Shiv-Ram, Inc. v. McCaleb

Decision Date30 December 2003
Citation892 So.2d 299
PartiesSHIV-RAM, INC., d/b/a Ramada Inn of Anniston v. Linda McCALEB.
CourtAlabama Supreme Court

Joe L. Leak and Robert G. Boliek, Jr., and James W. Moss of Friedman, Leak & Bloom, P.C., Birmingham, for appellant.

Kenneth W. Hooks of Pittman, Hooks, Dutton, Kirby & Hellums, P.C., Birmingham, for appellee.

H. Hampton Boles, Ed R. Haden, and Eric B. Langley of Balch & Bingham, LLP, Birmingham, for amici curiae Business Council of Alabama, Alabama Bankers Association, Alabama Civil Justice Reform Committee, and Automobile Dealers Association of Alabama, Inc., in support of the appellant's application for rehearing.

HARWOOD, Justice.

On September 14, 1998, Linda McCaleb ("Linda") and her husband, Dennis, sued Shiv-Ram, Inc., d/b/a Ramada Inn of Anniston ("Shiv-Ram"), and other named and fictitiously named defendants not parties to this appeal. Their complaint alleged negligence, wantonness, breach of contract, and loss of consortium and sought both compensatory and punitive damages. The case was tried before a jury in the Calhoun Circuit Court. At the close of the evidence, Shiv-Ram moved for a judgment as a matter of law, which the trial court denied as to all claims except Linda's breach-of-contract claim. The jury returned a verdict in favor of Linda, awarding compensatory damages of $176,572.82 and punitive damages of $500,000.00. The jury returned a verdict in favor of Shiv-Ram as to Dennis's loss-of-consortium claim.1 The trial court entered a judgment on the verdict and Shiv-Ram filed postjudgment motions pursuant to Rules 50 and 59, Ala.R.Civ.P., seeking a judgment as a matter of law, a new trial, or a remittitur of the damages. After a hearing on those motions, the trial court entered an order denying Shiv-Ram's postjudgment motions and providing an extensive and thorough analysis of the applicable law; Shiv-Ram appealed. We affirmed.


The record shows the following. On June 14, 1997, Linda, accompanied by two children, checked into a Ramada Inn motel ("the motel") located in Anniston. Linda had reserved a room with a king-sized bed. After getting settled in the room, Linda began to iron some clothes. Because there was no ironing board in the room, Linda was using the bed as an ironing board. While she was ironing, Linda took a step by the side of the bed to approach the nightstand adjacent to the bed. When she did so, her right ankle "struck something," causing a "very sharp pain." Linda examined her ankle; it had a "goose egg" on it and there was a "speck" of blood. After composing herself, Linda lifted the bedspread and saw what she described as a "sharp thing sticking out" from the bed frame; it was approximately three inches in length. The object was part of the frame that supported the mattress and box springs. Linda then went to the front office of the motel and reported her injury to the clerk on duty.

Although Linda presented a great deal of evidence at trial concerning the severe medical problems and damage she suffered as a result of her injury, involving 99 visits to 14 different doctors, we need not recount any of that evidence because Shiv-Ram states in its initial brief that it "elects not to challenge the jury's very substantial award of compensatory damages to Ms. McCaleb," choosing to challenge only the punitive-damages award.

On February 25, 1997, before Linda's injury, Danny Patel, as the successful bidder at the auction where the motel was sold, entered into an agreement with Anniston Motel Associates, Inc. (hereinafter referred to as "AMA"), the then owner of the motel, to purchase the motel in an "as-is, where is" condition. The transaction was to close on June 13, 1997. In the interim, Danny incorporated Shiv-Ram, which would own and operate the motel. Two days before the closing, Jay Patel, who is not related to Danny but who is a minority shareholder in Shiv-Ram, was told that he would be the general manager of the motel. Jay had been in the motel business for seven years and had been the general manager of a motel in Talledaga for three and a half years. Jay testified at trial that the responsibilities of a general manager included maintenance services and guest safety. He also testified that it was customary in the motel industry to routinely inspect guest rooms for safety and to maintain incident reports and work-order books to keep abreast of any injuries or safety-related problems occurring at the motel. He acknowledged that he was aware that while the motel had been "on the auction block" for some time preceding the execution of the February 25 purchase agreement and during the almost four months between that date and the June 13 closing, the condition of the motel had been allowed to "deteriorate greatly."

The purchase agreement granted Shiv-Ram the right to inspect each room in the motel during the four months preceding the closing, but Shiv-Ram made no effort to do so. Jay testified that he knew that the purchase agreement stipulated that Shiv-Ram was purchasing the property "as-is, where is," and he agreed that, accordingly, if the motel was "full of unsafe beds, that's the way you're buying it." Jay acknowledged that the purchase agreement declared that the seller made no warranties as to the "merchantability, suitability, or fitness for any particular use" of the motel; that Shiv-Ram had been given a sufficient opportunity to inspect the property and was relying solely on its own inspections and examinations of the property and its "own determination of the condition of the property"; and that the purchase agreement gave Shiv-Ram the right to inspect the property and to conduct its own engineering studies and reports, but that between February 25 and June 13 Shiv-Ram had conducted no such inspections or examinations. Jay explained that Shiv-Ram wanted a "seamless transition" in the ongoing operation of the motel, and did not want to shut down operations to conduct inspections and to make repairs.

The "Ramada Standards of Operation and Design Manual," which imposed requirements on franchisees of Ramada Franchise Systems, Inc. ("Ramada"), such as Shiv-Ram, a copy of which was available at the motel, required all room furnishings to be "in excellent physical condition." Jay acknowledged that a bed in the condition of the bed in Linda's room, as depicted by a photograph shown to him at trial, "[w]ould be hazardous" and "dangerous." He was aware that a guest in a room at the motel would "have to negotiate around the bed ... to get about the room [and] to get to either nightstand" and that "it was forseeable ... or it's obvious people would be walking around the bed in close proximity to the bed." He agreed that with a bedspread covering a projecting piece of the metal bed frame, the frame "could be" dangerous. He knew after the fact that there had been "a piece sticking out of the middle of [Linda's] bed." Had he inspected any of the records kept by the previous owners of the motel, he would have learned that those records clearly indicated a recurring problem with bed frames.

Under the purchase agreement, Shiv-Ram had access to all of the records maintained by AMA, including incident reports, which listed incidents or injuries that had taken place on the premises of the motel, and work orders that listed repairs that had been, or that needed to be, made. Jay stated at trial that there were boxes containing "hundreds" of documents to which Shiv-Ram had access and that, although he had had the opportunity to inspect those documents, he never did. Included in those documents were four incident reports made by AMA as a result of other patrons' of the motel striking their ankles on pieces of metal protruding from king-sized bed frames. Jay acknowledged that no incident report or work order was filed detailing Linda's injury and that no photographs were taken of the bed on which she was injured even though such measures should have been taken.

A month before the closing a Ramada representative conducted an inspection of the motel and provided Shiv-Ram with a punch list of what needed to be done to bring the motel within Ramada's standards. In the process, the Ramada representative inspected 18 of the 98 rooms in the motel, but not the one Linda subsequently rented. In his resulting report, the Ramada representative enumerated many items that needed to be repaired, replaced, or refurbished, including some items in the inspected guest rooms. The punch list required Shiv-Ram to make the stated improvements no later that February 1, 1998. Some of the rooms inspected contained king-sized beds, but the report contained no reference to any problems with the bed frames in those rooms.

The record further shows that employees of AMA had full knowledge of the conditions of the bed frames and of various complaints that had been made regarding them. Monica Smith, who had been a "desk manager" at the motel when it was owned by AMA, was retained by Shiv-Ram as the acting general manager when the purchase agreement was entered into and the general manager quit. She testified that even before she became acting general manager, the motel had been allowed to deteriorate and that thereafter there were cutbacks in housekeeping and maintenance, resulting in the further deterioration of the premises. According to her, the maintenance person would sit in the maintenance room all day because he had no supplies or materials to work with. Smith further testified that there were chronic problems in the motel with beds being "off the track and off their frames, and of metal protruding, these rails protruding from the beds"; that the employees of AMA, including the housekeeping staff, had conversations about those problems; that she had seen the file reflecting several injuries caused by the bed frames and numerous work orders relating to the bed frames; that she had written one of the reports concerning...

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