Stafford v. Mississippi Valley Title Ins. Co.

• Decision Date: 28 September 1990
• Citation: 569 So.2d 720
• Parties: Carl STAFFORD, et al. v. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY. 89-688.
• Court: Alabama Supreme Court

Page 720

569 So.2d 720

Carl STAFFORD, et al. v. MISSISSIPPI VALLEY TITLE INSURANCE COMPANY.

89-688.

Supreme Court of Alabama.

Sept. 28, 1990.

Vincent F. Kilborn of Kilborn & Roebuck, Mobile, for appellants.

William M. Lyon, Jr. of McFadden, Lyon, Willoughby & Rouse, Mobile, for appellee.

HOUSTON, Justice.

The issue presented in this case is whether summary judgment was properly entered in favor of the defendant, Mississippi Valley Title Insurance Company ("Mississippi Valley"), with respect to the fraud claims that were made by the plaintiffs, Carl Stafford, Faith Stafford, Harold Walters, and Jacqueline Walters. ¹ We affirm in part, reverse in part, and remand.

In 1982, Carl Stafford and his wife, Faith, contracted to purchase a house in Mobile from John George, Jr., and his wife, Merle George. The house is located on a lot that is approximately 660 feet from the nearest public road, U.S. Highway 90; the lot is landlocked except for a 30-foot-wide dirt road that traverses property owned by O.D. Dickerson and his wife, Mildred Dickerson, and connects the lot to the highway. The Georges agreed, among other things, to give the Staffords a warranty deed that conveyed the house and the lot as well as an easement over the dirt road, and to purchase a title insurance policy for the Staffords from Mississippi Valley, through Title Guaranty and Abstract Company of Mobile ("Title Guaranty"). ² Title Guaranty acted as the "settlement agent" at the closing, which was conducted by an employee of Title Guaranty, with the assistance of Sidney Harrell, an attorney who had been approved by Mississippi Valley. The Staffords were given a warranty deed pursuant to their agreement with the Georges; however, they were not shown or given a copy of a commitment for title insurance that had been issued by Mississippi Valley acknowledging that a "conflict of title" had been found with respect to the property during an examination of the probate records, and setting out certain requirements that needed to be met in order to facilitate the issuance of a policy. A policy was not issued until approximately six years later.

In 1984, the Staffords, suffering financial difficulties, were forced to convey the property to Faith Stafford's parents, Harold and Jacqueline Walters. The Staffords continued to live on the property. The deed from the Staffords to the Walterses also recites the conveyance of an easement over the dirt road. In April or May 1987, O.D. Dickerson obstructed the dirt road with a fence, disputing the Walterses' claim to an easement, and, thereafter, refused to remove it. After hiring an attorney, who investigated the matter, the Staffords and the Walterses learned of the title problems that had been found and acknowledged by Mississippi Valley in 1982. After being notified of the problem by the plaintiffs' attorney and being apprised of possible litigation, Mississippi Valley accepted liability for closing the sale without satisfying the requirements that had been set out in the commitment, and issued a policy in 1988, effective retroactively to 1982, insuring against any defect in the title.

On September 12, 1988, the Staffords and the Walterses filed suit, alleging that Mississippi Valley, through its authorized agents, had intentionally or recklessly misrepresented to them that title to the property was clear, giving a cause of action pursuant to Ala.Code 1975, § 6-5-101; that Mississippi Valley, through its authorized agents, had concealed material information from them concerning the state of the title to the property, giving a cause of action pursuant to Ala.Code 1975, § 6-5-102; and that Mississippi Valley, through its authorized agents, had promised them that they would receive a clear title and that they would be provided with a policy insuring the title to the property, without any intention of keeping those promises, giving a cause of action pursuant to Ala.Code 1975, § 6-5-104(b)(4).

Summary judgment was proper in this case if there was no genuine issue of material fact and Mississippi Valley was entitled to a judgment as a matter of law. Rule 56, A.R.Civ.P. The burden was on Mississippi Valley to make a prima facie showing that no genuine issue of material fact existed and that it was entitled to a judgment as a matter of law. If that showing was made, then the burden shifted to the plaintiffs to present evidence creating a genuine issue of material fact, so as to avoid the entry of a judgment against them. Dupont v. Yellow Cab Co. of Birmingham, Inc., 565 So.2d 190 (Ala.1990). In determining whether there was a genuine issue of material fact, this Court must view the evidence in a light most favorable to the plaintiffs and must resolve all reasonable doubts against Mississippi Valley. Because this action was not pending on June 11, 1987, the applicable standard of review is the "substantial evidence" rule. Ala.Code 1975, § 12-21-12. "Substantial evidence" is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

After examining various depositions, affidavits, and exhibits, the trial court entered a summary judgment, without stating its reasons for doing so. The plaintiffs argue that the trial court erroneously determined that their fraud claims were barred by the applicable statute of limitations. Mississippi Valley argues that the plaintiffs' claims were barred by the statute of limitations and, therefore, that the summary judgment was proper. ³ We note that even if we cannot ascertain from the record the grounds upon which the trial court entered its judgment, if the judgment is correct it is due to be affirmed. Davison v. Lowery, 526 So.2d 2 (Ala.), cert. denied, 488 U.S. 854, 109 S.Ct. 140, 102 L.Ed.2d 113 (1988).

Initially, we note that it is undisputed in the record that no one connected with the closing made any representations or promises to, or concealed any information from, the Walterses concerning the state of the title to the property. The Staffords' conveyance to the Walterses occurred approximately two years after the transaction that forms the basis of this suit. If a fraud was committed, it was committed against the Staffords.

The evidence, viewed in a light most favorable to the Staffords, shows that Title Guaranty acted as the "settlement agent" at the closing; that an employee of Title Guaranty, with the assistance of an attorney who had been approved by Mississippi Valley, conducted the closing; that the Staffords were told by the attorney that title to the property was clear, or that it would be made clear, and that they would receive a policy insuring the title to the property; ⁴ that it was the practice of Mississippi Valley to issue policies within a reasonable time; that the Staffords never received a copy of the commitment and were never informed by anyone connected with the closing of any problems concerning the state of the title until those problems later surfaced; that subsequent to the closing, the requirements set out in the commitment were never satisfied; and that a policy was not issued until approximately six years after the closing, when the problems with the title began to surface and litigation became imminent.

Unless, as Mississippi Valley contends, the applicable statute of limitations was a bar, the summary judgment was not proper with respect to the Staffords' claims for intentional or reckless misrepresentation under § 6-5-101 (i.e., that Mississippi Valley, through Title Guaranty, had intentionally or recklessly misrepresented to them that title to the property was clear); for concealment of material information under § 6-5-102 (i.e., that Mississippi Valley, through Title Guaranty, had concealed the cloud on the title); and for promissory fraud under § 6-5-104(b)(4) (i.e., that Mississippi Valley, through Title Guaranty, had promised them that they would receive a clear title and that they would be provided with a policy insuring the title). Again, the evidence, viewed in a light most favorable to the Staffords, shows that the Staffords were told at the closing that title to the property was clear, or that it would be made clear, and that they would receive a policy insuring the title. The evidence requires that the trier of fact determine exactly what was said to the Staffords at the closing. If the trier of fact finds that the Staffords were told that title to the property was clear, then it must also determine whether that false representation was recklessly or intentionally made. If the trier of fact finds that the Staffords were told that title to the property would be made clear and that a policy insuring the title would be issued, then it must also determine whether those promises were made with an intent to deceive. Benetton Services Corp. v. Benedot, Inc., 551 So.2d 295 (Ala.1989). With regard to the Staffords' claim alleging concealment of material information, the evidence was sufficient to show that, under the circumstances, the Staffords should have been informed of the cloud on the title--that information being material to their decision to go forward with the purchase. See, e.g., Deupree v. Butner, 522 So.2d 242 (Ala.1988).

Effective January 9, 1985, the Legislature repealed Ala.Code 1975, § 6-2-39, the one-year statute of limitations applicable to fraud actions, and transferred the one-year actions to § 6-2-38, the two-year statute, and amended § 6-2-3, the "saving clause," to recognize that fraud actions were thenceforth required to be filed within two years of the accrual of the cause of action. ⁵ See Watson v. Trail Pontiac, Inc., 508 So.2d 262 (Ala.1987). Under § 6-2-3, a claim for fraud is considered as having accrued at the time of "the discovery by the aggrieved party of the fact constituting the fraud." Fraud is "discovered"...