, ...;

" '(b) representation which (1) the defendant knew was false when made, or (2) was made recklessly and without regard to its truth or falsity, or (3) was made by telling plaintiff that defendant had knowledge that the representation was true while not having such knowledge, Hockensmith v. Winton, 11 Ala.App. 670, 66 So. 954 (1914);

" '(c) reliance by the plaintiff on the representation and that he was deceived by it, Bynum v. Rucker, 235 Ala. 353, 179 So. 241 (1938);

" '(d) reliance which was justified under the circumstances, Fidelity & Cas. Co. v. J.D. Pittman Tractor Co., 244 Ala. 354, 13 So.2d 669 (1943);

" '(e) damage to the plaintiff proximately resulting from his reliance. Smith v. Smith, 266 Ala. 118, 94 So.2d 863 (1957).'

"First Virginia Bankshares v. Benson, 559 F.2d 1307, 1313 (5th Cir.1977), rehearing denied, 564 F.2d 416 (5th Cir.1977), cert. denied, ...