Justia Contracts Opinion Summaries

Joe Iskra and Rani Singh, the plaintiffs, entered into a contract to purchase a house from Kenneth Vinoski. Before closing, they hired a home inspection service that discovered a leak in the attic. The plaintiffs requested Vinoski to repair the leak before the sale, and Vinoski contracted Bear Roofing, LLC, the defendant, for the repair. The plaintiffs alleged that they were intended third-party beneficiaries of the contract between Vinoski and Bear, and that Bear breached the contract and an associated express warranty. They also claimed that Bear negligently performed the contracted repairs.The Jefferson Circuit Court entered a summary judgment in favor of Bear, ruling that the plaintiffs were not intended third-party beneficiaries of the contract between Vinoski and Bear. The court reasoned that the plaintiffs failed to provide substantial evidence that Bear intended to bestow a direct benefit to them at the moment the contract was formed. The court also noted that the contract did not mention or refer to the plaintiffs, and there was no evidence that Bear intended for anyone other than Vinoski to receive the benefit of its work performance.On appeal, the Supreme Court of Alabama reversed the trial court's decision and remanded the case for further proceedings. The Supreme Court found that the plaintiffs presented evidence showing a genuine issue of material fact regarding whether Bear intended to bestow a direct benefit upon them. The court also found that the plaintiffs presented evidence demonstrating a genuine issue of material fact regarding whether they were covered under Bear's warranty. Lastly, the court found that the plaintiffs presented evidence showing that they had relied to their detriment on Bear's performance in repairing the leak, and that Bear had known that it had been hired to repair a leak noted in an inspection report prepared in contemplation of the imminent sale of the house. Therefore, the trial court erred in entering a summary judgment in favor of Bear on the plaintiffs' negligence claim. View "Iskra v. Bear Roofing, LLC" on Justia Law

The case involves National Trust Insurance Company ("National Trust") and Whaley Construction Company, Inc. ("Whaley"). Whaley was a general contractor on a project at a Lockheed Martin facility. Smith's Inc. of Dothan ("Smith's of Dothan") was a subcontractor hired to install an HVAC system on the project, and Phoenix II Contracting, LLC ("Phoenix II"), was a subcontractor hired to install the roofing. Smith's of Dothan's subcontract with Whaley provided that Smith's of Dothan would name Whaley and Lockheed Martin as additional insureds on its liability policies. National Trust issued Smith's of Dothan a commercial-package policy and a commercial-liability umbrella policy ("the subject policies") through Harmon-DennisBradshaw, Inc. ("HDB"). Whaley and Lockheed Martin were additional insureds under the subject policies. Timothy L. Bozeman was working as a roof laborer on the Lockheed Martin project when he fell through an opening in the roof and was seriously injured. Bozeman sued Phoenix II and various fictitiously named defendants in the circuit court ("the state-court action").National Trust commenced a declaratory-judgment action in the Northern Division of the United States District Court for the Middle District of Alabama ("the federal-court action"). The complaint in the federal-court action named Smith's of Dothan, Whaley, Lockheed Martin, and the estate as respondents and included the following factual allegations: "25. A dispute has arisen as to whether Respondents Smith's [of Dothan], Whaley, and Lockheed [Martin] are entitled to a defense and indemnification as to the claims asserted in the Underlying Lawsuit. National Trust asserts that, based on the terms, conditions, and exclusions contained in the [subject] policies, Respondents Smith's [of Dothan], Whaley, and Lockheed [Martin] are not entitled to a defense in the underlying lawsuit or indemnification against settlement, award, or judgment therefrom.On April 14, 2023, Whaley filed a third-party complaint against National Trust and Continental Insurance Company ("Continental") in the state-court action. The third-party complaint alleged claims of breach of contract and bad-faith refusal to pay against National Trust and Continental. On May 4, 2023, National Trust filed a motion to dismiss in the state-court action. In the motion, National Trust asked the circuit court "to reconsider its previous Order … dated April 21, 2023, granting Whaley's motion for leave to file a third-party complaint against [National Trust] and further move[d] pursuant to Rule 12(b)(6) of the Alabama Rules of Civil Procedure to dismiss both of Whaley's claims asserted against [National Trust] in the Third-Party Complaint." In its motion, National Trust asserted that Whaley's claims against it were due to be dismissed "because they were compulsory counterclaims that Whaley was required to file in the federal[-court] action pursuant to § 65-440, Ala. Code 1975." On June 7, 2023, the circuit court entered an order denying National Trust's motion to dismiss the third-party complaint. National Trust subsequently filed a petition for a writ of mandamus asking this Court to direct the circuit court to enter an order dismissing National Trust from the state-court action.The Supreme Court of Alabama granted National Trust's mandamus petition in part and issued a writ directing the circuit court to enter an order dismissing Whaley's breach-of-contract and bad-faith claims in the state-court action that were based on National Trust's refusal to indemnify Whaley for the amount it had paid to settle Lockheed Martin's indemnity claim against it. However, the court denied the petition as to Whaley's contingent claims for a defense and indemnification. View "Ex parte National Trust Insurance Company" on Justia Law

This case involves a dispute among Players Recreation Group, LLC, an Alabama limited-liability company, three of its members, Jason L. McCarty, Felix McCarty, and Doyle Sadler, and S&M Associates, Inc., a company owned by Sadler. The LLC, established in 1999, owns and operates a bowling alley known as 'the Super Bowl.' In 2003, S&M, a company owned by Sadler, loaned the LLC $150,000, which is evidenced by a promissory note. In 2006, the Super Bowl began incurring substantial losses, and the LLC ultimately defaulted on the promissory note payable to S&M. In July 2015, S&M and Sadler sued the LLC and the other members of the LLC, asserting a breach-of-contract claim and a claim seeking an accounting. In August 2015, the LLC, Jason, and Felix filed an answer and a counterclaim, alleging that Sadler had breached his duty of loyalty and his duty of care to the LLC.The case proceeded to a bench trial. The parties initially stipulated that the LLC owed S&M a total of $310,139.66 on the promissory note; the trial court ultimately entered a judgment against the LLC for that amount based on the parties' stipulation. The case was then tried solely on the counterclaims asserted against Sadler by the LLC, Jason, and Felix. The trial court entered a judgment against Sadler on the counterclaims, based on its findings that Sadler had breached not only a duty of loyalty and a duty of care to the LLC, but also the implied covenant of good faith and fair dealing owed to the LLC. The trial court assessed damages against Sadler in the amount of $368,167.92.On appeal to the Supreme Court of Alabama, Sadler argued that the trial court erred insofar as it entered a judgment against him on the counterclaims asserted against him by the LLC, Jason, and Felix. The Supreme Court of Alabama agreed and reversed the judgment entered against Sadler on the counterclaims asserted against him because there was no evidence to support findings that Sadler had breached the duty of loyalty and the duty of care owed to the LLC or the implied covenant of good faith and fair dealing, and remanded the case to the trial court for the entry of a judgment consistent with this opinion.On remand, S&M and Sadler filed a motion for attorney's fees, costs, and expenses. The trial court denied the motions for attorney's fees, costs, and expenses. The trial court also found that the LLC had incurred $2,713,230.33 in expenses without contribution by Sadler or Scott Montgomery. That finding was not disturbed on appeal and has become the law of the case. The trial court took judicial notice that Jason and Felix McCarty have perfected, as the remaining members of the LLC, that claim or debt by filing a second mortgage with the Probate Court of Jefferson County, which second mortgage is inferior to the mortgage held by the late Ferris Ritchey’s real estate company, and the perfection of this claim makes it a priority over and superior to the claims of other creditors, including S&M.S&M and Sadler appealed the trial court's order on remand. The Supreme Court of Alabama affirmed the trial court's order on remand insofar as it denied S&M's and Sadler's requests for attorney's fees and costs, reversed the order insofar as it addressed the LLC's mortgage executed in favor of Jason and Felix and its purported priority, and remanded this case with instructions for the trial court to set aside that portion of its order that addressed the LLC's mortgage and its purported priority. View "S&M Associates, Inc. v. Players Recreation Group, LLC" on Justia Law

The case involves Alabama Relocation Services, Inc. ("ARS") and Patricia Buchannan, who filed a complaint against COWS USA, LLC ("COWS"), Trailpods Acceptance Corporation ("Trailpods"), Michael Frank, Ana Frank, and Leonard Rosenberg ("the COWS defendants"). ARS is a moving and storage company based in Mobile, Alabama, and Buchannan is its vice president. COWS is a Florida-based company that sells portable storage containers. ARS and Buchannan allege that they entered into a dealership agreement with COWS, which required them to lease equipment from Trailpods and finance the purchase of COWS equipment through Ascentium Capital, LLC ("Ascentium"). However, they claim that despite making payments, the promised equipment was never delivered.The COWS defendants filed a motion to dismiss the claims, arguing that the dealership agreement contained a forum-selection clause requiring disputes to be brought in Miami-Dade County, Florida. The Mobile Circuit Court denied their motion to dismiss. The COWS defendants then petitioned the Supreme Court of Alabama for a writ of mandamus, seeking an order directing the Mobile Circuit Court to vacate its order denying their motion to dismiss and to enter an order dismissing the claims.The Supreme Court of Alabama granted the petition. The court found that the dealership agreement's forum-selection clause clearly required actions between the parties to be brought in Miami, Florida. The court concluded that ARS and Buchannan failed to clearly establish that enforcement of the forum-selection clause would be unreasonable. The court directed the Mobile Circuit Court to vacate its order denying the COWS defendants' motions to dismiss and to enter a new order dismissing the claims against the COWS defendants, without prejudice. View "Ex parte Cows USA, LLC" on Justia Law

In this case, Fred Zackery sought access to confidential settlement agreements between the Water Works and Sewer Board of the City of Gadsden ("the Board") and various carpet and chemical manufacturers. Zackery requested these agreements under the Open Records Act. The Board had sued the manufacturers, alleging they contaminated the Board's raw water intake. The Board settled with all the manufacturers and planned to use the settlement funds to build and maintain a new water-treatment facility.Zackery, a citizen of Gadsden and a local radio station manager, intervened in the lawsuit specifically to request disclosure of the settlement agreements. The trial court granted his intervention but ruled that the Board didn't have to disclose the agreements until it had accepted a bid for the construction of the water-treatment facility. This decision was grounded in Alabama's Competitive Bid Law, which is designed to guard against corruption and favoritism in awarding contracts for public projects.The Supreme Court of Alabama upheld the trial court's decision, affirming that the immediate disclosure of the settlements could interfere with the competitive bid process, potentially driving bids upwards and leaving fewer funds for the long-term operation and maintenance of the new facility. This situation, the court reasoned, could cause rate hikes for the Board's customers. Therefore, the court concluded that an exception to the Open Records Act justified nondisclosure of the settlement agreements until the competitive-bid process was complete. View "Zackery v. Water Works and Sewer Board of the City of Gadsden" on Justia Law

In the case before the Supreme Court of Alabama, David and Anna Roberson appealed from an order by the Jefferson Circuit Court that dismissed their indemnification claim against Drummond Company, Inc. ("Drummond"). David, a former vice president of Drummond, was convicted of bribery in federal court for approving payments that were part of an environmental public-relations campaign. After his conviction, Drummond continued to pay David's salary and benefits for a period, but later terminated his employment. The Robersons then sued Drummond and others, asserting multiple claims, including one for indemnification. They alleged that Drummond had directed David to make the payments that were later deemed to be bribes, and that he had incurred damages as a result, for which Drummond had a duty to indemnify him. The circuit court dismissed the indemnification claim, ruling that indemnification generally comes into play in a contractual arrangement, and the Robersons had neither produced nor alleged the existence of a contract or agreement establishing such a duty. The Robersons appealed this decision.The Supreme Court of Alabama affirmed the lower court's decision. The court found that the losses the Robersons sought to recover were not indemnifiable, as they were not judicially imposed liabilities to a third party or out-of-pocket expenses that David incurred in processing the invoices. The court also found that the Robersons failed to demonstrate they had sufficiently pleaded a claim for common-law indemnification. The court rejected the Robersons' argument that Drummond's resolution to pay David's salary and benefits constituted a contract for indemnification, stating that the obligation they alleged Drummond undertook was not a promise to indemnify David, but simply a promise not to fire him. Finally, the court found that the Robersons had failed to preserve their claim for court-ordered indemnification under the Alabama Business and Nonprofit Entity Code for appellate review, as they had not asserted this argument in the trial court. View "Roberson v. Drummond Company, Inc." on Justia Law

In November 2015, Joseph H. Reeves contracted with Wilson Floor & Wallcovering, Inc. ("Wilson Floor") and its owner, Tom Wilson, to replace the wood flooring in his home. After the work was completed, Reeves found the new flooring to be unlevel and claimed that Wilson Floor and Tom Wilson refused to make further repairs. Reeves filed a complaint against "Tom Wilson" and "Wilson Flooring" in May 2017, alleging negligence, fraudulent suppression, fraudulent inducement, and breach of contract.The Supreme Court of Alabama reviewed the case after the Autauga Circuit Court dismissed Reeves's claims against Wilson Floor due to "lack of service" under Rule 4, Ala. R. Civ. P. Although it was undisputed that Reeves's attempted service on Wilson Floor was ineffective, the Supreme Court of Alabama concluded that Wilson Floor was adequately informed of Reeves's action against it, and hence, the trial court's dismissal of his claims against Wilson Floor was prohibited under Rule 4(i)(2)(C).The Court noted that while Tina Wilson, Tom Wilson's wife, was not Wilson Floor's registered agent, she was one of the company's listed officers and could accept service on its behalf. As Tina had actually received the summons and the complaint, the Court established that Wilson Floor was informed of Reeves's action within time to avoid default. Therefore, the Supreme Court of Alabama reversed the trial court's order dismissing Reeves's action against Wilson Floor and remanded the case for further proceedings. View "Reeves v. Wilson Floor and Wallcovering, Inc." on Justia Law

In this case, Richard Mullen and Cheryl Mullen petitioned the Supreme Court of Alabama for a writ of mandamus to direct the Jefferson Circuit Court to transfer their case to the Walker Circuit Court. The case at hand arises from a dispute between the Mullens and Karl Leo and Fay Leo, who purchased a parcel of property from the Mullens in Walker County. The Leos alleged that the Mullens, unlicensed homebuilders, sold them a residence with multiple latent defects and refused to remedy these defects. The Leos filed a suit against the Mullens in the Jefferson Circuit Court, where the Mullens resided, claiming breach of contract, breach of the implied warranty of habitability, fraud, negligence, and fraudulent suppression.The Mullens sought dismissal or transfer of the case to Walker County, arguing that as the property in question was located there, it was the appropriate venue. The Jefferson Circuit Court, however, denied their motion. The Mullens then petitioned the Supreme Court of Alabama, arguing that Walker County was the proper venue due to the location of the property and the Leos' request for equitable relief in their complaint.The Supreme Court of Alabama granted the Mullens' petition for a writ of mandamus. The Court found that the property sold by the Mullens to the Leos in Walker County was the "subject matter" of the action within the meaning of Rule 82(b)(1)(B). Therefore, the Court directed the Jefferson Circuit Court to vacate its order denying the Mullens' motion to transfer the action and to transfer the case to the Walker Circuit Court. View "Ex parte Mullen" on Justia Law

In Alabama, RAM-Robertsdale Subdivision Partners, LLC contracted Construction Services LLC, d/b/a MCA Construction, Inc. ("MCA") to build infrastructure for a proposed housing subdivision. The relationship between the two parties deteriorated, leading to a lawsuit by RAM-Robertsdale against MCA for various claims including breach of contract, negligence, and negligent misrepresentation, among others. MCA counterclaimed and also filed third-party claims against Retail Specialists, LLC, a member of RAM-Robertsdale, and Rodney Barstein, a corporate officer for Retail Specialists and RAM-Robertsdale, for breach of contract, fraud, unjust enrichment, and defamation. The RAM defendants moved for summary judgment on MCA's counterclaims and third-party claims, arguing that MCA was not properly licensed when it signed the contract, thus making the contract void for public policy. The circuit court granted the RAM defendants' motion for summary judgment and certified its judgment as final.On appeal, the Supreme Court of Alabama found that the circuit court had exceeded its discretion in certifying its judgment as final under Rule 54(b), Ala. R. Civ. P., because the claims pending below and those on appeal were closely intertwined, arising from the same contract and the parties' performance under that contract. The Court noted that if the contract was indeed void for public policy, then neither party would be able to enforce it, impacting the remaining claims pending in the circuit court. As the Court found that deciding the issues at this stage would create an intolerable risk of inconsistent results, it dismissed the appeal for lack of jurisdiction. View "Construction Services, LLC v. RAM-Robertsdale Subdivision Partners, LLC" on Justia Law

In this case, Eli Global, LLC, and Greg Lindberg appealed a summary judgment entered against them by the Mobile Circuit Court in Alabama. The dispute involved Eli Global's alleged failure to fulfill its obligations on a promissory note and Lindberg's alleged failure to fulfill his obligations on a guaranty of that promissory note. The promissory note and guaranty were part of an agreement to purchase a healthcare company. Eli Global and Lindberg also challenged the circuit court's award of attorney fees and expenses to the plaintiffs.The Supreme Court of Alabama affirmed the lower court's judgment finding Eli Global and Lindberg liable based on the promissory note and the guaranty, and its award of the principal amount plus interest due based on that liability. The court found that the promissory note was not a negotiable instrument under New York law, and even if it was, the plaintiffs were not required to prove who possessed the promissory note because Eli Global and Lindberg waived that argument in the lower court. In addition, the court found that one of the plaintiffs did not release his claims against Lindberg that were based on the guaranty.However, the court remanded the case back to the lower court to provide a more detailed explanation for the award of attorney fees and expenses. The court found that the lower court's order did not provide sufficient explanation on how it determined the award of attorney fees and expenses. The lower court was instructed to return its explanation to the Supreme Court within 42 days. View "Eli Global, LLC v. Cieutat" on Justia Law