If your termite company signed off on a home that turned out to be riddled with active infestation or old damage, one of the first questions to ask is whether the company was merely careless — or whether it knew the truth and hid it. In Alabama, that distinction is the difference between a negligence claim and a fraud claim, and it can dramatically change what a homeowner is able to recover.
Key takeaways. Negligence is doing the inspection or treatment job carelessly. Fraud is knowingly or recklessly telling you something false, or staying silent about a material fact the company had a duty to reveal. Alabama recognizes several distinct fraud theories — misrepresentation, suppression, and deceit — each with its own statute. Suppression claims turn on whether the company had a duty to disclose, which Alabama courts evaluate using a six-factor test. And in the termite context, courts have seen companies document serious damage internally while telling the homeowner nothing.
Negligence versus fraud: why the difference matters
Negligence is about the standard of care. A termite inspector who rushes through a crawlspace, misses obvious mud tubes, or applies a treatment improperly may be negligent — that is, the inspector failed to do the job with the care a reasonably competent professional would use. Negligence does not require any bad intent. An honest mistake, if it falls below the professional standard and causes harm, can be negligence.
Fraud is different. Fraud is about honesty, not competence. A company commits fraud when it knowingly or recklessly makes a false statement of material fact, or when it deliberately conceals a fact it was obligated to disclose. The company may have done the physical inspection carefully and still committed fraud if it then lied about what it found.
This matters for two practical reasons. First, the remedies differ. Fraud can open the door to mental-anguish damages and, in serious cases, punitive damages that negligence alone typically will not support. (For more on that, see our companion article, "Mental Anguish and Punitive Damages in Alabama Termite Cases.") Second, the deadlines differ in how they are triggered. A fraud claim generally does not begin to run until the fraud is discovered or reasonably should have been discovered, which can matter a great deal when a company hides the truth for years.
Alabama's statutory fraud framework
Alabama codifies its fraud theories in the Code of Alabama. A homeowner-facing summary looks like this.
Legal fraud / misrepresentation — § 6-5-101
Under Ala. Code § 6-5-101, misrepresentations of a material fact are actionable if the plaintiff relied on them. One feature of this statute surprises many people: the misrepresentation does not have to be a deliberate lie. Alabama law makes willful, reckless, and even innocent or mistaken misrepresentations of material fact actionable when made to induce another to act and the other party reasonably relies to their injury. In other words, a termite company that assures a buyer "there is no active infestation and no damage" can be liable for that statement even if it genuinely believed it — although the innocent version generally does not carry the same punitive exposure as a knowing lie.
In the termite world, a classic § 6-5-101 misrepresentation is a false inspection report — a clearance letter or wood-infestation report that affirmatively states the home is clear when it is not.
Suppression of a material fact — § 6-5-102
Ala. Code § 6-5-102 addresses silence. It provides that suppression of a material fact that a party is under an obligation to communicate is fraud. The obligation to communicate can arise from a confidential relationship between the parties or from the particular circumstances of the case.
Suppression is often the heart of a termite case because the wrongdoing is what the company didn't say. Imagine an inspector who finds heavy damage in a wall but simply omits it from the report. There is no false statement to point to — the report is silent. Whether that silence is fraud depends on whether the company had a duty to speak.
Deceit — §§ 6-5-103 and 6-5-104
Alabama also recognizes deceit. Ala. Code § 6-5-103 addresses willful misrepresentation made to induce another to act, and Ala. Code § 6-5-104 addresses fraudulent deceit — willful deception that induces the other party to change position injuriously. These theories overlap heavily with § 6-5-101 and § 6-5-102 in practice, but they emphasize willfulness and are often pleaded alongside the others so that no theory of the wrongdoing is left out.
The duty to disclose: the six-factor test in State Farm v. Owen
Because suppression under § 6-5-102 requires an obligation to communicate, the pivotal question in most termite suppression cases is: did the company have a duty to disclose what it knew?
Alabama's leading modern authority on that question is State Farm Fire & Cas. Co. v. Owen, 729 So. 2d 834 (Ala. 1999). Owen teaches that mere silence, or the fact that one party simply had superior knowledge, does not by itself create a duty to speak. Instead, whether a duty to disclose exists is evaluated by weighing several factors:
- the relationship of the parties;
- their relative knowledge;
- the value of the particular fact at issue;
- the plaintiff's opportunity to discover the fact independently;
- customs and practices of the trade; and
- the other circumstances of the case.
Apply those factors to a termite inspection and the duty often comes into focus. A homeowner or buyer hires the inspector precisely because the inspector has specialized knowledge the homeowner lacks. The inspector can see inside crawlspaces, read mud tubes, and identify frass and galleries that a layperson cannot. The value of "there is active infestation" or "there is structural damage in the sill" is enormous — it can determine whether a purchase closes or a bond claim is paid. The buyer has little practical opportunity to discover the truth independently, and the whole point of the inspection industry is to supply that information reliably. Weighed together, those circumstances frequently support a duty to disclose known material facts.
When companies hide damage: Orkin v. Jeter
Alabama's most instructive suppressed-damage termite case is Orkin Exterminating Co. v. Jeter, 832 So. 2d 25 (Ala. 2001). There, the company's inspectors documented heavy termite damage but, consistent with an internal practice, did not disclose it to the homeowner. The original damage diagram (the "graph") was lost, and the damage was later mischaracterized as water damage in an effort to avoid bond obligations. The jury returned a substantial verdict, including a large punitive award later reduced by the trial court, and the Alabama Supreme Court addressed the size of the remitted award on appeal.
Jeter illustrates each piece of the framework above. The internal decision not to tell the homeowner about documented damage maps directly onto suppression under § 6-5-102. Recharacterizing termite damage as "water damage" maps onto misrepresentation under § 6-5-101 and deceit under §§ 6-5-103 and 6-5-104. And the conduct — knowing concealment to dodge a repair obligation — is exactly the kind of behavior that can support punitive damages. We take the "graphing" mechanics apart in more detail in our companion article, "'Graphing' Old Damage: How Some Termite Companies Hide Infestations — and What Orkin v. Jeter Teaches."
Concrete termite examples
To make the categories tangible, here are the situations we most often see described as fraud or suppression:
- False inspection or clearance report. The report states there is no active infestation or no visible damage when the inspector saw otherwise. This is misrepresentation under § 6-5-101.
- Claiming a treatment that never happened. The company bills for a soil treatment or bait installation it did not actually perform, or performs a fraction of it. Representing completed work that was not done is misrepresentation and, if willful, deceit.
- Hiding known damage. The inspector documents damage internally — on a graph, in field notes, or in photos — but leaves it out of the report to the homeowner. This is the paradigm suppression case under § 6-5-102, assuming the duty-to-disclose factors are met.
- Recharacterizing termite damage. Labeling clear termite galleries as "water damage," "old damage," or "settling" to avoid a bond obligation, as in Jeter.
None of these labels is automatic. Whether particular conduct is fraud depends on what the company actually knew, what it said or concealed, and whether a duty to disclose existed. That is a fact-intensive inquiry.
What to do if you suspect fraud or suppression
If you think a termite company misled you rather than merely erred, the practical steps overlap with any termite claim but have a fraud-specific emphasis:
- Preserve everything in writing. Keep the inspection report, clearance letter or wood-infestation report, the bond or contract, invoices, and every email or text. In a suppression case, what the company did and did not put in writing is central evidence.
- Do not repair or re-treat before documenting. Repairs can destroy the physical proof that damage existed and was overlooked or concealed. Photograph and video the damage first. (See "Don't Repair That Termite Damage Yet: Preserving Evidence in a Termite Claim.")
- Request the company's records. Ask for the inspection graph or diagram, field notes, and prior reports. A missing or altered graph — as in Jeter — can itself be significant.
- Get an independent inspection. A second qualified inspector can document current conditions and give an informed opinion about how long the damage has likely existed.
- Mind the deadlines. Fraud and suppression claims in Alabama are generally subject to a two-year limitations period, with the clock often running from when the fraud was or should have been discovered. Because these rules are technical and the discovery question is fact-specific, do not assume you still have time; confirm it with counsel promptly.
- Consult a termite litigation attorney. Whether conduct crosses the line from negligence into fraud, and whether a duty to disclose existed under Owen, are judgment calls best made with a lawyer who has reviewed your specific documents.
Closing
The line between a sloppy inspection and a dishonest one is legally decisive in Alabama. Negligence asks whether the work met the standard of care; fraud and suppression ask whether the company was honest about what it found. Because suppression claims rise or fall on the duty to disclose, and because Jeter shows how far concealment can go, a careful, document-driven review is worth doing before assuming your situation is "just a bad inspection."
Talk to Yates Anderson
If a pest-control company has denied a termite claim, buried damage, or filed an inspection you believe was wrong, the analysis above only goes so far. Request a case evaluation and a Yates Anderson attorney will respond within one business day.
Informational only. Not legal advice. No attorney-client relationship is created by reading this post. Consult a licensed attorney in your jurisdiction.