Articles Posted in Contracts

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Jessie and Rickey Castleberry appealed a circuit court order dismissing their claims against Angie's List, Inc., based on a forum-selection clause in a contract between Angie's List and the Castleberrys. The Castleberrys, who are father and son, became members of Angie's List in 2014. They claim that they used their membership with Angie's List to locate a contractor, Dream Baths of Alabama, LLC ("Dream Baths"), which the Castleberrys hired to renovate a bathroom in Jessie Castleberry's house to make it handicapped accessible. According to the Castleberrys, Dream Baths was not properly licensed and poorly performed the work it contracted to do. The Alabama Supreme Court found the Castleberrys simply pointed out in the argument section of their brief that, in addition to suing Angie's List, they also sued Dream Baths. They asserted that "[t]his action pertains not only to the agreement between the Castleberrys and Angie's List, but to improper work performed upon a home located in Montgomery County, Alabama by defendant Dream Baths." The Castleberrys provided no significant discussion of the specific claims against Dream Baths and Angie's List. To the Supreme Court, it appealred that the Castleberrys' claims against Angie's List and Dream Baths were based on different categories of wrongdoing that were only tangentially related. The trial court, therefore, did not err in enforcing the forum-selection clause simply because the Castleberrys also sued Dream Baths. View "Castleberry v. Angie's List, Inc." on Justia 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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Putnam County Memorial Hospital ("Putnam") appealed a circuit court denial of its motion to set aside a default judgment entered in favor of TruBridge, LLC ("TruBridge"), and Evident, LLC ("Evident"). In September 2015, Putnam entered into a "Master Services Agreement" with TruBridge ("the MSA agreement") and a license and support agreement with Evident ("the LSA agreement"). In the MSA agreement, TruBridge agreed to provide accounts-receivable management services for Putnam for five years. The MSA agreement provided that TruBridge would receive 5.65 percent of the "cash collections," as that term is defined in the MSA agreement, to be paid monthly, for its account and billing services. In the LSA agreement, Evident agreed to provide Putnam with Evident's electronic health-records system as well as maintenance and support for that system. According to Putnam, starting in 2016, Putnam entered into a series of agreements with Hospital Partners, Inc. ("HPI"), in which HPI agreed to manage and control the operations of the hospital and its facilities. TruBridge and Evident alleged that at that time, Putnam began entering patient information and billing services through a different computer system than the one provided by Evident pursuant to the LSA agreement and used by TruBridge for accounts receivable pursuant to the MSA agreement. When a TruBridge manager contacted Putnam to inquire about this drop in new-patient admissions into their system, Putnam claimed to have almost no new patients and that it was barely surviving. TruBridge and Evident alleged Putnam was deliberately false and that Putnam was, in fact, simply entering new patients into a different system. Putnam did not enter an appearance in the lawsuit brought by TruBridge and Evident for breach of contract. The circuit court entered a default judgment. Putnam's motion to set aside the judgment was denied. The Alabama Supreme Court concluded Putnam met its evidentiary threshold to trigger the statutory requirement the circuit court reconsider its motion to set aside and for reconsideration relating to the default judgment. Therefore, the Court reversed the circuit court and remanded for further proceedings. View "Putnam County Memorial Hospital v. TruBridge, LLC, and Evident, LLC" on Justia Law

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Lonnie Beal sued his former employer, Shoals Extrusion, LLC, an aluminum-extrusion business in Florence, Alabama after his employment there was terminated in November 2015. Beal alleged that Shoals Extrusion breached the terms of his employment agreement by refusing to give him severance compensation and benefits to which he claims he was entitled. The Circuit Court entered a summary judgment in favor of Beal and awarded him $80,800. The Alabama Supreme Court found, however, a genuine issue of material fact about whether Beal first breached the terms of the employment agreement and whether such breach excused further performance by Shoals Extrusion under that agreement. Accordingly, the summary judgment was reversed and the case remanded for further proceedings. View "Shoals Extrusion, LLC v. Beal" on Justia Law

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Alfa Insurance Corporation, Alfa Mutual General Insurance Corporation, Alfa Life Insurance Corporation, and Alfa Specialty Insurance Corporation (collectively, "Alfa") petitioned the Alabama Supreme Court for a writ of mandamus requiring the Montgomery Circuit Court to vacate its May 23, 2018, orders: (1) denying Alfa's motion for a protective order as to materials Alfa contended were protected by the attorney-client privilege; and (2) compelling Alfa to produce such materials for in camera inspection and for discovery. The underlying suit arose out of a policy dispute in which one side invoked an arbitration clause in the policy at issue. The insured claimed Alfa breached the policy by refusing to provide a defense and/or indemnity coverage. After review, the Supreme Court was satisfied Alfa established the trial court exceeded its discretion when it disregarded the attorney-client privilege and entered the May 2018 orders denying Alfa's motion for a protective order and compelling Alfa to produce the materials sought for in camera inspection or for discovery. Accordingly, the Supreme Court granted Alfa's petition for the writ of mandamus and directed the trial court to vacate the May 2018 orders denying Alfa's motion for a protective order and compelling Alfa to produce the materials at issue. View "Ex parte Alfa Insurance Corporation et al." 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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SE Property Holdings, LLC ("SEPH") appealed the grant of summary judgment entered in favor of Bank of Franklin ("BOF") on BOF's claim demanding specific performance of a contractual provision. In March 2005, Vision Bank, a Florida company, loaned Bama Bayou, LLC, formally known as Riverwalk, LLC ("the borrower"), $6,000,000. Multiple individuals allegedly personally guaranteed repayment of the loan ("the guarantors"). In June 2008, pursuant to a "participation agreement," Vision Bank conveyed to BOF a 25 percent interest in the loan. Vision Bank conveyed additional participation interests in the loan to other banks. The borrower and the guarantors allegedly defaulted on their obligations with respect to the loan, and in January 2009 Vision Bank filed suit against them. The borrower and the guarantors asserted counterclaims against Vision Bank and brought BOF into the action as an additional counterclaim defendant. In April 2009, Vision Bank foreclosed on a mortgage securing the loan. Vision Bank was the highest bidder at the foreclosure sale and thereafter executed foreclosure deeds in favor of BOF and the other participating banks. In 2012, Vision Bank sold its operating assets to Centennial Bank and relinquished its Florida bank charter. Vision Bank and SEPH entered into an "agreement and plan of merger," whereby Vision Bank merged "with and into" SEPH. In October 2016, the trial court entered an order setting aside the foreclosure sale and declaring the foreclosure deeds void. Among other things, BOF asserted in its cross-claim that SEPH had an obligation to repurchase BOF's participation interest in the loan. In support, BOF pointed to the participation agreement between BOF and SEPH's predecessor, Vision Bank. The court granted BOF's motion for summary judgment on its claim for specific performance based on the participation agreement. SEPH argued on appeal that the trial court erred in determining that a "proceeding" involving Vision Bank's termination of existence was "commenced," so as to invoke the contractual provision; it asserted Vision Bank's voluntary merger with SEPH was not a "proceeding." The participation agreement in this case stated that BOF's participation interest was conveyed without recourse, but the contract provision provided BOF at least some security in the form of a right to force the repurchase of its participation interest in the event of the financial deterioration of the originating bank, i.e., Vision Bank. The Alabama Supreme Court concluded the voluntary merger like the one entered into by Vision Bank and SEPH is not a "proceeding" as that term is used in the participation agreement, and reversed the trial court's judgment ordering SEPH to purchase BOF's participation interest. View "SE Property Holdings, LLC, f/k/a Vision Bank v. Bank of Franklin" 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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The Wilcox County Board of Education ("the Board"); Tyrone Yarbrough, individually and in his official capacity as the superintendent of the Board; and members of the Board Bernard Martin and Lester Turk, individually and in their official capacities, petitioned the Alabama Supreme Court for a writ of mandamus to direct the Wilcox Circuit Court to vacate its order denying their motion to dismiss and to enter an order dismissing with prejudice all claims against them. Reginald Southall was a teacher at Wilcox Central High School. During a meeting of the Board in April 2013, then Superintendent Yarbrough recommended the nonrenewal of Southall's probationary contract. Five Board members were present during the vote. Normally, the Board consists of six members. One seat on the Board, however, was vacant at the time of the April 2013 meeting, due to an order of the circuit court enjoining the Board from filling the vacant seat. Thus, the Board conducted business with only five members during the April 2013 meeting. Upon a motion to accept Yarbrough's recommendation, three Board members voted in favor of not renewing the contract, one member opposed the recommendation, and one member abstained. Southall filed a petition seeking a declaratory judgment, injunctive relief, and a writ of mandamus, in which he asserted that, because of the vacancy on the Board, the termination of his employment was the result of an illegal vote of the Board in violation of 16-8-4, Ala. Code 1975. Under the limited circumstances of this particular case, a majority of the five members was all that was required to accept Yarbrough's recommendation not to renew Southall's probationary contract. Therefore, the Supreme Court concluded the petitioners demonstrated a clear legal right to the order sought. The Supreme Court granted the petition for a writ of mandamus directing the Wilcox Circuit Court to vacate its order, and to enter an order dismissing the underlying action. View "Ex parte Wilcox County Board of Education et al." on Justia Law