Randolph County v. Alabama Power Co.

Citation784 F.2d 1067
Decision Date18 March 1986
Docket NumberNo. 84-7292,84-7292
PartiesRANDOLPH COUNTY, Plaintiff-Appellant, v. ALABAMA POWER COMPANY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Francis H. Hare, Jr., John H. Lavette, James J. Thompson, Jr., Birmingham, Ala., for plaintiff-appellant.

James H. Miller, III, Birmingham, Ala., Sterling G. Culpepper, David R. Boyd, Montgomery, Ala., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Alabama.

Before RONEY and HATCHETT, Circuit Judges, and NICHOLS *, Senior Circuit Judge.

NICHOLS, Senior Circuit Judge:

This is an appeal from the United States District Court, Middle District of Alabama, Eastern Division, granting Alabama Power Company's motion for directed verdict. The district court determined that even if Randolph County could prove the misrepresentations alleged, the evidence did not support a finding of reliance as required by Alabama state law on fraud. We affirm.

Background

Alabama Power Company (APCo) constructed a dam and reservoir on the Tallapoosa River in Randolph County, Alabama, which required the flooding of roads and bridges maintained by Randolph County (county) in the Crooked Creek watershed area. Alabama law permits a water power company, such as APCo, to flood public roads and bridges if it pays the affected county "the cost of locating, laying out and opening other public roads in lieu of and to the same extent as the public roads flooded or intended to be flooded." Ala.Code Sec. 10-4-320(5) (1975).

In 1965, APCo and the county began negotiations to determine the amount of compensation APCo owed the county pursuant to state law. In 1969, the Randolph County Court of County Commissioners (Commissioners) issued an order setting compensation at $781,015.24. Upon APCo's 1974 petition, the Commissioners amended the amount to $1,056,015.24 to cover the additional flooding needed to meet federal licensing requirements. By the end of 1977, APCo paid the county the amount determined in the 1974 amendment. It was shown that this sum sufficed for but a part of the new roads and bridges the flooding made necessary.

Proceedings Below

In 1981, the county sued APCo under 42 U.S.C. Sec. 1983 and the Federal Power Act, 16 U.S.C. Secs. 791a-828c, with pendent claims of fraud, alleging inadequate compensation. By order of November 10, 1983, No. 81-119-E, the court granted APCo's motion for summary judgment on all federal law claims. The case went before a jury on the issue of fraud. The jury, unable to reach a verdict, was discharged and a mistrial declared. APCo moved for directed verdict.

The county argued that the Commissioners were fraudulently induced into issuing orders in 1969 and 1974 that set the level of compensation lower than the amount to which the county was actually entitled. Specifically, the county claimed that APCo falsely represented the standard or measure of compensation on which the Commissioners relied in making their determination, i.e., "fair market value" instead of replacement cost. False representation in Alabama, the district court found in its decision of April 4, 1984, requires a false representation as to a material fact, reasonable reliance on that representation and a resultant injury. Burroughs Corp. v. Hall Affiliates, Inc., 423 So.2d 1348, 1353 (Ala.1982). The district court determined that the evidence as to whether the alleged misrepresentations were actually made was in conflict, but that neither party introduced evidence that "even suggested that the county relied upon APCo's alleged representations concerning the measure of compensation * * *." Instead, the court found undisputed evidence that the 1969 order was based on the studies of County Engineer C.P. McNeil (McNeil); that the McNeil studies focused on the cost of construction of functionally equivalent substitute facilities; and that the 1974 order was based on the McNeil studies with adjustments made for inflation and federal licensing requirements. Viewing all the evidence in the light most favorable to the county, the district court determined that "the facts and inferences point so strongly and overwhelmingly in favor of one party that the Court believes that reasonable men could not arrive at a contrary verdict," Federal Kemper Life Assurance Co. v. First National Bank, 712 F.2d 459, 464 (11th Cir.1983), and accordingly, granted APCo's motion for directed verdict. The county appealed.

Discussion
I. Charges of Fraud.

The county argues that the district court erred in granting APCo's motion for directed verdict on the charge of fraudulent misrepresentation of the measurement method. On a motion for directed verdict, the court should "view all the evidence, together with all logical inferences flowing from the evidence, in the light most favorable to the non-moving party." Neff v. Kehoe, 708 F.2d 639, 641 (11th Cir.1983). On this basis, we must affirm the district court.

We first note that the proper way to fix an award for a taking of this kind is a legal matter, not a factual one. 4 J. Sackman, Nichols on Eminent Domain Sec. 12.1 (3d ed. 1985). Thus, the misrepresentation alleged is a matter of law. Alabama law on fraud, codified in Ala.Code Sec. 6-5-100 to 104 (1975), Barrett v. Farmers & Merchants Bank, 451 So.2d 257, 264 (Ala.1984), generally requires a misrepresentation of a material fact. Army Aviation Center Federal Credit Union v. Poston, 460 So.2d 139, 142-43 (Ala.1984); Neff v. Kehoe, 708 F.2d at 642; United States v. Burgreen, 591 F.2d 291, 297 (5th Cir.1979). Moreover, the Alabama Supreme Court has recently held that there is no duty to disclose the law because "it is available and presumed known." Moore v. Liberty Mutual Insurance Co., 468 So.2d 122, 124 (Ala.1985); Henson v. Estes Health Care Center, Inc., 439 So.2d 74, 76 (Ala.1983). Nonetheless, a rare few of Alabama cases have found fraud based on a misrepresentation of law. Spry Funeral Homes, Inc. v. Deaton, 363 So.2d 786, 789 (Ala.Civ.App.1978); Bank of Loretto v. Bobo, 37 Ala.App. 139, 67 So.2d 77, 85, cert. denied, 259 Ala. 374, 67 So.2d 90 (1953). Those decisions involved representations made in exceptional circumstances, e.g., where to hold to the contrary would be against public policy or where the speaker was an attorney. In this regard, we note that the Alabama Supreme Court recently found no fraud where the party charged with the misrepresentation was a layman. "Moore's allegations would require [the insurance representative] Frost to give legal advice, which the law prohibits a layman from doing." Moore, 468 So.2d at 124.

The record demonstrates that the member of APCo who allegedly made the misrepresentations was Neal Williams, a layman. As a layman, Mr. Williams is prohibited by law from giving legal advice. His representations as to the proper standard to use, a matter of law, cannot be the basis of a claim of fraud for either intentional/reckless or innocent/mistaken misrepresentations.

The county also argues that the district court erred in granting APCo's directed verdict motion because it improperly found that the county did not rely on APCo's statements. Again we disagree.

Alabama fraud law requires reasonable reliance and a resultant injury. The district court was correct in concluding that the evidence did not even suggest reliance where there was undisputed evidence that the dollar amounts in the 1969 and 1974 orders were based on the county engineer's studies that were based on the substitute facilities doctrine.

There are two other factors as regards reliance. First, we note that the transaction involving "real estate is a kind of transaction where retention of counsel is ordinary and usual," Mills v. United States, 410 F.2d 1255, 1258, 187 Ct.Cl. 696 (1969). The record demonstrates that Randolph County had a lawyer on retainer who could have advised it. The record, however is not clear as to the actual involvement of this county lawyer. Mr. Fred McCain, a county commissioner at the time of the compensation negotiations, testified "[w]ell, I guess it's the commissioners' fault because we didn't look into the law, and nobody didn't tell us what the law was, and we took Mr. Neal Williams' word that that's all they [APCo] was going to pay." Tr. at 568.

Second, we are aware of a 1951 Fifth Circuit case describing the substitute facilities doctrine, City of Fort Worth, Texas v. United States, 188 F.2d 217, 222 (5th Cir.1951), and a law review article, Note, Just Compensation and the Public Condemnee, 75 Yale Law Journal 1053 (1966), which describes the substitute facility doctrine as one developed by courts to meet the unique needs of public condemnees who must recover for the loss of bridges, roads, etc. It appears to us that the county could have made better use of its attorney and that its attorney could have determined the proper legal standard without undue burden. He could well have got enough light from the statutory text alone. This does not seem to be an example of reasonable reliance on the other side of the table.

The county argues that the district court erred in not ruling on the 6-5-102 Suppression of Material Facts charge under which affirmative misrepresentation is not required. We disagree. Reviewing Alabama law on section 102, the Eleventh Circuit recently held that either the confidential relations of the parties or the particular circumstances of the case must impose an obligation to communicate. Kaye v. Pawnee Construction Co., 680 F.2d 1360, 1370 (1982). Without either of these, active concealment is required and the fact concealed must be material. Id. We do not construe the relationship between Randolph County and the Power Company, who by statute must pay the county for its flooded roads and bridges, as confidential. In addition, the particular circumstances of the case do not impose an obligation to...

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