Valley Properties, Inc. v. Strahan

• Decision Date: 27 April 1990
• Citation: 565 So.2d 571
• Parties: VALLEY PROPERTIES, INC., et al. v. Leon STRAHAN and Mary Sue Strahan. 88-480, 88-501.
• Court: Alabama Supreme Court

Page 571

565 So.2d 571

VALLEY PROPERTIES, INC., et al. v. Leon STRAHAN and Mary Sue Strahan.

88-480, 88-501.

Supreme Court of Alabama.

April 27, 1990.

Rehearing Denied June 22, 1990.

Gerald R. Paulk of Livingston, Porter & Paulk, Scottsboro, for appellants.

Robert W. Hanson, Albertville, for appellees.

ALMON, Justice.

This appeal arises from a suit based on alleged fraud and interference with business relations filed by Leon and Mary Sue Strahan against Haden and Mary Tidmore and Valley Properties, Inc. A jury awarded the Strahans a total of $75,000 and denied relief to the Tidmores on their counter-claims for damages for breach of contract and for ejectment. The trial court entered judgment on those verdicts.

In 1986 the Strahans were operating a restaurant known as Val Monte Steak House on property they possessed under a lease with an option to purchase. The property was owned and leased by Vickie Robbins ¹ and was subject to a mortgage held by the Tidmores.

In 1986, after some discussion and negotiation, the Tidmores offered to advance the Strahans funds to be used to complete improvements that they had begun on the property. The Tidmores entered into an agreement dated March 16, 1986, to lend the Strahans $30,000. In consideration for this loan, the Tidmores were to receive 2 1/2% of the gross receipts from the Steak House business until the loan was repaid. The Strahans initially made some of these payments but thereafter ceased making payments.

On September 23, 1986, the parties entered into a second agreement under which the Tidmores lent the Strahans an additional $10,000. This second agreement required the Strahans to make the 2 1/2% payments still due under the March agreement and to continue to pay the Tidmores 2 1/2% of the gross receipts. The Strahans failed to make any of these payments following the execution of the September agreement.

Apparently because of problems between Robbins and the Tidmores, the Tidmores began foreclosure proceedings on their mortgage on the property. In January 1987, the Tidmores and the Strahans began discussing a plan by which the Tidmores would purchase the property from Robbins and lease it to the Strahans. The Tidmores proposed to the Strahans a lease with an option to purchase that was very similar to the Robbins lease. The proposed lease included an attachment, referred to by the parties and herein as "Exhibit B," adding a long list of conditions not present in the Strahans' lease with Robbins. Exhibit B would have given the Tidmores extensive power over the daily operation of the Steak House and specified the accounting and business practices in detail. For example, paragraph 12 directed the Strahans to provide the Tidmores, or their agent, a set of keys to the entire property, including the office, with complete access to all of the records. The Strahans contend that they never agreed to the inclusion of Exhibit B in the lease.

On January 30, 1987, the parties met in the office of Ralph Smith, the Tidmores' lawyer, and executed a lease/purchase agreement. This agreement established a purchase price, gave credit to the Strahans for payments they had made to Robbins, and added the principal and interest on the funds that the Tidmores had advanced in 1986. Although it is undisputed that all the parties signed the agreement, there is considerable disagreement between the Tidmores and the Strahans as to whether Exhibit B was part of the executed lease/purchase agreement.

The Tidmores claim that the Strahans were given a copy of Exhibit B, prior to the meeting, and were advised to consult their lawyer. The Tidmores, Smith, and Smith's legal secretary, Deborah Pinson, all assert that the Strahans agreed to the inclusion of Exhibit B, that Exhibit B was present in the office with all of the other lease documents, and that it was later stapled to the executed lease that the Strahans signed. According to Smith, a reference to its inclusion was added in the main body of the lease at Paragraph 33.

Leon Strahan, in contrast, claims that Exhibit B was not attached to the copies that he and his wife signed and was not attached to the copy that they were given to take home. Strahan maintains that the Tidmores assured him that the provisions in Exhibit B would not be a part of the executed lease. He testified that he received a letter from Haden Tidmore, dated January 24, 1987, stating that "we will follow our two previous agreements." The January 24 letter states that the new agreement deleted several provisions previously required and would save the Strahans more money. For example, the letter states in part:

"[The agreement] does not require, among other things, the following:

"(1) the original $13,000.00 earnest money payment.

"(2) Monthly payment reduced by $500.00.

"(3) Instead of getting credit for less than half of your monthly payment, you will be getting 100 percent of your monthly payment credited as outlined in this agreement."

Following the execution of the lease/purchase agreement on January 30, the Strahans did not comply with the provisions of Exhibit B, nor did they submit payments of 2 1/2% of the gross receipts as directed by the March 16 and September 23 agreements.

On February 21, 1987, the Tidmores received title to the property from Robbins. On that same day the Tidmores, through Smith, informed the Strahans that they were the new owners of the property. Smith's letter emphasized that Exhibit B was a part of the January 30 agreement and that any term or condition in Exhibit B that was not satisfied should be fulfilled immediately. The Strahans assert that it was only after they received this letter that they discovered the reference to Exhibit B in paragraph 33 of the lease, and, further, that this was their first notice that the Tidmores intended to enforce the conditions of Exhibit B. The Tidmores claim that, following this initial letter, they gave the Strahans timely notice to cure the default in regard to the conditions detailed in Exhibit B.

On March 10, 1987--17 days after they received title to the property--the Tidmores executed a lease/purchase agreement for the property with Robert and Betty Bains from Georgia. This new agreement provided that the Bainses would pay the Tidmores $550,000 versus the original $310,000 that the Strahans had agreed to pay.

The Strahans insist that, following the agreement with the Bainses, the Tidmores began attempts to evict them from the property and they allege that the Tidmores were motivated by the lucrative offer from the Bainses. They charge that various inspectors, including the county health inspector, the fire marshal, and the city building inspector, came to the property at the insistence of the Tidmores. They also allege that the Tidmores hired off-duty policemen and deputies to watch the premises during and after business hours, and that the Tidmores tried to create problems by attempting to hire their employees and by telling their employees "they were taking over" the business.

The Strahans filed an action in the circuit court against the Tidmores and Valley Properties, a corporation owned principally by the Tidmores and through which they purchased and leased the property, alleging fraud and interference with business and demanding compensatory and punitive damages. The Tidmores and Valley Properties counterclaimed, alleging a breach of the March 16 loan agreement, the September 23 loan agreement, and the January 30 lease/purchase agreement, and seeking damages for fraud. The Strahans amended their original complaint and added a count alleging breach of the January 30 lease and seeking specific performance of the purchase option contained in that lease.

During this same time, the Tidmores and Valley Properties filed an action for eviction against the Strahans in the District Court of Marshall County, Alabama. The district court entered a judgment in favor of Valley Properties, awarding it possession of the property. The Strahans appealed that judgment to the circuit court.

The Tidmores and Valley Properties filed a motion to consolidate the Strahans' appeal from the judgment of eviction with the Strahans' action against the Tidmores and Valley Properties, and the circuit court granted that motion.

The jury returned the following verdicts:

$25,000 in favor of the Strahans, and against the Tidmores and Valley Properties, on the claim for interference with business relations.

$50,000 in favor of the Strahans and against the Tidmores and Valley Properties on the fraud claim.

For the Strahans on the Tidmores' and Valley Properties' counterclaim alleging fraud.

For the Strahans on the Tidmores' and Valley Properties' claims alleging breach of contract and seeking possession of the property.

The Tidmores and Valley Properties filed a motion for judgment notwithstanding the verdict, or alternatively, for a new trial. The Strahans filed an amended complaint asking the court to order the Tidmores to specifically perform their obligation to sell pursuant to the option to purchase contained in the lease and asking the court to establish the rights of the parties in regard to the option to purchase and to establish the purchase price of the property. The trial court denied the Tidmores' and Valley Properties' motions and the Strahans' claim for specific performance and declaratory relief. The Tidmores and Valley Properties appeal from the judgments in favor of the Strahans based on those verdicts.

The Tidmores argue six issues in their appeal to this Court. First, they assert that the verdict in favor of the Strahans on the fraud claim should be set aside because, they say, it is inconsistent with the jury finding that the Tidmores were not entitled to damages for breach of contract. The Strahans' fraud claim was based on alleged misrepresentations made by the Tidmores concerning the inclusion of Exhibit B in the January 30 agreement. The Tidmores argue that in order for the...