Potter v. First Real Estate Co., Inc.

• Citation: 844 So.2d 540
• Parties: Joseph POTTER and Jamie Potter, v. FIRST REAL ESTATE COMPANY, INC., and Dawn Borden.
• Decision Date: 06 September 2002
• Court: Supreme Court of Alabama

844 So.2d 540

Joseph POTTER and Jamie Potter, v. FIRST REAL ESTATE COMPANY, INC., and Dawn Borden.

1010339.

Supreme Court of Alabama.

September 6, 2002.

W. Lee Pittman and C. Carter Clay of Pittman, Hooks, Dutton & Hollis, P.C., Birmingham (rehearing brief filed by W. Lee Pittman, C. Carter Clay, and J. Chris Cochran of Pittman, Hooks, Dutton, Kirby & Hellums, P.C., Birmingham), for appellants.

Michael R. Lunsford and William Perry Webb of Porterfield, Harper & Mills, P.A., Birmingham, for appellees.

On Application for Rehearing

LYONS, Justice.

The opinion of May 24, 2002, is withdrawn, and the following is substituted therefor.

Joseph Potter and Jamie Potter filed an action to recover damages from Dawn Borden and First Real Estate Company, Inc., based upon allegations of misrepresentation, suppression, fraud, promissory fraud, breach of contract, negligence and recklessness in the sale of a house. Borden and First Real Estate moved for a summary judgment. The trial court denied the Potters' Rule 56(f), Ala. R. Civ. P., motion to continue the summary-judgment hearing and entered a summary judgment for First Real Estate and Borden on the ground that the statute of limitations barred the Potters' claims. The Potters appealed, but limited their submissions to this Court to the misrepresentation, suppression, fraud, and promissory-fraud claims. Therefore, those are the only claims before us. See Hannah v. Gregg, Bland & Berry, Inc., 840 So.2d 839, 852 (Ala.2002).

Pertinent Facts

The following discussion of the facts is based entirely on Joseph Potter and Jamie Potter's depositions and the documents underlying the sales transaction. First Real Estate did not submit an affidavit from Borden, and the trial court declined to postpone the hearing on the motion for a summary judgment to permit Borden to be deposed. We review the facts before the trial court at the time it ruled on the motion for a summary judgment in the light most favorable to the Potters, the nonmovants. Nationwide Prop. & Cas. Ins. Co. v. DPF Architects, P.C., 792 So.2d 369, 372 (Ala.2001).

In 1998 Joseph Potter and his then fiancée, Jamie, were looking to purchase their first house. Joseph had graduated from Birmingham-Southern College with a degree in graphic design and was working as a graphic designer. Jamie was working as a dental assistant and was living with her parents. Joseph and Jamie saw a "First Real Estate" sign in the yard in front of Kimberly Boler's house. They telephoned the number on the sign and spoke with Borden, a real-estate agent employed by First Real Estate.

Joseph Potter, Boler, First Real Estate, and Borden entered into an agency agreement; that agreement provided as follows:

"Seller and Buyer hereby acknowledge and agree that First Real Estate and its Agent(s) (for convenience referred to together, or interchangeably as `Broker') are representing both Buyer and Seller and that Broker has been and is now the Agent of both Seller and Buyer with respect to this transaction. Seller and Buyer have consented to this dual representation.

"Seller, Buyer and Broker understand that Limited Consensual Dual Agency can create conflicts of interest. Therefore, Broker will not represent the interests of one party to the exclusion or detriment of the interest of the other party. Seller and Buyer, hereby acknowledge that Broker's relationship with them is not one of a fiduciary, and they waive all claims which they have now or which may arise in the future in connection with conflict of interest and/or limited consensual dual agency.

"The parties understand that because Broker represents both parties, Broker must endeavour to be impartial as between Seller and Buyer. Except as expressly provided below, Broker in its capacity as Limited Consensual Dual Agency, will disclose to both Seller and Buyer all facts and information which Broker believes are material or which might affect Seller's or Buyer's decisions with respect to this transaction, whether or not the facts or information would be confidential except for the limited consensual dual agency."

It is undisputed that Borden told Jamie Potter that she represented Joseph and Jamie "as much as she represented the seller."

Borden twice accompanied Joseph and Jamie to the house. Joseph Potter testified that during the first visit he asked Borden if the house was located in a flood plain. Joseph Potter further testified that Borden responded that to her knowledge it was not, but that she would check on a survey she had in her office. Borden told Joseph and Jamie that they could obtain another survey if they wished, but that the one she had was a recent one and that they could save money if they used it. During their second visit to the property, Borden brought with her a survey of the property that she purportedly had obtained from a prior owner. Borden showed the survey to Joseph Potter. In his deposition, Joseph Potter testified:

"I looked over it and there was something on there about the flood [plain] and it was hard to read. You know, I attempted to read it and she said, well, `it says it's not in a flood plain.' And I tried to read the—you know, it's got, `is, is not.' It was hard to decipher so I just took her word."

He further testified that he believed that the survey introduced into evidence by Borden and First Real Estate in support of their motions for a summary judgment was a copy of the survey Borden showed him during the second visit. However, Joseph also stated that the survey Borden and First Real Estate introduced into evidence was "easier to read" than the one he was shown during his second visit to the house. Comparing the survey introduced into evidence and the one he was shown on his second visit, Joseph testified:

"I can make out most of the words on [the survey introduced into evidence by the defendants] by guessing [their] shape. [The survey I was shown at the house] was hard to make out ... half the words probably."

Joseph testified that the survey he was shown during the second visit to the house was "almost illegible."

On July 7, 1998, Joseph and Jamie met with Borden and Joseph executed an eight-page "Financed Sales/VA Contract" for the house. The sales contract stated: "THE PROPERTY ... ____ IS X IS NOT LOCATED IN A FLOOD PLAIN...." (Capitalization original.) At the July 7 meeting, Jamie asked if the property was in a flood plain, and Borden replied, "No." The sales contract also included a disclaimer that read, in part:

"Seller and Purchaser acknowledge that they have not relied upon the advice or representations of Broker ... relative to... (vii) the investment or resale value of the Property; ... or (ix) any other matters affecting their willingness to purchase the Property on the terms and price herein set forth. Seller and Purchaser acknowledge that if such matters are of concern to them in the decision to sell or purchase the Property, they have sought and obtained independent advice relative thereto."

Joseph placed his initials under this disclaimer. The sales contract also stated that "Neither Purchaser, Seller, nor Broker... shall be bound by any understanding, agreement, promise, or representation concerning the Property expressed or implied, not specified herein." An addendum to the sales contract stated that it was possible that sinkholes existed on the property and further stated:

"NO WARRANTY OR REPRESENTATION RESPECTING THE SOIL CONDITION OR ANY SUBSURFACE FAULT OR DEFECT, OR ANY OTHER CONDITION OF THE LAND ... IS MADE BY FIRST REAL ESTATE... OR ITS AGENTS OR SUBAGENTS."

(Capitalization original.) Joseph Potter placed his initials below this addendum.

At the closing on July 31, 1998, Joseph was given several documents in addition to the sales contract, including a copy of the survey of the property. On that survey, in small print, appeared a notation that once stated, before the presence of any handwritten marks, "the property described herein (is) (is not) located in a special flood hazard area." A slightly diagonal handwritten line moves from the lower left to the right over the words "is not." The record before us does not contain a document purporting to be the actual document presented at closing. For all that appears, we have only a photocopy.

Joseph Potter signed a certificate acknowledging that he had "received and approved a copy of the survey." Jamie did not sign any of the documents. According to Joseph's deposition, as is discussed later, the copy of the survey he was given at the closing was another copy of the same survey he described as "almost illegible" at the time he first saw that survey on his second visit to the house.

Joseph and Jamie married on October 23, 1998, and she moved into the house with him. The Potters testified that they first learned their property was in a flood plain on September 2, 1999, when they received a letter from their mortgage company stating that the property was in a flood plain and that they were required to purchase flood insurance. Joseph testified that when he received the letter he thought, "This can't be right, we're not in a flood plain," and he put the letter in a drawer. After he received a second letter from his mortgage company, he contacted a friend who consulted "some old maps" and told him that he thought part of the Potters' property was in a flood plain. Joseph contacted an insurance agent and purchased flood coverage for the structure of the house. In March 2000, after heavy rains, the Potters' house flooded. Potter testified that he then consulted the survey he had received at the closing. He testified,

"It was very hard to read and I couldn't make out whether it said `is' or `is not' so it didn't end my questions."

On February 22, 2001, the Potters filed this action. On September 28, 2001, after the Potters unsuccessfully attempted to postpone consideration of Borden's and First Real Estate's motions for a summary judgment to allow further discovery, ...