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01/13/95 JEFF HENRY VAUGHN AND HENRY HOMES v.

January 13, 1995

JEFF HENRY VAUGHN AND HENRY HOMES, INC.
v.
RICHARD BUTLER ET AL.



Appeals from Mobile Circuit Court. (CV-91-4332 and -4333). Edward B. McDermott, TRIAL JUDGE.

Rehearing Overruled February 24, 1995, . Certiorari Denied May 26, 1995.

Sam A. Beatty, Retired Justice. All the Judges concur.

The opinion of the court was delivered by: Beatty

BEATTY, Retired Justice

The defendants Jeff Henry Vaughn and Henry Homes, Inc., appeal from judgments in favor of Richard Butler and his wife Kathy Butler, and Sean Lovelace and his wife Phyllis Lovelace, in the actions against the defendants brought by the Butlers and the Lovelaces. Each action alleged negligence, wanton conduct, and breach of an implied warranty in the sale of a residential house. This case is before this court pursuant to § 12-2-7(6), Ala. Code 1975.

The Butlers purchased a new residence on Lot 11 of Camelot West Additions, Unit Four, on March 28, 1990; the Lovelaces bought a new residence on an adjoining lot, Lot 12, on July 10, 1990. The defendant Jeff Henry Vaughn had developed this subdivision in 1979 and had sold it in 1980 to the defendant Henry Homes, Inc., of which he was president. In that capacity Vaughn had supervised construction of houses on the lots and had negotiated the sales to these two sets of plaintiffs.

Each of these residences was serviced by a septic tank system, and notice that these systems were malfunctioning was first given to Vaughn and Henry Homes during January 1991. Ultimately, these actions were filed against Vaughn, Henry Homes, and others. The two cases were tried together, and both were submitted to a jury on the claims of negligence and wanton conduct against Vaughn, Henry Homes, and Murrill Tank Service and George Murrill, the septic tank installers. The implied warranty claim was submitted to the jury only as to Henry Homes. The jury awarded the Butlers $25,000 in compensatory damages and $5,000 in punitive damages against Vaughn and Henry Homes; it returned an identical verdict for the Lovelaces. The jury found in favor of Murrill and Murrill Tank Service. The court entered judgment on the verdicts. These appeals followed.

There is substantial disagreement among the parties on the issues presented for review. Our search of the record, including the defendants' motions for a directed verdict and then for a new trial, see King Mines Resort, Inc. v. Malachi Mining & Minerals, Inc., 518 So. 2d 714, 716-17 (Ala. 1987), forces us to conclude that the sole issue preserved for our review is whether there was sufficient evidence to support the jury's verdicts finding wanton conduct. Indeed, all parties concede that this is the principal issue.

The septic tank systems serving each residential lot in question presented no operational problems until January 1991. During that month the Butlers' system backed up. Their backyard became wet with sewage; the sewage caused a foul odor. Thereafter, sewage flooded into their home on several occasions. Problems continued until the time of trial. A field line burst, and afterwards, when the Butlers operated their toilet or shower, one could observe a discharge of excrement from the ground in the backyard. The Lovelaces had similar problems, with overflowing bathrooms and sewage flooding their home.

Both families put Vaughn and Henry Homes on notice of their problems and also notified the Mobile County Health Department ("the Health Department"). The Health Department inspected the properties, and then sent notices to each family advising them that the unsanitary conditions violated the rules and regulations promulgated by the Board of Health of the State of Alabama governing septic systems ("the state rules and regulations"). See Rules of the State Board of Health regarding onsite sewage disposal and subdivision onsite sewage systems, Chapter 420-3-1, Ala. Admin. Code; State Board of Health regulations governing onsite sewage disposal systems, §§ 2-150, 161-62; and State Board of Health regulations governing subdivision development, §§ 2-223-224.

When Vaughn obtained the land which became Camelot West Additions, he submitted to the Health Department a plan for a residential subdivision on that land, requesting approval for the use of septic tank systems. Thirteen of the lots in Units Three and Four, including Lots 11 and 12 of Unit Four, were "deleted" *fn1 because they could not be used for such a system without certain changes to bring them into compliance with the state rules and regulations. These changes involved additional filling and grading. Vaughn and Henry Homes added fill to Lots 11 and 12 over a period of 10 years.

Vaughn, acting for Henry Homes, engaged Larry Crawley of Pioneer Plumbing Company to conduct percolation tests and to design proposed septic tank systems for Lots 11 and 12. The actual designs for the two systems were done by Larry Crawley's father, Delaney Crawley, a licensed professional engineer who was at the time a consulting engineer with his son Larry's plumbing company. In March 1989, Delaney Crawley submitted his designs to the Health Department for its approval. The Health Department approved the designs on April 13, 1989, and Henry Homes completed construction on Lots 11 and 12 around September 27, 1989. Murrill Tank Service installed the septic tank system on Lot 11, and the Health Department issued a permit for its use on August 10, 1989. The Butlers took possession of Lot 11 on March 28, 1990. Murrill Tank Service also installed the septic tank system on Lot 12, and the Health Department issued a permit for its use on June 14, 1989. The Lovelaces took possession of Lot 12 on July 10, 1990.

Under the state rules and regulations, it was incumbent upon the builder that the system, an "alternative" one, would be installed and that the completed installation would be certified by an engineer. Vaughn signed "form letters" of assurance, but, he maintained, they were in blank when he signed them. Vaughn gave them to Larry Crawley and, after their completion, they were ultimately delivered to the Health Department.

When Vaughn developed the subdivision, he established restrictive covenants requiring that houses be built 25 feet or more from the front property lines. Vaughn's plans for the houses on Lot 11 and Lot 12 conformed to this requirement, with the septic tanks to be located immediately behind the houses. When Delaney Crawley measured the 25 feet required for the minimum setback, however, he measured from the curb of the street in front of the lots, not from the property lines. That meant that when the houses were built 25 feet from the front property lines, they were located over the area Crawley had used as the planned locations for the septic tanks. L. K. Cochran, the senior environmentalist with the Health Department at the time, was the official who reviewed the engineer's proposal for the septic systems, inspected the premises, and approved the engineer's plan. He inspected the premises of both lots after the problems arose, and in doing so, discovered that both houses were set further back than the house sites he had approved; in fact, he discovered the houses were built over the area where the percolation tests and soil borings had been made. Delaney Crawley testified at trial that he had been told by Vaughn that the property line and the curb were the same. Of course, ...


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