Articles Posted in Alabama Supreme Court

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AutoSource Motors, LLC petitioned the Supreme Court for a writ of mandamus to direct the Montgomery Circuit Court: (1) to vacate its order denying AutoSource's motion to dismiss the action filed against it by Stephanie Chamberlain for lack of personal jurisdiction; and (2) to enter an order granting AutoSource's motion to dismiss for lack of personal jurisdiction. The controversy arose when Chamberlain purchased a vehicle from AutoSource via the Internet. Chamberlain's affidavit did not rebut the prima facie showing made by AutoSource in that her affidavit failed to establish that AutoSource was subject to suit in Alabama pursuant to either general personal jurisdiction or specific personal jurisdiction; consequently, the Supreme Court held that the circuit court erred in denying AutoSource's motion to dismiss Chamberlain's complaint for lack of personal jurisdiction. AutoSource demonstrated a clear legal right to the relief it sought; the Supreme Court granted its petition and issued the writ. View "Chamberlain v. AutoSource Motors, LLC" on Justia Law

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Merchants Bank appealed a Circuit Court judgment in favor of Elizabeth Head on Merchants Bank's claim against her alleging breach of a promissory note. After the 2008 promissory note at issue was executed, Merchants Bank wired the $400,000 to Elizabeth's husband, David Head's, personal account. David testified that he then wrote a check distributing the funds to his real-estate-development company, Head Companies, LLC. The Heads renewed the 2008 promissory note in March 2009 and again in March 2010, in August 2010, in February 2011, and, finally, in July 2011. With the exception of the July 2011 renewal, each renewal was signed on page three by both David and Elizabeth. A box on page two was left blank. On the initial version of the July 2011 renewal of the note, however, Elizabeth signed in both the box on page two, indicating that she intended to "give [Merchants Bank] a security interest" in the Heads' personal residence, and at the end of the document on page three. signature on page two of the initial July 2011 note was "a mistake in the nature of a scrivener's error and [Merchants] Bank subsequently had the Heads execute a corrected note, which they did knowingly and voluntarily." Elizabeth presented no evidence to the contrary. The "corrected note" bore the same date as the initial July 2011 note and, like all the previous renewals, was signed by both David and Elizabeth on page three of the document only. The box on page two of the corrected July 2011 note was left blank. The Heads defaulted on the promissory note in April 2012. In September 2012, Merchants Bank sued the Heads, alleging breach of the promissory note and attaching to the complaint the initial July 2011 note as evidence of the debt. David did not answer the complaint, and Merchants Bank obtained a default judgment against him in the amount of $415,142.57 plus interest on the judgment. Elizabeth did answer the complaint, arguing that the note was unenforceable against her because she had signed the initial July 2011 note only to give a security interest in her and David's residence not "for the purpose of agreeing to pay the debt evidenced thereby" and because she had not received consideration for her signature on the note. Merchants Bank moved for a summary judgment against Elizabeth. That motion was denied. After a bench trial in March 2013, the circuit court entered a final judgment in favor of Elizabeth. Upon review, the Supreme Court held that Elizabeth renewed her obligations under the 2008 promissory note in the capacity of a maker in July 2011, and that her obligations under the 2008 promissory note were supported by valid consideration. It was undisputed that she and David defaulted on their obligations under the corrected July 2011 note. Thus, Elizabeth was liable to Merchants Bank on its claim of breach of promissory note, and the circuit court erred in entering a judgment in her favor. View "Merchants Bank v. Head " on Justia Law

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Bryant Bank appealed the grant of partial summary judgment in favor of defendants Talmage Kirkland & Company, Inc., d/b/a Kirkland & Company ("TKC"), and Quentin Ball and Jason Stoutamire, appraisers for TKC. This case arose out of an appraisal of real property conducted by TKC for Bryant Bank in the course of Bryant Bank's consideration of a loan application submitted by Wallace Seafood Traders, Inc. ("WST"), in September 2007 for the purchase of the property, which WST was renting and out of which it was operating its business. The Bryant Bank employees responsible for approving WST's loan application suspected that the value of the property might have been overstated in TKC's appraisal. However, Bryant Bank approved WST's loan application and issued the loan to WST. Ultimately, WST defaulted on the loan. Bryant Bank obtained another appraisal of the property from a different appraisal firm; this new appraisal indicated that the property had a value that differed drastically from that which TKC had appraised. Bryant Bank sued the defendants, alleging breach of contract and negligent misrepresentation arising from its reliance on TKC's appraisal report in issuing the loan to WST. In their partial-summary-judgment motion, the defendants argued that Ball and Stoutamire were entitled to a summary judgment as to the breach-of-contract claim because they were acting as agents of a disclosed principal, Bryant Bank. As to the negligent misrepresentation claim, the defendants argued that they were entitled to a summary judgment in their favor because: (1) the opinion of value expressed in TKC's appraisal report could not serve as the basis of a negligent-misrepresentation claim; (2) Bryant Bank had not relied upon TKC's valuation; and (3) the claim was barred by the statute of limitations. The Supreme Court concluded the Bank presented substantial evidence that it relied on TKC's appraisal of the property, and that each of the arguments defendants raised in their partial-summary-judgment motion did not warrant the entry of a summary judgment in their favor with respect to the Bank's negligent misrepresentation claim. Therefore, Court reversed the trial court's order and remanded the case for further proceedings. View "Bryant Bank v. Talmage Kirkland & Company, Inc." on Justia Law

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Southeast Construction, L.L.C. ("SEC") appealed a Circuit Court order enforcing, a previous judgment entered by that court based on an arbitration award in favor of WAR Construction, Inc ("WAR"). Upon review of the facts of this case, the Supreme Court affirmed in part, reversed in part, and remanded for further proceedings. The Court concluded the circuit court erred in finding in a January 9 order that "all liens and claims against SEC ... from WAR's subcontractors/suppliers that filed a lien on the project ... ha[d] been released and/or adequate security ha[d] been provided." Furthermore, the Court concluded the circuit court erred in finding that WAR had "attempt[ed] to comply with what the Supreme Court ordered the circuit court to implement as of May 13, 2011," and that WAR was entitled to have the interest owed under the arbitrators' award and the May 9 judgment calculated from that date. View "Southeast Construction, L.L.C. v. WAR Construction, Inc. " on Justia Law

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This case arose from a contract between Roanoke Healthcare Authority (doing business as Randolph Medical Center) and Batson-Cook Company, a general contractor, to renovate the medical center, located in Roanoke. Batson-Cook received written notice from Roanoke Healthcare that work on the renovation project had been suspended. Batson-Cook notified one of its subcontractors, Hardy, of the suspension and stated that "[t]he contract has been suspended by [Roanoke Healthcare] through no fault of Batson-Cook ... or its subcontractors. [Roanoke Healthcare] is currently out of funding and has subsequently closed the facility while seeking a buyer." Liberty Mutual, the project's insurer, alleged in its answer that Roanoke Healthcare failed to pay Batson-Cook $241,940.51 for work performed pursuant to the contract. Batson-Cook sent Hardy a change order the change order deducted from the subcontract the $147,000 in equipment and materials another subcontractor Hardy hired, Johnson Controls, Inc. (JCI), had furnished for the renovation project and for which it has not received payment. JCI notified Liberty Mutual, Roanoke Healthcare, Batson-Cook, and Hardy by certified letters of its claim on a payment bond. The letters identified Batson-Cook as the general contractor and Hardy as the debtor. Liberty Mutual denied the claim. JCI sued Liberty Mutual, alleging JCI was entitled to payment on the payment bond Liberty Mutual had issued to Batson-Cook. Upon review, the Supreme Court concluded JCI was a proper claimant on the payment bond. Therefore, the circuit court erred in entering a summary judgment in favor of Liberty Mutual and denying JCI's summary judgment motion. View "Johnson Controls, Inc. v. Liberty Mutual Insurance Company " on Justia Law

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Alfa Life Insurance Corporation ("Alfa") and Brandon Morris, an agent for Alfa, appealed a judgment entered against them following a jury verdict for Kimberly Colza, the widow of Dante Colza. In 2010, Morris met with Dante to assist him in completing an application for a life-insurance policy. There was disputed evidence as to whether Morris asked Dante whether he had had a moving traffic violation, a driver's license suspended, or an accident in the prior three years, it was undisputed that Morris entered a checkmark in the "No" box by that question. The evidence indicated that Dante applied for the Preferred Tobacco premium rate. Dante named Kimberly as the beneficiary under the policy. At the close of the meeting, Kimberly wrote a check payable to Alfa for $103.70, the monthly Preferred Tobacco premium rate. Kimberly testified at trial that Morris informed them that Dante would be covered as soon as they gave Morris the check. Dante was later examined by the medical examiner. During the examination, Dante informed the examiner that his family had a history of heart disease and that he had had moving traffic violations within the past five years. The day after he had his medical examination, Dante was killed in an accident. Two days later, Alfa received the medical examiner's report, which indicated that Dante's family had a history of heart disease, that Dante's cholesterol was above 255, and that Dante had had moving traffic violations in the past five years. In light of the report, Alfa's underwriters determined that Dante was not eligible for the Preferred Tobacco rate for which he had applied; rather, the proper classification would have been the Standard Tobacco rate (which had a higher premium). Additionally, in light of the moving vehicle violations, Dante was a greater risk to insure and a "rate-up" of $2.50 per $1,000 worth of coverage was required. Alfa notified Kimberly by letter that no life-insurance coverage was available for Dante's death "because no policy was issued and the conditions of coverage under the conditional receipt were not met." Kimberly sued Alfa seeking to recover under the terms of the conditional receipt (an acknowledgment of the policy). She alleged, among other claims, that Alfa had breached the contract and had acted in bad faith when it refused to pay life-insurance benefits on Dante's death. Kimberly also sued Morris, alleging, among other claims, that he had negligently failed to procure insurance coverage for Dante. After a trial, the jury found that Alfa had breached the contract and had in bad faith refused to pay the insurance benefits due, and that Morris had negligently failed to procure insurance. Upon review, the Supreme Court concluded Alfa and Morris were entitled to a judgment as a matter of law on those claims, and the trial court erred by submitting the claims to the jury for consideration. View "Alfa Life Insurance Corporation v. Colza " on Justia Law

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Guardian Builders, LLC, and E. Wayne Tackett appealed a Circuit Court order denying their motion to vacate or modify an arbitration award entered in favor of Randy Uselton and his wife Melissa. In 2010, the Useltons sued Guardian alleging several claims arising from Guardian's construction of a house for the Useltons. Guardian subsequently filed a motion to compel arbitration, and the circuit court granted that motion. In late 2011, the arbitrator entered a final award in favor of the Useltons. Guardian subsequently filed a motion to vacate or modify the arbitration award to the circuit court, to which it attached a copy of the arbitration award. The Useltons filed a 'motion to confirm' the arbitration award. The circuit court entered an order purporting to deny Guardian's motion to vacate or modify the arbitration award, purporting to grant the Useltons' motion to confirm the arbitration award, and purporting to order Guardian to pay $1,421.75 in Better Business Bureau fees and facility costs related to the arbitration. Guardian objected only to a subset of the damages that were awarded the Useltons that were not directly related to the poorly constructed house, specifically, attorney fees and arbitration fees (including both the arbitrator fee and the forum fee charged by the Better Business Bureau of North Alabama ("the BBB"), which administered the arbitration). Furthermore, Guardian argued the arbitrator lacked the authority to award the Useltons attorney fees and arbitration fees. The Supreme Court agreed that the arbitrator exceeded his authority by awarding those remedies. The trial court's judgment was reversed and the case remanded for the trial court to enter a modified judgment subtracting attorney fees and arbitration fees from the award made to the Useltons. View "Guardian Builders, LLC v. Uselton " on Justia Law

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Nationwide Retirement Solutions, Inc. ("NRS"), appealed a circuit court judgment awarding PEBCO,Inc. over a million dollars in attorney fees and $29,132.01 in expenses. In 2007, participants in the State of Alabama Public Employees Deferred Compensation Plan filed a class action against Nationwide Life Insurance Company ("NL"), NRS, the Alabama State Employees Association ("ASEA"), and PEBCO, Inc., alleging breach of fiduciary duty, conversion, and breach of contract in the administration of the Plan. The parties filed a "Stipulation of Settlement," which the trial court approved in its final order entered in 2011. Pursuant to the settlement, NL and NRS paid $15.5 million to the participants in the Plan and $2.9 million in attorney fees to settle class claims against all defendants, including ASEA and PEBCO. In its findings of fact, the trial court stated: "ASEA is being permitted to retain more than $12 million in sponsorship payments that it allegedly received unlawfully, and ASEA is receiving full release from any liability." A day before the parties filed their "Stipulation of Settlement," Nationwide moved for an order barring ASEA and PEBCO from filing any indemnification claims. The trial court granted the order except for claims for attorney fees and costs. "[I]n light of Nationwide's substantial contributions to the settlement," the court wrote that it was "fair and reasonable that ASEA and PEBCO be barred from pursuing any claims against Nationwide for reimbursement, indemnification, or contribution other than claims for attorney fees and costs ...." A month before entering its final order in the class action, the trial court ordered severance of ASEA and PEBCO's claim for fees and directed the Circuit Court clerk to docket that claim as "a separate and independent action," with ASEA and PEBCO as plaintiffs and NL and NRS as defendants. The trial court found that the indemnification clause in the agreement required that NRS pay the fees and costs incurred by ASEA and PEBCO in defending the class action. Noting that NRS "has contended, and still contends, that indemnification is improper based on the language of the agreement and the attending facts," the trial court stated that it "has held hearings on that issue and by prior order has ruled that indemnification is appropriate. The instant action was filed to enforce indemnification." The court ordered NRS to pay PEBCO $863,988.50 in attorney fees and $15,297.54 in expenses for the class-action litigation, and $210,039 in attorney fees and $13,834.47 in expenses for litigating the severed cross-claim. NRS timely appealed that decision to the Supreme Court. The Supreme Court reversed and remanded: "[b]ecause NRS did not fail to perform those duties under the agreement that ultimately gave rise to the class action, it did not, as a matter of law, breach the indemnification clause in the agreement. . . . Alabama does not permit a party to seek indemnification for defending against its own allegedly wrongful acts." View "Nationwide Retirement Solutions, Inc. v. PEBCO,Inc. " on Justia Law

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Clay Merches petitioned the Alabama Supreme Court for a writ of mandamus to direct the trial court to dismiss claims against him for lack of personal jurisdiction. The underlying case concerned a missing flatbed trailer owned by Builders Transportation, a Tennessee company. The plaintiffs were Alabama residents. The complaint alleged that the parties had entered into a contract in which Builders Transportation and Dwight Bassett (employee of Builders Transportation) had agreed to pay the plaintiffs $10,000 in return for information about the location of the missing trailer. The plaintiffs further alleged that Builders Transportation and Bassett had breached that contract by failing to pay the plaintiffs $10,000 for the information given about the trailer, which was located in a field in Hale County. Instead of receiving $10,000, the plaintiffs were arrested in Hale County and charged with receiving stolen property and conspiracy to commit theft of property. Those charges were later dismissed. In July 2012, the plaintiffs amended their complaint to add Merches, an employee of Builder Transportation as a defendant. The claims and factual allegations made against Merches in the amended complaint were the same as those made against Builders Transportation and Bassett. Upon review, the Supreme Court concluded Merches lacked sufficient contact with Alabama to support the trial court's exercise of personal jurisdiction over him. Accordingly, the Court issued the writ. View "Brantley v. Bassett" on Justia Law

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State Farm Mutual Automobile Insurance Company petitioned the Supreme Court for a writ of mandamus to direct the Clarke Circuit Court to vacate its order denying State Farm's motion to transfer this case to the Mobile Circuit Court and to enter an order granting the motion. The underlying action arose from an automobile accident that occurred in Mobile County in 2010. Sandra Banks, a resident of both Clarke and Mobile Counties, sued Robert Spray, a resident of Baldwin County, and State Farm. Banks alleged that she suffered injuries as a result of the wrongful, negligent, and/or wanton conduct of Spray when the vehicle he was driving and owned struck her vehicle. Additionally, Banks alleged that at the time of the accident she had a policy of insurance with State Farm, which included uninsured-/underinsured-motorist coverage, and that she was due proceeds under her coverage. Because both the "convenience of parties and witnesses" and the "interest of justice" prongs of the doctrine of forum non conveniens compelled the transfer of this case from Clarke County to Mobile County, the Supreme Court concluded the trial court abused its discretion in refusing to transfer the action. Therefore, the Court granted State Farm's petition and issued a writ directing the Clarke Circuit Court to vacate its order and to enter an order granting the motion. View "Banks v. Spray" on Justia Law