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Rainbow Cinemas, LLC ("Rainbow"), Ambarish Keshani, and Harshit Thakker (collectively, "the defendants") appealed a circuit court order denying their motion to compel arbitration of a contract dispute with Consolidated Construction Company of Alabama ("CCC"). In the contract at issue here, CCC agreed to provide specified services in constructing a movie theater for Rainbow. The parties signed the American Institute of Architects "Document A101-2007 -- Standard Form of Agreement Between Owner and Contractor where the basis of payment is a Stipulated Sum" ("the agreement"). The agreement incorporated by reference American Institute of Architects "Document A201-2007 -- General Conditions of the Contract for Construction" ("the general conditions"). In 2016, after having already initiated the arbitration process, CCC sued the defendants. Among other things, CCC alleged that the defendants had fraudulently induced it into entering into the contract. Specifically, CCC alleged that the defendants knew that the contract required an initial decision maker and that the defendants also "knew they had not contracted for [initial-decision-maker] services from the [initial decision maker]." CCC alleged that the defendants "failed to inform CCC ... that Rainbow had not contracted with [architect Hay] Buchanan to act as [the initial decision maker]." The Alabama Supreme Court reversed and remanded, finding that the contract incorporated the AAA's Construction Industry Arbitration Rules, which state that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement." Although the question whether an arbitration provision may be used to compel arbitration between a signatory and a nonsignatory is a threshold question of arbitrability usually decided by the court, here that question was delegated to the arbitrator. The arbitrator, not the court, had to decide that threshold issue. View "Rainbow Cinemas, LLC v. Consolidated Construction Company of Alabama" on Justia Law

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Rochester-Mobile, LLC, and Salzman-Mobile, LLC ("Rochester-Salzman"), appealed a judgment entered against them in a declaratory-judgment action relating to the validity of a 25-year sublease between Rochester-Salzman and Southern Family Markets of Mobile South University BLVD, LLC ("SFM"), and C&S Wholesale Grocers, Inc. ("C&S"). The trial court concluded that because the sublease was not recorded pursuant to section 35-4-6, Ala. Code 1975, the sublease was void for the remainder of the term extending beyond 20 years. After review, the Alabama Supreme Court held that the sublease in this case was not void under the provisions of section 35-4-6. Accordingly, the trial court erred in entering a judgment on the pleadings in favor of SFM and C&S and against Rochester-Salzman. Given this holding, the Court pretermitted discussion of the issue whether the sublease contained separate agreements that are independently enforceable, regardless of the validity of the sublease. View "Rochester-Mobile, LLC v. C&S Wholesale Grocers, Inc." on Justia Law

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This action concerned a piece of real property located in Calhoun County, Alabama. Lynda Newman, individually and as personal representative of the estate of Oscar Newman, deceased, appealed the summary judgment entered in favor of Michael and Rhonda Howard. The Howards owned the property in 2003 and in April 2003 mortgaged the property to secure a note. In 2007, the Howards conveyed the property by general warranty deed to Lynda and Oscar Newman; Oscar, Lynda's husband, subsequently died. It was undisputed that, unbeknownst to the Newmans, the 2003 mortgage was not satisfied by the Howards before the conveyance and remained an encumbrance on the property. The Newmans and the Howards were involved in litigation concerning numerous claims against one another, as well as others, involving deeds, financing agreements, mortgages, and contracts between the various parties concerning several pieces of real property, including the property at issue in this case. Before a final judgment was reached in that litigation, in December 2014 the parties dismissed the lawsuit and entered into a "settlement agreement and mutual release agreement." Also in December 2014, shortly after Lynda signed the agreement, she attempted to sell the property at issue here. During the process of closing on the sale of the property, Lynda's attorney conducted a title search of the property and discovered that the property was encumbered by the 2003 mortgage. Lynda requested that the Howards satisfy the mortgage pursuant to the terms of the May 16, 2007, warranty deed. The Howards refused. Following a hearing, the circuit court granted the Howards' summary-judgment motion on the sole basis that Lynda had released any claims she may have had against the Howards. Lynda appealed. The Alabama Supreme Court reversed, finding Lynda timely objected to the Howards' reliance on the affirmative defense of settlement and release in their summary-judgment motion and equally clear that an amendment to specially plead that affirmative defense was not made by the Howards. The circuit court erred in granting the Howards' summary-judgment motion based on an unpleaded affirmative defense of release. View "Newman v. Howard" on Justia Law

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Margaret Hulgan tripped and fell at a Fourth of July celebration at a City of Guntersville-owned Civitan Park. She sued the City, and the City claimed immunity under Alabama recreational-use statutes. The trial court denied the City’s motion to dismiss, and the City appealed. Finding that the City demonstrated it had a clear legal right to immunity, and that Hulgan failed to present substantial evidence to overcome the City’s right to immunity, the Alabama Supreme Court granted the City mandamus relief, and ordered the trial court to enter summary judgment in favor of the City. View "Ex parte City of Guntersville." on Justia Law

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Family Security Credit Union ("FSCU") appealed the trial court's denial of its motions to compel arbitration in eight separate but closely related cases. Action Auto Sales ("Action Auto") was a car-financing group that financed the vehicle inventory of Pine City Auto ("Pine City"), a used-car dealership. Action Auto held titles to the vehicles in inventory, and released a title only when a vehicle was sold, and Pine City paid off a proportional amount of the inventory financing. Pine City eventually went out of business without paying off the inventory financing on some of the vehicles it had sold. Action Auto sued Pine City and the purchasers of eight vehicles who had purchased vehicles from Pine City and financed those purchases through FSCU. Action Auto sought possession of the vehicles and money damages. The purchasers each filed counterclaims and cross-claims against Action Auto and Pine City and third-party claims against FSCU, alleging negligence, wantonness, and conspiracy. The purchasers' third-party claims against FSCU were based on FSCU's alleged failure to perfect its security interest in the vehicles before financing the purchasers of the vehicles. FSCU moved for each of those third-party claims to be submitted to arbitration. The purchasers opposed the motions to compel arbitration, but they did not submit any evidence. After review, the Alabama Supreme Court concluded the trial court erred in denying FSCU's motions to compel arbitration in each of the eight cases, and remanded all for further proceedings. View "Family Security Credit Union v. Etheredge" on Justia Law

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Lamar Ragland appeals the dismissal of his bad-faith claim against State Farm Mutual Automobile Insurance Company. Ragland sought punitive damages from State Farm based on State Farm's alleged bad-faith failure to pay and related failure to subject his claim for underinsured-motorist ("UIM") benefits to a cognitive review. State Farm moved to dismiss Ragland's claims, because Ragland had filed a separate civil action in 2014 that had not yet been resolved. After review, the Alabama Supreme Court dismissed Ragland's claim as being from a nonfinal judgment. View "Ragland v. State Farm Mutual Automobile Ins. Co." on Justia Law

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Julie Gerstenecker borrowed money from her mother-in-law Janice Gerstenecker, for help in repaying her student loans. According to Janice, Janice agreed to repay Julie's student loans and Julie agreed to repay Janice by "pay[ing] [Janice] $700 a month until [Julie and Adam's child] turned one. And then the payments would rise to $1,000." Janice testified that the terms of the agreement between her and Julie were not reduced to writing. Julie testified that she had never borrowed money from Janice and that she does not recall Janice telling her that Janice would lend her money to repay her student loans. Adam Gerstenecker, Janice's son and Julie's husband, also testified at trial; his testimony supported his mother's version of the agreement. Adam and Julie would eventually divorce. Some repayments were made, but ultimately Janice sued Julie for the balance owed. The trial court found Julie breached the agreement she had with Janice. However, the Alabama Supreme Court found the trial court erred in reading an acceleration-of-payments clause into the agreement between Janice and Julie. The Supreme Court reversed the trial court's damages award and remanded this case for the trial court to determine the amount owed based on the accrued payments as of the date of the judgment and not the full amount of the outstanding loan balance. View "Gerstenecker v. Gerstenecker" on Justia Law

Posted in: Contracts

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SSC Selma Operating Company, LLC, doing business as Warren Manor Health and Rehabilitation Center, and SavaSeniorCare Administrative Services, LLC, appealed a circuit court order denying their motion to compel arbitration of a retaliatory-discharge claim filed against them by Jackie Fikes. Fikes sued the companies, seeking to recover worker's compensation benefits pursuant to the Alabama Workers' Compensation Act, and alleging that the companies had discharged her from her employment in violation of Ala. Code 1975, sec. 25–5–11.1, solely because she had filed a claim for worker's compensation benefits. Fikes alleged that in 2013, she suffered a work-related injury when she attempted to lift a patient while working for the companies as a certified nurse assistant; that she underwent medical treatment for her work-related injury; and that she returned to work under light-duty restrictions until Spring 2014, at which time, she says, the companies wrongfully terminated her employment. Fikes requested in the complaint that the worker's compensation claim and the retaliatory-discharge claim be severed in order for the retaliatory discharge claim to be tried by a jury. The companies moved to compel arbitration of the retaliatory discharge claim pursuant to their employment-dispute resolution program ("the EDR program") under which Fikes had agreed to be bound. Fikes responded, arguing that the retaliatory-discharge claim was not covered by the EDR program. After review, the Alabama Supreme Court concluded Fikes failed to demonstrate her retaliatory-discharge claim was not covered by the EDR program. Accordingly, the Court reversed the trial court's order denying the companies' motion to compel arbitration of that claim. View "SSC Selma Operating Company, LLC v. Fikes" on Justia Law

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Plaintiff Roger Firestone sued defendants Carl Weaver, Charles Tooley, L.C. Collins, Jr. ("L.C."), and Mickie Collins ("Mickie"), alleging that defendants conspired to and brutally assaulted and battered Firestone. Firestone appealed summary judgment entered in favor of Weaver, dismissing his claims as barred by an applicable statute of limitations. After review, the Alabama Supreme Court concluded that the trial court exceeded its discretion in certifying the summary judgment in favor of Weaver as final because proceedings were still pending against the other defendants, and issues in Weaver’s matter were so closely intertwined with those of the other defendants “that separate adjudication would pose an unreasonable risk of inconsistent results.” A non-final judgment would not support an appeal; therefore Firestone’s appeal was dismissed. View "Firestone v. Weaver" on Justia Law

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Three matters consolidated for review resulted from separate automobile accidents between either an Allstate or a GEICO insured with Underinsured-Motorist (UIM) coverage and allegedly underinsured tortfeasors. In each case, it was undisputed that the applicable insurance policy contained a "consent-to-settle" clause requiring the provision of notice to, and the consent of, the affected insurer prior to the insured's settlement of any claims against the alleged underinsured tortfeasors and/or a release of the tortfeasors' liability. After review of the specific facts of each case, the Alabama Supreme Court concluded that because the insurers, in following the express directives of the Court, were deprived of their contractual rights as well as the benefit of the procedures set forth in the controlling case law, the insurers demonstrated a clear legal right to their requested relief. In case no. 1150511 and 1151266, the Court directed the applicable circuit court to vacate its respective orders purporting both to "enforce" the pro tanto settlement agreements against the insurer's consent and to dismiss the tortfeasors. In case no. 1150269, the Court dismissed the petition. View "Ex parte GEICO Indemnity Company." on Justia Law