Justia Alabama Supreme Court Opinion Summaries

Articles Posted in Business Law
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Warren Averett Companies, LLC, sought a writ of mandamus to direct a circuit court to vacate its order denying Warren Averett's motion to strike the jury demand asserted by Gerriann Fagan and to enter an order granting the motion to strike the jury demand. The underlying dispute involved a business proposition Warren Averett made to Fagan to to build a human-resources consulting practice. Fagan would wind down the operations of her company, The Prism Group; Fagan would then become a member of Warren Averett, and Warren Averett would purchase The Prism Group's equipment and furniture, assume responsibility for The Prism Group's leases; and that Warren Averett would assume The Prism Group's membership in Career Partners International, LLC. The "Standard Personal Service Agreement" ("the PSA") entered into by Fagan and Warren Averett drafted by Warren Averett included, in pertinent part, a dispute-resolution clause. Fagan resigned from Warren Averett after a salary dispute, and, on February 28, 2019, Fagan filed a demand for arbitration with the American Arbitration Association ("AAA"). The AAA determined that, under its rules, Fagan owed $300 and Warren Averett owed $1,900. The AAA also stated that any dispute regarding the filing fees should be raised before the arbitrator for a determination once all the filing requirements, including payment of the fees, had been satisfied. Warren Averett refused to pay its share of the filing fees as requested by the AAA, and the AAA closed the file in the matter. Thereafter, Fagan sued Warren Averett alleging multiple causes of action. Fagan demanded a jury trial. Warren Averett moved to dismiss the claims, and concurrently moved to compel arbitration. The Alabama Supreme Court determined Fagan did not show prejudice by the almost two-year delay between the filing of Fagan's amended complaint and the filing of Warren Averett's motion to strike the jury demand: "The trial court granted Warren Averett's motion to compel arbitration, and Fagan sought review of that decision. We reversed that decision; on remand, the trial court set a scheduling conference, and Warren Averett filed its motion to strike Fagan's jury demand. Although there was a delay between the time that Fagan demanded a jury and the time that Warren Averett sought to strike that demand, Fagan has not shown that she was prejudiced by that passage of time." Warren Averett's petition was granted and the writ issued. View "Ex parte Warren Averett Companies, LLC." on Justia Law

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George Russell, doing business as Carl's Country, appealed a circuit court order dismissing his declaratory-judgment action, pursuant to Rule 12(b)(6), Ala. R. Civ. P., because the action did not state a justiciable controversy. Carl's Country was a bar operated under a Class 1 lounge liquor license in Autauga County, issued by the Alabama Alcoholic Beverage Control Board (ABC Board). The bar was located in Autauga County, outside the corporate limits of the City of Prattville ("the City") but within the City's police jurisdiction. At the time of Russell's declaratory-judgment action, there was no no law or ordinance in effect authorizing the sale of draft beer in Autauga County. In 2013, the State legislature enacted a statute pertaining to the City's authority to regulate the sale and distribution of draft beer. In turn, the City enacted an ordinance allowing for on-premises consumption of draft beer sold by licensees of the ABC Board within the City's corporate limits and police jurisdiction. In May 2020, after the enactment of Ordinance, the sheriff of Autauga County ordered Russell to cease and desist selling draft beer at his bar; Russell did not comply. The ABC Board also contacted Russell's draft-beer distributors and ordered them to cease delivering draft beer to the bar. Thereafter, an attorney for the Autauga County Commission, an attorney for the ABC Board, and the "City of Prattville- Police Committee" discussed whether the City could enact an ordinance authorizing the City to regulate the sale and distribution of draft beer within its police jurisdiction in Autauga County. It was determined that the City did not have the authority to regulate the sale and distribution of draft beer in the portions of Autauga County outside the City's corporate limits because such authority was reserved for the local governing body of Autauga County, i.e., the County Commission, and not the City. Russell, acting pro se, filed suit seeking a declaration the City had the authority to enact an ordinance extending the sale of draft beer to its police jurisdiction and, specifically, a judgment declaring the legality of draft-beer sales at his bar. The Alabama Supreme Court affirmed, finding that Russell did not claim the ordinance at issue was either invalid or unreasonable. There was, therefore, no bona fide justiciable controversy to be settled between Russell and the defendants. View "Russell d/b/a Carl's Country v. Sedinger, et al." on Justia Law

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Sandra Penney appealed a circuit court judgment which concluded, among other things, that she, Michael Shay Penney (“Shay”) and Emily Penney had been partners in an implied partnership to operate a poultry-farming business in Marshall County, Alabama. The trial court found that a loan entered into by the parties in 2002 (one of many loans), the members shared in the profits and losses, and certain actions taken with regard to business property implied a general partnership. Sandra appealed the judgment, arguing the trial court erred in treating certain real property as partnership property, and when it calculated her contribution to the partnership. She also argued the judgment was inequitable and contrary to Alabama Partnership Law. Finding no reversible error however, the Alabama Supreme Court affirmed the trial court. View "Penney v. Penney et al." on Justia Law

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Caterpillar Financial Services Corporation ("CFS") petitioned the Alabama Supreme Court for mandamus relief from a circuit court order purporting to grant a motion to set aside a default judgment in favor of CFS in its action against Horton Logging, LLC ("HL"), and Gary Horton ("Horton"). Because the Supreme Court found the trial court's order purported to grant a successive postjudgment motion, over which the trial court had no jurisdiction, it granted CFS's petition and issued the writ. View "Ex parte Caterpillar Financial Services Corporation." on Justia Law

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Vectus 3, Inc., sued Shorter Brothers, Inc., and its owners for breaching an asset-purchase agreement and related claims. In doing so, Vectus asked the trial court to pierce Shorter Brothers' corporate veil and hold Shorter Brothers' owners personally liable for the company's actions. The trial court granted complete relief to Vectus and awarded it damages, leading defendants to appeal to the Alabama Supreme Court. Vectus cross-appealed, arguing that the damages awarded were insufficient. Vectus operated FedEx Ground delivery routes for several years before its owner decided to sell its assets. Brothers Joseph Shorter and Jason Shorter expressed interest in purchasing those assets. Shorter Brothers entered into an asset purchase agreement ("the Agreement") with Vectus in October 2018. Because of concerns that Shorter Brothers would not obtain financing by the Agreement's closing, the parties provided a financing contingency in the Agreement. Shorter Brothers failed to obtain financing. As a result, it paid a downpayment and a monthly rental fee for approximately six months. It ceased making any payments after June 2019. The Alabama Supreme Court found no reversible error in the trial court's judgment. Accordingly, judgment was affirmed as to the Shorter Brothers' appeal and Vectus' cross-appeal. View "Shorter Brothers, Inc.,et al. v. Vectus 3, Inc." on Justia Law

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Edward Wrenn ("Edward") and David Wrenn ("David") petitioned the Alabama Supreme Court for a writ of mandamus to direct a circuit court to vacate an order requiring Edward and David to disclose their personal income-tax returns to plaintiff Jeffrey Wright, and to enter a protective order shielding the tax returns from production. Wright alleged he contracted with A-1 Exterminating Company, Inc. ("A-1 Exterminating"), for periodic termite treatments of his house. Over the course of several decades of treatments, Wright says, A-1 Exterminating used a "watered-down pesticide so weak that it may only kill ants and 'maybe' spiders." A-1 Exterminating allegedly concealed this practice from him. As a result, Wright contended his house was infected with and damaged by termites. Wright sued Edward, David, A-1 Exterminating, A-1 Insulating Company, Inc., and Wrenn Enterprises, Inc., alleging breach of warranty, breach of contract, negligence and wantonness. Wright sought to represent a class consisting of himself and other A-1 Exterminating customers allegedly harmed by defendants' actions. In support of his request to certify a class, Wright alleged that a "limited fund" existed that would support a class action under Rule 23(b)(1)(B), Ala. R. Civ. P. The Supreme Court held that for tax returns to be discoverable, they must be highly relevant, the litigant seeking their disclosure must show a compelling need for them, and their disclosure must be clearly required in the interests of justice, and that those standards have not been met in this case. Accordingly, the Court granted the petition and issued the writ to direct the trial court vacate its order requiring disclosure of the tax records. View "Ex parte Edward Wrenn & David Wrenn." on Justia Law

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Plaintiff Gerriann Fagan appealed a circuit court order granting defendant Warren Averett Companies, LLC's motion to compel arbitration. Fagan was the owner of The Prism Group, LLC, a human-resources consulting firm. In February 2015, Warren Averett approached her and asked her to join Warren Averett and to build a human-resources consulting practice for it. In February 2015, she agreed to join Warren Averett, entering into a "Transaction Agreement" which provided that: Fagan would wind down the operations of The Prism Group; Fagan would become a member of Warren Averett; Warren Averett would purchase The Prism Group's equipment and furniture; Warren Averett would assume responsibility for The Prism Group's leases; and that Warren Averett would assume The Prism Group's membership in Career Partners International, LLC. The Transaction Agreement further provided that Fagan would enter into a "Standard Personal Service Agreement" ("the PSA") with Warren Averett; that Fagan's title would be president of Warren Averett Workplace; and that Fagan would be paid in accordance with the compensation schedule outlined in the PSA. Fagan alleged that she subsequently resigned from Warren Averett when she was unable to resolve a claim that Warren Averett had failed to properly compensate her in accordance with the PSA. On or about February 28, 2019, Fagan filed a demand for arbitration with the American Arbitration Association ("AAA"). The employment-filing team of the AAA sent a letter dated March 4, 2019, to the parties informing them of the conduct of the arbitration proceedings. On April 18, 2019, the employment-filing team notified the parties that Warren Averett had failed to submit the requested filing fee and that it was administratively closing the file in the matter. On April 30, 2019, Fagan sued Warren Averett in circuit court. The Alabama Supreme Court determined Warren Averett's failure to pay the filing fee constituted a default under the arbitration provision of the PSA. Accordingly, the trial court erred when it granted Warren Averett's motion to compel arbitration. View "Fagan v. Warren Averett Companies, LLC" on Justia Law

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In appeal no. 1180355, Donald Porter, Marc Porter, Porter Capital Corporation, Porter Bridge Loan Company, Inc., Lowerline Corporation, CapitalPartners Leasing, Inc., and CapitalPartners Leasing, LLC (hereinafter referred to collectively as "the Porter defendants"), appealed a judgment entered in favor of Byron Porter Williamson in his action seeking specific performance of a shareholders agreement that Williamson had entered into with Donald and Marc ("the agreement"). In appeal no. 1180634, Williamson cross-appealed the same judgment seeking prejudgment interest on the full amount of the judgment. The question presented for the Alabama Supreme Court's review was whether the trial court exceeded the scope of Williamson's request for specific performance of the agreement by awarding Williamson a monetary sum representing the value of his interest in the Porter companies based on a valuation process that differed from the valuation process set forth in the agreement. The Porter defendants did not challenge the trial court's determination that Williamson's retirement was a "triggering event" under the agreement that required the Porter defendants to "acquire" Williamson's shares under paragraph 9 of the agreement. They argued only that the trial court awarded relief beyond the scope of a request for specific performance of the agreement. The Supreme Court concurred the trial court's determination of share value used an evaluation process inconsistent with the agreement. The cross-appeal was dismissed and the matter remanded for further proceedings. View "Porter, et al. v. Williamson" on Justia Law

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Consolidated appeals stemmed from an August 2012 transaction in which SMM Gulf Coast, LLC ("SMM"), purchased the assets of four salvage and recycling businesses in Alabama and Mississippi. After that transaction closed, Dade Capital Corporation ("Dade"), a creditor of one of the businesses whose assets were purchased by SMM, and Dade's president David Fournier, who owned stock in that same business, sued SMM, the four businesses that had sold their assets to SMM, and various individuals associated with those businesses alleging that Dade and Fournier should have received a greater share of the purchase price paid by SMM. Following a bifurcated trial, the trial court found that Dade and Fournier's claims were barred by a release agreement that Fournier executed in conjunction with the transaction and entered a judgment against them. SMM, two of the businesses that had sold their assets to SMM, and two individuals with ownership interests in those businesses subsequently moved the trial court to award them attorney fees, court costs, and litigation expenses in accordance with a prevailing-party provision in the release agreement. The trial court denied their motions, and those parties appeal, arguing that the prevailing-party provision entitles them to the requested awards and that they have not waived their right to recover the requested amounts. The Alabama Supreme Court determined that none of the reasons the trial court used as grounds for denial SMM's reimbursement motions was a proper basis for denial. Judgment was reversed and the matter remanded for the trial court to consider the evidence submitted by SMM and the appellant sellers in conjunction with their motions for reimbursement and to enter an appropriate award based on that evidence. View "Collier v. Dade Capital Corporation" on Justia Law

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Alabama imposed a license or privilege tax on tobacco products stored or received for distribution within the State ("the tobacco tax"). Under Alabama law, the Department of Revenue could confiscate tobacco products on which the tobacco tax had not been paid. Panama City Wholesale, Inc. ("PCW") was a wholesale tobacco-products distributor located in Panama City, Florida, and owned by Ehad Ahmed. One of PCW's customers, Yafa Wholesale, LLC ("Yafa"), was an Alabama tobacco distributor owned by Sayeneddin Thiab ("Thiab"). On October 10, 2018, Hurricane Michael destroyed the roof on PCW's warehouse. Department surveillance agents observed observed one of Thiab's vehicles being unloaded at two of the recently rented storage units. The day after that, agents observed one of Thiab's delivery vehicles being loaded with tobacco products from a recently rented unit following the storm. On October 23, 2018, the Department confiscated 1,431,819 cigars from four storage units leased by persons connected to Yafa and Thiab. It is undisputed that the tobacco tax had not been paid on the cigars. Ahmed filed an action against Vernon Barnett, as Commissioner of the Department, seeking a judgment declaring that the cigars were Ahmed's and that they were not subject to confiscation. The case was transferred to the Jefferson Circuit Court, PCW was substituted for Ahmed, and the parties were realigned to make the Commissioner of the Department the plaintiff and PCW the defendant in a civil forfeiture action. On PCW's motion, the circuit court entered a summary judgment in PCW's favor, ruling that the Commissioner failed to present substantial evidence that the cigars were in the possession of a retailer or semijobber, as the court believed was required by the confiscation statute. The Commissioner appealed. A divided Alabama Supreme Court reversed, concluding the circuit court erred in interpreting the confiscation statute to apply only to untaxed tobacco products in the possession of retailers and semijobbers, and because the Commissioner presented substantial evidence that the cigars were subject to confiscation under a correct interpretation of the statute, the Court reversed summary judgment and remanded for further proceedings. View "Alabama Department of Revenue v. Panama City Wholesale, Inc." on Justia Law