Jim Walter Homes, Inc. v. Waldrop

• Decision Date: 30 September 1983
• Citation: 448 So.2d 301
• Parties: JIM WALTER HOMES, INC., a corporation, and Mid-State Homes, Inc., a corporation v. Gerald D. WALDROP, et al. 81-1022.
• Court: Alabama Supreme Court

Page 301

448 So.2d 301

JIM WALTER HOMES, INC., a corporation, and Mid-State Homes, Inc., a corporation v. Gerald D. WALDROP, et al.

81-1022.

Supreme Court of Alabama.

Sept. 30, 1983.

Rehearing Denied April 6, 1984.

Samuel H. Franklin of Bradley, Arant, Rose & White, Birmingham, for appellants.

J. William Thomason, Bessemer, for appellees Gerald Waldrop and Lois Waldrop.

Joyce E. May of Winston, Winston & May, Birmingham, for appellee Charles Patterson.

PER CURIAM.

This is an appeal from a jury verdict in favor of Gerald D. and Lois J. Waldrop and against Jim Walter Homes, Inc., in a breach of contract action concerning construction of a home, and from a jury verdict in favor of Charles and Cathy Patterson and against Jim Walter Homes, Inc. and Mid-State Homes, Inc., on a cross-claim alleging fraudulent misrepresentation in the sale of a home. We affirm in part; reverse in part; and remand.

In 1976, appellees Gerald D. and Lois J. Waldrop (the Waldrops) entered into a contract with Jim Walter Homes, Inc. (Jim Walter) whereby Jim Walter agreed to construct a house on property owned by the Waldrops. In return, the Waldrops signed a promissory note and gave Jim Walter a mortgage on the property to secure payment. No payments were due under the note and mortgage until completion of construction by Jim Walter. The note and mortgage were immediately assigned to Mid-State Homes, Inc. (Mid-State) for financing purposes.

Jim Walter and Mid-State are both subsidiary corporations of Jim Walter Corporation, Tampa, Florida. Jim Walter is engaged in the business of building shell homes to various stages of completion. The standard written documents executed by a purchaser of a Jim Walter home in Birmingham, Alabama, include a written building contract; Exhibit "A" to the contract describing the options selected by the purchaser; Exhibit "B" defining the items included in the options described in Exhibit "A"; an agreement by the buyer to comply with the City of Birmingham or Jefferson County building codes and to obtain a certificate of occupancy; and a "receipt" whereby the purchaser acknowledges receiving copies of these documents. The evidence shows that the Waldrops signed and eventually received copies of all these documents, but they contend that they never read nor asked any questions about the documents or their terms or conditions.

Jim Walter acquired a building permit and began construction on the house in August 1976. When the house was at a suitable stage of completion, the Waldrops installed an air conditioner and turbines on the roof, painted the walls, placed flooring in the house, installed a screen door, graded the lot and paid an inspection fee to the gas company. They applied for a certificate of occupancy from the City of Hueytown, but were denied. The city inspector gave the Waldrops a list of things which needed to be finished before the City would issue the certificate. In a letter dated November 19, 1976, Mr. Waldrop informed Jim Walter that a number of items in the house would have to be completed before the city would issue a certificate of occupancy to them. Mr. Waldrop stated that he believed it was Jim Walter's responsibility to complete these items and that he did not intend to make payments on the house until it was fit for occupancy. Jim Walter wrote back acknowledging the Waldrops' letter and stating that it would look into the problem. Mr. Waldrop wrote a second letter, dated December 2, 1976, acknowledging receipt of payment cards from Jim Walter which indicated that the Waldrops were to begin making payments on the house on December 5, 1976. Mr. Waldrop renewed the assertions of his first letter and again asked that Jim Walter make the house fit for occupancy.

On March 7, 1977, Jim Walter sent a letter to the Waldrops stating that Jim Walter had investigated their complaint, but found that all the work stated in the contract as Jim Walter's responsibility had been completed and any additional items not mentioned in the contract were the Waldrops' responsibility. Paragraph 7 of the "Agreement for Buyers to Comply with City of Birmingham or Jefferson County, Alabama Building Code" reads:

"Buyers agree to completely finish all work not contracted for; obtain necessary permits, inspections, and obtain a Certificate of Occupancy before attempting to occupy the residence."

This form was part of the Jim Walter standard documents and was executed by both Gerald and Lois Waldrop. The March 7 letter also informed the Waldrops that their initial payment date had been changed to April 5, 1977.

On March 16, 1977, Mr. Waldrop sent a third letter to Jim Walter stating that he still believed it was Jim Walter's responsibility to complete the work on the house. In the letter he listed eight items ¹ that he believed Jim Walter was required to complete. Jim Walter did not complete the items as requested, and the Waldrops never made a payment on the house.

In May 1977, Mid-State wrote to the Waldrops declaring a default on the mortgage and giving notice of intent to foreclose. On July 8, 1977, the foreclosure sale was held and Mid-State purchased the property. Mr. Waldrop acknowledged notice of the sale and notice of his statutory right to redeem the property within one year, but testified that he was financially unable to redeem. Jim Walter then completed the items necessary to make the house suitable for occupancy and resale by Jim Walter. On June 10, 1978, Jim Walter resold the house to one Charles Patterson who is a co-defendant in this suit.

On January 10, 1978, the Waldrops filed suit against Jim Walter and Mid-State, alleging that Jim Walter had breached the written contract for the construction of the house by failing to complete it in a timely manner; that the Waldrops were entitled to rescind the contract due to failure to advise the Waldrops of certain rights under the Federal Consumer Credit Protection Act; and that Mid-State, by virtue of the recordation of a foreclosure deed, had slandered the Waldrops' title to real estate. Jim Walter and Mid-State in their respective answers denied all the allegations.

On May 1, 1980, the court granted the Waldrops' motion to amend their original complaint so as to add Charles and Cathy Patterson, as co-defendants to the lawsuit and to add a fourth count which alleged that the foreclosure proceedings conducted by Mid-State were invalid. Counsel for Jim Walter and Mid-State then filed a motion to dismiss on behalf of the Pattersons as to the claims asserted against them in the fourth count. The trial court denied the motion.

On September 21, 1981, the Pattersons, having obtained independent counsel, filed a cross-claim against Jim Walter and Mid-State. In their cross-claim, the Pattersons contended that Jim Walter and Mid-State had negotiated in June 1978 (after the filing of the original complaint by the Waldrops) to sell to them the property previously owned by the Waldrops, and that Jim Walter and Mid-State fraudulently concealed the existence of the pending litigation initiated by the Waldrops in order to induce them to purchase the property. The Pattersons claimed damages by virtue of the fact that they had been joined as defendants in the Waldrop litigation, and also sought punitive damages. Following denial of their motion to dismiss the Pattersons' cross-claim, Jim Walter and Mid-State answered the cross-claim, denying all of its allegations.

The Waldrops again were allowed to amend their complaint, on April 5, 1982, by striking the first two counts of the original complaint and adding a fifth count in which they claimed damages for "mental anguish" allegedly suffered due to breach of the building contract by Jim Walter. The Pattersons also were allowed to amend their cross-claim to seek damages for mental anguish.

The case then went to trial. At the conclusion of the evidence presented by the Waldrops, Jim Walter and Mid-South moved for a directed verdict as to each of the Waldrops' claims. The trial court granted the motion for directed verdict in favor of Jim Walter as to each claim except the breach of contract count and granted the motion for directed verdict in favor of Mid-State as to the Waldrops' claims in their entirety. Jim Walter and Mid-State also moved for a directed verdict against the Patterson cross-claim at the close of the Pattersons' evidence, but the trial court overruled the motion.

On April 9, 1982, the jury returned a verdict in favor of the Waldrops and against Jim Walter in the amount of $15,000.00 and a verdict in favor of the Pattersons and against Jim Walter and Mid-State in the amount of $37,500.00, and judgments were entered thereon. Jim Walter and Mid-State proceeded to file various post-trial motions, including a motion for new trial alleging that the jury verdict in favor of the Pattersons for $37,500.00 was excessive. On July 21, 1982, the trial court entered an order finding that the verdict in favor of the Pattersons was excessive to the extent of $12,500.00 and ordered that the motion for a new trial be granted unless the Pattersons filed a remittitur. On July 28, 1982, the Pattersons accepted a remittitur and accordingly judgment was entered for $25,000.00. All the other post-trial motions were denied.

On September 1, 1982, Jim Walter and Mid-State filed a notice of appeal to this Court. They appeal from the judgments entered upon the jury verdicts in favor of both the Waldrops and the Pattersons, from the orders of the trial court overruling the motions for directed verdict as to the Waldrops' claim and the Pattersons' cross-claim, and from the denial of their motions for post-trial relief.

Appellants' first contention on appeal is that the trial court erred in allowing the Waldrops to testify, over appellants' objections, to alleged oral statements or promises made by Jim Walter's sales representative to the Waldrops prior to execution of the written contract. Mr. Waldrop was allowed...