Savage v. Wright, 82-148
| Decision Date | 30 September 1983 |
| Docket Number | No. 82-148,82-148 |
| Citation | 439 So.2d 120 |
| Parties | James W. SAVAGE, III, and Marion Savage, d/b/a Home Pest Control Company, et al. v. Elbert Hubbard WRIGHT. |
| Court | Alabama Supreme Court |
John T. Kirk, Montgomery, for appellants.
William G. McKnight, Montgomery, for appellee.
Appeal by the defendants from a judgment for plaintiff in an action based upon fraud, fraudulent concealment, and negligence. We affirm.
The action grew out of the purchase of a 25-year-old house by plaintiff, Elbert Hubbard Wright, from Mr. and Mrs. Henry Wingate. Wright learned of the house through a salesman of Rossi and Turner Realty Company. When Wright inspected the house, it was fully furnished but unoccupied. The closing took place on February 27, 1980.
Approximately two months after moving into the house, plaintiff observed certain defects in the floor and other parts. He had M.K. Johnson, an architect, inspect the house. This inspection disclosed termite damage to the floor and to one of the door frames. Ultimately plaintiff filed a complaint, originally naming the Wingates and fictitious parties. Later, however, the Wingates were dismissed because of a pro tanto release made with plaintiff, who amended his complaint to add as defendants James W. Savage, III, and Marion Savage, d/b/a Home Pest Control Company. A later amendment added Home Specialty Pest Control Company, Inc., and Aetna Casualty and Surety Company, Inc., as defendants.
A default judgment was entered against Aetna. Summary judgment motions of the other defendants were denied, and the case was tried to a jury, which awarded $10,000.00 as damages. Defendants' motion for a new trial was denied and this appeal ensued.
Defendants have raised three issues for our review:
1. Whether the trial court erred in denying defendants' motion for summary judgment, in view of the caveat emptor rule applicable to the sale of used residential property;
2. Whether the trial court erred in submitting the issue of defendant's negligence to the jury; and
3. Whether the trial court erred in failing to grant Aetna's motion to set aside the default judgment rendered against it.
The Savages' motion for summary judgment was filed for themselves and for their Birmingham franchisor. It was supported by a copy of the contract of sale between sellers and purchaser, the deposition of Mr. Wright, an affidavit of Mr. James W. Savage, and a memorandum brief. Plaintiff Wright filed a brief in opposition, with supporting affidavits of himself, Philip Pelham, and Johnny A. Block. Also filed in opposition were a stipulation on the testimony of William A. Ward, chief of the construction and evaluation section of the Montgomery Veterans Administration Office, copies of the "letter of clearance" executed by James W. Savage, the Veterans Administration "certificate of reasonable value," and the inspection report of Philip Pelham. These materials, together with the pleadings on file, disclose that the plaintiff's action against the pest control companies was based upon fraud by misrepresentation, fraud by suppression of material facts, and negligence.
Defendants argue that the case of Ray v. Montgomery, 399 So.2d 230 (Ala.1980), foreclosed any recovery against the defendants. There, the purchasers of a used house sued the sellers and a pest control company on the theories of fraud, breach of the duty to disclose termite damage to the purchasers, fraud by the pest control company in failing to disclose termite damage, and breach of contract by the pest control company in failing to adequately treat the house, with the purchasers as third party beneficiaries of that contract. This Court found no evidence of misrepresentation by the sellers to the purchasers. The contract there contained an "as is" clause and did not require a termite inspection. Moreover, there was no breach of any duty to disclose facts in Ray because no confidential relationship was shown to exist between the seller and the purchaser. And finally, the purchasers were found not to be intended beneficiaries of the pest control service contract, because that contract had been entered into between owners who preceded the seller's title and entered into for the purpose of protecting their house as property rather than for the purpose of protecting possible subsequent purchasers. It should also be noted that in Ray this Court observed that "a purchaser may protect himself by express agreement in the deed or contract of sale." Ray, supra, at 233.
This case is factually distinguishable from the Ray case. The contract of purchase and sale here was no "as is" contract. Moreover, this contract contained the following clause:
"In the event this contract necessitates the obtaining of a new mortgage loan, 'it is expressly agreed that, notwithstanding any other provisions of this contract, the PURCHASER shall not be obligated to complete the purchase of the property described herein or to incur any penalty by forfeiture of earnest money, deposits or otherwise unless the SELLER has delivered to the PURCHASER a written statement issued by the Federal Housing Commissioner, Veterans Administration or Conventional appraiser, as appropriate, setting forth the appraised value of the property of not less than $25,000 which statement the SELLER agrees to deliver to the purchaser promptly after such appraised value statement is available to the SELLER."
It is clear from this completed provision and from the testimony that the purchaser here was applying for a "V.A. Loan" which required a "V.A. Appraisal" (Certificate of Reasonable Value), and a "termite certificate." The "termite certificate" to have been furnished is explained in item 26 of the "V.A. Appraisal":
"The seller shall furnish the veteran purchaser at no cost to the veteran prior to settlement a written statement (or certification) from a recognized exterminator that based on careful visual inspection of accessible areas and on sounding of accessible structural members, there is no evidence of termite or other wood-destroying insect infestation in the subject property, and, if such infestation previously existed, it has been corrected and any damage due to such infestation has also been corrected or alternatively been fully disclosed as follows...."
The testimony established that the Montgomery office of Home Pest Control Company was contacted by one of the realty agents who was handling the sale, for the purpose of obtaining the "termite certificate," or letter of clearance. This Montgomery office was operated by James W. and Marion Savage, who held a franchise agreement with Home Specialty Pest Control Company of Birmingham. It was stipulated at trial that James W. Savage was an agent, servant, or employee of the Birmingham company. Savage made the following report:
This document was delivered to plaintiff Wright, who acknowledged its delivery:
Defendants nevertheless argue that the sales contract between the buyer and the sellers expressly excluded any guarantee or warranty respecting the condition of the property. Moreover, they contend that the statements in Savage's report, "No visual structural damage," and "This is not a guarantee that there are no Termites in this Building," fall within the bar to liability provided by Ray v. Montgomery, supra.
We cannot agree with that position. The gist of plaintiff's claims against the pest control defendants was fraud and negligence, not breach of contract. The plaintiff's evidence opposing summary judgment established that the termite inspection was part of the loan requirements, that it was to be made in his behalf, that the "letter of clearance" was furnished by Home Pest Control Company, and that the plaintiff relied upon it to his detriment. It further tended to establish that there was "visible old termite damage" which pre-existed the inspection conducted by Savage. Savage himself maintained that he had made a careful inspection of the premises by visual inspection and by sounding accessible structural members, and found no infestation. This evidence was contradicted by evidence of plaintiff which tended to establish negligent inspection as well as misrepresentation and non-disclosure. Although Savage denied either hiding or willfully failing to disclose the existence of damage, the evidence of his "letter of clearance," which affirmatively reported "a careful visual inspection ... and sounding" and that "[i]f such infestation previously existed infestation has been corrected and any damage due to such infestation has been corrected or alternately [sic] been fully disclosed," in the face of plaintiff's evidence of extensive and long-existing termite damage, made factual issues for the jury. Indeed, it is well established that summary judgment is authorized only when the moving party clearly shows that there is no genuine issue as to any material fact, and the movant is entitled to a judgment as a matter of law, Kutack v. Winn-Dixie Louisiana, Inc., 411 So.2d 137 (Ala.1982); if there is a scintilla of evidence supporting the party against whom the motion is made, summary judgment may not be granted. Campbell v. Alabama Power Co., 378 So.2d 718 (Ala.1979). Although Savage himself had no contact with the...
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...of the inspection and knew that his "letter of clearance" would be presented to, and was for the benefit of, the buyer. Savage v. Wright, 439 So.2d 120, 123 (Ala. 1983). We see no reason that the rationale in Savage should not apply to astructural inspection by a licensed contractor. Moreov......
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Hood v. Prudential Ins. Co. of America, 82-628
...Summary judgment is inappropriate when there is, as here, evidence supporting the party against whom the motion is made. Savage v. Wright, 439 So.2d 120 (Ala.1983). Therefore, for the above stated reasons, we reverse the judgment of the circuit court as to all issues, except the issue regar......
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Rumford v. Valley Pest Control, Inc.
...the only party calculated to derive a direct, substantial benefit from such a contract is the prospective buyer. See Savage v. Wright, 439 So.2d 120, 123 (Ala.1983) ("inferable" that the provider of a termite letter "knew not only the purpose of his employment but that his 'letter of cleara......
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...against whom the motion is made, summary judgment may not be granted. Henderson v. Winkler, 454 So.2d 1358 (Ala.1984); Savage v. Wright, 439 So.2d 120 (Ala.1983). Accordingly, we must review the trial court's granting of Molton's motion for summary judgment in light of the scintilla rule. T......