Hillcrest Center, Inc. v. Rone
| Decision Date | 01 August 1997 |
| Citation | 711 So.2d 901 |
| Parties | HILLCREST CENTER, INC., et al. v. Robert E. RONE and Mariella C. Rone. 1940535. |
| Court | Alabama Supreme Court |
Forrest S. Latta and W. Pemble DeLashmet of Pierce, Carr, Alford, Ledyard & Latta, P.C., Mobile, for appellants (on original submission).
Michael A. Worel of Cunningham, Bounds, Yance, Crowder & Brown, Mobile, for appellant Hillcrest Center III, Ltd. (on original submission).
David P. Broome, Mobile, for appellees.
Forrest S. Latta and J. Robert Turnipseed of Pierce, Ledyard, Latta & Wadsden, P.C., Mobile, for appellants (on application for rehearing).
The defendants, Hillcrest Center, Inc.; Hillcrest Center III, Ltd.; and Margaret G. Seibert, appeal from a judgment in favor of the plaintiffs, Robert E. Rone and his wife, Mariella C. Rone. We affirm conditionally.
Hillcrest Center, Inc., is an Alabama corporation, and it is the sole general partner of Hillcrest Center III, Ltd., an Alabama limited partnership. Margaret Seibert is the president of Hillcrest Center, Inc., and is an officer of Hillcrest Center III, Ltd. Hillcrest Center, Inc., manages the commercial building in issue here (Hillcrest Office Park), which is owned by Hillcrest Center III, Ltd.
In April 1993, the Rones sued, alleging that Seibert, by intentional or reckless misrepresentations, had fraudulently induced the Rones to lease space in a commercial building owned by Hillcrest Center III, Ltd. The Rones sought money damages and rescission of the lease contract. The defendants denied the allegations of the complaint and asserted the affirmative defense of estoppel.
In November 1993, the defendants filed a motion asking that the Rones be required to make an election of remedies, on the ground that the claim alleging fraud in the inducement was inconsistent with the claim seeking rescission of the lease. In response to that motion, the trial court held:
During trial, the defendants moved to strike the counts of the complaint seeking damages for fraud, claiming that the Rones had elected the remedy of rescission of the lease contract and, having done so, could not also recover compensatory and punitive damages for the fraud claim, which the defendants alleged was inconsistent. The trial court denied the motion. The trial court also denied the defendants' motion to exclude evidence relating to the claims for punitive damages and damages to compensate for lost profits.
The trial court instructed the jury with regard to fraud resulting from intentional or reckless misrepresentations; promissory fraud; and compensatory and punitive damages. The trial court denied the defendants' requested jury instruction on the affirmative defense of estoppel. The issue whether the lease contract should be rescinded was also submitted to the jury.
The jury's general verdict read, in pertinent part, as follows:
The trial court entered a final judgment on the jury's verdict, and the Rones vacated Hillcrest Office Park. After a hearing on the parties' post-trial motions, the trial court, pursuant to Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So.2d 218 (Ala.1989), granted the defendants' motion for a remittitur with regard to the punitive damages award and reduced the punitive damages award to $130,000.
The defendants contend that the trial court erred in submitting the Rones' fraud claims to the jury. However, say the defendants, even if the trial court had been correct in charging the jury on fraud, the evidence did not support the claim alleging ordinary fraud and the jury was entitled to consider only the claim of promissory fraud. We disagree.
Mariella Rone met Seibert in 1990 when Seibert came into Mrs. Rone's small manicure shop in Mobile. In the fall of 1991, Mrs. Rone told Seibert that she and her husband were looking for space where they could open a full-service beauty salon. The Rones had attempted to find space for their proposed salon business but had been unsuccessful because of their parking requirements. Seibert told Rone about the plans for the Hillcrest Office Park and told Mrs. Rone that she should put the new business there.
The Rones contended that, during numerous meetings regarding the lease contract, they made it clear to Seibert that their business required a large number of parking spaces for employees and clients and that sufficient parking was a prerequisite to their leasing space at Hillcrest Office Park. Mrs. Rone testified that she told Seibert that more than one commercial building manager had refused to lease space to the Rones for the salon because the Rones' parking needs were so great. Robert Rone testified that he gave Seibert a list indicating the number of employees and clients that could be at the salon at any given time, along with an estimate that the salon would need a total of approximately 30 spaces. According to the Rones, Seibert consistently assured them that parking would be no problem and that there would be a "huge" parking area.
Robert Rone testified that he met with Seibert on October 8, 1991, before signing the lease. He stated that he pointed out to Seibert paragraph 30 of the lease agreement, which assigned only three parking spaces to the Rones' business, and that he reminded Seibert that their business would require many more parking spaces than three. Rone also told Seibert that he was quitting his job to manage the beauty salon and could not afford to have the business fail. According to Mr. Rone, each time he expressed to Seibert his concerns about the parking, she told him not to worry, that there would be plenty of parking, and that she had an option to purchase an adjacent lot where she intended to build a small building and a large parking lot.
The Rones testified that Seibert's representations regarding the adequacy of parking were a primary inducement to them to put their new business in Hillcrest Office Park. They also testified that, in reliance on Seibert's representations, they executed a five-year commercial lease for the space at Hillcrest Office Park.
As the lot was cleared for construction of Hillcrest Office Park to begin, the Rones realized that the parking at the new building would be inadequate to accommodate their needs. According to the Rones, Seibert continued to assure them that additional parking would be available on the adjacent lot. At trial, Seibert maintained that she did not recall, from these early meetings with the Rones, any specific conversations about parking.
The Rones moved their business into Hillcrest Office Park in the spring of 1992. According to the Rones, they had inadequate parking space and experienced problems because of the inadequate parking, including an inability to attract employees and clients. Mrs. Rone testified that the building held four businesses, that the parking lot contained only 12 spaces, and that the Rones' business alone was designed to employ 13 people (a fact, say the Rones, that they had communicated to Seibert). The Rones testified that, because of the inadequate parking, they were able to have only two hairdressers and Mrs. Rone working at the salon at any given time. As a result, they testified, they were able to utilize only one-half of the leased space, although they had purchased and installed equipment and fixtures for the entire leased premises.
On December 29, 1992, Seibert met with the Rones and told them that she would not be purchasing the adjacent property and that no additional parking would be available. Seibert testified that she had always planned on putting a building and parking facilities on the adjacent lot, but that she had never planned on using it exclusively as a parking area. Therefore, Seibert said, when she could not get a commitment from a tenant for the proposed building on the adjacent lot she withdrew her offer to purchase the property.
Another prospective tenant of Hillcrest Office Park testified that when he questioned Seibert about the apparent scarcity of parking, she assured him that parking would be no problem because there would be "an arrangement" with the owner of the adjacent property to handle Hillcrest Office Park's overflow parking. This conversation took place in February 1993--after the December 29, 1992, meeting between the Rones and Seibert during which Seibert admitted that the adjacent property was no longer a part of the plan for Hillcrest Office Park.
The final witness at trial was Don Williams, the engineer on the Hillcrest Office Park construction and on other construction done for Seibert. Williams testified that when working on a project such as Hillcrest Office Park, Seibert "always wants the maximum size building and the minimum parking spaces" allowed by law.
In charging the jury, the trial court correctly set out the essential elements of what the court called "factual fraud," as well as the additional elements required for the recovery of...
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