Phillips v. Wayne's Pest Control Co., Inc.
| Decision Date | 30 June 1993 |
| Citation | 623 So.2d 1099 |
| Parties | Larry PHILLIPS and Elaine Phillips v. WAYNE'S PEST CONTROL COMPANY, INC., et al. 1911484. |
| Court | Alabama Supreme Court |
David McKnight of Baxley, Dillard & Dauphin, Birmingham, for appellants.
John W. Clark, Jr. and Michael E. Henderson of Clark & Scott, P.C. and Garrick L. Stotser of Massey & Stotser, P.C., Birmingham, for appellees.
The plaintiffs, Larry and Elaine Phillips, brought an action against Thomas Travis, 1 from whom the plaintiffs had bought a house, and Wayne's Pest Control Company, Inc. ("WPC"), alleging fraud and breach of contract after they discovered that their house had been damaged by termites. The Phillipses appeal from a summary judgment for WPC on the fraud claim, made final pursuant to Rule 54(b), Ala.R.Civ.P.
In reviewing a summary judgment, this Court must determine if the moving party made a prima facie showing that there was no genuine issue of material fact and that he was entitled to a judgment as a matter of law. Raymond v. Amason, 565 So.2d 614 (Ala.1990); A.R.Civ.P. 56. If the movant carries this burden, then the nonmoving party must rebut that showing by presenting substantial evidence creating a genuine issue of material fact. Ala.Code 1975, § 12-21-12(d). "Substantial evidence" has been defined as "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co., 547 So.2d 870, 871 (Ala.1989). Additionally, all reasonable doubts concerning the evidence must be resolved in favor of the nonmoving party. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).
On September 18, 1989, the Phillipses purchased Travis's house in Leeds, Alabama. The contract expressly provided that the existing termite bond on the house be transferred to the buyers at the seller's expense.
WPC had treated the house on August 17 and had given Travis a termite bond with an effective date of September 1, 1989. On October 12, 1989, WPC sent to the Phillipses a Veterans Administration ("V.A.") form entitled "WOOD DESTROYING INSECT INFORMATION--EXISTING CONSTRUCTION." In this form, WPC stated that "Based on careful visual inspection of the readily accessible areas of the property ... [n]o visible evidence of infestation from wood destroying insects was observed." This form also provided, however, that
On that same day, WPC issued to the Phillipses a renewal of Travis's termite bond. The closing of the sale occurred in November 1989, and the Phillipses discovered no problems with termite infestation for several months. In the spring of 1990, Larry Phillips noticed active termites and substantial termite damage when he removed a rotten board while repairing the deck attached to the back of the house. Phillips then telephoned WPC, and Larry O'Brien, a WPC representative, came to inspect the house. After acknowledging the termites and the damage, O'Brien showed Phillips an August 17, 1989, graph of the house prepared by WPC and signed by Travis that had indicated the existence of the termites. Phillips told O'Brien that he had never seen that document.
Phillips subsequently asked the Alabama Department of Agriculture and Industries ("ADAI") to inspect the house. At the inspection, ADAI found active termites in the deck area, and it concluded that WPC's treatment of the house was "inadequate." ADAI then ordered WPC to retreat the house. WPC did retreat the house, but upon reinspection, ADAI once again discovered active termites. Thereafter, the Phillipses obtained an estimate from Colonial Construction Company for the cost of repairing the termite damage to the house; Colonial concluded that the cost of repair exceeded $8,000.
The essential elements of a fraud action are: 1) misrepresentation of a material fact; 2) made willfully to deceive, or recklessly without knowledge; 3) which was justifiably relied upon by the plaintiff under the circumstances; and 4) which caused damage as a proximate consequence. Harris v. M & S Toyota, 575 So.2d 74 (Ala.1991); Ramsay Health Care, Inc. v. Follmer, 560 So.2d 746 (Ala.1990).
The Phillipses argue that WPC defrauded them when it represented in the V.A. form of October 12, 1989, that "[n]o visible evidence of infestation from wood destroying insects was observed." 2
The V.A., as a prerequisite to approving financing for a house, requires the buyer to have a pest control company inspect the house and to report on a V.A. form the condition of the house. The form provides, in pertinent part:
WPC checked the box beside alternative B, and its general manager signed the form and dated it "10/12/89." The Phillipses argue that this statement constitutes either a willful or a reckless misrepresentation, Burlington Northern R.R. v. Warren, 574 So.2d 758, 766-67 (Ala.1990), because, they argue, two WPC agents had in fact observed active infestation in August 1989 and no one from WPC had reinspected the house before WPC issued the V.A. form on October 12, 1989. WPC appears to concede that it did not reinspect the house before October 12, 1989.
WPC raises two arguments. First, it argues that this situation is controlled by this Court's decision in Reynolds v. Fowler Pest Control & Insulation, Inc., 479 So.2d 1185 (Ala.198...
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