LaFarge Bldg. Materials, Inc. v. Stribling

• Decision Date: 17 October 2003
• Citation: 880 So.2d 415
• Parties: LaFARGE BUILDING MATERIALS, INC. v. Phillip E. STRIBLING II and Sidney A. Evans.
• Court: Alabama Supreme Court

880 So.2d 415

LaFARGE BUILDING MATERIALS, INC. v. Phillip E. STRIBLING II and Sidney A. Evans.

1020623.

Supreme Court of Alabama.

October 17, 2003.

B. Clark Carpenter, Jr., of Wooten, Thornton, Carpenter, O'Brien, Lazenby & Lawrence, Talladega; and M. Christian King, William H. Brooks, and Ivan B. Cooper of Lightfoot, Franklin & White, L.L.C., Birmingham, for appellant.

Will O. "Trip" Walton III of Walton Law Firm, P.C., Auburn, for appellees.

LYONS, Justice.

LaFarge Building Materials, Inc. ("LaFarge"), appeals from the trial court's denial of its postverdict motion for a judgment as a matter of law ("JML"), a new trial, or, alternatively, a remittitur. We affirm in part, reverse in part, render a judgment in part, and remand.

I. Facts and Procedural History

During the 1980s, the Chattahoochee Valley Railway Company ("Chattahoochee") leased land to Sidney Evans, who used the land to operate Valley Concrete Company in Lanett. Evans paid $100 per month to lease the land and placed improvements on the land to operate the concrete company. In 1987, Evans sold his business and the equipment used in the business to Williams Brothers, Inc., an entity that was LaFarge's predecessor in interest. Shortly after Evans sold the business, LaFarge began to operate the concrete plant and took the additional step of securely attaching the equipment to the property by pouring concrete around the bases of the equipment. Evans remained involved in the concrete plant, working as LaFarge's plant manager from 1987 to 1991. During LaFarge's operation of the concrete plant, it leased the land from Chattahoochee under terms identical to those in the Chattahoochee-Evans lease.

In 1995, Phillip E. Stribling II, an acquaintance of Evans's, purchased the land on which LaFarge's concrete plant was located from Chattahoochee for $7,500. The purchase agreement assigned to Stribling all of Chattahoochee's rights under its lease with LaFarge. Six days after Stribling purchased the land, Evans acquired from Stribling a 50% interest in the land.

On December 31, 1996, LaFarge's lease expired. Stribling notified LaFarge that it could renew the lease at the substantially higher rate of $2,000 a month or it could purchase the property for $100,000. LaFarge declined both offers and opted to vacate the property.

When LaFarge vacated the property, it removed and dismantled several pieces of equipment, apparently the same equipment Williams Brothers had previously purchased from Evans. Additionally, LaFarge destroyed several structures and/or removed several structures from the property. LaFarge admitted that when it vacated the property it left the property in a state of disarray. Subsequently, Stribling and Evans sued LaFarge, alleging breach of contract, wanton or malicious destruction of property, and negligence in removing the equipment and several structures from the plant.

Paragraph 6 of the assigned Chattahoochee-LaFarge lease regarding property improvements is the centerpiece of Evans and Stribling's claim. It provides as follows:

"6. Any buildings and improvements erected on the leased property by the Lessee shall become the sole property of Lessor at the expiration of the lease term or any extension thereof as herein provided and it is hereby understood and agreed that any building and improvements situated on the leased property at the inception date of the lease is the sole property of the Lessor."

Evans and Stribling argue that the equipment and structures are improvements to the land; therefore, they maintain, according to paragraph 6 of the lease agreement, they owned the equipment and structures.

At trial, Evans and Stribling testified that they intended to operate a concrete plant on the land after the lease expired, and that the removal of the equipment caused them to lose profits of $424,598. LaFarge argued that the removed items consisted of "trade fixtures" and that it was entitled to remove the trade fixtures upon the termination of its lease. Stribling and Evans testified that LaFarge had converted a once portable cement plant into a permanent structure. LaFarge, they said, added concrete walls, anchored silos in cement, added a "batch house," attached a diesel pump into the cement, and dug a reclamation pond. Stribling and Evans also presented evidence showing that the value of the property declined when LaFarge removed those objects. LaFarge contends that it erected, placed, or attached to the ground all of the equipment at issue, including structures and bins, in furtherance of its trade or business. Stribling and Evans do not contradict this contention. Stribling acknowledged that the purpose of putting the equipment on the property was to carry on a trade or business. At the close of the evidence, Stribling and Evans voluntarily dismissed their negligence and breach-of-contract claims, leaving for consideration by the jury only the tort claims alleging wantonness and intentional conduct. The trial court denied LaFarge's preverdict motion for a JML and instructed the jury as follows on how to determine whether the equipment and the structures were trade fixtures:

"I will charge you that the intent of the party who installs the property is essential in determining whether property was a business fixture. Intent may be determined by the expressed statements of a party either oral or written or by that party's conduct. In that regard, you may take into consideration the manner in which property was connected to the land, that is, to say whether the property was connected solely as a means of affixing or fastening the property in its place or whether the property was affixed in a manner with the intent of becoming a part of the land."

(Emphasis added.) The jury returned a verdict in favor of Evans and Stribling, awarding them $500,000 in compensatory damages and $1,500,000 in punitive damages.

LaFarge then moved for a postverdict JML, arguing that under Alabama law the equipment and structures were trade fixtures. Further, LaFarge argued that a new trial was necessary because, it argued, (1) the trial court's instructions regarding trade fixtures were erroneous; (2) the trial court refused to charge the jury on the doctrine of equitable estoppel; (3) the trial court improperly allowed the jury to consider evidence of cleanup costs; and (4) the trial court struck the testimony of LaFarge's expert witness. Finally, LaFarge asserted that if the trial court determined that neither a JML nor a new trial was warranted, then the punitive-damages award should be reduced because, it argued, the award violated state and federal constitutional due-process requirements.

The trial court denied LaFarge's motion. In its order, the trial court stated that "there was a legitimate and justiciable dispute as to which items were trade fixtures and which items were a part of the realty. The court will not disturb the jury's verdict in that regard." Further, the court stated that the evidence regarding damages was sufficient and that the testimony of LaFarge's expert witness was properly excluded. In response to LaFarge's request for a remittitur of the punitive-damages award, the trial court stated that the punitive damages were not excessive in light of LaFarge's intentional destruction of the property.

II. LaFarge's Motion for a Judgment as a Matter of Law

This Court reviews a denial of a motion for a JML by the same standard the trial court used in initially denying the motion. Palm Harbor Homes, Inc. v. Crawford, 689 So.2d 3 (Ala.1997). Furthermore, we must determine "whether the party who bears the burden of proof had produced substantial evidence creating a factual dispute requiring resolution by the jury." Bell v. T.R. Miller Mill Co., Inc., 768 So.2d 953, 956 (Ala.2000), citing Carter v. Henderson, 598 So.2d 1350 (Ala. 1992). We view the evidence in a light most favorable to the nonmoving party and entertain any reasonable inferences the jury may have been able to draw. Bell, 768 So.2d at 956. Notwithstanding, we accord the trial court's ruling on a question of law no presumption of correctness. Id.

Under the general rule of the common law, everything annexed to the freehold estate was treated as a part of it. However, tenants placing trade fixtures on the property to be used in connection with trade or manufacturing were excepted from the operation of the foregoing general rule. Walker v. Tillis, 188 Ala. 313, 66 So. 54 (1914).

Black's Law Dictionary 652 (7th ed.1999) defines trade fixtures as "[r]emovable personal property that a tenant attaches to leased land for business purposes." Black's defines an improvement as "[a]n addition to real property whether permanent or not; esp., one that increases its volume or that enhances its appearances." Black's Law Dictionary 761 (7th ed.1999). A tenant can remove trade fixtures at the end of a lease term even when the lease states that improvements and fixtures are not to be removed. See Walker, 188 Ala. at 327, 66 So. at 58.

"It seems to be the result of all these cases that covenants to redeliver, with all improvements, do not include trade fixtures of the tenant, but do cover all fixtures or improvements of the landlord which were intended, when placed upon the premises, to become a part of, or an improvement of, the freehold."

Walker, 188 Ala. at 336, 66 So. at 60.

In Walker, this Court discussed the governing intention of the tenant in determining the availability of the exception applicable to improvements attached to land in the form of trade fixtures, noting:

"[T]hat the intention of the tenant making the annexation was to serve the convenience of his trade, and not to enhance the freehold; that it was the reasonable intention of the tenant to place such trade fixtures upon the land for the purpose of better enjoying the articles annexed, or of using them in his trade as chattels, and to remove them at his pleasure."

188 Ala. at 325, 66 So. at 57 (emphasis added...