## Facts

- Thomas and Carol Hogan contracted to buy a lot and a house to be constructed for $37,500.
- Kenneth R. Morrow, an officer/agent of B & M Homes, signed the purchase agreement as “seller” without clearly indicating he signed only in a representative capacity.
- During construction, Mrs. Hogan observed a hairline crack in the concrete slab running through the structure and notified Morrow; he characterized it as common and not a concern.
- After completion, the Hogans received a written “warranty of completion of construction” signed by Morrow for B & M Homes and moved in.
- Multiple defects were reported; repair efforts did not address the slab, and the crack widened and extended, causing major structural damage.
- Expert testimony indicated the slab likely could not be permanently repaired and substantially reduced the home’s value; one expert described the home as “worthless.”
- The Hogans claimed mental anguish from fear of living in an unsafe house, including concerns about potential gas and water line failures and an inability to afford moving.

## Issues

1. Whether mental-anguish damages are recoverable for breach of a contract or warranty to construct a residence.
2. Whether evidentiary rulings (including alleged hearsay and VA-financing evidence) required reversal.
3. Whether defendants were entitled to judgment based on a claimed variance between pleading and proof or limits on parol evidence.
4. Whether Morrow was entitled to judgment as a matter of law on the ground that only the corporation, not he personally, was liable.
5. Whether the remitted $50,000 judgment should stand or the original $75,000 jury verdict should be reinstated.

## Decision

- The Supreme Court of Alabama affirmed liability on the breach-of-contract and breach-of-warranty theories.
- The court held that mental-anguish damages were properly submitted to the jury and were recoverable on these facts.
- The court rejected defendants’ asserted errors regarding hearsay, variance, parol evidence, and VA-financing evidence as non-reversible.
- The court upheld the denial of summary judgment and directed verdict for Morrow, concluding the evidence permitted a finding of personal liability.
- The court reinstated the jury’s original $75,000 verdict and set aside the remittitur.

## Legal Principles

- Although contract damages ordinarily exclude mental anguish, an exception applies when the contract is closely connected to matters of mental concern such that breach would naturally and foreseeably cause mental suffering.
- A contract and warranty to build a family residence may fall within that exception because the home is tied to personal security, comfort, and peace of mind.
- Mental anguish may be recovered when the evidence supports that such suffering was a foreseeable, proximate result of defective construction affecting habitability or safety.
- An agent’s failure to clearly disclose representative capacity in executing a contract may permit a factfinder to impose personal contractual liability, depending on the documents and surrounding evidence.
- A remittitur should not reduce a supported jury verdict absent a legally sufficient basis (e.g., passion, prejudice, or improper motive).

## Conclusion

The court upheld a verdict for homeowners harmed by severe structural defects in a newly constructed residence, holding that mental-anguish damages were recoverable because the contract to build a home is closely associated with personal safety and emotional concern, and reinstating the jury’s $75,000 award.


B & M Homes, Inc. v. Hogan, 376 So. 2d 667 (Ala. 1979)