Justia Contracts Opinion Summaries

Black Warrior Minerals, Inc. sued Empire Coal Sales, Inc. and John Fay, Jr. Black Warrior sought money allegedly owed pursuant to a coal-purchase agreement between Black Warrior and Empire and a personal guaranty executed by Mr. Fay. A trial court entered summary judgment in favor of Black Warrior, awarding it damages plus attorney fees and costs. The trial court held a bench trial on the breach-of-guaranty claim against Mr. Fay, entering judgment in favor of Mr. Fay. Black Warrior appealed the latter, arguing that the trial court erred in finding the language of the guaranty was ambiguous and applied only to amounts in excess of $1.2 million owed by Empire to Black Warrior. Upon review of the language of the guaranty and the applicable legal authority, the Supreme Court concluded the trial court erred in its interpretation of the guaranty's terms. The Court reversed the lower court's judgment and remanded the case for further proceedings.

Matador Holdings, Inc. and HoPo Realty Investments, LLC filed separate appeals to challenge elements of a circuit court's order involving commercial property owned by Matador. Matador sued HoPo for payment for materials and services Matador provided to HoPo's lessee Stratford Plastic Components of Alabama. The lease agreement contained provisions allowing for HoPo or its agents to enter the property during the lease-term to make inspections or repairs. Stratford had applied for and received a line of credit with Matador. After taking possession of the leased property, Stratford ordered materials from Matador to convert the property into one suitable for Stratford's production needs. Stratford vacated the property before the lease term expired without paying Matador for the materials. HoPo's agents testified that Stratford did not request any changes be made to the leased property and had no knowledge that Matador would supply materials to the lessee. To resolve the dispute, the trial court denied Matador's claim that HoPo was unjustly enriched by the services provided to Stratford that were unpaid, but the court placed a lien on HoPo's property for the unexpired portion of the Stratford lease. Upon review of the trial court record and its order, the Supreme Court affirmed the lower court's denial of Matador's unjust enrichment claim. Furthermore, the Court reversed the lower court's order insofar as it enforced any portion of a lien against HoPo's property or the improvements made to the property. The Court ruled the lien void.

In 2007, Massachusetts Defendant No. 1 Steel Products, Inc. (No. 1 Steel) was a subcontractor on a construction project at a health rehabilitation center in Massachusetts (Cape Regency project). While working on the project, No. 1 Steel determined that it needed to hire out some of the steel fabrication for which it was responsible. No. 1 Steel found Alabama Plaintiff Garrison Steel Fabricators, Inc. (Garrison). No. 1 Steel was dissatisfied with Garrison's work and refused to pay Garrison anything beyond what it had previously paid. In an attempt to collect the remaining amount owed, Garrison sent No. 1 Steel notice that it intended to file mechanic's liens on the project unless it was paid. Upon receiving the notice, No. 1 Steel filed a motion in Massachusetts court to discharge and release the not-yet-filed-lien, arguing that Garrison was not registered to do business in Massachusetts and that no written contract of the parties' agreement existed. The Massachusetts court granted the motion without stating a rationale. In 2009 Garrison sued No. 1 Steel in Alabama court, asserting claims of open account, implied contract and labor and work performed. No. 1 Steel moved to dismiss, arguing a lack of personal jurisdiction. Upon review of the record, the Supreme Court found the "specific contacts" No. 1 Steel had were not sufficient enough that it should have anticipated being haled into court in Alabama; No. 1 Steel's relationship with Garrison was limited to a one-time purchase of customized goods. The Court directed the trial court to dismiss Garrison's case because the court lacked personal jurisdiction over No. 1 Steel.

Alabama Title Loans, Inc., Accurate Adjustments, LLC and Kevin Sanders all appealed a trial court order that denied their motions to compel arbitration filed against them by Plaintiff Kimberly White. In 2009, Ms. White borrowed money from Alabama Title Loans (ATL), securing the loan with an interest in her automobile. ATL required Ms. White to surrender the title to the automobile. The title-loan agreement contained an arbitration clause. Ms. White subsequently paid off her loan and borrowed more money against her car several more times. In August 2009, Ms. White said she went to ATL ready to pay off her loan in full. In January 2010, ALT contracted with Accurate Adjustments to conduct a "self-help" repossession of Ms. White's automobile. The police were called, and Accurate and ATL were required to release the automobile when it could not produce the title they claimed gave them the right to repossess. Ms. White filed suit alleging multiple theories: assault and battery, negligence, wantonness, trespass, wrongful repossession and conversion. At trial, the court denied the title-loan parties' motion to compel arbitration without making any findings of fact. Based on the broad language of the arbitration clause in the title-loan agreements executed by Ms. White, the Supreme Court held that the trial court should have granted the title-loan parties' motions to compel arbitration. The Court reversed the trial court's decision and remanded the case for further proceedings.

The Federal District Court for the Northern District of Alabama certified a question to the State Supreme Court. The Court was asked whether the failure of an insured to give notice of a proposed settlement to an insurance company causes the insured to forfeit underinsured motorist coverage (UIM), regardless of the insuredâs actual knowledge of that coverage, and regardless of prejudice to the insurance company if the insured has a copy of the policy that contains the coverage. In 2007, Delbert and Lou Ann Downey were stopped at an intersection on their motorcycle when a vehicle driven by Wyndell Thompson failed to stop and hit them. At the time of the accident, multiple insurance policies were in force. The Downeys had underinsured motorist coverage. The Downeys, in consideration of $10,000 and while represented by counsel (but without having notified Travelers Property Casualty Insurance Company that they were doing so), executed a general release to discharge Mr. Thompson and his insurance company from all liability arising out of the accident. Subsequently, and with different counsel, the Downeys notified Travelers of the accident for the first time and that they were making a claim under their underinsured motorist policy. Travelers denied the claim and the Downeys sued. The Supreme Court found that the Downeys were at all relevant times in possession of the policy, and it clearly provided UIM coverage. However, the Downeys did not meet the threshold of showing any condition under which their lack of notice could be excused. "In other words, the Downeys have âforfeit[ed]â UIM coverage."

Barbara Roberts sued Steve Lanier and his firm Steve Lanier, PC, and Rodney Stallings and his firm Coggin & Stallings, LLC. In 2006, Ms. Roberts was arrested on murder charges and sent to the Cherokee County jail. She contacted Attorney Lanier, who then met with her and agreed to represent her in her criminal proceedings. The contract between them provided that Ms. Roberts would pay a "nonrefundable retainer" of $50,000. At that time, Ms. Roberts executed a power-of-attorney authorizing Mr. Lanier to withdraw the retainer from her bank accounts. Ms. Roberts testified at trial that she first learned that Mr. Lanier was not licensed to practice law in Alabama when she appeared for her first hearing at the district court. It was then that she was introduced to Mr. Stallings, who "associated" on her case. Seeing no need for two lawyers, she tried to terminate Mr. Lanier's representation. Mr. Stallings eventually managed Ms. Roberts' case, having all her mail sent to his office so that he could "oversee every aspect" of her personal life, including payment of all outstanding bills and expenses. Ms. Roberts alleged that instead of using her money for the purposes she intended, Mr. Stallings misappropriated approximately $100,000 of her funds. Ms. Roberts was eventually convicted of capital murder and sentenced to life without parole. She later learned that the "nonrefundable retainer" language in her contract with Mr. Lanier was unenforceable under Alabama law, and sued her former lawyers for legal malpractice. The circuit court granted summary judgment to the lawyers. Upon review, the Supreme Court reversed the circuit court's grant of summary judgment in favor of the lawyers only with respect to employment contract and the "nonrefundable retainer" and the misappropriation of Ms. Roberts' money for expenses while she awaited trial. The Court remanded the case for further proceedings.

Plaintiff Branded Trailer Sales, Inc. (Branded) appealed a circuit court judgment that dismissed its case against Universal Truckload Services for lack of personal jurisdiction. A customer contacted Branded about having some flatbed trailers designed and manufactured. Branded contacted Universal for a recommendation for companies that could do the work. Universal recommended Liddell Trailers, LLC to design and manufacture the trailers. Branded entered into a contract with Liddell. The contract provided that Universal would buy several of the specially-designed trailers from Branded. Liddell later contacted Branded that the price for each trailer would increase from their previously-agreed cost, and that it would take longer for the components to be assembled. Branded would later learn that Universal negotiated a deal directly with Liddell to provide the same trailers at a lower price, excluding Branded from the agreement. Branded filed suit alleging that Universal and Liddell had intentionally interfered with the Branded-Liddell contract. Upon review, the Supreme Court found sufficient evidence that Branded made detailed assertions regarding its theories of personal jurisdiction, and the record reflected Branded presented that evidence to support those assertions. Therefore, the Court found that the trial court exceeded its discretion when it granted Universal's motion to dismiss. The Court reversed the trial court's judgment and remanded the case for further proceedings.

Petitioner Brady Farr appealed a circuit court judgment in favor of Respondents The Gulf Agency, Orange Beach Insurance Agency and Lexington Insurance Company. Mr. Farr finished renovating his house in 2003. In 2004, he decided to sell his property to a developer who wished to turn the property into condominiums. In anticipation of the sale, Mr. Farr obtained a $1 million loan, secured by a mortgage. As part of the loan process, the mortgage company ordered an appraisal of the property. The property was appraised at $1.3 million and the improvements were valued at $313,000. In 2004, Mr. Farr contacted Orange Beach to insure the property against "total loss." Lexington, acting as Orange Beach's agent, submitted an insurance application for policy limits based on the appraisal to The Gulf Agency, who ultimately served as underwriter for the policy. In the fall of 2004, Mr. Farr was concerned that the policy limits were not sufficient to adequately cover a total loss of the property. In September, Mr. Farr's concerns were realized when Hurricane Ivan destroyed the property. He filed a claim with Orange Beach. In November, Mr. Farr sold his property for $1.18 million. The sales agreement was amended to reflect the total loss he suffered as a result of the hurricane. Lexington's adjuster visited the property to determine the cause of Mr. Farr's loss. The adjuster found the hurricane was the "proximate cause". Lexington subsequently paid Mr. Farr $50,000 for the damage. Alleging that the policy did not provide adequate coverage and that Lexington failed to pay the proper benefits under the policy, Mr. Farr sued the insurance companies for breach of contract, fraud, misrepresentation, negligence, conspiracy, and bad-faith failure to pay an insurance claim. The trial court granted the companies' motion for summary judgment, finding that some of Mr. Farr's claims were barred by a two-year statute of limitations. Upon review of the trial court record, the Supreme Court affirmed the lower court's judgment pertaining to Mr. Farr's tort claims. The Court found that those claims were indeed barred by a statute of limitations. The Court however found that the breach of contract and bad faith claims should not have been dismissed through summary judgment. The Court affirmed part and reversed part of the lower court's order and remanded the case for further proceedings.

Nationwide Mutual Insurance Company (Nationwide) appealed a trial courtâs order that denied its "renewed motion for a judgment as a matter of law" in its case against J-Mar Machine & Pump. J-Mar is a repair shop that held a commercial liability and property insurance policy with Nationwide. In 2004, in anticipation of its policy renewal, Nationwide sent an inspector to the shop. In his report, the inspector noted several safety hazards and a messy shop. The insurance policy was renewed in March but several months later Nationwide cancelled the policy. Nationwide cited the inspectorâs report as reason for the cancellation. J-Mar management was not aware of the cancellation until late that year when shop property was stolen. When it tried to file a claim, Nationwide declined J-Marâs claim. A jury trial was held on the disputed policy cancellation and coverage. At the close of J-Marâs case, Nationwide moved the court for a "judgment as a matter of law" which was denied. Nationwide unsuccessfully motioned again at the close of all evidence. Upon review of the trial court record, the Supreme Court found that the evidence J-Mar presented at trial was insufficient to support the jury verdict in its favor. Accordingly, the Court reversed the trial courtâs judgment denying Nationwideâs motion and rendered a judgment in Nationwideâs favor.

Petitioner Willard Ryals appealed a trial court's order enforcing a creditor's judgment against him in favor of Respondent Lathan Company, Inc. (Lathan). In 2004, Lathan sued Ryals Construction Company for breach of a construction sub-contract. The contract called for Ryals to obtain workers' compensation insurance for the project. Lathan claimed it made an advance payment for the insurance. When Ryals failed to get the insurance, Lathan sued. No one appeared on behalf of Ryals on the trial date. A default judgment was entered on behalf of Lathan. Two years later, Lathan tried to collect on its default judgment by serving a post-judgment discovery request on Ryals Construction. The request went unanswered. Lathan filed a motion for sanctions, naming "Ryals Real Estate," Willard Ryals and Ryals Construction Company. Through counsel, Willard Ryals moved to strike the motion for sanctions which the trial court granted. Lathan then amended its complaint to substitute Willard Ryals with fictitious parties. Rather than re-allege the allegations of its first complaint, Lathan sought to hold Ryals Real Estate and Willard Ryals liable as alter egos for the judgment it held against Ryals Construction Company. After a bench trial, the trial court determined that Lathan's amended complaint did not technically substitute Willard Ryals and Ryals Real Estate for fictitiously named parties in the original complaint; it added them and asserted a new cause of action. The court found that Willard Ryals and Ryals Construction were liable for the creditor judgment. Willard Ryals appealed, arguing that the trial court lacked jurisdiction over Lathan's amended complaint. Upon careful consideration of the trial court record and the applicable legal authority, the Supreme Court dismissed the case as void: "The trial court's attempt to treat Lathan's amended complaint as a new action was in words only and was not sufficient to commence a new action." Accordingly, the trial court did not have jurisdiction to enter its judgment against Willard Ryals and Ryals Real Estate.