Palm Harbor Homes, Inc. v. Crawford

Decision Date10 January 1997
Citation689 So.2d 3
PartiesPALM HARBOR HOMES, INC. v. Rosemond D. CRAWFORD and Cecilia Ann Crawford. 1951156.
CourtAlabama Supreme Court

W. F. Horsley of Samford, Denson, Horsley, Pettey & Martin, Opelika; James R. McKoon, Jr., Phenix City; Walter R. Byars of Steiner, Crum & Baker, Montgomery; and J. Pelham Ferrell, Clayton, GA, for Appellant.

Sam E. Loftin of Loftin, Herndon & Loftin, Phenix City, for Appellees.

BUTTS, Justice.

The defendant, Palm Harbor Homes, Inc., appeals from a trial court judgment based on a jury verdict in favor of the plaintiffs Rosemond D. Crawford and Cecilia Ann Crawford. We affirm in part, reverse in part, and remand.

I.

Rosemond Crawford purchased for himself and his wife Cecilia Crawford a custom-built mobile home manufactured by Palm Harbor; he purchased it from All Star Mobile Homes, Inc. All Star is a retailer of Palm Harbor products in Opelika, Alabama. In July 1992, before Mr. Crawford purchased the mobile home, the Crawfords visited the Palm Harbor factory in Boaz, Alabama, and took a factory tour. The Crawfords testified that during their visit to the factory, they were told that if that they bought a Palm Harbor home, Palm Harbor would "do everything for them except sell them the home."

During the visit, the Crawfords were given a brochure that contained an introduction by "your Palm Harbor retailer" and described a guided tour of the factory. The last page of the brochure referred to a "Palm Harbor Sales Center" and listed several ways the sales center would assist the purchaser of a Palm Harbor home. At that point, the brochure included the following statement: "We will handle the delivery and setup of your home just as though we were the ones who were going to live in it."

In August 1992, Mr. Crawford ordered a custom-built, double-wide Palm Harbor home from All Star for $41,000. He made a $4,100 down payment on the home at that time. Although the Crawfords testified that up to that point they had still not been informed that Palm Harbor would not set up their mobile home, the purchase agreement with All Star that Mr. Crawford signed provided that delivery and setup of the home was to be performed by All Star.

After the Crawfords' home was manufactured by Palm Harbor, it was delivered to the All Star lot in October 1992. While still located on the All Star lot, the Crawfords' home was accidentally damaged when a truck delivering another mobile home backed into it. All Star contacted Palm Harbor regarding the damage, and Palm Harbor dispatched an employee to repair the home. However, neither All Star nor Palm Harbor disclosed to Mr. Crawford that the new home had been damaged.

A few days before the scheduled meeting for Mr. Crawford to close the purchase of the mobile home, All Star telephoned him and informed him that Virgil Adams, Sr., would visit the site the Crawfords had chosen to have the home set up on. Although Mr. Adams had been employed by All Star to set up the mobile home, Mr. Crawford testified that he was not told at that time who Mr. Adams worked for. On October 23, 1992, Mr. Crawford completed the closing transaction for the purchase of his mobile home at the All Star office. Mrs. Crawford was not a party to the purchase of the home.

Approximately a week after the closing, and after the mobile home had been delivered to its site, Mr. Crawford located the mobile home's installation manual inside the mobile home. The installation manual included the Palm Harbor home warranty. He had not seen or read the Palm Harbor warranty before that time. The setup of the home by All Star's crew of workers directed by Mr. Adams took several weeks--much longer than the Crawfords had been told it would take.

After the Crawfords moved in, representatives from All Star conducted a walk-through of the mobile home in November 1992, and made a list of items needing correction. The list was forwarded to Palm Harbor for repair under its warranty. Palm Harbor did not send a representative to repair the items until almost two months later, in January 1993, and the man did not perform all of the requested repairs. The Crawfords discovered further defects and sent another list to All Star and Palm Harbor. The Crawfords were notified that a Palm Harbor repairman would arrive to perform the repair work on February 21, 1993, but no repairman arrived on that date.

On February 25, 1993, the Crawfords made a complaint regarding the condition of their mobile home to the Alabama Manufactured Housing Commission ("AMHC"). Palm Harbor rescheduled the repair work for March 6, 1993, but again no repairman arrived on that date. Thereafter, a representative of the AMHC inspected the Crawfords' home and compiled a lengthy list of needed repairs. More than 20 of the needed repairs were attributed to manufacturing defects; however, others were attributed to a faulty, unlevel setup of the home. The AMHC forwarded the list to Palm Harbor, but Palm Harbor took no action in regard to those defects other than to send a representative to the Crawfords' home to make his own list of required repairs. Then in May 1993, Palm Harbor sent Mr. Adams and his crew, the same workers All Star had hired to set up the Crawfords' home, to do repair work on the home. However, Mrs. Crawford would not let them perform the work, telling them she had learned they were not licensed by the AMHC.

The Crawfords filed suit in August 1993, alleging breach of express and implied warranties against Palm Harbor and All Star, and alleging that Palm Harbor, All Star, and Virgil Adams, Sr., had negligently or wantonly caused or allowed the mobile home to be set up improperly. The complaint was later amended to add claims against Cannon Manufactured Housing Group, All Star's parent company. The amended complaint also added claims alleging that Palm Harbor had intentionally or recklessly misrepresented that it would handle the delivery and setup of the Crawfords' home, and alleging that Palm Harbor and All Star had fraudulently suppressed the fact that the mobile home had been damaged.

In January 1995, All Star, Cannon, and Mr. Adams filed a motion to stay the trial pending arbitration of the claims against them according to the terms of the sales contract between All Star and Mr. Crawford. In March 1995, the trial court entered an order staying trial of the claims against All Star and Cannon, in favor of arbitration, and denying the stay as to Mr. Adams. However, in July 1995, the trial court also referred the Crawfords' claims against Mr. Adams to arbitration.

In August 1995, nearly eight months after All Star, Cannon, and Adams had moved for arbitration, and five months after the motion had been granted as to All Star and Cannon, Palm Harbor moved to compel arbitration. The trial court denied the motion; however, Palm Harbor did not file an interlocutory appeal of that ruling.

The Crawfords then filed a second amended complaint, alleging several counts against Palm Harbor: (1) breach of implied and express warranties (as to both Mr. and Mrs. Crawford), 1 (2) fraudulent misrepresentation that it would handle the delivery and setup of the mobile home (as to Mr. Crawford), (3) fraudulent suppression of the fact that the home had been damaged (as to Mr. Crawford), and (4) fraudulent misrepresentation that the home was free of defects and had been constructed in compliance with federal standards (as to Mr. Crawford). The Crawfords sought compensatory and punitive damages.

The case went to trial in November 1995. Palm Harbor moved for a directed verdict at the close of the Crawfords' evidence and again at the close of all evidence. The trial court denied the motions and submitted the case to the jury. The jury returned two verdicts: a general verdict in favor of Mr. Crawford awarding $63,000 in compensatory damages and $1,000,000 in punitive damages, and a verdict in favor of Mrs. Crawford on her breach of warranty claims awarding $50,000 in compensatory damages for emotional distress and physical injury. 2 The trial court entered a judgment based on the verdicts. Palm Harbor then moved for a J.N.O.V., a new trial, or remittitur. Following a Hammond 3 hearing, the trial court denied Palm Harbor's post-judgment motions. Palm Harbor appeals.

II.

Palm Harbor has raised several issues on appeal: (1) whether the trial court erred in denying its motion to compel arbitration, (2) whether the trial court erred in denying its motions for a directed verdict and submitting the fraud claims to the jury, (3) whether the trial court erred in submitting the claim of punitive damages to the jury, (4) whether the trial court erred in denying its motion for a J.N.O.V., a new trial, or remittitur, and (5) whether the jury's award of punitive damages is unconstitutionally excessive. Palm Harbor raises no issue relating to the Crawfords' claims based on breach of warranty.

III.

We first address the issue whether the trial court erred by denying Palm Harbor's motion to compel arbitration of the Crawfords' claims against it. Although there was no arbitration agreement between Palm Harbor and the Crawfords, Palm Harbor argues that the Crawfords' claims against it should have been referred to arbitration based on the broad language of the arbitration clause contained in the mobile home purchase agreement between All Star and Mr. Crawford. Although it was not a signatory to the arbitration agreement, Palm Harbor, relying on Ex parte Gates, 675 So.2d 371 (Ala.1996), argues that the language of the arbitration agreement is such that Palm Harbor, as the manufacturer of the home, was due to be included as a party to the arbitration. 4

In response, the Crawfords argue that the trial court correctly denied Palm Harbor's motion to compel arbitration. They make several arguments in support of their position, including the argument that Palm Harbor waived any right it had to arbitration. The Crawfords point...

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