Court: Court of Civil Appeals of Alabama; August 30, 1989; Alabama; State Appellate Court
In the case of First Real Estate Corporation of Alabama v. Ann Winters, the Court of Civil Appeals of Alabama addressed an appeal concerning a settlement made by First Real Estate after Ronald and Angela Key discovered that their newly purchased home from Winters was not connected to the city sewer system, despite representations to the contrary. Winters had employed First Real Estate to sell her home, and the listing agent, Allyne Robinson, obtained information about the house from Winters, which was reflected in a multiple listing service. Following the Keys' complaints about the sewer situation and a threat of legal action, First Real Estate settled the claim with the Keys for $5,000, although the actual cost to connect the house to the sewer was uncertain, with some evidence suggesting it was $2,500.
After the settlement, First Real Estate sought reimbursement from Winters, leading to a lawsuit alleging fraud and misrepresentation. The trial court ruled in favor of Winters, and on appeal, First Real Estate raised various theories of indemnity, including between principal and agent and among joint tort-feasors. Winters contended that indemnity was not applicable since it was not raised at trial and presented additional procedural arguments. The appellate court noted that the trial court's judgment is presumed correct if supported by evidence and reasonable inferences, despite the lack of explicit findings of fact. It was highlighted that in Alabama, a joint tort-feasor typically has no right to contribution or indemnity from another joint tort-feasor, although exceptions exist.
A joint tort-feasor may seek indemnity under two conditions: (1) if they are not at fault except in a technical or constructive manner, or (2) if both parties are at fault but the fault of the indemnity-seeking party was the primary cause of the injury. In this case, witness testimonies regarding fault between joint tort-feasors were conflicting. Robinson, the listing agent, testified that Winters, the homeowner, claimed the house was "on sewer," which was recorded on the multiple listing form. However, Winters later stated he did not inform Robinson about the sewer's connection to the house. The Keys, prospective buyers, relied on the listing’s information and were misled about the sewer. The trial court concluded that First Real Estate was not free from fault, or that any fault from Winters was not the primary cause of the injury. Additionally, since the Keys purchased the house for $62,500 and later sold it for $71,900 after minor repairs, the court could find they suffered no damages, undermining their right to recover from First Real Estate or Winters. Furthermore, a settlement by First Real Estate would be considered unreasonable if the Keys experienced no damages, negating any claim for indemnity. According to the Restatement (Second) of Agency, a principal is generally required to indemnify an agent for damages incurred in authorized actions unless otherwise agreed. For the agent to recover, they must demonstrate they were compelled to make a payment and that the amount was reasonable. Determining whether First Real Estate had liability towards the Keys is necessary to assess its obligation to indemnify.
In Miller v. Sexton, 549 So.2d 10 (Ala.1989), and related cases, it is established that a listing agent is not liable for fraud or negligence when acting solely as a conduit for information provided by the seller, unless there is evidence of bad faith or a confidential relationship. In this case, prospective purchasers, the Keys, were shown a property by Loretta Kelly, while Allyne Robinson, the listing agent, did not communicate directly with the Keys regarding the sewer system's status. Whether the seller, Winters, misrepresented the sewer connection to the Keys is irrelevant to determining First Real Estate’s liability. The court found that First Real Estate's liability was a factual and legal issue that could have been resolved in their favor, indicating that the subsequent claim settlement was neither reasonable nor necessary. The court concluded that there was no error in the trial court's judgment, which was adequately supported by the record. The decision was affirmed, with all judges concurring. The opinion was authored by Retired Appellate Judge L. Charles Wright, serving in an active capacity.
