Rel 09/19/2003 Aldridge v. Olive
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 242-4621), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2003
_________________________
_________________________
v.
Appeal from Lauderdale Circuit Court
(CV-01-89)
MADDOX, Retired Justice.
The sole issue presented in this appeal is whether the trial judge, who had granted Randall Aldridge and the other plaintiffs specific performance of a real-estate contract erred in failing to award incidental damages allegedly suffered as a proximate result of the defendant's failure to perform.
We believe that a trial court, so long as it does not exceed its discretion, has the power to determine whether to award incidental damages when it orders specific performance of a real-estate sales contract; consequently, based on the particular facts set forth in the record before us, we refuse to disturb the holding of the trial court that the plaintiffs were not entitled to incidental damages.
Sometime in December 1999, Randall E. Aldridge entered into an oral agreement with Richard E. Olive; pursuant to that agreement Olive was to sell Aldridge a mobile home and 4.86 acres of real property on which the mobile home was located. The purchase price of the mobile home and the real property was $110,000. Under the terms of the oral agreement, Olive was to receive $18,762.13 as a down payment, and Aldridge was to assume a promissory note Olive had executed to First Southern Bank, which was secured by a mortgage on the 4.86 acres, and, in addition, to assume a second promissory note Olive had executed to AmSouth Bank, secured by a security interest in the mobile home.
Aldridge claimed that he was purchasing the 4.86 acres to establish a retail sales lot in a joint venture with SouthTrust Bank in order to sell mobile homes that SouthTrust Bank had repossessed.
One of Aldridge's main arguments in the trial court and
on appeal is that he is entitled to recover incidental
damages for the harm he allegedly suffered because Olive
refused to timely schedule a closing date. (1)
Olive
disputes this claim and argues in his brief that "[b]oth
parties contend that the other party refused to close as
required under the [oral] agreement" but that any
failure to close the transaction was caused by other
factors and was not Olive's fault. In any event, Aldridge sued Olive on February 14, 2001,
seeking specific performance of the oral agreement, and
in his complaint he sought incidental damages, including
lost profits, he claimed he suffered as a direct result
of Olive's failure to perform. In his complaint, he
also included counts alleging breach of contract and
fraud, and he subsequently amended his complaint to add
as plaintiffs Rose Aluminum Products, a corporation;
Blackburn Park, LLC; and Southern Housing Services, LLC,
which he averred were "wholly owned and/or controlled by
the plaintiff, Aldridge." He claimed that he caused
these entities to make the payments to First Southern
Bank and AmSouth, respectively, on the promissory notes
secured by the land and the mobile home located on the
land. The case was tried on January 15, 2002, without a jury.
The court heard oral testimony and also considered
deposition testimony of Michael Carrigg, a vice
president of SouthTrust Bank. The trial court
subsequently rendered a judgment in favor of Aldridge
and the other plaintiffs on March 21, 2002, in which it
granted specific performance of the oral agreement and
also at that time awarded incidental damages of $80,000.
But on April 29, 2002, Olive filed a motion for relief
from judgment and asked the trial court for additional
time to submit additional argument, which the trial
court granted. Pursuant to the trial court's direction, Olive
subsequently filed a brief entitled "Defendant's
Argument," in which Olive argued, in part, as follows: "The undisputed testimony offered at trial establishes
that the sales price for the Real Property was
$110,000.00. Aldridge was to assume debts to AmSouth
Bank and First Southern Bank (in the aggregate of
$92,000.00) that were secured by a mortgage on the Real
Property, while approximately $18,000.00 was to be paid
to Olive in cash. Pending assumption of the AmSouth and
First Southern debts and a closing of the transaction,
Aldridge was to pay those debts. The undisputed trial
testimony further establishes that the transaction was
to be closed within approximately 30 days and that an
attorney selected by Aldridge would close the
transaction. The testimony at trial establishes that
Aldridge was unable to assume the AmSouth and First
Southern debts. The parties both testified that, when
assumption of the outstanding obligations became
impossible, Aldridge agreed to continue the purchase
transaction, and stated that he would pay the
outstanding obligations in cash at closing." In his brief to the trial court, Olive also argued that
Aldridge had been convicted of a felony and that the
trial court should view his testimony regarding many of
the facts with that conviction in mind. He also argued
that Aldridge was an experienced real-estate developer
and that Aldridge did not present "any evidence to
refute Olive's documented contention that Aldridge,
through his counsel, had failed to close the deal and
had made counter-offers at lower prices." Olive closed
his argument by stating, "Consequently, Aldridge is not
entitled to the relief sought in the complaint." On July 29, 2002, after Olive had submitted his
additional argument, the trial court entered an amended
judgment, again granting specific performance; in this
order, however, it denied the plaintiffs any incidental
damages. After Aldridge and the other plaintiffs filed
a motion to alter or amend the July 29, 2002, judgment,
the trial court, on November 13, 2002, reaffirmed the
July 29, 2002, judgment and the court ordered Aldridge
to pay Olive $18,762.13 as a down payment. Aldridge and
the other plaintiffs appealed, and the main issue
presented is whether the trial court erred in failing to
award incidental damages. We do not believe the trial
court erred, and we affirm. Under the applicable scope of review, we must determine
whether the trial judge exceeded his discretion in
refusing to award any incidental damages when he ordered
specific performance of the contract. This Court, on more than one occasion, has addressed the
question whether a party can have "a decree for specific
performance and damages for breach of the same
contract." Grayson v. Boyette, 451 So. 2d 798, 800
(Ala. 1984). In Grayson this Court stated: "The sole issue remaining, then, is whether, under the
instant facts, both an award of damages and a decree of
specific performance will lie for the breach of the same
contract. Ordinarily, one cannot have a decree for
specific performance and damages for breach of the same
contract. Gulf Oil Corporation v. Spriggs Enterprises,
Inc., 388 So. 2d 518 (Ala. 1980). This Court has,
however, on occasion, allowed both the recovery of
damages and ordered specific performance of the same
contract. Suter v. Arrowhead Investment Co., Ltd., 387
So. 2d 815 (Ala. 1980)." In Gulf Oil Corp. v. Spriggs Enterprises, Inc., 388 So.
2d 518 (Ala. 1980), which was cited in Grayson, this
Court said: "[O]ne cannot have a decree for specific performance and
damages for breach of the same contract. Nor may the
court award damages for the tort of fraud and
misrepresentation and, at the same time, grant specific
performance of the agreement. The theories of recovery
are inconsistent, both legally and factually, and,
therefore, the court's decree and the jury's verdict
cannot coexist. U.S. Fidelity & Guaranty Co. v.
McKinnon, 356 So. 2d 600 (Ala. 1978)." 388 So. 2d at 520. But, see, Anderson v. Wooten, 549
So. 2d 40 (Ala. 1989), where the trial court granted
specific performance and also ordered the payment of
incidental damages. On appeal, the Andersons contended
that the trial court had erred in awarding incidental
damages to Wooten in an equity action where it had
ordered specific performance. This Court disagreed. We
said, in part: "The trial court, applying equitable principles, was
authorized to make those findings. Suter v. Arrowhead
Investment Co., 387 So. 2d 815 (Ala. 1980); Grayson v.
Boyette, 451 So. 2d 798 (Ala. 1984). "The trial court granted Wooten, as incidental damages,
one half of the profits from the poultry operation,
amounting to $8,412.40, as specified in the sales
contract; rent for the dwelling on the farm, amounting
to $1,984; rent from the peanut allotment, amounting to
$992.82; and rent for the hay pasture, amounting to
$433.81; totaling $11,823.03. The trial court found,
however, that the Andersons were entitled to a set-off
for accrued interest on the down payment, which totalled
$9,452.02. The trial court then entered a judgment in
favor of Wooten for incidental damages in the amount of
$2,371.01. We find no error in this aspect of the trial
court's judgment. "In his cross-appeal, Wooten contends that he is
additionally entitled to out-of-pocket expenses,
attorney fees for the period between July 24, 1987, and
September 21, 1987, and accountant fees. We disagree,
and we affirm the trial court's judgment on the
cross-appeal. "It is within the sound judicial discretion of the trial
judge to make findings regarding incidental damages when
balancing the equities between the parties in specific
performance cases. See, Wray v. Harris, 350 So. 2d 409
(Ala. 1977). Absent a clear abuse of that discretion,
or palpable error, such findings will not be disturbed
on appeal." 549 So. 2d at 43-44. In Anderson v. Wooten, the
plaintiff made a claim for lost profits, as was made in
this case. On that issue this Court said: "In regard to Wooten's claims for loss of profits
because of his inability to raise peanuts and to expand
the poultry production, the trial court in this case did
not err in holding that such damages were too
speculative, conjectural, and remote because Wooten had
no established past experience in raising poultry. "The Andersons finally contend that the trial court
erred in refusing their demand for a jury trial on the
issue of damages. In exercising its equitable powers,
the trial court awards such incidental damages in an
attempt to balance the equities in order to protect the
rights of all the parties, and to do complete justice
between them. See, Wray v. Harris, [350 So. 2d 409
(Ala. 1977)]. "A balancing of the equities, by awarding incidental
damages to do complete justice between the parties,
falls within the equity jurisdiction of the trial court.
A jury trial is inappropriate in an equitable action.
See, Pugh v. Calloway, 295 Ala. 139, 325 So. 2d 135
(1976)." 549 So. 2d at 44. Aldridge's basic argument in support of his claim that
he is entitled to incidental damages is that "[t]he
evidence was ... undisputed that [he] and the other
plaintiffs had sustained damages and the amount of said
damages as a result of Olive's breach of his [oral]
agreement," and that the trial court should have awarded
him damages in the amount he proved. In his brief to
this Court, he states: "On the issue of Aldridge's damages, the substance of
the plaintiff's testimony is as follows: "(1) that Aldridge's damages range between $118,800 and
$152,880; "(2) that said damages were based upon loss of rent and
loss of sales commission arising from the loss of a
lease and sales agreement the plaintiffs had with
SouthTrust Bank; "(3) that the amount of damages for loss of commission
was based on prior sales history of the plaintiff and
SouthTrust Bank relative to the sale of mobile homes
from the lot and commissions paid thereon; "(4) SouthTrust Bank terminated its agreement with
Aldridge and thereby caused the above-described
financial loss to Aldridge due to Olive's refusal to
convey the real property and mobile home; "(5) that Aldridge told Olive that SouthTrust Bank was
terminating its agreement with him because Aldridge
could not obtain control of the property; "(6) that Aldridge had committed $800,000 to the
project planned for the property and needed the 4.86
acres for ingress and egress." (Aldridge's brief, pp. 15-16; citations to record
omitted.) Aldridge also contends that the record shows,
without dispute, that he suffered a loss of rental
income and the loss of commissions on sales of the
mobile homes that had been repossessed by SouthTrust
Bank and that he intended to sell on the property. He
says that the trial judge clearly exceeded his
discretion by "not awarding the plaintiffs monetary
damages" to "place the plaintiffs back in the same
position they would have been had Olive closed the
transaction within thirty (30) days of the date of the
agreement as Olive admitted in his trial testimony he
was supposed to do." On the other hand, Olive argues that the amount of
incidental damages Aldridge and the other plaintiffs
allegedly suffered was not undisputed, as they claim.
He says that on cross-examination "Aldridge admitted
that his damage[s] calculations were based on conjecture
and not supported by any evidence." We have examined the record and the briefs of the
parties, and we are of the opinion that the trial judge
did not clearly exceed his discretion in refusing to
award Aldridge and the other plaintiffs incidental
damages. (2) Furthermore, this Court has said that "[i]n
exercising its equitable powers, the trial court awards
such incidental damages in an attempt to balance the
equities in order to protect the rights of all the
parties, and to do complete justice between them," and
further that "[a] balancing of the equities, by awarding
incidental damages to do complete justice between the
parties, falls within the equity jurisdiction of the
trial court." Anderson v. Wooten, 549 So. 2d at 44. Although Aldridge recognizes the general rule that a
party cannot have specific performance of a contract and
also damages for breach of the same contract, he argues
that "in order to do complete equity and where the
damages are incidental to the breach of [the] contract,
there are numerous cases where specific performance and
the recovery of damages have been allowed." (Aldridge's
brief, p. 18.) He cites Grayson v. Boyette, supra;
Suter v. Arrowhead Inv. Co., 387 So. 2d 815 (Ala. 1980);
and Wray v. Harris, 350 So. 2d 409 (Ala. 1977), in
support of his argument. We agree that this Court, in
an appropriate case, has permitted the recovery of
incidental damages when specific performance has been
ordered, but we must point out that in Wray v. Harris,
which Aldridge cites, this Court determined that the
plaintiff had not presented any prior records from which
to determine the profits of the business; therefore,
this Court questioned whether any incidental damages
should have been allowed. (3) In Wray v. Harris, this
Court stated that the plaintiffs Wray and Hatmaker were
starting a new business, and "they had no prior records
on which profits could reasonably be based." 350 So. 2d
at 414. We believe that the facts of this case are
similar to those in Wray v. Harris; therefore, the
judgment of the trial court is due to be affirmed. This opinion was prepared by Retired Justice Hugh
Maddox, sitting as a Justice of this Court pursuant to §
12-18-10(e), Ala. Code 1975. AFFIRMED. See, Brown, Johnstone, Harwood, and Stuart, JJ., concur.
Under the terms of the oral agreement, the closing was
to occur within 30 days of the date of the oral
agreement, but Aldridge was to be put in immediate
possession of the land and mobile home. Aldridge took
possession immediately and remained in continuous
possession until this action was filed. Olive claims
that the delay in closing was not his fault, and that
Aldridge had failed to close the deal and had continued
to make counteroffers at lower prices than the $110,000
purchase price.
"Q. Would it be fair to say that the mobile home business over the last few years has gone south, I mean that sales have been bad?
"A. Absolutely.
"....
"Q. So you basically sat down and guesstimated some numbers here for average monthly sales that you might have done, and what your expenses might have been.
"But, any number of a million things could have affected that, couldn't it?
"A. Always." In that case, this Court stated:
"Since we hold that specific performance should be granted, this court must address the issue of damages. The jury in this case awarded the appellants $40,000 in damages, which the trial judge remitted to $25,000. For the reasons given below, we question the necessity of allowing any of these damages on remand."
350 So. 2d at 413-14.