Executive Development, Inc. v. Smith

557 So. 2d 1231, 1990 Ala. LEXIS 48, 1990 WL 10907
CourtSupreme Court of Alabama
DecidedJanuary 19, 1990
Docket88-658
StatusPublished
Cited by2 cases

This text of 557 So. 2d 1231 (Executive Development, Inc. v. Smith) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Executive Development, Inc. v. Smith, 557 So. 2d 1231, 1990 Ala. LEXIS 48, 1990 WL 10907 (Ala. 1990).

Opinion

MADDOX, Justice.

This appeal involves the question of whether the trial court erred in granting a defendant realtor's1 motion for summary judgment on a purchaser’s promissory fraud claim based on the purchaser’s allegation that the realtor had represented that rezoning of the property could be accomplished while knowing at the time he made the representation that the rezoning could not be accomplished.

I

First, we state the scope of review as set forth in Gulf City Body & Trailer Works, Inc. v. Phoenix Properties Trust, Inc., 531 So.2d 870, 872-73 (Ala.1988):

“The standard of review of a summary judgment based on a showing by the defendant that plaintiff cannot prove a cause of action is whether it clearly ap[1232]*1232pears, with no genuine issue as to any material fact, that there is no evidence as to some essential element of the cause of action. In determining whether there is evidence of the questioned element, this Court must review the record in a light most favorable to the plaintiff and resolve all reasonable doubts against the defendant. Harrell v. Reynolds Metals Co., 495 So.2d 1381, 1383 (Ala.1986). The initial burden is on the movant to prove that there is no evidence as to some essential element of the cause of action.”

After a review of the record in a light most favorable to the plaintiff, Executive Development, Inc., we hold that the trial court erred when it granted the defendant’s motion for summary judgment on Executive’s promissory fraud claim.

II

Executive is a closely held corporation whose president and principal stockholder is Dr. Charles D. Robinson, Jr.

In May 1986, Robinson, acting as president of Executive, contacted Caroline Chat-ham, a real estate agent, and told her that he was interested in purchasing real estate in Birmingham for a townhouse development. Chatham contacted Gary Smith, whose real estate agency listed land for sale in the desired location.

Robinson alleges that before he signed the real estate sales contract with Smith on May 9, 1986, Chatham had told him that Smith had no objections to a townhouse development on the proposed site. In fact, Robinson further alleges that Chatham told him that Smith had said he was favorably disposed to the townhouse development because Smith owned real estate within the same area and he too had thought about developing his property in the near future.

Robinson claims that Smith’s alleged representation relayed to him through Chat-ham prompted him to sign the real estate sales contract with Smith. As a condition to signing the contract, Robinson says, he insisted that a contingency clause be included in it, stipulating that the contract would be contingent upon being able to have the proposed site rezoned for townhouse development. The closing date, as set forth in the contract, was to be on or before August 17, 1986.

Robinson claims that at the time of the closing, which was held on July 17, 1986, 31 days prior to the deadline set forth in the contract, although the proposed site had not been rezoned for townhouse development, Smith directly told him that he, Smith, did not oppose the proposed townhouse development and did not foresee any problems that Robinson might encounter with getting the proposed site rezoned for townhouse development. Despite the fact that the proposed site had not been rezoned, Robinson, at Smith’s suggestion, agreed to delete the contingency clause from the contract. Robinson says that he agreed to the deletion of the clause because Smith assured him that he would not oppose townhouse development on the proposed site and that rezoning of the proposed site would not pose any foreseeable problems for Robinson.

On November 13, 1986, the day of the rezoning hearing before the Birmingham Planning and Zoning Commission, Robinson appeared at the hearing to request the desired rezoning for his real estate. Upon the Commission’s offer to hear any opposition to the proposed rezoning request, Smith approached the Commission and spoke in opposition to the request. Despite Smith’s opposition to the requested rezoning, the Commission granted Robinson a preliminary approval of his request. However, on December 9, 1986, at a final rezoning hearing held before the Jefferson County Commission, that Commission denied Robinson’s rezoning request. Smith did not appear at that hearing to oppose Robinson’s rezoning request.

Unable to obtain the desired rezoning for townhouse development, Robinson sold the real estate. Robinson contends that the sale of the real estate resulted in a $10,000 loss.

After reviewing evidence presented by Smith, the trial judge granted Smith’s motion for summary judgment, stating that [1233]*1233the assurances made by Smith to Robinson constituted an “opinion” and not a statement of material fact, which is a necessary element in any fraud action. Robinson disagrees, and he appeals.

Ill

The elements necessary to support an action for promissory fraud were set forth in Leisure American Resorts v. Knutilla, 547 So.2d 424 (Ala.1989), wherein this Court stated:

“The elements of the tort of promissory fraud are: 1) a false representation; 2) of a material fact; 3) that is relied upon by the plaintiff; 4) such that he is damaged as a proximate result thereof; 5) the representation must have been made with a present intent to deceive; and 6) when the representation was made, the defendant intended not to perform in accordance with it. Selby v. Quartrol Corp., 514 So.2d 1294 (Ala.1987); and Coastal Concrete Co. v. Patterson, 503 So.2d 824 (Ala.1987).”

547 So.2d at 426. (Emphasis added.)

An essential element to be proven in any fraud claim is a misrepresentation of a “material fact.” Within the meaning of Alabama’s fraud statutes [Code 1975, §§ 6-5-101, 6-5-102], a “material fact” is a fact of such a nature as to induce action on the part of the complaining party. See, Bank of Red Bay v. King, 482 So.2d 274 (Ala.1985); Crigler v. Salac, 438 So.2d 1375 (Ala.1983). In speaking to the difficulty of discerning whether a statement is an “opinion” or a “material fact,” this Court has stated:

“ ‘Whether a given representation is an expression of opinion or a statement of fact depends upon all the circumstances of the particular case, such as the form and subject matter of the representation and the knowledge, intelligence and relation of the respective parties.’ ”

Harrell v. Dodson, 398 So.2d 272, 274 (Ala.1981) (quoting Fidelity & Cas. Co. of New York v. J.D. Pittman Tractor Co., 244 Ala. 354, 358, 13 So.2d 669, 672 (1943)).

Applying that standard to the facts of this case, this Court finds in the record evidence that the representations allegedly made by Smith to Robinson constituted statements of “material fact,” not merely the expression of an opinion.

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Cite This Page — Counsel Stack

Bluebook (online)
557 So. 2d 1231, 1990 Ala. LEXIS 48, 1990 WL 10907, Counsel Stack Legal Research, https://law.counselstack.com/opinion/executive-development-inc-v-smith-ala-1990.