This diversity action was instituted by Ben Neff against Nell Bilbro Kehoe as a result of misrepresentations allegedly made in connection with the sale of a coin collection. Neff argues that representations made by Kehoe were knowingly false or that Kehoe recklessly represented facts that were in fact false. In addition to claiming damages based on fraud, Neff alleged a right to recover based on breach of warranty as to the genuine character of the coins.
Neff, a resident of Texas, first learned in 1980 that Kehoe, a resident of Alabama, might be interested in selling her coin collection. Neff confirmed by telephone that the collection might be for sale. Neff requested and received a general description of each coin in the collection. Neff testified that during this conversation Kehoe stated that one coin, a 1907 Roman Numeral Twenty Dollar gold piece, was similar to a coin which the newspaper column "Ripley's Believe It or Not" had reported as having been sold at a 1974 New York City auction for $200,000. Following the conversation, Neff purchased several coin collector's magazines and contacted expert numismatists in New York City, Houston and New Orleans in an effort to obtain information and advice about the value of coins in the Kehoe collection.
Neff traveled to the Kehoe residence in Alabama and examined the coins. After his return to Texas, Neff, by telephone, offered to pay $64,000 for the collection. Kehoe stated that she felt the collection was worth more and should be valued at between $75,000 and $100,000. Neff increased his offer to $74,000 and Kehoe accepted. Neff again traveled to Alabama, paid the $74,000 by two cashier's checks and received the collection.
Upon returning to Texas, Neff had the coins examined by the United States Department of the Treasury. The Department informed Neff by letter that two of the coins, including the Roman Numeral, were counterfeit. Neff filed this action in federal district court. At the conclusion of the evidence by both sides, the district court directed a verdict for defendant Kehoe as to all issues in the case.
Although this is a diversity case, the propriety of the directed verdict is governed by federal law. New England Merchants' National Bank v. Rosenfield, 679 F.2d 467, 473 (5th Cir.1982) (Unit B); King v. Ford Motor Co., 597 F.2d 436, 439 (5th Cir.1979). Because a directed verdict decides contested substantive issues as matters of law, the same standard of review is applied by this court as by the district court. J & H Auto Trim Co. v. Bellefonte Insurance Co., 677 F.2d 1365, 1368 (11th Cir.1982). In determining whether a party's evidence is sufficient to withstand a directed verdict motion, the court must apply the principles articulated in Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969), made binding on this court in Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir.1981) (en banc). Courts view all the evidence, together with all logical inferences flowing from the evidence, in the light most favorable to the non-moving party:
Boeing, 411 F.2d at 374-75. Accord Kaye v. Pawnee Construction Co., 680 F.2d 1360, 1364 (11th Cir.1982); Maxey v. Freightliner Corp., 665 F.2d 1367, 1371 (5th Cir.1982) (en banc). Applying the Boeing standard to the present case, we reverse the directed verdict on both the fraud claim and the breach of warranty claim.
While the directed verdict standard is drawn from federal law, Alabama law governs the merits of the fraud and breach of warranty claims in this diversity case. In International Resorts, Inc. v. Lambert, 350 So.2d 391, 394 (Ala.1977), the Alabama Supreme Court delineated the elements necessary to sustain a cause of action based on fraud:
See also Winn Dixie Montgomery, Inc. v. Henderson, 395 So.2d 475 (Ala.1981).
Neff has presented sufficient evidence as to all of the requisite Lambert factors. He adamantly maintained at trial that Kehoe had represented the coins as genuine:
Kehoe denied having made representations of genuineness, but the jury might reasonably have credited the testimony of Neff rather than that of Kehoe. The alleged representations clearly concerned a fact material to the transaction contemplated by the parties. It is true that the record does not demonstrate that Kehoe acted willfully with an intent to deceive. But while intent to deceive is an indispensible element of fraud, under Alabama law the requisite intent may be inferred from a showing that the representations were made recklessly or mistakenly. Winn-Dixie Montgomery, 395 So.2d at 476; Lambert, 350 So.2d at 394.
Neff was aware that Kehoe had obtained the coins from her late husband's estate and that Kehoe herself had never purchased or dealt with gold coins and was not knowledgeable in the coin business.
Although the evidence was insufficient to support a jury finding that Neff relied upon representations of the value of the coins if genuine, a jury might have found that Neff relied upon representations of genuineness. The jury could reasonably have concluded that the scope of Neff's investigation covered only value and not authenticity. The jury could have found that Kehoe recklessly or mistakenly represented the coins to be genuine and that Neff relied to his detriment on such representations. Based on the evidence discussed above, we find that Neff has made a prima facie showing of reliance requiring submission of the issue to the jury.
The final element under the Alabama fraud law is damages. Neff had the burden of proving that damages to him flowed from Kehoe's alleged misrepresentation. At the close of testimony by both sides, there was no testimony as to the difference in the value of the coin collection as allegedly represented and its actual value after the counterfeit coins were taken into account. On direct examination, counsel repeatedly asked Neff his opinion of the value of the coin collection that he had purchased. Neff was not tendered as an expert; rather, his lay opinion was based upon coin collector publications, upon appraisals he received from various collectors and upon his own experience as owner of the collection. In sustaining Kehoe's objection to this testimony, the district court rejected Neff's contention that the owner of property is entitled to give an opinion of its value when the owner has had opportunity to form a correct opinion.
Accurate valuation of coins requires a fair amount of technical proficiency and Neff did not assert otherwise. He testified that such estimates are "based on the condition of the coin, and only an expert can tell" and that evaluating the "exact amount is really a science by real experts upon precise examination." The court, in sustaining Kehoe's objection to the evidence, observed:
Cases binding on this court have held that "an owner of property is competent to testify regarding its value." Dietz v. Consolidated Oil & Gas, 643 F.2d 1088, 1094 (5th Cir.), cert. denied, 454 U.S. 968, 102 S.Ct. 513, 70 L.Ed.2d 385 (1981); Kestenbaum v. Falstaff Brewing Corp., 514 F.2d 690, 698 (5th Cir.1975), modified on other grounds en banc, 575 F.2d 464 (5th Cir.1978), cert. denied, 424 U.S. 943, 96 S.Ct. 1412, 47 L.Ed.2d 349 (1979). Accord Justice v. Pennzoil Co., 598 F.2d 1339, 1344 (4th Cir.), cert. denied, 444 U.S. 967, 100 S.Ct. 457, 62 L.Ed.2d 380 (1979). Though such testimony may be "self-serving and unsupported by other evidence," J & H Auto Trim, 677 F.2d at 1369, it is "subject to attack through cross-examination or independent evidence refuting the owner's estimate." Kestenbaum, 514 F.2d at 699. We conclude that at any relitigation of this case, Neff should be permitted to give his opinion of the value of the coin collection.
Breach of Express Warranty
Neff contended that Kehoe represented the coins to be genuine and that such representation constituted a breach of express warranty under the Alabama Uniform Commercial Code. The Code of Alabama defines express warranty at section 7-2-313:
Ala.Code § 7-2-313 (1975). No reliance need be shown. See id. (official comment 3).
Appellant argues that Kehoe's statements regarding genuineness and authenticity were more than mere expressions of opinion. Neff asserts that regardless of Kehoe's lack of expertise in the coin trade, she affirmatively asserted the coins to be genuine and authentic. Neff submits that the issue of whether Kehoe warranted the coins was an issue of fact for the jury and that resolution of that disputed fact question required credibility choices especially within the jury's providence. We agree.
Substantial evidence supports Neff's contention. Kehoe testified that she never represented the Roman Numeral coin as being genuine: "I did not say it was genuine. I said I felt it was genuine ... I felt like my husband wouldn't have bought something that wasn't. He was an honest man." Despite some uncertainty about Kehoe's "exact words," Neff testified positively and consistently, on direct and cross-examination, that Kehoe had told him that the coins were "genuine" and that the Roman Numeral coin was "just like" the one reported in "Ripley's Believe It or Not." The question of whether statements made by Kehoe were affirmations of fact is an issue of fact, resolution of which hinges on the credibility of witnesses Neff and Kehoe. The credibility of witnesses is to be evaluated by the jury, not by the judge on directed
REVERSED and REMANDED.
R. LANIER ANDERSON, III, Circuit Judge, concurring in part and dissenting in part:
I reluctantly concur in the majority's reversal of the directed verdict on the breach of warranty claim, but I dissent from that portion of the majority opinion which reverses the directed verdict on the fraud claim.
With respect to the fraud claim, the majority opinion indicates that the district court should not have directed a verdict because the jury "could have found that Kehoe recklessly or mistakenly represented the coins to be genuine and that Neff relied to his detriment on such representations." At 643. The majority opinion fails to discuss whether the jury could have found that Neff's reliance was reasonable.
Under Alabama law, a plaintiff must have reasonably relied on a false representation in order to maintain an action for fraud. See, e.g., Bedwell Lumber Co. v. T & T Corp., 386 So.2d 413, 415 (Ala.1980) (recognizing "the basic legal proposition that the representee's reliance must be reasonable under the circumstances"); Cook v. Brown, 393 So.2d 1016, 1019 (Ala.Civ.App. 1981) (stating that when plaintiff "cannot be said to have reasonably relied upon the misrepresentation ... [he] cannot obtain damages or other relief from defendant"). In this case, Neff had some familiarity with coin collecting and was given several opportunities to carefully examine the coins before he purchased them. More importantly, it is undisputed that Neff knew that the seller, Kehoe, was not an experienced coin collector and had no experience in evaluating the genuineness of coins. Neff also knew that Kehoe had not personally purchased the coins, but merely had received them from the estate of her late husband. Under such circumstances, I agree with the district judge that no reasonable jury could find that Neff reasonably relied on Kehoe's statements that the coins were genuine.
With respect to the claim for breach of express warranty, I reluctantly concur in the reversal of the directed verdict. I believe the most reasonable interpretation of all of the evidence, viewed in the light most favorable to Neff, is that Kehoe's statements