LANDALE ENTERPRISES, INC., PLAINTIFF-APPELLANT,
v.
CRANFORD BERRY AND NELL BERRY, ET AL., DEFENDANTS-APPELLEES

11th Cir. | 1982-05-17
No. 80-7946
Before RONEY and FAY, Circuit Judges, and EDENFIELD , District Judge.
676 F.2d 506 Court of Appeals for the Eleventh Circuit (1982) Positive Treatment
Cited by 11 cases

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Holding

A specific contractual disclaimer of reliance on representations, agreed to by sophisticated parties in an arms-length transaction, effectively bars a subsequent fraud claim based on those representations.


Facts & Procedural History

Plaintiff purchased a marina from defendants, alleging fraud based on misrepresentations of the business's net annual income. The sales contract, howe…

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Opinion of the Court
PER CURIAM:

PER CURIAM:

The district court entered summary judgment for defendants in this diversity suit alleging fraud in the sale to plaintiff of a marina in Alabama. We affirm the grant of summary judgment on the ground that a clause in the sales contract effectively bars the claim of fraud.

Under the uncontroverted facts, Thomas E. Marsh and his wife Barbara Marsh negotiated with defendants United Farm Agency and Brian and Craig Nelson, real estate agents for defendants Cranford Berry and Nell Berry, owners of the property. The marina was purchased by plaintiff Landale Enterprises, Inc., a foreign corporation, wholly owned by the Marshes. After the purchase, Landale-brought this suit alleging fraud by defendants for their representation that the business had a net annual income of $61,930. Plaintiff contends that it relied on this false representation and that defendants either knew the representation was false at the time made or was made in a reckless manner for the purpose of fraudulently inducing plaintiff to purchase the property.

For summary judgment purposes, we accept as true plaintiff’s statement that during the course of negotiations defendants misrepresented the net annual income of the business. See Bishop v. Wood, 426 U.S. 341, 347, 96 S.Ct. 2074, 2078, 48 L.Ed.2d 684 (1976). A provision of the sales contract, however, disclaims any reliance on such representations. The sales contract contained the following provision:

It is agreed that the buyer has thoroughly examined the property to be conveyed and relies solely on his own judgment in making this agreement to purchase, and that there are no agreements, understandings or representations made either by seller, broker, or broker’s representative that are not set forth herein.

Alabama courts have not dealt with this type of specific disclaimer provision. The clarity of this clause materially distinguishes this case from those cases dealing with a general, vague clause used by plaintiff to support its position. Were we dealing with the latter type clause, the fundamental principle that a general merger clause is ineffective to exclude parol evidence to show fraud in inducing the contract would control the case. See Stanard Tilton Milling Co. v. Mixon, 243 Ala. 309, 9 So. 2d 911, 913 (1942); Alabama Machinery & Supply Co. v. Caffey, 213 Ala. 260, 104 So. 509, 511 (1925).

Under the facts here, plaintiff has in the clearest language provided in a contract which he himself drafted that he was not relying on any representations of sellers. A contract should be construed against the party who drafted the provision. McDowell-Purcell, Inc. v. Manhattan Construction Co., 383 F.Supp. 802, 805 (N.D.Ala.1974), aff’d, 515 F. 2d 1181 (5th Cir.), reh. denied, 520 F. 2d 943 (5th Cir. 1975), cert. denied, 424 U.S. 915, 96 S.Ct. 1115, 47 L.Ed.2d 320 (1976).

The specific disclaimer of reliance on the representations defeats the fraud claim. See Danann Realty Corp. v. Harris, 5 N.Y.2d 317, 184 N.Y.S.2d 599, 157 N.E. 2d 597 (1959). To hold otherwise would be to say that it is impossible for two businessmen dealing at arms length to agree that the buyer is not relying on representations by the seller as to particular facts.

This was an “arms length” transaction. Mr. Marsh, acting on behalf of Landale, had numerous opportunities to examine the property, observe a three-day weekend operation of the business, and talk with people in the area. Mr. Marsh was a sophisticated purchaser. He was formerly employed as a purchasing agent and dealt frequently with accounting principles. The secretary-treasurer of the corporation, Barbara Marsh, was a skilled real estate agent with more than fifteen years real estate experience.

Although the misrepresentation of income may have induced plaintiff to enter into the contract, there is nothing to indicate that the specific disclaimer provision was procured through fraud. This clause was not induced by defendants to protect themselves from legal consequences. The fraud which would entitle a plaintiff to avoid a specific provision of the contract must underlie the execution of that provision. See Barbour v. Poncelor, 203 Ala. 386, 83 So. 130 (1919).

AFFIRMED.


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  • Billington v. Ginn-La Pine Island, Ltd., LLLP, 192 So. 3d 77 (Fla. 5th DCA 2016)
    …ance clause precluded fraud claim as matter of law); First Fin. Fed. Sav. & Loan Ass’n v. E.F. Hutton Mortg. Corp., 834 F. 2d 685, 687 (8th Cir.1987) (disclaimer of reliance on representation negated claim for fraud); Landale Enters., Inc. v. Berry, 676 F. 2d 506, 507-08 (11th Cir.1982) (applying Alabama law, non-reliance clause negated fraud claim); LeTourneau Techs. Drilling Sys., Inc. v. Nomac Drilling, LLC, 676 F. Supp. 2d 534, 543 (S.D.Tex.2009) (applying Texas law, disclaimer of reliance on prior repre…
  • Quiller v. Barclays American/Credit, Inc., 727 F.2d 1067 (11th Cir. 1984)
    …ith legal rights, and risk that contract might allow lender to employ ambiguous provisions to his advantage). The rule of construction that ambiguities and inconsistencies should be resolved against the drafter, Landale Enterprises, Inc. v. Berry, 676 F. 2d 506 (11th Cir.1982), is particularly appropriate in the areas protected by consumer legislation. The Quiller contract provides in part: If Customer defaults on any obligation under this contract, or if Holder shall consider the indebtedness or the Coll…
  • Veale v. Citibank, 85 F.3d 577 (11th Cir. 1996)
    …e of $3,582.87, 83 of $3,582.87, and 1 of $350,-565.12.” Thus the note obviously contained a typographical error, as it could not require both 84 and 85 payments. Such an error must be construed against Citibank, Landale Enterprises Inc. v. Berry, 676 F. 2d 506, 508 (11th Cir.1982), and so the note must be read to require only 84 total payments. The Truth in Lending disclosure statement listed 84 payments (83 plus the final balloon payment) and accurately reflected the Veales’ obligations. This typograph…

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