Articles Posted in Business Law

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Greenway Health, LLC, and Greenway EHS, Inc. (formerly EHS, Inc.) (collectively, "the Greenway defendants"), and Sunrise Technology Consultants, LLC, and Lee Investment Consultants, LLC (collectively, "the Sunrise defendants"), appealed separately a circuit court order denying their motion to compel the arbitration of certain claims asserted against them by Southeast Alabama Rural Health Associates ("SARHA"). Because the Alabama Supreme Court determined the Greenway defendants failed to establish the existence of a contract containing an arbitration provision, the Sunrise defendants' argument based on an intertwining-claims theory also failed. The Court therefore affirmed the trial court's denial of the Greenway defendants' and the Sunrise defendants' motions to stay proceedings and to compel arbitration. View "Greenway Health, LLC, and Greenway EHS, Inc. v. Southeast Alabama Rural Health Associates" on Justia Law

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The issue this case presented for the Alabama Supreme Court’s review was who had the power to determine the location of an arbitration proceeding: an arbitrator or Circuit Court. The Court concluded that, under the facts of this case, the arbitrator had that power; thus, reversed and remanded. View "Alliance Investment Company, LLC v. Omni Construction Company, Inc., a/k/a OCC, Inc" on Justia Law

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International Paper Company and three of its employees (collectively, "IPC") petitioned the Alabama Supreme Court for a writ of mandamus to direct the Wilcox Circuit Court to vacate its order denying IPC's motion to dismiss the underlying third-party action against it without prejudice based on improper venue. In 2015, Caterpillar Financial Services Corporation ("Caterpillar") entered into various loan and guaranty agreements with JRD Contracting, Inc. ("JRD") for the purchase of certain equipment. That equipment was to serve as collateral for the loans between Caterpillar and JRD. According to Caterpillar, JRD failed to pay the amounts due under the loan agreements, and, in September 2015 and again in December 2015, Caterpillar notified JRD of its intention to accelerate the loans and to make demand for the return of the equipment. In the summer of 2016, a JRD subsidiary, JRD Land Contracting and Land Clearing, Inc. ("JRD C&L"), signed an agreement with International Paper in which JRD C&L agreed to dispose of International Paper's waste at its Pine Hill Mill for a period of five years. In 2016, Caterpillar sued JRD at the Wilcox Circuit Court alleging a claim of detinue and seeking damages for breach of contract and breach of the guarantees. After performing work for International Paper under a waste-services agreement for eight months, JRD C&L received written notice of International Paper's intent to terminate the waste-services agreement. The equipment Caterpillar sought was used for the JRD C&L contract; in the pending Wilcox Circuit Court action, JRD filed a third-party complaint against IPC and fictitiously named defendants seeking a declaration and damages for breach of contract, promissory estoppel, fraud, work and labor done, and indemnity. When International Paper terminated that agreement, JRD alleged, it could no longer afford to pay the loans from their lenders, including Caterpillar, although they had already defaulted on some of those loans. IPC moved to dismiss the third-party complaint based on improper venue. According to IPC, the waste-services agreement contained an outbound forum-selection clause that provided that the courts of Tennessee would have jurisdiction over any disputes arising out of or relating to that agreement. IPC also challenged whether JRD or Dailey had a right to bring the third-party action because, it argued, the third-party action had nothing to do with the transactions underlying Caterpillar's lawsuit. IPC argued that, generally, outbound forum-selection clauses were enforceable in Alabama and that the third-party plaintiffs did not establish that the enforcement of the clause would be unfair or unreasonable. According to IPC, because the third-party plaintiffs failed to meet their burden, the outbound forum-selection clause should have been enforced. The Alabama Supreme Court agreed with IPC and issued the writ. View "Ex parte International Paper Company." on Justia Law

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Somnus Mattress Corporation d/b/a Posturecraft Mattress Company ("Somnus") appealed the grant of summary judgment in favor of Stephen Hilson and Crutchfield & Graves Insurance Agency, LLC ("CGIA"), on Somnus's claim that Hilson and CGIA were negligent in advising Somnus not to purchase insurance coverage for business interruption and loss of profits ("business-income coverage"). After review of the circuit court record, the Alabama Supreme Court concluded Hilson and CGIA did not have a duty to advise Somnus concerning the adequacy of its insurance coverage. Without such a duty, as a matter of law Somnus could not establish that Hilson and CGIA were negligent in their actions. Therefore, the circuit court did not err in entering a summary judgment in favor of Hilson and CGIA. View "Somnus Mattress Corp. v. Hilson" on Justia Law

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Ace American Insurance Company ("Ace"), an intervenor in the action below, appeals from the Baldwin Circuit Court's dismissal of the action filed by Ace's insured, Willie James Westbrook, against Rouse's Enterprises, LLC, d/b/a Rouses Markets ("Rouses Markets"). In August 2016, Westbrook sued Rouses Markets seeking to recover damages for injuries he sustained as the result of the allegedly negligent operation of a pallet jack by a Rouses Markets' employee while Westbrook was delivering goods to the Rouses Markets' location in Spanish Fort during the course of his employment with Cardinal Logistics Management Corporation ("Cardinal"). The Alabama Supreme Court has stated previously that, "'since dismissal with prejudice is a drastic sanction, it is to be applied only in extreme situations' and that, as a result, 'appellate courts will carefully scrutinize such orders and occasionally will find it necessary to set them aside.'" The Court could not say that the circumstances presented by this case presented an extreme situation in which dismissal of Ace's claim for want of prosecution was warranted. Accordingly, it reversed the judgment of the trial court dismissing Ace's claim and remanded the case for further proceedings. View "Ace American Insurance Company v. Rouse's Enterprises, LLC, d/b/a Rouses Markets" on Justia Law

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Maynard, Cooper & Gale, P.C. ("MCG"), petitioned the Alabama Supreme Court for a writ of mandamus to direct the Jefferson Circuit Court to vacate its July 30, 2018 order denying MCG's motion for a change of venue and to enter an order transferring the underlying action to the Madison Circuit Court on the basis of the doctrine of forum non conveniens. In late 2017, AAL USA, Inc. ("AAL"), a Delaware corporation doing business in Alabama, and Oleg Sirbu, a resident of Dubai, United Arab Emirates (collectively, "the plaintiffs"), sued MCG, asserting a claim of legal malpractice pursuant to the Alabama Legal Services Liability Act ("the ALSLA"), and seeking, among other relief, disgorgement of all attorney fees paid by the plaintiffs to MCG. AAL maintained, repaired, and overhauled helicopters through various government contracts or subcontracts on United States military bases. MCG represented the plaintiffs from 2014 through October 28, 2016; two MCG attorneys, Jon Levin and J. Andrew Watson III, were shareholders of MCG whose allegedly wrongful conduct was performed within the line and scope of their employment with MCG. The events giving rise to this litigation began in September 2016, when AAL received a "base-debarment" letter notifying it that it no longer had access to certain military bases outside the continental United States. MCG chief financial officer Keith Woolford forwarded this letter to MCG, and, according to the plaintiffs, MCG "immediately embarked in a central role in [MCG CEO Paul] Daigle's and Woolford's scheme to steal the assets of AAL." The complaint alleged that Levin worked closely with Woolford and Daigle to draft the APA pursuant to which Black Hall Aerospace, Inc., Daigle, and Woolford would purchase all of AAL's assets, as a way to cure the base-debarment problem. The plaintiffs alleged that MCG knew that the APA would "gut" the plaintiffs –- its current clients –- while simultaneously benefiting Daigle, Woolford, and BHA –- other clients of MCG -- and that this "clear and irreconcilable conflict of interest ... was never disclosed to [the plaintiffs]." The Alabama Supreme Court concluded MCG carried its burden of showing that Madison County's connection to the action was strong and that Jefferson County's connection to the action was weak. Thus, the circuit court exceeded its discretion in refusing to transfer the case to the Madison Circuit Court in the interest of justice. MCG's petition for a writ of mandamus was granted. View "Ex parte Maynard, Cooper & Gale, P.C." on Justia Law

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Linda Unger, as personal representative of the estate of Marshall Unger ("Unger") deceased, appealed the grant of summary judgment in favor of Wal-Mart Stores East, L.P., and its employees, Naomi Phillips (the store greeter) and Billy Odom (the store manager, collectively referred to as "the Wal-Mart defendants" or “defendants”). On May 20, 2014, Unger, who was 77 years old, and his wife, Linda, visited a Wal-Mart discount store in Mobile. In an attempt to dislodge a stuck shopping cart from the front of the store, Unger lost his balance and fell to the floor, allegedly suffering two fractured vertebrae in his thoracic spine. Several Wal-Mart employees went to Unger's assistance and offered to call an ambulance, but Unger told the employees that he did not require an ambulance. In January 2015, Unger sued Wal-Mart Stores East, L.P., Billy Odom, and fictitiously named defendants alleging that, on the day he was injured, Phillips, the store greeter, had been negligent and/or wanton in failing to "stage a clean [shopping] cart for easy access in violation of Wal-Mart's policies"; that "the Wal-Mart employee collecting carts from outside the store overloaded the machine used for collecting carts creating an unsafe condition that consumers would have no knowledge of"; and that Wal-Mart had been negligent and/or wanton in failing to train and/or supervise its employees. Unger died in April 2016, while his action was pending. The Alabama Supreme Court concluded plaintiff failed to establish by substantial evidence that Wal-Mart had a legal duty to provide Unger, a business invitee, with a staged shopping cart when he entered the store on May 20, 2014. Accordingly, the summary judgment in favor of the Wal-Mart defendants was affirmed. View "Unger v. Wal-Mart Stores East, L.P." on Justia Law

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Aqua Marine Enterprises, Inc. ("AME"), and AME's chief operating officer and vice president Brent Mitchell appealed a circuit court judgment in favor of K&B Fabricators, Inc. ("K&B"), following a bench trial in a dispute alleging the usurpation of corporate opportunities in the business of fabricating storm shelters. In 2006, Mitchell began discussions with Kendall Blaxton, who owned a welding-supply company used by AME, about starting a storm-shelter-fabrication business in Alabama because Mitchell believed it would be more efficient to deal with a local shelter fabricator. Those discussions led to the formation of K&B, a closely held corporation with three shareholders, Mitchell and two brothers, Kendall and Kenneth Blaxton. From 2006 to mid 2014, all of AME's steel storm-shelter orders were fabricated by K&B. AME entered into a non-compete/non-disclosure agreement with K&B. Kendall testified that in 2009 he and his brother had a dispute about how K&B was being managed, and Kendall ended up buying out Kenneth's ownership interest in K&B. Kendall then owned 90 percent of K&B's stock and Mitchell owned 10 percent. In early 2012, Kenneth formed Compliance Construction with two others; the company was to "take advantage of business opportunties that did not involve storm-shelter fabrication." By 2014, the relationship between AME and K&B had soured, and ended with AME accusing K&B of violating the noncompetition agreement between them. AME contended the trial court erred in concluding K&B did not violate the agreement. The Alabama Supreme Court found that AME failed to demonstrate Compliance's involvement in storm-shelter fabrication constituted a violation by K&B of the noncompetition agreement. The Court affirmed a finding of liability against Mitchell and its imposition of a constructive trust upon AME; the Court also affirmed the ruling in favor of K&B on AME's allegation of breach of the noncompetition agreement. The Court reversed, however, part of the trial court's judgment awarding damages, finding the award was not based upon the profits earned by AME in its fabrication. View "Aqua Marine Enterprises, Inc. v. K&B Fabricators, Inc." on Justia Law

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Brian Pipkin appealed a circuit court's grant of summary judgment in favor of Sun State Oil, Inc. on Pipkin's claim of conversion, negligence, and/or wantonness, and trespass with regard to Sun State's removal of gasoline pumps from Pipkin's property. IMAS Partnership, LLC ("IMAS"), purchased from William Rivers and Sybil Rivers a parcel of real property located at 15065 Highway 43 North, Bucks, Alabama ("the property"), on which was situated a convenience store and gasoline station. IMAS intended to operate the business as "Bucks Country Store." In anticipation of its acquisition of the property, IMAS entered into a "Petroleum Supply Agreement" with Sun State to procure a supply of gasoline to sell to customers of the store ("the PSA"). The PSA provided that Sun State would lease two gasoline pumps to IMAS for 10 years in exchange for IMAS purchasing a minimum of 6 million gallons of petroleum from Sun State over the 10-year term. At some point in 2012, Sun State stopped doing business with IMAS because it had heard the store was not making money would would go into foreclosure. Sun State did not reclaim the gas pumps immediately, to allow, as it described at trial, the owner to get a new tenant, yet retain the store as a customer. The Riverses executed a vendor's lien deed conveying the property to Pipkin; Pipkin testified that William Rivers made it clear when they negotiated the sale of the property that the gas pumps were included in the purchase price. By the summer of 2014, Sun State became concerned about vandalism at Pipkin's property and decided to retrieve the pumps, offering to reinstall them once Pipkin had a tenant to operate the store. Sun State declined to return the pumps, however. Pipkin subsequently filed suit against Sun State for the pumps. The Alabama Supreme Court found no evidence that Sun State filed an UCC-1 financing statement before Pipkin purchased the property. Sun State's unperfected security interest in the gasoline pumps did not have priority over Pipkin's ownership interest in the property. Accordingly, Pipkin acquired the pumps free and clear of Sun State's interest, and Sun State did not possess an ownership interest in the pumps when it removed them from Pipkin's property. Accordingly, the Alabama Supreme Court reversed summary judgment in favor of Sun State, and remanded this case for further proceedings. View "Brian Pipkin v. Sun State Oil, Inc., et al." on Justia Law

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Bert Nettles appealed summary judgment entered in favor of Rumberger, Kirk & Caldwell, P.C. ("Rumberger") and several attorneys with the firm. This case stemmed from the demise of the law firm of Haskell Slaughter Young & Rediker, LLC ("Haskell Slaughter"). Nettles and the individual defendants were all former members of Haskell Slaughter. In 2013, Haskell Slaughter was in financial distress, and members of the firm were in discussions as to what, if anything, could be done to save the firm. In December 2013, 10 lawyers, including the individual defendants, left Haskell Slaughter and joined Rumberger. Haskell Slaughter permanently closed in February 2014. In 2015, Bluebird Holdings, LLC ("Bluebird"), filed a complaint against Nettles and three other former members of Haskell Slaughter, seeking to collect on personal guarantee agreements executed by the former members. Nettles filed a third-party complaint in the Bluebird action against Rumberger and the individual defendants. Nettles sought damages from Rumberger and the individual defendants for alleged breach of fiduciary duty, fraud, conspiracy, and tortious interference with a contract. Nettles alleged that the individual defendants, in violation of fiduciary duties owed Nettles and Haskell Slaughter, conspired with each other and with Rumberger to orchestrate Rumberger's acquisition of two of Haskell Slaughter's most profitable practice groups. Nettles alleged that the loss of those practice groups "was the psychological and financial death blow to Haskell Slaughter" in that it thwarted plans for a potential firm-saving reorganization, caused the remaining members of the firm to leave, and resulted in the liquidation of Haskell Slaughter and ultimately the Bluebird action. The demise of Haskell Slaughter caused it to default on bank debt for which Nettles was a guarantor. Rumberger and the individual defendants filed a motion to dismiss Nettles's third-party complaint, arguing, among other things, that certain of Nettles's damages claims were not permissible under Rule 14, Ala. R. Civ. P. The trial court agreed and ruled that Nettles could recover only money that he may be required to pay as a result the personal guarantee agreement made the basis of the Bluebird action. As a result of that ruling, Nettles filed this suit, now before the Alabama Supreme Court. Finding no reversible error in the grant of summary judgment to the firm and individual defendants on all claims asserted, the Supreme Court affirmed the trial court's judgment. View "Nettles v. Rumberger, Kirk & Caldwell, P.C., et al." on Justia Law