Gary v. Kirkland

• Decision Date: 25 September 1987
• Citation: 514 So.2d 970
• Parties: Paul GARY and Mitsuko Gary v. Kenneth KIRKLAND. 86-39.
• Court: Alabama Supreme Court

Page 970

514 So.2d 970

Paul GARY and Mitsuko Gary v. Kenneth KIRKLAND.

86-39.

Supreme Court of Alabama.

Sept. 25, 1987.

J. Huntley Johnson of Johnson, Huskey, Hornsby & Etheredge, Dothan, for appellants.

Peter A. McInish and Huey D. McInish of Lee & McInish, Dothan, for appellee.

MADDOX, Justice.

This is a fraud case. The plaintiffs, Paul and Mitsuko Gary, entered an agreement to purchase a convenience store from the defendant, Kenneth Kirkland, who was the owner and operator of the store at the time. The agreement was made in the form of a deposit agreement and an agreement of sale drawn up on January 9, 1984. As a part of the agreement, Kirkland was to sell the inventory and equipment in the store on the date of closing. The price of the inventory was to be "retail [price] less 28 percent." Of the $32,000 purchase price, $19,000 was to be for the inventory. The deal was closed on Monday, February 6, 1984. At that time, an inventory of the store's stock was taken while both plaintiffs were in the store. The inventory indicated that the store's stock did not equal $19,000 and the purchase price was accordingly reduced by $791.11 to $31,208.89.

After the Garys began operating the store, they learned that certain items of the inventory had been marked up excessively; that some items had been marked up immediately before the sale of the store; and that a large number of items had passed their expiration dates. They also found that some of the expiration dates had been altered or concealed.

The Garys filed suit against Kirkland, claiming actual and punitive damages. The jury returned a verdict in favor of the plaintiffs on May 6, 1986, in the sum of $40,000. Judgment was entered accordingly and Kirkland then moved for judgment notwithstanding the verdict (JNOV) or in the alternative for a new trial. The trial judge granted the JNOV but did not rule on the motion for a new trial. The Garys filed a motion to alter, amend, or vacate the judgment and a motion for a new trial. It is from the denial of these motions that the Garys appeal.

Before turning to the facts of this particular case, we set out our standard of review in JNOV cases. A motion for JNOV should be denied if there is any conflict in the evidence for the jury to resolve, and the existence of such a conflict is to be determined by the scintilla rule. Handley v. City of Birmingham, 475 So.2d 1185, 1187 (Ala.1985); Elrod v. Ford, 489 So.2d 534, 537 (Ala.1986). On review of a JNOV, the evidence must be viewed in a light most favorable to the non-moving party. Wadsworth v. Yancey Bros. Co., 423 So.2d 1343, 1345 (Ala.1982).

In his order, the trial judge stated that the case was being tried on a suppression theory, that is, that Kirkland had suppressed material facts; the judge had charged the jury on that basis.

The code section applicable to this fraud action is Code 1975, § 6-5-102:

"Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case."

The trial judge properly recited the elements necessary to support a cause of action under this code section: (1) A duty to disclose facts; (2) concealment or nondisclosure of material facts by the defendant; (3) inducement of the plaintiff to act; and (4) action by the plaintiff to his injury. Wilson v. Brown, 496 So.2d 756, 759 (Ala.1986). Resolution of this case hinges on the first element--whether a duty to disclose facts existed. The statute presents two situations in which a duty to disclose arises: where a confidential relationship is present, and where there are "particular circumstances of the case." Code 1975, § 6-5-102.

This Court has had occasion to deal with this issue in the past. Under § 6-5-102, mere silence is not fraud unless confidential relations or special relations, or special circumstances exist; active concealment or misrepresentation must be present. Berkel & Co. Contractors v. Providence Hospital, 454 So.2d 496, 505 (Ala.1984).

The trial judge correctly pointed out that the Garys had two opportunities to inspect the merchandise at the store.

"When the means and sources are equally accessible to both parties, the ignorance of the purchaser is regarded as self-deception, unless art or artifice is employed to prevent investigation or stifle information.... No evidence was presented to show or even infer that defendant by artifice or trickery prevented plaintiffs from examining anything in the store that they wished. The Court is convinced that because of the undisputed evidence cited above, that it was in error in submitting the case to the jury in the first instance."

We disagree with the trial judge. Evidence was presented at trial from which the jury could infer that the defendant employed artifice or trickery to defraud the Garys. When even a scintilla of evidence is present, in favor of a non-moving party, a JNOV is improper. Under Alabama law, a scintilla is described as "a mere gleam, glimmer, a spark, the least particle, the smallest trace, or a scintilla in support of the theory of the complaint." Howard v. Crowder, 496 So.2d 31 (Ala.1986).

A former employee of Kirkland testified that she had been in the store on Sunday, February 5 (the day before the sale) and that when she returned on Monday afternoon (after the sale) prices on two specific items (sunglasses and beef jerky) had been marked up substantially. She also testified that other items she could not name specifically had been marked up.

The same employee testified that she was told to put labels over the expiration dates of some products and to put some outdated items back on the store shelves, and that she had been instructed...