Fisher v. Comer Plantation, Inc.

• Decision Date: 19 May 2000
• Citation: 772 So.2d 455
• Parties: Harry FISHER v. COMER PLANTATION, INC., et al.
• Court: Alabama Supreme Court

772 So.2d 455

Harry FISHER v. COMER PLANTATION, INC., et al.

1980866.

Supreme Court of Alabama.

May 19, 2000.

Lynn W. Jinks III of Jinks, Jackson, Daniel & Crow, L.L.C., Union Springs; and James E. Williams and Flynn Mozingo of Melton, Espy, Williams & Hayes, P.C., Montgomery, for appellant.

Alexander W. Jones, Jr., William S. Pritchard III, and Amy L. Slate of Pritchard, McCall & Jones, L.L.C., Birmingham, for appellees Comer Plantation, Inc.; Old Spring Hill Plantation, Inc.; James Kenneth Freeman; Alabama Land Locators, Inc.; and Paul H. Thomas.

Jack B. Hinton, Jr., of Gidiere, Hinton & Herndon, Montgomery, for appellee Roger M. Pugh.

William C. Carn III and William W. Nichols of Lee & McInish, Dothan, for appellee Timothy Speaks.

On Applications for Rehearing

MADDOX, Justice.

The opinion of January 21, 2000, is withdrawn, and the following opinion is substituted therefor.

This case arises out of a sale of real estate and requires us to examine the various duties owed to prospective buyers in real-estate transactions.

The real estate involved is a 2600-acre tract, known as the Comer Plantation, located in Barbour County. Harry Fisher negotiated for the purchase of the plantation; he paid $50,000 in earnest money, but later sought to rescind the contract of purchase and get a refund of his earnest money. When he failed in those attempts, he sued Comer Plantation, Inc. (the entity that owned the tract); its stockholders; Alabama Land Locators ("Locators"), a real-estate brokerage firm; and others, including Roger Pugh, who had done an appraisal on the property; Tim Speaks, an agent for Locators; and Paul Thomas, the owner of Locators and a stockholder in Comer Plantation, Inc.

The trial court entered a summary judgment for each defendant. The plaintiff appealed. We reverse as to the claims alleging suppression and breach of fiduciary duty against Speaks, Thomas, and Locators, and as to the claim alleging a breach of fiduciary duty by Locators as an escrow agent. We affirm the summary judgments on all remaining claims.

The record before us, viewed in the light most favorable to the plaintiff, suggests the following facts: In early 1995, Harry Fisher, a lawyer from Troy, North Carolina, developed an interest in Alabama real estate after going on numerous hunting trips throughout the State. Because Fisher knew nothing about Alabama real-estate markets, he contacted Locators for assistance. He telephoned the firm and left his name and telephone number and asked that someone contact him.

Tim Speaks, an agent for Locators, returned Fisher's telephone call. Fisher told Speaks about the kind of property he was looking for and speculated on potential uses for it. After that initial conversation, Speaks sent Fisher information regarding various properties, including Comer Plantation, a 2600-acre antebellum plantation located in Barbour County. Speaks told Fisher that this property best accommodated Fisher's potential needs. Speaks told Fisher that Comer Plantation had been on the market for a long time and that the sellers would probably accept a price that Fisher would find reasonable. Speaks then invited Fisher to visit Comer Plantation and inspect the property. Fisher agreed.

Speaks made all the appropriate arrangements for Fisher's visit, including arrangements for accommodations and transportation to Comer Plantation. When Fisher first arrived at the hotel, Speaks provided him with a real-estate appraisal that had been prepared by Roger Pugh for the benefit of Paul Thomas, who was the owner of Locators and a stockholder in Comer Plantation, Inc. The report, addressed to SouthTrust Bank, estimated the value of Comer Plantation to be $919,000. Speaks advised Fisher to read the entire report and to bring it with him when he looked at the property.

The following morning, Speaks took Fisher on a tour of the property, and Fisher saw that the property needed extensive work in order to be usable. Many of the roads were impassable, primarily because of washouts and a need for culverts. Many of the structures on the property, including antiquated tenant houses, a windmill, a smokehouse, and other structures dating back to the antebellum period, were in complete disrepair. Pugh's appraisal listed the aggregate value of these structures as $20,000, which Speaks represented to Fisher to be a correct figure. There was also a man-made lake that had yet to be completed and filled with water. When Fisher asked Speaks about these problems, Speaks advised him to make an offer on the property "as-is." Speaks again told him that the owners wanted to sell the property as soon as they could.

That night, when Speaks and Fisher returned to the hotel, Speaks suggested that Fisher should offer between $500,000 and $600,000 for the property "as-is." Fisher considered what Speaks told him and formulated an offer based on the appraisal and on his inspection of the land. After a second day of inspecting the property, Speaks introduced Fisher to Paul Thomas. Speaks, however, never told Fisher that Thomas was also his employer.

The meeting was short and spirited. Fisher offered $500,000 for the property "as-is." Thomas refused to take the offer to the other owners. Fisher suggested that they should reduce the offer to writing, but Thomas abruptly said that there was no need to do so because the other owners would never consider it. When Thomas left, Speaks apologized for Thomas's conduct and said that he was going to talk with other owners who, he said, were more influential. Fisher responded by saying that he was no longer interested in the property, and he returned to North Carolina.

Days later, Billy Pritchard, a Birmingham lawyer who was also a stockholder in Comer Plantation, Inc., telephoned Fisher, apologized for Thomas's conduct, and told Fisher that he was the only true representative of the owners in regard to a sale. He told Fisher that he—Pritchard—would like to sell the property, but not "as-is," if Fisher was still interested.

Fisher soon began to negotiate with Pritchard. According to Fisher, Pugh's appraisal was the foundation for the negotiations. In arriving at an agreeable price, Fisher and Pritchard started at the full-appraisal figure, $919,000, and made deductions where both agreed deductions were appropriate. Fisher testified that he believed that $919,000 represented the true market value of Comer Plantation, and that because Pritchard clearly relied on that figure as the starting price, he thought that Pritchard also believed that it represented the true market value.

Speaks had an active part in making the sales contract. On Fisher's behalf, he negotiated for the owners to provide culvert pipes to repair the damaged roads on the property. Originally, Pritchard had wanted Fisher to pay for the cost of the pipes, but Speaks talked Pritchard into providing them free of charge. Speaks also helped Fisher by providing information, advice, and general assistance throughout the negotiations.

Eventually, Fisher and Pritchard agreed on a price of $710,000. Pritchard sent Fisher a contract, which he signed and returned. Pursuant to the contract, Fisher tendered a check for $50,000 earnest money to be deposited in an escrow account maintained by Locators.

Days after the execution of the contract, Fisher sent Pugh's appraisal to Jimmy Preslar, his personal banker in North Carolina, to obtain financing. Preslar checked the arithmetic used in the appraisal and discovered an error in addition that had caused the estimate to be nearly $100,000 greater than the underlying numbers supported. Fisher immediately telephoned Pritchard, notified him of the error, and told him that he no longer wished to be bound by the contract because, he said, the negotiations had been premised on a faulty estimate. Fisher also demanded the return of his $50,000. Pritchard checked the appraisal, confirmed the error, and promised to investigate it.

Later that day, Pugh telephoned Fisher and offered an explanation for the error. Pugh said that while $919,000 was the correct total value of the property, the estimate of the value of the other improvements—including the unusable tenant houses, the decaying windmill, the smokehouse, and other structures built over 150 years ago—had been incorrectly stated as approximately $20,000 when it should have been nearly $120,000. Pugh claimed the error was typographical. Fisher questioned the explanation. The error convinced Fisher that he should withdraw from the contract. He again demanded the return of his $50,000, but Speaks refused to return it.

Comer Plantation, Inc., and its stockholders, on May 5, 1995, filed a declaratory-judgment action in the Jefferson Circuit Court, against Locators. Fisher was not notified of that Jefferson County action and did not discover that it had been filed and adjudicated until after discovery in the present case had commenced. The Jefferson Circuit Court held that the contract had been breached and ordered that the $50,000 be disbursed among the owners of Comer Plantation. Consequently, the $50,000 was removed from escrow and was distributed to the owners of Comer Plantation, which included Thomas, according to the terms of the order.

Subsequently, Fisher filed this lawsuit to recover the $50,000 down payment and to recover other damages, based on claims of fraudulent misrepresentation, suppression, breach of fiduciary duty, and negligence. Most of the issues presented in this case are affected by the relationship that Fisher, as a prospective purchaser of real estate, had with each defendant. We will therefore address the merits of each claim and the issues presented as they apply to each defendant.

I.

Our scope of review in regard to a summary judgment has been frequently stated. "In reviewing the disposition of a motion for summary judgment, we utilize the same standard ... the trial court [used] in determining whether the evidence before [it] made...