Deupree v. Butner, 522 So.2d 242 (Ala. 1988) – Comprehensive Study Notes

Case Overview

• Parties
  • Plaintiffs / Appellees: Sam and Louise Butner (townhouse purchasers).
  • Defendants / Appellants:
  • James L. ("Skip") Deupree, Jr. (individual developer).
  • Bay Development Corporation of Destin, Inc. (corporate developer).
• Property: Townhome in the “Pointe South” development, Destin, Florida.
• Core Promise: Each townhome would include a private boat slip; price of slip built into unit price.
• Dispute Trigger: Florida Department of Natural Resources (DNR) would not grant the required submerged-land leases.
• Trial Court (Talladega County, AL): Jury verdict for Butners on both claims—breach of contract and fraud.
  • Contract damages: 20{,}000 (compensatory).
  • Fraud damages: 59{,}001 (1 nominal + 59{,}000 punitive).

Procedural Posture

• Appeal to the Alabama Supreme Court: Four alleged errors.
  1. Improper “double recovery” for contract and fraud.
  2. Insufficient evidence of fraud.
  3. Fraud claim time-barred (statute of limitations).
  4. Contract verdict excessive.
• Holding: Affirmed on all issues.

Key Issues & Holdings

• Issue 1: Can compensatory contract damages and punitive fraud damages both be awarded for the same transaction?
  ➔ Yes. Not "fraud in the inception"; concealment occurred after contract formation. No duplication because different damage categories.
• Issue 2: Was there sufficient evidence of fraud / fraudulent concealment? ➔ Yes. Evidence that Deupree hid material facts and misled the Butners.
• Issue 3: Was the fraud action untimely? ➔ No. Conflicting evidence created a jury question; jury could find discovery in \text{Apr 1985}, suit filed \text{Aug 5, 1985}; thus timely under \text{Ala. Code }§6\text{–}2\text{–}3.
• Issue 4: Was 20{,}000 for contract breach excessive? ➔ No. Supported by expert testimony that a slip adds ≈20{,}000 to value.

Detailed Reasoning & Supporting Law

1. Double-Recovery Argument

• McKinnon precedent limited to “fraud in inception” (misrep. re existence of contract).
• Here, fraud = suppression of permitting difficulties after contract existed, aligning with Herring v. Prestwood.
• Trial judge charged jury explicitly to avoid duplicate compensatory damages.

2. Evidence of Fraud / Concealment

• Statutory basis: §6\text{–}5\text{–}102 (suppression of material fact).
• Concealed facts at closing:
  • Heightened DNR scrutiny of Old Pass Lagoon.
  • Multiple objections & scheduled public hearing.
  • Application placed “on hold.”
  • Continued illegal construction; told DNR owners were building slips.
• Post-closing letter \text{Jul 26, 1983}: Deupree assured approval “a matter of time.”
• Butners testified they would not have closed had they known.
• Court cites prior companion case, Deupree v. Ruffino, finding same developer liable for similar concealment.

3. Statute of Limitations

• Fraud accrues on discovery (§6-2-3).
• Defense evidence: attorney allegedly warned Butners \text{Jun 1983}.
• Plaintiff evidence: first learned obstacles \text{Apr 1985} via DNR depositions.
• Conflict → jury question; instruction unchallenged; verdict stands.

4. Damages for Contract Breach

• Contract clause required “bona-fide effort,” with 10{,}000 escrow if slip unavailable at closing.
• Developer on appeal raised “merger” & “liquidated-damages” cap—arguments waived (not raised below).
• Expert real-estate testimony: boat slip adds “at least 20{,}000” to value; scarcity increases premium.
• Jury charged on standard expectancy measure: place injured party in position as if contract performed.

Key Contract Language (excerpt)

• “Slip 2 of Pier 1 … shall be included … no additional costs.”
• 10{,}000 escrow only if closing happened before slip usable. (No escrow in fact.)

Statutes & Doctrines Cited

• §6\text{–}5\text{–}102: Fraud by suppression.
• §6\text{–}2\text{–}3: Discovery rule for fraud limitations.
• Case precedents:
  • Herring v. Prestwood (414\,\text{So.2d}\,52).
  • U.S.F.&G. v. McKinnon (356\,\text{So.2d}\,600).
  • National Security Fire & Cas. Co. v. Vintson (414\,\text{So.2d}\,49).
  • Deupree v. Ruffino (505\,\text{So.2d}\,1218).
  • Sims v. Lewis, Strait v. Vandiver, Shiver v. Waites (standards for jury verdict review).

Practical / Real-World Implications

• Developers must disclose regulatory hurdles that materially affect promised amenities.
• Purchasers may recover both expectancy (contract) and punitive (fraud) damages when concealment post-contract harms them.
• Raises stakes for “soft-pedaling” permit problems in coastal developments.

Ethical / Professional Takeaways

• Duty of candor heightened when one party uniquely controls information ("special relationship").
• Letters or statements minimizing obstacles can constitute ongoing fraud when prior facts intentionally withheld.
• Misleading regulators (claiming owners are building slips) compounds legal exposure.

Numerical / Financial References (all in ):

• 522\,\text{So.2d}\,242 (report citation).
• Contract damages: 20{,}000.
• Fraud punitive: 59{,}000; nominal 1; total 59{,}001.
• Escrow clause: 10{,}000.
• Appeal docket: 86\text{–}241.
• Key dates: \text{May 20, 1983} (closing); \text{Jul 26, 1983} (assurance letter); \text{Apr 1985} (discovery); \text{Aug 5, 1985} (complaint); \text{Mar 4, 1988} (decision).

Connections to Broader Doctrine

• Illustrates distinction between:
  • Fraud inception (void/voidable contract) vs. fraud collateral/after-formation (tort + contract).
• Reinforces Alabama’s permissive stance on concurrent tort & contract recovery where damages do not overlap.
• Demonstrates application of “discovery rule” to fraudulent concealment claims.

Study / Discussion Questions

1. How would the result differ if the misrepresentation concerned the existence of the contract itself?
2. Should punitive damages be limited when compensatory contract damages are also awarded? Why or why not?
3. What compliance protocols could a developer implement to avoid similar liability?
4. Analyze whether the 10{,}000 escrow clause could qualify as an enforceable liquidated damages limitation.

Memorization Flash Points

• Twin recovery allowed if fraud is not "inception fraud."
• §6\text{–}2\text{–}3 → limitations clock starts on discovery.
• Expectancy measure: "place plaintiff where they’d be if performed."
• Boat-slip scarcity in coastal regulation regimes = significant property premium (≈20{,}000$$).