Sho-Me Motor Lodges, Inc. v. Jehle-Slauson Const. Co., SHO-ME

• Court: Supreme Court of Alabama
• Writing for the Court: BEATTY; TORBERT
• Citation: 466 So.2d 83
• Parties: MOTOR LODGES, INC., of Alabama, d/b/a Mobile Howard Johnson's, a corporation v.CONSTRUCTION COMPANY, a partnership; Southern Roof Deck Applicators, Inc. 83-324.
• Decision Date: 11 January 1985
• Docket Number: SHO-ME,JEHLE-SLAUSON

Page 83

466 So.2d 83 SHO-ME MOTOR LODGES, INC., of Alabama, d/b/a Mobile Howard Johnson's, a corporation
v.
JEHLE-SLAUSON CONSTRUCTION COMPANY, a partnership; Southern Roof Deck Applicators, Inc. 83-324. Supreme Court of Alabama. Jan. 11, 1985.
Rehearing Denied March 22, 1985.

Page 84

Michael J. Salmon, Gulf Shores, for appellant.

Charles J. Fleming and Edward C. Greene of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, for appellee Jehle-Slauson Const. Co.

Victor T. Hudson and William W. Watts of Reams, Vollmer, Philips, Killion, Brooks & Schell, Mobile, for appellee Southern Roof Deck Applicators, Inc.

BEATTY, Justice.

This is an appeal by Sho-Me Motor Lodges, Inc., of Alabama (Sho-Me), d/b/a Mobile Howard Johnson's Motor Lodge (Mobile Howard Johnson's), from summary judgments entered in favor of Jehle-Slauson Construction Company (Jehle-Slauson)

Page 85

and Southern Roof Deck Applicators, Inc. (Southern Roof).

This case actually involves three separate actions, although only the last of the three is presently before us on appeal. The following facts are pertinent to all three actions:

On or about September 17, 1979, Sho-Me, the owner of the Mobile Howard Johnsons's, entered into a contract with Jehle-Slauson, as prime contractor, for the repair of damage caused by Hurricane Frederic. Jehle-Slauson then subcontracted with Southern Roof and under the terms of the contract Southern Roof agreed to complete the sheetrock work. On February 20, 1980, Sho-Me cancelled the contracts of both Jehle-Slauson and Southern Roof.

Before elaborating on the nature and outcome of the three actions involved, we will at this point briefly summarize those actions:

Action No. 1 (CV-80-1491)

June 30, 1980 Jehle-Slauson filed suit against Sho-Me.

March 27, 1981 Dismissed with prejudice, on stipulation of the parties.

Action No. 2 (CV-80-1652)

July 18, 1980 Southern Roof filed suit against Sho-Me and Jehle-Slauson

August 13, 1980 Jehle-Slauson filed a cross-claim against Sho-Me.

December 9, 1980 Complaint and cross-claim dismissed with prejudice, on stipulation of the parties.

Action No. 3 (CV-81-1218)

May 28, 1981 Sho-Me filed suit against Jehle-Slauson.

July 9, 1981 Jehle-Slauson filed a third-party complaint against Southern Roof.

October 28, 1983 Summary judgments granted in favor of defendant Jehle-Slauson and third-party defendant Southern Roof.

Jehle-Slauson filed an action on June 30, 1980, (Action No. 1) upon a lien against Sho-Me and others in the Circuit Court of Mobile County, claiming monies due under its contract as of the date of the cancellation by Sho-Me. This suit was settled, with Sho-Me executing a release on February 17, 1981, in connection with the settlement. In pertinent part, as events will show, this release contained the following provision:

"Provided, however, that all rights of the undersigned are preserved with respect to the 'mildew problem' referred to in the letter attached to this release as Exhibit 'A' and with respect to any defects in workmanship or materials which are neither (a) evident and obvious at the present time nor (b) known by the undersigned to exist at the present time;"

The letter referred to in this exception was written on December 30, 1980, by Ms. Bert S. Rector, manager of Mobile Howard Johnson's, to Jehle-Slauson:

"We are experiencing a mildew problem in a number of the rental units. Most of the problems are in buildings D, A and B. There is one area of mildew in building C. The mildew is on the common unit wall which has a double layer of sheet rock; the exterior wall over the thru-wall heating/cooling unit; and on the sheet rock behind the paneling. There does not appear to be any mildew on the bathroom or corridor walls.

"Preliminary investigation has indicated that the cause is from excessive moisture being in the sheet rock at the time of installation.

"Please make arrangements to inspect the problem in order that corrective action can be taken under the contractor's one year guarantee."

The settlement agreement between Sho-Me and Jehle-Slauson, dated March 27, 1981, contained, among other terms, these provisions:

"WHEREAS, the said action has been settled and will be dismissed by the Plaintiffs with prejudice

"It is hereby AGREED by the parties as follows:

Page 86

"The settlement and dismissal of the aforementioned case shall not preclude SHO-ME OF ALABAMA, D/B/A MOBILE HOWARD JOHNSON'S; SHO-ME MOTOR LODGES, INC. OF ALABAMA; SHO-ME MOTOR LODGES, INC.; McLEAN ENTERPRISES, INC.; THE PRUDENTIAL INSURANCE COMPANY OF AMERICA; and THE LINCOLN NATIONAL LIFE INSURANCE COMPANY from the filing of a suit against JEHLE-SLAUSON CONSTRUCTION COMPANY based upon any warranty rights which exist arising from the agreement between some of the parties dated September 19, 1979, as amended February 7, 1980.

"It is the intention of the parties hereto to set forth the AGREEMENT of JEHLE-SLAUSON CONSTRUCTION COMPANY that the filing of a later claim against it arising from any warranty rights which exist under the above described contract shall not be considered or asserted to be a compulsory counterclaim which should have been filed in the above described action."

The lawsuit brought by Jehle-Slauson, accordingly, was dismissed on March 27, 1981, "by stipulation of the parties."

Shortly after Jehle-Slauson filed suit against Sho-Me, Southern Roof brought an action against Sho-Me, Jehle-Slauson, and others (Action No. 2), based upon a lien arising out of Southern Roof's subcontract with Jehle-Slauson. Jehle-Slauson cross-claimed against Sho-Me. Both the original action and the cross-claim were settled and, upon a stipulation for dismissal by the parties, dismissed on December 9, 1980. In that connection, Southern Roof had executed a release on December 4, 1980, in favor of Sho-Me and Jehle-Slauson containing this clause:

"[Southern Roof] further agrees that it understands that, anything in this document to the contrary notwithstanding, it continues to be responsible for any work or repairs or labor or material furnished upon the Mobile Howard Johnson's, for any warranties, express or implied by contract or law, to the extent of the same."

During the pendency of Action No. 1 and Action No. 2, as suggested by the above letter of Ms. Rector, sometime in August of 1980, Sho-Me discovered the mildew problem when one of the maids at the Mobile Howard Johnson's discovered discoloration on the walls of one room and reported it to the housekeeper. During August and September of 1980, Sho-Me, in an apparent effort to determine the cause of this condition, had inspections conducted by several contractors, but the inspections proved inconclusive. Therefore, Sho-Me had studies performed by two testing laboratories. The reports of these two laboratories were completed in November and December of 1980. On December 30, 1980, Sho-Me gave written notice of the mildew condition to Jehle-Slauson and Southern Roof.

On May 28, 1981, Sho-Me filed suit in the Circuit Court of Mobile County against Jehle-Slauson (Action No. 3). In this complaint, Sho-Me claimed damages as a result of the mildew condition that had developed at the Mobile Howard Johnson's following Hurricane Frederic. Specifically, Sho-Me contended that in supplying and using moisture-laden sheetrock, Jehle-Slauson breached its written contract with Sho-Me for the repair of this storm-related damage by supplying defective workmanship and material and breached its implied warranty that the work performed pursuant to this contract would be accomplished in a good and workmanlike manner.

In July of 1981, Jehle-Slauson answered the complaint, denying allegations of breach of contract and breach of warranty made by Sho-Me. In addition, Jehle-Slauson advanced third-party claims against Southern Roof as the subcontractor who performed the sheetrock work in the Sho-Me project, and Sho-Me's architect, Hood-Rich Architects and Consulting Engineers. The architects were taken out of the action by summary judgment, which was affirmed by this Court in Jehle-Slauson Construction Co. v. Hood-Rich Architects, 435

Page 87

So.2d 716 (Ala.1983). In its third-party complaint against Southern Roof, Jehle-Slauson alleged that it and Southern Roof had entered into a subcontract by which Southern Roof agreed to perform work required by the contract to include furnishing all labor and material to install all sheetrock walls.

Southern Roof answered the third-party complaint of Jehle-Slauson by pleading a general denial and certain affirmative defenses.

After extensive discovery, Jehle-Slauson moved for summary judgment based upon the pleadings, discovery materials, the depositions of Charles Sturgell and Bert Rector, and the files of the earlier case of Southern Roof v. Sho-Me, et al. That motion was denied. Jehle-Slauson moved for a reconsideration of this action, while Southern Roof also moved for summary judgment. Upon reconsideration of Jehle-Slauson's motion and consideration of Southern Roof's motion, the trial court entered the following order:

"October 28, 1983 Motion [of defendant Jehle-Slauson] to reconsider, Granted; and upon reconsideration, defendant, Jehle-Slauson Construction Company's motion for summary judgment denied on August 29, 1983, hereby set aside and motion for summary judgment Granted; Cause dismissed as to said defendant, costs taxed to plaintiff; The Court further finds there is no just reason for delay in the entry of said final judgment."

The order entered on the motion for summary judgment filed by Southern Roof reads:

"October 28, 1983 Motion for summary...