Justia Alabama Supreme Court Opinion Summaries

MTA, Inc. appealed a circuit court order which held that its claims against Merrill Lynch, Pierce, Fenner & Smith, Inc. were subject to an arbitration agreement and compelling MTA to arbitrate those claims. MTA entered into a deferred compensation agreement ("the DCA") with its employee, Yvonne Sanders. Pursuant to the terms of the DCA, MTA was obligated to pay Yvonne $270,000 in 120 equal monthly installments beginning the month following her 50th birthday or, in the event Yvonne died before reaching her 50th birthday, to pay her children, Tiffany Sanders and Roderick Dedrick, a total of $750,000 in 120 equal monthly installments beginning the month after her death. MTA thereafter obtained a $1,000,000 life insurance policy on Yvonne to fund the death benefit provided in the DCA in the event it became payable. On October 22, 1999, Yvonne died at the age of 43. MTA thereafter received the $1,000,000 it was owed under the life-insurance policy. However, MTA did not begin making payments to Tiffany and Roderick as called for by the DCA. Instead, Tiffany and Robert asked MTA to establish a rabbi trust to handle the payments, presumably to allow for more favorable tax treatment for Tiffany and Roderick. MTA executed a trust agreement with Thomas W. Dedrick, Sr., Tiffany and Roderick's uncle and a licensed broker employed by Merrill Lynch, establishing the trust and depositing into it an initial sum of $506,450. The trust agreement also provided that Thomas would act as trustee of the trust. Subsequent to the creation of the trust some intermittent payments were made from the trust to Tiffany and Roderick before payments ceased in late 2009. The sum total of the payments made did not equal $750,000. In 2011, Tiffany and Roderick filed an action against MTA asserting breach-of-contract and unjust-enrichment claims and seeking $213,777, the amount they allege was still due them pursuant to the DCA. Merrill Lynch moved to compel arbitration of MTA's claims against it pursuant to the arbitration provisions in the account-authorization form. MTA opposed that motion, arguing that it was not a party to those contracts, and, following a hearing on the matter, the trial court granted Merrill Lynch's motion to compel arbitration and dismissed MTA's third-party claims against Merrill Lynch. Upon review, the Supreme Court reversed that order, holding that MTA was not a signatory to those contracts and that the scope of the arbitration provisions in those contracts was too narrow to encompass disputes between Merrill Lynch and other entities not a party to those contracts. The case was remanded for further proceedings. View "MTA, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc." on Justia Law

BancorpSouth Bank petitioned the Supreme Court for a writ of mandamus to direct the trial court to vacate its order denying the bank's motion to strike a jury demand in the complaint filed against it by Plaintiff Thomas L. Busby and to enter an order granting the Bank's motion, thereby enforcing Busby's waiver of a jury trial. The dispute arose from a construction loan to which Plaintiff Busby guaranteed. The loan agreement contained the jury trial waiver in the event of a dispute between the parties. The borrower defaulted on the loan, and the bank sought payment from Plaintiff. Plaintiff sued the bank, alleging multiple counts of fraud, misrepresentation and breach of contract. Upon review, the Supreme Court concluded that the bank demonstrated that it had a clear legal right to have the jury demand stricken. Accordingly the Court granted the petition, issued the writ, and directed the trial court to enter an order granting the bank's motion. View "Busby v. BancorpSouth Bank" on Justia Law

According to Braden Furniture Company, Inc., between 2003 and 2010, Bonnie Manning, an assistant bookkeeper, accessed Braden Furniture's accounting program and created over 200 unauthorized checks, totaling over $470,000, that she then deposited in her account at Union State Bank. The majority of the checks did not identify a payee. Braden Furniture sued Union State Bank, RBC Bank, and Manpower, Inc., alleging common-law negligence and wantonness and violations of sections 7-3-404(d), 7-3-405(b), and 7-3-406, Ala. Code 1975. Union State Bank moved for a summary judgment. The trial court entered summary judgment for the Bank. Upon review, the issue before the Supreme Court was whether provisions in the Alabama Uniform Commercial Code ("the UCC") displaced common-law claims of negligence and wantonness when a drawer seeks to recover the loss of payment for unauthorized checks. Braden Furniture contended that the trial court erred in holding that the provisions of the UCC displaced its common-law claims of negligence and wantonness because, allowing its common-law claims to proceed did not "create rights, duties and liabilities inconsistent" with the UCC. The Supreme Court concluded that the trial court did not err in entering a summary judgment for Union State Bank in this regard. View "Braden Furniture Company, Inc. v. Union State Bank " on Justia Law

Morgan Keegan & Company, Inc. and Regions Bank (hereinafter referred to collectively as "Regions") appealed an order of the Baldwin Circuit Court which granted in part and denied in part their motions to compel arbitration in an action filed against them by Baldwin County Sewer Service, LLC ("BCSS"). In 2001 BCSS began discussing with AmSouth Bank ("AmSouth"), the predecessor-in-interest to Regions Bank, options to finance its existing debt. AmSouth recommended that BCSS finance its debt through variable-rate demand notes ("VRDNs").1 In its complaint, BCSS alleged that in late 2008 it received a notice of a substantial increase in the variable interest rates on its 2002, 2003, 2005, and 2007 VRDNs, which constituted BCSS's first notice that the interest-rate-swap agreements recommended by Regions did not fix the interest rate on the VRDNs but, instead, exposed BCSS to "an entirely new increased level of market risk in the highly complex derivative market." BCSS sued Regions Bank and Morgan Keegan asserting that Regions falsely represented to BCSS that swap agreements fixed BCSS's interest rates on all the BCSS debt that had been financed through the VRDNs. Following a hearing on the motions to compel arbitration, the trial court entered an order in which it granted the motions to compel arbitration as to BCSS's claims concerning the credit agreements but denied the motions to compel arbitration as to BCSS's claims concerning the failure of the swap transactions to provide a fixed interest rate. The trial court reasoned that the "Jurisdiction" clause in a master agreement, in combination with its merger clause, "prevent[ed] any argument that the VRDN arbitration agreement applies to disputes concerning the swap agreements" and that those clauses demonstrated that it was "the parties' intention, as it relates to the interest-swap agreement and any transaction related to that agreement, that the parties would not arbitrate but instead [any dispute] would be resolved by proceedings in a court of competent jurisdiction." Upon review, the Supreme Court concluded that Regions presented evidence of the existence of a contract requiring arbitration of the disputes at issue. The Court reversed the order of the trial court denying the motions to compel arbitration of BCSS's claims concerning the master agreement and the swap agreement and remanded the case for further proceedings. View "Regions Bank v. Baldwin County Sewer Service, LLC " on Justia Law

Regions Bank ("Regions"), as sole trustee of the J.F.B. Lowrey Trust ("the Lowrey Trust"), appealed a circuit court's order that denied Regions' motion to award it attorney fees and costs. Sam G. Lowrey, Jr., and Shelby Lowrey Jones, two of the current beneficiaries of the Lowrey Trust ("the beneficiaries") cross-appealed the trial court's judgment in favor of Regions on their breach-of-fiduciary-duty claim. The beneficiaries claimed that Regions failed to protect and preserve the assets of the Lowrey Trust, which consisted primarily of approximately 20,000 acres of timberland located in Monroe and Conecuh Counties and which have been the subject of much intra-family litigation. The trial court entered a detailed order in favor of Regions, rejecting the beneficiaries' claims of mismanagement of the trust assets and taxing costs against the beneficiaries. Regions filed a bill of costs and a supplemental bill of costs detailing all the expenses incurred in defending the claim, and attaching supporting documentation. The beneficiaries filed a motion to review taxation of costs and a motion to vacate the judgment. The trial court did not rule on the motions, and all post-trial motions were deemed denied by operation of law. Regions timely appealed, and the beneficiaries filed a cross-appeal. Upon review of the record of the five-day bench trial and the considerable documentary evidence, the Supreme Court held that there was substantial evidence to support the trial court's decision on the beneficiaries' breach-of-fiduciary-duty claim. Thus, the Court affirmed the trial court's judgment in favor of Regions on that claim. The Court reversed the trial court's ruling on Regions' motion for attorney fees, and remanded this case back to the trial court for a hearing on Regions' attorney-fee motion to consider the reasonableness of the attorney fee. View "Regions Bank v.Lowrey" on Justia Law

The United States Bankruptcy Appellate Panel of the Court of Appeals for the Ninth Circuit ("the BAP") certified a question to the Alabama Supreme Court: "In Alabama, is a 'default' judgment premised upon discovery sanctions or other post-answer conduct of the defendant sufficient to support the application of issue preclusion in a later proceeding?" Debtor-Defendant Anthony Malfatti was one of three principals of TA Financial Group ('TAF') purportedly designed to assist credit card holders in arbitration of disputes with the card issuers. The arbitration providers were selected by the card holders from a list provided by TAF. Among the arbitration providers was Arbitration Forum of America, Inc. ('AFOA'). AFOA was not conducting legitimate arbitrations; every arbitration resulted in an award in favor of the card holder, which was then reduced to judgment. Malfatti claims he was unaware that AFOA's practices and the judgments stemming therefrom were illegitimate. At some time after the banks involved learned of the judgments, they filed cross-complaints against the card holders to set aside the judgments as fraudulently obtained. In September 2005, the banks, including Bank of America, N.A. (USA) filed Amended Third Party Complaints against, among others, Malfatti and TAF, alleging tortious interference with contract, abuse of process, wantonness, and civil conspiracy, and sought an injunction against further arbitrations. The Banks moved for default judgments against Malfatti and TAF for failing to comply with discovery orders, repeated failures to appear for depositions, and failure to respond to written discovery. Malfatti and TAF filed a motion to set aside the defaults. The court found Malfatti and TAF to be jointly and severally liable for compensatory damages, awarded punitive damages against Malfatti, and found Malfatti to be liable for punitive damages awarded against TAF under the alter ego doctrine. Malfatti filed for Chapter 7 bankruptcy the Banks filed an adversary proceeding alleging the debt owed to them by Malfatti was nondischargeable. Upon review, the Alabama Supreme Court answered the certified question in the negative: "[f]or purposes of determining whether an issue is precluded by the doctrine of collateral estoppel, Alabama law makes no distinction between a simple default and a penalty default." View "Malfatti v. Bank of America, N.A." on Justia Law

Regions Bank, in its fiduciary capacity as trustee or cotrustee of various trusts, Delores Ancell, and David Puckett filed two permissive appeals, pursuant to Rule 5, Ala. R. App. P., to challenge the Jefferson Circuit Court's orders denying the trustees' motions to dismiss in part Ernest Kramer's and Kenyon R. Kirkland's complaints filed against the trustees. In his complaint, Kramer alleged that the trustees' management of the assets held by the Kramer revocable trust constituted a breach of fiduciary duty, negligence, wantonness, breach of contract, fraud, reckless misrepresentation, negligent misrepresentation, suppression, violation of the Alabama Securities Act. Finding that the trustees failed to support their argument with relevant legal authority, the Supreme Court affirmed the trial court's orders. View "Regions Bank v. Ernest Kramer " on Justia Law

Fred and Nancy Eagerton appealed a summary judgment granted in favor of Vision Bank in the bank's action seeking to enforce the Eagertons' obligations under certain guaranty contracts. "Dotson 10s, LLC" was organized to operate a tennis club in Fairhope. Dotson 10s executed a note and security agreement with Vision Bank, and the bank obtained in exchange, unlimited personal guarantees from John and Elizabeth Dotson, and limited guarantees from the Eagertons. The Dotsons executed a second loan to which the Eagertons were not a party. The Dotsons defaulted on both loans, and the bank sued the Dotsons as the primary obligors, and the Eagertons as personal guarantors. Dotson 10s then filed for bankruptcy protection. Part of the reorganization plan provided in part that the two loans would be combined and paid in full. Dotson 10s subsequently defaulted on the bankruptcy plan. The properties were foreclosed and sold, with the proceeds applied to the consolidated loan. The circuit court then entered a partial summary judgment in favor of the bank against Dotson 10s, but denied the motion as to the Eagertons. The bank argued that the Eagertons were still responsible under their guaranty contracts for the deficiency remaining on the consolidated loan. The Eagertons argued that the creation of the consolidated loan without their knowledge or consent, operated to discharge them from any further obligations under their guaranty contracts. Upon review, the Supreme Court agreed, and reversed the circuit court's judgment in favor of the bank, and remanded the case for further proceedings. View "Eagerton v. Vision Bank " on Justia Law

Capmark Bank appealed a preliminary injunction entered in favor of RGR, LLC; MB Park, LLC; TTM MB Park, LLC; Robert G. Randall; and T. Todd Martin III (referred to collectively as "RGR") which enjoined Capmark from foreclosing on certain real property that served as the primary collateral for a loan from Capmark to RGR, LCC, MB Park, LLC, and TTM MB Park, LLC. Upon review, the Supreme Court concluded RGR failed to establish the requisite elements entitling it to a preliminary injunction. The Court therefore reversed the trial court's judgment issuing the injunction. View "Capmark Bank v. RGR, LLC " on Justia Law

Robert S. Grant Construction, Inc. (the corporation), Robert S. Grant (RSG), and Pam E. Grant (PEG) (collectively referred to as "the Grants") appealed an order striking their jury demands in an action commenced by Frontier Bank (the bank) against the Grants and others alleging breach of contract, fraud, and the fraudulent conveyance of real estate. This case arose out of a loan from the bank to the corporation. The loan ultimately involved a number of related agreements, including a construction-loan agreement between the corporation and the bank and a series of "continuing guaranties," whereby RSG personally guaranteed repayment of the loan. The Supreme Court was unable to reach the merits of the Grants' contentions, and dismissed the appeal because, despite the invocation of Rule 54(b), the trial court's order was not final and appealable. View "Robert S. Grant Construction, Inc. v. Frontier Bank " on Justia Law