Court: Supreme Court of Alabama; June 21, 1996; Alabama; State Supreme Court
Plaintiffs Janet Watson and Watson Development Inc. appeal a summary judgment favoring defendants Owens Cross Roads Water Authority (OCRWA), its executive director Bobby Salmon, and directors Wayne Clayton, Lloyd Pinkerton, and Danny Whorton. Summary judgment is appropriate when no genuine issue of material fact exists, shifting the burden to the non-moving party to present substantial evidence to the contrary. Watson contacted OCRWA in July 1993 regarding water services for her planned subdivision. Salmon assured her that OCRWA had ample water capacity, despite a newspaper article indicating potential shortages. Relying on this assurance, Watson purchased the property on September 8, 1993. Further inquiries by her surveyor and real estate agent also elicited confirmation from OCRWA of sufficient water storage. After the purchase, OCRWA's board promised to supply water, though Watson claims OCRWA was aware since 1989 of its need for additional storage. Evidence includes letters from the Alabama Department of Environmental Management (ADEM) highlighting OCRWA's storage deficiencies and related board meeting minutes indicating OCRWA's acknowledgment of the issue without subsequent action to expand storage.
The engineer who designed the OCRWA facility testified that it was inadequately equipped to handle the water needs of its customers in July 1993, as it was serving 1100 customers despite being designed for only 300. By December 1993, OCRWA had not extended water service to a proposed subdivision, and during a board meeting, Watson was informed that OCRWA lacked the capacity to service her subdivision. Despite Watson's expressed concerns, the board reassured her that water service would be available. However, by March 24, 1994, OCRWA still did not have sufficient storage capacity, leading Watson to sue OCRWA and its directors for fraud, promissory estoppel, negligence, wantonness, and breach of contract. The trial court granted summary judgment to the defendants, who claimed that OCRWA had adequate water supply for other systems and argued that Watson could not justifiably rely on their statements without an approved water supply plan. The court found these arguments insufficient, stating that evidence of OCRWA's actual water supply was disputed and that the question of justifiable reliance on the defendants' representations was also a material fact for trial. Additionally, Watson contended she relied on these statements when purchasing the property, not while developing the subdivision. The defendants failed to provide evidence that state regulations required her to submit a water supply plan prior to the property purchase. The court rejected the defendants' reasoning, comparing it to a situation where a car buyer could not rely on a seller's representation of good title due to later issues with licensing. Consequently, the summary judgment was reversed and the case remanded for further proceedings.
