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28f83444-d260-4357-bd4b-3dfeddf81e33 | Jefferson County Bd. of Educ. v. Moore | 706 So. 2d 1147 | 1960615, 1960616 | Alabama | Alabama Supreme Court | 706 So. 2d 1147 (1997)
JEFFERSON COUNTY BOARD OF EDUCATION
v.
Roderick MOORE, et al.
JEFFERSON COUNTY BOARD OF EDUCATION
v.
Dwayne POUNCY, et al.
1960615, 1960616.
Supreme Court of Alabama.
November 14, 1997.
*1148 Burgin H. Kent and Carl Johnson of Bishop, Colvin, Johnson & Kent, Birmingham, for appellant.
Charles F. Norton, Homewood, for appellees Roderick Moore and Dwayne Pouncey.
David R. Boyd and Anna C. Northington of Balch & Bingham, L.L.P., Montgomery, for amicus curiae Alabama Ass'n of School Boards.
PER CURIAM.
These appeals arise from the dismissal of Roderick Moore and Dwayne Pouncy from their employment by the Jefferson County Board of Education (the "Board") and their subsequent reinstatements. Moore and Pouncy were dismissed for violations of the Board's "Drug and Alcohol Program Procedure Policy," Board Policy No. 281 (the "Board policy"). Moore and Pouncy sought review of their dismissals under the Fair Dismissal Act ("FDA"), Ala.Code 1975, § 36-26-100 et seq. In each case, the employee review panel ordered reinstatement. The Jefferson Circuit Court affirmed both reinstatement orders, and the Board appealed. We affirm.
This Court's review is limited to the questions (1) whether there is substantial evidence to support each panel's decision, (2) "whether the findings and conclusions of the panel were contrary to the uncontradicted evidence, or [(3)] whether there was an improper application of the findings viewed in a legal sense." Colbert County Bd. of Educ. v. Johnson, 652 So. 2d 274, 275-76 (Ala. Civ.App.1994).
The evidence before this Court suggests that the Board followed the recommendation of the school superintendent and dismissed Pouncy, a truck driver, after he tested positive for marijuana in a post-accident drug test. It dismissed Moore, a journeyman painter, after he reported to work intoxicated. Moore and Pouncy, pursuant to the FDA, appealed the Board's decisions. The respective employee reviewing panels decided that termination was not warranted. Instead, the panels ordered Moore and Pouncy to undergo substance abuse rehabilitation and ordered the Board to reinstate them after they satisfactorily completed the rehabilitation.
The Board petitioned the Circuit Court of Jefferson County for a writ of certiorari, requesting reversal of the employee panels' decisions. In each case, although the trial court did not agree with the panel's decision, it held that the decision was supported by substantial evidence.
Review of a board decision by an employee review panel is de novo. It is fully within the panel's discretion to substitute its judgment for that of the board. Birmingham Bd. of Educ. v. Holifield, 604 So. 2d 422 *1149 (Ala.Civ.App.1991). However, the panel's review is not without limits:
Ala.Code 1975, § 36-26-106 (emphasis added).
The Board argues that the decisions of the employee review panels were not supported by substantial evidence, because the evidence before the panels conclusively established that Moore and Pouncy (1) had violated the Board policy; (2) had voluntarily submitted to being tested for drugs after being suspected of violating the Board policy; (3) had not contested the results of their respective tests, which were positive; and (4) were aware that they could be, and would likely be, terminated for violating the Board policy.
Moore and Pouncy contend that the employee review panels' decisions were supported by substantial evidence. They argue: (1) that the Board violated its own policy, which requires that the employee be given an opportunity for rehabilitation and an opportunity to return to work after becoming substance-free; and (2) that Moore and Pouncy both had excellent employment records. Separately, Moore challenges the appropriateness of his termination because: (1) he contends that his supervisor had no basis for suspecting that he was intoxicated, and thus, had no basis for subjecting him to a breath test,[1] (2) he introduced evidence indicating that others suspected of being under the influence of alcohol were sent home to sober up, and, thus, he argues, his treatment was inconsistent with Board practice; and (3) he introduced evidence indicating that inhaling paint solvents will cause the alcohol test to register positive, and because he inhaled paint solvents before the breath test, he argues that the results of the test were unreliable. Pouncy contends that he should not have been terminated because: (1) he says that marijuana can stay in the system 30 to 40 days and, thus, the Board produced no evidence of "actual" work impairment; and (2) he says he should not have been subjected to a drug test, because federal law requires only that those with commercial driver's licenses be subjected to drug testing and only if (a) there is an accident and someone is injured, or (b) the driver is issued a citation for a "moving" violation (neither of these happened in Pouncy's case).
In each case, the employee review panel held that termination of employment was not proper, based primarily on the fact that Moore and Pouncy both had had essentially perfect work histories. Moore's panel found that the Board had failed to consider his employment record (no evidence was introduced of any previous disciplinary action during his entire 12-year work history), and that the Board had failed to establish an objective criterion for evaluating situations like his (thereby creating a question whether the Board's decision was arbitrary and unjust). Pouncy's panel, based on his employment record of more than 15 years and on Board Policy No. 281,[2] determined that drug rehabilitation and temporary suspension without pay for a period not exceeding four months was appropriate.
While this Court might have chosen sanctions different from those chosen by the employee panels, it is not our province to substitute our opinion for that of the employee panel as to the appropriate sanction for Board employees who have tested positive for drugs or alcohol. Section 36-26-106 provides *1150 that "[t]he decision of the panel shall be final and binding upon the parties." Any change in this policy lies with the Legislature.
The panels were required by the FDA to consider the employment records of Moore and Pouncy. There was substantial evidence that each of them had an excellent employment record on which the panel could have relied to determine that termination of employment was inappropriate. Therefore, we find no abuse of discretion by the employee panels in ordering that Moore and Pouncy be reinstated after successfully completing their rehabilitation programs.[3]
The Board also challenges the constitutionality of the FDA. It contends, first, that the FDA violates § 45 of the Alabama Constitution of 1901 by addressing more than one subject. Section 45 provides in pertinent part:
The Board acknowledges that the overall purpose of the FDA is to provide a fair dismissal procedure for a full-time nonteacher or nonclassified school system employee, but contends that because the statute also addresses discipline in the form of reprimands, censures, and suspensions with or without pay, it encompasses more than a single subject and is, therefore, unconstitutional.
Admittedly, as this Court has stated, "the `Fair Dismissal Act' is not a model of legislative clarity." Bolton v. Board of Sch. Comm'rs of Mobile County, 514 So. 2d 820, 824 (Ala.1987). Its purpose, however, is clear: "to provide ... a fair and swift resolution of proposed employment terminations." Id. The Board's proffered construction would preclude consideration of suspension, for example, as an alternative to termination. In fact, lesser sanctions are not separate subjects, but are an essential component of a fair-dismissal process.[4]
The Board also challenges the constitutionality of the FDA under § 125 of the Constitution of Alabama of 1901,[5] contending that the Governor invalidly amended House Bill 296 (the "Bill"), which eventually became the FDA. The Board asserts that the Governor submitted an executive amendment that did not comply with § 125, in that it did not include a statement of the Governor's objections, *1151 and that the subsequent enactment is therefore invalid.
In fact, when the Bill was submitted to the Governor for his signature, he returned it to the House unsigned, requesting that sections 6 and 7 be deleted. This was a specific indication of his objections to the Bill. The Governor also provided the House with language that he would approve for those sections. The Governor concluded his message to the House with the statement that "the adoption of the above and foregoing suggested Executive Amendment will remove my objections to this Bill." (Emphasis added.) House Journal of Alabama 2, pp. 1595-96 (Regular Session 1983). The Bill, with the Governor's amendments, passed both the House and the Senate, in full compliance with § 125.
Because the Board has failed to establish that the employee review panels abused their discretion by reinstating Moore and Pouncy, and because the Board has failed to prove that the FDA violates § 45 or § 125 of the Alabama Constitution, the judgments of the trial court are affirmed.
1960615AFFIRMED.
1960616AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, KENNEDY, COOK, and SEE, JJ., concur.
[1] Moore's supervisor testified that he did not suspect that Moore was under the influence of alcohol, because, the supervisor said, Moore was not behaving in an impaired fashion and was adequately performing his job just prior to the test.
[2] The "Discipline" section of Board Policy No. 281 provides in pertinent part:
"All employees who test positive in a confirmed substance test will be subject to discipline up to and including discharge. Rehabilitation, at a pre-approved treatment provider, may be available to individuals who violate the policy."
Thus, although termination of employment is permissible, it is not the only form of discipline provided by the Board policy.
[3] The Board also contends that Alabama public policy precludes reinstatement of Moore and Pouncy, citing Hobson v. American Cast Iron Pipe Co., 690 So. 2d 341 (Ala.1997). Hobson`s public policy holding, however, cannot control the outcome here, because the legislature has provided a specific statute to address the specific issue in this case. Tuscaloosa County Comm'n v. Deputy Sheriffs' Ass'n of Tuscaloosa County, 589 So. 2d 687, 689 (Ala.1991).
[4] See Ex parte Holifield, 604 So. 2d 420, 422 (Ala.1991) (stating that "`reasonableness must be read into the provisions [of the FDA]'") (quoting Bolton, 514 So.2d at 824); State v. Ballard, 341 So. 2d 957, 959 (Ala.Crim.App.1976), writ quashed, 341 So. 2d 962 (Ala.1977) (stating that "a statute will, if possible, be so construed as to render it valid").
[5] Ala. Const. art. V., § 125 (1901) provides in pertinent part:
"Every bill which shall have passed both houses of the legislature, except as otherwise provided in this Constitution, shall be presented to the governor; if he approve, he shall sign it; but if not, he shall return it with his objections to the house in which it originated, which shall enter the objections at large upon the journal and proceed to reconsider it. If the governor's message proposes no amendment which would remove his objections to the bill, the house in which the bill originated may proceed to reconsider it, and if a majority of the whole number elected to that house vote for the passage of the bill, it shall be sent to the other house, which shall in like manner reconsider, and if a majority of the whole number elected to that house vote for the passage of the bill, the same shall become a law, notwithstanding the governor's veto. If the governor's message proposes amendment, which would remove his objections, the house to which it is sent may so amend the bill and send it with the governor's message to the other house, which may adopt, but can not amend, said amendment; and both houses concurring in the amendment, the bill shall again be sent to the governor and acted on by him as other bills. If the house to which the bill is returned refuses to make such amendment, it shall proceed to reconsider it; and if a majority of the whole number elected to that house shall vote for the passage of the bill, it shall be sent with the objections to the other house, by which it shall likewise be reconsidered, and if approved by a majority of the whole number elected to that house, it shall become a law." | November 14, 1997 |
dca3cbef-938f-4dfe-862c-26fb735b60f7 | Ex parte The Retirement Systems of Alabama et al. | N/A | 1140170 | Alabama | Alabama Supreme Court | Rel: 6/12/15
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
____________________
1140170
____________________
Ex parte The Retirement Systems of Alabama et al.
PETITION FOR WRIT OF MANDAMUS
(In re: James B. Burks II et al.
v.
The Retirement Systems of Alabama et al.)
(Montgomery Circuit Court, CV-14-900964)
BRYAN, Justice.
The Retirement Systems of Alabama ("RSA"), the Teachers'
Retirement System of Alabama ("TRS"), the Public Education
Employees' Health Insurance Plan ("PEEHIP"), the Public
1140170
Education Employees' Health Insurance Fund ("PEEHIF"), the
Board of Control of TRS ("the TRS Board"), the Board of
Control of PEEHIP ("the PEEHIP Board"), David G. Bronner, as
chief executive officer of RSA and as secretary-treasurer of
TRS and PEEHIP, and various members of the TRS Board and of
the PEEHIP Board in their official capacities (hereinafter
1
collectively referred to as "the PEEHIP defendants") seek
mandamus review of the Montgomery Circuit Court's denial of
their motion to dismiss the claims filed against them by James
B. Burks II, Eugenia Burks, Martin A. Hester, Jacqueline
Hester, Thomas Highfield, Carol Ann Highfield, Jake Jackson,
and Melinda Jackson, individually and on behalf of a class of
similarly situated individuals (hereinafter collectively
referred to as "the public-education plaintiffs").
For the reasons set forth herein, the petition is granted
in part and denied in part and a writ is issued directing the
Montgomery Circuit Court to dismiss all the public-education
According to the petition, the same individuals make up
1
both the TRS Board and the PEEHIP Board. The following are
the members of both boards named in the underlying action:
Tommy Bice, Bill Newton, Young Boozer, Sarah S. Swindle, Susan
Phillips Brown, Sallie Cook (who retired from the TRS Board in
June 2014 and who was replaced by Joe Ward), Luke Hallmark,
Susan Lockridge, Russell Twilley, Teresa Harbinson Swindall,
John R. Whaley, Charlene McCoy, and C. Ray Hayes.
2
1140170
plaintiffs' claims against RSA, PEEHIP, the PEEHIP Board,
PEEHIF, TRS, the TRS Board, the members of the TRS Board, and
Bronner, in his capacity as chief executive officer of RSA and
as secretary-treasurer of TRS; to dismiss all the public-
education plaintiffs' state-law claims against the members of
the PEEHIP Board and Bronner, in his capacity as secretary-
treasurer of PEEHIP; and to dismiss the public-education
plaintiffs' claims against the members of the PEEHIP Board and
Bronner, in his capacity as secretary-treasurer of
PEEHIP,
for
monetary relief, pursuant to § 1983. The petition is denied
with regard to the public-education plaintiffs' claims for
injunctive relief, pursuant to § 1983, against the members of
the PEEHIP Board and Bronner, in his capacity as secretary-
treasurer of PEEHIP.
Facts and Procedural History
PEEHIP, which is managed by the PEEHIP Board, provides
group health-insurance benefits to public-education employees
in Alabama. Each year, the PEEHIP Board submits "to the
Governor and to the Legislature the amount or amounts
necessary to fund coverage for benefits authorized by this
article for the following fiscal year for employees and for
3
1140170
retired employees as a monthly premium per active member per
month." § 16-25A-8(b), Ala. Code 1975. That monthly premium
is paid by employers for each of their active members ("the
employer contribution"). See § 16-25A-8(a), Ala. Code 1975.
In addition, "[e]ach employee and retired employee [is]
entitled to have his or her spouse and dependent children, as
defined by the rules and regulations of the [PEEHIP] board,
included in the coverage provided upon agreeing to pay the
employee's contribution of the health insurance premium for
such dependents." § 16-25A-8(e), Ala. Code 1975. Section 16-
25A-1(8), Ala. Code 1975, provides, in pertinent part, that
"[i]ndividual premiums may include adjustments and surcharges
for ... family size including, but not limited to, a husband
and wife both being covered by a health insurance plan as
defined herein." The employer contribution, as well as "all
premiums paid by employees and retired employees under the
provisions of this section and any other premiums paid under
the provisions of this article," are deposited into PEEHIF.
§ 16-25A-8(f), Ala. Code 1975.
In May 2014, the public-education plaintiffs, who are all
public-school educators and PEEHIP participants married to
4
1140170
other public-school educators and PEEHIP participants and who
have
dependent
children,
sued
the
PEEHIP
defendants,
alleging:
"Until
2009,
each
participating
educator
in
each
school system received the full allotment provided
by
their
employer
[(i.e.,
the
employer
contribution)], regardless of marital status. For
example, under the pre-2009 policy, a husband and
wife in the public school system in 2013 would have
each received an allotment of $714 for a total of
$1428 to spend on health insurance. Accordingly,
the couple would have no out-of-pocket costs for
health insurance.
"However, in 2009, [the PEEHIP defendants]
implemented a policy whereby a wife and husband who
are both educators in the public school system and
who have dependent children would receive a single
allotment, rather than two. Based on this policy,
two educators who are married to each other and who
have dependent children received a single allotment
of $714 rather than each receiving an individual
allotment of $714.
"Accordingly,
since
2009
public
school
educators
who are married to another Alabama educator and who
have dependent children have been required to pay
out-of-pocket for any health insurance expenses that
exceed the amount of an individual allotment.
Therefore, rather than having no out-of-pocket costs
for health insurance, the couple has to contribute
$177 of their own money each month for health
insurance. Moreover, educators who are married to
each other are not permitted to utilize the second
allotment toward the purchase of the four optional
plans or the supplemental medical plan. In effect,
one of the spouses receives no insurance benefit
whatsoever.
"On
the
other
hand,
every
single
educator, every
married educator whose spouse is not employed by a
5
1140170
school system and every married educator who does
not have dependent children continues to receive
individual allotments. Therefore, in 2013 every
public school educator in Alabama –- other than [the
public-education plaintiffs] and Class Members -–
received a monthly allotment of $714 for insurance
benefits. If an educator's spouse works outside the
public school system and the educator is covered on
the spouse's health plan, the educator can utilize
his or her allotment to purchase the four optional
plans with no out-of-pocket cost."
The public-education plaintiffs alleged that the policy
adopted by the PEEHIP Board in 2009 ("the 2009 policy")
violated Article V, § 138.03, Alabama Constitution of 1901,2
as well as the public-education plaintiffs' rights to equal
protection, due process, and freedom of association under the
Alabama Constitution, the United States Constitution, and 42
U.S.C. § 1983. The public-education plaintiffs also alleged
Section 138.03 provides:
2
"All of the assets, proceeds or income of the
teachers' ... retirement systems of Alabama, or any
successor systems thereto, and all contributions and
payments made to such systems to provide for
retirement and related benefits thereunder, shall be
held, invested as authorized by law, or disbursed as
in trust for the exclusive purpose of providing for
such benefits, refunds and administrative expenses
under the management of the boards of control of the
aforementioned retirement systems; and, none of such
assets, proceeds, income, contributions or payments
shall be used, loaned, encumbered or diverted to or
for any other purpose whatsoever."
6
1140170
that the 2009 policy violated Alabama public policy and their
right to family integrity as protected by the Alabama
Constitution. The public-education plaintiffs sought relief
in the form of (1) a judgment declaring "[the PEEHIP
defendants'] practice of denying an allotment for insurance
benefits to educators who are married to another educator and
who
have
dependent
children
to
be
unconstitutional,
discriminatory and unlawful under both State
and
Federal
law";
(2) an injunction preventing the PEEHIP defendants from
"denying an allotment for insurance benefits to educators
whose spouse is also an educator in the public school system
and who have dependent children"; (3) restitution of "amounts
... unlawfully withheld and/or ... amounts [the public-
education plaintiffs] have paid for insurance that they would
not have paid absent [the PEEHIP defendants'] unlawful
conduct" or other equitable relief; and (4) costs and attorney
fees.
The PEEHIP defendants moved the circuit court, pursuant
to Rules 12(b)(1) and 12(b)(6), Ala. R. Civ. P., to dismiss
the public-education plaintiffs' complaint, arguing, among
other things, that the claims against them were barred by the
7
1140170
doctrine of sovereign immunity. The circuit court denied the
motion to dismiss, and the PEEHIP defendants have petitioned
this Court for mandamus relief from that order.
Analysis
"It is well established that mandamus will lie to compel
the dismissal of a claim that is barred by the doctrine of
sovereign immunity." Ex parte Blankenship, 893 So. 2d 303,
305 (Ala. 2004).
"As this Court has consistently held, the writ
of mandamus is a
"'"drastic
and
extraordinary
writ
that
will
be issued only when there is: 1) a clear
legal right in the petitioner to the order
sought; 2) an imperative duty upon the
respondent to perform, accompanied by a
refusal to do so; 3) the lack of another
adequate remedy; and 4) properly invoked
jurisdiction of the court."'
"Ex parte Wood, 852 So. 2d 705, 708 (Ala. 2002)
(quoting Ex parte United Serv. Stations, Inc., 628
So. 2d 501, 503 (Ala. 1993)). '"In reviewing the
denial of a motion to dismiss by means of a mandamus
petition, we do not change our standard of review
...."'• Drummond Co. v. Alabama Dep't of Transp.,
937 So. 2d 56, 57 (Ala. 2006) (quoting Ex parte
Haralson, 853 So. 2d 928, 931 (Ala. 2003)).
"'In Newman v. Savas, 878 So. 2d 1147
(Ala. 2003), this Court set out the
standard of review of a ruling on a motion
to dismiss for lack of subject-matter
jurisdiction:
8
1140170
"'"A ruling on a motion to
dismiss is reviewed without a
presumption
of
correctness.
Nance v. Matthews, 622 So. 2d
297, 299 (Ala. 1993). This Court
must accept the allegations of
the complaint as true. Creola
Land Dev., Inc. v. Bentbrooke
Housing, L.L.C., 828 So. 2d 285,
288 (Ala. 2002). Furthermore, in
reviewing a ruling on a motion to
dismiss we will not consider
whether
the
pleader
will
ultimately prevail but whether
the pleader may possibly prevail.
Nance, 622 So. 2d at 299."
"'878 So. 2d at 1148.'
"Pontius v. State Farm Mut. Auto. Ins. Co., 915 So.
2d 557, 563 (Ala. 2005). We construe all doubts
regarding the sufficiency of the complaint in favor
of the plaintiff. Drummond Co., 937 So. 2d at 58."
Ex parte Alabama Dep't of Transp., 978 So. 2d 17, 20-21 (Ala.
2007).
I. Claims Against RSA, PEEHIP, the PEEHIP Board, PEEHIF, TRS,
the TRS Board, Members of the TRS Board, and Bronner, in His
Official Capacity as Chief Executive Officer of RSA and
Secretary-Treasurer of TRS
The
public-education
plaintiffs
have
agreed
to
voluntarily dismiss their claims against RSA, PEEHIP, the
PEEHIP Board, PEEHIF, TRS, the TRS Board, and Bronner, in his
capacity as chief executive officer of RSA and as secretary-
treasurer of TRS, stating:
9
1140170
"[The PEEHIP] [d]efendants concede in their petition
that the PEEHIP Board has the authority to grant the
[public-education] [p]laintiffs the relief they seek
in this action. ... Because the [PEEHIP] Board can
act only at the direction of the Members of the
PEEHIP Board and through its officers, the Members
of the PEEHIP Board and PEEHIP's officers ...
necessarily have the authority to direct the
[PEEHIP] Board to provide [the public-education]
[p]laintiffs the benefits to which they are
entitled. With this concession, [the public-
education] [p]laintiffs are willing to voluntarily
dismiss their claims against RSA, PEEHIP, the PEEHIP
Board, PEEHIF, TRS, and the TRS Board and to proceed
with their claims against the members of the PEEHIP
Board and PEEHIP's officers."3
Public-education plaintiffs' brief, at 1. Therefore, the
petition for mandamus relief is granted in this regard, and
the circuit court is instructed to dismiss all the claims
against RSA, PEEHIP, the PEEHIP Board, PEEHIF, TRS, the TRS
Board, the members of the TRS Board, and Bronner, in his
capacity as chief executive officer of RSA and as secretary-
The
public-education
plaintiffs
do
not
explicitly
address
3
whether they are voluntarily dismissing their claims against
the members of the TRS Board. However, the public-education
plaintiffs do acknowledge that it is the PEEHIP Board that has
the authority to grant them the relief they seek and that they
are proceeding with their claims against the members of the
PEEHIP Board and PEEHIP's
officers
only.
The public-education
plaintiffs make no further reference to the members of the TRS
Board in their brief to this Court. For these reasons, we
conclude that the public-education plaintiffs intended to
dismiss the claims against the members of the TRS Board as
well.
10
1140170
treasurer of TRS. However, because the arguments in the
petition for the writ of mandamus were made by the PEEHIP
defendants, we continue to use that term when discussing those
arguments.
II. State-Law Claims Against the Members of the PEEHIP Board
and Bronner, in His Capacity as Secretary-Treasurer of PEEHIP
The PEEHIP defendants argue that the public-education
plaintiffs' claims against the members of the PEEHIP Board and
Bronner, as secretary-treasurer of PEEHIP, are barred by Art.
I, § 14, Alabama Constitution of 1901. "The wall of immunity
erected by § 14 is nearly impregnable. This immunity may not
be waived. 'This means not only that the [S]tate itself may
not be sued, but that this cannot be indirectly accomplished
by suing its officers or agents in their official capacity,
when a result favorable to plaintiff would be directly to
affect the financial status
of the state treasury.'" Patterson
v. Gladwin Corp., 835 So. 2d 137, 142 (Ala. 2002) (quoting
State Docks Comm'n v. Barnes, 225 Ala. 403, 405, 143 So. 581,
582 (1932) (citations omitted)). "This Court has held that
the immunity afforded by § 14 applies to instrumentalities of
the State and State officials sued in their official
capacities when such an action is effectively an action
11
1140170
against the State." Vandenberg v. Aramark Educ. Servs., Inc.,
81 So. 3d 326, 332 (Ala. 2011).
This Court has recognized six categories of actions that
survive the § 14 bar: (1) actions to compel State officials to
perform their legal duties, Aland v. Graham, 287 Ala. 266,
229, 250 So. 2d 677, 679 (1971); (2) actions to enjoin State
officials from enforcing an unconstitutional law, id.; (3)
actions to compel State officials to perform
ministerial
acts,
287 Ala. at 229-30, 250 So. 2d at 678-79; (4) actions under
the Declaratory Judgment Act, § 6-6-220 et seq., Ala. Code
1975, seeking construction of a statute and how it applies in
a given situation, 287 Ala. at 230, 250 So. 2d at 679; (5)
valid inverse-condemnation actions brought against State
officials in their representative capacities, Drummond Co. v.
Alabama Dep't of Transp., 937 So. 2d 56, 58 (Ala. 2006); and
(6)
actions
to
enjoin
State
officials
from
acting
fraudulently, in bad faith, beyond their authority, or in a
mistaken interpretation of law, Ex parte Moulton, 116 So. 3d
1119, 1141 (Ala. 2013). This Court has also noted that "'an
4
We also stated in Ex parte Moulton that § 14 does not bar
4
"actions for damages brought against State officials in their
individual capacity where it is alleged that they had acted
fraudulently, in bad faith, beyond their authority, or in a
12
1140170
action is one against the [S]tate when a favorable result for
the plaintiff would directly affect a contract or property
right of the State, or would result in the plaintiff's
recovery of money from the [S]tate.'" Alabama Agric. & Mech.
Univ. v. Jones, 895 So. 2d 867, 873 (Ala. 2004) (quoting
Shoals Cmty. College v. Colagross, 674 So. 2d 1311, 1314 (Ala.
Civ. App. 1995)).
The PEEHIP defendants argue that the public-education
plaintiffs' claims here do not fall within any of the six
categories of actions that survive the bar of § 14 and are,
therefore, barred by the doctrine of sovereign immunity. We
agree.
The parties agree that the fifth category –- valid
inverse-condemnation actions -– does not apply in this case.
However, the public-education plaintiffs argue that they have
requested injunctive relief, pursuant to the first, second,
mistaken interpretation of law, subject to the
limitation
that
the action not be, in effect, one against the State." 116 So.
3d at 1141. However, as noted in Ex parte Bronner, [Ms.
1110472, December 31, 2014] ___ So. 3d ___, ___ n.7 (Ala.
2014): "[A]ny action against a State official that seeks only
to recover monetary damages against the official 'in [his or
her] individual capacity' is, of course, not an action against
that person in his or her official capacity and would of
necessity fail to qualify as 'an action against the State' for
purposes of § 14."
13
1140170
and sixth categories of actions permitted by § 14 against
State officials in their official capacities. They argue:
"[The PEEHIP defendants] have designed and
implemented
a
constitutionally
impermissible
classification system for allotting health insurance
funds to public educators in the State of Alabama.
The [public-education plaintiffs] therefore seek to
enjoin the [members of the PEEHIP Board and Bronner]
in their representative capacities from enforcing
this unconstitutional policy, to perform their legal
duties and to correct their mistaken interpretation
of law."
Public-education plaintiffs' brief, at 11-12.
This Court has stated that "the 'legal-duty' exception
applies only where a law, a regulation, or a validly enacted
internal rule commands a specific course of conduct." Rodgers
v. Hopper, 768 So. 2d 963, 968 (Ala. 2000). The public-
education plaintiffs have not identified –- either in their
complaint or in their brief to this Court –- any law,
regulation, or internal rule that, they argue, creates a legal
duty for the PEEHIP Board to allow the public-education
plaintiffs access to the employer contribution paid on their
behalf to spend on health insurance or "that could serve as a
basis for our holding this lawsuit against the [members of the
PEEHIP Board and Bronner] to be authorized by this exception."
Id., at 969.
14
1140170
Similarly, the public-education plaintiffs have not
identified
an
allegedly
unconstitutional
law
being
enforced
by
the members of the PEEHIP Board and Bronner, as secretary-
treasurer of PEEHIP. The public-education plaintiffs have
alleged that the 2009 policy is unconstitutional in its
application because it creates a distinction between benefits
offered to couples both of whom are
public-education
employees
and who have dependant children, on the one hand, and other
public-education employees, on the other. However, the
public-education plaintiffs have made no argument and
cited
no
authority indicating that such a policy constitutes an
"unconstitutional law" for purposes of the second category of
actions permitted by § 14.
Finally, the public-education plaintiffs have not
identified in their complaint or their brief to this Court any
law the PEEHIP Board allegedly mistakenly interpreted or
construed in adopting or implementing the 2009 policy.
5
The public-education plaintiffs did allege in their
5
complaint
that
denying
them
access
to
the
employer
contribution to spend on health insurance violated § 138.03,
which, they argue, requires that the contributions and
payments made on behalf of the public-education plaintiffs be
held in trust for the "exclusive purpose of providing
benefits" to public-education employees. However, § 138.03
relates to "assets, proceeds or income of [TRS], or any
15
1140170
Instead, they argued that the 2009 policy unlawfully deprived
them of a benefit to which they were entitled. Again,
however, they have not identified a legal basis on which they
are entitled to that benefit. Thus, their claims are not
authorized under the sixth category of actions permitted by §
14.6
The public-education plaintiffs have also requested
declaratory relief, "ask[ing] that th[e] [circuit] [c]ourt
determine and adjudge that [the public-education plaintiffs]
and Class Members are entitled to the same benefits as other
public educators" and that "the [circuit] [c]ourt enter an
Order declaring [the PEEHIP defendants'] practice of denying
an allotment for insurance benefits to educators who are
married to another educator and who have dependent children to
be unconstitutional, discriminatory and unlawful." However,
this request for declaratory relief relates to the PEEHIP
successor systems thereto, and all contributions and payments
made to such systems to provide for retirement and related
benefits." It does not address contributions and payments
made to fund PEEHIP or policies implemented by the PEEHIP
Board.
The
public-education
employees
have
not
alleged
or
argued
6
that the PEEHIP Board acted fraudulently, in bad faith, or
beyond its authority in adopting and implementing the 2009
policy. See Moulton, supra.
16
1140170
defendants' conduct under the 2009 policy, not to the PEEHIP
Board's performance under any particular statute the public-
education plaintiffs now seek to have construed or "applie[d]
in a given situation." Aland, supra. Thus, the request for
declaratory relief does not fall within the categories of
actions against State officials in their official capacities
permitted under § 14.7
Relying on this Court's decision in Alabama Department
7
of Transportation v. Harbert International, Inc., 990 So. 2d
831 (Ala. 2008), the public-education plaintiffs argue that
their claim for declaratory relief is not barred because they
"seek a declaration 'giving direction and instruction to
individual
State
officers
on
the
interpretation
and
application of [state and federal] law.'" Public-education
plaintiffs' brief, at 12 (quoting Harbert, 990 So. 2d at 841).
However, their reliance on this language from Harbert is
misplaced. We stated in that case:
"As this Court held in [Ex parte Town of]
Lowndesboro, [950 So. 2d 1203 (Ala. 2006),] '[t]he
exception afforded declaratory-judgment actions
under § 14 generally applies only when the action
seeks "construction of a statute and how it should
be applied in a given situation," Aland v. Graham,
287 Ala. 226, 230, 250 So. 2d 677, 679 (1971), and
not when an action seeks other relief.' 950 So. 2d
at 1211. Early cases discussing the declaratory-
judgment-action 'exception' to § 14 describe the
purpose of a declaratory-judgment action as giving
direction and instruction to individual State
officers on the interpretation and application of
law:
"'In State v. Louis Pizitz Dry Goods
Co., 243 Ala. 629, 633, 11 So. 2d 342, 345
17
1140170
The public-education plaintiffs also argue that they
"seek
an
order
compelling
State
officers
in
their
(1943), superseded, in part, on other
grounds, Ala. Code 1940, tit. 7, § 167 (now
Ala. Code 1975, § 6–6–221), we further
explained
why
a
declaratory-judgment
action
is not barred by § 14:
"'"But we have held that
when an officer of the State is
confronted
with
an
uncertain
problem of what the law means
which requires certain acts on
his part, or whether the law is
valid, and he proposes to pursue
a certain course of conduct in
that
connection,
which
would
injuriously affect the interests
of others who contend that he has
no legal right thus to act, there
is thereby created a controversy
between them and the Declaratory
Judgments Act furnishes a remedy
for either party against the
other to declare the correct
status of the law. The purpose is
to settle a controversy between
individuals, though some of them
may be State officers."'"
Harbert, 990 So. 2d at 840-41 (emphasis added).
As
noted
previously,
the
public-education
plaintiffs
have
not requested instruction or direction with regard to the
meaning, application, or validity of any particular law but
have, instead, requested a judgment declaring the 2009 policy
unlawful and unconstitutional. This does not fall within the
category of declaratory-judgment actions permitted by § 14.
18
1140170
representative capacities to perform ministerial acts,"
public-education plaintiffs' brief, at 13, i.e., to pay the
public-education plaintiffs "restitution for the amounts the
[PEEHIP defendants] have unlawfully withheld and/or for the
amounts [the public-education] plaintiffs have paid for
insurance that they would not have paid absent [the PEEHIP
defendants'] unlawful conduct." "'It is settled beyond cavil
that State officials cannot be sued for damages in their
official capacities.'" Ex parte Montgomery Cnty. Bd.
of
Educ.,
88 So. 3d 837, 842 (Ala. 2012) (quoting Burgoon v. Alabama
State Dep't of Human Res., 835 So. 2d 131, 132-33 (Ala.
2002)). Moreover, as noted previously, "an action is one
against the [S]tate when a result favorable for the plaintiff
would ... result in the plaintiff's recovery of money from the
[S]tate." Jones, 895 So. 2d at 873 (emphasis omitted). See
also Ex parte Moulton, 116 So. 3d at 1132 ("Teplick concedes
that his claims against the petitioners in their official
capacities seeking monetary damages, including backpay,
'front' pay, and an attorney fee, are barred by § 14.").
The public-education plaintiffs argue:
"[The] request for incidental monetary relief is not
barred by sovereign immunity because the Court may
19
1140170
order State officers to pay the predetermined amount
as a ministerial duty. [Alabama Dep't of Transp. v.]
Harbert [Int'l, Inc.], 990 So. 2d [831] at 845
[(Ala. 2008)]. '[A]lthough the payment of the funds
"may ultimately touch the State treasury," the
payment does not "affect the financial status of the
State treasury," because the funds "do not belong to
the State," and the State treasury "suffers no more
than it would" had the State officers originally
performed their duties and paid the debts.' Id., at
845-46 (citations omitted). Should [the public-
education plaintiffs] prevail in this action and be
awarded restitution, the financial status of the
State treasury will likewise suffer no more than if
the [PEEHIP Board] had performed [its] legal duty
and allotted [the public-education plaintiffs] the
amounts
to
which
they
were
statutorily
and
constitutionally entitled."
Public-education plaintiffs' brief, at 13-14.
The public-education plaintiffs' reliance on Alabama
Department of Transportation v. Harbert International, Inc.,
990 So. 2d 831 (Ala. 20008), in this regard is misplaced. In
Harbert, this Court addressed, among other things, whether
Harbert International, Inc. ("Harbert"), could maintain an
action against the Alabama Department of Transportation
("ALDOT"), seeking, among other things, (1) the return of
liquidated damages withheld under an allegedly unlawful
provision of Harbert's contract with ALDOT, (2) $291,750 of a
retainage ALDOT owed under the contract, and (3) compensation
for extra work Harbert had performed under the contract. This
20
1140170
Court noted that "mandamus relief is available in certain
situations to compel a State officer to perform the
ministerial act of tendering payment of liquidated or certain
sums the State is legally obligated to pay under a contract."
Harbert, 990 So. 2d at 842. We went on to affirm the circuit
court's judgment insofar as it required ALDOT to pay Harbert
the liquidated damages and retainage owed under the contract
but reversed the judgment insofar as it directed the payment
to Harbert of unliquidated damages for its breach-of-contract
claim.
Although the public-education plaintiffs argue that the
restitution they are requesting is not "compensatory or
unliquidated damages" and is "an amount known to [the PEEHIP
defendants]," public-education plaintiffs' brief, at 14, the
restitution requested in this case is more in the nature of a
refund of amounts overpaid than a request for liquidated or
certain damages owed under contract. This Court has
determined that such claims are barred by § 14.
In Poiroux v. Rich, 150 So. 3d 1027, 1037 (Ala. 2014),
this Court addressed whether an action against
State
officials
in their official capacities requesting a refund of fees paid
21
1140170
under
allegedly
unconstitutional
portions
of
§
12-19-311,
Ala.
Code 1975, was barred by § 14, stating: "Recovery on those
claims ... would 'affect the financial status of the state
treasury,' Patterson[ v. Gladwin Corp.], 835 So. 2d [137,] 143
[(Ala. 2002),] and would '"result in the ... recovery of money
from the [S]tate."'" (Quoting Jones, 895 So. 2d at 873.)
Similarly, in Patterson, a taxpayer who had successfully
challenged the constitutionality of certain taxes that had
been assessed pursuant to § 40-14-40, Ala. Code 1975, brought
a class action against the commissioner of the Department of
Revenue in his official capacity, seeking a refund of taxes
paid under that statute. This Court determined that a
judgment in favor of the class in that case "would 'affect the
financial status of the state treasury,'" Patterson, 835 So.
2d at 143 (quoting State Docks Comm'n v. Barnes, 225 Ala. 403,
405, 143 So. 581, 582 (1932) (emphasis omitted)), and that
"the Taxpayer's class action seeking a refund of franchise
taxes paid pursuant to Alabama's invalid statutory scheme is
an action against the State as that concept is expressed in §
14." Id., at 154.
22
1140170
The public-education plaintiffs argue that "Alabama
courts have held on more than one occasion that actions by
employees or officers of the State to recover funds to which
they are entitled are not barred by the doctrine of sovereign
immunity." Public-education plaintiffs' brief, at 14.
However, none of the cases they rely on in support of that
proposition involves a request for restitution or a refund of
funds allegedly overpaid. In Druid City Hospital Board v.
Epperson, 378 So. 2d 696 (Ala. 1979), this Court addressed the
rights of a creditor to garnish the wages of a state employee.
Gunter v. Beasley, 414 So. 2d 41 (Ala. 1982), McMillan v. Lee,
655 So. 2d 906 (Ala. 1994), and Ex parte Bessemer Board of
Education, 68 So. 3d 782 (Ala. 2011), were actions to compel
State officials to perform a ministerial duty, i.e., to pay
specific amounts owed by the State under a statute. None of
those cases supports a finding that the aspect of this action
requesting monetary relief seeks to compel the performance of
a ministerial act or otherwise survives the § 14 bar.
The public-education plaintiffs also requested costs and
attorney fees. This Court has held that "an award of interim
attorney fees and expenses impacts the State treasury and
23
1140170
divests it of funds in the very way forbidden by § 14." Ex
parte Town of Lowndesboro, 950 So. 2d 1203, 1211-12 (Ala.
2006). Thus, the public-education plaintiffs' request for
costs and attorney fees is also barred by § 14.
Because the state-law claims alleged by the public-
education plaintiffs in their complaint do not fall within the
categories of actions permitted by § 14, those claims are
barred by the doctrine of sovereign immunity. Therefore, the
PEEHIP defendants have demonstrated that they have a clear
legal right to have the state-law claims against the members
of the PEEHIP Board and Bronner, in his capacity as secretary-
treasurer of PEEHIP, dismissed.
III. Federal Claims Against the Members of the PEEHIP Board
and Bronner, in His Capacity as Secretary-Treasurer of PEEHIP
The PEEHIP defendants argue that "Eleventh Amendment
immunity bars [the public-education plaintiffs'] federal
claims."
"It is clear ... that in the absence of consent a
suit in which the State or one of its agencies or
departments is named as the defendant is proscribed
by the Eleventh Amendment. This jurisdictional bar
applies regardless of the nature of the relief
sought.
"When the suit is brought only against state
officials, a question arises as to whether that suit
24
1140170
is a suit against the State itself. ... The Eleventh
Amendment bars a suit against state officials when
'the state is the real, substantial party in
interest.'"
Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 101
(1984) (quoting Ford Motor Co. v. Department of Treasury, 323
U.S. 459, 464 (1945) (citations omitted)).
"To ensure the enforcement of federal law, the Eleventh
Amendment permits suits for prospective injunctive relief
against state officials acting in violation of federal law.
This standard allows courts to order prospective relief, as
well
as
measures
ancillary
to
appropriate
prospective
relief."
Frew v. Hawkins, 540 U.S. 431, 437 (2004) (citations omitted).
Claims for monetary relief against State officials in their
official capacities are barred by the Eleventh Amendment. See
Edelman v. Jordan, 415 U.S. 651 (1975) ("'[W]hen the action is
in essence one for the recovery of money from the state, the
state is the real, substantial party in interest and is
entitled to invoke its sovereign immunity from suit even
though
individual
officials
are
nominal
defendants.'"
(quoting
Ford Motor Co., 323 U.S. at 464, overruled on other grounds by
Lapides v. Board of Regents of Univ. Sys. of Georgia, 535 U.S.
613 (2002))).
25
1140170
It is undisputed that the members of the PEEHIP Board and
Bronner,
as
secretary-treasurer
of
PEEHIP,
are
State
officials
and that the public-education plaintiffs' federal claims are
asserted against them in their official capacities. The
claims for restitution are claims for retroactive monetary
relief, and, as noted previously, a judgment in the public-
education plaintiffs' favor on those claims would result in
the recovery of money from the State. Therefore, those claims
are barred under the Eleventh Amendment. See Edelman, supra.
The public-education plaintiffs' request for injunctive
relief, however, is in the nature of prospective injunctive
relief (i.e., an order enjoining the members of the PEEHIP
Board and Bronner, as secretary-treasurer of PEEHIP, from
continuing to deny them the benefit of the employer
contribution). That relief is not barred by the Eleventh
Amendment. See Frew, supra. Thus, the PEEHIP defendants have
a clear legal right to have the federal claims for monetary
relief against the members of the PEEHIP Board and Bronner, as
secretary-treasurer of PEEHIP, dismissed, but the federal
claims for prospective injunctive relief remain.
26
1140170
The public-education plaintiffs argue that "[t]he Court
should not grant [the PEEHIP defendants'] petition for a writ
of mandamus based on 'Eleventh Amendment Immunity,'" because
"[the PEEHIP defendants] did not move to dismiss [the public-
education plaintiffs'] claims based on 'Eleventh Amendment
Immunity' in the trial court. A petitioner that fails to
raise an issue in the trial court cannot raise the issue for
the first time before an appellate court." Public-education
plaintiffs' brief, at 16-17. However, the PEEHIP defendants
argued in their motion to dismiss that "Alabama courts have
also applied sovereign immunity principles and Eleventh
Amendment doctrine to bar federal law claims brought in state
court," citing the same cases relied on in their petition for
mandamus relief filed in this Court. Thus, the issue was
presented to the circuit court, and, even assuming for the
sake of argument that the PEEHIP defendants could not raise
Eleventh Amendment immunity for the first time in their
mandamus petition, the public-education plaintiffs have not
demonstrated that the requested immunity should be denied on
that basis.
27
1140170
The public-education plaintiffs also argue that "[t]he
Eleventh Amendment does not provide a source of immunity in
state courts." Public-education plaintiffs' brief, at 17.
However, this Court has applied the Eleventh Amendment to bar
federal claims brought against State officials in
state
courts
in various contexts. See, e.g., Haywood v. Alexander, 121 So.
3d 972, 978 (Ala. 2013) (affirming the circuit court's
judgment dismissing § 1983 claims against a sheriff on the
basis of Eleventh Amendment immunity); Ex parte Madison Cnty.
Bd. of Educ., 1 So. 3d 980, 987 (Ala. 2008) (addressing
whether a local board of education was an "arm of the State"
for purposes of Eleventh Amendment immunity from § 1983 claims
alleged against it in state court); and Alabama State Docks
Terminal Ry. v. Lyles, 797 So. 2d 432, 439 (Ala. 2001) ("We
are therefore required to read the Eleventh Amendment as the
United States Supreme Court currently interprets it; that is
to say, an Alabama state court has no jurisdiction over an
action brought under the [Federal Employees'
Liability Act, 45
U.S.C. § 51 et seq.]."). Thus, the public-education
plaintiffs have not demonstrated that their claims for
28
1140170
monetary relief pursuant to § 1983 are outside the scope of
Eleventh Amendment immunity.
Conclusion
As
noted
previously,
the
public-education
plaintiffs
have
agreed to voluntarily dismiss all the claims against RSA,
PEEHIP, the PEEHIP Board, PEEHIF, TRS, the TRS Board, members
of the TRS Board, and Bronner, in his capacity as chief
executive officer of RSA and as secretary-treasurer of TRS.
For the foregoing reasons, we conclude that, pursuant to § 14,
the members of the PEEHIP Board and Bronner, in his capacity
as secretary-treasurer of PEEHIP, are entitled to immunity
from the public-education plaintiffs' state-law claims. The
members of the PEEHIP Board and Bronner, in his capacity as
secretary-treasurer of PEEHIP, are also entitled to Eleventh
Amendment immunity on the public-education plaintiffs' § 1983
claims for monetary relief. The members of the PEEHIP Board
and Bronner, in his capacity as secretary-treasurer of
PEEHIP,
are not entitled to Eleventh Amendment immunity from the
public-education
plaintiffs'
claims
for
prospective
injunctive
relief under § 1983.
29
1140170
Therefore, the petition is granted in part and a writ of
mandamus issued, instructing the circuit court to dismiss all
the public-education plaintiffs' claims against RSA, PEEHIP,
the PEEHIP Board, PEEHIF, TRS, the TRS Board, the members of
the TRS Board, and Bronner, in his capacity as chief executive
officer of RSA and as secretary-treasurer of TRS, and to
dismiss all the public-education plaintiffs' state-law claims
and federal claims for monetary relief against the members of
the PEEHIP Board and Bronner, in his capacity as secretary-
treasurer of PEEHIP. In all other respects, the petition is
denied.
PETITION GRANTED IN PART AND DENIED IN PART; WRIT ISSUED.
Stuart, Bolin, Shaw, and Wise, JJ., concur.
Parker, J., concurs specially.
Moore, C.J., and Murdock, J., concur in the result.
Main, J., recuses himself.
30
1140170
PARKER, Justice (concurring specially).
I concur in the majority opinion because nowhere in the
briefs before us are we presented with a challenge to the
policy or internal rule adopted by the PEEHIP Board in 2009 as
being
in
contravention
of
Regulations
800—6-3-.01
and
800-6-7-
.02 of the Alabama Administrative Code (Retirement Systems of
Alabama). Regulation 800-6-3-.01 states:
"Combination Of Allocations. Husbands and wives may
combine
state
allocations
to
purchase
family
hospital/medical coverage under PEEHIP. For this
purpose the state allocation may be transferred from
a participating employer to another participating
employer or from a nonparticipating employer to a
participating
employer.
However,
the
state
allocation
may
not
be
transferred
from
a
participating
employer
to
a
nonparticipating
employer."
Regulation 800-6-7-.02 states:
"PEEHIP Transfer Of Allocation. Used where husband
and wife are both entitled to state insurance
allocation and wish to have those allocations
combined as partial payment of one family basic
hospital/medical plan."
I write specially to express my concern over government
ruling by regulation, rather than by laws enacted by the
legislature. Regulations passed by bureaucrats, instead of
bills passed by the legislative branch and signed into law by
the executive branch, are commonplace in our society today.
31
1140170
For instance, in Alabama, there are currently 130 agencies,
boards, commissions, authorities, etc., that have passed
regulations that are part of the Alabama Administrative Code.
Legislative Reference Service, which is responsible for
printing the Alabama Administrative Code, could not say how
many pages currently make up the Alabama Administrative Code
because the Administrative Code is constantly changing based
on regulations adopted or repealed by the 130 government
entities. My concern is not limited to our State's
government; the Code of Federal Regulations now exceeds
175,000 pages. Clyde Wayne Crews, Jr., Ten Thousand
Commandments: An Annual Snapshot of the Federal Regulatory
State, p. 6 (Competitive Enterprise Institute 2015). Some
state and federal regulations may have the potential to burden
the liberties of its citizens -- all without the democratic
process as a check and balance.
Given the ever growing power of government through
regulations, the people of Alabama must not be barred from
challenging
State
officials
seeking
to
enforce
unconstitutional regulations. The absence of that check on
State officials would only serve as an incentive for
32
1140170
government to pass more and more regulations through
bureaucrats, who are insulated from the public, rather than
statutes through legislators, who are directly accountable to
the people of Alabama through democratic elections.
This Court has recognized six categories of actions that
survive the bar to actions against the State in Art. I, § 14,
Alabama Constitution of 1901: (1) actions to compel State
officials to perform their legal duties, Aland v. Graham, 287
Ala. 226, 229, 250 So. 2d 677, 679 (1971); (2) actions to
enjoin
State
officials
from
enforcing
an
unconstitutional
law,
id.; (3) actions to compel State officials to perform
ministerial acts, 287 Ala. at 229-30, 250 So. 2d at 679; (4)
actions under the Declaratory Judgment Act, § 6-6-220 et seq.,
Ala. Code 1975, seeking construction of a statute and how it
applies in a given situation, 287 Ala. at 230, 250 So. 2d at
679; (5) valid inverse-condemnation actions brought against
State officials in their representative capacities, Drummond
Co. v. Alabama Dep't of Transp., 937 So. 2d 56, 58 (Ala.
2006); and (6) actions to enjoin State officials from acting
fraudulently, in bad faith, beyond their authority, or under
33
1140170
a mistaken interpretation of law, Ex parte Moulton, 116 So. 3d
1119, 1141 (Ala. 2013).
This Court has already recognized that "the 'legal-duty'
exception applies only where a law, a regulation, or a validly
enacted internal rule commands a specific course of conduct."
Rodgers v. Hopper, 768 So. 2d 963, 968 (Ala. 2000). All the
§ 14 exceptions must be read to include "a law, a regulation,
or a validly enacted internal rule," as applicable. This
would not expand the exceptions to § 14 immunity; rather, it
is the State that has expanded the means by which it governs.
The citizens of Alabama must be permitted to defend their
rights.
34 | June 12, 2015 |
689d6a9a-3d63-464c-b11a-d34a0165db9a | Hillcrest Center, Inc. v. Rone | 711 So. 2d 901 | 1940535 | Alabama | Alabama Supreme Court | 711 So. 2d 901 (1997)
HILLCREST CENTER, INC., et al.
v.
Robert E. RONE and Mariella C. Rone.
1940535.
Supreme Court of Alabama.
August 1, 1997.
Opinion Modified on Denial of Rehearing November 14, 1997.
Rehearing Denied with Statement November 14, 1997.
*902 Forrest S. Latta and W. Pemble DeLashmet of Pierce, Carr, Alford, Ledyard & Latta, P.C., Mobile, for appellants (on original submission).
Michael A. Worel of Cunningham, Bounds, Yance, Crowder & Brown, Mobile, for appellant Hillcrest Center III, Ltd. (on original submission).
David P. Broome, Mobile, for appellees.
Forrest S. Latta and J. Robert Turnipseed of Pierce, Ledyard, Latta & Wadsden, P.C., Mobile, for appellants (on application for rehearing).
COOK, Justice.
The defendants, Hillcrest Center, Inc.; Hillcrest Center III, Ltd.; and Margaret G. Seibert, appeal from a judgment in favor of the plaintiffs, Robert E. Rone and his wife, Mariella C. Rone. We affirm conditionally.
Hillcrest Center, Inc., is an Alabama corporation, and it is the sole general partner of Hillcrest Center III, Ltd., an Alabama limited partnership. Margaret Seibert is the president of Hillcrest Center, Inc., and is an officer of Hillcrest Center III, Ltd. Hillcrest Center, Inc., manages the commercial building in issue here (Hillcrest Office Park), which is owned by Hillcrest Center III, Ltd.
In April 1993, the Rones sued, alleging that Seibert, by intentional or reckless misrepresentations, had fraudulently induced the Rones to lease space in a commercial building owned by Hillcrest Center III, Ltd. The Rones sought money damages and rescission of the lease contract. The defendants denied the allegations of the complaint and asserted the affirmative defense of estoppel.
In November 1993, the defendants filed a motion asking that the Rones be required to make an election of remedies, on the ground that the claim alleging fraud in the inducement was inconsistent with the claim seeking rescission of the lease. In response to that motion, the trial court held:
During trial, the defendants moved to strike the counts of the complaint seeking damages for fraud, claiming that the Rones *903 had elected the remedy of rescission of the lease contract and, having done so, could not also recover compensatory and punitive damages for the fraud claim, which the defendants alleged was inconsistent. The trial court denied the motion. The trial court also denied the defendants' motion to exclude evidence relating to the claims for punitive damages and damages to compensate for lost profits.
The trial court instructed the jury with regard to fraud resulting from intentional or reckless misrepresentations; promissory fraud; and compensatory and punitive damages. The trial court denied the defendants' requested jury instruction on the affirmative defense of estoppel. The issue whether the lease contract should be rescinded was also submitted to the jury.
The jury's general verdict read, in pertinent part, as follows:
The trial court entered a final judgment on the jury's verdict, and the Rones vacated Hillcrest Office Park. After a hearing on the parties' post-trial motions, the trial court, pursuant to Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), granted the defendants' motion for a remittitur with regard to the punitive damages award and reduced the punitive damages award to $130,000.
The defendants contend that the trial court erred in submitting the Rones' fraud claims to the jury. However, say the defendants, even if the trial court had been correct in charging the jury on fraud, the evidence did not support the claim alleging ordinary fraud and the jury was entitled to consider only the claim of promissory fraud. We disagree.
Mariella Rone met Seibert in 1990 when Seibert came into Mrs. Rone's small manicure shop in Mobile. In the fall of 1991, Mrs. Rone told Seibert that she and her husband were looking for space where they could open a full-service beauty salon. The Rones had attempted to find space for their proposed salon business but had been unsuccessful because of their parking requirements. Seibert told Rone about the plans for the Hillcrest Office Park and told Mrs. Rone that she should put the new business there.
The Rones contended that, during numerous meetings regarding the lease contract, they made it clear to Seibert that their business required a large number of parking spaces for employees and clients and that sufficient parking was a prerequisite to their leasing space at Hillcrest Office Park. Mrs. Rone testified that she told Seibert that more than one commercial building manager had refused to lease space to the Rones for the salon because the Rones' parking needs were so great. Robert Rone testified that he gave Seibert a list indicating the number of employees and clients that could be at the salon at any given time, along with an estimate that the salon would need a total of approximately 30 spaces. According to the Rones, Seibert consistently assured them that parking would be no problem and that there would be a "huge" parking area.
Robert Rone testified that he met with Seibert on October 8, 1991, before signing the lease. He stated that he pointed out to Seibert paragraph 30 of the lease agreement, which assigned only three parking spaces to the Rones' business, and that he reminded Seibert that their business would require many more parking spaces than three. Rone also told Seibert that he was quitting his job to manage the beauty salon and could not afford to have the business fail. According to Mr. Rone, each time he expressed to Seibert his concerns about the parking, she told him not to worry, that there would be plenty of parking, and that she had an option to purchase an adjacent lot where she intended to build a small building and a large parking lot.
*904 The Rones testified that Seibert's representations regarding the adequacy of parking were a primary inducement to them to put their new business in Hillcrest Office Park. They also testified that, in reliance on Seibert's representations, they executed a five-year commercial lease for the space at Hillcrest Office Park.
As the lot was cleared for construction of Hillcrest Office Park to begin, the Rones realized that the parking at the new building would be inadequate to accommodate their needs. According to the Rones, Seibert continued to assure them that additional parking would be available on the adjacent lot. At trial, Seibert maintained that she did not recall, from these early meetings with the Rones, any specific conversations about parking.
The Rones moved their business into Hillcrest Office Park in the spring of 1992. According to the Rones, they had inadequate parking space and experienced problems because of the inadequate parking, including an inability to attract employees and clients. Mrs. Rone testified that the building held four businesses, that the parking lot contained only 12 spaces, and that the Rones' business alone was designed to employ 13 people (a fact, say the Rones, that they had communicated to Seibert). The Rones testified that, because of the inadequate parking, they were able to have only two hairdressers and Mrs. Rone working at the salon at any given time. As a result, they testified, they were able to utilize only one-half of the leased space, although they had purchased and installed equipment and fixtures for the entire leased premises.
On December 29, 1992, Seibert met with the Rones and told them that she would not be purchasing the adjacent property and that no additional parking would be available. Seibert testified that she had always planned on putting a building and parking facilities on the adjacent lot, but that she had never planned on using it exclusively as a parking area. Therefore, Seibert said, when she could not get a commitment from a tenant for the proposed building on the adjacent lot she withdrew her offer to purchase the property.
Another prospective tenant of Hillcrest Office Park testified that when he questioned Seibert about the apparent scarcity of parking, she assured him that parking would be no problem because there would be "an arrangement" with the owner of the adjacent property to handle Hillcrest Office Park's overflow parking. This conversation took place in February 1993after the December 29, 1992, meeting between the Rones and Seibert during which Seibert admitted that the adjacent property was no longer a part of the plan for Hillcrest Office Park.
The final witness at trial was Don Williams, the engineer on the Hillcrest Office Park construction and on other construction done for Seibert. Williams testified that when working on a project such as Hillcrest Office Park, Seibert "always wants the maximum size building and the minimum parking spaces" allowed by law.
In charging the jury, the trial court correctly set out the essential elements of what the court called "factual fraud," as well as the additional elements required for the recovery of punitive damages:
(Emphasis added.)
This Court has written:
National Security Insurance Co. v. Donaldson, 664 So. 2d 871, 876 (Ala.1995) (citations omitted).
We hold that there was substantial evidence from which the jury could reasonably infer that Seibert's continued promises of parking adequate to meet the demands of the Rones' business were, at the very least, reckless misrepresentations. Indeed, the factfinder could reasonably infer from the evidence that Seibert knew or should have known that the planned parking at Hillcrest Office Park would be entirely inadequate for the Rones' needs.[1]
Although Seibert made efforts to obtain parking space on the adjacent lot, her assertions to the Rones that the adjacent lot would be available for parking constitute a basis for a finding of a reckless misrepresentation because, at the time the statements were made, she was still negotiating for the purchase of that lot and in fact there was no guarantee that she would be able to purchase it, or a finding that she had not intended to purchase the lot if she would not be able to place a building on it.
Seibert's persuading the Rones to enter into the lease agreement was premised on the Rones' believing that Seibert had the present ability to provide the number of agreed-upon parking spaces within a certain period of time. The misrepresentation of the existing material fact occurred when Seibert told the Rones, among other things, that she had the option to purchase the adjacent lot, and that there would be ample parking in a huge parking lot, thereby conveying to the Rones the impression that Seibert had the present ability to provide the required number of parking spaces.
"[W]hen representations are made recklessly and heedlessly without any regard to their consequences, they will supply the necessary intent to support a fraud action." Winn-Dixie Montgomery, Inc. v. Henderson, 395 So. 2d 475, 476 (Ala.1981). The evidence supports the conclusion that Seibert recklessly misrepresented an existing material fact to the Rones and that, in justifiable reliance[2] on Seibert's misrepresentation, the Rones suffered damage. There was no error in submitting to the jury the Rones' claim alleging ordinary fraud.
With regard to promissory fraud, this Court has held:
Russellville Production Credit Ass'n v. Frost, 484 So. 2d 1084, 1087 (Ala.1986).
"Ordinarily, intent is a matter peculiarly within the province of the trier of facts." Purcell Co. v. Spriggs Enterprises, Inc., 431 So. 2d 515, 519 (Ala.1983). Taking the testimony of all the witnesses as a whole, we conclude that the evidence was sufficient for the jury to infer that Seibert intended, from the beginning, to induce the Rones to execute the lease contract, yet never intended to purchase the adjacent lot to provide the additional parking unless she was able to secure a tenant for the proposed building to be built on the adjacent lot (a "contingency" Seibert never communicated to the Rones), despite her continued assurances to the Rones that there would be "plenty of parking." The evidence was sufficient for the jury to infer that Seibert's conduct toward the Rones exhibited the intent required for a finding of promissory fraud.[3]
The defendants next argue that they are entitled to a new trial because, they say, the court allowed the Rones incompatible forms of relief: damages for fraud and rescission of the lease contract. In support of this argument, the defendants quote from Day v. Broyles, 222 Ala. 508, 509, 133 So. 269 (1931):
In Sheffield v. Andrews, 679 So. 2d 1052 (Ala.), cert. denied, ___ U.S. ___, 117 S. Ct. 610, 136 L. Ed. 2d 535 (1996), this Court was faced with a similar issue. In Sheffield, the plaintiff was allowed to "rescind" a contract that had been executed as a result of the defendant's fraud and was awarded punitive damages for the fraud. In answering the defendant's contention that these remedies were inconsistent and mutually exclusive, we held:
The Rones contend that this case falls squarely within the holdings of Sheffield and Mid-State Homes, and that forcing them to elect between remedies would, in effect, allow the defendants to perpetrate a fraud and run no risk of liability beyond placing themselves in the position they were in when Seibert began her negotiations with the Rones. We agree. The jury found that the defendants were guilty of fraud in the inducement; therefore, the remedy of allowing rescission of a contract executed as the result of fraudulent misrepresentations is not inconsistent with a monetary award for the damage resulting from the fraud.
The defendants next argue that the trial court erred in not charging the jury on the affirmative defense of estoppela defense raised by the defendants in their answer and, according to the defendants, covered by their written requested jury charge on estoppel. We disagree, for several reasons.
The defendants' requested jury charge is incomplete in that it did not set out the elements that must be proved to support a claim of estoppel. See Talladega City Board of Education v. Yancy, 682 So. 2d 33 (Ala.1996) (quoting Mazer v. Jackson Insurance Agency, 340 So. 2d 770 (Ala.1976)). Indeed, the requested charge did no more than recite the defendants' conclusions as to the Rones' conduct and state of mind and the defendants' allegations that, as a result of what the defendants perceived to be the Rones' conduct and state of mind, the Rones were estopped from suing these defendants.
Further, we note a further portion of Mazer that was quoted with approval in Yancy:
Mazer v. Jackson Insurance Agency, 340 So. 2d at 772. No evidence in the record would support an inference that the Rones' conduct "render[ed] the assertion of [their] rights contrary to equity and good conscience." Indeed, the evidence tended to show that the Rones remained at Hillcrest Office Park and continued to make improvements to their leased space in good-faith reliance on the assertions of Seibert that the problem of inadequate parking would be remedied.
We also note that the defendants' requested charge on estoppel would not advise the jury that it could find that the Rones were estopped from asserting their claims against these defendants only if it first found that the Rones had certain knowledge that Seibert had never intended to supply additional parking, despite assurances otherwise. This prerequisite was not a part of the defendants' requested charge; thus, the charge was defective in this additional aspect.
Finally, we note that the requested charge would advise the jury that the Rones were estopped from bringing their claims because they occupied the leased premises in April 1992 and "did not bring this action until a full year later." The statutory limitations period for a fraud action is two years (Ala. Code 1975, § 6-2-38); therefore, this portion of the requested charge is misleading and a misstatement of Alabama law.
The defendants did not request a curative amendment so that the requested charge would adequately state the law on estoppel as applied under the circumstances of this case. The trial court correctly denied the requested charge regarding estoppel.
Finally, the defendants argue that if this Court affirms the imposition of liability, then it should further reduce the damages award.
The defendants first contend that the Rones' evidence regarding lost profits was inadmissible and that the jury based its verdict on that evidence. According to the defendants, Alabama law requires that evidence *908 of lost profits with regard to a new, unestablished business be established by expert testimony only. We disagree.
In Kirkland & Co. of Anniston, P.C. v. A & M Food Service, Inc., 579 So. 2d 1278 (Ala.1991), this Court noted that claims of lost profits were often supported by expert testimony, but stated that the standard to be applied in regard to claims for lost profits is one of "reasonable certainty":
579 So. 2d at 1287-88. See, also, Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 51 S. Ct. 248, 75 L. Ed. 544 (1931).
In Mason & Dixon Lines, Inc. v. Byrd, 601 So. 2d 68 (Ala.1992), we reaffirmed the "reasonable certainty" standard by which to test a basis for estimating alleged lost profits. In Mason & Dixon, Byrd sued Mason and Dixon Lines, alleging fraud and breach of contract, based on a claim that Mason and Dixon had induced Byrd to become its transportation agent and then had terminated his services.
With regard to Byrd's proof of his damages claima claim for lost profitsthe Mason & Dixon Court quoted with approval from Paris v. Buckner Feed Mill, Inc., 279 Ala. 148, 149-50, 182 So. 2d 880, 881 (1966):
601 So. 2d at 70. The Mason & Dixon Court went on to state, "`[T]he rule dictates that recovery will ensue despite the fact damages cannot be calculated with mathematical certainty.' " 601 So. 2d at 70, quoting Morgan v. South Central Bell Telephone Co., 466 So. 2d 107, 116 (Ala.1985), and it allowed Byrd to compare his earnings with his previous employer with his potential earnings at Mason and Dixon, which, this Court held, "constituted a horizontal comparison of businesses and provided a basis for the jury to estimate with reasonable certainty the profits Byrd lost." 601 So. 2d at 71.
Robert Rone, who kept the financial books for the Rones' business, was allowed to testify concerning the lost profits the Rones alleged had proximately resulted from Seibert's misrepresentations. Plaintiffs' Exhibits 11 and 12, prepared by Robert Rone and containing projections for income and expenses for the Rones' business for the first two years of operation, were admitted into evidence. These exhibits, however, were admitted only with the trial court's explicit direction to the jury that the projections were offered to "show that the parties may have anticipated or contemplated such income or such expenses," and that the jurors should give these exhibits "such weight and credibility as [they] assign to it in [their] discretion." Based on the trial court's limiting instructions setting out the predicate upon which the jury was directed to view these two exhibits, we find no error in the admission of Plaintiffs' Exhibits 11 and 12.
Further, in its "order and revised judgment" entered following the hearing on post-trial motions, the trial court reaffirmed the correctness of the jury's award of compensatory damages. The trial court stated that the Rones had suffered "significant" harm and that there was sufficient evidence to support the jury's award of $47,000 in compensatory damages. We find no error in the jury's awarding compensatory damages or in its computation of those damages, and we find no error in the trial court's order upholding the compensatory damages award. See Hollis v. Wyrosdick, 508 So. 2d 704 (Ala. 1987).
The trial court reduced the jury's punitive award of $200,000 by $70,000. We find no abuse of discretion in the trial court's order reducing the award of punitive damages to $130,000.
*909 Recent decisions of this Court and of the United States Supreme Court have explained and refined appellate review of punitive damages awards in Alabama. See, for example, BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). However, these decisions leave unaltered the presumption of correctness that attends a jury verdict awarding punitive damages and leave unaltered the defendant's burden for overcoming that presumption, the burden of proving the verdict was not correct. Here, the presumption of correctness is strengthened by the trial court's denial of the defendants' post-judgment motions, by its conducting a post-judgment hearing pursuant to Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and by its reducing the punitive damages award by $70,000.
Therefore, in light of the presumption attending the judgment appealed from, in order to determine whether these defendants are correct in arguing that the punitive damages award is excessive or otherwise improper this Court must conduct a "meaningful" judicial review pursuant to the principles discussed in BMW v. Gore, supra, and Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991), and determine whether the trial court correctly applied the "Green Oil factors" during its post-judgment Hammond hearing.
The trial court's "order and revised judgment" reveals that the court thoroughly reassessed the evidence and the relative positions of the parties and understood the purposes and practical results of imposing punitive damages. The court's reassessment and understanding were accomplished as a result of the application of the principles enumerated in Green Oil.
In this review of a contested punitive damages award, we must consider the "guideposts" set out by the United States Supreme Court in BMW v. Gore, supra. Thus, we look carefully at 1) the degree of reprehensibility of the defendants' conduct; 2) the ratio of the punitive damages award to the compensatory damages award; and 3) a comparison of the punitive damages award with civil or criminal penalties that could be imposed for comparable conduct.
The reprehensibility of the defendants' conduct is of a degree that supports the jury's punitive damages award. In the preceding portions of this opinion we held that there was substantial evidence from which the jury could properly infer that Seibert was guilty of fraud of either the ordinary variety or the promissory variety. In his "order and revised judgment," the trial judge characterized the conduct of Seibert, including the execution of a "sham mortgage" on Seibert's home, as "chicanery in concealing and minimizing ... assets."
There are no comparable civil or criminal remedies against which we may gauge the punitive damages awarded here. However, with regard to the third BMW v. Gore "guidepost"the ratio of the punitive damages to the compensatory damageswe are reminded of this Court's language in Green Oil, supra:
539 So. 2d at 222. See, also, Wilson v. Dukona Corp., N.V., 547 So. 2d 70 (Ala.1989).
According to the testimony presented in support of the post-judgment motions and the findings of the trial court following the hearing on those motions, the punitive damages award, as reduced by the trial court, is approximately 60% of the net worth of Mrs. Seibert and the corporate defendants. The ratio of the punitive damages award, as reduced, to the compensatory damages award is approximately 2.8:1. While not reaching an amount that would destroy the defendants, the punitive damages award does, under these circumstances, exceed what is necessary to "punish."
*910 We hold, therefore, as follows: The judgment is affirmed as to the imposition of liability, both for compensatory damages and for punitive damages; and the $47,000 award of compensatory damages is affirmed. However, the award of punitive damages must be reduced to $94,000.[4] If the plaintiffs do not, within 28 days of the date of this opinion, file with the clerk of this Court a remittitur of $36,000, then the defendants shall be granted a new trial.
AFFIRMED CONDITIONALLY.
ALMON, SHORES, HOUSTON, and KENNEDY, JJ., concur.
BUTTS, J., concurs in part and dissents in part.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
BUTTS, Justice (concurring in part and dissenting in part [as to opinion of August 1, 1997]).
I concur except as to the amount of the remittitur of punitive damages ordered. The record shows that Seibert has $150,000 in personal assets, plus $65,000 in equity in the Hillcrest commercial property, for a total net worth of $215,000. After the remittitur, the remaining punitive damages award of $94,000 amounts to approximately 44% of Seibert's net worth. As this Court pointed out in BMW of North America, Inc. v. Gore, 701 So.2d 507(Ala.1997) (on remand from the United States Supreme Court), a punitive damages award that exceeds 10% of the defendant's net worth might be considered to have crossed the line between punishment and destruction. I believe that a punitive damages award of $94,000 crosses that line here. I would order a remittitur of $108,000, resulting in a punitive damages award of $22,000, approximately 10% of Seibert's net worth.
HOOPER, Chief Justice (dissenting [as to opinion of August 1, 1997]).
I must respectfully dissent. Certainly, any customer-driven enterprise must have easy parking access to be successful. I believe these plaintiffs deserved a judgment that would release them from their contract or, in the alternative, one that would place them firmly in the position they would have occupied had the contract been correctly performed. I am glad this Court reduced the punitive damages award; however, the majority both rescinds the contract and awards compensatory and punitive damages to the plaintiffs. The punitive award, even when reduced, will almost surely destroy the defendants. This award, allowing both equitable and legal remedies, severely punishes Seibert and unjustly rewards the Rones.
The general rule that should be applied in this case is the rule stated in Glass v. Cook, 257 Ala. 141, 144, 57 So. 2d 505, 507 (1952), "that one defrauded has to elect either to affirm the contract and sue for damages for the deceit or disaffirm and sue for his money back but he may not do both." (Emphasis added.) The appellees claim that the extraordinary rule from Mid-State Homes, Inc. v. Johnson, 294 Ala. 59, 311 So. 2d 312 (1975), and not the general rule, should apply. I find their reliance on this exception to be misplaced.
In Mid-State Homes, the plaintiff made a down payment on property to which he was guaranteed immediate possession but (a) as to which he was never put into possession, (b) which he was never allowed to use or otherwise receive any benefit from, and (c) for which he never made any periodic payments. In Mid-State Homes, quoting from Ward v. Taggart, 51 Cal. 2d 736, 743, 336 P.2d 534, 538 (1959), this Court wrote:
294 Ala. at 66, 311 So. 2d at 318.
If the plaintiff's remedy in Mid-State Homes had been limited to rescission, then the defendant, who had never given up possession *911 of the property nor given the benefit of the land to the plaintiff, would have lost nothing. In that case, exemplary damages were appropriate.
In the instant case, however, the defendants surrendered possession of the building for approximately one year. During that time, the Rones had the benefit of running a business for profit on the premises. After successfully arguing their case, the Rones were awarded compensatory damages of $47,000, an amount that covers the rent they paid, and they were awarded $130,000 in punitive damages.
I believe that if the trial court was satisfied that the elements of ordinary fraud or of promissory fraud were present, then the contract should have been rescinded and the defendants should have been forced to pay costs and compensatory damages incurred between the time of contracting and the rescission of the contract. If the trial court had ordered this remedy, then the defendants still would have been forced to pay compensatory damages, the Rones would have profited from their year in business using the lease, and Seibert would have had to endure the burden of finding new tenants after the rescission. Allowing the Rones to rescind the contract and receive compensatory damages would have been punishment enough. Therefore, this case is much more similar to cases that follow the general rule of Glass than it is to those cases that follow the extraordinary rule from Mid-State Homes.[5]
Another major concern I have with the majority's opinion is with the magnitude of the punitive damages award. Considering the evidence in the trial court's Hammond Green Oil order in the light most favorable to the plaintiffs, I think this punitive award is manifestly unjust and unfair and is unconstitutionally excessive. According to the trial judge's finding, the defendants' net worth is $215,000. The punitive award, even after the reduction to $94,000, will be approximately 44% of their net worth. Such an excessive verdict will certainly destroy the defendants financially. Have the courts of Alabama abandoned the notion that punitive damages should serve to punish the defendants and adopted the idea that punitive damages must destroy in order to be effective? Judging from this dispute over the number of parking spaces at a beauty salon, it appears that we have.
For these reasons, I must dissent.
MADDOX and SEE, JJ., concur.
COOK, Justice.
There being no reason to disturb the original (August 1, 1997) holding, the application for rehearing is overruled. The extension of the discussion in this case, on application for rehearing, shall not be construed as a substantial modification of the original opinion for purposes of filing a second application for rehearing. See Ala. R.App. P. 40.
APPLICATION OVERRULED; OPINION OF AUGUST 1, 1997, MODIFIED.
ALMON, SHORES, HOUSTON, KENNEDY, and BUTTS, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
[1] Indeed, the trial court, in its order following the hearing on the defendants' motion for a remittitur of damages, referred to the testimony of Seibert's engineer on the Hillcrest Office Park project:
"Seibert advised [the Rones] that there would be ample parking available in a huge parking lot which would accompany the construction of the building and which would meet [the Rones'] specific needs. Before Seibert made these representations, she had advised her project engineer to design the largest building possible with the smallest parking lot allowed by the building codes and had obtained drawings from the engineer which showed that parking for all prospective tenants of the entire building (which would be occupied by several tenants other than [the Rones]) would not have the number of spaces specified by [the Rones] alone."
(Emphasis added.)
[2] In Foremost Insurance Co. v. Parham, 693 So. 2d 409 (Ala. 1997), this Court overruled Hickox v. Stover, 551 So. 2d 259 (Ala.1989), and readopted the "reasonable reliance" standard of review. However, because this return to the reasonable reliance standard represented a fundamental change in the law of fraud, the Court made that new standard applicable in all fraud cases filed after the date Foremost was decided, i.e., March 14, 1997.
[3] In this case, there is no problem resulting from the fact that multiple claims were submitted to the jury and the jury returned a general verdict. At the close of the Rones' case, the defendants moved for a directed verdict as to both ordinary fraud and promissory fraud. The court denied the motion, and the jury returned a general verdict in favor of the Rones. Because there was sufficient evidence to require the trial court to submit to the jury the claim alleging ordinary fraud and the claim alleging promissory fraud, it is apparent that the verdict was returned on a valid count. See Cummins Engine Co. v. Invictus Motor Freight, Inc., 641 So. 2d 761 (Ala.1994); Aspinwall v. Gowens, 405 So. 2d 134 (Ala.1981).
[4] This reduction results in a 2:1 ratio of punitive damages to compensatory damages.
[5] Since 1975, this Court has only one time followed the exceptional rule regarding rescission and punitive damages in a fraud case based on Mid-State Homes. See Sheffield v. Andrews, 679 So. 2d 1052 (Ala. 1996). I concurred in Justice Cook's opinion in Sheffield, based on the same principles that compel me to dissent in the present case. In Sheffield, the Court reasoned that punitive damages must be permitted, or else the defendant would be allowed to perpetrate fraud and face no risk of liability beyond that of returning that which was wrongfully obtained. 679 So. 2d at 1053. The defendants face liability even if the plaintiffs are awarded no punitive damages. Ordering rescission (and not punitive damages) would give the Rones the benefit of their year in business on the premises while burdening Seibert in her release of the property for the year, her payment of compensatory damages, and her effort to find new tenants. Evidence at trial tended to indicate that the compensatory award, without the punitive damages award, would be sufficient to destroy the defendants financially. Even in Sheffield, I considered the punitive damages originally awarded to be unreasonably high. See Justice Maddox's dissent in Sheffield from the order overruling the application for rehearing, 679 So. 2d at 1059. | November 14, 1997 |
418d7cc9-b98b-4b99-99f4-3abfa9b0d659 | Union SEC. Life Ins. Co. v. Crocker | 709 So. 2d 1118 | 1931672 | Alabama | Alabama Supreme Court | 709 So. 2d 1118 (1997)
UNION SECURITY LIFE INSURANCE COMPANY
v.
Evelyn CROCKER.
1931672.
Supreme Court of Alabama.
August 15, 1997.
Rehearing Overruled November 21, 1997.
*1119 Broox G. Holmes, James E. Robertson, Jr., and Rodney R. Cate of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile; John W. Thompson II of Thompson & Thompson, Butler; and Andrew L. Frey and Evan M. Tager of Mayer, Brown & Platt, Washington, DC, for appellant (on remand and on rehearing following remand).
Larry W. Morris, Alexander City, and William L. Utsey, Butler, for appellee (on remand).
No brief filed for appellee (on rehearing following remand).
BUTTS, Justice.
The Supreme Court of the United States has vacated our judgment in this case and has remanded the case for our further consideration in light of BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).
In BMW, Dr. Ira Gore sued BMW of North America for damages for fraud, based upon BMW's failure to disclose that it had made presale repairs to an automobile it sold to him as new. The jury awarded Gore $4,000 in compensatory damages and $4 million in punitive damages; this Court reduced the punitive award to $2 million. See BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala.1994). The Supreme Court determined that the $2 million punitive damages award was "grossly excessive," particularly in relation to the compensatory damages award, and violated the Due Process Clause of the Fourteenth Amendment. 517 U.S. at 575, 116 S. Ct. at 1599. The Supreme Court then remanded the BMW case, as well as this present case, for this Court to reconsider in each the punitive damages award.
We begin with this statement of the pertinent facts, as they are set out in our original opinion in this case, Union Sec. Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala.1995):
667 So. 2d at 691-92.
Mr. Crocker died from heart disease in August 1991; Mrs. Crocker submitted a death certificate to Union Security and attempted to collect the credit life benefits. Union Security investigated the claim and denied coverage, based on Mr. Crocker's history of heart disease. Without her husband's income, and without the benefits of the coverage for which she had paid premiums, Mrs. Crocker was unable to pay off the balance on her First Alabama loan. On December 11, 1991, Taylor wrote Mrs. Crocker to inform her that, because of her default on the loan, First Alabama would foreclose the mortgage on her double-wide mobile home, which was the collateral for the loan. The foreclosure was to take place on December 20, 1991, five days before the first Christmas that Mrs. Crocker would spend as a widow. The foreclosure proceedings were halted only after Mrs. Crocker obtained legal counsel. Mrs. Crocker subsequently brought this fraud action against Union Security, Taylor, and First Alabama.
With these facts in mind, we will now apply the three "guideposts" set out by the United States Supreme Court in BMW v. Gore, which are intended to gauge whether Union Security had received adequate notice that misconduct such as that committed in this case could lead to a $2 million punitive damages award.
"Perhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct." BMW, 517 U.S. at 575, 116 S. Ct. at 1599. Although the Supreme Court in BMW did not provide any particular yardstick by which to measure reprehensibility, it did acknowledge that "`trickery and deceit' ... are more reprehensible than negligence" and that acts of affirmative misconduct, such as making deliberate false statements, are more reprehensible that an innocent misrepresentation. 517 U.S. at 576,116 S. Ct. at 1599. Likewise, this Court has stated that in determining the reprehensibility of a defendant's conduct the reviewing court may consider "`[the] duration of this conduct, the degree of the defendant's awareness of any hazard which his conduct has caused or is likely to cause, and any concealment or "cover up" of that hazard, and the existence and frequency of similar past conduct.'" Green Oil Co. v. Hornsby, 539 So. 2d 218, 223 (Ala.1989), quoting Aetna Life Ins. Co. v. Lavoie, 505 So. 2d 1050, 1062 (Ala.1987).
The evidence shows that the Crockers could not obtain the First Alabama loan they needed unless they also obtained credit life insurance from Union Security. Sammy Taylor, acting as Union Security's agent, knew that applicants for credit life insurance who revealed previous or existing health problems on the health disclosure statement contained in the application would not qualify *1121 for the coverage. There was evidence that Taylor was a friend of Mr. Crocker, that he and his wife had vacationed with the Crockers, and that they had visited the Crockers during the time that Mr. Crocker suffered from both Parkinson's disease and heart disease. There is evidence that Taylor knew that these health conditions existed when Mr. Crocker and his wife applied to him for credit life insurance in conjunction with this home equity loan. Taylor knew that he would receive a commission from the sale of credit life insurance to Mr. Crocker, even if a future claim for the benefits was denied.
With this knowledge, Taylor deliberately precompleted for the Crockers the health disclosure statement on the Crockers' application form, marking "No" beside questions that asked if Mr. Crocker suffered from heart disease or certain other illnesses. Taylor thus intentionally falsified information on the Crockers' life insurance application, to secure a fraudulent approval by Union Security. He did so knowing that the Crockers were relying on the coverage to pay off the loan and to prevent the foreclosure of their home mortgage in the event either of them died. He assured them they would receive coverage, and he collected his commission when they did, knowing that their benefits would be denied if his false representations on their applications were discovered after the fact.
Union Security issued insurance to Mr. Crocker without any meaningful knowledge of his medical history, and it collected premiums from him until he died on August 28, 1991. When Mrs. Crocker, newly widowed, submitted her claim for benefits under the policy, Union Security denied it, leaving her with no means to pay her debt to First Alabama. She was threatened with foreclosure of her home mortgage, only five days before the first Christmas that she would spend without her husband after 31 years of marriage.
Given these facts, we agree that the gravity of Union Security's misconduct is a factor that would support a considerable punitive damages award. However, we must also recognize that Union Security's misconduct appears to have been an isolated incident, rather than the result of a standard operating procedure. The evidence shows that in 1991 Union Security received 134 claims for payment on credit life insurance issued through First Alabama, and that Mrs. Crocker's claim was the only one it denied. In 1992, Union Security received 119 claims for payment and denied only two; both were denied because the insureds had committed suicide and the policies had suicide-exclusion clauses. In 1993, Union Security received 113 claims and denied only four of them. Thus, during the period 1991-1993, Union Security's denial rate on credit life claims was less than 1% and most of the denials were based upon an insured's having committed suicide. The evidence thus indicates that, while Union Security's misconduct in this case was highly reprehensible, it was also an aberration for the company.
According to the United States Supreme Court in BMW, a second factor to be considered in determining whether an award of punitive damages is excessive is the ratio of punitive damages to the actual harm inflicted upon the plaintiff. Because the jury awarded general damages in this case, we cannot determine with certainty the ratio of punitive damages to compensatory damages. Certainly we do not consider the compensatory damages award to be based solely upon economic loss, as Justice See suggests in his dissent. Rather, we have thoroughly reviewed the compelling evidence of Mrs. Crocker's emotional and mental distress over Union Security's misconduct, as well as her economic loss, in determining the possible ratio of punitive damages to compensatory damages.
The evidence shows that Mrs. Crocker suffered as much as $16,222.61 in actual economic loss, representing not only the $1,659.61 that Mrs. Crocker and her husband paid for the credit life insurance, but also the $14,563 outstanding balance on the loan, which the insurance policy was to have paid. It is important to recognize that this economic injury was catastrophic for Mrs. Crocker in the wake of her husband's death; without *1122 his income to help make the loan payments to First Alabama, those benefits were all she had to keep from losing her home to foreclosure.
The United States Supreme Court in BMW held that an economic loss to the plaintiff in that case, a well-to-do medical doctor, did not support a large punitive damages award; however, the Supreme Court was careful to point out that economic injury inflicted upon the "financially vulnerable" is an entirely different concern and "can warrant a substantial penalty." 517 U.S. at 576, 116 S. Ct. at 1599. Where, as here, the economic harm could devastate its target, this is an especially serious consideration to be weighed against the amount of damages awarded. The Supreme Court also recognized in BMW that "[a] higher ratio [of punitive damages to compensatory damages] may... be justified in cases in which the injury is hard to detect or the monetary value of noneconomic harm [is] difficult to determine." 517 U.S. at 582, 116 S. Ct. at 1602.
Likewise, in the recent case of First Commercial Bank v. Spivey, 694 So. 2d 1316 (Ala.1997), this Court emphasized: "There is no fixed standard for ascertaining the amount of compensatory damages that may be awarded for emotional distress. The determination of how much to award is left to the sound discretion of the jury, subject only to review by the court for a clear abuse of that discretion." 694 So. 2d at 1326. In Spivey, this Court upheld the jury's award of $1 million in damages, $500,000 of which was compensatory damages awarded largely on the basis of the plaintiff's evidence of mental and emotional distress arising from the defendant's fraudulent conduct that led to the foreclosure of the mortgage on the plaintiff's home.
Aside from the economic loss the evidence suggests, there is the unknowable amount of compensation the jury could have awarded to Mrs. Crocker based upon the emotional and mental toll the wrongful conduct took upon her; that conduct led to her fight over insurance and caused her to face the threat of losing her home in foreclosure proceedings only months after losing her husband. Based on this evidence, we cannot conclude that the possible ratio of punitive damages to compensatory damages in this case would indicate excessiveness.
A third factor we must consider in determining whether the punitive damages award was excessive is the relationship of the punitive damages award to the civil or criminal penalties that could be imposed for comparable misconduct. BMW, 517 U.S. at 583, 116 S. Ct. at 1603. In BMW, the Supreme Court questioned whether the Alabama Deceptive Trade Practices Act, which imposes a maximum penalty of $2,000 for a violation, was adequate to provide BMW with notice of the severity of the punishment that would result from its deceptive practice. 517 U.S. at 584, 116 S. Ct. at 1603. However, as this Court stated in its opinion upon remand in BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) ("BMW II"), the maximum statutory sanction against insurance fraud in this state is meager and, "[b]ecause the legislature has set the statutory penalty for deceitful conduct at such a low level, there is little basis for comparing it with any meaningful punitive damages award." 701 So. 2d at 514.
As we determined in BMW II, the United States Supreme Court's "due process" guideposts are not intended to exclude judicial consideration of the factors of review already established by this Court in Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989). We will now reconsider those factors as they apply in this case.
In a Hammond-Green Oil review, we are required to determine whether, if the wrongful conduct was profitable to the defendant, the punitive damages award removes the profit and is in excess of the profit, so that the defendant recognizes a loss. Green Oil, 539 So. 2d at 223. It is undisputed that Union Security and Taylor made a profit from *1123 the sale of credit life insurance to the Crockers. Taylor testified that he received an annual commission of $600-$800 from selling credit life insurance for Union Security through First Alabama. There was evidence that Union Security earned $67,019 from selling credit life insurance through First Alabama in 1991. Clearly, the punitive damages award removes this profit and so exceeds it that Union Security will recognize a significant loss.
In determining whether the punitive damages award was excessive, we must next consider Union Security's financial position. In 1993, when the jury awarded the damages in this case, Union Security had a net worth of $24,340,000. Out of that sum, Union Security had an unassigned surplus of approximately $15,000,000, from which it would pay the punitive damages award. Thus, the $2 million in punitive damages would remove 8.2% of Union Security's net worth and 13% of its available surplus. As we stated in BMW II, if a punitive damages award exceeds 10% of the defendant's net worth, that fact might, under certain circumstances, indicate that the punitive damages award has gone beyond reasonable punishment and is excessive, BMW II, 701 So. 2d at 514. The punitive damages award in this case is close to that range, and we agree that it would be excessive for misconduct that, while reprehensible, was isolated.
In a Green Oil review, the court should consider whether the punitive damages award was sufficient to reward the plaintiff's lawyer for assuming the risk of bringing the lawsuit and to encourage other victims of wrongdoing to come forward. In its Green Oil review of this case, the trial court determined that the plaintiff's attorneys had spent approximately $35,000 in prosecuting this claim. Although the plaintiff's attorneys have since incurred additional expenses in defending the verdict and the punitive damages award on appeal before this Court and before the United States Supreme Court, the $2 million award is well out of proportion to these expenses.
A Hammond-Green Oil review requires us to consider whether criminal sanctions have been imposed on Union Security for its conduct. There were no such sanctions.
The record does not indicate that other civil actions have been filed based on the same misconduct by Union Security that is present in this case.
We have carefully reconsidered this case in view of the United States Supreme Court's ruling in BMW v. Gore, and we have conducted a second Hammond-Green Oil review. We find that Union Security's misconduct was highly reprehensible and that it caused Mrs. Crocker mental and emotional distress, as well as serious economic harm. However, the evidence indicates that this misconduct was an aberration for Union Security and that the $2 million award would take away a considerable percentage of Union Security's net worth as punishment for it. Based upon all the factors of this review, and given the evidence, we conclude that the $2 million award was excessive and that an award of $1 million would be proper.
The trial court's judgment and its order denying Union Security's motion for a new trial are affirmed on the condition that the plaintiff file with this Court within 21 days a remittitur of damages in the amount of $1 million, thus reducing the award to $1 million; otherwise, the judgment will be reversed and the cause remanded for a new trial.
AFFIRMED CONDITIONALLY.
ALMON, SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
HOOPER, Chief Justice (dissenting).
I must respectfully dissent. It is clear from the record and this Court's earlier opinion *1124 in this case that the primary tortfeasor was First Alabama Bank. As this Court noted in its first opinion in this case, First Alabama has entered into a $1 million settlement with Mrs. Crocker. Union Security Life Insurance Co. v. Crocker, 667 So. 2d 688, 690 (Ala.1995). I find no evidence of reprehensible conduct on the part of Union Security that would justify a substantial punitive damages award against it. Consequently, I conclude that the $2 million damages award against Union Security was grossly excessive.
Because we do not know the amount of punitive damages awarded by the jury's general verdict, I agree with Justice See that the case should be remanded. However, if it were proper for this Court to reduce the amount of punitive damages at this stage, I believe that several factors from BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), mandate a substantial reduction of the damages awarded to Mrs. Crocker.
The Crockers' policy provided for a one-year contestability period.[1] Mr. Crocker died approximately nine months after the closing of the consolidation loan in connection with which he obtained credit life insurance. Thus, Union Security, after Mr. Crocker's death, properly investigated the answers provided on the application.
Sammy Taylor committed the wrongful conduct in this case. Taylor was the branch manager of the Gilbertown branch of First Alabama. Because there has been no finding that Union Security had knowledge of any fraudulent conduct on the part of its agent, Union Security's liability is entirely vicarious. The majority does not reduce the punitive damages award to an amount that appropriately reflects the wrongfulness of Union Security's conduct.
As the majority writes, the United States Supreme Court in BMW indicated that the first, and perhaps the most important, indicium of the reasonableness of a punitive damages award is the reprehensibility of the defendant's conduct. According to the majority, the reprehensibility of Union Security's conduct supports a substantial punitive damages award in this case. I disagree.
It is clear that Union Security is liable for the acts of Taylor, its Alabama insurance agent. See, e.g., Wofford v. Safeway Ins. Co. of Alabama, 624 So. 2d 555 (Ala.1993). However, I do not believe that the full measure of Taylor's wrongful actions should be attributable to Union Security, at least not for the analysis under BMW. There is a noticeable lack of evidence from which one could conclude that Union Security supported Taylor's conduct, or, for that matter, that Union Security had any knowledge at all of Taylor's deception or of any previous misconduct by Taylor as an agent. In fact, the majority writes that the evidence indicates that any misconduct attributable to Union Security was an "aberration for the company." 709 So. 2d at 1121. While I agree that Union Security is subject to liability for the acts of its agent, I do not agree that in examining a punitive damages award for excessiveness the principal's ratification or nonratification of the agent's misconduct is totally irrelevant.
As for the analysis under the third "guidepost" stated by the Supreme Court in BMW, the size of criminal and civil penalties for comparable misconduct, I find myself, once again, disagreeing with the majority. The majority writes that, because it finds the penalties for deceitful conduct in Alabama to be so meager, there is little basis for comparing the penalty with any punitive damages award. The most important consideration behind the analysis called for by this "guidepost" is the notice available to this defendant of what penalty might be imposed upon it for deceitful conduct. The fact that the penalty is meager argues in favor of a reduction in *1125 the punitive award. If the penalty is meager, then the defendant received less notice that it would be subject to such an extraordinary punitive damages award. On the basis of this portion of the BMW analysis alone, I would substantially reduce the damages award in this case.
This Court should remand this case for the trial court to determine which portion of the award was punitive and which portion was compensatory. I also believe that this Court has once again ignored the United States Supreme Court's admonition that grossly excessive punitive damage awards, such as that awarded in this case, violate the Due Process Clause of the Fourteenth Amendment.
SEE, Justice (dissenting).
The record in this case does not specify how much of the general award represents punitive damages and how much represents compensatory damages. It is therefore impossible to determine whether the punitive award is excessive. This case should be remanded for a determination of what portion of the general award is punitive. I, therefore, respectfully dissent.
Mr. and Mrs. Crocker borrowed money from First Alabama Bank. A First Alabama employee sold the Crockers a credit life insurance policy issued by Union Security Life Insurance Company ("Union Security") to insure payment of the loan. While acting in the capacity of an agent for Union Security, the First Alabama employee falsified answers on the credit life application.
Mr. Crocker died of heart disease less than a year later. Pursuant to the terms of the policy, Union Security investigated Mrs. Crocker's insurance claim and discovered that Mr. Crocker had had a history of heart disease that was not disclosed on the application form. Accordingly, Union Security denied payment. Mrs. Crocker, unable to pay, defaulted on the loan. First Alabama instituted foreclosure proceedings.
Mrs. Crocker sued Union Security, First Alabama, and the First Alabama employee. The jury awarded her a $5 million general verdict. The trial court reduced that award to $3 million. First Alabama settled for $1 million, leaving Union Security facing the $2 million balance. Union Security alone appealed. This Court affirmed the $2 million award. Union Sec. Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala.1995). The Supreme Court of the United States vacated this Court's judgment and remanded this case for reconsideration in light of BMW of North America, Inc. v. Gore, 517 U.S. 559,116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996) ("BMW"). Union Sec. Life Ins. Co. v. Crocker, 517 U.S. 1230, 116 S. Ct. 1872, 135 L. Ed. 2d 169 (1996). In BMW, 517 U.S. at 575-587, 116 S. Ct. at 1599-1604, the Supreme Court established, for the first time, three guideposts for assessing whether a punitive award exceeds the outer limit of federal due process. These are: (1) the ratio of punitive damages to compensatory damages; (2) civil and criminal sanctions for comparable misconduct; and (3) the reprehensibility of the defendant's conduct.
First, the ratio of punitive damages to compensatory damages that the United States Supreme Court requires us to consider, BMW, 517 U.S. at 579-85, 116 S. Ct. at 1601-03, cannot be computed when both numbers that would compose the ratio are unknown. In this case, the general verdict specifies neither the amount of compensatory damages nor the amount of punitive damages; thus, it is impossible to compute the ratio.
Second, the comparison of civil and criminal sanctions to the punitive award, which the United States Supreme Court requires us to consider, BMW, 517 U.S. at 583-87, 116 S. Ct. at 1603-04, cannot be made when the amount of punitive damages is unknown. In this case, comparison of a civil or criminal sanction to an unknown portion of the $2 million general award is meaningless.
Undaunted by the impossibility of applying the first two guideposts, the majority attempts to justify the unknown punitive award solely on the reprehensible nature of the defendant's conduct. The majority relies on the telephone call to Mrs. Crocker five days before Christmas informing her of a pending foreclosure on her home mortgage. However, it was not the defendant in this appeal, Union Security, that made the call. It was *1126 First Alabama. And when First Alabama made the call, it was acting as a foreclosing creditor, not as the sales agent for Union Security. First Alabama settled with Mrs. Crocker and is not subject to the unspecified punitive award here affirmed by the majority.
I would remand this case for the trial court to determine the amounts of punitive and compensatory damages,[2] because those amounts are necessary for a considered review.[3] Without the kind of information that we can obtain here only through remand, any review of the appropriateness of the punitive damages award is arbitrary.
An indispensable characteristic of a sound legal system is the production of predictable results. This guards against the arbitrary use of governmental power[4] and allows the bench, the bar, and, most importantly, the people to order their affairs.[5] This Court's punitive damages jurisprudence has failed to produce predictable results.[6] The fact that the majority inexplicably reduces the award here to $1 million makes the review process no less arbitrary.
The standards this Court established in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), are designed to prevent arbitrary punitive damages awards. As Justice Breyer observed in his concurrence in BMW, 517 U.S. at 597, 116 S. Ct. at 1609, however, this Court's application of those standards "violate[d] the basic guarantee of nonarbitrary governmental behavior that the Due Process Clause provides." That the misapplication of the three guideposts produces arbitrary results is illustrated by the majority's holding in the three cases decided since BMW:
*1127 I dissent.
MADDOX, J., concurs.
BUTTS, Justice.
APPLICATION OVERRULED.
ALMON, SHORES, KENNEDY, and COOK, JJ., concur.
HOUSTON, J., concurs specially.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
HOUSTON, Justice (concurring specially).
I did not vote in this case when this Court affirmed a $2,000,000 award against Union Security Life Insurance Company, Union Security Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala.1995), judgment vacated, 517 U.S. 1230, 116 S. Ct. 1872, 135 L. Ed. 2d 169 (1996), because I recuse myself in cases involving Regions Bank (formerly First Alabama Bancshares), which had been a party in this case. On remand from the United States Supreme Court, the issue was limited to whether the punitive damages assessed against Union Security Life Insurance Company were unconstitutionally excessive; therefore, there was no reason for me to recuse myself.
Whether the trial court erred in directing the jury to return a general verdict was not an issue on the original submission of this case to this Court. It appears that there was no request that any verdict for the plaintiff be broken down into separate awards of compensatory damages and punitive damages, and that there was no objection to the form of the verdict requiring, in case of a verdict for the plaintiff, a combined compensatory and punitive damages award. Therefore, I believe it was incumbent on this Court to resolve the excessiveness issue without a remand, based on established standards of review and established caselaw.
The invocation of our statutory authority to determine the proper amount of recovery and to affirm the judgment, subject to the plaintiff's filing of a remittitur of the amount in excess of the proper amount, is dependent upon our holding that the presumption of correctness of the jury verdict has been overcome by a clear showing that the amount of the verdict is excessive. It is also well understood that in considering the adequacy or excessiveness of a verdict, each case must be determined on its own facts and that neither the trial court nor this Court may substitute its judgment for that of the jury. Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989).
In dealing with compensatory damages, the interest of the uncompensated victim must always be kept foremost in mind. When considering punitive damages, however, the defendant's right to fair punishment must be considered above the plaintiff's right to recover the fullest amount of punitive damages. Wilson v. Dukona Corp., N.V., 547 So. 2d 70 (Ala.1989), citing Layman v. Hendrix, 1 Ala. 212, 214 (1840), and Tatum v. Schering Corp., 523 So. 2d 1042, 1048 (Ala. 1988) (Houston, J., dissenting). Accordingly, in a case such as this one, where the excessiveness vel non of a jury verdict presumably awarding both compensatory and punitive damages is an issue, the focus must be on the plaintiff with regard to the propriety of the compensatory damages award, and on the defendant with respect to the propriety of any assessment of punitive damages.
Applying these standards for reviewing the excessiveness issue in this case, I presumed, as did every other Justice on this Court, that the jury's general verdict included an award compensating the plaintiff. Because the *1128 plaintiff sought recovery for both economic loss and emotional distress, I had to further presume that the jury's compensatory award included damages for economic loss of around $16,222.61 (representing not only the $1,659.61 that the plaintiff and her husband had paid for the credit life insurance, but also the $14,563 outstanding balance on the loan, which the insurance policy was to have paid), as well as damages for emotional distress. Recently, I authored an opinion in First Commercial Bank v. Spivey, 694 So. 2d 1316 (Ala.1997), in which this Court upheld the jury's award of more than $400,000 in compensatory damages for emotional distress on the basis of the plaintiff's evidence of emotional distress arising from the defendant's fraudulent conduct that ultimately led to the foreclosure of the mortgage on the plaintiff's house. Based on that opinion, and on the fraud cases cited therein where this Court affirmed compensatory damages awards of well over $250,000 for emotional distress, see Duck Head Apparel Co. v. Hoots, 659 So. 2d 897 (Ala.1995), and Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995), judgment vacated, 517 U.S. 1217, 116 S. Ct. 1843, 134 L. Ed. 2d 945 (1996), on remand from the United States Supreme Court, 708 So. 2d 111 (Ala.1997), and on this Court's affirmance of the $250,000 award of compensatory damages for emotional distress in Life Insurance Co. of Georgia v. Johnson, 701 So. 2d 524 (Ala.1997), I concluded that the jury in this case could have awarded as much as $250,000 in damages to compensate the plaintiff for her economic loss and emotional distress and that such an award would not have been reduced by this Court, based upon the cases hereinbefore cited and others not cited. (There was not a foreclosure of the plaintiff's mortgage in this case. The foreclosure proceedings were halted, however, only after the plaintiff obtained legal counsel.) Assuming such an award of $250,000, which the evidence would support, that left a $750,000 punitive damages award approved by this Court; that award represented a 3:1 ratio of punitive damages to compensatory damages. This ratio is the benchmark against which I measure reasonableness. See BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) (Houston, J., concurring in the result).
I would have preferred that the jury enter separate awards for compensatory damages and punitive damages. Ala.Code 1975, § 6-11-1. I believe that either party has a right to demand that the verdict form submitted to the jury require that. However, if no party objects to the verdict form submitted and the jury returns a general verdict, then I believe this Court must assume that the general verdict includes the maximum amount of compensatory damages that this Court would affirm.
[1] A contestability period is the time during which an insurance company may contest the validity of the insurance contract because of misstatements on the application. If a policy has a one-year contestability period and the insured lives for more than a year after coverage commences, the coverage becomes incontestable even if the application contained material misstatements. Under Alabama law, ordinary life insurance policies are incontestable after a maximum of two years. Ala.Code 1975, § 27-15-4. Credit life insurance policies are incontestable after only 12 months. See Ala. Ins. Reg. No. 28, § VI(J)(2) (1991).
[2] In Hammond v. City of Gadsden, 493 So. 2d 1374, 1379 (Ala.1986), this Court required "trial courts to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of the damages." I reiterate the necessity for trial courts to examine with specificity each of the factors set forth in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala. 1989), in light of the evidence at trial and to reflect in the record how the final punitive award was determined.
[3] In my view, the appropriate review after remand would be based on the cogent analysis set forth in Justice Houston's special concurrence in BMW of North America, Inc. v. Gore, 701 So. 2d 507, 516 (Ala.1997).
[4] Compare, e.g., 1 William Blackstone, Commentaries *46 (describing the Roman emperor Caligula's unjust practice of writing his laws in small characters and hanging them on high pillars, thereby facilitating arbitrary enforcement) with J.B. Bury, A History of Greece 179 (Modern Lib. ed.1937) (describing the Greek lawgiver Solon's just practice of inscribing his laws on wooden tables and placing them on revolving stands in the Public Hall of Athens, thereby facilitating consistent enforcement).
[5] As Justice Holmes stated:
"People want to know under what circumstances and how far they will run the risk of coming against what is so much stronger than themselves [i.e., public enforcement of judicial decrees], and hence it becomes a business to find out when this danger is to be feared. The object of our study, then, is prediction, the prediction of the incidence of public force through the instrumentality of the courts."
Oliver Wendell Holmes, Jr., The Path of the Law, in Collected Legal Papers 167, 167 (Legal Classics Lib. ed.1982).
[6] A majority of this Court has also rejected the Legislature's attempt to provide predictability. Compare Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala.1993) (holding that the statute limiting punitive awards violated the Alabama Constitution) with BMW of North America, Inc. v. Gore, 517 U.S. 559, 593-97, 116 S. Ct. 1589, 1608-09, 134 L. Ed. 2d 809 (1996) (Breyer, J., concurring) (citing favorably Texas, Connecticut, Florida, and Georgia statutes that limit punitive damages awards).
[7] These ratios are rounded to the nearest whole number.
[8] BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997).
[9] Life Ins. Co. of Georgia v. Johnson, 701 So. 2d 524 (Ala.1997).
[10] This number represents the economic loss apparently suffered by Mrs. Crocker. The damages are computed by comparing her economic position when Union Security refused to pay the balance due on the loan with the position she would have been in had Union Security paid the balance due on the loan. In both instances, Mrs. Crocker would have paid the $1,660 in premiums to Union Security. In this instance, however, Mrs. Crocker did not receive the $14,563 payment from Union Security to pay off the loan.
Because the amount of compensatory damages in this case is unknown, I use Mrs. Crocker's apparent economic damages for purposes of illustration. | November 21, 1997 |
4b4d8617-3973-42c4-8206-11c2f3b29bce | Life Ins. Co. of Georgia v. Parker | 706 So. 2d 1108 | 1951583 | Alabama | Alabama Supreme Court | 706 So. 2d 1108 (1997)
LIFE INSURANCE COMPANY OF GEORGIA
v.
James PARKER and Rosie Parker.
1951583.
Supreme Court of Alabama.
November 7, 1997.
*1109 Charles E. Vercelli, Jr., and David P. Stevens of Nix, Holtsford & Vercelli, P.C., Montgomery, for appellant.
Milton C. Davis, Tuskegee, for appellees.
BUTTS, Justice.
James Parker and his wife Rosie Parker sued Life Insurance Company of Georgia and James Mark Taunton in his capacity as an agent of the insurance company, alleging conversion, intentional misrepresentation, and fraudulent suppression of material facts in relation to the defendants' sale of life insurance policies to the Parkers. The trial court entered a summary judgment for Life of Georgia as to the conversion claim, but denied its summary judgment motion as to the fraud claims. At trial, the defendants moved for a directed verdict at the close of the plaintiffs' evidence and at the close of all evidence; the trial court denied those motions. The jury returned a verdict in favor of the Parkers, awarding them $4,276 in compensatory damages and $200,000 in punitive damages. Life of Georgia moved for a JNOV, challenging the sufficiency of the evidence and the amount of the punitive damages award; the trial court denied that motion and entered a judgment on the verdict on February 7, 1996. Life of Georgia appeals from the denial of its motions for a directed verdict and a JNOV.[1]
"The standard of appellate review applicable to a motion for directed verdict is identical to the standard used by the trial court in granting or denying the motion initially. Thus, when reviewing the trial court's ruling on the motion, we determine whether there was sufficient evidence to produce a conflict warranting jury consideration." Ogle v. Long, 551 So. 2d 914, 915 (Ala.1989). The standard of review for testing the sufficiency of the evidence when the sufficiency is challenged by either a motion for directed verdict or a motion for JNOV is the "substantial evidence rule." Id. Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989). In considering the question of the sufficiency of the evidence, we are required, as was the trial court, to view the evidence in the light most favorable to the nonmovant. Bussey v. John Deere Co., 531 So. 2d 860, 863 (Ala.1988).
Viewed in the light most favorable to the Parkers, the evidence suggests the following: In 1993, James Mark Taunton, after working as an agent for another insurer for over 20 years, began employment as an agent for Life of Georgia. He was assigned a debit route that he worked regularly, collecting premium payments from policyholders and soliciting new business. Taunton soon met the Parkers, who were Life of Georgia policyholders on his debit route. He learned that James and Rosie Parker were 68 years old and 70 years old, respectively, and that both of them were in poor health. He also learned that Rosie Parker was legally blind because of diabetes and that the Parkers' only income was a monthly Social Security check.
In December 1993, Taunton visited the Parkers to conduct a "policy review" and to determine if they could buy more insurance from Life of Georgia. He saw that they had purchased three life insurance policies from Life of Georgia in 1981.[2] He noted that James Parker had a $1,000 policy and a $500 policy and that Rosie Parker had a $1,000 policy; all of these policies would pay the full face amount of benefits upon the Parkers' deaths.[3] Taunton was aware that the three policies would pay full benefits and that the Parkers could no longer qualify for whole-life policies, because of their age and health. Instead they could qualify only for a "graded-death-benefit" policy; with such a policy they would have to pay premiums for a minimum of three years before the policy would be worth its full face value upon their death.
Taunton pointed out to them that Rosie Parker had less insurance on her life than did her husband James, and he encouraged the Parkers to buy more insurance to "even out" their coverage. Taunton told them that he could "fix it" so that the Parkers could each have $2,000 in life insurance coverage. Taunton could not "even up" the Parkers' insurance by merely selling them another $500 policy, because Life of Georgia had stopped selling policies that small. Taunton therefore suggested that James Parker cash in his $500 policy and indicated that, if he did, the Parkers could receive "400 and something dollars" before Christmas, only a few weeks away. Taunton told them that they could purchase two new $1,000 policies, which he said he would add on to the two $1,000 policies they already had, combining the monthly premiums and giving them each $2,000 in coverage.
Taunton did not disclose to the Parkers that because of their age and health he could not sell them full-benefit policies. He did not inform them that the policies he would obtain for them would be graded-death-benefit policies that would not pay full benefits until after three years. Taunton told the Parkers that, with the new policies added to their 1981 policies, they would each have $2,000 in coverage; however, Taunton knew that the Parkers would not have this amount of coverage *1111 until the new policies had matured for three years.
The Parkers agreed that they wanted to have $2,000 apiece in death benefits and, believing that they were buying whole-life policies, signed the applications for the new policies. At the top of the applications were these words: "Application for Graded Death Benefit Life Insurance"; at the signature line were the words "I understand fully that this policy has a limited death benefit for the first three years." The applications did not define the terms "graded death benefit" or "limited death benefit" or explain how the benefits would be limited for the first three years.
Although the Parkers agreed to cash in James Parker's $500 policy, Taunton did not at that time execute the necessary paperwork to cash in the $500 policy, and the Parkers did not receive a check for the cash value of the $500 policy before Christmas. Life of Georgia did, however, issue two $1,000 graded-death-benefit policies to the Parkers, and Taunton went to their house in January 1994 to begin collecting the premiums for the new policies. James Parker explained to Taunton that he could not afford to pay the premiums, and Taunton told him that when the Parkers received their check for the cash value of the $500 policy, they could use it to pay the premiums on their insurance.
Toward the end of January 1994, the Parkers passed Taunton on the street as they were driving and he signaled for them to stop. He went to their car and gave James Parker a document to sign to cash in the $500 policy. Soon thereafter, the Parkers received a check for $141.17, representing the cash value of the policy. Mrs. Parker, still expecting to receive the "400 and something dollars" that she believed was due on the policy, delayed cashing the check, waiting until Taunton's next monthly stop at her house, when she planned to inquire why the amount was so small.
Life of Georgia normally directs its agents to continue making monthly calls on insureds who miss premium payments and to give them several months to make the payments current so that the policies may remain in force. However, Taunton did not return to the Parkers' house again after they failed to pay the January 1994 premium on the policies, and Mrs. Parker ultimately cashed the check.
After the Parkers did not make the January 1994 premium payment, the new graded-death-benefit policies lapsed. Because the premiums for the two $1,000 policies the Parkers had bought in 1981 had been added with the premiums for the two new policies, the Parkers' nonpayment of the premiums also caused the 1981 policies to lapse. However, there were certain provisions within the 1981 policies that thereafter went into effect. James Parker's policy was converted to "extended term insurance"; this meant that Life of Georgia used the net cash value of the 1981 policy to purchase term insurance that would pay the full face value of $1,000 at the event of his death, but shortened the period of coverage. James Parker was left with $1,000 in benefits payable upon his death, but only until December 8, 1999. Rosie Parker's 1981 life insurance policy converted to "reduced paid-up" status; that is, the cash value of her policy was lessened, but the policy would remain in effect for the same period as the original policy. Rosie Parker was left with a full coverage period, but only $608 in benefits for her beneficiaries upon her death.
The Parkers argued at trial that they had agreed to cash in the $500 policy only because Taunton represented that they would receive "400 and something dollars," i.e., most of the policy's face amount, at a time when they had a pressing need for the money. They further argued that Taunton suppressed the fact that the new $1,000 policies he wanted them to buy were graded-death-benefit policies, not whole-life policies. The Parkers argued that they would not have bought the new policies if they had known that they were graded-death-benefit policies. The Parkers also pointed out that, because of the changes in their coverage that they made based upon Taunton's representations, they lost part of the benefit of their 1981 policies, which, after the new policies lapsed, were converted into policies with lesser coverage. They claimed damages based upon the lesser amount of cash value that they received for *1112 the $500 policy, as well as $4,000 for the loss of the amount of coverage that they had believed the change in their policies would immediately bring them. They further sought damages for the stress, anxiety, and mental anguish they testified to having suffered as a result of their dispute with Life of Georgia.
Life of Georgia first argues that the evidence was insufficient to support the Parkers' fraudulent suppression claim and that the trial court thus erred in denying its directed verdict and JNOV motions on this claim. To establish their claim of fraudulent suppression, the Parkers were required to show: (1) that Life of Georgia had a duty to disclose an existing material fact; (2) that Life of Georgia had actual knowledge of the fact and its materiality; (3) that Life of Georgia suppressed that fact; (4) that the Parkers' lack of knowledge concerning that fact induced them to act; and (5) that they suffered actual damage as a proximate result of their action. Hardy v. Blue Cross & Blue Shield, 585 So. 2d 29 (Ala.1991). Under Ala. Code 1975, § 6-5-102, the particular circumstances that impose upon a party a duty to communicate a material fact may arise from the relationship between the parties, the relative knowledge of the parties, and the value of the particular fact and other circumstances. See Mason v. Chrysler Corp., 653 So. 2d 951 (Ala.1995). Where one person has superior knowledge of a fact and suppression of that fact will induce another person to take action that he or she otherwise would not take, the obligation to disclose is particularly compelling. Dominick v. Dixie Nat'l Life Ins. Co., 809 F.2d 1559 (11th Cir.1987).
We hold, under the undisputed facts of this case, that Taunton, and, through him, Life of Georgia, had a duty to disclose to the Parkers the kind of policy they were purchasing, particularly in view of the Parkers' lack of education, their advanced age, and their poor health. The limitations of the new policies the Parkers were buying and the effect the change in insurance could have on their existing policies were material facts known to Life of Georgia, but which the Parkers had little means of knowing. The evidence also establishes that Life of Georgia had a duty to disclose the fact that, because of the Parkers' age and poor health, the new policies were of less value to them than their 1981 policies. A jury could thus conclude that as a result of Taunton's failure to disclose these facts the Parkers were induced to change their insurance, when they might not otherwise have done so.
Viewed in the light most favorable to the Parkers, the evidence shows that Taunton did not tell the Parkers that the new policies would not pay the full face value in benefits unless their deaths occurred after the policies had been in effect three years. Taunton did not explain that allowing the new policies to lapse would result in a modification of the two $1,000 policies the Parkers had maintained since 1981. Instead, Taunton merely impressed upon the Parkers their need to "even up" their coverage by purchasing more insurance, which they could not afford, and to compromise the modest, but stable, insurance policies they had maintained since 1981.
Life of Georgia argues that even if Taunton did not orally disclose to the Parkers that the new $1,000 policies were graded-death-benefit policies, they should have understood from reading the application what kind of policy they were buying, instead of relying upon Taunton to explain it to them. Life of Georgia emphasizes that the words "graded death benefit life insurance policy" were in the heading of the application and that a sentence near the signature line indicated the new policy would provide "limited death benefits" for the first three years. We do not agree that merely placing these terms on the application was the functional equivalent of explaining them to Rosie Parker, who is blind and could not read the application, or to James Parker, who has only a sixth-grade education and is a not sophisticated insurance buyer. As stated, Taunton's superior knowledge of the terms and his years of experience in selling such policies placed upon him the duty to inform the Parkers, at the very least, what kind of insurance they were buying, and he failed to do so. We therefore conclude that the trial court properly denied Life of Georgia's directed verdict *1113 and JNOV motions as to the Parkers' fraudulent suppression claim.
Life of Georgia next argues that the evidence is not sufficient to support the Parkers' misrepresentation claim. To establish their claim of misrepresentation, the Parkers were required to show (1) that Taunton misrepresented a material fact; (2) that he did so willfully to deceive, recklessly without knowledge, or mistakenly; (3) that they relied on the misrepresentation and that under the circumstances their reliance was justifiable; [4] and (4) that they were caused damage as a proximate consequence of their reliance. Harrington v. Johnson-Rast & Hays Co., 577 So. 2d 437 (Ala.1991). The Parkers argued that Life of Georgia misrepresented two material facts: (1) that they would not be entitled to the full face amount of death benefits under the two new $1,000 policies until the fourth year of the policy period, and (2) the amount of money they would receive when they cashed in the $500 policy.
Life of Georgia argues that even if Taunton, as the insurance company's agent, did misrepresent the limitations on the two $1,000 graded-death-benefit policies, he did not do so intentionally. However, Taunton assured the Parkers that by buying two new $1,000 policies and adding them to their existing $1,000 policies, they would have $2,000 each in life insurance coverage. He knew when he made this representation that the Parkers would not have the benefit of $2,000 each in life insurance coverage when they bought the new policies, but would have to pay for them for three years before the policies would pay the full amount of benefits in the event of their deaths. He also knew that the Parkers were elderly and in poor health, two conditions that made them anxious about their immediate future and weighed against the likelihood that they would desire to buy insurance that would not pay full benefits until years later.
Life of Georgia points out that Taunton earned only a very small commission on his business with the Parkers and could have earned much more by persuading them to cash in all of their existing policies and "evening out" their insurance by purchasing two $2,000 graded-death-benefit policies.[5] Essentially, Life of Georgia argues that Taunton did not mislead the Parkers into buying the graded-death-benefit policies, because, it claims, they did not buy enough of it to generate a greater gain for him. However, there is evidence that, but for Taunton's misleading statements, the Parkers would not have bought graded-death-benefit policies in any amount or even considered "evening out" their insurance coverage. Taunton represented to the Parkers that he could obtain for them two policies that, when added to their two existing $1,000 policies, would give them a death benefit of $2,000 each. Taunton knew, based upon their health and age, that the only kind of policy he could sell to the Parkers was a graded-death-benefit policy. Taunton knew when he sold them the new policies that this kind of policy would not immediately give the Parkers the full benefit he represented that the policies would have. Rosie Parker testified that the Parkers would not have bought the policies had they known that they would have to wait three years before the policies would provide the full face value in death benefits. The fact that Taunton did not sell the Parkers a greater amount of graded-death-benefit insurance, for a greater profit, does not change the evidence indicating that the Parkers bought the $1,000 policies in reliance upon Taunton's misrepresentations and might not otherwise have bought those policies. Based on these facts, the jury could have concluded that Taunton's misrepresentation as to the *1114 limitation of the graded-death-benefit policies was intentional.
Life of Georgia next argues that the evidence does not support a finding that Taunton misrepresented the amount of cash value that the Parkers would receive for the $500 policy. Life of Georgia correctly points out that, in the end, it did pay the Parkers $141.17, the amount they were actually due under the policy, and that it did so well within the six-month period allowed by the insurance policy. However, we do not agree with Life of Georgia that the ends justify the means in this case; although the Parkers ultimately received the amount they were due, there is evidence that they would not have cashed in the $500 policy at all if Taunton had not misrepresented both the amount they would receive and the time within which they would receive it. It is clear that the Parkers relied upon Taunton to inform them about the effect of their cashing in the policy, and their reliance was particularly justified in view of their age, health, and lack of education. As to the claim of fraudulent misrepresentation, the trial court properly denied Life of Georgia's motion for a directed verdict and its motion for a JNOV.
Life of Georgia next argues that the punitive damages award is excessive and amounts to a violation of its due process rights guaranteed by the Fourteenth Amendment. In its motion for a JNOV, Life of Georgia asked the trial court, among other things, to require a remittitur of punitive damages, based upon the claim of excessiveness; the court denied the motion, but the record does not contain written findings of fact to support the trial court's conclusion that the award was not excessive. See Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986). This Court stated in Hammond:
493 So. 2d at 1378-79 (citations omitted) (emphasis added). Because the trial court did not put in the record its reasons for refusing to interfere with the jury's verdict on grounds of excessiveness, we are unable to review its ruling on that issue. We therefore must remand this cause to allow the trial court to make written findings of fact on this issue, in compliance with Hammond.
We affirm the trial court's denial of Life of Georgia's directed verdict motion and its JNOV motion as they relate to the sufficiency of the evidence to support the Parkers' fraud claims. However, we remand the case for the trial court to make written findings on the issue of excessiveness of the punitive damages award. The trial court is directed to file a return with this Court within 28 days of the date of this opinion.
AFFIRMED IN PART AND REMANDED.
SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., concur in part and dissent in part.
HOOPER, Chief Justice (concurring in part and dissenting in part).
There are two foundational aspects for analyzing a case in a court of lawthe facts and the law. Appellate review of a case requires that judges take into account all the *1115 relevant facts and apply the appropriate legal standard of review. I believe the majority's review of this case is lacking with respect to both of those aspects.
This case was tried to a jury on February 6-7, 1996. Three witnesses testified: the defendant Mark Taunton, the plaintiff Rosie Parker, and James Layson (a corporate representative for the defendant Life of Georgia). The defendants raise three issues on appeal: (1) Whether the defendants were entitled to a summary judgment against the Parkers' claims of intentional misrepresentation and suppression; (2) whether the evidence submitted at trial supports the jury's verdict and the subsequent punitive damages award; and (3) whether the jury's award of punitive damages is unconstitutionally high when considered in comparison with the compensatory damages awarded. I concur in affirming the award of compensatory damages, but I dissent from the majority's conclusion that the evidence supports a punitive damages award. Although I think no punitive damages award would be appropriate, I concur in remanding the case for a Hammond hearing.
In order to fully explain why I think the majority opinion ignores certain aspects of this case, I need to tell the full story.
The Parkers complained that in December 1993, the defendant Mark Taunton came to their house on behalf of Life of Georgia and told them (1) that he would adjust their life insurance policies so as to leave each of them with $2,000 worth of life insurance coverage (a total of $4,000 for the couple), and (2) that before Christmas, they would receive a check for "400 and something dollars" for cashing in all the life insurance policies they had previously purchased from Life of Georgia.
To understand the basis of the Parkers' complaint and their understanding of life insurance, one must have some background information about the Parkers and the history of their life insurance since 1981. At the time of their December 1993 meeting with Taunton, Mrs. Rosie Parker was 70 years old; she had been educated to the sixth grade, and she had been legally blind for several years as a result of a diabetes condition. Mr. James Parker was 68 years old and had been educated to the fifth grade. In 1981, Mr. Parker purchased two life insurance policies, a $500 policy and a $1,000 policy. Mrs. Parker also bought a $1,000 policy in 1981. They each purchased one additional $1,000 policy in 1987. In April 1993, they cashed in the two 1987 policies and received a total of $399.
In December 1993, Life of Georgia issued two new $1,000 policies to the Parkers, based upon applications turned in by Taunton and signed by the Parkers. These documents also show that Mr. Parker surrendered his $500 policy for cash. Thus, after the Parkers' December 1993 purchase of insurance policies, each of them had two $1,000 policies, (a total of $2,000 in insurance coverage for each of them). Taunton testified that he understood this result to be what the Parkers had wanted at that time. Because the increase in Mr. Parker's coverage was below Life of Georgia's threshold for awarding a commission, Taunton received no commission for increasing Mr. Parker's $1,500 coverage to $2,000. However, he received a commission for increasing Mrs. Parker's insurance coverage from $1,000 to $2,000.[6] (R.T. 117, 195-97.)
*1116 The Parkers claim that at the December 1993 meeting, Taunton told them that they would each be issued $2,000 worth of new insurance and that they would receive "400 and something dollars" before Christmas of 1993 in cash value on previously purchased insurance that they wished to cash in. Mrs. Parker testified that she expected to cash in all the insurance she and Mr. Parker owned at that time and that she expected they would receive two new $2,000 policies each.[7] It is undisputed that the Parkers' goal was for the two of them to have equal amounts of insurance, as opposed to what they had had before meeting with Taunton$1,500 on Mr. Parker's life and $1,000 on Mrs. Parker's life. Taunton testified that Mr. Parker said that he thought he and his wife already had equal amounts of insurance$2,000 on the life of Mr. Parker and $2,000 on the life of Mrs. Parker. (R.T. 71, 72, 132, 138.) Taunton testified that he informed the Parkers that if they cashed in Mr. Parker's $500 policy, then they would receive a payout of between $139 and $152.[8] Mrs. Parker disputes that testimony. Taunton also testified that he believed he could accomplish what was necessary for the Parkers without cashing in their 1981 policies. He could meet their goal by cashing in the $500 policy and adding two new $1,000 policies to the two $1,000 policies they already owned. (R.T. 72.) Although the new $1000 insurance policies became effective as of December 13, 1993,[9] the Parkers received no check before Christmas from Life of Georgia. Taunton testified at trial that he knew the Parkers were elderly and in bad health. Taunton testified that if he had cashed in all of the Parkers' policies, as Mrs. Parker contends he promised to do, then the premiums for the replacement policies would have been too expensive for them because of their ages.[10]
No evidence in the record indicates that at the December meeting the Parkers signed any paperwork regarding the cash surrender of Mr. Parker's $500 policy. Mrs. Parker testified that neither she nor her husband signed any paperwork at that meeting. Mrs. Parker testified that Mr. Parker signed a form one day in January 1994 when, she said, Taunton signaled for them to stop while they were driving down the road. Mrs. Parker testified that she did not know the nature or purpose of the form that her husband signed regarding the cash surrender of his $500 policy, but, based on all the documents and the testimony, one must conclude that it was the form styled "Application for Cash Surrender" that relates to Mr. Parker's $500 policy.[11] However, Mrs. Parker testified that she knew a person had to sign something *1117 in order to receive the cash value of a life insurance policy.[12] She had previously signed such paperwork in April 1993, eight months before the December 1993 meeting with Taunton, to receive the cash value of a $1,000 insurance policy. (C.R.296.)[13] The Parkers received $397 as a result of that transaction. The form Mr. Parker signed in January 1994, entitled "Application for Cash Surrender," instructed Mr. Parker that he would receive $141.17 in return for the surrender of the $500 policy. Although neither of the Parkers signed any other "Application for Cash Surrender" after the December meeting in 1993, they claim that they were expecting the "400 and something dollars" based on what they allege Taunton had told them in December 1993.
Mrs. Parker testified that the check for "400 and something dollars" did not come before Christmas and that she became concerned about when they would receive it. During January 1994, Taunton came to the Parkers' house to collect a premium. They asked him no questions about the check. Mr. Parker refused to pay the premium at that time.[14] As of November 1, 1993, the Parkers had allowed to lapse $2,000 worth of life insurance issued to them by Life of Georgia. Sometime during December, James Layson, Taunton's field manager at the Auburn office, telephoned Mr. Parker; there is also testimony that, at a time one cannot ascertain from the record, Mr. Parker telephoned Mr. Layson.[15] Layson explained to Mr. Parker the procedure for cashing in an *1118 insurance policy and confirmed that Mr. Parker did want to cash in the $500 policy. Layson also told him in a telephone conversation initiated by Mr. Parker that their cash value check was being processed. (R.T. 169, 173-75.) Mrs. Parker testified that she did not believe that she had any insurance in January 1994.[16] Her understanding was incorrect; the Parkers had a total of $4,000 in insurance ($2,000 each) as of January 13, 1994, and $1,608 in coverage even after they allowed the policy to lapse.[17]
When Taunton went to the Parkers' house to collect the January 1994 premium, Mr. Parker told him he did not have the money to pay the premium. (R.T. 116.) At that time, the policy had not yet lapsed. (R.T. 103.) Taunton told them that once they received the cash value check, they could use it to pay their premium. He told them to contact his wife, Kathy, at the Farmers Exchange Bank.[18]
Toward the end of January 1994, while they were driving, the Parkers passed Taunton, who, Mrs. Parker said, "waved them down." She said Taunton had Mr. Parker sign the cash value surrender application on his $500 policy. (R.T. 133.) Not long after that, the Parkers received the cash value check for $141.17. The Parkers did not attempt to contact Taunton, his wife, or Layson before or after cashing the check to ask why it was less than they had expected. (R.T. 150-51.) The check for $141.17 was the cash value of Mr. Parker's $500 policy, not for Mrs. Parker's policy. Mrs. Parker testified that instead of paying the January premium that was owed to Life of Georgia she held the *1119 check for a while, expecting Taunton to make another visit to her home, as had been the regular practice of previous agents of the Parkers.[19] When he did not come back or send another check, she cashed the $141.17 check. After the meeting between Taunton and the Parkers on the road in January 1994, Taunton did not return to the Parkers' house, because their insurance lapsed and their name was taken off Taunton's route list. (R.T. 191.) Mrs. Parker testified that when she received the check for less than the expected "400 and something dollars," she had a "sugar attack." (R.T. 136-37.)
It is undisputed that $141.17 was the correct cash surrender value of Mr. Parker's $500 insurance policy. It is also undisputed that each of the Parkers' insurance policies contained tables that, for each year that they owned them, showed the cash surrender value, i.e., the amount they would receive if they cashed the policy in. (C.R.223, 245, 254.) The Parkers eventually purchased insurance coverage with another insurance company in June 1994. (R.T. 136.)
Based on Life of Georgia's alleged misrepresentation, the Parkers claimed damages based on the loss of the full benefit of $4,000 of life insurance coverage (i.e., the $4,000 face amount), plus $500 for the loss of coverage under the $500 policy they cashed in,[20] and they claimed damages for the stress, anxiety, and mental anguish they claim to have suffered as a result of this dispute.
In addition to the allegations set out above, the plaintiffs further alleged fraudulent suppression of material information regarding the two $1,000 policies issued to them after the December 1993 meeting. The Parkers claim that Taunton failed to tell them that the policies were "modified death benefit" policies; the fact that the policies were modified-death-benefit policies meant that the face value of the policies would not reach the full $1,000 coverage amount until the beginning of the fourth year after the policies were issued. Mrs. Parker testified that she thought that the policies they purchased in the December meeting would entitle them to the full benefit of $1,000 if one of them were to die.[21] The Parkers claim that Taunton did not inform them that he was selling them this kind of policy. The two $1,000 insurance policies that Mrs. Parker had purchased in 1981 and 1987 were also modified- or graded-death-benefit policies. The record contains the policy schedules for the 1981 and 1987 policies purchased by Mrs. Parker (C.R.238, 267); on the first page of those policies the policies are clearly identified as "Graded Benefit Whole Life" policies, and each of those policies contains a chart of the benefits available.
Taunton claims he explained the kind of policies he was selling the Parkers. However, it is interesting to note that in Taunton's testimony, he seemed to assume that the words "modified death benefit" on the Parkers' applications for insurance were self-explanatory. Here is the exchange that occurred between Taunton and the Parkers' attorney at trial:
(Cross-examination of Taunton, R.T. 89.) Also, the figure in the blank for "amount applied for" is $1,000, with no other explanation on the application for what that means with respect to a modified-death-benefit policy.[22]
At least four separate writings, all in the possession of the Parkers, informed them about the details of the modified-death-benefit policy: (1) the insurance policy application that the Parkers each signed, which stated that each policy was a "modified death benefit" insurance policy that had an "ultimate benefit" of $1,000; (2) a written receipt given to the Parkers when they purchased the policies, which contained a table explaining the graded death benefit for each of the first four years of the policy (R.T. 204); (3) the policies that were in fact issued, outlining the exact benefits the Parkers would receive each year; and (4) the $1,000 policies from 1981 and 1987, each of which was a graded-death-benefit policy with an outline of how the graded death benefit worked for the first four years. All of this written information, as well as Taunton's testimony that he told the Parkers he was selling them a graded-death-benefits policy, supports the defendants' position that the details concerning the value of the policy were not fraudulently suppressed. According to Taunton's testimony, Mr. Parker's bad health at the time would have disqualified him for anything but a modified-death-benefit policy with Life of Georgia. (R.T. 86, 87.) In spite of this information that was available to the Parkers, the majority states that "the Parkers had little means of knowing" about the graded death benefits. 706 So. 2d at 1112.
The majority ignores certain facts. First, its opinion provides no analysis of the fact that Mrs. Parker had purchased a graded- or modified-death-benefit policy before Taunton talked with her and Mr. Parker in 1993. The opinion makes passing mention of this fact in footnote 2, 706 So. 2d at 1110, but it does not relate that fact to the question of what Mrs. Parker knew or should have known or whether Taunton was guilty of intentional suppression of a material fact. How could Life of Georgia have suppressed information in this particular sale, when that was the kind of policy the Parkers already owned? The majority mentions the fact that these policies would not have paid the full benefits if a policyholder died within the first year after purchase. The majority opinion notes that the policies were not "whole life" policies as if that phrase is significant.[23] It is not. The question is whether the policies would have paid full benefits the first year. The policies the Parkers purchased from Taunton would not have. However, the majority never addresses other inferences that arise from the fact that the Parkers had owned similar policies in the past. Nowhere does the majority's *1121 opinion address the question of what knowledge the Parkers had about the kind of policies they already owned or whether Taunton reasonably believed that if they had already owned a graded- or modified-death-benefit policy then they already knew what the term "modified death benefit" meant.
Second, the majority ignores the fact that the very first page of the policy schedule of the 1993 policies shows that accidental death benefits are available in the first three years; this fact partially compensates for the fact that the regular death benefits are below $1,000 the first three years. Third, the Parkers voluntarily stopped paying on their insurance policies, and allowed them to lapse. How can Life of Georgia be liable for that decision? Fourth, the Parkers received a check for $141.17. If they wanted a cash value check because they could not afford premiums (which is the reason Mr. Parker gave Taunton for not paying in January), why did they not use that check to pay the January premium? They received it after they told Taunton they did not have enough money to pay their insurance premium for January. If they were concerned about the amount of the check, why did they not contact the company and ask why the check was smaller than they had expected it to be? Of course, in that event the company would have explained the transaction and would have explained that it had been performed properly by Life of Georgia. Life of Georgia would have cleared up any misunderstanding created during the December meeting between the Parkers and Taunton. But if that had happened, the Parkers would have had very little evidence to support their claim that Life of Georgia is sufficiently culpable to deserve to pay punitive damages.
It is also unusual that Mr. Parker did not testify. Mrs. Parker was clearly confused about the transaction. If she and Mr. Parker had cashed in all their life insurance, they would have received much more than "400 and something dollars," but that decision would have been financially devastating for them. Taunton arranged a transaction for them that allowed them to obtain some cash and not pay an exorbitant amount in premiums. Mr. Parker was the center of most of the communications with Life of Georgia. Certainly, his testimony could have cleared up much of the misunderstanding. However, testimony that showed Mr. Parker understood more than his wife understood would not help to establish the plaintiffs' claims of misrepresentation and suppression. The record is devoid of any explanation as to why Mr. Parker did not testify in support of the plaintiffs' case, or why the defense did not call him as a witness.
I would affirm the compensatory judgment with regard to the misrepresentation and fraudulent suppression claims, but I would reverse the award of punitive damages. The plaintiffs did not offer convincing evidence to support the allegation that the defendants "consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff." That is the standard, required by Ala.Code 1975, § 6-11-20, for a plaintiff to be entitled to punitive damages.
In order to prove fraud, a plaintiff has the burden of proving: (1) a misrepresentation of a material fact; (2) that the misrepresentation was made willfully to deceive, recklessly without knowledge, or mistakenly, and that it was acted on by the plaintiff; (3) that the plaintiff justifiably relied upon the misrepresentation,[24] given the circumstances; and (4) that the plaintiff incurred damage as a proximate consequence of the reliance. McGarry v. Flournoy, 624 So. 2d 1359, 1361 (Ala.1993). If the evidence reasonably affords an inference that the plaintiff was defrauded by the misrepresentation, the case is one for the trier of fact. Baker v. Bennett, 603 So. 2d 928, 935 (Ala.1992) (citing Hartselle Real Estate & Ins. Co. v. Atkins, 426 So. 2d 451 (Ala.Civ.App.1983)).
*1122 The testimony is somewhat confusing as to just what was misrepresented and how the Parkers relied upon the misrepresentations. It is undisputed that as of January 13, 1994, the date the Parkers allowed their insurance to lapse, Life of Georgia had $2,000 worth of life insurance in force on Mr. Parker's life and $2,000 worth of insurance in force on Mrs. Parker's life. It is also undisputed that these amounts are the amounts of insurance coverage they expected Taunton to obtain for them after their December 1993 meeting with him. It is also undisputed that half of that coverage for each of them was based on the 1981 policies and half of it was based on the newly issued policies based on the December 1993 conversation with Taunton. Yet, Mrs. Parker testified that she thought they had no insurance at all at that time. In addition, Mrs. Parker said she thought that Taunton would "cash out" all their old policies, even though that would have resulted in the Parkers' paying a higher premium each month for the same amount of insurance. Taunton testified that he thought such a result would be of no benefit to the Parkers, that it would be cheating them. If Taunton had cashed in all their policies and issued two new $2,000 policies on their lives, he would have made more money in commissions. (R.T. 117.)
Part of the confusion stems from the fact that Mr. Parker did not testify at trial, even though he was apparently the only one who communicated with Life of Georgia after the December 1993 meeting with Taunton. For example, Mr. Layson testified that he contacted Mr. Parker by telephone in December to ascertain that Mr. Parker was sure he wanted to cash in his $500 policy. Mr. Layson testified that when he was asked by Mr. Parker when the Parkers would receive their check, he told Mr. Parker the paperwork was being processed. Also, when Taunton came to collect the insurance premium in January 1994, he spoke to Mr. Parker, who told him they did not have the money to pay yet. Mrs. Parker confirmed that that visit and that conversation occurred. Mrs. Parker was present later that month when Taunton had Mr. Parker sign the application for cash surrender value to cash in the $500 policy, but she claims not to have known what the paperwork was. Mrs. Parker could confirm that a telephone conversation occurred between Layson and Mr. Parker, that Taunton spoke to Mr. Parker about the premium that was due in January 1994, and that Taunton contacted the Parkers in January 1994 to get them to sign a piece of paper, but her testimony does not dispute what was actually communicated by Mr. Parker and Layson. Without Mr. Parker's testimony as to what transpired between him and Life of Georgia, the only evidence of the substance of those communications is the testimony of Layson and the testimony of Taunton; this fact makes their testimony regarding those particular conversations undisputed.
That testimony, as well as the documentary evidence, calls into question why Mrs. Parker would think she had no insurance at all with Life of Georgia. She testified that since age nine she had had insurance with Life of Georgia and that for many years she had done business with Life of Georgia. (R.T. 129-30.) No one had told her or Mr. Parker that they had no insurance coverage. Taunton attempted to collect their premium in January 1994 and even had Mr. Parker sign the cash surrender application at the end of January. If she was concerned about her coverage, she never attempted to contact Layson, Taunton, or Taunton's wife to ask questions. Based on the communications that Mr. Parker had with Life of Georgia, it is reasonable to believe that any misunderstanding Mrs. Parker had was based on communications (or the lack thereof) with her husband. Based on the evidence in the record, there appears no justification for Mrs. Parker to believe that she had no insurance. The evidence also draws into question the justification for the Parkers' voluntarily allowing their insurance to lapse as of January 13, 1994.
For the purpose of proving fraud, there are some questions the Parkers were required to answer. What material fact was falsely represented? Did Life of Georgia know that its representation was false or did it make the representation recklessly without knowledge? Did Life of Georgia mistakenly make a misrepresentation to the Parkers? Did the Parkers justifiably rely upon that false representation? Did the Parkers incur damage or harm as a result? As for the loss *1123 of the $4,000 coverage they had as of January 13, 1994, any loss of that coverage was due to Mr. Parker's voluntary nonpayment of the premium. All the information that had been provided to the Parkers as of the end of January 1994 indicated that Life of Georgia was their insurance company and that the insurance they had previously purchased was in force. In fact, the evidence showed that there still existed some insurance ($1,608) on their lives even after the policies had lapsed. How can this Court say that the Parkers justifiably relied upon a misrepresentation in allowing their insurance to lapse?
However, the evidence is disputed as to whether Taunton promised that the Parkers would receive a "400 and something dollars" check before Christmas. Construing the evidence in the light most favorable to the nonmovants, the Parkers, I must agree that there was evidence of a misrepresentation as to the amount of the check the Parkers could expect to receive. The testimony as to this matter is also somewhat confusing, however, because Mrs. Parker testified that Taunton said he would cash out all of their old policies. Accepting that as true, it is still problematic, because if Taunton had in fact cashed out all their policies, the Parkers would have received more than $800 in cash value.[25] Cashing in the $500 policy and either of the $1,000 policies purchased in 1981 by Mr. and Mrs. Parker would have resulted in a check equal to at least $400. In addition, cashing in all of the Parkers' old policies and issuing $2,000 worth of new insurance for each of them would have resulted in a higher premium for exactly the same coverage. The Parkers had already allowed $2,000 worth of insurance to lapse on November 1, 1993, just before the meeting with Taunton. Mr. Parker told Taunton that he did not have the money when Taunton came to collect the January 1994 premium for the insurance policies they still owned.
Taking into consideration all the testimony in this case, I consider it reasonable to believe Taunton's testimony that he did not want to increase their premium by issuing them totally new insurance. In essence, Taunton replaced the insurance that the Parkers had allowed to lapse in November 1993 and provided a means for them to pay the premiums on this insurance by advising them to cash in the $500 policy. Because they did not cash in more policies, the check the Parkers received at the end of January 1994 was for less than Mrs. Parker said the Parkers had expected.[26] There was a trade-off between (1) the Parkers' receiving a check for "400 and something dollars" and paying a higher premium and (2) the Parkers' receiving a check for $141.17 and paying a lower premium. Taunton's choosing of the latter, given the Parkers' inability to pay the premiums for all new insurance (and Mrs. Parker says she expected all the coverage to be new insurance) and Taunton's concern that they not pay more in premiums for the same amount of insurance, is what we should expect from an insurance agent who is looking out for his client. However, it is also the duty of an insurance agent to keep his clients informed of changes he intends to make in what they believe they have purchased. And Taunton apparently did not do this.
The Parkers presented evidence that they relied on an oral promise that they would receive a check for "400 and something dollars" and that each of them would have $2,000 in new insurance coverage. They presented evidence that in reliance on that promise they purchased new insurance; that purchase benefited Life of Georgia.[27] They in fact received the $2,000 in total insurance coverage promised on each of their lives, as a result of the method used by Taunton. *1124 Therefore, there was no misrepresentation as to that promise and no damage either. If the Parkers' claim is that they would not have purchased additional insurance but for Taunton's promise that they would receive the insurance coverage plus the check for "400 and something dollars," the only damage to the Parkers would have been the difference between the amount they thought they would receive as cash value"400 and something dollars"and the $141.17 they received.[28] The purchase of the added insurance caused no damage to them; they received what they had requestedthe total amount of insurance coverage they wanted to have in force on each of their lives after the transaction was $2,000. That is what they received. Whether the insurance coverage was new coverage or was not new coverage has no effect on the Parkers except for the amount of premium they would be required to pay.
Based on my review of the record, I conclude that the Parkers presented substantial evidence that Taunton, as an agent for Life of Georgia, mistakenly or recklessly misrepresented to Mrs. Parker that the cash value of Mr. Parker's $500 policy would be "400 and something dollars." The evidence of an intentional misrepresentation is lacking, because Taunton's decision not to cash in all the policies owned by the Parkers as of December 1993 resulted in less benefit to him than he would have received if he had taken what Mrs. Parker testified was the agreed course of action. If he had cashed in all their policies, the Parkers would in fact have received a check for more than $400. It is not reasonable to believe that he would intentionally misrepresent to the Parkers a fact that would provide less commission to him and that would result in a benefit to the Parkers (lower premiums). It is reasonable to infer from the evidence that Taunton simply was not careful enough in his explanation of what the Parkers would receive in cash value. It is also reasonable to infer that Taunton simply mistakenly, or incompletely, communicated with the Parkers. It is not reasonable to infer that Taunton intentionally misrepresented the amount of the cash value check the Parkers would receive.
What about the suppression claim? The elements of fraud based on suppression of material facts are (1) a duty on the part of the defendant to disclose facts, (2) the defendant's concealment or nondisclosure of material facts, (3) inducement of the plaintiff to act, and (4) action by the plaintiff, with resulting injury. Cato v. Lowder Realty Co., 630 So. 2d 378 (Ala.1993).
If the Parkers' claim is that they did not receive the "full benefit" of the new $1,000 policies on each of their lives, then I think there exists substantial evidence to support that claim. The new policies issued to the Parkers by Life of Georgia in fact provided $1,000 in coverage on each of their lives. However, they were modified-death-benefit policies; the total paid out as a death benefit if either of the Parkers had died would not have equalled $1,000 until the end of the third year the policies were in force. Mrs. Parker had owned this kind of policy before. (C.R.255-56, 275-76, 292.) Because of their ages and their health, this was the only kind of policy Life of Georgia could issue to them. Mrs. Parker testified that Taunton did not explain that aspect of the policy, and, construing the evidence in the light most favorable to the nonmovants, we must accept her version of the meeting in December 1993.
At the signature line of the policy, the policy stated that it provided a "limited death benefit for the first three years." The receipt the agent gives to his clients upon their purchase of such a policy explains in a table exactly what the death benefit would be if the insured died in any of those early years of the policy. However, Mrs. Parker is blind, aged, and in poor health. Even in his testimony at trial, Taunton assumed that the trial *1125 court understood the meaning of the term "modified death benefit" printed at the top of the application. It is not unreasonable to impose on Taunton a duty to ensure that the elderly and blind Mrs. Parker understood exactly what she was purchasing.[29]
The record reveals a genuine issue of material fact as to whether the defendants fraudulently suppressed information that they should have relayed to the Parkers concerning the modified-death-benefit aspect of the policies. The Parkers presented substantial evidence that Taunton, without knowing whether Mrs. Parker understood how a modified- or graded-death-benefit life insurance policy would work, convinced her to purchase such a policy and that she would not have purchased such a policy if she had understood. She purchased a product that would not entitle her beneficiary to the full death benefit payment until after the third year. He knew her age and her poor health condition; therefore, in spite of all the reasons he may have had for believing that she knew what she was purchasing, he should have carefully explained to her the meaning of this policy. Viewing the evidence in the light most favorable to the Parkers, the nonmoving parties, I must conclude that they presented substantial evidence that Taunton and, through him, Life of Georgia suppressed information about the nature of the policies; that by doing so Taunton induced the Parkers to change their insurance; and that they were harmed as a result.
I think, however, that Taunton's misrepresentation did not rise to the level of willfulness, malice, oppression, or wantonness. By issuing the Parkers two new $1,000 policies rather than cashing in their old policies and issuing them two new $2,000 policies, the defendants actually chose a better course of action for the Parkers than the Parkers had originally chosen. Had the defendants chosen the method Mrs. Parker thought Taunton was pursuing, then the Parkers would have owed a higher premium than they had been paying for the policies they had purchased in 1981.[30] According to the testimony regarding the lapse of their insurance, they could not afford to pay a higher premium. Therefore, it was proper for Taunton to avoid an arrangement that would increase their premium to an even higher amount. Nevertheless, it is reasonable to infer that Taunton, as an agent for Life of Georgia, suppressed a material fact that he was under an obligation to communicate to Mrs. Parker and that he did so in order to write new insurance on her life. Again, because Mr. Parker did not testify, we do not know if he understood the nature of a modified-death-benefit life insurance policy. It is also reasonable to infer that Taunton's actions were unintentional, because the Parkers had a history of purchasing this kind of insurance and had abundant documentation of what they had purchased through Taunton.
According to Ala.Code 1975, § 6-11-20, punitive damages may not be awarded except upon "clear and convincing evidence" of the extreme misconduct outlined in the statute:
This Court is obligated to review the question whether the Parkers produced "clear and convincing evidence" that Taunton or Life of Georgia acted in a way that would justify the award of punitive damages under this statute. However, the majority opinion does not even mention the requirements of this statute.
The Parkers did not produce "clear and convincing evidence" entitling them to punitive damages on their claim of intentional misrepresentation. The evidence shows that Taunton's actions were meant, at least in some respect, to benefit the Parkers. By canceling the $500 policy and issuing two new $1,000 policies, rather than canceling all of the Parkers' existing policies and issuing two new $2,000 policies, Taunton received a smaller commission than he otherwise would have received. His actions also meant less premium money for Life of Georgia. Some of the evidence showed that the way Taunton handled the transaction saved the Parkers money. By not issuing new policies to the Parkers, who were older and in worse health than when the original $1,000 policies were issued, Taunton saved the Parkers money in insurance premiums. The evidence did not clearly and convincingly indicate that Taunton or Life of Georgia "consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff[s]." Thus, I would hold that the punitive damages award on the plaintiffs' claim of misrepresentation is not supported by the evidence.
With regard to the claims of fraudulent suppression, I would also hold that the evidence does not support an award of punitive damages under the "clear and convincing" standard. The evidence supporting the jury's finding that the defendants suppressed information regarding the graded-death-benefits policy does not support a punitive damages award. While one can infer from the testimony that Taunton did not orally inform the Parkers of the fact that the policies they were buying would not fully mature for three years, the written information given to the Parkers clearly informed them of this fact. The Parkers had purchased modified-death-benefit policies before. Thus, it is reasonable to infer that the defendants did not act maliciously in selling them this kind of policy. Also, because of their poor health and their advanced age, the plaintiffs could not have purchased a full-benefits policy even if they had wanted to. The Parkers qualified only for a modified-death-benefit policy. It is conceivable that Taunton was trying to influence the Parkers to purchase the modified-death-benefit policy by suppressing the information about the manner in which the death benefit was paid out for the first three years and misrepresenting the amount the Parkers would receive for cashing in their policies. However, the evidence of such a scheme is far from clear and convincing. In fact, the evidence is quite unconvincing.
The standard is "clear and convincing evidence." I would hold that, as a matter of law, the Parkers did not present clear and convincing evidence on the kind of conduct § 6-11-20 would require for an award of punitive damages.
This Court should not need to answer this question, because the Parkers did not even meet the standard for proving that punitive damages were appropriate in the first place. The punitive damages award should be reduced to zero. However, I concur with the majority's decision to remand for a Hammond hearing on the question of punitive damages.
I would affirm the award of compensatory damages based on the claims of misrepresentation *1127 and fraudulent suppression, but I would reverse the award of punitive damages. I do not think the plaintiffs provided the clear and convincing evidence necessary to support an award of punitive damages.
SEE, J., concurs.
[1] Rule 50, Ala. R. Civ. P., as amended effective October 1, 1995, renames the "motion for a directed verdict" a "motion for a judgment as a matter of law," and renames a "motion for a judgment notwithstanding the verdict" a "renewal of the motion for a judgment as a matter of law." The standard of review for a motion for a judgment as a matter of law is the same as for a motion for a directed verdict and a motion for a JNOV.
[2] The Parkers had also purchased two $1,000 policies in 1987, but they had cashed in those policies in April 1993.
[3] James Parker's $1,000 and $500 policies were whole-life policies. Rosie Parker's $1,000 policy was a matured graded-death-benefit policy that would pay its full face value at her death.
[4] The complaint in this case was filed before this Court issued its opinion in Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala.1997), which overruled Hickox v. Stover, 551 So. 2d 259 (Ala.1989). That Foremost Ins. Co. opinion replaced the "justifiable reliance standard" in fraud cases with the "reasonable reliance standard."
[5] The record shows that if an insured cashes in a policy, or allows it to lapse, an agent who rewrites insurance for that insured will earn a commission only if the premium for the new policy is greater than that of the previous policy. Under this rule, Taunton, in effect, received a commission only upon the $1,000 policy that he sold Rosie Parker.
[6] Layson testified:
"A. Life of Georgia has what they call a rewrite rule. Which means, if a person CSV's, cashes in or lapses a policy, if you rewrite that person within six months, from the time the cash value went in, or the policy lapsed, the only commissions you will be paid on, are commissions above whatever that premium was that you lost. So, for instance, if they lapsed or cashed in a $20 a month premium well, I'll just use the example we have here. They lapsed a $27.72 premium on James Parker. Mark [Taunton] sold him a $15.29 premium. Mark made zero on it. The only way he could have made money would have been to have sold him a bigger policy to where the new premium would have been more than $27.72 a month. Then he would only make commission on the difference. So, the company has a vehicle in force to discourage that practice from happening. It would have been to Mark's advantage, to sell the 2,000 on each of them."
(R.T. 195-96.)
[7] Mrs. Parker testified:
"Q. What did you understand when he said it was going to be a $2,000 policy?
"A. I thought I was going to cash all the policies out and return some money and join another one. But he didn't explain nothing to me. That was my thoughts.
"Q. Were you supposed to get a $2,000 policy for you and one for your husband too?
"A. Yes.... But I hadn't received not a one."
(Emphasis added.) (R.T. 131-32.)
[8] Mr. Parker's policy chart shows those two amounts as the minimum and maximum amounts they could receive, based on the number of years they had owned the policy.
[9] Life of Georgia produced a status-of-coverage letter dated June 25, 1994, which indicated that the two new $1,000 policies for Mr. and Mrs. Parker were effective as of December 13, 1993.
[10] Taunton testified:
"[I]f I had cashed in the 1,000 [the 1981 policy on Mr. Parker's life], it would be like Mr. Parker being a brand new customer with the company. He would be, like starting all over again. Plus, the premium at his older age would have been a lot higher than it would have been. He couldn't have bought another $1,000 policy for the same premium he was paying for the one he bought in '81 because he was a lot older." (R.T. 114-15.)
He also testified:
"[I]t would have been doing them a misjustice. Because it wouldn't have been benefiting the Parkers. They would have been paying me more money each month for the same amount of $2,000 insurance. It wouldn't have been doing them no justice." (R.T. 118.)
[11] That application form appears in the clerk's record at page 225.
Mrs. Parker was questioned about the exchange on the road in January 1994 between Mr. Parker and Taunton:
"Q: Now, Mrs. Parker, did Mr. Taunton present you with any documents for you to sign or to read [in the December meeting]?
"A: No, because I couldn't read. But, he met us, we were coming to town one day.
That was in January. He met us on the road, he waved us down, and handed my husband a paper and said, sign this. And then my husband signed it and he took off. And I hadn't seen him since."
(R.T. 133.)
It is not clear why Taunton had Mr. Parker sign a cash surrender application in late January 1994. Layson, Taunton's field manager at the Auburn office, was under the impression that an application had already been filed with his office for the Parkers, which would have explained why Layson telephoned Mr. Parker to ensure that he wanted to cash in the policy. (R.T. 173-76.)
[12] She testified:
"Q. And, each time he [the Parkers' former Life of Georgia insurance agent] did that [cashed in a policy for Mrs. Parker], as you did later on, he would have you sign something and you would have to give him the policy, right?
"A. When I asked him to cash it out, and I would sign it, then he would ask me for the policy.
"Q. All right. But you knew you had to sign something whenever you cashed one out; is that right?
"A. That's right."
(Cross-examination of Mrs. Parker, R.T. 149.)
[13] Mrs. Parker also testified that in April 1993 she had turned in her insurance policy to the agent in order to receive the cash value. She testified that she did not turn in her policy to Taunton in December 1993.
[14] Mrs. Parker testified: "[Mr. Parker] told [Taunton] he hadn't got no money." (Testimony of Mrs. Parker, R.T. 134.)
[15] Mrs. Parker testified that her husband telephoned Layson, who was Taunton's supervisor and the field manager at Life of Georgia's office in Auburn, to ask about their check:
"Q. Did you make any kind of attempt to contact [Taunton] or anybody else at Life of Georgia?
"A. My husband called the field manager and talked with him. And he said
"[DEFENSE COUNSEL:] Objection.
"[COURT:] Sustained.
"Q. Did your husband call him on the telephone?
"A. Yes.
"Q. But you're saying there was an attempt to contact the company.
"A. Yes.
"Q. Did the company respond to you?
"A. Mr. James, I think is his name, he said
"Q. No, don't tell me what he said. Don't tell me what he said. He didn't talk to you; did he?
"A. No."
(R.T. 137-38.) Mrs. Parker did not talk to Layson, and Mr. Parker did not testify; therefore, we have no evidence from the plaintiffs as to what was said in that telephone conversation, nor is it clear when the conversation occurred.
Layson testified that he telephoned Mr. Parker as a matter of company policy, to make sure that Mr. Parker was certain that he wanted to cash in his $500 policy:
"I just wanted to make sure that he understood that he was cashing in a policy that was older than what he was taking out. In other words, he couldn't buy it again at that age. And I just followed up and asked him did he understand what he was doing. And he told me that he needed to get a hold of some money and that's why he was cashing it in. And that call was made to his home.... I know it wasn't in January. It was in December. I would say, probably the first two weeks of December."
(R.T. 169, 170.)
(Footnote cont'd.)
Layson testified that he talked with Mr. Parker twice:
"A. I talked with Mr. Parker twice. I talked with him the first time concerning whether or not he understood what he was doing with his insurance. I talked with him another time, how long after that I do not know. One other time he was concerned about why he had not received his cash value check. That's the only two times I talked to him during that time.
"Q. Now, who initiated that conversation?
"A. The conversation about the cash value check, Mr. Parker called the office.
"Q. He called your office and asked you where his money was; is that right?
"A. That's correct.
"Q. What did you tell him?
"A. I told him it was being processed.
"Q. Did you and he have a conversation about the amount of money that was being processed?
"A. No, we didn't.
"Q. Did he indicate to you the amount of money he was expecting?
"A. No, he didn't.
"Q. Was this conversation you haddid he register with you some concern or some complaint about not having received this money earlier?
"A. He called because he was concerned that he had not received the money."
(R.T. 173-74.)
The only evidence as to when these conversations occurred comes in Layson's testimony; he said the first conversation occurred before the Parkers received the check for $141.17.
[16] On direct examination, Mrs. Parker testified as follows:
"Q: Did you have any insurance after January of 1994?
"A: No. Later on in June, I joined another policy.
"Q: With another company?
"A: Yes.
"Q: So, you were without insurance in January of 1994; is that right?
"A: Yes.
"Q: You were not covered by this policy?
"A: No.
"Q: That Mr. Taunton promised you.
"A: That's right."
(R.T. 136.)
[17] According to the documentation in the record, at the time the Parkers allowed coverage to lapse they actually had $4,000 of life insurance. Even after the Parkers ceased paying their premiums and the policy lapsed as of January 13, 1994, a total of $1,608 worth of life insurance was still in effect on the Parkers' lives. Without payment of any premiums, the extended term insurance on Mr. Parker's life remained in effect until December 8, 1999. The $608 worth of reduced paid up life insurance on Mrs. Parker's life was still in effect after the lapse. (C.R.236.)
[18] Mrs. Parker testified:
"Q. Did [Taunton] come to your house in January [1994] to collect any type of premiums?
"A. My husband said he did. I was back in the back. [My husband] told him he hadn't got no money. [Taunton] just took off. He said, `If you get any money or you get a check, you call Kathy.' Who was Kathy, I don't know, he said she was his wife. That she worked at the Exchange Bank. To let her know. He said, `If you get a check don't cash it,' turn it over to him. That's what he said."
(R.T. 134.)
[19] Mrs. Parker stated that she "held [the check] a while but [Taunton] didn't come back. I thought he was going to come back for another monthly premium but he never did. So I spent it." (R.T. 135-36.)
[20] The Parkers claim that they cashed in the $500 policy because they had been told that they would receive "400 and something dollars" for it. Consequently, their claim is for the period that they were without the $500 coverage.
[21] Mrs. Parker testified as follows:
"Q: Did [Mr. Taunton] explain to you anything about a policy that would increase over time?
"A: No.
"Q: Would you have bought a policy that would increase over time?
"A: No. Because I thought when you joined a policy, and received your policy, you are paid for everything. You get the whole benefit.
"Q: So, it was never your intention to buy a policy that would only have a face value after four [sic] years?
"A: No. I didn't know it."
(R.T. 139-40.) The first thing the reader sees in the center of the first page of the policy schedule for these policies is the chart showing the amount that would be paid in any particular year to the beneficiary. That chart takes up almost half the page and is clearly understandable to a person with a sixth-grade education.
[22] Because it contains the chart of payments for the first four years of the policy, the first page of the policy schedule is important. Nowhere on that page are the words "modified death benefit." The modified or graded benefits, however, are clearly explained in two locations, at the center of the page and at the bottom.
[23] The majority states: "The Parkers agreed that they wanted to have $2,000 apiece in death benefits and, believing that they were buying whole-life policies, signed the applications for the new policies." 706 So. 2d at 1111.
The significance of the 1981 and 1987 policies is threefold: One, they were over four years old; therefore, any new graded-death-benefit policy sold in exchange for any of those policies by Taunton would not for three years equal the death benefits that would have been available from the 1981 and 1987 policies. Two, the fact that the Parkers had those policies is evidence that the Parkers did know or should have known what they were purchasing from Taunton in 1993. Three, the fact that the Parkers had those policies is evidence that Taunton was not so culpable in not explaining the meaning of the term "modified death benefit."
[24] See note 4 of the majority opinion, 706 So. 2d at 1113.
[25] Adding up the cash value of all the insurance policies owned by the Parkers as of the time of the December 1993 meeting with Taunton gives a minimum of $806.17a minimum of $278 for Mr. Parker's 1981 policy, a minimum of $387 for Mrs. Parker's 1981 policy, and $141.17 for Mr. Parker's $500 policy.
[26] We do not know what Mr. Parker expected, because he did not testify.
[27] The Parkers' purchase also benefited Taunton minimally. Because Mr. Parker's insurance coverage increased so little (from $1,500 to $2,000), Taunton received no commission for obtaining that additional insurance for him. Mrs. Parker's increase (from $1,000 to $2,000) would have provided a small commission for Taunton.
[28] It could be argued that we should factor into the calculation the savings in premium payments the Parkers would have because of Taunton's method of obtaining the $2,000 in insurance coverage on each of their lives compared to the premium the Parkers would have paid if Taunton had done what Mrs. Parker said she understood he was going to do. However, that would require a calculation of the total savings during their expected life spans, discounted over time. No evidence of this amount was presented in the trial court. In addition, the Parkers' ages indicate that that amount would probably be quite minimal.
[29] While Mrs. Parker did not receive exactly what she thought she had purchased, she received more than she had owned previously. Her 1981 $1,000 policy was still in force at the time of the meeting with Taunton, and the modified-death-benefit policy provided for a death benefit that increased each year until the payment reached $1,000 the fourth year. Mr. Parker's situation is different. If he had died during the first year after the new policy became effective, then Mrs. Parker, his beneficiary, would have received only $1,189 ($1,000 from the 1981 policy and $189 from the new modified-death-benefit policy). That amount is less than the $1,500 she would have received if he had died the year before, when his $500 policy still would have been in force. We do not know what Mr. Parker thought he had purchased, after the meeting with Taunton, because he did not testify. Therefore, there is no evidence in the record that he did not receive what he had bargained for.
[30] The 1981 policies had been in effect for over 12 years. In 1993, Mr. Parker was 68 years old and was in poor health, and Mrs. Parker was 70 years old and was in poor health. Insurance companies compute premium payments based primarily on age. A difference of 12 years, taken with the Parkers' being over 65 years old, would surely have increased drastically the premiums the Parkers would have had to pay for new policies. | November 7, 1997 |
8a42def8-fb1c-403a-82ef-0b5080556f53 | Taylor v. General Motors Corp. | 707 So. 2d 198 | 1952072 | Alabama | Alabama Supreme Court | 707 So. 2d 198 (1997)
Richard TAYLOR, et al.
v.
GENERAL MOTORS CORPORATION and Bay Chevrolet, Inc.
1952072.
Supreme Court of Alabama.
October 31, 1997.
*199 Ross Diamond III and James H. Frost of Diamond, Hasser & Frost, Mobile, for appellants.
Warren B. Lightfoot and Madeline H. Haikala of Lightfoot, Franklin & White, L.L.C., Birmingham; David M. Heilbron and Leslie G. Landau of McCutchen, Doyle, Brown & Enersen, L.L.P., San Francisco, CA; Richard Dorman of McRight, Jackson, Dorman, Myrick & Moore, L.L.C., Mobile; Thom Rumberger of Rumberger, Kirk & Caldwell, Orlando, FL, for appellees.
ALMON, Justice.
The plaintiff Richard Taylor appeals from a judgment entered on a jury verdict in favor of the defendants General Motors Corporation ("GM") and Bay Chevrolet, Inc. Although Taylor's wife and children were also plaintiffs and also appeal, we shall refer only to Taylor as the plaintiff/appellant, for simplicity's sake. Similarly, we shall refer only to GM as the defendant/appellee, although the defendant Bay Chevrolet, Inc., is also an appellee. Taylor sought to recover damages for injuries he sustained when the automobile he was driving ran off the road. Alleging that a defective condition in his 1988 Chevrolet Sprint caused the wreck, Taylor proceeded against GM under the Alabama Extended Manufacturer's Liability Doctrine and a theory of breach of implied warranty of merchantability.
Taylor raises the following issues: (1) Whether the circuit court adequately instructed the jury on the meaning of the term "defective," as that term is used in our formulation of the AEMLD; (2) whether the circuit court erred by refusing Taylor's requested jury instruction stating that Alabama law does not require proof of a specific defect in order to sustain an AEMLD claim; (3) whether the circuit court erred by excluding from evidence GM reports related to 14 other incidents involving Chevrolet Sprint automobiles; and (4) whether the circuit court erred by excluding GM records pertaining to the warranty replacement on other Sprints of parts identical to those Taylor alleges were defective in his vehicle.
On May 20, 1990, Taylor was driving the Sprint along Government Boulevard in Mobile, and his three children were passengers in the vehicle. They were travelling west, just past Interstate Highway 65, when the car suddenly veered right and went off the roadway. Witnesses testified that they heard a sharp bang before the car left the *200 road; after leaving the road, the car struck a concrete marker, became airborne, and then landed near the top of an embankment leading to Montlimar Creek. The Sprint rolled over as it went down the hill, and it came to rest upright in the water of Montlimar Creek. Taylor's spinal cord was crushed in the accident and he was paralyzed from the chest down. The children were also hurt, but their injuries were relatively minor.
On May 14, 1992, Taylor filed a complaint against GM and Bay Chevrolet, Inc.the dealership from which Taylor had purchased the Sprintalleging that a defective torque rod bracket and a defective transmission mount had caused the accident. Taylor later added Bridgestone-Firestone, Inc., as a defendant, under a theory of negligent maintenance or negligent repair of the vehicle after purchase. Bridgestone-Firestone settled with Taylor, and the circuit court dismissed it from the action; it is not a party to this appeal.
At trial, Taylor sought to prove that the sharp bang heard by witnesses was the sound of the Sprint's aluminum torque rod bracket fracturing. His expert witnesses testified that the torque rod bracket, as well as the left-side transmission mount, failed because of fatigue. According to Taylor's experts, the failure of these components caused a phenomenon called "torque steer," which they said would cause the vehicle to veer to the right. GM rebutted this evidence with expert testimony indicating that the torque rod bracket and transmission mount actually broke during the impact of the accident, not as a result of fatigue. GM's experts further testified that, even if those parts had failed, excessive or uncontrollable torque steer would not have occurred as a result.
The jury returned a verdict for GM, and the circuit court entered a judgment on that verdict. Taylor moved for a new trial, but the court denied his motion.
Taylor contends that the circuit court failed to adequately instruct the jury on the definition of "defect" or "defective" under the AEMLD. Specifically, two of his requested jury charges would have instructed the jury that "`[d]efective' means the product does not meet the reasonable expectations of an ordinary consumer as to its safety." The circuit court declined to give the requested charges and, instead, instructed the jury that "defective" means "unreasonably dangerous." This definition comes directly from Instruction 32.12, Alabama Pattern Jury Instructions (Civil) (2d ed.1993).
Taylor asks this Court to rule that, by itself, an instruction that "defective" means "unreasonably dangerous" is insufficient. In support of this argument, he cites language in both Casrell v. Altec Industries, Inc., 335 So. 2d 128, 133 (Ala.1976), and General Motors Corp. v. Edwards, 482 So. 2d 1176, 1183 (Ala.1985), interpreting the word "defective," as it is used in this Court's formulation of the AEMLD, to mean "that the product does not meet the reasonable expectations of an ordinary customer as to its safety."
While this Court has so interpreted the word "defective" in AEMLD cases, the mere fact that particular language appears in an opinion of this Court does not necessarily make that language appropriate for a jury instruction. Alabama Power Co. v. Tatum, 293 Ala. 500, 504, 306 So. 2d 251, 254 (1975). In interpreting "defect" or "defective" in the context of AEMLD claims, this Court has employed various language when addressing particular cases. The notes following A.P.J.I. Instruction 32.12which itself defines "defective" simply as "unreasonably dangerous"point out the myriad of phrases used by this Court:
Although the notes following the pattern instruction present this litany of variant phrases, they do not suggest when some definition besides "unreasonably dangerous" should be employed.
In reviewing a jury instruction to determine if it correctly and adequately sets forth the applicable law, this Court must read and consider the charge as a whole. Volkswagen of America, Inc. v. Marinelli, 628 So. 2d 378, 384-85 (Ala.1993). The circuit court must give a charge that properly presents to the jury a party's theory of the case, and if the circuit court fails to do so, its failure is reversible error. Id. at 384; Alabama Farm Bureau Mut. Ins. Service, Inc. v. Jericho Plantation, Inc., 481 So. 2d 343, 344 (Ala.1985).
The circuit court's jury charge properly instructed the jury that "defective" means "unreasonably dangerous." That the circuit court refused to charge the jury on other definitions of "defective" in no manner compromised Taylor's right to have his theory presented to the jury by a proper instruction. His entire claim could be distilled to the argument that his Sprint was unreasonably dangerous because of a likelihood that the torque rod bracket and the transmission mount would fail. Even though Taylor was not given the exact charge he requested, the circuit court's oral charge substantially covered the same principles as the requested charge. Crown Life Ins. Co. v. Smith, 657 So. 2d 821, 825 (Ala.1994); Volkswagen at 385; Cone Builders, Inc. v. Kulesus, 585 So. 2d 1284, 1290 (Ala.1991). Furthermore, Taylor has not convincingly argued how the giving of the requested charge might have led to a different jury verdict.
The "unreasonably dangerous" definition of "defective" contained in A.P.J.I. Instruction 32.12 goes to the heart of most products liability claims and will be adequate for the majority of claims pursued under an AEMLD theory. Thus, no particular alternative definition of "defective" is necessarily due to be given in a jury charge. Were we to require a circuit court to give an instruction setting out all of the possible definitions of "defective," or even a set of particular definitions chosen by a plaintiff, the charge in an AEMLD case would rapidly become cumbersome and confusing to a jury. While there may be certain plaintiffs' theories that will require providing alternative or additional definitions of "defective," those cases should be the exception rather than the rule. Therefore, we believe it is best to require only that the circuit court give an instruction that properly presents a party's theory to the jury. Volkswagen at 384; Jericho Plantation at 344. For most AEMLD actions, A.P.J.I. Instruction 32.12 will satisfy that requirement. Taylor has made no showing that the facts of his case called for some different or additional definitions.
For the foregoing reasons, there was no error in refusing the plaintiff's requested charge.
Taylor also argues that the circuit court erred by failing to give a requested charge instructing the jury that Alabama law does not require proof of a specific defect in order to sustain an AEMLD claim. In part, the plaintiff's requested charge number 11 stated:
This requested charge number 11, like those charges pertaining to the definition of "defective," pulls language directly from previous opinions of this Court, particularly Casrell and Sears, Roebuck & Co. v. Haven Hills Farm, Inc., 395 So. 2d 991 (Ala.1981). Again, however, Taylor's argument only further proves the propriety of the rule that even *202 though language in a requested charge is derived from an opinion of this Court it is not necessarily appropriate for a jury instruction. Tatum, 293 Ala. at 504, 306 So. 2d 254.
The Casrell Court held that "[i]f a product is unreasonably dangerous, it is necessarily defective, and the consumer should not be required to prove defectiveness as a separate matter." 335 So. 2d at 131. Taken alone, this excerpt might lead to the conclusion that a plaintiff in an AEMLD action need not prove the existence of a specific defective condition as a prerequisite to recovering damages. However, a closer examination of this statement in the proper context shows that such a conclusion would be mistaken.
In Casrell, where this Court first adopted a hybrid form of liability in defective product cases, the language now quoted by Taylor is found in the context of differentiating between traditional negligence principles and the doctrine of strict liability in tort. There, this Court stated:
Casrell at 131.
In Sears, the Court reiterated the language now relied on by Taylor, but prefaced it by stating that "proof of the specific defect, i.e., the exact act, omission, process, construction, etc., resulting in the product's failing its intended use, is not required." 395 So. 2d at 994 (emphasis added). Sears also cited Restatement (Second) of Torts, § 402A, cmt. g (1965), to describe the plaintiff's burden of proof in products liability cases:
395 So. 2d at 995 (emphasis added).
In its proper context, the language Taylor has pulled from Casrell and Sears was clearly meant to relieve AEMLD plaintiffs only of the burden of proving the specific negligent conduct that ultimately caused a defective condition in a manufacturer's product. In this case, for example, Taylor would not have to prove that the torque rod bracket and the transmission mount were negligently designed by a GM engineer or that a GM worker negligently installed these components in the Sprint. Nonetheless, Taylor still must prove the existence of a defective condition and prove that the defect proximately caused his injuries.
In an effort to carry his burden of proof, Taylor offered the testimony of experts to show that the torque rod bracket and the transmission mount were defective because of a likelihood of fatigue that would cause the parts to break. If the jury rejected this evidence, his case would necessarily fail for lack of proving a defective condition in the Sprint. Nonetheless, Taylor's requested instruction, which would have told the jury that he need not prove a specific defect, could have allowed the jury to infer the existence of a defect simply by virtue of the car's inexplicably running off the road.
However, allowing a jury to infer that a product is defective solely from the fact that it failed in some manner does not square with our holding in Sears, where the Court held that the AEMLD requires "a showing that the product's failure of performance is causally related in fact to the product's defective condition at the time of its sale." 395 So. 2d at 995. The Sears Court held that the blowout of a four-and-a-half-month-old tire, which had been driven approximately 30,000 *203 miles, was not sufficient evidence to establish that there had been a defect in the tire. 395 So. 2d at 995-96. Similarly, we hold that evidence of Taylor's veering from the roadway in his two-year-old Sprint, which had been driven approximately 36,000 miles, is not sufficient evidence, under the AEMLD, to establish a defect in the vehicle. The Sears Court noted that there are myriad reasons for tire failure; we note that there are myriad reasons why vehicles veer from the road, including driver error and adverse highway conditions.
Therefore, after considering the circuit court's entire charge to the jury and considering the facts of this particular case, we find no reversible error in the court's refusing the requested charge.
Taylor also asserts that the circuit court erred in refusing to admit into evidence GM "Preliminary Investigation Reports" related to 14 other crashes involving Sprint vehicles. He argues that the reports should have been admitted because, he says, they demonstrate that other similar accidents had occurred involving drivers' sudden loss of control of similar Sprints. The circuit court ruled the reports inadmissible because the incidents described in them were not substantially similar to Taylor's accident.
Taylor cites General Motors Corp. v. Johnston, 592 So. 2d 1054 (Ala.1992), to support his claim that the reports should have been admitted. In that case, Johnston's pickup truck stalled in an intersection and was struck by an oncoming tractor-trailer truck. In an action brought under the AEMLD, Johnston sought to establish that a defective memory chip in the pickup's fuel delivery system had caused the accident. Johnston offered, as evidence of a defect in the fuel delivery system, 268 GM reports related to similar accidents; they were admitted into evidence. This Court held that the trial court had not abused its discretion in admitting those reports, because a majority of the reports specifically dealt with fuel-delivery-system components in engines identical to the one in the plaintiff's pickup.
However, our holding in Johnston does not require the reversal of the judgment in the instant case. Rulings on the admissibility of evidence under the "substantially similar" standard must be considered on a case-by-case basis. The admissibility of such evidence is within the discretion of the trial court, and the court's ruling will not be reversed absent an abuse of that discretion. Johnston at 1058-59.
Although the reports offered by Taylor related to incidents in which drivers lost control of their Sprint automobiles and ran off the road, the similarities between those incidents and Taylor's own accident end there. Of the 14 reports, none mentioned the failure of a torque rod bracket or a transmission mount, and none cited torque steer as the cause of the crash. Instead, the reports attributed the incidents to a variety of automotive malfunctions, ranging from brake failure to the loss of power steering, but not including a problem such as Taylor says caused his accident. The circuit court was justified in ruling that the offered reports indicated that the other incidents were not substantially similar to Taylor's accident. Therefore, the court did not abuse its discretion in excluding the reports.
Finally, Taylor argues that the circuit court erred by excluding evidence regarding the warranty replacement of parts on Sprint vehicles identical to the vehicle owned by Taylor. The documents offered in evidence included the number of torque rods, torque rod brackets, and transmission mounts that GM had replaced under warranty on 1985- to 1988-model Sprints. Taylor contends that the documents were relevant to show that other Sprints had the same defective components because they were replaced under warranty. However, the circuit court refused to admit the documents, because Taylor could not establish a relationship between the number of parts replaced and the number of parts that were actually defective. According to GM, this issue was of critical concern because, it said, nondefective parts were often replaced in conjunction with other work performed on a vehicle.
Evidence is relevant when it has some tendency to shed light on the inquiry at issue. Baker v. Merry-Go-Round Roller Rink, Inc., 537 So. 2d 1, 2 (Ala.1988); see also *204 Rule 401, Ala. R. Evid.; C. Gamble, McElroy's Alabama Evidence § 21.01 (5th ed.1996). Because the number of parts replaced under warranty has some tendency to lead to the inference that at least some of those parts were in fact defective, the documents offered by Taylor were relevant and the circuit court could have properly ruled them admissible. However, the fact that the evidence was relevant and could have been admitted is not dispositive, because the circuit court has the discretion to exclude relevant evidence that is speculative or of little probative value. Ryan v. Acuff, 435 So. 2d 1244, 1247 (Ala.1983); Collins v. Burns, 666 So. 2d 530, 533 (Ala.Civ.App.1995). Taylor could not assure the circuit court of any relationship between the overall number of parts replaced and the number of parts that were actually defective. Consequently, any probative value of the evidence was speculative at best, and the circuit court therefore did not abuse its discretion by refusing to admit the documents. Therefore, there was no error in the circuit court's ruling.
For the foregoing reasons, we affirm the judgment of the circuit court.
AFFIRMED.
HOOPER, C. J., and HOUSTON, COOK, and SEE, JJ., concur. | October 31, 1997 |
bab5f0b6-5467-461b-91c9-2212e302dc12 | Porter v. Williamson | N/A | 1130282 | Alabama | Alabama Supreme Court | Rel: 01/30/2015
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
_________________________
1130282
_________________________
Donald Porter et al.
v.
Byron Porter Williamson
Appeal from Jefferson Circuit Court
(CV-2013-902152)
MAIN, Justice.
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
1130282
defendants"), appeal from the denial of their motion to compel
arbitration of the claims asserted against them by Byron
Porter Williamson. We affirm in part, reverse in part, and
remand the case with instructions.
I. Facts and Procedural History
Marc Porter and Donald Porter are brothers; they founded
Porter Capital Corporation in 1991 and thereafter established
the related companies Porter Bridge Loan Company, Inc.,
Lowerline Corporation, CapitalPartners Leasing, Inc., and
CapitalPartners Leasing, LLC (the business entities are
hereinafter
referred
to
collectively
as
"the
Porter
companies"). In 1992, the Porters hired their nephew
Williamson as an employee of the Porter companies. In 2004,
Williamson, Marc Porter, and Donald Porter entered into a
shareholders agreement that made Williamson a 10% shareholder
in Porter Capital Corporation, Porter Bridge Loan Company,
Inc., Lowerline Corporation, and CapitalPartners Leasing,
Inc. ("the agreement").1
The agreement did not include CapitalPartners Leasing,
1
LLC, which the Porter defendants note was formed after 2004.
The parties do not contend that the post-agreement formation
of CapitalPartners Leasing, LLC, has any effect on the legal
issues on appeal.
2
1130282
On August 3, 2012, Williamson's employment as an employee
of the Porter companies was terminated.
Williamson
thereafter
provided written notice to the Porter companies of his
intention to retire as a shareholder of the corporations and
as a member of the limited-liability company. The agreement
provided
that
under
certain
circumstances,
including
termination of the employment of a shareholder for cause or
retirement of a shareholder, the Porter companies were
required to purchase the shares of the terminated or retiring
shareholder. Following his termination and resignation as a
2
shareholder of the corporations and a member of the limited-
liability company, Williamson demanded that his shares in the
corporations
and
his
interest
in
the
limited-liability
company
be purchased by the Porter companies pursuant to the
agreement. The parties, however, were unable to agree on the
value of Williamson's shares and interest. On May 30, 2013,
Williamson sued Marc Porter, Donald Porter, and the Porter
companies.
The parties apparently treat the limited-liability
2
company as being included in the agreement. We, therefore,
assume, for purposes of this opinion, that it is covered by
the terms of the agreement as to Williamson's interest in the
limited-liability company.
3
1130282
Count I of Williamson's complaint asserted that, pursuant
to the agreement, the Porter defendants were required to
purchase his shares and interest in the Porter companies.
Williamson requested that the court enter an order requiring
specific performance of the provisions of the agreement
requiring the Porter defendants to purchase his shares and
interest. Count II of Williamson's complaint asserted,
alternatively, that the agreement was due to be rescinded.
Count III sought compensatory and punitive damages
for
alleged
misrepresentations and suppression of material facts by the
Porter defendants. Count IV alleged that the Porter
defendants had converted money belonging to Williamson
from an
investment account controlled by the Porter companies.
On July 12, 2013, citing the arbitration provision of the
agreement, the Porter defendants moved the trial court to
dismiss the action without prejudice or to stay discovery and
compel arbitration. Two provisions of the agreement bear on
whether Williamson's claims must be arbitrated.
The
agreement
provides:
"28. Specific Performance. The Corporations and
the Shareholders hereby acknowledge and agree that
4
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the
Securities[ ]
cannot
be
readily
purchased or
sold
3
in the open market and are of a unique and
extraordinary nature, and for that reason, among
others, they will be irreparably damaged in the
event this Agreement is not specifically enforced.
Should any dispute arise concerning the sale or
disposition of the Securities, an injunction may be
issued restraining any sale or disposition thereof
pending the determination of such controversy, in
the event of any controversy concerning the purchase
or sale of any such Securities, the same shall be
enforceable in a court of equity by a decree of
specific performance or by temporary or permanent
injunction or any other legal or equitable remedy,
without the necessity of showing actual damages or
furnishing a bond or other security. Such remedy
shall, however, be cumulative and not exclusive, and
shall be in addition to any other remedy which the
Corporations and the Shareholders may have.
"29. Arbitration. Except for items of specific
performance referred to above, any controversy or
claim arising out of, resulting from or relating to
this Agreement shall be settled by arbitration
conducted in Birmingham, Alabama in accordance with
the Commercial Arbitration Rules of the American
Arbitration Association (or organization which is
the successor thereto). The parties hereto agree
that service of process or notice of motion or other
application in connection with any arbitration may
be served by the means by which notices are to be
given under this Agreement, provided that a
reasonable time for appearance is allowed. Any
award [in] such arbitration may be enforced on
application of either party by the order or judgment
of a court of any competent jurisdiction. The fees
and expenses of any arbitration shall be borne by
the parties equally, but each party shall bear the
The agreement defines "Securities" as "the shares of the
3
Common Stock or other evidence of ownership interest in" the
corporations.
5
1130282
expenses of its own attorneys and experts and the
additional expenses of presenting its own proof."
Williamson opposed the
Porter
defendants' motion to dismiss or
to compel arbitration, arguing that some or all of his claims
fell within the specific-performance exception of the
arbitration provision in the agreement.
On October 30, 2013, following a hearing on the Porter
defendants' motion to dismiss or to compel arbitration, the
trial court issued an order denying the Porter defendants'
motion. The trial court reasoned:
"The Court has reviewed the complaint and the
written motion in some detail, and also considered
the oral argument presented. The motion is due to
be denied as to [the Porter] defendants' prayer to
send all of [Williamson's] claims to arbitration.
The Court determines that the subject shareholder's
agreement does not mandate that every dispute or
controversy relating to the agreement be referred to
binding arbitration. ...
"....
"Here, Williamson's complaint seeks an order
that [the Porter] defendants specifically perform
the agreement to buy his shares. Any such order
could not be interpreted in any other way but that
Williamson would also be ordered to specifically
perform the agreement to sell his shares, including
doing everything required to effect the sale.
"Accordingly, it is hereby ordered and directed
as follows:
6
1130282
"1.
[The Porter] Defendants' motion to dismiss
without prejudice, stay the discovery
process, and refer all [Williamson's]
claims to arbitration is denied as to
dismissing the complaint;
"2.
[The Porter] Defendants' motion to dismiss
without prejudice, stay the discovery
process, and refer all [Williamson's]
claims to arbitration is denied as to
referring all claims alleged in the
complaint to arbitration ...."
(Capitalization omitted; emphasis in original.)
The Porter defendants appealed.
II. Standard of Review
"Our standard of review of a ruling denying a
motion to compel arbitration is well settled:
"'"This Court reviews de novo the
denial of a motion to compel arbitration.
Parkway Dodge, Inc. v. Yarbrough, 779 So.
2d 1205 (Ala. 2000). A motion to compel
arbitration is analogous to a motion for a
summary judgment. TranSouth Fin. Corp. v.
Bell, 739 So. 2d 1110, 1114 (Ala. 1999).
The party seeking to compel arbitration has
the burden of proving the existence of a
contract
calling
for
arbitration
and
proving that the contract evidences a
transaction affecting interstate commerce.
Id.
'[A]fter
a
motion
to
compel
arbitration has been made and supported,
the burden is on the non-movant to present
evidence that the supposed arbitration
agreement is not valid or does not apply to
the dispute in question.' Jim Burke Auto.,
Inc. v. Beavers, 674 So. 2d 1260, 1265 n.1
7
1130282
(Ala. 1995) (opinion on application for
rehearing)."'"
SSC Montgomery Cedar Crest Operating Co. v. Bolding, 130 So.
3d 1194, 1196 (Ala. 2013) (quoting Elizabeth Homes, L.L.C. v.
Gantt, 882 So. 2d 313, 315 (Ala. 2003), quoting in turn
Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277, 280 (Ala.
2000)).
III. Analysis
The parties do not dispute the validity of the
arbitration provision.
Rather,
this appeal concerns the scope
of the specific-performance exception of the arbitration
provision--i.e., whether the arbitration provision applies to
the dispute in question.
The Porter defendants argue that the trial court erred in
concluding that Williamson's claims fell outside the scope of
the arbitration provision. The arbitration provision
provides, in pertinent part, that "[e]xcept for items of
specific performance referred to above, any controversy or
claim arising out of, resulting from or relating to this
Agreement shall be settled by arbitration conducted ... in
accordance with the Commercial Arbitration Rules of the
American Arbitration Association." We agree with the Porter
8
1130282
defendants that the language of the arbitration provision
("any controversy or claim arising out of, resulting from or
relating to this Agreement shall be settled by arbitration")
is broad and encompassing. See, e.g., Serra Chevrolet, Inc.
v. Hock, 891 So. 2d 844, 847 (Ala. 2004) (noting that the
words "relating to" in the arbitration context are given a
broad construction). The arbitration provision, however,
expressly excepts from its reach "items of specific
performance referred to [in Section 28 of the agreement]."
The Porter defendants contend that, "[b]y its clear terms, the
specific performance provision is narrow and restrictive,
applying only to injunctive relief to restrict
a
shareholder's
attempted sale of Securities, i.e., stock or ownership
interest in the Porter companies, to a third party." (Porter
defendants' brief, at 20.) Williamson, on the other hand,
argues that count I of his complaint is the type of claim the
parties agreed would not be subject to arbitration.
"'We have held that a party cannot be required to
arbitrate a dispute that he or she did not agree to
arbitrate.'" American Family Life Assur. Co. of Columbus v.
Parker, 92 So. 3d 58, 66 (Ala. 2012) (quoting Merrill Lynch,
9
1130282
Pierce, Fenner & Smith, Inc. v. Kilgore, 751 So. 2d 8, 11
(Ala. 1999)).
"'Whether an arbitration provision encompasses a
party's
claim
"is
a
matter
of
contract
interpretation, which interpretation is guided by
the intent of the parties, and which intent, absent
ambiguity in the clause, is evidenced by the plain
language of the clause." Allied-Bruce Terminix Cos.
v. Dobson, 684 So. 2d 102, 110 (Ala. 1995).'"
Parker, 92 So. 3d at 67 (quoting Green Tree Fin. Corp. of
Alabama v. Fintson, 753 So. 2d 497, 505 (Ala. 1999)).
In the present case, the agreement requires that all
claims arising out of the agreement shall be arbitrated
"[e]xcept for items of specific performance referred to" in
Section 28 of the agreement. Section 28 provides, in
pertinent part:
"Should any dispute arise concerning the sale or
disposition of the Securities, an injunction may be
issued restraining any sale or disposition thereof
pending the determination of such controversy, in
the event of any controversy concerning the purchase
or sale of any such Securities, the same shall be
enforceable in a court of equity by a decree of
specific performance or by temporary or permanent
injunction or any other legal or equitable remedy,
without the necessity of showing actual damages or
furnishing a bond or other security."
(Emphasis added.) The allegations of Williamson's complaint
include the following:
10
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"[T]he [Porter] defendants have failed and refused
to follow the Shareholder Agreement and purchase
Plaintiff Williamson's shares as set forth in the
Shareholders Agreement, even though they agreed
[Williamson] has voluntarily retired....
"6.
Accordingly, [Williamson] is entitled under
Section 28 of the Agreement to specific performance
and an injunction requiring [the Porter] Defendants
to purchase his shares in accordance with the
Agreement.
"7.
If a jury determines the Agreement is valid,
[the Porter] Defendants are in breach of this
Agreement, and [Williamson] prays that this Court
shall enter an order requiring specific performance
and purchase of his shares.
"....
"9.
[Williamson]
prays
that
this
Court
shall
empanel
a jury on all issues and determine if the Agreement
is enforceable and, if valid, [enter] a judgment
that [the Porter] Defendants are required to buy his
shares at their fair value."
Williamson's action clearly pertains to a "controversy
concerning the purchase or sale of any ... Securities." As a
result of that "controversy," Williamson seeks "a decree of
specific performance ... injunction or other legal or
equitable remed[ies]." Accordingly, we hold that, under the
express and unambiguous terms of the agreement, Williamson's
11
1130282
claims for specific performance and injunctive relief are not
4
within the scope of the arbitration provision.
With regard to the remaining claims asserted against the
Porter
defendants
by
Williamson–-rescission,
misrepresentation
and suppression, and conversion–-Williamson does not argue on
appeal, and indeed appears to concede, that those claims do
5
not fall within the specific-performance exception to the
arbitration provision. The trial court's order, however, did
not address those remaining claims, instead denying
the
motion
to compel arbitration in its entirety based on the specific-
performance exception to the arbitration provision. The
United States Supreme Court has instructed that the Federal
Arbitration Act requires that "if a dispute presents multiple
The
Porter
defendants
also
argue
that
Williamson's
claims
4
should not be considered as proper claims for specific
performance because, they argue, specific performance is not
appropriate under the circumstances in this case. These
arguments, however, go to the merits of Williamson's claim,
not to the issue of arbitrability.
Williamson argues that the trial court has effectively
5
granted the motion to compel arbitration as to those claims
because it has permitted discovery to proceed only with regard
to the specific-performance claim. Thus, Williamson contends
that only the specific-performance claim remains before the
trial court. Nothing in the record, however, indicates that
the trial court has ordered any claim to arbitration, and,
indeed, the court denied the Porter defendants' motion to
compel arbitration in its entirety.
12
1130282
claims, some arbitrable and some not, the former must be sent
to arbitration even if this will lead to piecemeal
litigation." KPMG LLP v. Cocchi, ___ U.S. ___, ___, 132 S.Ct.
23, 24 (2011); see also Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213 (1985).
The status of the remaining claims is unclear from the
record. With regard to Williamson's claim for rescission, on
appeal Williamson concedes to the validity of the agreement.
(Williamson's brief, at 11 n.1) ("Williamson concedes the
validity of the Agreement as written."). With regard to the
conversion claim, the Porter defendants indicate that the
parties have reached an amicable resolution. Nevertheless,
nothing in the record indicates that these claims have been
dismissed. Therefore, we remand this case with instructions
for the trial court determine if any of the remaining claims
are due to be dismissed. To the extent those claims are not
dismissed, we instruct the trial court to grant the Porter
defendants' motion to compel arbitration with respect those
claims.6
Although not raised on appeal, we recognize the very real
6
potential for inconsistent results should Williamson's
alternative claim for rescission of the agreement be sent to
arbitration while his claim for specific performance of the
13
1130282
IV. Conclusion
We affirm the trial court's denial of the Porter
defendants' motion to compel arbitration insofar as that
motion
related
to
Williamson's
request
for
specific
performance
and
injunctive
relief.
With
regard
to
Williamson's remaining claims seeking rescission and alleging
misrepresentation and suppression and conversion, we reverse
the order of the trial court and remand the case with
instructions for the trial court either to dismiss those
claims or to grant the Porter defendants' motion to compel
arbitration of them.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED WITH
INSTRUCTIONS.
Stuart, Bolin, Parker, Murdock, Shaw, Wise, and Bryan,
JJ., concur.
Moore, C.J., concurs in the result.
contract remain pending in the trial court. We note that, in
such cases, the trial court has the discretion to order a stay
of the nonarbitrable claims. See Terminix Int'l Co. v.
Jackson, 669 So. 2d 893, 899 (Ala. 1995).
14 | January 30, 2015 |
3b896231-e502-4ab7-8873-6ec3dd2b825a | Ex Parte Dyess | 709 So. 2d 447 | 1960585 | Alabama | Alabama Supreme Court | 709 So. 2d 447 (1997)
Ex parte Elton G. DYESS, Jr., and Susie Dyess.
(In re Elton G. DYESS, Jr., and Susie Dyess v. AMERICAN HARDWARE INSURANCE GROUP, INC.).
1960585.
Supreme Court of Alabama.
October 24, 1997.
Rehearing Denied January 16, 1998.
*448 John T. Alley, Jr., of Alley & Waters, P.C., Montgomery, for petitioners.
Robert C. Black, Jr., of Hill, Hill, Carter, Franco, Cole & Black, P.C., Birmingham, for respondent.
HOOPER, Chief Justice.
Elton G. Dyess and his wife Susie Dyess petition for a writ of mandamus ordering Judge Charles Price of the Montgomery Circuit Court to vacate his order compelling them to arbitrate claims they brought in a lawsuit against American Hardware Insurance Group, Inc. ("American Hardware"). An insurance policy between Jack Ingram Motors, Inc., and American Hardware calls for arbitration of certain claims. The Dyesses claim that they cannot be compelled to arbitrate their claims because they did not sign the insurance policy, or any agreement that required them to arbitrate. The trial court granted American Hardware's motion to compel arbitration. We deny the Dyesses' petition.
Elton Dyess went to Jack Ingram Motors, an automobile dealership, to purchase a car. While he was test-driving an automobile belonging to Jack Ingram Motors, he was involved in an accident; Dyess says the accident was caused by an unknown motorist who, Dyess says, turned left in front of him and caused him to go left of the center line and strike another car. Dyess was injured in the accident. Because of this accident, Dyess sued American Hardware, claiming benefits under the uninsured motorist provision of its policy with Jack Ingram Motors.
Susie Dyess joined her husband's lawsuit, making a claim for loss of consortium against a fictitiously named defendant (the unknown driver of the car that turned left in front of Elton Dyess). The trial judge's order compelling arbitration directs both Elton and Susie Dyess to arbitrate their claims. Susie Dyess has made no claim against American Hardware; therefore, she has no claim now pending that may be the subject of an order compelling arbitration. We do not know what Susie Dyess would arbitrate with American Hardware, given that she has made no claim against American Hardware. Susie Dyess's claim is separate from her husband's claim, but it is also derivative. Weekley v. State Farm Mut. Auto. Ins. Co., 537 So. 2d 477 (Ala.1989).[1] Insofar as damages are concerned, her loss of consortium claim is independent of her husband's claim; however, as to the question whether she in fact has a claim, it is derivative. If her husband cannot sustain a claim against the fictitiously named defendant, then she cannot either. However, as to the uninsured motorist provision of the American Hardware policy, her claimed loss of consortium would not be compensable as a bodily injury. Weekley, supra, at 479-80. This Court does not have the policy before it; therefore, we must assume that Susie Dyess, recognizing her claim as a separate one not covered by the American Hardware policy, decided to ask for no relief in the mandamus petition. The mandamus petition makes no mention of this distinction and does not request relief as to that portion of the trial court's order purporting to compel Susie Dyess to arbitrate her claim. Because Susie Dyess has no claim against American Hardware, that portion of the trial court's order compelling arbitration would seem to have no effect as to her.
Jack Ingram Motors is the insured under a policy with American Hardware. The policy contains an uninsured motorist provision, which contains an arbitration clause. This clause reads:
Dyess did not sign this provision calling for the arbitration of claims under the policy. Initially, the adjuster for American Hardware, Tonya Roberts, denied coverage for Elton Dyess. She claimed that Dyess was not an "insured" under the liability portion of the policy. Later, American Hardware recognized that this denial was a mistake, because Roberts had failed to realize that Dyess was covered under the "medical pay" and the "uninsured motorist" portions of the policy.
After Dyess was denied coverage, he sued American Hardware, alleging breach of contract, bad faith, fraud, and the tort of outrage. The parties had attempted to resolve the dispute before Dyess invoked the litigation process. In response to a discovery request, American Hardware produced for Dyess a copy of the policy issued to Jack Ingram Motors. Dyess demanded payment of the policy limit of $120,000 and provided copies of his medical bills. American Hardware responded by asking for copies of Dyess's medical records so that it could verify the kind of treatment Dyess had received. American Hardware subsequently answered, but it continued to express an interest in resolving the dispute outside the litigation process. Robert Black, the attorney for American Hardware, signed an affidavit stating that he had informed counsel for Elton Dyess that the fact that American Hardware was filing the answer did not mean that American Hardware was no longer interested in continuing to try to resolve the matter. He also stated that he informed counsel for Dyess that he filed an answer only to get his name on the record so that he would receive court notices and the like.
Dyess moved to compel responses to discovery requests he had filed with the complaint. At that point, American Hardware filed a "Motion to Stay Judicial Proceedings and to Compel Arbitration." Dyess responded to this motion; the trial judge entered an order staying the proceedings and requiring the Dyesses to arbitrate their claims. The Dyesses then filed this petition for the writ of mandamus, seeking to have the order vacated.
Elton Dyess argues that he should not be required to arbitrate because he had signed no agreement with American Hardware and, therefore, he says, is not subject to the arbitration clause. Dyess also argues that, even if he otherwise should be subject to the arbitration clause, then, by its own terms, the clause should not apply to his claims. Dyess also argues that his claims based on fraud, the tort of outrage, and bad faith should not be arbitrated because, he argues, the arbitration clause applies only to a dispute concerning the amount of damages or a dispute as to whether an insured is legally entitled to damages. In other words, he claims that the clause contains exceptions in which arbitration would not apply and that his case comes within one of those exceptions. Dyess also claims that American Hardware, before it asked for arbitration, had substantially invoked the litigation process and, therefore, had waived any right to compel arbitration. Dyess also argues that the arbitration clause in this case is unenforceable because, he says, it appears in a contract, or is being applied to a claim, that did not involve interstate commerce.
A petition for a writ of mandamus is the appropriate means by which to challenge a trial court's order compelling arbitration. Ex parte Gates, 675 So. 2d 371, 374 (Ala. 1996). "Mandamus is an extraordinary remedy and requires a showing that there is: `(1) a clear right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.'" Id.
Under traditional principles of Alabama contract law and federal contract law, Dyess *450 could be considered a third-party beneficiary of the policy. As a third-party beneficiary, he would be subject to the arbitration clause even though he did not sign the policy. He may not pick and choose the provisions of the policy that he wants to follow. His case does not clearly fall within any of the exceptions set out within the arbitration clause. American Hardware did not waive its right to demand arbitration by substantially invoking the litigation process. Finally, this transaction i.e., the transaction by which American Hardware provided insurance to Jack Ingram Motors involved interstate commerce. Given the extraordinary nature of the writ of mandamus, we cannot say that Judge Price improperly compelled Elton Dyess to arbitrate even though he is a nonsignatory as to the contract in which the arbitration clause appears. Therefore, we deny the petition for the writ of mandamus.
Before we address Dyess's claims, we must first determine whether the Federal Arbitration Act could apply. Dyess argues that it does not apply because, he says, his claims do not involve interstate commerce and are not based on a transaction that involved interstate commerce. We disagree; his claims clearly involve or are based on an insurance agreement that involved, interstate commerce. American Hardware is an Indiana corporation and Jack Ingram Motors is an Alabama corporation.
In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995), the United States Supreme Court analyzed § 2 of the Federal Arbitration Act, 9 U.S.C. § 2, which addresses the "commerce" requirement. Section 2 provides:
The United States Supreme Court broadly interprets the phrase "involving commerce." That Court has said, "After examining the statute's language, background, and structure, we conclude that the word `involving' is broad and is indeed the functional equivalent of `affecting.'" AlliedBruce Terminix, at 273-74. The Supreme Court held that the term "involving commerce" was intended to reach to the limits of Congress's Commerce Clause power. Id., at 273, 115 S. Ct. at 839. Based on this analysis, we conclude that the policy issued by American Hardware to Jack Ingram Motors involves interstate commerce because the policy was between corporations of different states. Therefore, the Federal Arbitration Act applies, and it preempts any state law to the contrary. See Terminix International Co. Ltd. Partnership v. Jackson, 669 So. 2d 893, 895 (Ala.1995). There are commercial transactions in which the involvement of interstate commerce is tangential. However, a transaction between two companies located in separate states is not one of those transactions. Substantive federal law on arbitration controls in any case where there is a conflict between federal law and Alabama law. Id., at 895.
Dyess's most persuasive argument is that he should not be required to arbitrate because he did not sign the contract that contained the arbitration clause American Hardware seeks to enforce. Dyess is suing American Hardware under the uninsured motorist provision in the policy American Hardware issued to Jack Ingram Motors. In effect, Dyess is a third-party beneficiary of the policy between American Hardware and Jack Ingram Motors. "A party claiming to be a third-party beneficiary of a contract must establish that the contracting parties intended, upon execution of the contract, to bestow a direct, as opposed to an incidental, benefit upon the third party." Weathers Auto Glass, Inc. v. Alfa Mutual Ins. Co., 619 So. 2d 1328, 1329 (Ala.1993). The policy was written with the intent of directly benefiting people such as Dyess, who was injured while *451 test-driving an automobile belonging to Jack Ingram Motors.
Dyess seeks to benefit from the policy. However, he is attempting to avoid the arbitration clause found in the policy. He cannot pick and choose the portions of the contract that he wants to apply. Jack Ingram Motors would have to arbitrate any claim against American Hardware; we conclude that Dyess must arbitrate any claim that he has under the policy against American Hardware.
In Allied-Bruce Terminix, Justice Breyer said:
Allied-Bruce Terminix at 281, 115 S. Ct. at 843 (emphasis omitted; emphasis added).
One of the "basic terms" of the contract at issue in this case is the uninsured motorist clause, which allows Dyess to assert a claim against American Hardware based on injuries caused by an uninsured motorist. To enforce that portion of the contract and not to enforce the arbitration clause would produce a result inconsistent with the Federal Arbitration Act and with decisions of the United States Supreme Court. It is also important to realize that Dyess will not be denied a recovery by the requirement that he arbitrate his claim. If he wants to recover compensation under the policy, then, just as the signatory (Jack Ingram Motors) agreed to do, he must pursue his claim through arbitration rather than through litigation.
We further conclude that Dyess's claims should be arbitrated because they are founded on, and are intertwined with, the facts surrounding the underlying contract that contains the arbitration clause. See e.g., Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir.1993). Dyess's claims against American Hardware are so closely related to the insurance policy that Dyess must follow its terms even though he did not sign it. In addition, Dyess's claims would not exist but for the contract between Jack Ingram Motors and American Hardware.
The United States District Court for the Southern District of Alabama has held:
Dunn Constr. Co. v. Sugar Beach Condominium Ass'n, Inc., 760 F. Supp. 1479, 1482 (S.D.Ala.1991). See also McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342 (11th Cir.1984); Hughes Masonry Co. v. Greater Clark County School Bldg. Corp., 659 F.2d 836 (7th Cir.1981).
In Dunn Constr. Co., a contract existed between Dunn and Shoreline for the construction of a condominium project. The contract contained an arbitration clause. Altus Bank agreed to finance the construction. A dispute arose between Dunn and Shoreline, and Altus Bank intervened to recover money spent in repairing the allegedly defective condominium project. Altus Bank also sought recovery as obligee of the completion bond issued for Dunn. The court used the third-party beneficiary rationale, coupled with an equitable estoppel analysis, to rule that Altus Bank was subject to the arbitration clause in the contract between Dunn and Shoreline. We believe the present case involves circumstances similar to those presented in Dunn Constr. Co. Dyess did not sign the agreement to arbitrate, but, in order to benefit from the contract containing that *452 agreement, he must comply with the entire contract.
Other states have ruled similarly with respect to arbitration. In a case involving a similar dispute over arbitration, the Court of Appeals of Arizona has held that a party seeking coverage under an uninsured motorist provision must follow all of the terms of the policy. Jeanes v. Arrow Ins. Co., 16 Ariz.App. 589, 494 P.2d 1334 (1972). "[The party seeking coverage under the policy] has become a third party beneficiary of the contract. The rights here involved were created by that contract, and in order to accept benefits under that contract she must accept and abide by the terms of the contract." 16 Ariz.App. at 592, 494 P.2d at 1337. In another case involving a party that was trying to avoid arbitration because it had not signed an agreement to arbitrate, the Court of Special Appeals of Maryland quoted Williston on Contracts, § 364A (3d ed. 1957): "Where the contract contains an arbitration clause which is legally enforceable, the general view is that the beneficiary is bound thereby to the same extent that the promisee is bound." District Moving & Storage Co., Inc. v. Gardiner & Gardiner, Inc., 63 Md.App. 96, at 102, 492 A.2d 319, at 323 (1985).
Dyess is an intended beneficiary of the uninsured motorist policy. Although American Hardware and Jack Ingram Motors did not intend for Dyess in particular to benefit from the policy, they did intend to benefit people in Dyess's situation. We agree with the reasoning employed by Professor Williston. It would be unfair to American Hardware to allow Dyess to sue as an insured under the policy without enforcing against him the arbitration provision. When American Hardware agreed to insure Jack Ingram Motors, it did so with the understanding that disputes concerning the contract would be arbitrated. Therefore, we cannot say that Dyess had a clear right not to be compelled to arbitrate his claims against American Hardware, even though he did not sign the contract that contained the arbitration agreement.
Dyess argues that even if the arbitration clause would otherwise apply to this case, the exceptions set out within the clause prevent it from operating as to his claims. Dyess refers to the statement in the arbitration clause: "However, disputes concerning coverage under this endorsement [the uninsured motorist provision] may not be arbitrated." Dyess claims that this exception should apply because American Hardware initially denied coverage. As stated above, Tonya Roberts mistakenly denied Dyess's claim because Roberts had failed to consider the uninsured motorist endorsement of the policy, which would provide insurance benefits to Dyess. American Hardware no longer alleges that Dyess is not covered. It admits that Dyess qualifies as an "insured" under the policy. Therefore, there is no dispute concerning coverage. This exception in the policy does not apply.
Dyess makes an additional argument, suggesting that, by its own terms, the arbitration clause does not apply. For this argument, Dyess relies on paragraph 2 of the clause, which states: "This arbitration provision will not apply if legal action has been commenced by the `insured' against the owner or operator of an `uninsured motor vehicle'." Dyess argues that this sentence should apply and, as applied, should relieve him of the obligation to arbitrate, because he included a fictitiously named person as a defendant in his complaint. Dyess claims that he (an "insured") has "commenced" a "legal action ... against the owner or operator of an `uninsured motor vehicle'." He argues that the operator of the uninsured motor vehicle is the party fictitiously named in his complaint. However, the operator of the vehicle that turned in front of Dyess has never been located, and, thus, has not been served with process in regard to Dyess's lawsuit. Therefore, Dyess has not satisfied that exception to the arbitration clause, either.
The beginning of trial operates as a dismissal of fictitiously named parties. Ala. R.Civ.P. 4(f). If we accepted Dyess's argument, then American Hardware would not be able to demand arbitration until the trial of the case had begun. By that time, Dyess *453 would be able to successfully assert a waiver argument in opposition to American Hardware's motion to compel arbitration. This portion of the arbitration clause ("This arbitration provision will not apply if legal action has been commenced by the `insured' against the owner or operator of an `uninsured motor vehicle'") refers to a situation different from the one presented here. If there was a legal action pending between Dyess and a real party, then an arbitration proceeding would present a procedural conflict. American Hardware included that exception in the policy because it recognized that it could not use general contract principles to compel a tortfeasor/driver into an arbitration proceeding. Allowing a claimant to avoid the effect of the arbitration clause by adding fictitiously named parties would totally undermine the arbitration clause. We do not think the drafter intended to allow an insured to undermine the contractual provision with respect to arbitration by adding fictitiously named parties in the complaint. Arbitration must cease if Dyess should find and serve the fictitiously named party and add that party as a defendant in the legal action. Should that happen, the express terms of the arbitration provision would require that Dyess's claims return to the trial court for litigation.
Dyess argues that American Hardware substantially invoked the litigation process and thereby waived any right it may have had to demand arbitration. Dyess argues that American Hardware, by initially denying coverage, has, in effect, forced Dyess to sue in order to collect the benefits he claims he was entitled to under the policy. Thus, Dyess argues that this denial of coverage was enough to "substantially invoke" the litigation process. This case has involved very limited discovery, and American Hardware's only action was the filing of an answer. Dyess argues that several months passed between the time that the dispute arose and the time American Hardware demanded arbitration, and he claims that this delay prejudiced him. We agree with American Hardware that answering a complaint does not "substantially invoke" the litigation process. The trial judge determined that American Hardware had not waived its right to demand arbitration. We cannot say that he erred in that determination.
As authority for this waiver argument, Dyess cites Ex parte Prendergast, 678 So. 2d 778 (Ala.1996). In that case, this Court held that a party had waived the right to demand arbitration, by failing to demand it within a reasonable time. We first note that the Prendergast case involved a provision in the arbitration agreement that stated: "Notice of demand for arbitration shall be filed in writing with the other party and with the American Arbitration Association and shall be made within a reasonable time after the dispute has arisen." See 678 So. 2d at 779. The arbitration clause in the policy between American Hardware and Jack Ingram Motors contains no such "reasonable time" provision. The absence of such a provision affects the application the Prendergast holding might have to Dyess's case.
In Prendergast, the Prendergasts had contracted with Knobloch to build a house. The house was completed, and the Prendergasts moved into the house. After noticing some defects, they claimed a set-off against money owed to Knobloch. Knobloch filed a lien, the Prendergasts filed a declaratory judgment action, and, as holder of a mortgage covering the house, Knobloch began foreclosure proceedings. The Prendergasts amended their complaint, to seek a preliminary injunction; the trial court denied that injunction. Knobloch answered and filed a counterclaim, which was later satisfied. With regard to the Prendergasts' still-pending claim, Knobloch demanded arbitration. This Court held that Knobloch's actions constituted a waiver of the right to arbitrate and that the Prendergasts had been prejudiced by the delay. Thus, Dyess's case and the Prendergasts' case have significant factual differences. American Hardware filed an answer, but it did not invoke the litigation process to the extent that Knobloch invoked it.
The Court in Prendergast also considered the fact that Knobloch appeared to have chosen to forgo arbitration by choosing litigation as the means for resolving the dispute.
*454 American Hardware attempted to settle this case rather than litigate it. A party claiming that another party has waived its right to arbitrate its dispute normally must show more than the mere passage of time. This Court determines on a case-by-case basis whether a party has waived the right to compel arbitration. Ex parte Merrill Lynch, Pierce, Fenner, & Smith, Inc., 494 So. 2d 1 (Ala.1986). Also, a party seeking to prove a waiver of the right to arbitrate has a heavy burden. Id. Dyess has not been prejudiced by American Hardware's delay in demanding arbitration, and we conclude that Dyess has not shown that American Hardware waived its right to compel arbitration. Therefore, Dyess has not shown that he has a clear right to the relief requested.
Dyess argues that his claims alleging fraud, bad faith, and the tort of outrage may not be arbitrated because, he contends, the arbitration clause applies only to disputes as to whether the insured is entitled to recover damages or disputes as to the amount of damages that are recoverable. He argues that these three claims do not involve any dispute as to entitlement to insurance benefits or as to the amount of benefits. Dyess has not shown that the arbitration agreement is not broad enough in scope to cover these three claims against American Hardware and that he therefore has a clear right to the writ of mandamus.
American Hardware and Jack Ingram Motors could have excluded such claims from arbitration in their original contract if they had desired to do so. "[I]n order to exclude a claim from arbitration, there must be an express provision within the original contract between the parties that excludes a particular grievance." H.L. Fuller Constr. Co. v. Industrial Dev. Bd., 590 So. 2d 218, 222 (Ala. 1991). There was no such express provision in the American Hardware policy. The parties to this insurance contract expressly excluded two kinds of claims from the effect of the arbitration clause. The fact that they excluded these two kinds of claims, but did not exclude the claims Dyess now argues should be excluded, is evidence that they intended not to exclude claims of the kind presented here. They easily could have excluded claims such as fraud, bad faith, and outrage if they had intended to exclude such claims. These claims qualify under the contract language as arbitrable claims.
The Court of Appeals for the Eleventh Circuit has said, "[I]t is well established that a party may not avoid broad language in an arbitration clause by attempting to cast its complaint in tort rather than contract." McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984). Also, that court has stated: "[A]rbitration clauses are to be generously construed and all doubts are to be resolved in favor of arbitration." Ruby-Collins, Inc. v. City of Huntsville, 748 F.2d 573, 576 (11th Cir.1984).
We agree with the trial court that American Hardware had not waived its right to arbitrate the question of the amount of benefits Dyess was entitled to under the uninsured motorist coverage of the policy. Whether Dyess must arbitrate his claims of fraud, bad faith, and the tort of outrage depends on whether American Hardware unreasonably delayed its request for arbitration. If its delay in seeking to compel arbitration was unreasonable, then the trial court should have denied the motion to compel arbitration, on the basis that American Hardware had waived the right to arbitrate. The trial court found no unreasonable delay, and we agree with its decision. Dyess's claims of fraud, outrage, and bad faith bear directly upon Dyess's disagreement with American Hardware as to the amount of uninsured motorist benefits he was entitled to. We agree with Judge Price that the fraud, outrage, and bad faith claims should be arbitrated.
We conclude that Judge Price did not err in granting American Hardware's motion to compel arbitration. Elton Dyess may be entitled to insurance benefits and damages from American Hardware, but any recovery must result from arbitration rather than litigation. *455 Therefore, we deny the petition for the writ of mandamus.
PETITION DENIED.
MADDOX, HOUSTON, and SEE, JJ., concur.
SHORES, KENNEDY, and COOK, JJ., concur in the result.
BUTTS, J., dissents.
COOK, Justice (concurring in the result).
I concur in the result because the arbitration agreement is contained within the same contract under which the plaintiff asserts his claims against American Hardware. Although it originally disputed the matter, the defendant American Hardware conceded before the hearing on the motion to compel arbitration that the plaintiff Elton Dyess is an "insured" under the insurance policy between Jack Ingram Motors and American Hardware. In pertinent part, the liability coverage section of the policy provides:
Because Elton Dyess is an "insured" under the language of the policy, I will not address whether he is also a third-party beneficiary. He is bound by the arbitration agreement included in the policy because he is an insured and is seeking coverage pursuant to the policy. The plaintiff cannot pick and chose what portions of the policy are applicable to him. Furthermore, this case is factually distinguishable from Ex parte Isbell, [Ms. 1951384, August 29, 1997] (Ala.1997). In Isbell, we held that the relationships between the parties were separate and distinct and were not interrelated. However, in this case, the parties share an integral relationship, and the plaintiff must therefore submit his claim to arbitration pursuant to the agreement between Jack Ingram Motors and American Hardware.
KENNEDY, J., concurs.
BUTTS, Justice (dissenting).
I respectfully dissent. I would hold that American Hardware's protracted and unexplained delay in seeking arbitration of the Dyesses' claims constituted a waiver of its right to compel arbitration. See Ex parte Smith, 706 So. 2d 704 (Ala.1997).
[1] See also Zimmerman v. Lloyd Noland Foundation, 582 So. 2d 548 (Ala.1991); Weaver v. Allstate Ins. Co., 574 So. 2d 771 (Ala.1990); Price v. Southern Ry., 470 So. 2d 1125 (Ala.1985). | October 24, 1997 |
f6014eb6-ca31-4d3b-bdb9-1b67f84f671c | Ex Parte Wilson | 706 So. 2d 1151 | 1960949 | Alabama | Alabama Supreme Court | 706 So. 2d 1151 (1997)
Ex parte Robert T. WILSON, Jr.
(Re Robert T. WILSON, Jr.
v.
WILSON & KING, et al.).
1960949.
Supreme Court of Alabama.
November 14, 1997.
*1152 Lee H. Zell, Michael D. Freeman, and Teresa G. Minor of Balch & Bingham, L.L.P., Birmingham, for petitioner.
Paul G. Smith of Smith, Spires & Peddy, Birmingham, for respondents Wilson & King, James C. King, Garfield W. Ivey, Jr., and King & Ivey.
Sam M. Phelps and Michael S. Burroughs of Phelps, Jenkins, Gibson & Fowler, L.L.P., Tuscaloosa, for respondents King, Ivey & Junkin, and its partners, who are (1) Clatus Junkin, individually, and (2) King & Ivey, a partnership.
COOK, Justice.
This petition for the writ of mandamus challenges the Jefferson County Circuit Court's determination of venue in an action for an accounting and distribution of partnership assets. Robert T. Wilson, Jr., sued "Wilson & King; James C. King; Garfield W. Ivey, Jr.; King & Ivey; and King, Ivey & Junkin," seeking the equitable relief of an accounting and distribution of partnership assets. On motion of the defendants, the case was transferred to the Fayette County Circuit Court. Wilson has petitioned this Court for a writ of mandamus directing the Jefferson Circuit Court to vacate its transfer order. We deny the writ.
In 1988, Wilson, James C. King, and Garfield W. Ivey, Jr., executed a written partnership agreement to practice law under the name of Wilson & King. Under the terms of the partnership agreement, Wilson owned a 30% interest in the partnership.
In November 1994, Ivey stated that he planned to withdraw from the partnership on March 1, 1995. In January 1995, King and Ivey told Wilson they were forming a new partnership that did not include Wilson. Wilson immediately withdrew from the Wilson & King partnership, causing its dissolution.
King and Ivey formed the partnership of King & Ivey. They were joined by Clatus Junkin, and the name of the partnership was changed to King, Ivey & Junkin. The partners of King, Ivey & Junkin were Clatus Junkin, individually, and the partnership of King & Ivey.
The assets and property of the original Wilson & King partnership were transferred to the King & Ivey partnership and then to the King, Ivey & Junkin partnership. Wilson did not consent to the transfers and was not compensated for his interest in the dissolved Wilson & King partnership.
In his complaint, Wilson alleged 1) that the Wilson & King partnership maintained an office and transacted business in Jefferson County; 2) that the individual defendants King and Ivey are residents of Walker County; 3) that the King & Ivey partnership maintained an office in Jefferson County and transacted business there; and 4) that the King, Ivey & Junkin partnership maintained an office in Jefferson County and transacted business there.
The final page of the complaint read:
King & Ivey; James King; and Garfield Ivey filed answers denying Wilson's allegations, alleging that venue was improper in Jefferson County, and requesting the Jefferson County Circuit Court to transfer the action to the Fayette County Circuit Court "for the reasons stated in the motion to transfer by their co-defendant, Clatus Junkin."
A motion to transfer, filed "on behalf of King, Ivey & Junkin" and "by and through its partners," alleged 1) that the partnership of Wilson & King had its principal place of business in Walker County; 2) that the individual defendants King and Ivey reside in Walker County; 3) that the partnership of King & Ivey had its principal place of business in Walker County; 4) that the partnership of King, Ivey & Junkin has its principal place of business in Walker County, but has branch offices in Jefferson County and Fayette County; and 5) that Clatus Junkin is a resident of Fayette County. It further stated:
A similar motion to transfer, stating the same grounds, was filed on behalf of the Wilson & King partnership and on behalf of the King & Ivey partnership by the individual defendants King and Ivey.
The parties filed written briefs, and the trial court conducted a hearing on the merits of the motions to transfer. Following the hearing, the Jefferson County Circuit Court granted the defendants' motions and transferred the cause to the Fayette County Circuit Court.
Wilson claims that a partnership is a legal entity that can be sued in its own name and that a partnership is, in effect, an "unincorporated association." Therefore, says Wilson, venue for this action is governed by Ala.Code 1975, § 6-3-6:
Applying § 6-3-6, says Wilson, one must conclude that the appropriate venue for his action is Jefferson Countya county where the partnership of King, Ivey & Junkin "does business or has in existence a branch."
We find no authority for holding that § 6-3-6 governs venue in an action against a partnership. In Alabama, a partnership and an unincorporated association are two distinct forms of business organizations. Indeed, the legislature and this Court have separated these two forms of business organizations: Section 6-7-70 provides for the commencement of actions against partnerships, but § 6-7-80 governs the commencement of an action against an unincorporated association. Rule 4 of the Alabama Rules of Civil Procedure sets out the general provisions for service of process in Alabama. Rule 4(c)(7) states the manner in which service of process is to be made upon a partnership; Rule 4(c)(8), on the other hand, states the manner in which service of process is to *1154 be made upon an unincorporated organization or association.[1]
If Wilson's assertions were correct, then the comment to § 10-8A-201 of the revised Alabama Uniform Partnership Act (1996), effective January 1, 1997, would not have been necessary:
The Code Commissioners' comment to this section states:
Section 6 of 77 Am.Jur.2d Partnership (1975), entitled "Venue in Actions Involving Partnerships," states:
An action for the dissolution of a partnership and the accompanying accounting is an action in equity and, as such, is governed by equity procedural rules and principles. Nolen v. Wiley, 246 Ala. 482, 21 So. 2d 322 (1945).
68 C.J.S. Partnership § 412 P. 935 (1950).
See Seaboard Coast Line R.R. v. Gillis, 294 Ala. 726, 321 So. 2d 202 (1975).
The county to which this case was transferredFayette Countyis the county of residence of Clatus Junkin, a partner in the King, Ivey & Junkin partnership. Wilson, however, claims that he did not name Clatus Junkin as a defendant in the complaint and that Junkin has not filed a responsive pleading in this action.
As noted above, although Wilson did not name Junkin in the style of the case, he did name the partnership of King, Ivey & Junkin as a defendant. Wilson then listed Junkin under the heading "Serve Defendants By Certified Mail At The Following Addresses."
In the allegations in the body of the complaint, Wilson stated that Junkin was a partner in King, Ivey & Junkin and he alleged that "King, Ivey & Junkin and its partners have appropriated or converted the assets and property." A broad reading of this language, in the context of the entire complaint, yields the interpretation that Wilson considered *1155 Clatus Junkin a party defendant in this action, inasmuch as the partnership of King, Ivey & Junkin is composed of Clatus Junkin, individually, and the partnership of King & Ivey.
Two cases Wilson cites as authority for his arguments should be acknowledged. In Ex parte Macon County Greyhound Park, Inc., 634 So. 2d 997 (Ala.1993), a widow filed a dram shop action against a corporation and a sole proprietorship, alleging that the defendants' unlawful sale of alcohol to her husband had proximately resulted in the automobile accident that killed her husband. The sale occurred in Macon County, the accident occurred in Montgomery County, and the plaintiff was a resident of Elmore County.
The plaintiff sued in Montgomery County, and the defendants moved to transfer the case to Macon County. The trial court denied the motion, but transferred the case to Elmore County. The defendants' petition for the writ of mandamus asked this Court to vacate the trial court's order and direct that court to transfer the case to Macon County.
The Macon County Greyhound Park Court held, pursuant to § 6-3-7 and Ex parte Graham, 634 So. 2d 994 (Ala.1993), that because the Dram Shop Act injuries alleged by the plaintiff occurred in Macon County where the wrongful sale took placevenue was proper in Macon County with regard to the corporation. As to the sole proprietorship, the Court held that § 6-3-6 provided for venue "where the unincorporated organization does business," i.e., Macon County.
The decision in Macon County Greyhound Park is inapplicable here, because neither of the two defendants in that case was a partnership: one was a corporation and the other was a sole proprietorship doing business as an "unincorporated association." The method for determining the correct venue in actions against either of these two forms of business association is not applicable to the question of venue in an action against a partnership.
Wilson uses Norman Properties v. Bozeman, 557 So. 2d 1265 (Ala.1990), as authority for his claim that a partnership is a distinct legal entity that can be sued in any county where it does business. According to Wilson, Norman Properties holds that a judgment against a partnership attaches only to partnership property and not to property separately owned by any individual partner.
In Norman Properties, the plaintiffs bought a house that they alleged proved to be uninhabitable because of improper construction. The plaintiffs sued four individuals, alleging fraud and breach of the warranty of habitability. The four individuals did business as a partnership called "Norman Properties," and the plaintiffs later amended their complaint to add Norman Properties as a defendant.
Norman Properties, through the four individuals, had contracted with an independent contractor for that independent contractor to actually build the house in question. The individual partners purchased the lot, selected the plans, reviewed the specifications, coordinated the interior colors, and inspected the site from time to time.
557 So. 2d at 1270. The jury found for the individual defendant partners, but found against the defendant partnership. This Court reasoned:
557 So. 2d at 1270.
Norman Properties addresses the result of a judgment against a partnership (i.e., what property is affectedassets of the partnership as opposed to property of the individual partner); that case does not support Wilson's venue argument in the instant case.
Despite Wilson's claim that Junkin has not participated in the case by filing any responsive *1156 pleadings, a motion to transfer the case to Fayette County read:
In view of the foregoing, it is clear that the Jefferson County Circuit Court was not a proper venue for this equitable action, and that venue is proper in Fayette County, the residence of a partner who is a party defendant.
Ex parte Smith, 686 So. 2d 245, 246 (Ala. 1996).
Wilson has no clear legal right to an order vacating the transfer order or to an order transferring this case back to the Jefferson County Circuit Court. The Jefferson County Circuit Court did not rule arbitrarily or capriciously in transferring this case to Fayette County.
WRIT DENIED.
HOOPER, C.J., and SHORES and KENNEDY, JJ., concur.
HOUSTON and SEE, JJ., concur in the result.
MADDOX, J., dissents.
HOUSTON, Justice (concurring in the result).
Whether Clatus Junkin was sued individually was a fact question. From a review of the complaint, I cannot say that Wilson had a clear legal right to the order sought. Therefore, I concur in the result.
[1] Note the language of § 10-10-2:
"(a) Professional associations organized pursuant to this chapter shall be governed generally by all laws governing or applicable to corporations, where applicable, and not in conflict herewith. No such association shall be held or deemed to be a partnership, nor shall such association be governed by laws relating to partnerships."
(Emphasis added.) | November 14, 1997 |
1c79e874-5bf9-4d78-89a3-b4286d8a0d4f | AMERICAN PETROLEUM EQUIP. AND CONSTRUCTION, INC. v. Fancher | 708 So. 2d 129 | 1951603, 1951648, 1951650 | Alabama | Alabama Supreme Court | 708 So. 2d 129 (1997)
AMERICAN PETROLEUM EQUIPMENT AND CONSTRUCTION, INC., et al.
v.
Della K. FANCHER, et al.
Della K. FANCHER, et al.
v.
AMERICAN PETROLEUM EQUIPMENT AND CONSTRUCTION, INC., et al.
CITY OF BIRMINGHAM
v.
Della K. FANCHER, et al.
1951603, 1951648 and 1951650.
Supreme Court of Alabama.
September 19, 1997.
Rehearing Denied December 19, 1997.
*130 Demetrius C. Newton, Rowena Teague, and Michael M. Fliegel, city attys. office, Birmingham; and John D. Clements, F. A. Flowers III, and Mark M. Lawson of Burr & Forman, for the City of Birmingham and American Petroleum Equipment and Construction, Inc.
Michael C. Quillen, Frank C. Galloway, Jr., and Helen C. Foster of Walston, Stabler, Wells, Anderson & Bains, Birmingham, for Della K. Fancher, et al.
PER CURIAM.
These three appeals arise from a zoning case concerning a 4½acre tract of land located in Birmingham on U.S. Highway 280, a quarter mile north of the U.S. 280/I-459 interchange. The tract was rezoned by the Birmingham City Council to allow development of a hotel and service station. The trial court held the rezoning to be arbitrary and capricious, and therefore null and void. We reverse and remand.
On January 17, 1995, the Birmingham City Council passed Ordinance No. 1538-G, which rezoned this tract from "Contingency Office-Institutional District" ("C O-I") to "General Business District" ("B-2"). Della K. Fancher, Dirk Thomas, Mark Gamble, and J. Terry Bethea, homeowners and residents of the Cahaba Heights neighborhood, filed this action, alleging that the rezoning ordinance was arbitrary and capricious and not reasonably related to the protection of the public health, safety, morals, general welfare, and general conscience of the community. They sued the City of Birmingham; its mayor, Richard Arrington, in his official capacity; Aldrich *131 Gunn, William Bell, E.L. Blankenship, Antris Hinton, Roosevelt Bell, and Linda Coleman, in their official capacities as members of the City Council; and American Petroleum Equipment and Construction, Inc., the corporation that had applied for the rezoning. The trial court held that the rezoning was arbitrary and capricious; ruled that Ordinance 1538-G was therefore null and void; and reinstated the original classification. American Petroleum Equipment and Construction, Inc., and the Birmingham City Council appealed, primarily arguing that the trial court erred in holding that the City Council's actions in adopting the ordinance were arbitrary and capricious. The plaintiffs cross-appealed, claiming that the trial court erred in not awarding them attorney fees.
It is settled law that the Alabama Legislature has delegated to municipal legislative bodies, such as city councils, the power and authority to enact zoning ordinances. Section 11-52-76, Ala.Code 1976, provides that "[t]he legislative body of such municipality shall provide for the manner in which such [zoning] regulations and restrictions and the boundaries of such districts shall be determined, established and enforced." The power to amend, supplement, or change zoning ordinances "as may be necessary" from "time to time" is also delegated to municipal legislative bodies. Id. See BP Oil Co. v. Jefferson County, 571 So. 2d 1026, 1028 (Ala. 1990), citing Village of Euclid, Ohio v. Ambler Realty Co., 272 U.S. 365, 47 S. Ct. 114, 71 L. Ed. 303 (1926).
In Homewood Citizens Association v. City of Homewood, 548 So. 2d 142 (Ala.1989), this Court discussed the law applicable to a court's review of a city's action in zoning cases, stating that "[w]hen a municipal body acts either to adopt or to amend a zoning ordinance, it acts in a legislative capacity and the scope of judicial review of such action is quite restricted." 548 So. 2d at 143. The restrictions on this Court's review of the validity of a zoning ordinance have been explained as follows:
Homewood Citizens Association, 548 So. 2d at 143 (quoting 82 Am.Jur.2d Zoning and Planning § 338 (1976)). The Court further stated in Homewood Citizens Association that "[t]he burden is upon the party seeking relief from an ordinance to show that the ordinance was not a fairly debatable issue before the municipal governing body." 548 So. 2d at 144.
The "fairly debatable" rule concerns the application of a zoning classification to a specific parcel of property. Byrd Companies v. Jefferson County, 445 So. 2d 239, 247 (Ala.1983). "`[I]f the application of a zoning classification to a specific parcel of property is reasonably subject to disagreement, that is, if its application is fairly debatable, then the application of the ordinance by the zoning authority should not be disturbed by the courts.'" Id., quoting Davis v. Sails, 318 So. 2d 214 (Fla.Dist.Ct.App.1975). Thus, if the zoning ordinance is "subject to controversy or contention" or "open to question or dispute," it is "fairly debatable" and should not be disturbed by the courts. Aldridge v. Grund, 293 Ala. 333, 342, 302 So. 2d 847, 854 (1974); Cudd v. City of Homewood, 284 Ala. 268, 271, 224 So. 2d 625, 628 (1969).
*132 The City Council contends that its action in rezoning the property was within its sound legislative discretion as the governing body of the city and that the adoption of the zoning ordinance was a "fairly debatable" question upon which reasonable differences might exist in view of all of the circumstances. The City Council argues that a court should not substitute its judgment for that of a legislative body acting in its capacity as authorized by state law. City of Birmingham v. Norris, 374 So. 2d 854 (Ala.1979).
The plaintiffs argue that in reviewing the holding of the trial court this court should apply the ore tenus rule. Where evidence is presented to the trial court ore tenus, a presumption of correctness exists as to the court's conclusions on issues of fact; its determination will not be disturbed unless it is clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. Gaston v. Ames, 514 So. 2d 877, 878 (Ala.1987); Cougar Mining Co. v. Mineral Land & Mining Consultants, Inc., 392 So. 2d 1177 (Ala.1981). However, when the trial court improperly applies the law to the facts, no presumption of correctness exists as to the court's judgment. Gaston, supra; Smith v. Style Advertising, Inc., 470 So. 2d 1194 (Ala.1985); League v. McDonald, 355 So. 2d 695 (Ala. 1978). In addition, the ore tenus presumption of correctness has no application to a trial court's conclusions on questions of law. Beavers v. County of Walker, 645 So. 2d 1365 (Ala.1994); Ex parte Board of Zoning Adjustment of the City of Mobile, 636 So. 2d 415 (Ala.1994).
Because the adoption of an ordinance is a legislative function, the courts must apply a highly deferential standard in zoning cases. City of Mobile v. Karagan, 476 So. 2d 60, 63 (Ala.1985). This Court has said:
City of Birmingham v. Norris, supra, 374 So. 2d at 856 (quoting Waters v. City of Birmingham, 282 Ala. 104, 209 So. 2d 388 (1968)).
The tract in question is bounded on the west by Cahaba River Road, and on the south by an Alabama Power Company right-of-way and then by BellSouth's Operations Center. It is bounded on the north by a residential area, and on the east by the Summit development, a 153-acre mixed-use development that will include a full-service hotel and a shopping center. Approximately 300 feet of the tract fronts U.S. 280. When this site was annexed into the City of Birmingham in 1985, it was zoned "R-1" ("Residential/Single-family"). In 1987, the City Council rezoned the property from "R-1" to "O-I" ("Office-Institutional"); however, an office development on such a small tract did not prove to be commercially feasible. Still undeveloped, the site was rezoned in 1991, in conjunction with an interim land use plan for the Cahaba-Lake Purdy area to "C O-I" or "Contingency Office-Institutional." The City Council voted to rezone the property from "C O-I" to "B-2" ("General Business District") by the adoption of City of Birmingham Ordinance No. 1538-G.
The evidence presented during six days of testimony concerned the extensive commercial development on U.S. 280, as well as the plans for this particular tract. There was evidence that U.S. 280 has a daily traffic flow of approximately 78,000 vehicles and that at times more than 4,000 vehicles per hour pass this tract. The State of Alabama had recently widened U.S. 280 to six lanes to accommodate the large volume of traffic.[1] There is commercial development on U.S. 280, both north and south of this tract, including the *133 new 153-acre Summit development, located across U.S. 280 from the property. Despite all the development, there was testimony that there is still a need for additional hotel rooms and that there are no service stations on U.S. 280 between downtown Birmingham and the Inverness areas, which lies beyond this tract. A planning expert and four developers all testified that it is no longer practical to develop office buildings on the tract.
The trial judge indicated that he gave little, if any, weight to evidence that was presented to the court but was not presented to the City Council at its hearing; however, such evidence is relevant and admissible under this Court's decision in City of Birmingham v. Norris, 374 So. 2d 854 (Ala.1979). This evidence includes the fact that the development plans for the property have been made final. There will be a hotel, constructed of brick and siding. Guests will enter their rooms from the interior of the hotel, thereby reducing noise and traffic. The hotel swimming pool will be located on the south side, to screen the pool from adjoining residences. A service station will be located at the corner most distant from adjoining residential properties. Detailed and attractive landscaping will buffer the site from adjoining properties; directional lighting will be canopied downward. Residences will be separated from the developed tract, not only by a horizontal distance of approximately 70 feet, but also by a vertical distance of approximately 50 feet covered by vegetation. Sunset Carson testified at trial that the buffer will "do the job."
The developers and owners have agreed to a number of restrictive covenants by which they forgo certain types of uses of the property that would otherwise be permitted under both B-1 and B-2 zoning. The covenants require that the property be developed in accordance with the recommendations of the City of Birmingham's Planning Department, requiring a buffer and landscaping.
The testimony showed that circumstances in this case are very similar to those in BP Oil Co. v. Jefferson County, 571 So. 2d 1026 (Ala.1990). Evidence in BP Oil indicated "that dramatic changes in the neighborhood made the proposed zoning appropriate, inevitable and imminent, and that benefits to the community would result from the proposed rezoning." Id. at 1029. We hold that the application of Ordinance No. 1538-G was "fairly debatable"; that the ordinance has a reasonable relationship to the health, safety, morals, or general welfare of the community; and that the trial court erred in finding the rezoning by the City Council to be arbitrary and capricious and in declaring the ordinance "null and void." Homewood Citizens Association, supra; BP Oil Co. v. Jefferson County, supra; City of Birmingham v. Norris, 374 So. 2d 854 (Ala.1979); City of Gadsden v. Downs, 412 So. 2d 267 (Ala.1982); City of Birmingham v. Leo A. Seltzer, Inc., 229 Ala. 675, 159 So. 203 (1935); Leary v. Adams, 226 Ala. 472, 147 So. 391 (1933).
For the reasons stated above, the judgment of the trial court is reversed and the cause is remanded for the trial court to vacate that judgment and to enter a judgment approving Ordinance No. 1538-G. The plaintiff's cross-appeal, seeking to reverse the trial court's denial of attorney fees, is rendered moot by this decision and need not be addressed. Chisolm v. Crook, 272 Ala. 192, 130 So. 2d 191 (1961).
REVERSED AND REMANDED.
ALMON, SHORES, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
MADDOX, Justice (dissenting).
I must respectfully disagree with the majority. In finding that the actions of the Council were arbitrary and capricious, the trial court, on April 4, 1996, issued the following order:
I realize that our review is quite restricted when determining the validity of a zoning ordinance; however, we must also be mindful that in considering the correctness of the judgment of the trial court in a nonjury case we apply the rule that (1) the trial court is the ultimate trier of fact and is free to weigh the evidence and the credibility of the witnesses; (2) the findings of fact made by the trial court are presumed to be correct, if supported by credible evidence; and (3) a judgment based on those findings will not be set aside unless it is clearly erroneous or palpably wrong or unjust. Hayden v. Bruno's, Inc., 588 So. 2d 874, 875 (Ala.1991); see also O'Brien v. Westinghouse Electric Corp., 293 F.2d 1 (3d Cir.1961); Feaster v. American Liberty Insurance Co., 410 So. 2d 399 (Ala.1982).
After reviewing the record and the briefs, along with the trial court's lengthy finding of facts and conclusions of law, I do not believe that the trial court erred in finding that the action of the Birmingham City Council in rezoning the subject property was "clearly arbitrary, capricious, [and] unreasonable, having no substantial relation to the public health, safety, or welfare, [and was] plainly contrary to the zoning laws [in existence at the time of its action]." Homewood Citizens Association v. City of Homewood, 548 So. 2d 142 (Ala.1989) (quoting Am.Jur.2d Zoning and Planning § 338 (1976)). See also, BP Oil Co. v. Jefferson County, 571 So. 2d 1026 (Ala.1990); City of Birmingham v. Norris, 374 So. 2d 854 (Ala.1979); COME v. Chancy, 289 Ala. 555, 269 So. 2d 88 (1972); Allen v. Axford, 285 Ala. 251, 231 So. 2d 122 (1969); Marshall v. City of Mobile, 250 Ala. 646, 35 So. 2d 553 (1948); City of Birmingham v. Leo A. Seltzer, Inc., 229 Ala. 675, 159 So. 203 (1935); Leary v. Adams, 226 Ala. 472, 147 So. 391 (1933).
HOOPER, C.J., and SEE, J., concur.
[1] Tom McGee, chief planner for the City of Birmingham, testified that the widening of U.S. 280 was a "significant" change that promoted commercial development in the area. | September 19, 1997 |
3841922d-f535-4985-b492-7cb2ef7880dc | ENVIORON. WASTE CONTROL, INC. v. Browning-Ferris Industries, Inc. | 711 So. 2d 912 | 1950539 | Alabama | Alabama Supreme Court | 711 So. 2d 912 (1997)
ENVIRONMENTAL WASTE CONTROL, INC.
v.
BROWNING-FERRIS INDUSTRIES, INC., and Browning-Ferris Industries of Alabama, Inc.
1950539.
Supreme Court of Alabama.
October 31, 1997.
Rehearing Denied March 20, 1998.
*913 Samuel Fisher and Kyle T. Smith of Gordon, Silberman, Wiggins & Childs, P.C., Birmingham, for appellant.
T. Thomas Cottingham III, Robert S.W. Given, and Peter A. Grammas of Burr & Forman, Birmingham, for appellee.
COOK, Justice.
The opinion of May 16, 1997, is withdrawn and the following opinion is substituted therefor.
This is the second appeal in this case. See Environmental WasteControl, Inc. v. Browning-Ferris Industries, Inc., 657 So. 2d 885 (Ala.1995) ("Environmental I").[1]
In Environmental I, the trial court entered a summary judgment for the defendantsBrowning-Ferris Industries, Inc. ("BFI, Inc."), and Browning-Ferris Industries of Alabama, Inc. ("BFIA")on claims by Environmental Waste Control, Inc. ("EWC"), alleging fraud, promissory fraud, breach of contract, breach of a joint venture agreement, and intentional interference with business relations. This Court affirmed the summary judgment as to all claims except promissory fraud. Holding that EWC had presented substantial evidence in support of its promissory fraud claim, we reversed the judgment and remanded the cause.
On remand, the defendants filed two motions for summary judgment. The first motion was filed by BFI, Inc.; it alleged that the trial court lacked in personam jurisdiction over BFI, Inc., because, it argued, BFI, Inc., lacked "the requisite minimum contacts with the State of Alabama." The second motion for summary judgment was filed by both defendants; it claimed that there was no genuine issue of material fact regarding EWC's promissory fraud claim.
EWC moved to strike the motion for summary judgment on the promissory fraud claim, arguing that a summary judgment would be improper, in light of this Court's holding in Environmental I that EWC had presented substantial evidence of promissory fraud. The trial court denied EWC's motion to strike and heard oral arguments regarding the pending motions. In a single order, the trial court granted both pending motions for summary judgment and entered a judgment in favor of the defendants.
EWC appealed. However, in its brief to this Court, EWC stated:
When an appeal will not provide a remedy adequate to prevent "undue injury," a writ of mandamus may be issued, for example, to require a trial court to comply with the mandate of this Court. Ex parte Insurance Co. of North America, 523 So. 2d 1064 (Ala.1988). See, also, Ex parte Spears, 621 So. 2d 1255 (Ala.1993). Because there is no evidence that the appeal of this case will not provide an adequate remedy, the drastic remedy of mandamus is not required.
"Where the mandate of this Court to a court below is precise, it is the duty of the lower court to carry it into execution. Lyon v. Foscue, 60 Ala. 468 (1877)." Wright v. Cypress Shores Development Co., 461 So. 2d 1296, 1299 (Ala.1984). Our "mandate" in Environmental I was a partial reversal of the judgment and a remand of the cause. EWC claims that it was the duty of the trial court to comply strictly with the mandate in Environmental I and, therefore, that no judgment was permitted except the one directed in that opinion. In Environmental I, however, we gave no specific or "precise" instructions as to how the cause was to proceed on remand, nor did we direct a particular judgment. On remand, the parties conducted additional discovery. Although we conclude that a genuine issue of material fact continues to exist on the promissory fraud issue, our decision in *914 Environmental I did not prohibit the trial court from considering this additional evidence.
EWC first contends that the trial court erred in granting BFI, Inc.'s motion for summary judgment on the ground that the court lacked personal jurisdiction over BFI, Inc., because of a lack of "sufficient minimum contacts"[2] with Alabama. EWC contends that the record contains substantial evidence of BFI, Inc., contacts with Alabama sufficient to subject BFI, Inc., to suit in this state.
In its motion for summary judgment, supported by a "narrative summary of undisputed facts," depositions, an affidavit, and a memorandum of law, BFI, Inc., claimed that it had had no contacts with the State of Alabama.
In his affidavit, Steven L. Thomas, BFI, Inc.'s vice president for operations/administration, testified that BFI, Inc., was a Delaware corporation with its principal place of business in Houston, Texas, and that it was a "holding company." Mr. Thomas stated that BFI, Inc., had no employees or agents in Alabama; had no office in Alabama; did not do business in Alabama; did not supply goods or services in Alabama; did not solicit business in Alabama; and did not own, have an interest in, or possess real property in Alabama. Mr. Thomas concluded by stating that "[n]o officer, agent, or employee of BFI, Inc., has had any contact or communications with EWC or any of its officers or agents."
An Alabama court may obtain in personam jurisdiction over a foreign defendant if the plaintiff is able to demonstrate that the defendant had sufficient contacts with Alabamasuch contacts that "the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" McGee v. International Life Insurance Co., 355 U.S. 220, 222, 78 S. Ct. 199, 200, 2 L. Ed. 2d 223 (1957) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945)); Steel Processors v. Sue's Pumps, Inc. Rentals, 622 So. 2d 910 (Ala.1993).
Ex parte AmSouth Bank of Alabama, 669 So. 2d 154, 156 (Ala.1995) (emphasis supplied).
Duff v. Southern Ry., 496 So. 2d 760, 762-63 (Ala.1986) (emphasis supplied).
EWC maintains that the record contains sufficient evidence to, at the very least, create a genuine issue of material fact as to whether BFI, Inc., had sufficient contacts with this State to subject it in personam jurisdiction in Alabama. We agree.
In its complaint, EWC alleged that BFIA is a "wholly owned subsidiary of defendant Browning-Ferris Industries, Inc.," and the defendants' answer to the complaint admitted this allegation. The initial negotiations between EWC and BFI, Inc., were conducted by Joe Tortorigi, president of EWC, and Ross Patton, BFI, Inc.'s divisional vice president for market development and corporate research. And, although an employee of BFIA (Mark Brantley) contacted EWC to set up an initial meeting for the proposed Blount County landfill project, the meeting was conducted at a BFI, Inc., divisional office in Memphis, Tennessee, with BFI, Inc., representatives Hugh Dillingham and Steve Anderson.
A second negotiating meeting in Birmingham in the late summer of 1988 was attended by BFI, Inc., representatives Dean Brown and Steve Anderson. A November 7, 1988, letter to EWC from Dean Brown was under the letterhead of "BFI Waste Systems Browning Ferris IndustriesSouth Central Region." This letter constituted a proposal to EWC for a landfill in Blount County. The letter reads, in pertinent part, as follows:
(Emphasis added.)
In January 1989, EWC received the following letter from Mark Brantley (on letterhead of "BFI Waste SystemsBrowning Ferris Industries," with a Birmingham, Alabama, address):
Finally, EWC points to BFI, Inc.'s 1994 Form 10k report filed with the SEC, wherein BFI, Inc., stated that it operates its solid waste business through regional offices.
There is evidence throughout the record to indicate that BFI, Inc., maintained sufficient contacts with Alabama to subject it to the jurisdiction of our courts without violating "traditional notions of fair play and substantial justice." Indeed, it is not unreasonable to assume that it was "foreseeable" that BFI, Inc., could be held liable for the conduct of its subsidiary BFIA. Steel Processors v. Sue's Pumps, Inc., supra; and Millette v. O'Neal Steel, Inc., 613 So. 2d 1225 (Ala.1992). The trial court erred in granting BFI, Inc.'s motion for summary judgment on this issue. See Sudduth v. Howard, 646 So. 2d 664 (Ala. 1994).
In addition to arguing that the trial court ignored the mandate of this Court regarding the issue of promissory fraud, EWC also argues that it presented substantial evidence of promissory fraud, so as to preclude a summary judgment, and that, in Environmental I, this Court agreed. Therefore, we must determine whether, on remand, BFIA presented sufficient substantial evidence to overcome the holding in Environmental I that there existed a genuine issue of material fact with regard to the allegation of promissory fraud.
We quote from Environmental I the basis for our holding that the first summary judgment was improper with regard to EWC's claim of promissory fraud:
Environmental I, supra, 657 So. 2d at 889-90.
While BFIA maintains that the negotiations between the parties were terminated in January 1990, there is no dispute that a representative of BFIA telephoned EWC in June 1990 to say that the parties' negotiations were terminated. Despite BFIA's contention that the June communication was merely a "formal confirmation" of the termination of the negotiations, there is no documentary evidence indicating that the parties had terminated their relationship at any time earlier than June 1990; therefore, the date upon which these negotiations ended is, itself, a genuine issue of material fact.
BFIA also argues that "evidence relied on by EWC (an affidavit of a representative of the Blount County Commission filed for the first time on appeal in Environmental I) has now been developed in sworn deposition testimony [which] conclusively establishes that [BFIA] had no contact with Walker County until after the negotiations between EWC and BFIA terminated." However, the date "established" by this new deposition testimonyJune 20, 1990is the date of a meeting between BFIA and Blount County officials, and the deponent also testified that he would have spoken with the BFIA representative at least a week before June 20 in order to set up their meeting for that date. In the context of the disputed date of the termination of the parties' negotiations, this evidence is not sufficient to support BFIA's motion for summary judgment.
We hold that, on remand, BFIA did not present evidence sufficient to justify the trial court's ignoring this Court's determination that "EWC presented substantial evidence supporting its claim of promissory fraud." Therefore, the summary judgment on EWC's claim of promissory fraud is reversed and this cause is remanded for proceedings consistent with this opinion.
APPLICATION FOR REHEARING GRANTED; OPINION OF MAY 16, 1997, WITHDRAWN; OPINION SUBSTITUTED; REVERSED AND REMANDED.
HOOPER, C.J., and ALMON, SHORES, and BUTTS, JJ., concur.
[1] We note the spelling of "WasteControl" in our earlier opinion. The record in the present appeal indicates the spelling should be "Waste Control."
[2] See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980); Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 108 S. Ct. 2104, 100 L. Ed. 2d 722 (1988); and Horizons 2000, Inc. v. Smith, 620 So. 2d 606 (Ala. 1993).
[3] Rule 4.2, Ala. R. Civ. P., entitled "Process: Basis for and Methods of Out-of-State Service," defines "person" as "an individual, that persons's executor, administrator, or other personal representative, or a corporation, partnership, association, or any other legal or commercial entity." Rule 4.2(a)(3). | October 31, 1997 |
01d07035-f5b2-42c6-9a20-7f58f1f1b455 | Ex Parte McLeod | 718 So. 2d 682 | 1960766 | Alabama | Alabama Supreme Court | 718 So. 2d 682 (1997)
Ex parte John McLEOD and Barbara Dinkins.
(In re John McLEOD v. Dr. Larry BEATY, individually and in his capacity as president of Wallace State Community College; and Barbara DINKINS v. Dr. Larry BEATY, individually and in his capacity as president of Wallace State Community College).
1960766.
Supreme Court of Alabama.
November 26, 1997.
Rehearing Denied February 6, 1998.
*683 Gregory B. Stein of Stein & Brewster, Mobile, for petitioners.
Edward M. George and Jeffery A. Foshee of Foshee & George, L.L.C., Montgomery; and R. Rainer Cotter III of Cassady, Fuller & Marsh, Enterprise, for respondent.
Joe R. Whatley, Jr., and Andrew C. Allen of Cooper, Mitch, Crawford, Kuykendall & Whatley, L.L.C., Birmingham, for amicus curiae Alabama Education Ass'n in support of petitioners.
BUTTS, Justice.
We granted John McLeod and Barbara Dinkins's petition for a writ of certiorari to the Court of Civil Appeals in order to determine whether that court erred in affirming the summary judgment the circuit court had entered in favor of the defendants Wallace State Community College ("the College") and Larry Beaty, president of the College.
McLeod and Dinkins, instructors at the College, filed in the Dale Circuit Court complaints for declaratory judgments and petitions for writs of mandamus directed to the College, and to Larry Beaty, individually and in his capacity as president of the College. McLeod and Dinkins alleged that, because they had been employed by the College for a certain period of time, they had earned full-time nonprobationary employment ("tenure") under the Fair Dismissal Act, Ala.Code 1975, § 36-26-100 et seq. ("the FDA"), but that the defendants had not recognized their entitlement to tenure. They further claimed that the FDA protects them from partial termination of their employment without notice and a hearing, but that their employment was partially terminated by the College's reducing their teaching loads without notice and a hearing. They claimed that the FDA applied to them by its own terms, by the College's adoption of the FDA in its employee handbook, or by the State Board of Education's adoption, through its Postsecondary Education Department, of the FDA as its "Revised Hearing Procedure" ("RHP"). The plaintiffs sought orders from the circuit court *684 requiring the College to recognize them as tenured instructors, to issue them contracts for full-time employment, and to pay them damages for their cut in employment.
The circuit court entered summary judgments for the College and Beaty, holding that the plaintiffs' claims were precluded by the doctrine of exhaustion of administrative remedies and that the claims were barred by the doctrine of sovereign immunity declared by § 14 of the Alabama Constitution of 1901.
McLeod and Dinkins appealed to the Court of Civil Appeals. In a 3-2 decision, McLeod v. Beaty, 718 So. 2d 673 (Ala.Civ. App.1996), that court affirmed the summary judgments. The Court of Civil Appeals first ruled that McLeod and Dinkins's claims were not precluded by the doctrine of exhaustion of administrative remedies. However, the court held that as instructors at a two-year college, the plaintiffs were not employees covered by the FDA, but that they were covered by the State Board of Education's RHP, as interpreted by the chancellor of the Postsecondary Education Department. The defendants had submitted an affidavit from the chancellor stating his conclusion that neither McLeod nor Dinkins had met the requirement for tenure under the RHP. The Court of Civil Appeals affirmed the summary judgments based on that conclusion, and it did not address the circuit court's ruling that the plaintiffs' claims were barred by the doctrine of sovereign immunity.
We must first address the issue whether the circuit court correctly ruled that McLeod and Dinkins's claims are barred by the sovereign immunity provided the State by § 14 of the Constitution.[1] As noted above, the Court of Civil Appeals did not discuss this issue, but affirmed the summary judgments for the defendants based on another reason.
In general, § 14 prohibits the State and its agencies from being made defendants in any court. Alabama State Docks v. Saxon, 631 So. 2d 943 (Ala.1994). This protection from suit also applies to officers or agents of the State who are sued in their official capacities or individually, when the action is, in effect, one against the State. Mitchell v. Davis, 598 So. 2d 801 (Ala.1992); Phillips v. Thomas, 555 So. 2d 81 (Ala.1989). However, the immunity from suit conferred by § 14 is not absolute. A state officer is not immune from suit when he or she has acted under a mistaken interpretation of the law, when the lawsuit is to compel the performance of a legal duty or ministerial act, or where the lawsuit is brought under the Declaratory Judgment Acts. Mitchell, supra; Phillips, supra.
McLeod and Dinkins's complaints against the College and Beaty contained counts seeking declaratory judgments, and they also alleged that they had met all the requirements for nonprobationary status ("tenure"), but that the defendants had not acknowledged their entitlement to tenure because the defendants were interpreting the applicable law incorrectly. We conclude that these counts sufficiently implicate the exceptions to the protection from suit afforded by § 14, and we hold that the plaintiffs' actions against the defendants are not barred by the doctrine of sovereign immunity. See Rigby v. Auburn University, 448 So. 2d 345 (Ala.1984) (action brought by an employee against agents of the university seeking to compel them to pay him the salary that conformed with his job classification in the university's employee compensation plan was not barred by § 14); Breazeale v. Board of Trustees of the University of South Alabama, 575 So. 2d 1126 (Ala. Civ.App.1991) (action brought by employees challenging the university's failure to implement a performance evaluation system on which pay raises were to be based was an action to compel university to act in accord with its own rules and regulations and was not barred by § 14).
McLeod and Dinkins contend that the Court of Civil Appeals erred in ruling that *685 they are not covered by the provisions of the FDA. The relevant section of the FDA is set out below:
(Emphasis added.)
McLeod and Dinkins make several arguments to support their position that the Court of Civil Appeals erred in ruling they are not protected by the FDA. They say that the court's conclusion that they are not covered by the FDA comes primarily from the title of that Act given in the Alabama Code of 1975, and not from the language of the FDAAct No. 83-644, Ala. Acts 1983itself. The Court of Civil Appeals held that because the title of the FDA contains the word "non-teacher," the FDA does not apply to teachers, like the plaintiffs, who are instructors at two-year colleges. However, the plaintiffs argue that one considering the title given in the Act itself "To provide for fair dismissal procedures for non-teachers and non-certified or classified employees in the public school systems, two-year institutions under control of the State Board of Education..." would conclude that the legislature intended the FDA to cover employees who are nonteachers, employees who are noncertified, and employees who are classified. Instructors at two-year colleges are not required to be certified by the State Board of Education and, thus, McLeod and Dinkins say that as noncertified employees they are covered by the FDA.
McLeod and Dinkins next say that the Court of Civil Appeals erred by applying the rule of ejusdem generis in interpreting § 36-26-100, a part of the FDA. Under that general rule of statutory construction, where general words or phrases, such as "all persons," follow or precede a specific list of classes of persons or things, the general word or phrase is interpreted to be of the same nature or class as those named in the specific list. Lambert v. Wilcox County Comm'n, 623 So. 2d 727 (Ala.1993). The plaintiffs contend that the court erred because it applied the rule to the first sentence of § 36-26-100 but ignored the second sentence, which they say is more specific than the first and should control. McLeod and Dinkins say they are covered under the FDA by the second sentence of § 36-26-100, which states that the FDA covers "full-time employees who are not ... covered by the state merit system, the teacher tenure law, or other state statute." They point out that they are not covered by the state merit system or the teacher tenure law, and they say they are not covered by another state statute; they note that the State Board of Education's RHP is a set of regulations and not a statute.
Alternatively, McLeod and Dinkins argue that if this Court cannot say that they are covered by the FDA as a matter of law, a lesser basis for holding that they are covered by the FDA is that the College's personnel *686 handbook specifically references the FDA as its tenure rule. They contend that because the College chose to adopt the FDA in relation to tenure, the College should be estopped from acting as if the FDA is not controlling.
Finally, the plaintiffs argue that the State Board of Education's RHP criteria for obtaining tenure are identical to those in the FDA, and that if the RHP is applicable to them, rather than the FDA, then the RHP should be interpreted in the same manner as the FDA. They say that this Court, in Ex parte Clayton, 552 So. 2d 152 (Ala.1989), interpreted language in the FDA identical to language in the RHP in such a manner that they qualify as tenured instructors under that language. Thus, the plaintiffs argue that the Court of Civil Appeals erred in accepting the defendants' differing interpretation of RHP language that is identical to the language interpreted in Clayton.
The College and Beaty respond by first arguing that McLeod and Dinkins cannot be covered by the FDA because the title of the FDA states that the FDA sets out "dismissal procedures for non-teachers" and thus, they say, the FDA cannot apply to teachers. They further argue that the Court of Civil Appeals correctly applied the principle of ejusdem generis to the first sentence of § 36-26-100. The defendants say that the second sentence of § 36-26-100 uses the term "employees" only after it has been defined by the first sentence. In other words, they say that in order for the second sentence to apply, a person must already be an "employee," as that term is defined by the first sentence, and that there is no reason to get in the second sentence to the issue whether the plaintiffs were covered by the state merit system or teacher tenure law, or another statute at the time the FDA was adopted because, they say, the plaintiffs are not "employees." They also argue that the second sentence of § 36-26-100 excludes the plaintiffs because, the defendants say, the plaintiffs were covered by "another statute" when the FDA was adopted, specifically Ala. Code 1975, § 16-60-111.4, which authorized the State Board of Education to set up the RHP prescribing tenure qualifications for faculty members at two-year colleges.
In relation to the plaintiffs' argument that if the FDA's dismissal procedures are not controlling then the RHP should be interpreted in the same manner as the FDA, the defendants say that neither plaintiff ever made a claim under the RHP before the trial court.
In interpreting § 36-26-100, we have kept in mind the first rule of statutory construction: that the intent of the legislature should be given effect. Hines v. Riverside Chevrolet-Olds, Inc., 655 So. 2d 909 (Ala. 1994); Beavers v. County of Walker, 645 So. 2d 1365 (Ala.1994). If possible, the intent of the legislature should be gathered from the plain language of the statute. BP Exploration & Oil, Inc. v. Hopkins, 678 So. 2d 1052 (Ala.1996); Beavers, supra. After thoroughly studying the text of § 36-26-100, we conclude that McLeod and Dinkins are correct in their assertion that two-year college instructors are covered by the FDA. There are several reasons for this conclusion, which we discuss below.
The College and Beaty emphasize that the title of the FDA, as stated in the Code reads: "Dismissal Procedures for Nonteacher, Nonclassified, Etc., Employees in Certain School Systems, Institutions, Etc." They say that because that title includes the word "nonteacher," the FDA excludes all teachers.[2] We also find that the actual text of § 36-26-100 conflicts with the defendants' interpretation of the codified title of the Actthe last sentence of § 36-26-100 states: "Substitute teachers and substitute employees are excluded from the article." If all teachers are excluded from the FDA, there would have been no need for the legislature to expressly exclude substitute teachers. We believe that the express exclusion of substitute teachers *687 by the legislature implies the inclusion of other teachers.
Moreover, we have looked to the full title of the Fair Dismissal Act as it was adopted by the legislature, i.e., Act No. 83-644, Ala. Acts 1983. The full title reads:
(Emphasis added.) The language excluding those employees covered by the state merit system, the teacher tenure law, or another state statute is repeated in § 36-26-100. Giving literal meaning to the legislature's plain language used in the full title and in § 36-26-100, we believe that instructors such as McLeod and Dinkins at two-year colleges fall within coverage of the Act. They are not certified by the State Board of Education; thus, they are noncertified employees of a two-year institution under the control of the State Board of Education. Further, they are not covered by either the State's merit system or the teacher tenure law. Finally, although the defendants argue that the plaintiffs were covered by an "other state statute" at the time the FDA was passed, specifically § 16-60-111.4, that statute did not itself create due process protections for employees such as the plaintiffs. Thus, the full title of the Fair Dismissal Act supports McLeod and Dinkins's position.
Although the Court of Civil Appeals applied the rule of ejusdem generis to the first sentence of § 36-26-100, which defines "employees," and concluded that teachers were not of the same type of employees as "bus drivers, lunchroom or cafeteria workers, maids and janitors, custodians, maintenance personnel, secretaries and clerical assistants supervisors [sic]," that rule of statutory construction does not govern if an examination of the entire text reveals that its application would create a result contrary to the intent of the legislature. Moore v. City of Mobile, 248 Ala. 436, 28 So. 2d 203 (1946). As explained above, the text of § 36-26-100 and the full title of the FDA reveal a legislative intent to include some teachers under the FDA; we conclude that the rule of ejusdem generis has no application and that the Court of Civil Appeals erred in holding otherwise.
Given our conclusion that McLeod and Dinkins are covered by the FDA, we note that their employment is subject to § 36-26-101, the FDA section relating to nonprobationary status ("tenure"). That section reads, in part:
(Emphasis added.) In Clayton v. Board of School Commissioners of Mobile County, 552 So. 2d 152 (Ala.1989), this Court held that § 36-26-101(a) does not require that the three years of the probationary period be consecutive years or that the three-year period be a continuous period; and it held that a period of employment served before the enactment of the FDA would apply toward the probationary period. 552 So. 2d at 154-55.
We reverse the judgment of the Court of Civil Appeals and remand this case for further proceedings consistent with this opinion.[3]
REVERSED AND REMANDED.
*688 SHORES, J., concurs.
MADDOX and ALMON,[*] JJ., concur specially.
SEE, J., concurs in the result.
HOOPER, C.J., and KENNEDY,[*] J., dissent.
COOK, J., recuses himself.
ALMON, Justice (concurring specially).
I concur to reverse the judgment of the Court of Civil Appeals, for the reasons stated below.
The question presented is whether Mr. McLeod and Ms. Dinkins have attained "continuing service status" or "tenure" as full-time instructors at Wallace State Community College. More specifically, we granted certiorari review as to two issues raised by the petition: (1) whether the Court of Civil Appeals wrongly decided a question of first impression, that is, "whether the Fair Dismissal Act, Ala.Code 1975, § 36-26-100 et seq., covers instructional personnel at Alabama's two-year institutions of higher learning," and (2) whether the judgment of the Court of Civil Appeals conflicts with Ex parte Clayton, 552 So. 2d 152 (Ala.1989), by accepting the chancellor's interpretation of the Revised Hearing Procedure even though that interpretation is contrary to this Court's interpretation of the parallel provision of the Fair Dismissal Act. I disagree with the lead opinion's conclusion that the Fair Dismissal Act applies to instructional personnel such as McLeod and Dinkins, for reasons I shall state below. As to the second issue, however, I agree with the petitioners' argument that the holding of Clayton, that a three-year probationary period of employment does not have to be three consecutive or continuous years, applies to instructional personnel governed by the Revised Hearing Procedure, just as it does to employees governed by the Fair Dismissal Act.
The first issue raises the question whether instructional personnel at junior colleges and trade schools are "employees," as that term is defined by § 36-26-100, Ala.Code 1975, part of the Fair Dismissal Act. I agree generally with Judge Crawley's analysis for the Court of Civil Appeals, under his discussion of the principle of ejusdem generis, that a reading of that section as a whole shows that the Fair Dismissal Act was intended to cover support personnel at the described educational institutions, but not to cover teachers, faculty, or instructional personnel. The dispositive aspect of the language of that section, to my mind, is the following sentence: "Only full-time employees who are not otherwise covered by the state merit system, the teacher tenure law, or other state statute at the time this article is adopted are intended to be covered by this article."
When the Fair Dismissal Act was adopted in 1983, faculty members at junior colleges and trade schools were covered by the following provision of § 16-60-111.4, which was adopted in 1982:
The Revised Hearing Procedure, which was adopted pursuant to this authorization, provides tenure requirements for faculty members at junior colleges and trade schools. McLeod and Dinkins argue that because these procedures are not found in statutes, but in administrative rules, junior college and trade school faculty members are not "otherwise covered by ... other state statute" within the meaning of § 36-26-100. I disagree. "[A]lthough the legislature may not delegate its power to make law, it may vest a considerable measure of discretionary authority in the agency charged with administering the enactment." Employees' Retirement System of Alabama v. Oden, 369 So. 2d 4, 7 (Ala.1979). In § 16-60-111.4(5), the legislature *689 had provided for tenure for junior college and trade school faculty members by delegating to the Board of Education and the chancellor the authority to "[p]rescribe ... tenure requirements" for them. A year later, the legislature excepted from the coverage of the Fair Dismissal Act employees who were covered by a statute such as § 16-60-111.4(5). I would hold that the Fair Dismissal Act does not apply to junior college and trade school faculty members.
The legislature also gave the chancellor the authority to "[i]nterpret the rules and regulations of the [State Board of Education] concerning the junior colleges and trade schools," Ala.Code 1975, § 16-60-111.5(2), and "to take any and all actions necessary and proper to administer policies, rules and regulations of the board in carrying out its responsibility for the management and operation of the junior colleges and trade schools," § 16-60-111.5(4). Section 3.A of the 1984 version[4] of the Revised Hearing Procedure provided:
The chancellor, Dr. Fred Gainous, executed an affidavit in which he stated:
However, § 3.A of the Revised Hearing Procedure simply tracks the language of § 36-26-101(a), part of the Fair Dismissal Act, which provides:
In Ex parte Clayton, 552 So. 2d 152, 154-55 (Ala.1989), this Court interpreted this language as follows:
The chancellor's interpretation of § 3.A is therefore contrary to this Court's interpretation of § 36-26-101(a). The only difference in the language of these two provisions is that § 36-26-101(a) refers to "a period not to exceed three years," whereas § 3.A refers to "a period of three years" from the date of initial employment. If anything, therefore, § 3.A contains less indication that consecutive years or continuous employment was intended.
The chancellor's interpretation would have the anomalous effect that one classsupport personnel protected by the Fair Dismissal Actcan work intermittently for a period of years and achieve continuing service status under Clayton, without having to work three consecutive years, while another class of persons working for the same institutionfaculty members protected by § 16-60-111.4(5) and the Revised Hearing Procedurewho work the same schedule would not achieve tenure under the chancellor's interpretation. The chancellor's interpretation functions in a way that is contrary to the principle that underlies tenure laws, the protection of employees; that is, it gives junior colleges and trade school administrators an incentive to periodically reduce their faculty members to part-time employment or to employ them for only two quarters or less in an academic year, for the purpose of preventing them from achieving tenure. Thus, under that interpretation, a person can work for a junior college or a trade school for many years, as McLeod and Dinkins have done, and never *690 attain the job security that tenure laws were intended to provide.
An administrative agency's interpretation of a statute will not be given deference if it is contrary to the legislative intent. McCullar v. Universal Underwriters Life Ins. Co., 687 So. 2d 156, 163-64 (Ala.1996); State v. Vaughan, 241 Ala. 628, 4 So. 2d 9 (1941); State Health Planning & Resource Dev. Admin, v. Rivendell of Alabama, Inc., 469 So. 2d 613, 614 (Ala.Civ.App.1985). The chancellor's interpretation of § 3.A of the Revised Hearing Procedure is contrary to the legislative intent behind the virtually identical language of § 36-26-101(a), as construed by this Court in Ex parte Clayton. For this reason, I would hold that the Revised Hearing Procedure must be applied in a manner consistent with this Court's holding in Clayton. I therefore agree that the judgment of the Court of Civil Appeals must be reversed, and that the cause must be remanded.
MADDOX, J., concurs.
COOK, Justice (recusing).
I find it necessary to recuse myself in this proceeding for the following reason. The dispute in this case concerns whether the plaintiffs, who are instructors at a state two-year college, are protected by the provisions of the Fair Dismissal Act, Ala.Code 1975, § 36-26-100 et seq. Stated differently, this proceeding will decide whether the plaintiffs are protected by the provisions of the Fair Dismissal Act or are required to state their grievances under the Revised Hearing Procedure adopted by the State Board of Education. Significant procedural differences exist in the application of the terms of the Fair Dismissal Act and the application of the Revised Hearing Procedure.
My wife is employed by the state's two-year college system, and the decision rendered by the Court in this case will determine the grievance procedure available to "employees," as that term is defined by the Fair Dismissal Act. Thus, my wife has an interest that could be substantially affected by the outcome of this proceeding, although she is not employed by the institution involved in this litigation. Quite simply, should she have a claim that invokes the dispute resolution procedure, this case could decide the procedure available to her. Therefore, it is quite apparent that her interest is directly involved; and indirectly, though quite possibly to a lesser degree, my interest is also affected.
Canon 3, Canons of Judicial Ethics, provides in relevant part:
Because these provisions of Canon 3 are implicated by the issues now before this Court, I recuse myself from proceedings in this case.
[1] Section 14 states: "[T]he State of Alabama shall never be made a defendant in any court of law or equity."
[2] This reasoning is defective because Ala.Code 1975, § 1-1-14, states that "the descriptive headings or catchlines immediately preceding or within the text of the individual sections of this Code ... do not constitute part of the law, and shall in no manner limit or expand the construction of any such section."
[3] We further note that we have made no conclusions as to the validity of the plaintiffs' factual claims. At oral argument, the parties disagreed as to the exact number of credit hours the plaintiffs had taught during certain quarters of different school years. The circuit court is the proper court to first make the necessary factual findings.
[*] Although Justice Almon and Justice Kennedy did not sit at oral argument of this case, they have listened to the tape of oral argument.
[4] The Revised Hearing Procedure was revised in 1994, but no change was made to the language quoted here, except the numbering of the sections. | November 26, 1997 |
aaeb2017-14f9-4360-9cb5-aefb53111a17 | Ex Parte Martin | 703 So. 2d 883 | 1951420 | Alabama | Alabama Supreme Court | 703 So. 2d 883 (1996)
Ex parte Barbara MARTIN and George Martin.
(In re Barbara MARTIN and George Martin
v.
SOUTHERN ENERGY HOMES, INC., et al.).
1951420.
Supreme Court of Alabama.
November 8, 1996.
Rehearing Overruled October 3, 1997.
*884 Richard Horsley of Dillard, Goozee & King, Birmingham, for petitioners.
John Martin Galese and Jeffrey L. Ingram of John Martin Galese, P.A., Birmingham, for Southern Energy Homes, Inc.
BUTTS, Justice.
The plaintiffs, George and Barbara Martin, petition for a writ of mandamus directing the Circuit Court of Shelby County to vacate its order granting the motion of Southern Energy Homes, Inc., to compel arbitration and to stay proceedings pending arbitration of the plaintiffs' claims against that defendant.
The Martins sued Blue Ribbon Homes, Inc., doing business as Oak Tree Mobile Homes, and its agent David Walters, alleging fraud, negligence, wantonness, breach of contract, and breach of warranty, all arising from their purchase of a mobile home from Blue Ribbon Homes. The Martins also sued Southern Energy Homes, Inc., the manufacturer of the mobile home, alleging that it had breached the limited warranty it issued on the mobile home. In its answer to the complaint, Southern Energy Homes stated that it was not "in privity with" the contract under which the Martins purchased the mobile home from Blue Ribbon Homes, and it initiated discovery.
Shortly thereafter, however, Blue Ribbon Homes and Walters moved to compel arbitration of the Martins' claims, pursuant to an arbitration agreement contained within the contract for the purchase of the mobile home. Although it was admittedly not a party to this contract, Southern Energy Homes also moved to compel arbitration pursuant to the arbitration clause. The trial court subsequently granted all of the defendants' motions for arbitration. The plaintiffs' petition here relates only to the granting of Southern Energy Homes' motion to compel arbitration.
A writ of mandamus is an extraordinary remedy and requires a showing that there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court. Ex parte Edgar, 543 So. 2d 682 (Ala.1989). We note that the last two requirements have been met from the outset; a petition for a writ of mandamus is the proper means to challenge a trial court's order granting a motion to compel arbitration. Ex parte Phelps, 672 So. 2d 790 (Ala.1995).
The Martins negotiated with Blue Ribbon Homes' agent, David Walters, for the purchase of a mobile home. They signed a contract that included a document entitled "Arbitration Agreement between Blue Ribbon Homes, Inc. and (Purchaser)." The document was dated "6-23-95" and the names "George and Barbara P. Martin" were written in, to indicate that they were the purchasers. The agreement then stated, in pertinent part:
(Emphasis added.) With their mobile home, the Martins received from Southern Energy Homes a written limited warranty, which expressly stated in boldface:
(Emphasis added.) This warranty did not refer to the agreement between the Martins and Blue Ribbon Homes.
The Martins argue that the trial court erred in compelling arbitration of their claims against Southern Energy Homes, which was not a signatory to the arbitration agreement between them and Blue Ribbon Homes. As the Martins point out, the arbitration agreement names only two parties and is signed only by the Martins, an agent for Blue Ribbon Homes, and two witnesses. Further, in setting out the methods by which arbitration will be carried out, the agreement repeatedly refers to the "two parties" and "both parties," further evidencing the fact that the agreement was only between Blue Ribbon and the Martins, without reference or application to another party.
Southern Energy Homes argues, however, that this Court's recent decision in Gates v. Palm Harbor Homes, Inc., 675 So. 2d 371 (Ala.1996), has made it unnecessary for a party to sign an arbitration agreement in order to come within its protection. In Gates, the plaintiffs purchased from Bilo Homes, Inc., a mobile home represented to be a "new" mobile home, after negotiations with Bilo Homes' general manager. They signed a retail installment contract that provided, in pertinent part:
(Emphasis added.)
After purchasing the mobile home, the plaintiffs learned that it was not new, but had been sold previously to another buyer. They then sued Bilo Homes, as the seller of the mobile home, and also Palm Harbor Homes, Inc., as its manufacturer, alleging, among other things, breach of express and implied warranties, fraud, and negligent or wanton installation of the home.
Both Bilo Homes and Palm Harbor Homes moved to compel arbitration, based upon the arbitration agreement contained within the purchase contract. The trial court granted their motions, and the Gateses petitioned this Court for a writ of mandamus directing the trial court to vacate its order granting the arbitration motions, arguing that Palm Harbor Homes was not a signatory to the purchase agreement and therefore could not invoke the arbitration clause contained therein.
To determine the scope of that arbitration clause, the Gates Court first noted that the issue was a matter of contractual interpretation, to be resolved by considering the intent of the parties to the agreement. Gates at 374. The Court recognized that the language of the arbitration clause was particularly broad, encompassing not only the "disputes, claims, or controversies arising from" the contract, but also "the relationships" that resulted from it. The Court concluded, based upon the agreement's expansive language as it applied to the plaintiffs' claims, that the trial court had properly determined that the claims against Palm Harbor were arbitrable, despite the fact that Palm Harbor had not signed the agreement containing the arbitration clause.
The arbitration clause in Gates clearly contemplated arbitration of claims brought by the signatories to the agreements and also arbitration of claims brought by other, unnamed parties, if those claims arose from or related to the contract or the "relationships" that resulted from the contract.[2] Nothing in the arbitration agreement the Martins signed indicates that its scope was intended to be so broad; the agreement specifically names only the Martins and Blue Ribbon Homes as parties to the agreement, and it applies the arbitration procedures to "both" parties or to "either" party.
This Court has recently held that a nonsignatory to a limited arbitration clause specifically referencing only the signing parties is not sufficiently broad to encompass a nonsignatory defendant. In Ex parte Jones, 686 So. 2d 1166 (Ala.1996), the plaintiff Jones entered into a security agreement with The Money Tree, Inc., to finance the purchase of an automobile. One provision of this agreement required the plaintiff to maintain insurance on the car; however, it was Money Tree's duty to procure this insurance and to include its premium price in the amount it financed for the plaintiff. The security agreement named Money Tree as the "creditor" and the plaintiff as the "debtor," and included a clause whereby "all disputes, controversies or claims of any kind and nature between creditor and debtor arising out of or in connection with" the agreement would be submitted to arbitration.
Money Tree thereafter contracted with First Colonial Bank to obtain the insurance for the plaintiff's car, as it was required to do under the security agreement with the plaintiff; however, the contract between Money Tree and First Colonial did not contain an arbitration clause, nor did it refer to the arbitration clause contained within Jones's security agreement with Money Tree. The plaintiff's car was subsequently destroyed by fire and he then learned that the insurance Money Tree had procured for him from Colonial Bank was inadequate.
In the ensuing lawsuit, both Money Tree and First Colonial sought to compel arbitration of the plaintiff's claims, pursuant to the arbitration clause in the security agreement between the plaintiff and Money Tree. The trial court granted both motions, and Jones petitioned this Court for a writ of mandamus, arguing that First Colonial could not compel *887 arbitration under the terms of the security agreement that it was not a party to and had not signed.
In reversing the trial court's order compelling arbitration of Jones's claims against First Colonial, the Court emphasized that the arbitration clause expressly limited its scope to those disputes, controversies, or claims that arose between the "creditor and debtor," i.e., Money Tree and Jones, as they were named in the security agreement. Because the arbitration clause set these limits on its face, the Court determined that the parties had not intended to include any additional parties in the agreement.
In both Jones and Gates, the Court applied the well-settled rule that the enforcement of arbitration agreements, while favored by federal law as a sound public policy, must be governed by the plain terms of the agreements themselves that the courts are not to twist the language of a contract to achieve a result favored by federal policy but contrary to the intent of the parties. Goldberg v. Bear, Stearns & Co., 912 F.2d 1418 (11th Cir.1990).
It is clear that only the Martins and Blue Ribbon Homes negotiated and signed the arbitration agreement at issue, and it is clear that that agreement refers only to the Martins and Blue Ribbon Homes. Moreover, the Martins' claims against Southern Energy Homes arise from the limited warranty that it issued on the mobile home, by which, on its face, Southern Energy Homes disclaimed any liability under the purchase agreement; it cannot now seek protection under that agreement. Because Southern Energy Homes was not within the scope of the arbitration agreement, the Martins have a clear legal right to an order directing the trial court to set aside its order compelling arbitration of their claims against that defendant. The Martins' petition for the writ of mandamus is therefore granted.
WRIT GRANTED.
SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
ALMON, J., concurs in the result.
HOOPER, C.J., and MADDOX, J., dissent.
HOOPER, Chief Justice (dissenting).
The plaintiffs Barbara and George Martin ask this Court for a writ of mandamus ordering the trial court to vacate its order compelling them to arbitrate their dispute with Southern Energy Homes. I respectfully dissent from the majority's decision to grant the writ of mandamus, which relieves the Martins of their obligation to arbitrate their claims against Southern Energy Homes.
The Martins purchased a mobile home from Blue Ribbon Homes. When purchasing the home, the Martins signed a purchase contract with Blue Ribbon Homes that contained an arbitration clause requiring that "[a]ny controversy or claim arising out of or relating to that contract, or breach thereof, between Blue Ribbon Homes, Inc., and [George and Barbara Martin], dated [6-23-96], shall be settled under common law arbitration." The Martins also purchased, in conjunction with their mobile home, a oneyear limited warranty from Southern Energy Homes. The contract with Southern Energy Homes did not explicitly require arbitration, and it disclaimed any liability under the contract between Blue Ribbon Homes and the Martins. On January 19, 1996, the Martins sued Blue Ribbon Homes, its employee David Walters, and Southern Energy Homes, alleging fraud, suppression and deceit, breach of express and implied warranties, negligence, bad faith, misappropriation of money, and conspiracy. The trial court ordered arbitration to resolve all disputes between the plaintiffs and the defendants. The Martins seek review of the trial court's order, arguing that the trial court erred in compelling arbitration of their claims against Southern Energy Homes, who was not a signatory to the contract between the Martins and Blue Ribbon Homes.
The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-15 (1982), preempts state law and governs all written arbitration agreements appearing in contracts that involve interstate commerce. Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995); Maxus, Inc. v. Sciacca, 598 So. 2d 1376 (Ala.1992). The arbitration agreement between the Martins *888 and Blue Ribbon Homes clearly falls within the scope of the FAA because there is a written arbitration agreement and the sale of the mobile home, as stated in the contract in which that agreement appears, involves interstate commerce.
The FAA establishes a strong policy favoring arbitration. Moreover, under the FAA, there is a presumption that an ambiguity as to the scope of an arbitration clause should be resolved in favor of arbitration. Volt Information Sciences, Inc. v. Trustees of Stanford University, 489 U.S. 468, 109 S. Ct. 1248, 103 L. Ed. 2d 488 (1989); Allied-Bruce Terminix Companies v. Dobson, 684 So. 2d 102 (Ala.1995) (Hooper, C.J., concurring specially). Therefore, any ambiguity in this contract as to the scope of its coverage should be resolved in favor of compelling arbitration.
Although Southern Energy Homes is not a party to the contract containing the arbitration agreement, several courts, including this Court, have held that a nonsignatory to a contract may enforce an arbitration agreement contained in the contract. Gates v. Palm Harbor Homes, Inc., 675 So. 2d 371 (Ala.1996); Thomson-CSF, S.A. v. American Arbitration Association, 64 F.3d 773 (2d Cir. 1995); Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir.1993); McBro Planning & Development Co. v. Triangle Electrical Constr. Co., 741 F.2d 342 (11th Cir.1984). Relying on a theory of estoppel, these courts have allowed nonsignatories to compel arbitration where there is a close relationship between a signatory and the nonsignatory and a close connection between the claims subject to the arbitration clause and the nonsignatory's obligations and duties under the contract. Sunkist, 10 F.3d at 757. A finding that the claims are related is justified when the claims are "intimately founded in and intertwined with" the contract containing the arbitration clause. 10 F.3d at 758.
All of the Martins' claims as to both Blue Ribbon Homes and Southern Energy Homes relate to the same transaction, the sale of a mobile home. But for the contract between the Martins and Blue Ribbon Homes, there would never have been a contract between the Martins and Southern Energy Homes. Therefore, the claims the Martins assert against Southern Energy Homes appear to arise out of the underlying mobile home sales contract that contains the arbitration agreement and, accordingly, should be subject to that agreement.
The facts of this case are similar to those in Gates v. Palm Harbor Homes, supra, where this Court held that a nonsignatory to an arbitration agreement could compel arbitration. In Gates the purchaser of a mobile home sued the mobile home dealer and the mobile home manufacturer, alleging misrepresentation, concealment of material fact, and breach of warranty, all of which were asserted against both the dealer and the manufacturer. The installment sales contract between the purchaser and the dealer contained an arbitration clause specifically requiring that all claims arising from or relating to the contract "or the relationships which result from this contract" be arbitrated. 675 So. 2d at 373. This Court concluded that because all of the claims made by the Gateses related to the installment sales contract that contained the arbitration agreement, the trial court could compel arbitration of the claims against the nonsignatory mobile home manufacturer. In this situation, as in Gates, in each count of the complaint the plaintiffs make joint claims against the defendants Blue Ribbon Homes and Southern Energy Homes and do not attempt to distinguish these two defendants. Therefore, the claims against Southern Energy appear to arise out of and relate to the mobile home sales contract between Blue Ribbon Homes and the Martins. Arbitration is appropriate.
The majority, however, attempts to distinguish this Court's decision in Gates by focusing on the fact that in Gates the arbitration clause stated that arbitration was required for any "relationships which result from [the] contract." In this case the arbitration clause does not use language identical to that used in the Gates arbitration clause. The arbitration clause agreed to and signed by the Martins says that they will settle by arbitration "[a]ny controversy or claims arising out of or relating to that contract, or breach thereof between Blue Ribbon Homes, Inc.," and the *889 Martins. Therefore, the majority concludes that the arbitration of claims against anyone other than Blue Ribbon Homes is not contemplated within the clause. I believe that the language of this contract reaches the relationship between the Martins and Southern Energy Homes. Application of the majority's narrow reading of Gates to the facts of this present case violates the FAA's policy favoring arbitration and the presumption in favor of arbitration that courts should accord to such agreements.
In issuing the writ, the majority relies on this Court's recent decision in Ex parte Jones, 686 So. 2d 1166 (Ala.1996), which also involved nonsignatories. In Jones, on rehearing ex mero motu, this Court withdrew its original opinion, which had ruled in favor of compelling arbitration. The substituted opinion held that the nonsignatory could not compel arbitration. The majority noted that the arbitration clause in question referred only to the specific parties by name and to the "creditor" and the "debtor." Because the clause was so limited, this Court held that a nonsignatory defendant could not compel arbitration. Again, this narrow reading goes against the FAA's policy favoring arbitration in the case of ambiguous agreements. I think Justice Maddox's dissent in Jones, in which I concurred, presents the correct analysis. Justice Maddox's dissent, consistent with this Court's original opinion in Jones, would hold that a nonsignatory can enforce an arbitration agreement in situations in which the claims against the nonsignatory are "founded on and are intertwined with the facts surrounding the underlying contract that contains the arbitration clause." 686 So. 2d at 1169.
The Martins' purchase of a mobile home limited warranty in conjunction with the purchase of a mobile home was essentially part of the purchase transaction. The two agreements were made simultaneously, and the limited warranty would not have been purchased but for the purchase of the mobile home. The Martins made identical claims against Blue Ribbon Homes and Southern Energy Homes. Therefore, the claims against Southern Energy are "founded on and are intertwined with" the contract between Blue Ribbon Homes and the Martins. Because of this connection, and because of the FAA policy favoring arbitration, I believe that the trial court properly ordered arbitration of the Martins' claims against Southern Energy Homes. I must, therefore, respectfully dissent.
MADDOX, Justice (dissenting).
The plaintiffs sued the manufacturer of a mobile home that was sold to them by a dealer, who was also made a defendant, alleging that the manufacturer had made representations about the mobile home that were false and that they relied upon them to their detriment.
From a reading of the complaint, it is obvious that any and all of the alleged misrepresentations that form the basis for the plaintiffs' claims against the manufacturer were made by the dealer as the seller of the mobile home and were not made directly by the manufacturer; consequently, each of the claims made by the plaintiffs were intimately founded in and intertwined with the underlying contract the plaintiffs made with the dealer and are included in the scope of the arbitration agreement they executed.
The majority holds that the plaintiffs are not bound to arbitrate their dispute with the manufacturer, because the manufacturer was not a signatory to the contract. That holding, in my opinion, is not in accordance with federal decisions interpreting the scope of the Federal Arbitration Act ("F.A.A."), 9 U.S.C. § 1 et seq. That Act provides, in pertinent part:
9 U.S.C. § 2. Under 9 U.S.C. § 3, a party may seek a stay of proceedings pending arbitration and, in order to do so, must show (1) that a valid written arbitration agreement exists; (2) that the issues in the action are *890 referable to arbitration under the agreement; and (3) that the party is not in default in seeking arbitration.
Under the provisions of § 2 of the F.A.A., a party must show that the agreement in question involves interstate commerce. Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995). In this particular case, neither party disputes that a valid written arbitration agreement is in existence and that that agreement appears in a contract involving interstate commerce. In fact, there could be no argument on that point, because the United States Supreme Court in Allied-Bruce Terminix held that the F.A.A.'s reach coincided with that of the Commerce Clause. Allied-Bruce Terminix, 513 U.S. at 265, 115 S. Ct. at 835. The ultimate question in this case is whether one must be a signatory to a contract in order for the provisions of the F.A.A. to apply to it. Several federal courts have addressed this issue and have held, based upon the theory of estoppel, that "[a] signatory was bound to arbitrate with a nonsignatory at the nonsignatory's insistence because of `the close relationship between the entities involved,' as well as the relationship of the alleged wrongs to the nonsignatory's obligations and duties in the contract ... and [the fact that] the claims were `intimately founded in and intertwined with the underlying contract obligations.' " Thomson-CSF, S.A. v. American Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir. 1995); see also, Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir.1993), cert. denied, 513 U.S. 869, 115 S. Ct. 190, 130 L. Ed. 2d 123 (1994); McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir. 1984); J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 320-21 (4th Cir.1988).
It appears clear to me that federal courts have been "[w]illing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed." Thomson, 64 F.3d at 779. Why does the majority allow the Martins, as signatories to the agreement to buy the mobile home from a dealer, to avoid arbitration when the alleged wrongs over which they have sued alleged misrepresentations by a manufacturer are inextricably intertwined with the agreement they signed with the dealer? See my dissent in Ex parte Jones, 686 So. 2d 1166, at 1168 (Ala.1996).
BUTTS, Justice.
APPLICATION OVERRULED.
ALMON, SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX, J., dissent with opinion.
MADDOX, Justice, dissenting.
I wrote a dissenting opinion on original deliverance, but in view of the fact that the majority elects to overrule the application for rehearing without addressing the issues Southern Energy Homes raises in it, I elect to address some of the issues raised by Southern Energy in its application for rehearing.
From a reading of the complaint, it is obvious that any and all of the alleged misrepresentations that form the basis for the plaintiffs' claims against the manufacturer were made by the dealer as the seller of the mobile home and agent of the manufacturer and were not made directly by the manufacturer; however, each of "[t]he defendants acted in concert and conspiracy to commit those wrong[s] set forth ... injuring and damaging the plaintiffs." Consequently, each of the claims made by the plaintiffs was founded on, and was intimately intertwined with, the underlying contract that the plaintiffs signed with the dealer/agent, which contained the arbitration clause.
The majority opinion states: "The Martins sued Blue Ribbon Homes ... and its agent David Walters, alleging fraud, negligence, wantonness, breach of contract, and breach of warranty .... The Martins also sued Southern Energy Homes ..., alleging that it had breached the limited warranty it issued on the mobile home." 703 So. 2d at 884. *891 The majority's statement that the claim against Southern Energy Homes was solely a claim alleging the breach of a limited warranty is inaccurate. Southern Energy called this inaccuracy to the attention of the Court, but, unfortunately, it was not corrected.
The majority, in overruling the application for rehearing, continues to hold that the plaintiffs are not bound to arbitrate their dispute with the manufacturer, because the manufacturer was not a signatory to the contract. That holding, in my opinion, is not in accordance with federal decisions interpreting the scope of the Federal Arbitration Act ("F.A.A."), 9 U.S.C. § 1 et seq., and in my opinion it is inconsistent with the holding in Ex parte Gray, 686 So. 2d 250 (Ala. 1996), a case that is factually similar to this one.
The F.A.A. provides, in pertinent part:
9 U.S.C. § 2. Under 9 U.S.C. § 3, a party may seek a stay of proceedings pending arbitration, by showing (1) that a valid written arbitration agreement exists; (2) that the issues in the action are "referable to arbitration under [the] agreement"; and (3) that the party is not in default in seeking arbitration.
Under the provisions of § 2 of the F.A.A., a party seeking arbitration must show that the arbitration agreement in question appears in a contract that involves interstate commerce. See, Allied-Bruce Terminix Companies, Inc. v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995). In the present case, none of the parties disputes that a valid written arbitration agreement exists and that agreement appears in a contract involving interstate commerce. In fact, there could be no argument on that point, because the United States Supreme Court in Allied-Bruce Terminix held that the F.A.A.'s reach coincides with that of the Commerce Clause of the United States Constitution. 513 U.S. at 274-77, 115 S. Ct. at 839-41.
Several federal courts have held, based upon the theory of estoppel, that "[a] signatory was bound to arbitrate with a nonsignatory at the nonsignatory's insistence because of `the close relationship between the entities involved, as well as the relationship of the alleged wrongs to the nonsignatory's obligation and duties in the contract ... and [the fact that] the claims were "intimately founded in and intertwined with the underlying contract obligations."'" Thomson-CSF, S.A. v. American Arbitration Ass'n, 64 F.3d 773, 779 (2d Cir.1995); see also, Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir.1993), cert. denied, 513 U.S. 869, 115 S. Ct. 190, 130 L. Ed. 2d 123 (1994); McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984); J.J. Ryan & Sons, Inc. v. Rhone Poulenc Textile, S.A., 863 F.2d 315, 320-21 (4th Cir.1988).
It appears clear to me that federal courts have been "[w]illing to estop a signatory from avoiding arbitration with a nonsignatory when the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed." Thomson-CSF, S.A., 64 F.3d at 779 (emphasis omitted). In Thomson-CSF, S.A., the Second Circuit Court of Appeals wrote that one does not have to personally sign a contract in order to become subject to its arbitration provision, except as dictated by the laws of contract and agency. 64 F.3d at 776. The court listed the following as traditional bases for binding nonsignatories to an arbitration agreement: "(1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego [theories]; and (5) estoppel." Id. at 776. The analysis surrounding each of these bases requires a determination of the closeness of the relationship (i.e., the application of a "close relationship" test) between the signatories and the nonsignatories in regard to the underlying contract obligation, just as is required in a general contract analysis. I would apply those principles to this case because it is clear to me that the plaintiffs' claims in this case are inextricably intertwined with the *892 contract they signed when they bought the mobile home.
Because I firmly believe that the F.A.A., as interpreted by the Supreme Court of the United States and by other federal courts, requires a different result, I must respectfully dissent. See my dissent in Ex parte Jones, 686 So. 2d 1166, at 1168-71 (Ala.1996).
HOOPER, C.J., concurs.
[1] It is undisputed that the names "George and Barbara P. Martin," as the purchasers, and the date "6-23-95," shown on the face of the document to be the date of the contract, were intended to fill the respective blank spaces in this paragraph.
[2] We note that in upholding the arbitration agreement in Gates, the Court did not consider whether the language of the agreement was impermissibly overbroad; the appellants did not raise that issue, and it has not been considered by this Court in other cases. | October 3, 1997 |
66ed04a7-dda2-4cee-bbff-14c04e136c2b | Voyager Life Ins. Co., Inc. v. Whitson | 703 So. 2d 944 | 1960041 | Alabama | Alabama Supreme Court | 703 So. 2d 944 (1997)
VOYAGER LIFE INSURANCE COMPANY, INC., et al.
v.
Jackie E. WHITSON, et al.
1960041.
Supreme Court of Alabama.
September 19, 1997.
*945 William B. Hairston, Jr., and Nathan R. Norris of Engel, Hairston and Johanson, P.C., Birmingham, for appellants.
Betty C. Love of Love & Love, P.C., Talladega; Harvey B. Campbell, Jr., of Campbell & Campbell, P.C., Talladega; and Huel M. Love, Jr., Talladega, for Jackie E. Whitson.
HOUSTON, Justice.
The opinion of May 30, 1997, is withdrawn and the following is substituted therefor.
Jackie E. Whitson, as a class-representative plaintiff ("plaintiff"), filed this class action against Central Finance, Inc., and Royal Finance, Inc. ("defendants"), claiming that the defendants' loans to the plaintiff class were void because the forms used to document the loans included a provision requiring payment in excess of that authorized by Ala. Code 1975, § 5-18-15(j).[1] The note and security agreement in question were attached to the complaint as exhibits. The defendants filed a general denial and filed a third-party complaint against Voyager Life Insurance Company, Voyager Guaranty Insurance Company, Voyager Indemnity Company, Voyager Life and Health Insurance Company, and Voyager Property Insurance Company (all hereinafter referred to as "Voyager"), claiming that Voyager had supplied the defendants with the loan forms used to document the loans to the plaintiff class and that the defendants were entitled to recover from Voyager any damages recovered by the plaintiff class from the defendants. Voyager answered. Upon motion by the plaintiff, the trial court certified a class composed of:
On the same day it certified the class, the trial court granted the plaintiff's motion for a summary judgment, holding that the language on the back of "Alabama Small Loan Form No. CR3010-F(AL) Stock # 841" constituted a charge contracted for by the plaintiff class that violated § 5-18-15(j) and declaring the loans made on that form by the defendants void.
After a hearing to determine the amount of damages and attorney fees to be awarded to the plaintiff class, the trial court rendered a judgment in favor of the plaintiff class and against defendant Central for $650,430.43 plus attorney fees equal to 50% of the "common fund" ($328,815.21); and against defendant Royal for $456,751.29 plus attorney fees equal to 50% of the "common fund" ($228,375.64).
The defendants did not appeal, but Voyager did. The plaintiff moved to dismiss Voyager's appeal, arguing that the judgment appealed from does not adjudicate any rights or liabilities of Voyager; that Voyager is not a party to the "action" between the plaintiff class and the defendants; that the plaintiff is not a party to the "action" between the defendants and Voyager; and, therefore, that Voyager has "no standing to prosecute an appeal from a judgment entered between the plaintiff and the defendants in this case."
The plaintiff relies on Sho-Me Motor Lodges, Inc. v. Jehle-Slauson Construction Co., 466 So. 2d 83 (Ala.1985). In Sho-Me, the plaintiff appealed from a summary judgment entered in favor of Southern Roof Deck Applicators, Inc., in Jehle-Slauson's third-party action against Southern Roof. (This would be equivalent to the plaintiff, in this case, appealing from a summary judgment entered in favor of Voyager, if the trial court had entered a summary judgment for Voyager on *947 the defendants' third-party claim against it.) In Sho-Me, this Court wrote the following:
466 So. 2d at 88. (Citations omitted.)
In this case, Voyager was a party to the action. Sho-Me. Voyager, in its answer to the defendants' third-party claim for indemnity from Voyager for any judgment rendered against the defendants in the plaintiff's favor, asserted, as a defense, that the thirdparty complaint, to which a copy of the plaintiff's complaint was attached as an exhibit, failed to state a claim on which relief could be granted.
Voyager filed a memorandum in opposition to the plaintiff's motion for summary judgment against the defendants. Royal went out of business in June 1994, over two years before the summary judgment was entered against it. Central was in the process of liquidating before the summary judgment was entered against it. Clearly, Voyager is a party aggrieved by the summary judgment for the plaintiff class against the defendants, which assessed damages and fees of $1,664,372.57.
The defendants were licensees under the Alabama Small Loan Act ("the Act") (Acts of Alabama 1959, No. 374, which is codified as Ala.Code 1975, §§ 5-18-1 thru 5-18-23), and they made loans under the Act. The Act provides that only those charges provided for in the Act can be contracted for or received by any licensee. Section 5-18-15(j) provides that beginning six months after the due date of the final installment of principal or interest, interest may be charged at a rate not to exceed eight percent per annum. The undisputed evidence is that the defendants have not received any charges in excess of those authorized by § 5-18-15(j). Therefore, the issue presented is whether the evidence presented on the summary judgment motion showed that the defendants and the plaintiff class contracted for charges in excess of those allowed by § 5-18-15(j). On the first page of the "Disclosure Statement, Note, and Security Agreement" (the "Agreement"), the following appears:
Hereinafter, this quoted statement is referred to as "the first provision."
The term "Annual Percentage Rate" appears twice on the first page of the agreement. In one place it is defined as "the cost of your credit as a yearly rate." In the other place, the term "Annual Percentage Rate" appears with an arrow pointing to a blank space, which was filled in with a number in excess of 8%.
On the second page of the Agreement, the following appears:
(Emphasis added.) Hereinafter, this statement is referred to as "the second provision."
"Stated" is defined in Black's Law Dictionary 1407 (6th ed. 199), as "[d]etermined, fixed, or settled." In The American Heritage Dictionary of the English Language 1259 (1969), "state" is defined as "[t]o set forth in words; declare." In determining what the plaintiff and the defendants contracted for, we have to determine whether the "stated Annual Percentage Rate" was to be "the cost of [] credit as a yearly rate," which would include the cost of the credit before the maturity of the note, the highest lawful contract rate from maturity until 6 months after the final installment date, and 8% per annum from 6 months after the final installment date until the debt was paid in full; or whether the "stated Annual Percentage Rate" was to be the amount that would be written in the space beside the words "Annual Percentage Rate":
If the stated "Annual Percentage Rate" is the former, it does not violate the Alabama Small Loan Act; if it is the latter, it violates that Act and the contract is void.
"[A] document is unambiguous if only one reasonable meaning emerges." Wayne J. Griffin Electric, Inc. v. Dunn Construction Co., 622 So. 2d 314, 317 (Ala.1993). When any aspect of a contract is capable of more than one meaning, it is ambiguous. Griffin Electric, supra; Cannon v. State Farm Mut. Auto. Ins. Co., 590 So. 2d 191 (Ala.1991); 17A Am.Jur.2d Contracts § 338 (1991); 17A C.J.S. Contracts § 294(2) (1963). When we find an agreement to be ambiguous, we must employ established rules of contract construction to resolve the ambiguity found in the inartfully drafted document. Lowery v. May, 213 Ala. 66, 104 So. 5 (1925); Dickson v. Van Hoose, 157 Ala. 459, 47 So. 718 (1908); 17A Am.Jur.2d Contracts § 337 (1991).
With a choice between a valid construction and an invalid construction, the court has a duty to accept the construction that will uphold, rather than destroy, the contract. Wilson v. World Omni Leasing, Inc., 540 So. 2d 713 (Ala.1989); Louisville & N.R.R. v. Black Creek Coal & Coke Co., 248 Ala. 280, 27 So. 2d 473 (1946); Reynolds v. Massey, 219 Ala. 265, 122 So. 29 (1929); Montgomery Enterprises v. Empire Theater Co., 204 Ala. 566, 86 So. 880 (1920); Ashby v. Cathcart, 159 Ala. 474, 49 So. 75 (1909); Lively v. Robbins, 39 Ala. 461 (1864); Adams v. Adams, 26 Ala. 272 (1855); Evans v. Sanders, 8 Port. 497, 33 Am. Dec. 297 (Ala.1839); Loeb v. City of Montgomery, 7 Ala.App. 325, 61 So. 642, cert. denied, 184 Ala. 217, 63 So. 1023 (1913); 17A Am.Jur.2d Contracts § 346 (1991); 2 William Blackstone, Commentaries 380; 1 Joseph Chitty, Jr., A Treatise on the Law of Contracts at 112 (5th ed. 1874); 4 William Herbert Page, The Law of Contracts, § 2051 (2d ed.1920); Restatement (Second) of Contracts § 203(a) (1981); 3 Arthur Linton Corbin, A Comprehensive Treatise on the Rules of Contract Law § 546 (1960); 4 Samuel Williston, A Treatise on the Law of Contracts § 620 (3d ed.1961).
In accordance with this rule of construction, the "stated Annual Percentage Rate" in the default provision on the second page of the agreement would be "the cost of [ ] credit as a yearly rate," which would be the cost of credit before maturity of the note for that period of time; the highest lawful contract rate that could be charged from maturity until 6 months after the final installment date in the contract, for that period of time; and 8% per annum from 6 months after the final installment date until the debt is paid in full, for that period of time.
Even if we assumed that there was no ambiguity as to what the term "stated Annual Percentage Rate" meant in the second provision and that it clearly meant the illegal rate that would cause the agreement to be void, we would still find an ambiguity in the agreement arising from the difference between the second provision and the first provision. Griffin Electric, supra.
*949 Again, we would have to apply the rule of construction holding that when there is a choice between a valid construction and an invalid construction, the court has a duty to accept the construction that will uphold, rather than destroy, the contract. See Wilson v. World Omni Leasing, Inc., and the other cases cited with it, supra. One other established rule of construction when an examination is limited to the four corners of the agreement itself, is that the first of two conflicting provisions prevails over the second provision.
Any inconsistencies between clauses or conditions that cannot be reconciled must be resolved in favor of the first clause. City of Fairhope v. Town of Daphne, 282 Ala. 51, 208 So. 2d 917 (1968), appeal after remand, 284 Ala. 556, 226 So. 2d 383 (1969), appeal after remand, 286 Ala. 470, 241 So. 2d 887 (1970); Scherf v. Renfroe, 266 Ala. 35, 93 So. 2d 402 (1957); Epperson v. Stacey, 266 Ala. 396, 96 So. 2d 750 (1957); G.F.A. Peanut Association v. W.F. Covington Planter Co., 238 Ala. 562, 192 So. 502 (1939), Lowery v. May, 213 Ala. 66, 104 So. 5 (1925); Vizard v. Robinson, 181 Ala. 349, 61 So. 959 (1913); Head v. Hunnicutt, 172 Ala. 48, 55 So. 161 (1911); Petty v. Boothe, 19 Ala. 633 (1851); 2 William Blackstone, Commentaries 381; 1 Joseph Chitty, Jr., A Treatise on the Law of Contracts at 122 (5th ed. 1874); 4 Samuel Williston, A Treatise on the Law of Contracts § 624 (3d ed.1961); 17A Am.Jur.2d Contracts § 394 (1991).
If one must go beyond the four corners of the agreement in construing an ambiguous agreement, the surrounding circumstances, including the practical construction put on the language of the agreement by the parties to the agreement, are controlling in resolving the ambiguity. Walls v. Bank of Prattville, 575 So. 2d 1081 (Ala.1991); Fouts v. Beall, 518 So. 2d 1236 (Ala.1987); Mass Appraisal Services, Inc. v. Carmichael, 404 So. 2d 666 (Ala.1981); City of Montgomery v. Maull, 344 So. 2d 492 (Ala.1977); Flagg-Utica Corp. v. City of Florence, 275 Ala. 475, 156 So. 2d 338 (1963); Taylor v. Riley, 272 Ala. 690, 133 So. 2d 869 (1961); Hill v. Davis, 272 Ala. 166, 130 So. 2d 39 (1961); Irwin v. Baggett, 231 Ala. 324, 164 So. 745 (1935); Parnell v. Cole, 220 Ala. 643, 127 So. 237 (1930); Merchants' Nat'l Bank of Mobile v. Hubbard, 220 Ala. 372, 125 So. 335 (1929); Brooks v. Bank of Wetumpka, 210 Ala. 689, 98 So. 907 (1924); A.S. Knowles Dry Goods Co. v. Gunter, 204 Ala. 411, 85 So. 735 (1920); 3 Arthur Linton Corbin, A Comprehensive Treatise on the Rules of Contract Law § 558 (1960); 4 Samuel Williston, A Treatise on the Law of Contracts § 623 (3d ed.1961); 17A Am.Jur.2d Contracts § 357 (1991); 17A C.J.S. Contracts § 325(1) (1963).
It is undisputed that the defendants knew the amount of interest they were legally allowed to charge six months after the last installment was due. There was no evidence that they ever charged or attempted to charge in excess of that amount. It is undisputed that the defendants were not aware of the second provision in the agreement. The only reasonable construction that can be put on the agreement, in accordance with our established rules of construction, is that if the first provision and the second provision conflict and thereby create an ambiguity, then the plaintiff and the defendants contracted for the interest provided for in the first provision.
The plaintiff relies on New Finance, Ltd. v. Ellis, 284 Ala. 374, 225 So. 2d 784 (1969). In New Finance, the contract unambiguously provided for an improper fee, specifically, for collection costs. Because there was no conflicting provision concerning the impermissible fee, there was no question that the parties had contracted for the collection of the impermissible fee. New Finance would control if only the second provision appeared in the agreement. To rely on New Finance is to ignore the first provision and our established rules of construction.
The key words in Ala.Code 1975, § 5-18-15(h), as that section applies to the undisputed facts in this case, are "contracted for." Assuming that the term "stated Annual Percentage Rate" in the second provision is ambiguous, then, in accordance with the established rules of contract construction adopted by this Court and in accordance with authorities on the law of contracts, we would conclude that the first provision would be the provision contracted for by the plaintiff and *950 the defendants and we would find no violation of § 5-18-15(j). Assuming that the term "stated Annual Percentage Rate" is not in itself ambiguous, but means the rate stated on the first page of the contract in the box designated "Annual Percentage Rate" which would cause the second provision to violate § 5-18-15(j) then the first provision and the second provision would make the agreement ambiguous. In accordance with the established rules of contract construction adopted by this Court and advocated by authorities on the law of contracts, this Court must consider the first provision to be the provision "contracted for" by the plaintiff and the defendants.
We also note the plaintiff's contention that the defendants' loans to the class were void because the defendants had contracted to include earned interest as part of the "unpaid principal balance" for purposes of computing interest due upon default. (The second provision states, in part, that upon default the "full amount Borrower owes, less unearned charges ..., will become due." (Emphasis added.)) Specifically, the plaintiff cites § 5-18-15(a), which provides for interest to be charged on the "unpaid principal balance," and § 5-18-15(c)(1), which prohibits the compounding of interest. The plaintiff argues that "[t]aken together [§ 5-18-15(a) and § 5-18-15(c)(1)] make it clear that default interest must be calculated only on the `unpaid principal balance' and not on any earned interest charges." (Emphasis original.) After fully considering this contention, we find it to be without merit. Section 5-18-15(c)(2) provides:
(Emphasis added.) As we read this section, interest earned before default on an installment contract is considered to be part of the "unpaid principal balance" for purposes of computing default interest. Reading this provision together with the other provisions in § 5-18-15, we hold that the defendants' loans were not void on this ground.
OPINION OF MAY 30, 1997, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION GRANTED; REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX and SEE, JJ., concur.
COOK and BUTTS, JJ., concur in the result.
[1] Section 5-18-15(j) provides: "Interest as provided in this section shall not accrue or be recovered or charged on any loan made under this chapter [`Small Loans'] for any longer than six months after the due date of the final installment of principal or interest. After the expiration of said six-month period, interest may be charged at a rate not to exceed eight percent per annum." | September 19, 1997 |
0ce5df0f-4e27-42aa-965a-a9807cf2b165 | Ex Parte City of Geneva | 707 So. 2d 626 | 1960518 | Alabama | Alabama Supreme Court | 707 So. 2d 626 (1997)
Ex parte CITY OF GENEVA.
(Re CITY OF GENEVA v. Sharon YARBROUGH, individually and as next friend of Christina Yarbrough).
1960518.
Supreme Court of Alabama.
September 26, 1997.
*627 John L. Knowles, Geneva, for petitioner.
David F. Holmes, Slocomb, for respondent.
SHORES, Justice.
We granted certiorari review to consider whether the defendant municipality was shielded from liability under the "recreational use statutes," §§ 35-15-1 through -28, Ala.Code 1975.
Sharon Yarbrough, individually and as next friend of her minor daughter Christina Yarbrough, sued the City of Geneva, alleging negligence. On June 14, 1991, Christina Yarbrough, then age 11, attended a ball game at C.D. Chapman Memorial Park, which is owned and operated by the City. While leaving the park that evening, Christina fell over a cable that was stretched across the park's entrance, and in the fall she suffered serious injuries. At trial, the City moved for a directed verdict at the close of all the evidence. The trial court denied the motion. The jury returned a $20,000 verdict for the plaintiff, upon which the trial court entered a judgment. The City moved for a judgment notwithstanding the verdict, or, in the alternative, for a new trial. The court denied the motion. By a 3-2 vote, the Court of Civil Appeals affirmed. City of Geneva v. Yarbrough, 707 So. 2d 623 (Ala.Civ.App.1996).
We reverse and remand. In reviewing the trial court's denial of the City's motions for a directed verdict and a JNOV,[1] we must determine whether the party with the burden of proof, Yarbrough, had produced sufficient evidence of a conflict warranting a jury's consideration. Macon County Comm'n v. Sanders, 555 So. 2d 1054, 1056 (Ala.1990); Bussey v. John Deere Co., 531 So. 2d 860, 862 (Ala.1988). We are governed by the "substantial evidence" rule, Ala.Code 1975, § 12-21-12(d). "Substantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial *628 judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co., 547 So. 2d 870, 871 (Ala.1989). The evidence must be viewed in a light most favorable to the nonmoving party. Continental Eagle Corp. v. Mokrzycki, 611 So. 2d 313 (Ala.1992).
When the City built the park, about 1981, it installed chain-link gates across the entrance. In 1987, to make it easier for pedestrians to enter the park, while still preventing people from driving motor vehicles onto the park grounds, the City replaced these gates with a cable across the entrance. This cable was about one foot above the ground and was suspended loosely between a wooden post and a fence. There was also at the entrance a walk area a few feet wide between the post and another fence that allowed pedestrians to go around the cable. When the cable was first installed, the City attached a caution sign and white cloth strips to it, but there was some evidence suggesting that warning devices might not have been affixed to the cable when the accident in this case occurred.
On June 14, 1991, Christina entered the park in the late afternoon, accompanied by five girlfriends, also minors, and an adult chaperon, Mrs. Dixie Lee. This was Christina's first trip to C.D. Chapman Memorial Park. She testified that when she entered the park there was still some daylight and that she saw and easily stepped over the cable at the entrance. After watching some baseball games, the group decided to leave, sometime around 8:30 to 9:00 p.m. When the girls neared the park entrance, they began to run toward the chaperon's car, which was parked in the lot outside the cable. As the group of running girls approached the cable, the chaperon attempted to remind the girls of the cable, by saying either, "Watch out" or "Watch out for the wire." Several girls successfully jumped the cable, but Christina and one of her friends hit the cable and fell. Christina suffered a broken leg as the result of her fall. Christina testified that she did hear the chaperon's warning while she was running, but heard it only when she was right at the cable. She admitted that upon hearing the warning she did see the cable and tried to jump it, but she said that because of the darkness she had not seen the cable in time to stop or jump all the way over it.
The City contends that its motions for a directed verdict and later for a JNOV should have been granted because, it argues, it was shielded from liability under §§ 35-15-1 through -28, Ala.Code 1975. Those sections make up Chapter 15 of Title 35; that chapter is entitled "Duty of Care Owed Persons on Premises for Sporting or Recreational Purposes." Hereinafter those Code sections are referred to as "recreational use statutes."
Sections 35-15-1 through -5 of the recreational use statutes, appearing in Article 1 of Chapter 15, define and limit the duties of an owner of recreational land in relation to a person using the land for recreational purposes. Under these sections, "[a]n owner, whether public or private, owes no duty to users of the premises except for injury caused by a willful or malicious failure to guard or warn against a dangerous condition, use, structure, or activity." Poole v. City of Gadsden, 541 So. 2d 510 (Ala.1989); § 35-15-3, Ala.Code 1975.
Unlike Article 1, Article 2, consisting of §§ 35-15-20 through -28, applies specifically to owners of noncommercial public recreational land, such as the City here. These sections "provide such landowners with even greater protections than §§ 35-15-1 through -5." Poole, at 513. See also Grice v. City of Dothan, 670 F. Supp. 318, 321 (M.D.Ala.1987) ("[Article 2] further limits the liability of owners of land"); Clark v. Tennessee Valley Authority, 606 F. Supp. 130 (N.D.Ala.1985) ("[Article 2] provides [landowners] even tighter limitations than [Article 1]"). The recreational use statutes appearing in Article 2 provide the following limitations on landowner duty and liability:
"§ 35-15-22.
"§ 35-15-23.
The plaintiff concedes that the recreational use statutes apply in this case but argues the jury nonetheless could have found the City liable because, the plaintiff argues, the evidence indicated that the conditions of § 35-15-24 were satisfied. That section carves out an exception to the liability limitations provided in §§ 35-15-22 and -23:
"§ 35-15-24.
The City argues that the plaintiff failed to meet her burden of proving that the exception of § 35-15-24 applies. Specifically, the City argues that her evidence was insufficient to allow the jury to find that the cable was "not apparent to the person or persons using the outdoor recreational land," within the meaning of § 35-15-24(a)(3). We agree.
Article 2 does not define the term "apparent." However, the legislature stated that the landowner protections of Article 2 were enacted to "encourage owners of land to allow noncommercial public recreational use of land which would not otherwise be open to *630 the public." Section 35-15-20. In order to achieve this express purpose, it is necessarily true that those who permit the public upon their lands for noncommercial recreational purposes must not be exposed to greater potential liability under the recreational use statutory scheme than they would have faced at common law. Thus, this Court has continued in some circumstances to look to the common law for guidance in interpreting the recreational use statutes. See, e.g., Poole, supra; Edwards v. City of Birmingham, 447 So. 2d 704 (Ala.1984); Glover v. City of Mobile, 417 So. 2d 175 (Ala.1982); Wright v. Alabama Power Co., 355 So. 2d 322 (Ala. 1978).
Under common law premises liability classifications, it is clear that Christina was merely a licensee. Being on the City's property with the City's consent, but for no business purpose, she was a licensee. Edwards, supra, 447 So. 2d at 705; see also Poole and Glover, supra. The duty a landowner owes to a licensee is not to willfully or wantonly injure him or to negligently injure him after discovering his peril. Hambright v. First Baptist Church-Eastwood, 638 So. 2d 865, 868 (Ala.1994). In Edwards, supra, we stated:
447 So. 2d at 705. See also Poole, supra.
Thus, we conclude that the words "not apparent," as used in § 35-15-24(a)(3), imply that the person could not avoid the condition, use, structure, or activity by the use of reasonable care and skill. Further, the common law rule is that, under ordinary circumstances, trespassing children or children on the land of another as licensees occupy the same position as trespassing adults. Hollis v. Norfolk So. Ry., 667 So. 2d 727 (Ala.1995); Copeland v. Pike Liberal Arts School, 553 So. 2d 100 (Ala.1989); Alabama Great So. R.R. v. Green, 276 Ala. 120, 159 So. 2d 823 (1964). So, too, do children and adults occupy the same position under the recreational use statutes, because the recreational use statutes provide no exception for minors. See Poole, supra, 541 So. 2d at 513, citing Grice, supra. The definition of "person" for the purposes of Article 2 includes "[a]ny individual, regardless of age, maturity, or experience." Section 35-15-21(4) (emphasis added). "[T]he Alabama Legislature did not intend for minors to be treated any differently from adults relative to the duty owed to them by landowners under §§ 35-15-20 through -28." Grice, supra, 670 F. Supp. at 322. This interpretation serves to effectuate the express legislative intent of the recreational use statutes.
The plaintiff did not present substantial evidence indicating that the cable Christina fell over was a condition that a person could not avoid by the use of reasonable care and skill. The fact that Christina was a minor did not alter the duty owed to her under the recreational use statutes. There was evidence suggesting that the park entrance was only dimly lighted. There was a streetlight near the park entrance, but it had been inoperative for several years because vandals had repeatedly broken it and the City had decided not to repair it. Thus, the primary illumination of the entrance and cable would have come from the lights used for the baseball *631 games in the park itself. However, the undisputed evidence shows that the cable could be seen by the use of reasonable care, and, therefore, the City had no duty to warn licensees using the park of its presence. Several of the other minors at the park with Christina were able to see and jump over the cable only moments before her accident, even as they too were running out of the park. Christina admitted that she knew of the cable because she had stepped over it upon entering the park. Finally, there was no evidence that anyone besides Christina had ever tripped over the cable, despite the park's history of nighttime use.
We hold, under the facts of this case, that the plaintiff failed to present substantial evidence that the condition that caused the injury was "not apparent," within the meaning of § 35-15-24(a)(3), Ala.Code 1975. Accordingly, the judgment of the Court of Civil Appeals is reversed and the cause is remanded for entry of a judgment consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, ALMON, KENNEDY, COOK, and SEE, JJ., concur.
HOUSTON, J., concurs in the result.
[1] These motions are now referred to in our Rules of Civil Procedure as motions "for judgment as a matter of law." See Rule 50(a) and (b), Ala. R. Civ. P.
[2] We note that the four-part "actual knowledge" test of § 35-15-24 appears likely to be a codification of the test employed by the state courts of Georgia when determining whether a noncommercial recreational landowner may be liable for "willful ... failure to guard or warn against a dangerous condition, use, structure, or activity." See Ga.Code Ann. § 51-3-25 (1982), the analogue to § 35-15-3, Ala.Code 1975. Before the 1981 enactment of § 35-15-24, Ala.Code 1975, the Georgia Court of Appeals had interpreted the "willful failure" language of current § 51-3-25, Ga.Code Ann. (1982), as follows:
"`A wilful failure' imports a conscious, knowing, voluntary, intentional failure, a purpose or willingness to make the omission, rather than a mere inadvertent, accidental, involuntary, inattentive, inert, or passive omission.' Carpenter v. Forshee, 103 Ga.App. 758, 773, 120 S.E.2d 786, 796. In the context of the whole statute, it would seem that a wilful failure to guard or warn would require actual knowledge of the owner that its property is being used for recreational purposes; that a condition exists involving an unreasonable risk of death or serious bodily harm; that the condition is not apparent to those using the property; and that having this knowledge, the owner chooses not to guard or warn, in disregard of the possible consequences. This test excludes either constructive knowledge or a duty to inspect. We believe this to be the intent of sections [51-3-22] and [51-3-25, Ga.Code Ann. (1982)] read together."
McGruder v. Georgia Power Co., 126 Ga.App. 562, 563-64, 191 S.E.2d 305, 307, rev'd on other grounds, 229 Ga. 811, 194 S.E.2d 440 (1972). See also, e.g., Georgia Marble Co. v. Warren, 183 Ga.App. 866, 360 S.E.2d 286 (1987); South Gwinnett Athletic Ass'n v. Nash, 220 Ga.App. 116, 469 S.E.2d 276 (1996). | September 26, 1997 |
977344ca-c823-4122-83d7-53a840eae550 | Ex Parte Ala. Dept. of Forensic Sciences | 709 So. 2d 455 | 1961759 | Alabama | Alabama Supreme Court | 709 So. 2d 455 (1997)
Ex parte ALABAMA DEPARTMENT OF FORENSIC SCIENCES and State Medical Examiner Gregory P. Wanger.
(In re Bettie SMITH, et al. v. Gregory P. WANGER, M.D., et al.).
1961759.
Supreme Court of Alabama.
November 14, 1997.
Rehearing Denied January 16, 1998.
*456 Bill Pryor, atty. gen., and Stanley E. Graham and Alice Ann Byrne, asst. attys. gen., for petitioners.
Randolph B. Walton of Walton, Ritchie & Green, L.L.C., Mobile, for respondents.
PER CURIAM.
The defendants, the Alabama Department of Forensic Sciences ("the Department") and State Medical Examiner Dr. Gregory P. Wanger, petition for a writ of mandamus directing Judge Edward B. McDermott, of the Mobile Circuit Court, to grant their Rule 12(b)(6), Ala. R. Civ. P., motion to dismiss the complaint against them. They claim to be entitled to the dismissal, based upon the defenses of sovereign immunity and qualified immunity, relying on § 14, Ala. Const. of 1901. We grant the petition.
After the death of Charles Smith, Sr., his body was sent to the Department's regional laboratory in Mobile for examination. It was stored overnight in a rented refrigeration unit, which malfunctioned. As a result of the malfunctioning, the body substantially deteriorated. Mr. Smith's widow and sons (Bettie Smith, Charles Smith, Jr., and Craig Smith) sued the Department, Dr. Wanger, and several fictitiously named parties. Their complaint alleged: (1) that the defendants had negligently handled Mr. Smith's body; (2) *457 that they had acted recklessly or wantonly in handling his body or had willfully mishandled it; and (3) that the defendants had committed trespass to the personal property of the widow, which she alleged to be the body of Mr. Smith. The complaint sought both compensatory and punitive damages.
The Department and Dr. Wanger moved to dismiss the complaint, on the basis of the defenses of sovereign immunity and qualified immunity. They also moved to stay discovery pending the court's ruling on the motion to dismiss. The circuit court denied both motions. The Department and Dr. Wanger again moved the court to dismiss and moved for a stay of discovery pending the ruling on the second motion to dismiss. The court denied the motion to stay discovery, but has not ruled on the second motion to dismiss the complaint. The Department and Dr. Wanger petitioned the Court of Civil Appeals for a writ of mandamus directing the trial judge to grant their motion to dismiss; that court denied the petition, without opinion, Ex parte Alabama Dep't of Forensic Sciences, (No. 2961088, July 15, 1997) ___ So.2d ___ (Ala. Civ.App.1997) (table). They have now petitioned this Court for a writ of mandamus.
A writ of mandamus is an extraordinary remedy, and it will be "issued only when there is 1) a clear legal right in the petitioner to the order sought; 2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; 3) the lack of another adequate remedy; and 4) properly invoked jurisdiction of the court." Ex parte United Service Stations, Inc., 628 So. 2d 501, 503 (Ala.1993).
Section 14, Ala. Const. of 1901 states: "[T]he State of Alabama shall never be made a defendant in any court of law or equity." Under § 14, the State and its agencies have immunity from suit in any court. Although there are judicially recognized exceptions to the protection afforded by sovereign immunity, see State of Alabama Hwy. Dep't v. Milton Constr. Co., 586 So. 2d 872 (Ala.1991), none of those exceptions is invoked by the circumstances of this case. Thus, the Department, as an agency of the State, is immune from the tort liability the plaintiffs seek to impose. Ex parte Franklin County Dep't of Human Resources, 674 So. 2d 1277 (Ala.1996); Williams v. John C. Calhoun Community College, 646 So. 2d 1 (Ala.1994); Rutledge v. Baldwin County Comm'n, 495 So. 2d 49 (Ala.1986). The trial court was without jurisdiction to entertain the action against the Department; thus, as to the Department, the complaint must be dismissed.
State officers and employees, such as Dr. Wanger, sued in their official capacities and individually, are also entitled to the sovereign immunity afforded by § 14, Ala. Const. of 1901, when the action against them is, in effect, an action against the State. Barnes v. Dale, 530 So. 2d 770 (Ala.1988); Rutledge, supra; Shoals Community College v. Colagross, 674 So. 2d 1311 (Ala.Civ.App. 1995), cert. denied, Ex parte Colagross, 674 So. 2d 1315 (Ala.1996). However, the immunity conferred by § 14 is not absolute; it does not apply where the state officer or employee is alleged to have acted illegally, fraudulently, in bad faith, beyond his authority, or under a mistaken interpretation of law, or where the lawsuit seeks to compel the performance of a legal duty or a ministerial act or to enjoin the enforcement of an unconstitutional law, or where the action is brought under the Declaratory Judgment Act. Mitchell v. Davis, 598 So. 2d 801 (Ala.1992); Phillips v. Thomas, 555 So. 2d 81 (Ala.1989). None of these exceptions to the rule of sovereign immunity applies to this case. Thus, we must go further and determine whether this action is, in effect, an action against the State. In determining whether an action against a state officer or employee is one against the State, this Court must consider the nature of the action and the kind of relief sought. Phillips, supra; DeStafney v. University of Alabama, 413 So. 2d 391 (Ala.1981).
The plaintiffs' complaint alleges that Dr. Wanger acted negligently or wantonly and committed a trespass in the performance of his official duties as state medical examiner. Our caselaw holds that a state *458 official or employee is not protected by the State's sovereign immunity when the action alleges such conduct. Phillips, supra; Barnes, supra; DeStafney, supra. Thus, although Dr. Wanger is not protected by absolute immunity from this lawsuit, we must determine whether he is entitled to qualified immunity, also known as "substantive immunity." Qualified immunity shields a state employee from liability if the employee is engaged in a discretionary act, instead of a ministerial one, when the alleged tortious conduct occurs. Defoor v. Evesque, 694 So. 2d 1302 (Ala.1997); Taylor v. Shoemaker, 605 So. 2d 828 (Ala.1992); Phillips, supra. Whether a state employee's action was discretionary or merely ministerial is a question of law to be decided by the trial court. Defoor, supra; Phillips, supra; Grant v. Davis, 537 So. 2d 7 (Ala.1988).
This Court has explained that discretionary functions are characterized by planning and decision-making, while ministerial functions are characterized by operational tasks. Defoor, supra; McDuffie v. Roscoe, 679 So. 2d 641 (Ala.1996); Grant, supra.
57 Am.Jur.2d Municipal, County, School and State Tort Liability § 119 (1988).
Id. at § 120.
The act by Dr. Wanger that the plaintiffs claim was tortious was the use of a rented refrigeration unit to store Mr. Smith's body and other bodies. Although Dr. Wanger had an affirmative duty to store bodies in a certain condition, we conclude that his decision to use a rented refrigeration unit when the Department's facilities were insufficient was a discretionary act rather than a ministerial one and that he is protected by qualified immunity. See McDuffie v. Roscoe, 679 So. 2d 641 (Ala.1996); Taylor v. Shoemaker, 605 So. 2d 828 (Ala.1992); Grant v. Davis, 537 So. 2d 7 (Ala.1988); Barnes v. Dale, 530 So. 2d 770 (Ala.1988). Although this Court has noted that "it is the rare case involving the defense of [qualified] immunity that would be properly disposed of by a dismissal pursuant to Rule 12(b)(6), Ala.R.Civ.P.," Patton v. Black, 646 So. 2d 8, 10 (Ala.1994), we conclude that Dr. Wanger is clearly entitled to the relief he seeks.
Because the Department and Dr. Wanger are protected by sovereign immunity and qualified immunity, respectively, the trial court erred in failing to grant their motion to dismiss the complaint for failure to state a claim for which relief could be granted. We grant their petition for a writ of mandamus ordering Judge McDermott to grant their motion to dismiss.
PETITION GRANTED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, COOK, BUTTS, and SEE, JJ., concur.
KENNEDY, J., dissents. | November 14, 1997 |
0f40e786-8972-4117-97d3-130e18928bd9 | Browder v. State | 728 So. 2d 1108 | 1951737 | Alabama | Alabama Supreme Court | 728 So. 2d 1108 (1997)
Ex parte State of Alabama.
Re David Mitchell BROWDER, Paul Lamar Stinson, and Billy Alford Welch
v.
STATE of Alabama.
1951737.
Supreme Court of Alabama.
May 2, 1997.
As Modified on Denial of Rehearing November 14, 1997.
*1109 Bill Pryor, atty. gen., and Thomas F. Parker IV, deputy atty. gen., for petitioner (on original submission).
Richard D. Horne, Mobile, for David Mitchell Browder (on original submission and on application for rehearing).
W. Lloyd Copeland of Clark, Deen & Copeland, Mobile, for Billy Alford Welch (on original submission and on application for rehearing).
No brief filed for petitioner (on application for rehearing).
HOOPER, Chief Justice.
This Court granted the State's certiorari petition to review the judgment of the Court of Criminal Appeals reversing the sentences of David Mitchell Browder and Billy Alford Welch for their convictions of the crime of conspiracy to traffic in marijuana.[1] (The defendant Paul Lamar Stinson is not involved in this certiorari review.) We reverse that judgment of the Court of Criminal Appeals and remand for that court to order the trial court to determine (1) whether under Alabama law, as discussed below, either Browder or Welch "possessed" a firearm for the purposes of the firearm enhancement statute, and (2) if the trial court determines that one conspirator possessed a firearm or firearms, whether under the three-part test we adopt today from United States v. Otero, 890 F.2d 366 (11th Cir.1989), the sentence of the other conspirator can be enhanced because of his status as a coconspirator. The trial court should hold a hearing on these issues.
David Mitchell Browder, Billy Alford Welch, and Paul Lamar Stinson were indicted, in alternative counts, for conspiracy to traffic in marijuana, trafficking in marijuana, and possession of marijuana. Their cases were consolidated for trial. Pursuant to a jury trial, each of them was convicted. Browder was convicted of conspiracy to traffic in marijuana and was sentenced to 30 years' imprisonment; this term included five years' sentence enhancement for possessing a firearm during the commission of the offense, pursuant to § 13A-12-231(13), Ala. Code 1975. Welch was convicted of conspiracy to traffic in marijuana and was sentenced to 35 years' imprisonment; this term also included five years' sentence enhancement pursuant to § 13A-12-231(13). Stinson was convicted of trafficking in marijuana and was sentenced to 20 years' imprisonment; Stinson's sentence was not enhanced by the firearm provision. The three defendants appealed together to the Court of Criminal Appeals, raising many issues, several of which overlapped.
The Court of Criminal Appeals on January 19, 1996, issued an unpublished memorandum regarding some aspect of each defendant's case (No. CR-93-0780, January 19, 1996) ___ So.2d ___ (Ala.Crim.App.1996) (table). Also on January 19, 1996, the Court of Criminal Appeals issued an opinion in their appeal. By that opinion, it affirmed Stinson's conviction and sentence; by that same opinion it *1110 affirmed Welch and Browder's convictions, but remanded their cases to the trial court for a new sentencing hearing.[2] The Court of Criminal Appeals held that the trial court had incorrectly enhanced the sentence of the conspirators Browder and Welch by applying the firearm enhancement provision of § 13A-12-231(13). On January 31, 1997, this Court denied Stinson's petition for certiorari review, without opinion (docket no. 1960036); in that certiorari petition Stinson did not challenge his sentence. The Court of Criminal Appeals remanded Browder and Welch's cases for resentencing; on remand, the trial court entered new sentences for those two defendants, without the firearm enhancement. The Court of Criminal Appeals affirmed the new sentences on return from remand, by a new opinion dated May 10, 1996.
The State's certiorari petition raises an issue of first impression: whether the firearm enhancement provision in § 13A-12-231(13) should apply to the crime of conspiracy to traffic in marijuana, set out in Ala.Code 1975, § 13A-12-204(c). We hold that the firearm enhancement statute, § 13A-12-231(13), may be applied not only to enhance the sentence of one convicted of the substantive crime of distributing controlled substances, but also to enhance the sentence of one convicted of the crime of conspiring to distribute a controlled substance (§ 13A-12-204).
The Court of Criminal Appeals, relying on Williams v. State, 665 So. 2d 955 (Ala. Cr.App.1994), stated:
Browder v. State, 728 So. 2d 1106, 1107 (Ala. Cr.App.1996). We hold otherwise.
The Williams case dealt with Ala.Code 1975, § 13A-12-250. That section deals only with the "sale" of a controlled substance within particular zones:
In keeping with the plain language of the statute, this Court has held that a defendant convicted of conspiring to sell drugs within the stated zones could not be punished by the five-year enhancement of § 13A-12-250. Ex parte Mutrie, 658 So. 2d 347 (Ala.1993); see also Williams, supra. The language of § 13A-12-250 is clearit cannot be applied to one convicted of conspiring to sell a controlled substance. The firearm enhancement statute, § 13A-12-231(13), on the other hand, is not limited by its language to a "sale." The conspiracy statute, § 13A-12-204(c), specifically provides that a "conspiracy to commit a controlled substance crime shall be punished the same as the controlled substance crime that is the object of the conspiracy."
Section 13A-12-231(13), the firearm enhancement provision applicable to the crime of trafficking in controlled substances, reads as follows:
(Emphasis added.) Section 13A-12-204(c) states that "[a] criminal conspiracy to commit a controlled substance crime shall be punished the same as the controlled substance crime that is the object of the conspiracy." The object of Browder and Welch's conspiracy was trafficking in cannabis, a controlled substance crime. Part of the punishment for this particular controlled substance crime is provided by the firearm enhancement provision of § 13A-12-231(13). Section 13A-12-204 has incorporated, without any limitation, the punishment of § 13A-12-231, for any conspiracy that has as its object a crime subject to § 13A-12-231. The legislature has from time to time modified the punishment set out in § 13A-12-231 (one modification adding the firearm enhancement provision of subsection (13)), but as it has modified § 13A-12-231 it has not seen fit to limit the punishment that § 13A-12-204(c) incorporates for the crime of conspiracy. Therefore, the firearm enhancement provision of § 13A-12-231 applies to a defendant convicted of the conspiracy offense.
Section 13A-12-231(13) provides that any person "who has possession of a firearm during the commission of any act proscribed by this section" shall be subject to the five-year sentence enhancement. Did Browder and Welch have "possession of a firearm" so as to invoke the sentence enhancement?
At the original sentencing hearing for Browder, the trial court ruled as follows:
(C.R. 2307.) At the original sentencing hearing for Welch, the trial court ruled as follows:
(C.R. 2305.)[3] Although Welch and Browder argued that the Autauga County residence was a hunting camp and that the guns were in the house only to be used for hunting, the trial judge determined that, at least in the case of the Mossberg shotgun, the weapon was "used" in the conspiracy. The trial court did not make a finding on the issue of whether either Browder or Welch "possessed" the guns. We, therefore, remand this case to the Court of Criminal Appeals for that court to order a hearing to determine whether either of these defendants "possessed" any of the weapons in furtherance of the conspiracy.
In Ynosencio v. State, 629 So. 2d 795 (Ala. Cr.App.1993), the defendant Ynosencio appealed both as to his conviction and as to the five-year enhancement of his sentence under § 13A-12-231(13) for trafficking in cannabis. The firearm that was the basis for Ynosencio's sentence enhancement was discovered during a warrantless search of a locked toolbox in his truck. The toolbox had two compartments. The officer who searched Ynosencio found, inside the compartments, large quantities of marijuana and a tote bag that contained a semi-automatic pistol.
The Court of Criminal Appeals affirmed Ynosencio's conviction and his sentence. In affirming the sentence, that court interpreted the word "possession" as it is used in § 13A-12-231(13):
629 So. 2d at 798. We agree that the statute was meant to encompass both actual and constructive possession of a firearm. The trial court should take that factor into consideration when determining whether Browder and Welch possessed any of the firearms found in the Autauga County house.
Now, on a matter of first impression in Alabama, we hold that if the trial court determines on remand that one of these two conspirators possessed a firearm or firearms in furtherance of the conspiracy but that the other one did not, then the trial court still may enhance the sentence of the other because of his culpability as a coconspirator.
Since 1989, the Eleventh Circuit Court of Appeals, under its sentencing guidelines, has permitted a conspirator's sentence to be enhanced based on a coconspirator's possession of a firearm. See United States v. Otero, 890 F.2d 366 (11th Cir.1989); see also United States v. Luiz, 102 F.3d 466 (11th Cir.1996). In Otero, the Eleventh Circuit Court of Appeals held that the defendant's sentence for cocaine possession and conspiracy to possess with the intent to distribute cocaine had been properly enhanced under Section 2D1.1(b) of the Federal Sentencing Guidelines, based on his coconspirator's possession of a firearm. In affirming the sentence, the court restated a loosely constructed three-pronged test[4] for determining whether a sentence enhancement based on a coconspirator's possession of a firearm is proper:
Otero, 890 F.2d 366, at 367. We adopt this test as a useful method for determining whether a defendant is to be found to constructively possess a firearm on the basis that his coconspirator possesses a firearm. If it finds that one conspirator possessed the firearm, under the constructive-possession rationale of Ynosencio, then the trial court should determine whether to enhance the sentence of the other conspirator, by applying the three-pronged test from Otero.
Accordingly, we reverse the judgment of the Court of Criminal Appeals affirming the new sentences of Browder and Welch. We remand the case for the Court of Criminal Appeals to order hearings in the trial court for the trial court to determine whether either *1113 Welch or Browder "possessed" the firearm or firearms in question. The trial court shall use the three-pronged Otero test to determine whether the sentence of a coconspirator who did not "actually possess" the firearm or firearms should be enhanced.
SENTENCES OF DEFENDANTS BROWDER AND WELCH REVERSED AND CASE REMANDED AS TO THOSE TWO DEFENDANTS.
MADDOX, SHORES, HOUSTON, KENNEDY, and SEE, JJ., concur.
ALMON and COOK, JJ., dissent.
COOK, Justice (dissenting).
I respectfully dissent. I disagree with the majority's holding that the firearm enhancement statute, § 13A-12-231(13), Ala.Code 1975, which applies to the substantive crime of distributing controlled substances, may be extended to apply to the crime of conspiring to distribute a controlled substance under § 13A-12-204.
Section § 13A-12-231(13) states:
(Emphasis added.)
The plain language of § 13A-12-231(13) states only that the firearm enhancement statute is to be applied to acts proscribed by § 13A-12-231, the drug trafficking statute. Criminal conspiracy to commit a controlled substance crime is an act proscribed by § 13A-12-204, not § 13A-12-231. Because it is mandatory that an act be proscribed by § 13A-12-231 in order for the firearm enhancement provision to apply, and because criminal conspiracy is not proscribed by § 13A-12-231, the firearm enhancement provision does not apply to criminal conspiracy. Therefore, in keeping with the plain language of § 13A-12-231, I conclude that it is erroneous to apply the enhancement provision to criminal conspiracy convictions, which are proscribed by § 13A-12-204.
I would have affirmed the new sentences for defendants Browder and Welch, which did not include the firearm enhancement.
ALMON, J., concurs.
[1] The opinion of the Court of Criminal Appeals does not specifically say the sentences were "reversed," but the effect of that opinion seems to be that the court intended to reverse them. The court held that the sentences were erroneous and remanded the case for resentencing.
[2] The Court of Criminal Appeals seems to have "affirmed" all three convictions by the unpublished memorandum on January 19, 1996the same day it also affirmed all three convictions by an opinion. The unpublished memorandum, like the opinion of the same date, also affirmed Stinson's sentence.
[3] Three guns were found in the Autauga County house, a rural house that was rented in Welch's name. The house was one of several alleged bases for the trafficking operation. A Mossberg shotgun was found in the proximity of what the trial judge referred to as a "peephole," maybe a "window that was blacked out or something." (C.R. 46.) A Browning shotgun and a Browning automatic rifle were taken from Welch's bedroom. As the guns were being carried away by the police, Welch asked, "Where are you going with my guns?" (C.R. 47.)
[4] The opinion that loosely adopted the threepronged test stated in Otero is United States v. Missick, 875 F.2d 1294, 1301-02 (7th Cir.1989) (citing Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946)). | November 14, 1997 |
0c6c8c93-213d-4a2a-acaa-7b9fbbca7c3c | Pitts v. Beasley | 706 So. 2d 711 | 1960324 | Alabama | Alabama Supreme Court | 706 So. 2d 711 (1997)
Gerard PITTS
v.
James BEASLEY, et al.
1960324.
Supreme Court of Alabama.
October 31, 1997.
*712 E. Ansel Strickland of Law Offices of M. Clay Ragsdale, Birmingham, for appellant.
Brittin T. Coleman and Philip J. Carroll III of Bradley, Arant, Rose & White, L.L.P., Birmingham, for appellees.
HOUSTON, Justice.
The plaintiff, Gerard Pitts, appeals from a summary judgment for the defendants, James Beasley, Charles Stewart, Jack Stevenson, and Thomas McNider. Pitts's action sought to recover damages under Ala.Code 1975, § 25-5-11, for injuries Pitts says were caused by "willful conduct" of co-employees. We affirm.
A summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ.P. Once the moving party makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present sufficient evidence creating such an issue of fact. In determining whether there is sufficient evidence to defeat a properly supported summary *713 judgment motion, this Court, like the trial court, reviews the evidence in the light most favorable to the nonmovant and resolves all reasonable doubts against the movant. Specialty Container Mfg., Inc. v. Rusken Packaging, Inc., 572 So. 2d 403 (Ala. 1990).
Viewed in the light most favorable to the plaintiff, the evidence indicates the following: Pitts was injured in a methane gas explosion in the No. 5 underground coal mine operated by Jim Walter Resources, Inc. ("Jim Walter"). The explosion occurred at the mine face, where Pitts and several other miners were working. The mine had a ventilation system to facilitate the removal of dangerous methane gas and to provide the miners with an adequate supply of oxygen. That system consisted primarily of intake shafts and exhaust shafts. At the top of the exhaust shafts were large fans that drew air out of the mine. This process of drawing air out of the mine created a negative pressure in the mine and, in turn, allowed fresh air to be drawn into the mine through the intake shafts. Inside the mine itself, various structures, including "extendable line curtains," were constructed to direct the flow of air through the mine. Extendable line curtains consist of sheets of a plastic material that are nailed to wooden frames and attached with brackets to the roof of the mine. The extendable line curtain was designed to be positioned by the miners so as to improve the removal of the methane gas from the mine face where they were working.
Jim Walter had been cited a number of times by the Mine Safety and Health Administration ("MSHA") for various violations in connection with the ventilation of the No. 5 mine. Those citations, however, did not involve the area of the mine where the explosion that injured Pitts occurred. McNider testified by affidavit that "many of these [violations] were corrected on the spot by mine personnel or soon thereafter." At the time of the accident, Beasley was the manager of the No. 5 mine; Stewart was the general manager of safety and training for Jim Walter; Stevenson was the general manager of mine ventilation for Jim Walter; and McNider was deputy general manager of mine ventilation for Jim Walter. Pitts had never notified the defendants that they were violating any of Jim Walter's safety rules.
The MSHA investigated the explosion, but its investigation did not implicate any of the defendants as having caused the explosion. MSHA did state that the extendable line curtain located near the face of the mine where Pitts was working was located 12 feet from the face of the mine, instead of 10 feet, as required by regulation. MSHA noted that this was a "potential contributing factor." It was the responsibility of the miners who were working in the area where the explosion occurred to maintain the extendable line curtain in the proper position. None of the defendants was working in the mine at the time of the explosion, and none of them was responsible for positioning the extendable line curtain at the face of the mine where Pitts was working.
The pertinent portions of § 25-5-11 on which Pitts based his co-employee claims provide as follows:
Pitts contends that a jury could infer from the evidence 1) that the defendants had a "purpose or intent or design" to injure him or someone else in the No. 5 mine; that their actions proximately caused the explosion; and, therefore, that they are liable for his injuries under § 25-5-11(c)(1); 2) that the defendants willfully and intentionally removed a safety guard or a safety device that had been provided by Jim Walter, knowing that such removal would likely or probably cause injury or death; that their actions in this respect proximately caused the explosion; and, therefore, that they are liable for his injuries under § 25-5-11(c)(2); and, 3) that the defendants willfully and intentionally violated a specific written safety rule after receiving proper notice of the violation; that their actions proximately caused the explosion; and, therefore, that they are liable for his injuries under § 25-5-11(c)(4). The gravamen of all three of these claims or theories is Pitts's allegation that the top of the extendable line curtain that was located in the area of the explosion was sagging and that the sagging caused the flow of air across the mine face where he was working to be insufficient to prevent a dangerous buildup of methane gas. The defendants contend 1) that no evidence indicates that they had a purpose, intent, or design to injure any miner working in the No. 5 mine, and, therefore, that they are not liable under § 25-5-11(c)(1); 2) that a mine is not a "machine" and, therefore, that there is no evidence that any safety guard or safety device was improperly maintained or effectively removed from a machine, and thus that they had no liability under § 25-5-11(c)(2); and 3) that the notice requirements of § 25-5-11(c)(4) were not satisfied and thus Pitts had no cause of action under that subsection.
After examining the record and considering the briefs, we agree with the defendants that the summary judgment was proper. Section 25-5-11(c)(1) defines "willful conduct" as involving "[a] purpose or intent or design to injure another." An employee seeking to recover under this subsection carries a heavy burden. In Reed v. Brunson, 527 So. 2d 102 (Ala.1988), we described the evidence an employee must present in order to submit a case to a jury under § 25-5-11(c)(1). We required that the employee show either:
527 So. 2d at 120. (Emphasis omitted.) Evidence showing only knowledge and an appreciation of the risk of injury or death, short of a substantial certainty that injury or death would occur, is insufficient for the purpose of showing willful conduct under subsection (c)(1). See Layne v. Carr, 631 So. 2d 978 (Ala.1994). We find in the record no evidence indicating that any of the defendants had a reason for wanting to intentionally injure anyone in the No. 5 mine. Likewise, we find no evidence from which one could reasonably infer that any of the defendants would have known before the explosion occurred that the extendable line curtain was sagging or that the curtain was in such a condition as to make it substantially certain to cause a methane gas explosion. Underground mining is unquestionably an extremely dangerous business. As Pitts points out, the evidence indicates that the defendants were aware that the No. 5 mine was an unusually "gassy" mine and indicates that Jim Walter had been cited a number of times by the MSHA for certain violations in connection with the ventilation system in the mine. The evidence also indicates, however, that most (if not all) of the violations cited by the MSHA had been corrected before this explosion occurred. Although this evidence may show that the defendants knew of an inherent risk of injury or death associated with underground coal mining and that they appreciated that risk, it falls far short of demonstrating that any of the defendants knew with substantial certainty that the extendable line curtain near where Pitts was working would cause a methane gas explosion. The evidence presented would have been insufficient for a jury to infer that any of the defendants acted with a purpose or intent or design to injure Pitts or any of the other miners in the No. 5 mine.
Pitts's claim under § 25-5-11(c)(2) is based on his argument that the defendants failed to properly maintain the extendable line curtain in the area where the explosion occurred and that, under the rationale of Bailey v. Hogg, 547 So. 2d 498 (Ala.1989), their failure was tantamount to the removal of a safety guard or a safety device from a "machine" provided by Jim Walter.[1] Pitts argues in his brief as follows:
(Emphasis original.)
We have carefully considered Pitts's argument, as well as Dr. King's expert opinion that a machine is generally understood by engineers and scientists to be "an assemblage *716 of bodies that transmit forces in a predetermined manner and to a desired end." However, this Court has held, as a matter of law, that "[a] mine is not a machine" within the meaning of § 25-5-11(c)(2). Mallisham v. Kiker, 630 So. 2d 420 (Ala. 1993). Therefore, the extendable line curtain, which was attached to the roof of the mine, could not constitute a "safety guard or safety device" attached to a "machine," within the meaning of those terms as they are used in § 25-5-11(c)(2).
As to Pitts's § 25-5-11(c)(4) claim, we note that the undisputed evidence indicates that Pitts did not provide the notice required to create a cause of action under subsection (c)(4). Pitts argues that the MSHA citations were sufficient to satisfy the notice requirements of § 25-5-11(c)(4); however, this Court has specifically rejected a similar argument in Coates v. Guthrie, 707 So. 2d 204 (Ala.1997), decided this same day.
The summary judgment is affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, COOK, and SEE, JJ., concur.
Kennedy, J., dissents.
[1] See Lane v. Georgia Casualty & Surety Co., 670 So. 2d 889 (Ala.1995). | October 31, 1997 |
a56051d9-eee6-44f6-9c6a-9c0a4ea228de | Ex parte Lisa Hanvey. | N/A | 1131235 | Alabama | Alabama Supreme Court | REL:01/30/2015
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
____________________
1131235
____________________
Ex parte Lisa Hanvey
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CIVIL APPEALS
(In re: Madison Academy, Inc.
v.
Lisa Hanvey)
(Madison Circuit Court, CV-11-901578;
Court of Civil Appeals, 2120753)
BOLIN, Justice.
I. Facts and Procedural History
1131235
On February 19, 2014, the Madison Circuit Court ("the
trial court") entered a judgment finding that Lisa Hanvey had
suffered a compensable injury caused by her exposure to
chemical fumes during the course of her employment with
Madison Academy, Inc. ("the employer"). The trial court
awarded
Hanvey
permanent-total-disability
benefits
in
accordance with the Workers' Compensation Act, § 25–5–1 et
seq., Ala. Code 1975 ("the Act"). The Court of Civil Appeals
reversed the trial court's judgment. See Madison Academy,
Inc. v. Hanvey, [Ms. 2120753, April 4, 2014] ___ So. 3d ___
(Ala. Civ. App. 2014). We granted Hanvey's petition for a
writ of certiorari to review whether the Court of Civil
Appeals erred in reversing the trial court's
judgment
awarding
Hanvey benefits for a permanent total disability under the
Act. We reverse and remand.
II. Standard of Review
In Ex parte Fort James Operating Co., 895 So. 2d 294, 296
(Ala. 2004), this Court stated the standard of review on a
petition for a writ of certiorari in a worker's compensation
case:
"'On certiorari review, this Court accords no
presumption of correctness to the legal conclusions
2
1131235
of the intermediate appellate court. Therefore, we
must apply de novo the standard of review that was
applicable in the Court of Civil Appeals.' Ex parte
Toyota Motor Corp., 684 So. 2d 132, 135 (Ala. 1996).
The Court of Civil Appeals, in turn, is bound by
Ala. Code 1975, § 25–5–[81](e), which provides that
legal issues are to be reviewed de novo and requires
that the judgment of the trial court be affirmed if
its factual findings are supported by substantial
evidence."
This Court has stated:
"A trial court's judgment in a worker's compensation
case based on pure findings of fact will not be
reversed if it is supported by substantial evidence.
§ 25–5–81(e)(2), Ala. Code 1975. '[The appellate
court] will not reverse the trial court's finding of
fact if that finding is supported by substantial
evidence--if that finding is supported by "evidence
of such weight and quality that fair-minded persons
in the exercise of impartial judgment can reasonably
infer the existence of the fact sought to be
proved."' Ex parte Trinity Indus., Inc., 680 So. 2d
262, 268–69 (Ala. 1996) (quoting West v. Founders
Life Assurance Co. of Florida, 547 So. 2d 870, 871
(Ala. 1989)). 'Therefore, in such a case the
appellate court must view the facts in the light
most favorable to the findings of the trial court.'
Ex parte Professional Bus. Owners Ass'n Workers'
Comp. Fund, 867 So. 2d [1099] at 1102 [(Ala. 2003)].
'Moreover, the Court of Civil Appeals observed in
Edwards v. Jesse Stutts, Inc., 655 So. 2d 1012, 1014
(Ala. Civ. App. 1995), that "the [1992 Workers'
Compensation] Act did not alter the rule that [an
appellate court] does not weigh the evidence before
the trial court."' Ex parte Phenix Rental Ctr., 873
So. 2d 226, 229 (Ala. 2003)."
Fort James Operating Co. v. Stephens, 996 So. 2d 833, 835
(Ala. 2008)
3
1131235
III. Analysis
The trial court stated the following in its February 19,
2014, judgment:
"Lisa Hanvey was 44 years old at the time of the
trial. She has a high school education, including
attending special education classes since elementary
school. She reads on a third grade level. Her past
work history has included child care.
"The relationship of employer and employee
between Ms. Hanvey and Madison Academy existed as of
May 1, 2011, and continued at least through
September 2011. Both parties were subject to and
governed by the Workers' Compensation Act of
Alabama, as amended. Ms. Hanvey worked at Madison
Academy as a janitor from September 2006 until her
health prevented her from continuing in her job. On
June 21, 2011, the employer-supplied doctor, Dr.
Syed Hasan, took Ms. Hanvey off work, and she did
not return to work again.
"Ms. Hanvey suffers from myasthenia gravis, a
neuromuscular and autoimmune disease. The disease
impairs the normal function of the neuromuscular
junction causing muscle fatigue. It produces an
antibody
which
affects
the
function
of
the
acetylcholine that enables muscle contraction. The
consequence is that muscles become fatigued more
easily.
"Ms. Hanvey's primary care physician is Dr.
Cheryl Bazzle, who has treated Ms. Hanvey since
September 27, 2005. She was also treated by a number
of
other
doctors,
including
employer-provided
physicians
Dr.
Syed
Hasan
and
Dr.
Laurence
Carmichael.
"Following
her
last
visit
to
her
employer-provided physician, Dr. Carmichael, on July
4
1131235
26, 2011, Ms. Hanvey continued to receive necessary
medical care from her primary care physician, Dr.
Cheryl Bazzle. Neurologist Dr. Amit Arora was the
initial neurologist involved in her treatment. She
was subsequently referred to Dr. Gwendolyn Claussen
at Kirklin Clinic in Birmingham, Alabama. Dr.
Anjaneyulu Alapati took over treatment of Ms.
Hanvey's myasthenia gravis since March 29, 2012.
The medical bills for these doctors and hospital
stays, to the extent they were paid, were paid by
Ms. Hanvey's private health insurance through Blue
Cross and Blue Shield of Alabama. Ms. Hanvey went to
the emergency room at Crestwood Hospital and at
Huntsville Hospital on more than one occasion, where
she
was
hospitalized
for
treatment
of
her
symptomatic myasthenia gravis.
"Before her repeated exposure to cleaning and
stripping and refinishing chemicals in May and June
2011, and the resulting respiratory distress and
infection, her health condition had never prevented
her from working at Madison Academy for any
significant length of time; significantly, she was
able to perform her job. Even the presence of
diplopia, or double vision, which is characteristic
of myasthenia gravis and which was noted during a
routine eye exam in April 2011, did not prevent her
from performing her job despite any preexisting
conditions.
"In May and June of 2011, Ms. Hanvey was exposed
to certain chemicals at work used to clean and treat
the floors. Those chemicals are shown by their
Material Safety Data Sheets to be capable of causing
respiratory problems. For example, the urethane used
on the gym floors may cause 'nose and throat
irritation,
dizziness,
headache,
nausea
or
respiratory
irritation.'
The
Red
Tornado
wax
stripper utilized by Defendant may cause harm when
breathing large amounts. The baseboard cleaner and
stripper utilized warns that it may 'aggravate
existing respiratory conditions such asthma.' Her
5
1131235
family physician. Dr. Bazzle, stated, '[W]hen she
got exposed to those floor chemicals, she did a
crash and burn, I can't breathe, show[ed] up in my
office with an 02 sat on room air of 70 percent and
had to go immediately into the ICU.' The shortness
of breath experienced by Ms. Hanvey on June 13,
2011, 'was triggered by the chemicals,' according to
Dr. Bazzle. Her doctor further adds: '... she got
exposed to chemicals, which flared up her--her
respiratory problems that she had anyway and then
triggered the immune-mediated disease that she had
going on.'
"The exposure to chemicals was more significant
in Ms. Hanvey because, according to Dr. Bazzle,
while 'any one of us could get exposed to chemicals
and develop a respiratory illness from it, ... it
would probably not cause us to have to go on a
ventilator or a BiPAP machine to maintain our oxygen
level like it did her. ... [C]learly, people who
have myasthenia are going to get sicker than other
people will when they get respiratory infections
or--or any--anything else that goes wrong with them.
It's going to be worse.' According to Dr. Bazzle,
Ms. Hanvey's exposure to chemical fumes 'acutely
caused the decompensation of [myasthenia gravis]. It
just worsened it, aggravated it.' Dr. Bazzle, who,
in her own words, knows Ms. Hanvey better than any
other doctor and finds her to be credible, opines
that Ms. Hanvey's exposure to chemical fumes at
Madison
Academy
aggravated
the
preexisting
myasthenia gravis condition. Further, Dr. Bazzle
concludes that, 'in the absence of the exposure to
the chemical fumes at work in the May and June time
frame ... Lisa would not have suffered the
disability at the time in the manner or degree she
did.'
"During this time in June 2011, after her
exposure to the stripping chemicals at work, she
developed
what
was
diagnosed
as
respiratory
infection when exposed to the fumes, which Dr.
6
1131235
Alapati calls a trigger of myasthenia weakness. She
was referred to American Family Care by her
employer, Madison Academy, on June 21, 2011,
complaining of breathing fumes from the stripper
'Red Tornado.' Dr. Hasan recorded her symptoms as
including difficulty breathing, shortness of breath
and coughing, and he treated her with antibiotics.
In addition to prescribing Lincomycin, Levaquine,
and Ceron, Dr. Hasan injected an antibiotic and then
followed with a strong oral antibiotic for treatment
of the bronchial infection which developed from
inhalation of fumes.
"These
undisputed
medical
records
are
consistent
with the testimony by the myasthenia expert, Dr.
Alapati, concerning the interplay of infection and
myasthenia weakness. Likewise, Dr. Arora stated by
letter of November 23, 2011, to Ms. Hanvey: 'We also
recommend that you stay away from a working
environment that could exacerbate your medical
condition. ... I do believe that the exposure you
have had to the chemicals more than likely caused
respiratory difficulties that led to you being
hospitalized in the intensive care unit and
ultimately led to this diagnosis. ... We would like
to avoid further episodes in the future and we have
recommended that you avoid any of these exposures in
the future as well.'
"It is Dr. Bazzle's opinion that Ms. Hanvey's
exposure to chemical fumes 'worsened' and aggravated
the myasthenia gravis. This is a worsening of the
underlying condition and not merely a recurrence of
symptoms inherent in the etiology of the preexisting
condition.
"The presence of strong chemicals at Lisa
Hanvey's
workplace
prior
to
her
respiratory
infection treated by the company doctor in June 2011
and her subsequent 'crash and burn' hospitalization
is undisputed. Ms. Hanvey's own testimony coupled
with the medical testimony consistently establishes
7
1131235
that Ms. Hanvey has suffered through the exposure to
strong chemicals that were part of her work
environment as a janitor at Madison Academy. No
evidence was presented that Ms. Hanvey was unable to
perform her work at Madison Academy prior to the
exposure.
"Through her job, Lisa Hanvey came face to face
with the two triggers of myasthenia weakness,
according to Dr. Alapati--infection and physical
activity. The respiratory infection that likely led
to her full-blown myasthenia gravis has been
previously discussed; as for the presence of the
second trigger, Ms. Hanvey performed work as a
janitor requiring very physical activity. During the
school term, Ms. Hanvey's janitorial work included
sweeping,
mopping,
dusting,
cleaning
windows,
vacuuming, with limited furniture movement. With the
end of the school term in May 2011, the physical
work increased [beginning] with the emptying of the
cafeteria for the stripping and refinishing of
floors. This was followed in like manner in the
classrooms where desks, chairs, tables, bookshelves
and filing cabinets had to be removed. Scraping the
stripper off the floors was also more physical and
unusual duties, as was scrubbing the baseboards.
Because these working conditions could trigger
future development of Ms. Hanvey's myasthenia
gravis, her physicians advised her to avoid such
physical activity. Dr. Claussen examined Ms. Hanvey
on December 1, 2011, and stated that she was unable
to work given the severity of her weakness. Dr.
Arora
completed
a
Clinical
Assessment
of
Fatigue/Weakness which characterized Ms. Hanvey's
fatigue as being present to such an extent as to be
distracting
to
adequate
performance
of
daily
activities or work.
"John McKinney, a vocational expert, evaluated
Ms. Hanvey, stating that she tested 'functionally
illiterate for all practical purposes.' McKinney
opined that, based upon the assessments of the
8
1131235
various treating medical specialists, Ms. Hanvey
would be 'incapable of performing or maintaining any
and all types of substantial gainful activity in the
competitive
labor
market--even
at
the
Sedentary/Unskilled
levels
of
exertion
and
proficiency.' According to McKinney, who was the
only vocational expert to testify, Ms. Hanvey is not
a
viable
candidate
for
vocational
retraining
assistance. McKinney's report is established as fact
in this matter.
"....
"The basis for compensation is the decrease in
earning capacity. Nashville Bridge Co. v. Honeycutt,
246 Ala. 319, 20 So. 2d 591 (1945). As the Court in
CVS Corp. v. Smith noted:
"'The determination of the extent of
disability is within the trial court's
discretion and cannot be disturbed on
appeal if there is evidence to support it.
Dolgencorp, Inc. v. Hudson, 924 So. 2d 727,
734 (Ala. Civ. App. 2005) (citing Golden
Poultry Co. v. Staggs, 660 So. 2d 1348,
1352 (Ala. Civ. App. 1995)). With regard to
determining
whether
an
employee
is
permanently and totally disabled, this
court has stated: "'The test for total and
permanent disability is the inability to
perform one's trade and the inability to
find gainful employment.' Fuqua v. City of
Fairhope, 628 So. 2d 758, 759 (Ala. Civ.
App. 1993). See also Liberty Trousers v.
King, 627 So. 2d 422, 424 (Ala. Civ. App.
1993). A 'permanent total disability' is
defined as including 'any physical injury
or mental impairment resulting from an
accident,
which
injury
or
impairment
permanently and totally incapacitates the
employee
from
working
at
and
being
retrained
for
gainful
employment.'
§
9
1131235
25-5-57(a)(4)d.,
Ala.
Code
1975;
Russell
v.
Beech Aerospace Services, Inc., 598 So. 2d
991, 992 (Ala. Civ. App. 1992)." Alabama
Catfish, Inc. v. James, 669 So.2d 917, 918
(Ala. Civ. App. 1995). See also Boyd Bros.
Transp., Inc, v. Asmus, 540 So. 2d 757, 759
(Ala. Civ. App. 1988) (stating that §
25-5-57(a)(4)d., Ala. Code 1975, "requires
that the employee be unable to perform his
trade or unable to obtain reasonably
gainful employment").'
"CVS Corp. v. Smith, 981 So. 2d 1128, 1136 (Ala.
Civ. App. 2007). Moreover, any disability award
received by Lisa Hanvey is not subject to an
apportionment for preexisting injuries as provided
in Ala. Code [1975,] § 25-5-58[,] because Ms. Hanvey
was able to perform her duties at work prior to the
injury.
"....
"Lisa Hanvey suffered a work-related injury
through being subjected to the fumes from strong
chemicals in May and June of 2011 while at work as
a janitor at Madison Academy. She was able to
perform her job before this exposure. While she may
arguably have had a preexisting condition in the
form of myasthenia gravis, she is still entitled to
collect workers' compensation benefits because her
employment has aggravated or combined with her
myasthenia
gravis
to
produce
disability;
significantly, her doctor has concluded that 'her
disease was worsened by the exposure to chemicals.'
Because she was able to perform her duties prior to
the injury, Lisa Hanvey will receive compensation
without regard for any preexisting medical condition
or problems.
"....
10
1131235
"Moreover,
the
Court
finds
that
this
work-related exposure has rendered Ms. Hanvey unable
to return to work at her job or perform her
accustomed trade. Dr. Alapati has testified that
physical
exercises
increase
the
symptoms
of
myasthenia gravis and cause tiredness and fatigue.
Ms. Hanvey's health, coupled with her physical and
mental limitations as noted in the vocational report
and as obvious in her testimony and demeanor, will
prevent any sort of new training. Indeed, she is
excluded from the opportunity for any gainful
employment that will provide comparable compensation
and work duties, based on her own limitations,
education,
experience,
physical
and
mental
condition, and other factors noted by vocational
expert John McKinney.
"The Court finds that Ms. Hanvey suffered a
permanent injury at work, which renders her
permanently and totally disabled under the workers'
compensation laws of this state. Accordingly,
[Hanvey] is entitled to judgment in her favor for
workers' compensation benefits under the Act."
In this case, the parties do not dispute that Hanvey
suffered a compensable injury under the Act, which was caused
by her exposure to chemical fumes during the course of her
employment; instead, the dispute, as claimed by the employer,
is whether Hanvey's exposure to the chemical fumes only
temporarily aggravated her underlying myasthenia gravis. On
appeal, the employer argued, and the majority of the Court of
Civil Appeals held, that Hanvey had proven only that her
myasthenia gravis had been temporarily aggravated by her
11
1131235
exposure to chemicals in the workplace. Specifically, the
employer contended that Hanvey experienced only a temporary
flare-up of her myasthenia gravis because, it said, the flare-
up was resolved with medications and Hanvey had been in
remission since Dr. Alapati began treating her. Thus, it
says, the trial court erred in awarding Hanvey permanent-
total-disability benefits. The issue for our review is
whether the record contains substantial evidence to support
the trial court's finding that the injury Hanvey suffered
rendered her permanently and totally disabled under the Act.
Fort James Operating, supra. We conclude that it does.
The evidence before the trial court demonstrated that
Hanvey's exposure to the chemicals in the workplace caused a
worsening and substantial acceleration of her underlying
myasthenia gravis and that she was unable to return to work at
her job or to perform her accustomed trade as a janitor. This
"worsening," according to the trial court, was a "worsening of
the underlying
[myasthenia gravis] and not merely
a
recurrence
of symptoms inherent in the etiology of the preexisting
condition." Prior to her exposure to the chemicals, Hanvey
had been working normally for the employer for approximately
12
1131235
five years with no disabling symptoms. According to the
testimony, myasthenia gravis is a slow, progressive disease.
However, Dr. Bazzle testified in her deposition that, when
Hanvey was exposed to the chemicals, "she did a crash and
burn," from which "she has not risen"; that Hanvey's exposure
to chemicals "acutely caused the decompensation of her
[myasthenia gravis]"; and that, "in the absence of the
exposure to the chemical fumes at work ..., [Hanvey] would not
have suffered the disability at the time [and] in the manner
[or] degree she did." Dr. Bazzle testified as follows:
"Q. ... If she's suffering from myasthenia gravis as
of May 23 of 2011, which you've indicated she was,
but it had not been diagnosed and there was no
treatment being rendered for the disease and it is
a progressive disease, it's medically possible, is
it not, that the disease could naturally progress
and worsen with time?
"....
"A. No doubt that it could progress, usually on a
slowly, you know, progressive path. But what
happened to her was it was--might have been
continuing to progress, but when she got exposed to
those floor chemicals, she did a crash and burn, I
can't breathe, show[ed] up in my office with an 02
sat on room air of 70 percent and had to go
immediately into the ICU.
"....
13
1131235
"Q. I understand that, but my question was: Could
shortness
of
breath
have
been
triggered
or
aggravated by factors other than the chemicals?
"....
"A. Her underlying condition was--was certainly a
factor and yes, she's overweight and probably
deconditioned because of that and also deconditioned
because she was chronically ill from the [myasthenia
gravis] not being diagnosed. And then she got
exposed to chemicals, which flared up her--her
respiratory problems that she had anyway and then
triggered the immune--mediated disease that she had
going on. And there you have it, this whole milieu
of–-of factors, exactly what you described, multiple
factors that--that went into a--a bad situation that
she has not risen from.
"....
"Q. ... How was the--how was [Hanvey's] exposure to
chemical fumes important in the development of
myasthenia gravis?
"....
"A. I think it--it acutely caused the decompensation
of it.
"....
"Q. Is it fair to say that in the absence of the
exposure to the chemical fumes at work in the May
and June time frame that [Hanvey] would not have
suffered the disability at the time [and] in the
manner or degree she did?
"....
"A. Yes."
14
1131235
(Emphasis added.)
In a letter dated November 23, 2011, Dr. Arora
recommended that Hanvey "stay away from a working environment
that could exacerbate" her myasthenia gravis. Dr. Arora
stated:
"I do believe that the exposure you have had to the
chemicals more than likely caused respiratory
difficulties that led to you being hospitalized in
the intensive care and ultimately led to this
diagnosis.
"We would like to avoid further episodes in the
future and we have recommended that you avoid any of
these exposures in the future as well."
Dr. Arora stated in a progress note dated January 13, 2012,
that he did not believe that Hanvey was capable of long-term
employment because of her physical condition.
Dr. Alapati testified that he last saw Hanvey on July 30,
2012, and that her myasthenia gravis had been in remission for
about six months. Dr. Alapati testified that myasthenia
gravis could get better and worse, i.e., it could "wax and
wane." However, he stated the following regarding Hanvey's
ability to work:
"Q. With regard to Ms. Hanvey based on your last
examination of her, do you have an opinion as to
whether or not she's able to be gainfully employed?
15
1131235
"A. Depending. If she did like work with desk work
or something like that, a lot of people go to work
in the desk work, but anything labor work, physical
activities, lifting weight, I'd advise them not to
do that because [they] can get more fatigued.
"....
"Q. And you discussed what work you would restrict
your patients to. As I understood it, you would
tell the myasthenia gravis patients to stay away
from physical work but they could do sedentary work,
is my understanding correct?
"A. It is, desk[work], yes.
"....
"Q. Besides physical work, have you--are you aware
of any other factors that can cause a waxing of the
symptoms or an exacerbation of the symptoms?
"A. Mainly, in my opinion, physical work and then
infections in the body are the two things that
typically trigger weakness, myasthenia weakness."
Although Hanvey's myasthenia gravis eventually went into
remission following a full-blown myasthenia gravis "crisis,"
the medical testimony presented demonstrates that any attempt
by Hanvey to engage in the type of physical labor she was able
to perform before her exposure to chemicals would cause her
myasthenia gravis to become symptomatic. As noted by the
trial court, Hanvey's job as a janitor required very physical
work; it also required that she be exposed to chemicals.
16
1131235
Moreover, the only vocational expert to testify in this case
evaluated Hanvey and opined that she would be "incapable of
performing or maintaining any and all types of substantial
gainful activity in the competitive labor market--even at the
Sedentary/Unskilled levels of exertion and proficiency." He
further concluded that Hanvey was not a viable candidate for
vocational-retraining assistance; hence, she is not a viable
candidate for "desk" work. It is well settled that under the
Act a worker is permanently and totally disabled if the worker
is "incapacitate[d] ... from working at and being retrained
for gainful employment." Ala. Code 1975, § 25-5-57(a)(4)d. "A
worker is not required to be totally helpless; he simply must
be unable to perform his trade or obtain other gainful
employment." Edmonds Indus. Coatings, Inc. v. Lolley, 893 So.
2d 1197, 1210 (Ala. Civ. App. 2004). Moreover, "[t]he
determination of the extent of disability is within the trial
court's discretion and cannot be disturbed on appeal if there
is evidence to support it." CVS Corp. v. Smith, 981 So. 2d
1128, 1136 (Ala. Civ. App. 2007). Based on the foregoing, we
conclude that there is substantial evidence to support the
trial court's finding that Hanvey was permanently and totally
17
1131235
disabled as a result of her exposure to chemicals in the
workplace, which resulted in a worsening and acceleration of
her underlying myasthenia gravis. See, e.g., Edmonds Indus.
Coatings, 893 So. 2d at 1210 (holding that "substantial
evidence supports the trial court's determination that the
worker was permanently and totally disabled as a result of his
allergy to paint fumes and the resulting aggravation of his
[chronic
obstructive
pulmonary
disease],"
despite
the
employer's claim that the aggravation was only temporary). We
also quote, in pertinent part, the following well reasoned
summary written by Presiding Judge Thompson in his dissent in
this case:
"From the evidence, the trial court reasonably
could have concluded that Hanvey had [myasthenia
gravis] before the refurbishing of [the employer's]
gym and classroom floors took place, but that the
condition did not affect Hanvey's job performance.
The testimony of Dr. Arora, as well as the testimony
of Dr. Alapati, indicates that if Hanvey were to
engage in physical exertion, the [myasthenia gravis]
symptoms
would
return.
Because
Hanvey
is
functionally illiterate, she is not a candidate for
what Dr. Alapati called 'desk work.' Therefore,
even if this court might have reached a different
conclusion from the same evidence, I believe the
record contains substantial evidence to support the
trial court's findings that Hanvey experienced 'a
worsening of the underlying condition and not merely
a recurrence of symptoms inherent in the etiology of
the preexisting condition' and that the worsening of
18
1131235
the
[myasthenia
gravis]
resulted
in
Hanvey's
inability to perform her job as she had been able to
do before her exposure to the chemicals. In other
words, the record contains substantial evidence
indicating that Hanvey's exposure to the chemicals
used in the refurbishing project hastened or
accelerated the progression of her [myasthenia
gravis] symptoms to the point that she is no longer
able to perform jobs for which she is qualified,
regardless of whether the [myasthenia gravis] is in
remission.
Further,
evidence
indicates
that
Hanvey's work-related '[myasthenia gravis] crisis'
did not create a temporary situation from which
Hanvey has recovered, or will ever recover, so as to
be able to work again. The '[myasthenia gravis]
crisis'
Hanvey
experienced
accelerated
the
progression of the disease and left her worse off
than she was before her exposure to the chemicals.
It cut short her working life, i.e., her ability to
earn. If not for the exposure to the chemicals,
Hanvey might have been able to continue working
normally for years to come."
Madison Academy, Inc., ___ So. 3d at ____ (Thompson, P.J.,
dissenting)(emphasis added).
On appeal, this Court must view the evidence in a light
most favorable to the trial court's findings of fact. Fort
James Operating, 996 So. 2d at 835. When substantial evidence
supports the factual finding of the trial court, an appellate
court may not reverse the trial court's judgment because there
is also substantial evidence that supports a factual
conclusion contrary to the finding made by the trial court.
See Boise Cascade Corp. v. Jackson, 997 So. 2d 1042, 1047
19
1131235
(Ala. Civ. App. 2008). Because we conclude that there was
substantial
evidence
to
support
the
trial
court's
determination that Hanvey was permanently and totally
disabled, we reverse the judgment of the Court of Civil
Appeals and remand the cause to that court for proceedings
consistent with this opinion.
IV. Conclusion
The judgment of the Court of Civil Appeals is reversed
and the case remanded for proceedings consistent with this
opinion.
REVERSED AND REMANDED.
Moore, C.J., and Stuart, Parker, Shaw, Main, Wise, and
Bryan, JJ., concur.
Murdock, J., dissents.
20
1131235
MURDOCK, Justice (dissenting).
In the portion of the opinion of the trial court quoted
by the main opinion of this Court, the trial court relied upon
a number of decisions holding, in reference to the potential
apportionment
of
compensation
under
§§
25-5-57(a)(4)e.
and
25-
5-58, Ala. Code 1975, that an employee is not considered to
suffer from a preexisting condition if that condition is not
affecting the worker's job performance at the time the worker
suffers a job-related injury. Those cases do not appear to
involve a preexisting infirmity that,
though not
an
impediment
to job performance at the time of the new injury, would
eventually become such thereafter, even in the absence of the
new injury. Compare Ex parte Lewis, 469 So. 2d 599, 601 (Ala.
1985) ("Since Lewis's ability to work was unaffected by the
arteriosclerosis prior to the accident, and there is no
evidence in the record to indicate that the condition would
have become symptomatic during the compensable period but for
the injury, the Court of Civil Appeals' decision affirming the
apportionment of the award for permanent disability between
the work related injury and the preexisting infirmity [was in
error]." (emphasis added)).
21
1131235
Here, Judge Moore, writing for the majority of the Court
of Civil Appeals, explains how the evidence in this case
supports the conclusion that Lisa Hanvey recovered from the
effects of her 2011 injury and explains that it was her
underlying condition that caused her to be unable to continue
her employment at Madison Academy, Inc. On the strength of
the factual and legal analysis of the issue of causation
offered by the opinion of the Court of Civil Appeals, I
respectfully dissent.
22 | January 30, 2015 |
57cd0568-82b3-40e8-bbe4-4cbdd6a2850b | Ex Parte Ford Motor Credit Co. | 717 So. 2d 781 | 1960517, 1960536 | Alabama | Alabama Supreme Court | 717 So. 2d 781 (1997)
Ex parte FORD MOTOR CREDIT COMPANY.
Ex parte ADAMSON FORD, INC.
(In re Robert BRAMLETT, Sr.
v.
ADAMSON FORD, INC., and Ford Motor Credit Company).
1960517, 1960536.
Supreme Court of Alabama.
November 7, 1997.
*782 Dennis G. Pantazis of Gordon, Silberman, Wiggins & Childs, P.C., Birmingham, for Ford Motor Credit Co.
John D. Richardson and G. Randall Spear of Richardson, Daniell, Spear & Upton, P.C., Mobile, for Adamson Ford, Inc.
Garve Ivey, Jr., and Barry A. Ragsdale of King, Ivey & Junkin, Jasper and Birmingham, for respondent.
H. Hampton Boles, Michael L. Edwards, and Gregory C. Cook of Balch & Bingham, Birmingham, for amicus curiae Alabama Bankers Ass'n, in support of petitioner Ford Motor Credit Co.
BUTTS, Justice.
We granted certiorari review upon the petitions of the defendants Ford Motor Credit Company ("FMCC") and Ford automobile dealership Adamson Ford, Inc. ("Adamson"), in order to determine whether the Court of *783 Civil Appeals erred in reversing the summary judgment in their favor entered on several claims brought by Robert Bramlett, Sr.[1]
Bramlett purchased a used automobile from Adamson. At Bramlett's request, Adamson provided financing for the purchase through FMCC at an interest rate of 15.49%. In accordance with the terms of an agreement between Adamson and FMCC, FMCC purchased the loan contract from Adamson at a lower rate than Bramlett had agreed to pay, in effect paying Adamson a commission of 3% of the loan amount; we will refer to this arrangement as "the commission agreement." Thereafter, Bramlett sued Adamson and FMCC, alleging breach of contract, fraudulent misrepresentation, fraudulent suppression, the tort of outrage, unconscionability, and civil conspiracy. The basis for Bramlett's claims was that Adamson and FMCC had failed to disclose to him the existence of their 3% commission agreement on loan contracts purchased from Adamson by FMCC.
The trial court entered a summary judgment in favor of Adamson and FMCC on all of Bramlett's claims. Bramlett appealed the summary judgment as to his claims of misrepresentation, suppression, unconscionability, and conspiracy. In Bramlett v. Adamson Ford, Inc., 717 So. 2d 772 (Ala.Civ.App.1996), the Court of Civil Appeals reversed the summary judgment as to the misrepresentation, suppression, and conspiracy claims, but affirmed it as to the unconscionability claim.
We must decide whether the Court of Civil Appeals erred in reversing the summary judgment for Adamson and FMCC as to Bramlett's claims of fraudulent misrepresentation, fraudulent suppression, and civil conspiracy. In order to enter a summary judgment, the trial court must determine that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56, Ala. R.Civ.P.; Bussey v. John Deere Co., 531 So. 2d 860 (Ala.1988). In order to defeat a properly supported motion for summary judgment, the nonmovant must present substantial evidence creating a genuine issue of material fact. Betts v. McDonald's Corp., 567 So. 2d 1252 (Ala.1990). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870 (Ala.1989). Finally, this Court must review the record in a light most favorable to the nonmovant. Hanners v. Balfour Guthrie, Inc., 564 So. 2d 412 (Ala. 1990).
In September 1993 Bramlett purchased a used automobile from the Long-Lewis Ford dealership; the automobile, a Ford Crown Victoria, was a "program car." He financed part of the purchase price through FMCC at an interest rate of 12.75%. However, before he took possession of the automobile it caught fire and was destroyed. The fire loss was covered by Bramlett's insurance policy.
A month later, in October 1993, Bramlett, still interested in purchasing a used car, found on Adamson's sales lot a 1992 Plymouth Acclaim that he liked. This car was not a program car. Bramlett was not a typical automobile purchaser. Rather, he was quite experienced in purchasing and selling used automobiles. Over his lifetime Bramlett had bought, repaired, and sold as many as 200 automobiles in his own part-time used car sales business, which he runs out of his home. He has financed the purchase of as many 20 of those automobiles. Bramlett, who has a G.E.D. certificate and who had attended the University of Alabama for one year, also had had prior experience as an employee of an automobile dealership and as an automobile damage claims appraiser for insurance companies.
The purchase price Adamson had listed for the Plymouth Acclaim was $8,850. Bramlett, *784 saying he believed that price was too high, negotiated with an Adamson salesperson to obtain a purchase price $500 lower. Bramlett agreed to purchase the car for $8,350. He said he could make only a $250 down payment on the purchase because he had not yet received the check from his insurance company relating to the Ford Crown Victoria that had been destroyed, and he told the Adamson salesperson that he wished to finance the remainder of the purchase price. Bramlett told the salesperson that he was in good standing with FMCC and suggested that his financing be obtained through FMCC. The salesperson told Bramlett that he would find Bramlett the best financing rate FMCC had available. Ultimately, the salesperson informed Bramlett that he could offer him financing over a term of 48 months at 15.49%. Even though Bramlett was aware that different lenders offer different interest rates, he did not seek a lending source for his used automobile purchase loan other than that offered through Adamson. Thus, although Bramlett knew he could "shop around" for financing,[2] he did not do so. The financing agreement signed by Bramlett included the disclosures required by the Federal Truth-in-Lending Act, 15 U.S.C. § 1601 et seq.
Although Bramlett agreed to the 15.49% interest rate, he asked the Adamson salesperson why it was so high. The salesperson responded by telling him that the rate was what it was because Bramlett was considered a poor credit risk Bramlett's credit history included a personal bankruptcy.[3] Adamson financed Bramlett's automobile purchase loan through its agreement with FMCC. The financing contract was executed on FMCC forms. Although the 3% commission agreement was disclosed by the financing documentation between Adamson and FMCC, it was not disclosed by the financing documentation provided to Bramlett. Bramlett, upon later learning of the commission agreement between Adamson and FMCC, sued.
Bramlett contends that the Court of Civil Appeals correctly reversed the summary judgment as to the fraudulent suppression claim. He argues that Adamson and FMCC had a legal duty to disclose to him the fact that they had an agreement that, in effect, paid Adamson a commission of 3% of the loan amount of every financing agreement Adamson sold to FMCC, but that they deliberately breached that duty. Bramlett contends that the existence of the commission agreement between Adamson and FMCC resulted in his paying a higher interest rate than he would have paid if the agreement had not existed. Thus, he contends that the existence of the commission agreement was a fact material to the loan transaction because, he says, had he known of the commission agreement he would have sought financing elsewhere.
Bramlett cites several cases that he contends support his argument that it is at least a question of fact whether Adamson and FMCC had a duty to disclose to him their commission agreement. He proposes several alternative bases for the alleged duty to disclose. First, he contends that the duty to disclose can be based on Adamson and FMCC's relationship to him as lenders, which he contends can be a fiduciary relationship. Second, Bramlett argues that the duty to disclose can arise from Adamson and FMCC's having superior knowledge of a material fact that, had he known it, would have caused him to take other action. Third, Bramlett argues that a duty to disclose arose from his request for information, specifically his question to the Adamson salesperson asking why his interest rate was so high. Finally, he contends that the issue of the existence of a duty to disclose cannot be determined by this Court as a matter of law because, he says, it is uniquely within the province of a jury to consider such factors as the relative sophistication of the parties and the degree of specificity of the question asked by the consumer, and then to determine whether a *785 duty to disclose existed under those circumstances.
Bramlett also argues that he suffered injury as a result of Adamson and FMCC's failure to disclose to him their commission arrangement. He says that but for their suppression he would not have agreed to the 15.49% interest rate and would have obtained an interest rate from another lender that was 3% lower. Thus, he contends that he incurred damage equal to the 3% "extra interest."
Both Adamson and FMCC contend that they had no legal duty to disclose to Bramlett the existence of the commission agreement; thus, they argue that the Court of Civil Appeals erred in reversing the summary judgment as to this claim. Adamson first argues that there is no statutory duty to disclose such information. It argues that Alabama's consumer protection legislation, the Alabama Mini-Code, § 5-19-1 to -32, Ala.Code 1975, does not impose on it a duty to disclose to customers such as Bramlett its commission agreement with FMCC. Adamson also contends that the Federal Truth-in-Lending Act and its regulations do not impose such a duty.
Although Adamson implies that the nonexistence of a statutory duty should end our inquiry, it goes on to argue that it had no common law duty to disclose to Bramlett its commission agreement with FMCC. In direct contradiction to Bramlett's first argument for the existence of a duty to disclose, Adamson argues that absent a special confidential relationship, a creditor-debtor relationship does not create a duty to disclose the kind of fact Bramlett claims was suppressed. Adamson also says that Bramlett was an experienced and intelligent businessman capable of protecting his interests in a commercial transaction, and it argues, therefore, that no duty to disclose such information existed.
Finally, Adamson relies on Blon v. Bank One, Akron, N.A., 35 Ohio St.3d 98, 519 N.E.2d 363 (1988), where the Supreme Court of Ohio was faced with a case nearly identical to this one. Adamson points out the Ohio Supreme Court's holding in that case:
35 Ohio St.3d at 102, 519 N.E.2d at 368. Adamson suggests that this Court should adopt a similar holding.
FMCC asserts that even if Adamson could be held to a duty to disclose the commission arrangement between Adamson and FMCC, it cannot be held liable because, it says, it was not a party to the conversation between Bramlett and Adamson and was unaware of it. FMCC also contends that it cannot be held vicariously liable because, it says, as a matter of law there was no agency relationship between it and Adamson. FMCC relies on this Court's opinion in Mardis v. Ford Motor Credit Co., 642 So. 2d 701 (Ala.1994), which it contends is controlling on the issue of agency. FMCC argues that the Court of Civil Appeals erred in holding that Mardis was distinguishable, and it further argues that Mardis requires us to hold as a matter of law that Adamson is not its agent.
The legislature has provided: "Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances." Ala.Code 1975, § 6-5-102. The trial court entered a summary judgment for the defendants on Bramlett's fraudulent suppression claim, and the Court of Civil Appeals reversed. Thus, we must determine whether Bramlett presented substantial evidence creating genuine issues of material fact as to each of the elements of a suppression claim. Those elements are: "(1) a duty on the part of the defendant to disclose facts; *786 (2) concealment or nondisclosure of material facts; (3) inducement of the plaintiff to act; (4) action by the plaintiff to his or her injury." Lambert v. Mail Handlers Benefit Plan, 682 So. 2d 61, 63 (Ala.1996); Gewin v. TCF Asset Mgmt. Corp., 668 So. 2d 523 (Ala. 1995).
Because we agree with the Court of Civil Appeals that this case presents at least a question of fact as to whether the existence of the commission agreement between Adamson and FMCC was a fact material to the loan transaction at issue, the critical question before us is whether the defendants had a legal duty to disclose to Bramlett that commission agreement. A duty on the part of one to disclose a material fact to another may be based on either a statute or the common law. In this case, there was no statutory duty to disclose the existence of the commission agreement. Neither the Alabama Mini-Code[4] nor the Federal Truth-in-Lending Act requires such a disclosure. However, those statutes do not prohibit such a duty from arising from the common law. Thus, we must determine whether the particular facts and circumstances of this case, viewed in a light most favorable to Bramlett, create a common law duty to disclose.
The Court of Civil Appeals answered this question as follows:
Bramlett, 717 So. 2d at 776 (citations omitted; emphasis original). Thus, the Court of Civil Appeals, in holding that the defendants had a duty to disclose the commission arrangement, specifically based that holding on Bramlett's general inquiry as to why the 15.49% interest rate offered by Adamson was so high. That court also implied that the Adamson salesperson had responded to Bramlett's question with only a half-truth.
We first respond to the issue not addressed by the Court of Civil Appeals: In the absence of Bramlett's inquiry, would Adamson and FMCC have had a duty to disclose to Bramlett their commission agreement? The answer is, clearly, no.[5] It is well settled that, in the absence of a special confidential relationship, the general creditor-debtor relationship does not impose a fiduciary *787 duty requiring such disclosure.[6] See Bank of Red Bay v. King, 482 So. 2d 274 (Ala.1985); Baylor v. Jordan, 445 So. 2d 254 (Ala.1984). Moreover, Bramlett was involved in an arm's-length commercial transaction with Adamson of a type he was more than adequately knowledgeable about, he was not in a position of unequal bargaining power, and he was fully capable of protecting his own interests. In such a situation, Alabama common law imposes no duty to disclose unless the information is specifically requested. Gewin, supra; Altmayer v. City of Daphne, 613 So. 2d 366 (Ala.1993); Bama Budweiser of Montgomery, Inc. v. Anheuser-Busch, Inc., 611 So. 2d 238 (Ala.1992).
That leaves us with the question whether the Court of Civil Appeals was correct in holding that Bramlett's inquiry of the Adamson salesperson was sufficient to impose on Adamson a duty to disclose the existence of the commission agreement between Adamson and FMCC. After much consideration, we disagree with the Court of Civil Appeals, and hold that Adamson did not have a duty to disclose the existence of the commission agreement to Bramlett. First, we believe that Bramlett's question, asking why the interest rate was so high, was not specific enough to impose such a duty. The Adamson salesperson answered that general question truthfully the interest rate offered to Bramlett by Adamson was higher than it would have been to another purchaser of the same automobile solely because of Bramlett's poor credit history; Bramlett made no allegation, and presented no evidence, that another purchaser's interest rate would not have included the 3% commission for Adamson.
Moreover, given the general nature of Bramlett's question, we believe it would be unreasonable to require that the Adamson salesperson reveal every factor that went into determining the exact interest rate offered to Bramlett. As Judge Thigpen noted in his dissenting opinion, "[t]he ultimate rate that Bramlett was offered was affected by a variety of factors, including the prime rate, the Federal Reserve Board's rate setting policy and procedure, the interest rates charged by other lenders, Bramlett's poor credit history, etc." 717 So. 2d at 779. While the law still requires, even in the present adversarial world of commercial transactions, that direct questions be responded to truthfully and accurately, the law also generally allows a business to keep confidential its internal operating procedures. See, e.g., Norman v. Amoco Oil Co., 558 So. 2d 903 (Ala.1990); King v. National Foundation Life Ins. Co., 541 So. 2d 502 (Ala.1989); Surrett v. TIG Premier Ins. Co., 869 F. Supp. 919 (M.D.Ala.1994) (applying Alabama law). Although this case specifically involves lenders and interest rates, interest is nothing other than the cost or price of borrowing money. Black's Law Dictionary, 812 (6th ed.1990). The 3% commission agreement at issue here is nothing more than Adamson's profit on the loan transaction, which had a wholesale price and a retail price. We decline to recognize a common law duty that would require the seller of a good or service, absent special circumstances, to reveal to its purchaser a detailed breakdown of how the seller derived the sales price of the good or service, including the amount of profit to be earned on the sale.
The Court of Civil Appeals erred in reversing the summary judgment on Bramlett's fraudulent suppression claim. As to that claim, the judgment of the Court of Civil Appeals is reversed.
Bramlett contends the Court of Civil Appeals correctly reversed the summary judgment as to his fraudulent misrepresentation claim. He argues that Adamson and FMCC fraudulently misrepresented to him that the 15.49% interest rate was the "best" or "most attractive" financing available. In support of this claim he simply argues that he presented sufficient evidence creating genuine issues of material fact proper for determination by a jury.
Adamson contends that Bramlett's misrepresentation claim must fail because, it says, any reliance by Bramlett on the salesperson's statement regarding the nature of the interest rate was not justifiable.[7] First, Adamson argues that it is not justifiable for a person as experienced as Bramlett was in purchasing, selling, and financing automobiles to rely on the alleged misrepresentation. Adamson notes that only a month earlier Bramlett had financed an automobile purchase at a significantly lower interest rate than the one offered by Adamson's salesperson, and Adamson points out that Bramlett knew he could shop around for financing. Adamson argues that, given those facts, any reliance by Bramlett on the salesperson's statement was not justifiable.
FMCC first argues that it cannot be held liable for any alleged misrepresentation by Adamson because, it says, as a matter of law Adamson was not its agent. FMCC makes the same argument as is noted in Section III. C. above. It also argues than the alleged misrepresentation by the Adamson salesperson was merely sales puffery that will not support a fraud claim.
The elements of the tort of fraudulent misrepresentation, as of the time Bramlett's complaint was filed, were (1) a false representation, (2) of an existing material fact, (3) that is justifiably relied upon,[8] and (4) damage resulting as a proximate cause. Spring Hill Lighting & Supply Co. v. Square D Co., 662 So. 2d 1141 (Ala.1995); Pinyan v. Community Bank, 644 So. 2d 919 (Ala.1994). The Court of Civil Appeals reversed the summary judgment as to this claim, based on its conclusion that questions of material fact existed as to the elements of this claim and that those questions required resolution by a trier of fact.
After thoroughly reviewing Bramlett's deposition testimony, we disagree with the Court of Civil Appeals. Bramlett testified as follows regarding the allegedly false representation:
Bramlett's argument relating to this claim implies that he requested Adamson to survey available automobile financing companies and to obtain for him the best rate possible, and that Adamson chose FMCC for Bramlett because of Adamson's commission agreement with FMCC, then told Bramlett that it had gotten him the best interest rate available. However, his deposition testimony does not support such an implication. In contrast, it indicates that Bramlett wanted Adamson's *789 assistance in obtaining financing for his automobile purchase, that he chose FMCC to be his creditor, that he wanted the best financing rate FMCC could offer through Adamson, and that Adamson represented to him that the rate it offered was the best it could obtain with FMCC. Given this clear view of the facts, we believe Bramlett failed to present substantial evidence creating a genuine issue of material fact as to whether the representation that the interest rate was the best available to Bramlett through FMCC was a false representation. Clearly, Adamson did not owe Bramlett a duty to offer him financing with FMCC, to forgo its existing commission agreement with FMCC, and, thus, to offer him an interest rate that was 3% lower than it would offer another customer with the same background as Bramlett.
Further, we conclude that any reliance by Bramlett on the alleged false statement was not justifiable. Under the "justifiable reliance standard" a plaintiff may not close his eyes to avoid discovering the truth. Hickox v. Stover, 551 So. 2d 259 (Ala. 1989). Given Bramlett's sophistication in buying, selling, and financing automobiles, and given that only a month earlier Bramlett had obtained financing for another used automobile at the significantly lower interest rate of 12.75%, we conclude that he would have had to "close his eyes" to his own very recent knowledge in order to rely on Adamson's representation. Accordingly, we conclude that any reliance on his part was not justifiable, as a matter of law.
We reverse the judgment of the Court of Civil Appeals reversing the summary judgment as to Bramlett's fraudulent misrepresentation claim.
Because the summary judgment was properly entered on the fraudulent suppression and fraudulent misrepresentation claims, there was no valid claim of underlying wrong that could support Bramlett's civil conspiracy claim. Therefore, the summary judgment was also proper as to that claim; as to that claim the judgment of the Court of Civil Appeals is reversed.
The judgment of the Court of Civil Appeals is reversed, and we remand this cause to that court for an order or proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, HOUSTON, COOK, and SEE, JJ., concur.
SHORES, J., concurs in the result.
SHORES, Justice (concurring in the result).
It is clear that the majority opinion holds that the existence or not of a duty to disclose is a question of law. The Court of Civil Appeals held, incorrectly, that the existence of a duty to disclose was a question of fact. The Court of Civil Appeals' opinion is quoted in the majority opinion as stating:
717 So. 2d at 776 (citations omitted; emphasis original).
Today's majority opinion states that a duty on the part of one to disclose a material fact to another may be based on either a statute or the common law. While that is a correct statement, the existence or not of the duty to disclose is still a question of law. See Berkel & Co. Contractors v. Providence Hosp., 454 So. 2d 496, 506 (Ala.1984), citing Hand v. Butts, 289 Ala. 653, 270 So. 2d 789 (1972), for the proposition that the question whether a duty exists is a question of law.
The majority disagrees with the Court of Civil Appeals' conclusion that Bramlett's inquiry of the Adamson salesperson was sufficient to impose a duty to disclose the existence of the commission agreement between *790 Adamson and FMCC. This Court, therefore, declines to recognize a common law duty that would require the seller of a good or service, absent special circumstances, to provide a purchaser a detailed breakdown of how the seller derived the sales price of the good or service, including the amount of profit to be earned on the sale, or else be liable for fraud.
I agree with the majority that in this case the trial court made the correct legal decision in holding that there was no duty. The failure to disclose one's superior knowledge, when one is bargaining at arm's length, does not violate a duty of disclosure or constitute fraud. Berkel & Co. Contractors v. Providence Hosp., supra.
[1] Although the Court of Civil Appeals held that FMCC's application for rehearing was untimely, we hold that FMCC's substantial compliance with Rule 25(a), Ala.R.App.P, was sufficient in this case.
[2] Bramlett also understood that the financing rate for a used automobile is generally higher than that for a program car or for a new automobile.
[3] Since Bramlett's bankruptcy, he had had credit requests turned down by several credit card companies and mortgage companies and by one bank.
[4] Ala.Code 1975, § 5-19-6(c), provides, in relevant part:
"[T]here is no obligation or duty under this chapter to disclose to a debtor any agreement to assign or otherwise transfer a consumer credit transaction contract at a discount or that the assignee of, or person who funded, the consumer credit transaction agreed or may agree to pay the creditor or other person who originated the consumer credit transaction all or a portion of the prepaid finance charges and other fees and/or a portion of the finance charge to be paid by the debtor over the term of the transaction and/or other compensation irrespective of how the compensation is determined or described."
Section 5-19-6(d) provides that subsection (c) retroactively applies to consumer credit transactions entered into before February 24, 1994, such as the transaction at issue in this appeal.
[5] We distinguish this case from Smith v. First Family Financial Services, Inc., 626 So. 2d 1266 (Ala.1993). In Smith, we held that the defendant real estate mortgage lender had a duty to disclose to the borrowers the existence of a 2% mortgage-broker origination fee. The factual difference between Smith and this case is that in Smith the defendant issued to the borrowers a commitment to lend them the money at an interest rate of 16%. Later, the 2% broker fee ("yield spread premium") was added to the quoted rate to increase the effective rate of interest to 18%. This interest rate increase was not properly disclosed to the borrowers. However, in this case there is no allegation that Bramlett was not fully informed of the interest rate he was being charged on his automobile purchase loan or of the total cost of the loan.
[6] We emphasize Bramlett has not alleged that he was not fully informed of the interest rate he would pay on the loan before he agreed to accept that rate, or that he was not fully informed of the total he would pay in interest charges.
[7] The complaint in this case was filed before this Court decided Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala.1997), which overruled Hickox v. Stover, 551 So. 2d 259 (Ala.1989), and replaced the "justifiable reliance standard" in fraud cases with the "reasonable reliance standard."
[8] See fn.7. | November 7, 1997 |
e90864ab-ac0e-41b8-83a8-abb44ac05e30 | Ex Parte Industrial Distribution Serv. Warehouse, Inc. | 709 So. 2d 16 | 1961225 | Alabama | Alabama Supreme Court | 709 So. 2d 16 (1997)
Ex parte INDUSTRIAL DISTRIBUTION SERVICES WAREHOUSE, INC.
(In re Billy Glen JACKSON v. INDUSTRIAL DISTRIBUTION SERVICES WAREHOUSE, INC.).
1961225.
Supreme Court of Alabama.
November 21, 1997.
*17 C. William Gladden and James S. Witcher III of Gladden & Sinor, P.C., Birmingham, for petitioner.
W. Lee Pittman of Pittman, Hooks, Dutton & Hollis, P.C., Birmingham, for respondent.
HOUSTON, Justice.
Billy Glen Jackson sued Industrial Distribution Services Warehouse, Inc. ("Industrial Distribution"), alleging, among other things, that Industrial Distribution had negligently or wantonly allowed him to fall off an interior loading dock at its warehouse; that the loading dock was defective and/or unreasonably dangerous; that Industrial Distribution had failed to remedy the defect and/or danger that caused him to fall; and that Industrial Distribution had failed to warn him about the defect and/or danger posed by the loading dock. The trial court entered a summary judgment for Industrial Distribution. The Court of Civil Appeals affirmed the summary judgment with respect to the wantonness claim; however, it reversed with respect to the negligence claim, holding that there were genuine issues of material fact to be resolved *18 by a jury. Jackson v. Industrial Distribution Services Warehouse, Inc., 709 So. 2d 12 (Ala.Civ.App.1997). We granted Industrial Distribution's petition for certiorari review to consider whether the Court of Civil Appeals erred in reversing with respect to the negligence claim. We reverse and remand.
The pertinent facts, which are not disputed by the parties, were adequately set out in the opinion of the Court of Civil Appeals:
709 So. 2d at 13-14.
Relying primarily on Owens v. National Security of Alabama, Inc., 454 So. 2d 1387 (Ala.1984), Industrial Distribution contends that this is the typical "step in the dark" case, in which there is no duty on an invitor *19 to warn of, or protect against, unseen hazards that an invitee may encounter on the invitor's premises under conditions of darkness. According to Industrial Distribution, the Court of Civil Appeals misapplied Owens to the facts of this case. Jackson, on the other hand, contends that this is not the typical "step in the dark" case and, therefore, that Owens does not control. He argues that his theory of liability was not predicated on the existence of a duty on Industrial Distribution to warn him that the warehouse was dark inside; rather, he says, a jury question was presented as to whether Industrial Distribution failed to exercise reasonable care by not erecting and maintaining a guardrail across the loading dock and as to whether he acted reasonably under the circumstances by accompanying a fireman into the warehouse. The essence of Jackson's argument, as we understand it, is that Owens does not apply because, he argues, there is evidence that he was exercising reasonable care when he entered the warehouse with the fireman. That being the case, Jackson maintains, a jury should be allowed to determine whether he acted reasonably under the circumstances and whether Industrial Distribution acted negligently by not erecting a guardrail across the loading dock. The Court of Civil Appeals, agreeing with Jackson, stated:
709 So. 2d at 15.
Assuming that Jackson was an invitee when he entered Industrial Distribution's warehouse, a fact that is conceded by Industrial Distribution for purposes of this appeal, then Industrial Distribution was under a duty to use reasonable care and diligence to keep the premises in a safe condition, or, if the premises were in a dangerous condition, to give sufficient warning so that, by use of ordinary care, Jackson could avoid the danger. Armstrong v. Georgia Marble Co., 575 So. 2d 1051, 1053 (Ala.1991). It is well established, however, that an invitor is not liable for injuries to an invitee resulting from a danger that was known to the invitee or that the invitee should have observed through the exercise of reasonable care. If the danger is open and obvious, the invitor cannot be held liable. Williams v. Newton, 526 So. 2d 18 (Ala.1988). Total darkness, possibly concealing an unseen and unknown hazard, presents an open and obvious danger to someone proceeding through unfamiliar surroundings, as a matter of law. Owens, supra.
In Owens, the injured plaintiff,[1] an employee of an independent contractor performing maintenance work on the premises of Montgomery Food Processors, was injured when he tripped over a forklift while walking to work through a dark portion of Montgomery Food Processors' plant. The plaintiffs sued the company in charge of the plant's security, contending that it had negligently caused or allowed the lights to be turned off without warning the injured plaintiff that the lights would be off. The trial court entered a summary judgment for the security company. This Court affirmed, stating in part:
454 So. 2d at 1389-90.
After carefully reviewing the record and the briefs, we cannot distinguish Owens from the present case. In Owens, the injured plaintiff attempted to walk through a dark building and was injured by a hazardous condition that, under the circumstances, he could not anticipate. In the present case, Jackson attempted to walk through a dark building and was injured by a hazardous condition that, under the circumstances, he could not anticipate. In Owens, the condition that caused the injury (the forklift) was hazardous only because of the darkness. In the present case, the condition that caused Jackson's injury (the loading dock) was hazardous only because of the darkness. In Owens, there was evidence indicating that the injured plaintiff exercised reasonable care in attempting to walk through the dark building (by using a lighter and shuffling his feet). In the present case, there was evidence indicating that Jackson acted reasonably under the circumstances by relying on the fireman to lead him through the dark building. Contrary to Jackson's contentions, and the holding of the Court of Civil Appeals, whether a jury might find that Jackson acted reasonably in his attempt to negotiate the warehouse in total darkness is not material to the question whether Industrial Distribution owed any duty to Jackson to eliminate, or warn of, the danger posed by the unseen loading dock. Owens dealt with the initial legal duty owed by the premises owner, not with the affirmative defenses of contributory negligence and assumption of the risk. The Owens Court noted: "Because we find that National Security did not owe a duty to warn Owens that the room was dark, we pretermit any discussion of assumption of the risk, contributory negligence, or the statute of limitations." 454 So. 2d at 1390. Owens was a refinement of the well-established rule that an invitor is not liable for injuries to an invitee that result from an open and obvious danger. Owens stands for the proposition that a dark, unfamiliar building that may conceal hidden hazards, much like a body of water that may conceal hazards beneath the surface, poses an open and obvious danger to an invitee, such as Jackson, who attempts to make his way through such a building. This is so even though the invitee may use due care to avoid injury, because the focus of our premises liability law is not on the care that may have been exercised by the invitee (unless *21 contributory negligence is an issue), but on relieving a premises owner of legal liability where an invitee knew of the danger that caused the injury or should have observed that danger through the exercise of reasonable care. See McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So. 2d 957, 959 (Ala.1992), wherein this Court, quoting Quillen v. Quillen, 388 So. 2d 985 (Ala.1980), stated:
"388 So. 2d at 989. See also Restatement (Second) of Torts § 343A(1) (1965)." (Emphasis added.) Compare Furgerson v. Dresser Industries, Inc., 438 So. 2d 732 (Ala. 1983), and Kingsberry Homes Corp. v. Ralston, 285 Ala. 600, 235 So. 2d 371 (1970), which are distinguished in Owens. In both of those cases, there was evidence suggesting that although the particular defective conditions were obvious, the dangerous potential of those conditions was not appreciated by the injured plaintiffs. See Young v. LaQuinta Inns, Inc., 682 So. 2d 402 (Ala.1996). See, also, Nayman v. Tracey, 599 So. 2d 604 (Ala. 1992); and Berness v. Regency Square Associates, Ltd., 514 So. 2d 1346 (Ala.1987), holding that Owens is not controlling in the landlord-tenant context where there are factual questions surrounding a landlord's duty to light and maintain "common" areas.
For the foregoing reasons, the judgment of the Court of Civil Appeals is reversed with respect to Jackson's negligence claim, and the cause is remanded.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, ALMON, and SEE, JJ., concur.
COOK, J., concurs in the result.
BUTTS, J., dissents.
COOK, Justice (concurring in the result).
In opposition to the motion for summary judgment, the plaintiff states in his brief that this is not the typical "step in the dark" case. The plaintiff contends that a guardrail should have been in place across the loading dock, or, alternatively, a warning of an unguarded drop-off. The plaintiff also contends that the evidence supports the inference that he reasonably followed a fireman, who had a flashlight, into the unlighted building. In other words, the plaintiff states that this case is not controlled by the absence of the landowner's duty to warn of the darkness; rather, he argues, this case presents a jury question on the question of the landowner's duty to erect a barrier across the loading dock or provide a warning of an unguarded drop-off. In addition, the plaintiff argues that it is a jury question whether he was contributorily negligent when he stepped away from the fireman into the dark in the direction of the fire *22 captain. If the landowner's standard of care called for a guardrail to be placed across the loading dock, which would have prevented the plaintiff's fall, the plaintiff's argument that the lack of a guardrail, rather than darkness, caused the fall would present a jury question.
I agree that darkness constitutes an open and obvious condition, for which there is no duty to warn. Owens v. National Security of Alabama, Inc., 454 So. 2d 1387 (Ala.1984). However, if the evidence indicates that the darkened condition was not the sole proximate cause of the fall, but that the fall was caused in part by the breach of some other duty, such as the lack of a guardrail, then the step-in-the-dark rule would not preclude this case from going to a jury. In reaching this determination, I do not focus on any conduct that may constitute contributory negligence by the plaintiff. I examine only the conduct of the defendant that relates to a duty owed or a breach of duty. Although I agree with the plaintiff's analysis on the applicability of the step-in-the-dark rule, I am not persuaded that the facts, as presented, constitute substantial evidence that the landowner breached a duty to erect a guardrail across the loading dock.
As the facts indicate, the plaintiff was called to the property in response to damage caused by a storm. The building was flooded and had no electrical service. The plaintiff's expert, Lawrence Weaver, testified, in substance, that if the loading dock is not being used as a loading dock then it should be guarded. He testified in part:
[1] The injured plaintiff's wife filed a derivative claim for loss of consortium. | November 21, 1997 |
69993812-effa-46f6-9e5f-db02f30852fc | Ex parte Fairfield Nursing & Rehabilitation Center, LLC | N/A | 1140454 | Alabama | Alabama Supreme Court | Rel: 05/29/2015
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
_________________________
1140454
_________________________
Ex parte Fairfield Nursing and Rehabilitation Center, LLC,
et al.
PETITION FOR WRIT OF MANDAMUS
(In re: Myrtis Hill
v.
Fairfield Nursing and Rehabilitation Center, LLC, et al.)
(Jefferson Circuit Court, Bessemer Division, CV-06-1266)
MAIN, Justice.
1140454
Fairfield
Nursing
and
Rehabilitation
Center,
LLC
("Fairfield"); D&N, LLC ("D&N"); DTD HC, LLC ("DTD"); Aurora
Cares, LLC (alleged to be doing business, and herein sometimes
referred to, as "Tara Cares"); and Aurora Healthcare, LLC
("Aurora") (hereinafter sometimes referred to collectively as
"the defendants"), petition this Court for a writ of mandamus,
directing the trial court to vacate its February 6, 2015,
order denying their "Motion to Quash Depositions and Motion
for Protective Order, and Motion to Reconsider January 30,
2015[,] Order." The defendants also request that we direct
1
the trial court to grant their motion. We grant the petition
and issue the writ.
I. Facts and Procedural History2
The trial court's January 30, 2015, order granted the
1
"Motion to Compel the Deposition of All Corporate Defendant
Representatives, or In the Alternative to Strike the Newly
Named Experts [for the Defendants]" filed by the original
plaintiff below, Myrtis Hill.
These parties have been before this Court on several
2
occasions. See Ex parte Fairfield Nursing & Rehab. Ctr.,
L.L.C., 22 So. 3d 445 (Ala. 2009); Hill v. Fairfield Nursing
& Rehab. Ctr., LLC, 134 So. 3d 396 (Ala. 2013) (opinion on
application for rehearing); and Ex parte Fairfield Nursing &
Rehab. Ctr., LLC (No. 1130955, June 6, 2014) (denial of
petition for the writ of mandamus).
2
1140454
On September 25, 2006, Myrtis Hill ("Hill") filed an
3
action in the Jefferson Circuit Court, Bessemer Division,
against Fairfield; D&N; DTD; Donald T. Denz ("Denz"); Norbert
A. Bennett ("Bennett"); Tara Cares; and Aurora. In the
4
complaint, Hill asserted:
"4. In May 2006 ... Hill ... was a patient at
[Fairfield].
At
the
time
of
admittance[,]
[Fairfield] undertook and agreed to provide [Hill]
with all necessary and proper care for [Hill's]
physical health, and medical needs.
"5. On [Hill's] admittance to [Fairfield],
[Hill] had no broken bones.
"The complaint also listed Hill's son, Fred Hill, as a
3
plaintiff in the capacity of 'next of friend' of Myrtis Hill,
but Fred Hill later was dismissed as a plaintiff after the
parties stipulated that Myrtis Hill was competent." Hill v.
Fairfield Nursing & Rehab. Ctr., LLC, 134 So. 3d 396, 399 n.
1 (Ala. 2013). Hill died on January 26, 2015. Respondent's
brief, at 7. Although the attachments to the petition and the
respondent's brief do not include a "Suggestion of Death" or
any filing showing that Hill's son, Fred, was substituted for
Hill as the plaintiff in this case, some of the documents
attached to the petition and the respondent's brief that were
filed after Hill's death show the named plaintiff as "Fred
Hill, as next friend of [Myrtis] Hill." For the sake of
continuity, in this opinion we continue to refer to the
plaintiff as "Hill."
Denz and Bennett are no longer parties in this matter.
4
See Hill v. Fairfield Nursing & Rehab. Ctr., LLC, 134 So. 3d
396, 399 n. 2 (Ala. 2013)("In addition to the defendants
listed, Hill at one point asserted claims against several
other individuals and
one
limited liability company, LKC, LLC,
not listed. At a hearing on a summary-judgment motion before
trial, Hill voluntarily dismissed those other defendants.").
3
1140454
"6. On May 10, 2006, ... Hill ... suffered a
broken leg while under the care of [a Fairfield]
employee, [who,] while attempting to transfer [Hill
to a bedside commode], negligently dropped her to
the floor thereby breaking [Hill's] right leg and
causing severe injury to both of her legs.
"7. Upon information and belief, Defendants,
their employees, and assigns negligently used said
lift in attempting to lower [Hill,] thereby
deviating from their own safety rules as well as
those imposed by state and federal regulations."
In addition to the medical-negligence claim, Hill also stated
a claim of "breach of contract/piercing the corporate veil."5
Between August 2009 and October 2009, Hill deposed, among
other persons, Chance Becnel, the corporate representative of
Tara Cares; Denz, the corporate representative of both DTD and
Aurora; and Bennett, the corporate representative of D&N.
6
Hill also deposed Denz and Bennett in their individual
The piercing-the-corporate-veil claim will be litigated,
5
if at all, in a separate bench trial after the medical-
negligence claim, which will be tried before a jury, has been
fully litigated.
"A party may ... name as the deponent a public or private
6
corporation
...
and
describe
with
reasonable
particularity
the
matters on which examination is requested. In that event, the
organization so named shall designate one or more officers,
directors, or managing agents, or other persons who consent to
testify on its behalf ...." Rule 30(b)(6), Ala. R. Civ. P.
4
1140454
capacities in 2009; additionally, Hill deposed 14 Fairfield
employees and 2 other Tara Cares employees.
The defendants moved the trial court for a summary
judgment; after holding a hearing, the trial court denied the
motion. Subsequently, the defendants moved the trial court to
"reconsider" its denial of their summary-judgment motion. On
November
13,
2009,
the
trial
court
granted
the
summary-judgment motion in part, entering a summary judgment
in favor of all the defendants except Fairfield. The case
against Fairfield proceeded to a jury trial. After Hill
concluded her case, Fairfield moved for a judgment as a matter
of law; the trial court granted Fairfield's motion on November
24, 2009. Hill subsequently moved the trial court to alter,
amend, or vacate its judgment; the trial court denied Hill's
motion on January 5, 2010. Hill timely appealed to this
Court. We reversed both the summary judgment in favor of all
the defendants except Fairfield and the judgment as a matter
of law in favor of Fairfield, and we remanded the cause to the
trial court for further proceedings, i.e., a new jury trial on
Hill's medical-negligence claim and, if necessary, and only
after the completion of the medical-negligence action,
a
bench
5
1140454
trial on Hill's piercing-the-corporate-veil claim. Hill v.
7
Fairfield Nursing & Rehab. Ctr., LLC, 134 So. 3d 396, 411
(Ala. 2013).
On January 27, 2015, Hill filed a document entitled
"Motion to Compel the Deposition of all Corporate Defendant
Representatives, or in the Alternative to Strike the Newly
Named [Defendants'] Experts." In that filing, Hill argued
that Hill should be permitted to redepose all the defendants'
corporate representatives because, Hill said, "facts may have
changed that [Hill] would need to know about prior to trial."
Alternatively, Hill argued that the trial court should strike
the "newly named experts" the defendants had disclosed as
persons who would be testifying at trial. On January 30,
2015, Hill filed a document entitled "Second Motion to Compel
the Deposition of all Corporate Defendant Representatives,"
essentially restating the same arguments presented in the
first motion to compel.
In Hill v. Fairfield Nursing & Rehabilitation Center,
7
LLC, 134 So. 3d 396, 411 (Ala. 2013), this Court noted that
"'[w]hether the corporate veil of a business entity should be
pierced is a matter of equity, properly decided by a judge
after a jury has resolved the accompanying legal issues.'"
(Quoting Heisz v. Galt Indus., Inc., 93 So. 3d 918, 929 (Ala.
2012) (emphasis added).)
6
1140454
Also on January 30, 2015, the defendants filed a document
entitled "Response to [Hill's] Motion to Compel and Motion to
Strike, and Defendants' Motion for Protective Order." In that
filing, the defendants argued, in sum: (1) that "[Hill]
already took the Rule 30(b)[, Ala. R. Civ. P.,] depositions of
the corporate defendants in August 2009 and October 2009" and
"has provided no justifiable reason, nor does one exist, that
entitles [Hill] to take any of these depositions again"; (2)
that "[Hill's] informal request for additional corporate
representative depositions amount[s] to nothing more than an
attempt to annoy and harass the Defendants that would be
unduly burdensome, and lead to unnecessary time and expense,"
in contravention of Rule 26(c), Ala. R. Civ. P.; and (3) that
the defendants had designated only one new expert, namely, Dr.
Lars Reinhart, to testify at trial and had "offered the
deposition of Dr. Reinhart on January 29, 2015," but that
"[Hill's] counsel advised that they did not need to depose Dr.
Reinhart and that they would just 'see him at trial.'" On the
same day, the trial court entered an order stating: "[Hill's]
Motion To Compel the [Rule] 30(b)(5) & (6) depositions of the
7
1140454
Defendant[] LLCs is granted and [the defendants are] ordered
to comply or suffer imposition of sanctions."
On February 4, 2015, the defendants filed a document
entitled "Defendants' Motion to Quash Depositions and Motion
for Protective Order, and Motion to Reconsider January 30,
2015[,] Order" ("motion for a protective order"). The
defendants presented four arguments in support of the motion
for a protective order. First, the defendants argued:
"[Hill] first issued [the] Deposition Notices
seven (7) days before the discovery cutoff mandated
by this Court's Scheduling Order. Because [Hill]
failed to initiate the discovery in such a time that
the depositions could be completed before the
discovery cutoff date, the requested depositions
should be quashed and a protective order in favor of
Defendants is warranted."
Second, the defendants argued that "[t]he Depositions should
be quashed because they are duplicative of depositions
previously taken by [Hill]." Third, the defendants argued
that "[t]he depositions should also not proceed because the
topics for which the depositions are sought pertain solely to
[Hill's] piercing the corporate veil claim that both this
Court and the Alabama Supreme Court have held must be tried
separately in equity." Fourth, the defendants argued that
"[they] are entitled to a protective order regarding the
8
1140454
depositions because
they
subject
[the] defendants
to
'annoyance, ... undue burden and expense,'" in contravention
of Rule 26(c). Also, the defendants moved the trial court to
vacate its order compelling the depositions of
the
defendants'
corporate representatives for the same four reasons. On
February 6, 2015, the trial court denied the motion for a
protective order without explaining its reasoning for doing
so. The defendants now seek mandamus review.
II. Standard of Review
"A writ of mandamus is an extraordinary remedy,
and is appropriate when the petitioner can show (1)
a clear legal right to the order sought; (2) an
imperative duty upon the respondent to perform,
accompanied by a refusal to do so; (3) the lack of
another adequate remedy; and (4) the properly
invoked jurisdiction of the court."
Ex parte BOC Grp., Inc., 823 So. 2d 1270, 1272 (Ala. 2001).
"'"Discovery
matters
are
within the trial court's sound
discretion, and this Court will
not
reverse
a trial court's
ruling on
a
discovery
issue
unless
the
trial
court
has
clearly exceeded its discretion.
Home Ins. Co. v. Rice, 585 So. 2d
859,
862
(Ala.
1991).
Accordingly, mandamus will issue
to reverse a trial court's ruling
on a discovery issue only (1)
where there is a showing that the
trial court clearly exceeded its
9
1140454
discretion, and (2) where the
aggrieved party does not have an
adequate
remedy
by
ordinary
appeal. The petitioner has an
affirmative burden to prove the
existence
of
each
of
these
conditions."
"'Ex parte Ocwen Fed. Bank, FSB, 872 So. 2d
810, 813 (Ala. 2003).
"'Moreover, this Court will review by
mandamus only those discovery matters
involving (a) the disregard of a privilege,
(b) the ordered production of "patently
irrelevant or duplicative documents," (c)
orders effectively eviscerating "a party's
entire action or defense," and (d) orders
denying a party the opportunity to make a
record sufficient for appellate review of
the discovery issue. 872 So. 2d at
813–14.'"
Ex parte Mobile Gas Serv. Corp., 123 So. 3d 499, 504 (Ala.
2013) (quoting Ex parte Meadowbrook Ins. Grp., Inc., 987 So.
2d 540, 547 (Ala. 2007)). Mandamus review is the appropriate
manner by which to challenge the denial of a motion for a
protective order after a trial court has compelled discovery.
See Ex parte Community Health Sys. Prof'l Servs. Corp., 72 So.
3d 595 (Ala. 2011); Ex parte Aramark Mgmt. Servs. Ltd. P'ship,
156 So. 3d 407 (Ala. Civ. App. 2014).
III. Analysis
A. Subject-Matter Jurisdiction
10
1140454
As an initial matter, we must address the defendants'
rather confusing and misguided argument regarding the trial
court's exercise of subject-matter jurisdiction in this case.
The defendants' argument is unclear. As best we understand,
the defendants argue that, because the information Hill seeks
from the requested depositions pertains only to the piercing-
the-corporate-veil claim that is not yet being adjudicated in
the trial court, "[that] court is adjudicating claims for
which it has no subject matter jurisdiction." This argument
is faulty for a number of reasons; among others, this argument
is erroneously premised on the defendants' apparent belief
that taking of depositions is the functional equivalent of
"adjudicating claims." That analogy is simply incorrect.
Also, taking depositions –- potentially -– with regard to the
yet-to-be-litigated piercing-the-corporate-veil claim in no
way disturbs the trial court's subject-matter jurisdiction
over the pending medical-negligence claim. Furthermore, the
defendants have effectively conceded that the trial court has
subject-matter jurisdiction in this action; notably, the
defendants in their mandamus petition do not seek the
dismissal of Hill's action for lack of subject-matter
11
1140454
jurisdiction but seek the issuance of a protective order,
which the trial court could not do if it lacked subject-matter
jurisdiction. See, e.g., Redtop Market, Inc. v. State, 66 So.
3d 204, 206 (Ala. 2010) (noting that, when a circuit court
lacks subject-matter jurisdiction, all orders and judgments
entered in the case, except an order of dismissal, are void ab
initio). The defendants' argument regarding the
trial
court's
subject-matter jurisdiction in this case is meritless.
B. Merits
The defendants' arguments on the merits of the petition
are more straightforward. The defendants argue, in pertinent
part, that the trial court exceeded its discretion in denying
the motion for a protective order because, they claim, Hill
has offered no compelling reason to support her request to
redepose the defendants' corporate representatives; that the
taking of those depositions would provide Hill information
that is merely duplicative of the information provided by the
corporate representatives during prior depositions; and that
the taking of those new depositions would cause the defendants
unnecessary "annoyance" and "expense" and would constitute an
"undue burden." We agree.
12
1140454
Rule 26(b)(2)(B), Ala. R. Civ. P., provides that a trial
court "shall" limit or prohibit discovery if it determines (1)
that the discovery sought is "unreasonably cumulative or
duplicative"; (2) "that the party seeking discovery has had
ample opportunity by discovery in the action to obtain the
information sought"; or (3) that the discovery sought is
"unduly burdensome." (Emphasis added.) The party contesting
the discovery request must demonstrate the existence of only
one of the three reasons for limiting or prohibiting discovery
quoted above; in this case, the defendants have demonstrated
the existence of all three reasons for prohibiting the
requested depositions.
First, the defendants have demonstrated that the
requested
depositions
would
be
unreasonably
duplicative
of
the
depositions already provided by the defendants' corporate
representatives. In their mandamus petition, the defendants
set forth nine examples of information Hill is seeking in the
requested depositions and demonstrate how the defendants'
corporate representatives have already provided substantial
testimony as to all nine of those issues. See Petition, at 6-
13. The defendants state that they have provided "only
13
1140454
representative examples" of the duplicative nature of
requested deposition testimony because, they say, "there are
nearly five hundred (500) pages of testimony responsive to the
topics" set forth in the petition. Id. at 6. Hill neither
provides
meaningful
response
to
nor
contradicts
the
defendants' argument. Instead, Hill merely posits
that "[t]he
simple truth is that whenever this case gets close to trial,
the
Petitioners/Defendants
improvidently
file
baseless
motions
seeking only to delay and deny both the trial and justice."
Respondent's brief, at 14. See also respondent's brief, at 17
("The simple truth is that the Defendants have purposely
attempted to derail the trial of this case on two different
occasions ... to delay justice and distract the Respondent
from trial preparation."). In fact, Hill goes so far as to
allege that "[the defendants'] 'delays,' in their eyes, have
brought about the intended outcome, i.e.[,] the death of
[Myrtis] Hill...." Id. at 14. Hill's response to the
defendants' argument is baseless; it does nothing to defeat
the defendants' showing that the requested depositions are
unreasonably duplicative of the depositions previously given
by the defendants' corporate representatives.
14
1140454
Second, the defendants have demonstrated that Hill has
had "ample opportunity by discovery in the action to obtain
the information sought." As noted, Hill filed the original
complaint against the defendants on September 25, 2006. Hill
deposed the defendants' corporate representatives between
August 2009 and October 2009. On January 27, 2015, Hill moved
the trial court to redepose the defendants' corporate
representatives. This action had been pending for almost 9
years when Hill moved to redepose the defendants' corporate
representatives, and this action is before the trial court
after having been addressed by this Court on three occasions.
Furthermore, as previously stated, Hill has already obtained
the information she seeks from the corporate representatives.
We are clear to the conclusion that Hill has had ample
opportunity to obtain, and, in fact, has already obtained, the
information sought in the requested depositions.
Third, the defendants have demonstrated that the
discovery would be "unduly burdensome." Suffice it to say,
the time, effort, and financial costs that would be required
of the defendants if Hill were allowed to redepose the
15
1140454
defendants' corporate representatives for information already
obtained by Hill would be unduly burdensome.
Lastly, we note that Rule 26(c) provides that a trial
court may issue a protective order refusing to compel
discovery in order to protect a party from, among other
things, "annoyance" and "undue burden and expense." As
stated, allowing Hill to redepose the defendants' corporate
representatives would clearly impose on the defendants an
undue burden and expense. Thus, based on the foregoing, we
hold that the trial court exceeded its discretion in denying
the motion for a protective order. See Rule 26(b)(2)(B), Ala.
R. Civ. P.; Rule 26(c), Ala. R. Civ. P.; and Ex parte
Industrial Dev. Bd. of City of Montgomery, 42 So. 3d 699, 718
(Ala. 2010) ("Because the [petitioner] has shown that [the
proposed deponent] is not the only source of information about
each of the topics on which the plaintiffs sought to depose
him and because the plaintiffs have not demonstrated that
deposing [the proposed deponent] is crucial to
preparing their
cases, the [petitioner] is entitled to a protective order
preventing the plaintiffs from deposing [the proposed
deponent].").
16
1140454
IV. Conclusion
The defendants have demonstrated "a clear legal right ...
to the order sought" and that the trial court clearly exceeded
its discretion in denying the defendants' motion for a
protective order. See Ex parte Mobile Gas Serv. Corp., 123
So 3d at 427. Therefore, we direct the trial court to vacate
its February 6, 2015, order denying the motion for a
protective order and to enter an order granting the same
motion. Hill's "Motion for Award of Damages based on [the
defendants']
pattern
and
practice
of
filing
frivolous
appeals"
is denied. We pretermit as unnecessary any discussion of the
defendants' remaining arguments.
PETITION GRANTED; WRIT ISSUED; RESPONDENT'S MOTION FOR
DAMAGES DENIED.
Stuart, Bolin, Parker, Wise, and Bryan, JJ., concur.
Moore, C.J., and Murdock and Shaw, JJ., dissent.
17 | May 29, 2015 |
7bc6a994-5077-4a7f-9e78-a64f0d87d37f | Spooner v. State Farm Mut. Auto. Ins. Co. | 709 So. 2d 1157 | 1961009 | Alabama | Alabama Supreme Court | 709 So. 2d 1157 (1997)
Yvonne Lee Pitts SPOONER
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, et al.
1961009.
Supreme Court of Alabama.
October 31, 1997.
Rehearing Denied January 23, 1998.
James H. Wettermark of Burge & Wettermark, P.C., Birmingham, for appellant.
Michael B. Maddox and Jeff W. Parmer of Maddox, Austill & Parmer, P.C., Birmingham, for appellees.
HOUSTON, Justice.
The plaintiff, Yvonne Lee Pitts Spooner, appeals from a summary judgment for the defendants State Farm Mutual Automobile Insurance Company and its claims representative Kevin Smith (we will refer to these defendants as "State Farm"). Spooner sought compensatory and punitive damages based on allegations of fraud. (Spooner also sued Dr. Laurence T. Zottoli, Jr., but he was dismissed.) We reverse and remand.
The standard of review applicable to this case is well settled. See Rule 56(c), *1158 Ala.R.Civ.P. The summary judgment for State Farm was proper if it clearly appears that there is no genuine issue of material fact and that State Farm is entitled to a judgment as a matter of law. In determining whether there is a genuine issue of material fact, this Court must review the record in the light most favorable to Spooner and must resolve all reasonable doubts against State Farm. Wayne J. Griffin Electric, Inc. v. Dunn Construction Co., 622 So. 2d 314 (Ala. 1993).
The evidence, viewed in the light most favorable to Spooner, indicates the following: On August 30, 1990, Spooner suffered personal injuries when the automobile she was driving collided with an automobile driven by Dr. Laurence T. Zottoli, Jr. Spooner's mother, who was a passenger in Spooner's automobile, was also injured. State Farm insured both Spooner and Zottoli; this fact put State Farm in a "double with claim" situation and in a fiduciary relationship with its insureds. State Farm Mutual Automobile Ins. Co. v. Ling, 348 So. 2d 472 (Ala.1977). Smith, who was assigned to investigate and adjust Spooner's claim, determined that Spooner was not at fault in the collision. Smith met with Spooner and her mother on October 12, 1990, and issued checks to them for the medical bills they had incurred. Smith also issued a check to Spooner to cover expenses for repairing her automobile. State Farm paid the medical bills under the medical payments coverage provided by Spooner's policy; it paid for Spooner's property damage under the liability coverage provided by Zottoli's policy. In addition, Smith issued checks to Spooner and her mother to compensate them for their pain and suffering caused by the accident, under the liability coverage provided by Zottoli's policy. During the course of the October 12 meeting, Smith asked for and obtained a signed general release from Spooner's mother, releasing Zottoli from all liability resulting from the accident. Smith also asked for and obtained a release from Spooner, after representing to her that she was only releasing Zottoli from any liability for her property damage. The release signed by Spooner is not in the record. Smith, in deposition, testified that Spooner signed a general release similar to the one signed by Spooner's mother. Spooner testified in her deposition as follows:
Smith further told Spooner that she would have a claim against Zottoli for three years from the date of the accident. Smith did not inform Spooner that, in fact, Alabama has a two-year statute of limitations applicable to a damages action against Zottoli. See Ala. Code 1975, § 6-2-38(l). Smith did not tell Spooner that her medical bills were being paid under the medical payments coverage provided by her policy or that she might be able to recover additional compensation from Zottoli, i.e., compensation for emotional distress, compensation for loss of wages, additional compensation for pain and suffering, etc.
State Farm eventually refused to renew Spooner's policy; however, nothing in the record substantiates Spooner's claim that it refused renewal because it had paid Spooner over $30,000 in medical payments under the medical payments provision of her policy. During a conversation concerning Spooner's health insurer's possible subrogation rights to payments she had received from State Farm, Smith told Spooner that she had released Zottoli from all liability "a long time ago." Spooner testified that Smith's actions had caused her emotional distress:
Upon being told that she had signed a general release, Spooner sought legal advice. She filed this action more than three years after the accident, also naming Zottoli as a defendant and seeking damages from him for negligence or wantonness in connection with the accident. State Farm did not raise the statute of limitations or the general release as an affirmative defense to Spooner's claims against Zottoli. Spooner later settled her claims against Zottoli, and he was dismissed from this action by stipulation of the parties.
Spooner's fraud claims were based on allegations that Smith had suppressed the fact that her claim against Zottoli was subject to a two-year statute of limitations; the fact that she might be able to recover additional compensation from Zottoli for pain and suffering, emotional distress, etc.; and the fact that her medical bills were being paid under her own medical payments coverage. She further alleged that Smith had misrepresented to her that she had three years from the date of the accident to make a claim against Zottoli and that the release she signed applied only to her claim for property damages. Spooner contends that the evidence created questions for a jury to decide as to whether Smith misrepresented or suppressed material information and, if so, whether she relied on Smith's actions to her detriment. According to Spooner, State Farm's status as both her insurer and Zottoli's insurer presented a conflict of interest. She argues that a jury could reasonably conclude from the evidence that Smith intentionally defrauded her in an attempt to limit State Farm's financial responsibility under Zottoli's liability coverage and that she suffered emotional distress as a result of that fraud. She also argues that State Farm's decision not to renew her policy was the result of her medical bills being paid under the medical payments coverage in her policy. State Farm argues that because Spooner was able to sue Zottoli and obtain a settlement of her claims against him, she cannot prove that she relied on anything that was or was not said by Smith or that she was damaged in any way as the result of his conduct.
After examining the evidence and considering the arguments, we conclude that there are genuine issues of material fact to be resolved by a jury and, therefore, that the summary judgment was improper. In Boswell v. Liberty National Life Ins. Co., 643 So. 2d 580, 581 (Ala.1994), this Court noted the well-established elements of causes of action based on misrepresentation and suppression:
Spooner presented sufficient evidence tending to show that Smith failed to inform her that the two-year statute of limitations applied to her claim against Zottoli. Smith was under a legal duty to make this material disclosure, see State Farm Mutual Automobile Ins. Co. v. Ling, supra, and she presented sufficient evidence that she relied on Smith's silence by not suing Zottoli within two years from the date of the accident. Likewise, there is sufficient evidence tending to show that Smith misrepresented that Spooner had three years to sue Zottoli and that he misrepresented the nature of the release signed by Spooner. There is sufficient evidence that, in reliance on Smith's misrepresentations, Spooner signed a general release, believing all the while that she was releasing Zottoli only from further liability for property damage. State Farm's strongest argument in support of the summary judgment is that Spooner could not prove that she suffered any compensable damage 1) because she was able to file an action against Zottoli and to ultimately settle her claims against him (as a result of State Farm's decision not to raise the statute of limitations or the general release as affirmative defenses) and 2) because State Farm had a legal right not to renew her policy. State Farm insists that no evidence connects any fraud on Smith's part to the nonrenewal of Spooner's policy. We find State Farm's argument only partially persuasive. We agree that Smith's actions did not prevent Spooner from obtaining additional compensation from Zottoli and that there is insufficient evidence for one to infer that State Farm's decision not to renew Spooner's policy was the result of fraud on State Farm's part. However, Spooner testified that she had also suffered emotional distress as the result of Smith's handling of her claim. Emotional distress is compensable in a fraud action. See, e.g., First Commercial Bank v. Spivey, 694 So. 2d 1316 (Ala.1997). We fail to see how State Farm's decision to waive the two potential affirmative defenses to Spooner's action against Zottoli could completely erase the emotional distress Spooner says she had suffered as a result of the uncertainty surrounding her claims against Zottoli from the time that she was informed that she had signed a general release and the time that she determined that she had only two years to file a claim against Zottoli, until State Farm waived the defenses of the release and the statute of limitations. The extent of that emotional distress, if any, would be for a jury to determine. This Court has stated that "once a fraud has been committed, the perpetrator cannot `take it back' or cover it up by his subsequent actions.... Once a fraud has been accomplished, subsequent actions cannot completely erase the injury done to the person against whom the fraud was committed." Boswell v. Liberty National Life Ins. Co., supra, 643 So. 2d at 584. It is for a jury to determine if the defendants made a misrepresentation and/or a suppression; if so, whether Spooner relied on it; and, if so, whether that misrepresentation and/or suppression proximately caused Spooner to suffer emotional distress. State Farm Mutual Automobile Insurance Co. v. Ling, supra.
The judgment is reversed and the cause is remanded for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and ALMON, COOK, and SEE, JJ., concur. | October 31, 1997 |
b9c7635a-ca6f-4508-b037-13c11b621b71 | Becton v. Rhone-Poulenc, Inc. | 706 So. 2d 1134 | 1960276 | Alabama | Alabama Supreme Court | 706 So. 2d 1134 (1997)
West Berry BECTON, Sr., and Mary L. Becton
v.
RHONE-POULENC, INC., as successor to Stauffer Chemical Company, Inc.; and Courtaulds PLC.
1960276.
Supreme Court of Alabama.
November 7, 1997.
*1135 Cecil Gardner of Gardner, Middlebrooks, Fleming & Hamilton, Mobile; and Janice Pennington and Misty A. Farris of Baron & Budd, P.C., Dallas, TX, for appellants.
Victor T. Hudson and William W. Watts of Reams, Philips, Brooks, Schell, Gaston & Hudson, Mobile, for Rhone-Poulenc, Inc., as successor in interest to Stauffer Chemical Company, Inc.
Wesley Pipes, Cooper C. Thurber, and William E. Shreve, Jr., of Lyons, Pipes & Cook, P.C., Mobile, for Courtaulds PLC.
HOUSTON, Justice.
On September 18, 1995, West Berry Becton[1] sued Rhone-Poulenc, Inc., as successor-in-interest to Stauffer Chemical Company, Inc. ("Rhone"), and various employees of Courtaulds Fibers, Inc. ("CFI").[2] On February 6, 1996, Becton amended his complaint to add Courtaulds PLC as a defendant. Becton alleged that while employed with CFI, he sustained various injuries as a result of his continuous exposure to carbon disulfide ("CS"2), a chemical used in a portion of CFI's rayon manufacturing process. Becton was employed at CFI from 1952 to 1986, and his last exposure to CS2 was in 1986, almost 9 years before this action was filed on September 19, 1995.
All of the defendants moved for summary judgments, asserting the statute of limitations as a defense. In opposition to these motions, Becton contended that a "federally mandated discovery rule" contained in the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), also known as "the Superfund Act," postponed commencement of the statutory period until Becton knew or should have known that his injuries were related to exposure to hazardous substances, of which CS2 is one. 40 C.F.R. § 302.4. The trial court entered summary judgments for Rhone and Courtaulds PLC.[3] Becton appeals as to those defendants. We affirm.
Ala.Code 1975, § 6-2-38(l), governs actions for personal injury not arising from contract and not specifically enumerated in § 6-2-38. Such actions must be filed within two years of the date of injury. For purposes of an action based on continuous exposure to a hazardous substance, the date of the injury is the day on which the plaintiff was last exposed to the hazardous substance causing the injuries. Hubbard v. Liberty Mutual Ins. Co., 599 So. 2d 20 (Ala.1992); Hillis v. Rentokil, Inc., 596 So. 2d 888 (Ala. 1992); American Mutual Liability Ins. Co., v. Phillips, 491 So. 2d 904 (Ala.1986); Garrett v. Raytheon Co., 368 So. 2d 516 (Ala.1979). A plaintiff's ignorance of the fact of injury, if *1136 there is no fraudulent concealment by the defendant, does not postpone the running of the limitations period. Garrett v. Raytheon Co., supra.
Under the facts of this case, Becton's action is time-barred because it was not filed within two years of the date of the last exposure, unless CERCLA preempts the Alabama "date of injury" rule in favor of the federally mandated "discovery rule." 42 U.S.C. § 9658 (Section 309(a)(1) of the Superfund Act, added by the Superfund Amendments and Reauthorization Act of 1986 (SARA), Pub.L. 99-499). See, e.g., Tucker v. Southern Wood Piedmont Co., 28 F.3d 1089, 1091 (11th Cir.1994). Section 9658 essentially prevents a state statute of limitations from beginning to run on actions under state law for personal injuries or property damage "caused or contributed to by exposure to any hazardous substance ... released into the environment from a facility" until discovery of the causal relationship between the injury and the exposure. 42 U.S.C. § 9658(a)(1) and (b)(4)(A).
Although this Court has not previously addressed the applicability of § 9658 to actions for personal injury pending in this State, the defendants argue that even if § 9658 did apply, Becton has not shown that he would come within that statute. Rather, the defendants argue that Becton seeks to apply § 9658 in a context completely outside the scope of CERCLA and the environmental concerns it was designed to reach. They maintain that most federal courts have refused to apply this statute to actions based on personal injuries caused by exposure to some hazardous substance in the absence of the existence of some potential or actual CERCLA liability or claim that has been or could have been asserted in connection with the alleged exposure.
Thus, the ultimate issue is whether this lawsuit, which Becton says he brought within two years of the date on which his carbon disulfide-related disease was diagnosed, was timely filed under § 9658 (the federally mandated discovery rule applicable to any action brought under State law for personal injuries contributed to by exposure to hazardous substance released into the environment from a facility).
Most federal courts have limited the application of § 9658 to situations where an underlying CERCLA claim has been made or could exist based on the presence of hazardous wastewhere there is an underlying claim dealing with, or cause of action providing for, cleanup and remedial activities. See, e.g., Knox v. A C & S, Inc., 690 F. Supp. 752 (S.D.Ind.1988); Electric Power Board of Chattanooga v. Westinghouse Electric Corp., 716 F. Supp. 1069 (E.D.Tenn.1988), aff'd, 879 F.2d 1368 (6th Cir.1989), cert. denied, 493 U.S. 1022, 110 S. Ct. 724, 107 L. Ed. 2d 743 (1990); First United Methodist Church v. United States Gypsum Co., 882 F.2d 862 (4th Cir.1989), cert. denied, 493 U.S. 1070, 110 S. Ct. 1113, 107 L. Ed. 2d 1020 (1990); Covalt v. Carey Canada Inc., 860 F.2d 1434 (7th Cir.1988).
Although exhaustive research has revealed no cases directly on point or factually similar to this case, we nonetheless find the reasoning and rationale of Covalt v. Carey Canada Inc. (in which the court held that "[t]he interior of a place of employment is not `the environment' for purposes of CERCLAat least to the extent employees are the injured personsand § 309(a)(1) therefore does not apply to Covalt's claim," 860 F.2d at 1439), persuasive in its interpretation of the application of CERCLA:
"Doubtless some of the language in the United States Code is meaningless. No institution can fill 20 linear feet of shelving with tiny type and commit no redundancies. Yet it is hard to believe that `released into the environment' is an empty phrase. The focus and structure of CERCLA itself show that it has force. ... [T]he Superfund Act is about inactive hazardous waste sites. As the House Report on CERCLA put matters, the bill would
"The ` § 301(e) study' to which the Committee referred was conducted by twelve lawyers on the authority of 42 U.S.C. § 9651(e); their charge was to investigate the `adequacy of existing common law and statutory remedies in providing legal redress for harm to man and the environment caused by the release of hazardous substances in the environment', § 9651(e)(1): in other words, the original focus of CERCLA. Neither the study nor the reports on the 1986 Amendments [suggest] that the federal rule for the commencement of the period of limitations has a broader ambit that the Superfund Act itselfhazardous wastes. To the contrary, the study noted:
860 F.2d at 1436-39. (Some emphasis original; other emphasis added.)
See Thompson v. Mindis Metals, Inc., 692 So. 2d 805, 806 (Ala.1997), in which this Court stated:
(Emphasis added.) See, also, Hunt v. Chemical Waste Management, Inc., 584 So. 2d 1367, 1381-83 (Ala.1991), rev'd, 504 U.S. 334, 112 S. Ct. 2009, 119 L. Ed. 2d 121 (1992), in which this Court, resolving the issue of the constitutionality of a statute imposing a base fee per ton on all waste and substances disposed of at commercial facilities regardless of state of origin, adopted the following portion of the trial court's order:
584 So. 2d at 1383. See also Thompson v. Taracorp, 684 So. 2d 152, 159 (Ala.Civ.App. 1996), in which the Court of Civil Appeals, resolving the issue of personal jurisdiction, explained the scope of CERCLA as imposing retroactive and strict liability on parties that "either own, operate, or sent hazardous substances to a site that is ultimately found to contain hazardous substances."
We note that Becton cited Tucker v. Southern Wood Piedmont Co., 28 F.3d 1089 (11th Cir.1994), and Tower Asphalt, Inc. v. Determan Welding & Tank Service, Inc., 530 *1140 N.W.2d 872 (Minn.App.1995), in support of his position that "the Eleventh Circuit and most other courts have applied § 9658 even in cases where there are no underlying CERCLA claims." We find that argument without merit.
In Tucker, the plaintiffs brought federal and state-law claims alleging property damage caused by releases of hazardous substances from a neighboring wood treatment site, formerly operated by the defendant. The defendants moved to restrict the state-law claims to damage that occurred during the four years immediately preceding the filing of the lawsuit. The trial court denied the motion, and the defendant filed an interlocutory appeal, making the argument that statutes of limitations have two independent functionsto define when an action may be brought and to define the period for which damages can be recovered. The trial court rejected this argument as "unsound." However, no issue was raised in Tucker as to whether § 9658 would apply in the absence of underlying CERCLA claims or CERCLA hazardous waste. In fact, Tucker does not indicate what the federal claims were, although presumably they would have related to remedies under CERCLA because, under the facts of Tucker, the wood treatment site was a hazardous waste site to which CERCLA would apply.
Tower also involved a hazardous waste situation governed by CERCLA. The plaintiff's lessee (the defendant) had spilled hazardous materials that had contaminated the groundwater under the plaintiff's land. Pursuant to a mandate from the Minnesota Pollution Control Agency, the plaintiff had incurred substantial cleanup costs and sought to recover those costs from the defendant. The court held that the plaintiff's claims were time-barred under state law but concluded that § 9658 applied, thereby making the claims timely. That is, the court held that the plaintiff could invoke § 9658 even though it had not alleged a CERCLA claim. Although Tower does not describe the nature of the claims other than to indicate that there were "state law" claims and although, as in Tucker, there is nothing to indicate that the plaintiff had asserted a CERCLA claim, Tower involved property contaminated by hazardous waste that placed it within the purview of CERCLAthat is, the presence of hazardous waste contaminating the groundwater under the plaintiff's property presented a context to which CERCLA remedies might apply.
We also note that Becton cited Kowalski v. Goodyear Tire & Rubber Co., 841 F. Supp. 104 (W.D.N.Y.1994), and Vermont v. Staco, Inc., 684 F. Supp. 822 (D.Vt.1988), vacated in part on other grounds, by an unpublished order, in support of his position. In Kowalski, the plaintiffs' home and automobile were contaminated by a chemical that the plaintiff/husband was exposed to at work and which he carried out of the workplace on his clothes and on his person. That contamination allegedly caused the plaintiff/wife to develop cancer. The court in Kowalski held that the plaintiffs could invoke § 9658 despite the fact that there was no underlying CERCLA action, based on its conclusion that nothing in the language of CERCLA or in the Congressional reports accompanying and explaining the legislation would make an underlying CERCLA action a requirement for the application of that sectionthat § 9658 did not require either a real or a potential CERCLA remedial action to give it life; and that hazardous chemicals carried out of the facility on the plaintiff/husband's body and clothing were hazardous substances released into the environment from a facility, within the contemplation of CERCLA, thus supporting the application of § 9658. In Staco, the plaintiffs brought a CERCLA action against a corporation for response costs incurred by the state "where mercury was released from [the corporation's] plant on the bodies and clothing of the workers" and the mercury "was finding its way into the workers' septic systems and into the [city] sewer system, as well as the homes and automobiles of the workers, affecting the workers' families and the city itself." The court in Staco found that the mercury was "released into the environment" from a plant when it was transported out of the facility on workers' bodies, garments, and footwear. However, it appears that the Kowalski court and the Staco court ignored other jurisdictions' interpretations *1141 of the kind of situations CERCLA was designed to remedy.
In this case, it is undisputed that there is no hazardous waste, contaminated property, or unlawful disposal activity involved. Rather, Becton's alleged exposure occurred while he was working at CFI with a chemical lawfully used in the rayon manufacturing process. The Occupational Safety and Health Administration ("OSHA") is charged with regulating exposures in the workplace, 29 C.F.R. § 1910.1000 (establishing limits for workplace exposure to chemicals, including CS2); and emissions from the CFI plant into the atmosphere are regulated by the Clean Air Act, 42 U.S.C. § 7401 through § 7671q. See 42 U.S.C. § 7412(b) (listing CS2 as an air pollutant governed by the Act). See also Covalt, 860 F.2d at 1437, in which the court stated that CERCLA "does not regulate emissions from existing sources (the subject of the Clean Air and Clean Water Acts) or the levels of toxic substances permitted at work (the subject of the Occupational Safety and Health Act [`OSHA'])."
Furthermore, the federally mandated discovery rule of § 9658 has no application to exposure solely within the interior of the workplace. Federal courts have rejected the application of the statute to situations where exposure to a hazardous substance occurs within the confines of the workplacethat is, a release in the workplace is not a release into the environment, as contemplated by § 9658. See, e.g., Covalt v. Carey Canada Inc., 860 F.2d at 1439 ("the interior of a place of employment is not `the environment' for purposes of CERCLA"); G.J. Leasing Co. v. Union Elec. Co., 54 F.3d 379, 385 (7th Cir. 1995) (release of asbestos inside building, with no leak outside, is not governed by CERCLA); 3550 Stevens Creek Associates v. Barclays Bank of California, 915 F.2d 1355, 1360-61 (9th Cir.1990), cert. denied, 500 U.S. 917, 111 S. Ct. 2014, 114 L. Ed. 2d 101 (1991) (CERCLA is inapplicable to hazardous waste inside a building, the court recognizing that "the `environment' referred to in [§ 9658] `includes the atmosphere, external to the building, but not the air within the building' "); Electric Power Bd. v. Westinghouse Electric Corp., 716 F. Supp. 1069, 1080 (E.D.Tenn.1988), aff'd, 879 F.2d 1368 (1989), cert. denied, 493 U.S. 1022, 110 S. Ct. 724, 107 L. Ed. 2d 743 (1990) (leak of dielectric fluid inside building was not a "release into the environment contemplated or intended by the CERCLA"), aff'd sub nom. Electric Power Bd. v. Monsanto Co., 879 F.2d 1368 (6th Cir.1989), cert. denied, 493 U.S. 1022, 110 S. Ct. 724, 107 L. Ed. 2d 743 (1990); Knox v. AC & S, Inc., 690 F. Supp. 752, 756-57 (S.D.Ind.1988) (employee's exposure to hazardous substance in workplace did not involve release into environment); and First United Methodist Church v. United States Gypsum Co., 882 F.2d at 867, n. 5 (noting with approval Knox and Covalt).
Even assuming that § 9658 was applicable, we would nonetheless affirm the judgment of the trial court because Becton failed to present substantial evidence that his injuries were caused by exposure to a hazardous substance released into the environment. Although Becton presented an affidavit in opposition to the defendants' motion for summary judgment, he merely stated in a conclusory manner that he had filed his action within two years of learning that his injuries were related to exposure to CS2 occurring "inside and outside" the facility, but he provided no facts as to how, when, or where he discovered the causal connection, why he could not have discovered it earlier, or the details of his exposure. See, e.g., Johnson v. Shenandoah Life Ins. Co., 291 Ala. 389, 281 So. 2d 636 (1973); Federal Savings & Loan Ins. Corp. v. Haralson, 813 F.2d 370, 377 n. 7 (11th Cir.1987). Furthermore, his affidavit provided only conjecture as to some unspecified duration and/or degree of exposure to carbon disulfide in the ambient air, and where, undisputedly, his most significant exposures, if any, occurred in the interior of the building where he was workingand thus were not caused by a "release into the environment," for purposes of § 9658that conjecture is insufficient to create a fact question. See, e.g., Riggs v. Bell, 564 So. 2d 882 (Ala.1990).
Moreover, the affidavit of Becton's medical expert filed in opposition to the defendants' motions for summary judgment was, as the trial court aptly held, "completely conclusory, *1142 speculative, and [lacking of] any proper foundation, in his testimony that, if plaintiff was exposed to carbon disulfide on his work clothing or in the open air outside the facility, `these exposures would have significantly contributed to his development of a carbon disulfide-related disease'" and it was insufficient to create a fact question. See, e.g., Morris v. Young, 585 So. 2d 1374 (Ala.1991); B.M. v. Crosby, 581 So. 2d 842 (Ala.1991); see, also, Viterbo v. Dow Chemical Co., 826 F.2d 420 (5th Cir.1987); Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed. 2d 469 (1993).
Although much criticism has been directed at the federal government for encroaching on the sovereignty of states, in the area of environmental law the federal government has set minimum standards for states to meet or exceed, see, e.g., the Clean Air Act and the Solid Waste Disposal Act. The potential ability of CERCLA's discovery rule to retroactively revive state-law-based claims for harm to persons or property from hazardous waste, which claims had previously expired under otherwise controlling state statutes of limitations, would seem to create several federalism issues as state government and federal government clash over which has the prerogative to control various facets of environmental policy. D. Marsh Prause, Environmental Provincialism, the Commerce Clause, and Hazardous Waste: The High Court Hazards A Guess, 27 Wake Forest L. Rev. 949 (1992). The rebirth of federalism in United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), may call into question the constitutionality of § 9658. See Adam Babich, Our Federalism, Our Hazardous Waste, and Our Good Fortune, 54 Md.L.Rev. 1516, 1551 (1995). However, because we hold that CERCLA does not apply under the facts of this case, it is unnecessary for us to determine any constitutional issue concerning § 9658's preemption of Alabama's applicable statute of limitations. See Lowe v. Fulford, 442 So. 2d 29 (Ala.1983) (stating that courts are reluctant to, and should not, reach constitutional issues unless to do so is absolutely necessary to the disposition of the case, but rather should decide the merits of the case on nonconstitutional grounds if possible) (cited with approval in Kinard v. Jordan, 646 So. 2d 1380, 1383 n. 5 (Ala.1994)). In light of the legislative purposes of CERCLA in remedying problems with existing hazardous waste sites and imposing liability on the operators and owners of such sites, and the legislative history behind § 9658, which reflects an intent to confine its purposes to the scope of CERCLA itself, we affirm the trial court's judgment.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, and SEE, JJ., concur.
KENNEDY, J., concurs in the result.
[1] West Berry Becton's wife, Mary L. Becton, was also a named plaintiff in this case. Her claim alleged a loss of consortium, based on her husband's personal injuries.
[2] Courtaulds PLC is a public limited company organized and existing under the laws of the United Kingdom. Through a chain of subsidiaries, Courtaulds PLC is the indirect parent of CFI, the Alabama corporation that owns and operates the rayon manufacturing plant in Axis, Alabama, where Becton was employed.
[3] The trial court also entered a summary judgment for defendants James R. Hunt, Herman Ross, Arnold Farmer, Roy Dean, Ed Johnson, Richard Prescott, Ross Laden, Harold Reynold, Colin Jennings, Nick Burroughs (at some points in the record this defendant's name is spelled "Burrows"), and John Stewart (Becton's co-employees) on the ground that the plaintiff West Berry Becton had failed to show by substantial evidence that the defendant coemployees had set out purposefully, intentionally, or by design to injure another. Grimes v. Stewart, 628 So. 2d 467 (Ala.1993); Reed v. Brunson, 527 So. 2d 102 (Ala. 1988); Merritt v. Cosby, 578 So. 2d 1242 (Ala. 1991). According to the case action summary, named defendants Johnny Clark and Jack Davis (also Becton's co-employees) were "stricken by amendment." C.R. 462-63. | November 7, 1997 |
e01c5b11-f1d2-4074-adc7-57bf23983904 | Ex parte Marvin Earl Pines. | N/A | 1130871 | Alabama | Alabama Supreme Court | REL:04/03/2015
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
____________________
1130871
____________________
Ex parte Marvin Earl Pines
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CRIMINAL APPEALS
(In re: Marvin Earl Pines
v.
State of Alabama)
(Montgomery Circuit Court, CC-12-429;
Court of Criminal Appeals, CR-12-0856)
PER CURIAM.
WRIT QUASHED. NO OPINION.
1130871
Stuart, Bolin, Parker, Shaw, Wise, and Bryan, JJ.,
concur.
Moore, C.J., and Murdock and Main, JJ., dissent.
2
1130871
MOORE, Chief Justice (dissenting).
Marvin Earl Pines was convicted of trafficking in
cannabis, a violation of § 13A-12-231(1)(a), Ala. Code 1975,
and was sentenced as a habitual offender to life imprisonment.
The Court of Criminal Appeals affirmed Pines's conviction and
sentence, without an opinion. Pines v. State (No. CR-12-0856,
March 21, 2014), ___ So. 3d ___ (Ala. Crim. App. 2014)
(table). This Court initially granted certiorari review; it
now quashes the writ. Because I believe Pines was entitled to
a judgment of acquittal on the ground of entrapment, I
respectfully dissent.
On the morning of September 16, 2011, Larry Wells, a
confidential informant working with the Montgomery Police
Department, contacted Cpl. M.K. Webster, an officer with the
Montgomery Police Department, informing Cpl. Webster that
Pines had agreed to sell Wells three pounds of marijuana.
Pines and Wells ultimately arranged for the exchange to take
place in the parking lot of a Winn-Dixie grocery store on the
Atlanta Highway in Montgomery. Once Pines arrived,
the
police,
who were watching from a distance, moved in and arrested
3
1130871
Pines. The police found approximately three pounds of
marijuana in Pines's vehicle.
Pines was indicted for trafficking in cannabis, a
violation of § 13A-12-231(1)(a), Ala. Code 1975. At trial,
Cpl. Webster testified that he had had sufficient evidence to
charge Wells with distribution of marijuana in an earlier case
but that Wells had agreed to serve as a confidential informant
in lieu of prosecution. Neither the State nor Pines called
Wells as a witness. At the close of the State's case-in-chief,
Pines moved for a judgment of acquittal on the ground of
entrapment, which motion was denied.
Pines testified in his own defense. According to Pines,
Wells had telephoned him four or five times on the evening of
September 15, 2011, asking Pines to sell him three pounds of
marijuana. Pines testified that he had refused each time,
explaining that he could not find three pounds of marijuana.
According
to
Pines,
Wells
telephoned
him
again
at
approximately 9:30 a.m. on September 16, 2011, asking Pines to
sell him three pounds of marijuana, and Pines again refused.
Pines testified that Wells telephoned him yet again at around
11:00 a.m. on September 16, 2011, and that, at that point,
4
1130871
Pines finally agreed to sell him the marijuana he was seeking.
Pines testified that his job paid only between $250 and $300
per week and that the thought of the extra money ultimately
led him to agree to sell Wells the marijuana. Pines further
testified that, after agreeing to sell Wells the marijuana, he
acquired three pounds of marijuana from a friend of his, who
was a drug dealer, and then went to meet Wells. Pines admitted
that he had prior drug-related convictions, but he testified
that the maximum amount of marijuana he had sold previously
was one-half of a pound.
At the close of his case-in-chief, Pines moved again for
a judgment of acquittal on the ground of entrapment. The trial
court again denied Pines's motion, but it instructed the jury
on the defense of entrapment. The jury returned a guilty
verdict. Pines was sentenced, as a habitual offender, to life
imprisonment. Pines was also ordered to pay a $25,000 fine,
1
court costs, a $100 fine to the Department of Forensic
Sciences, and a $50 crime-victims-compensation assessment.
Pines had been convicted three times of unlawful
1
possession of marijuana in the first degree, a violation of §
13A-12-213, Ala. Code 1975, a Class C felony.
5
1130871
On appeal, Pines's court-appointed trial counsel filed a
no-merit brief pursuant to Anders v. California, 386 U.S. 738
(1967). As part of the Anders procedure, the Court of
2
Criminal Appeals issued an order, offering Pines the
opportunity to present pro se any issues he wanted that court
to review, but he did not reply. After examining the record
and holding that there was "no basis for reversing the
judgment of the trial court," the Court of Criminal Appeals
affirmed Pines's conviction and sentence in an unpublished
memorandum. Pines v. State (No. CR-12-0856, March 21, 2014),
___ So. 3d ___ (Ala. Crim. App. 2014) (table). On April 2,
2014, the Court of Criminal Appeals appointed new counsel to
represent Pines on rehearing. Pines filed his application for
rehearing on April 21, 2014, which the Court of Criminal
Appeals overruled on April 24, 2014. Pines then petitioned
this Court for a writ of certiorari, which this Court granted
on June 16, 2014.
This Court reviews a trial court's order denying a motion
for a judgment of acquittal as follows:
Anders
provides
that
if
court-appointed
appellate
counsel
2
"finds his case to be wholly frivolous, after a conscientious
examination of it, he should so advise the court and request
permission to withdraw." Anders, 386 U.S. at 744.
6
1130871
"'Appellate courts are limited in reviewing a
trial court's denial of a motion for judgment of
acquittal grounded on insufficiency.' McFarland v.
State, 581 So. 2d 1249, 1253 (Ala. Crim. App. 1991).
'The standard of review in determining sufficiency
of evidence is whether evidence existed at the time
of [the defendant's] motion for acquittal was made,
from which the jury could by fair inference find the
[defendant] guilty.' Linzy v. State, 455 So. 2d 260,
261 (Ala. Crim. App. 1984) (citing Stewart v. State,
350 So. 2d 764 (Ala. Crim. App. 1977), and Hayes v.
State, 395 So. 2d 127 (Ala. Crim. App.), writ
denied, 395 So. 2d 150 (Ala. 1981)). In determining
the sufficiency of the evidence, we view the
evidence in the light most favorable to the State.
Linzy, supra."
Ex parte Burton, 783 So. 2d 887, 890-91 (Ala. 2000)
(alterations in the original).
Pines argues that the decision of the Court of Criminal
Appeals conflicts with Davis v. State, 570 So. 2d 791 (Ala.
Crim. App. 1990). In Davis, a government agent induced an
informant to persuade a third party to set up a drug
transaction with Ricky Davis. Davis kept refusing to
participate in the transaction, but he finally agreed after he
was telephoned on a daily basis for about a week. 570 So. 2d
at 792. Davis was arrested when the transaction occurred; he
was ultimately convicted of unlawful distribution. Id.
Before the Court of Criminal Appeals, Davis argued that
the evidence at trial was insufficient to negate his defense
7
1130871
of entrapment. The court defined "entrapment" as "'the
conception and planning of an offense by an officer, and his
procurement of its commission by one who would not have
perpetrated it except for the trickery, persuasion, or fraud
of the officer.'" 570 So. 2d at 793 (quoting Sorrells v.
United States, 287 U.S. 435, 454 (1932)). Alabama follows the
"subjective approach" in determining whether an entrapment
defense exists. Id.
"'A two-step test is used under the subjective
approach: the first inquiry is whether or not the
offense was induced by a government agent; and the
second is whether or not the defendant was
predisposed to commit the type of offense charged.
A defendant is considered predisposed if he is
'ready and willing to commit the crimes such as are
charged in the indictment, whenever opportunity was
afforded.'"
570 So. 2d at 793 (quoting 1 Wayne LaFave, Substantive
Criminal Law § 5.2(b) (1986)).
Regarding the proper allocation of the burden of proof
when the entrapment defense is raised, the Davis court stated:
"'The defendant must first come forward with
evidence sufficient to raise a jury issue "that the
Government's conduct created a substantial risk that
the offense would be committed by a person other
than one ready to commit it." United States v.
Mosley, 496 F.2d 1012, 1014 (5th Cir. 1974)[,]
citing Pierce v. United States, 414 F.2d 163, 168
(5th Cir. 1969). Once such issue is raised, the
8
1130871
government must prove beyond a reasonable doubt that
the defendant was predisposed to commit the charged
offense. Id. See also United States v. Gomez–Rojas,
507 F.2d 1213, 1218 (5th Cir. 1975).'"
Davis, 570 So. 2d at 795 (quoting United States v. Dickens,
524 F.2d 441, 444 (5th Cir. 1976)).
The Court of Criminal Appeals first considered whether
Davis had been induced by the government agent to arrange the
drug transaction. Citing Sorrells v. United States, 287 U.S.
435, 442 (1932), the court provided the following test for
determining whether a defendant has been induced:
"In Sorrells, supra, the United States Supreme
Court articulated the 'origin of intent test.' This
test permits invocation of the entrapment defense
'when the criminal design originates with the
officials of the Government, and they implant in the
mind of an innocent person the disposition to commit
the alleged offense and induce its commission in
order that they may prosecute.' Sorrells, supra, 287
U.S. at 442, 53 S.Ct. at 212–13."
570 So. 2d at 793. After holding that the origin-of-intent
test was broad enough to encompass inducement by an
unsuspecting middleman, the court reasoned that the crime was
"the creature of
[Agent
Cosey's] purpose" and that, therefore,
Davis had been induced by the government agent. Davis, 570 So.
2d at 794 (alteration in the original).
9
1130871
Turning to the second step of the test, the Davis court
analyzed whether Davis was predisposed to commit the offense:
"In the case at bar, it is undisputed that the
transaction complained of was not initiated by the
appellant. Indeed, the appellant rebuffed the
agent's advances on numerous occasions before
finally giving in so that they would cease 'bugging'
him. 'It is the response of the target when the
enterprise is initially proposed that can tell most
about the individual's predisposition. In many
entrapment cases, the accused exhibits reluctance,
and the inducing agent or private individual applies
pressure or persuasion, at the outset.' [Note,
Entrapment Through Unsuspecting Middlemen, 95 Harv.
L. Rev. 1139 (1982). (Footnotes omitted.)"
570 So. 2d at 795-96. The court also noted that there was no
evidence indicating that Davis had been a drug dealer, that
Davis did not know where to procure drugs to sell, and that
Davis did not make any profit off the sale. 570 So. 2d at 796.
Accordingly, the court reversed Davis's conviction and
rendered a judgment in his favor.
Applying Davis to the present case, the first issue is
whether Wells induced Pines to commit the offense. The
evidence tended to show that Wells, the government agent,
initiated the transaction with Pines. According to Pines,
Wells telephoned him four or five times on the evening of
September 15, 2011, and each time Pines refused to sell Wells
10
1130871
three pounds of marijuana. Pines testified that on the morning
of September 16, 2011, Wells telephoned Pines twice more, and
on the second telephone call Pines finally agreed to sell
Wells the marijuana. Thus, the crime was "the creature of
[Wells's] purpose." Davis, 570 So. 2d at 794.
The State argues that Pines was not induced because, it
argues, he actively participated in arranging the exchange
once he agreed to do it and that, therefore, at the very
least, the evidence was conflicting and the issue properly
went to the jury. I believe the State misapprehends the
inducement prong of the entrapment defense. Under the origin-
of-intent test, the relevant inquiry is whether the crime was
"the creature of the [government agent's] purpose." Davis,
570
So. 2d at 794. In this case, the evidence showed that the
transaction was Wells's idea. Because Pines "committed the
offense as a result of [Wells's] actions," Davis, 570 So. 2d
at 794, I believe Pines was induced to commit the offense of
trafficking in cannabis.
The next issue is whether Pines was predisposed to commit
the offense. Like the defendant in Davis, Pines initially
refused to commit the offense when the government agent sought
11
1130871
to induce him. Further, like the defendant in Davis, Pines
kept refusing to commit the offense when the government agent
kept telephoning him. Pines refused four or five times on
September 15, 2011, and once more on September 16, 2011,
before finally giving in on the sixth or seventh telephone
call, thus making Pines's response similar to Davis's.
Although Pines (unlike Davis) had a familiarity with drugs,
Pines testified that he had never sold three pounds of
marijuana and that he had never sold more than a half pound of
marijuana at one time.
Moreover, Pines repeatedly testified that he told Wells
he could not locate three pounds of marijuana. In my opinion,
it is impossible to prove that a defendant is "ready and
willing" to commit the offense of trafficking in cannabis,
which involves selling at least 2.2 pounds of marijuana, §
13A-12-231(1)(a), Ala. Code 1975, if the defendant cannot
locate the amount of marijuana necessary to complete the
offense and makes that known to the government agent. See
Davis, 570 So. 2d at 795 (holding that the accused must be
"ready and willing" to commit the crime). If Pines was unable
to perform as requested, then he certainly could not be ready
12
1130871
to commit the crime. Just as intoxication can negate the
ability to form the requisite intent to commit a crime, see
Lee v. State, 439 So. 2d 818, 821 (Ala. Crim. App. 1983), so
the inability to perform can negate the requisite readiness to
commit a crime. Given the evidence above, I am persuaded that
a jury could not find beyond a reasonable doubt that Pines was
predisposed to commit the crime of trafficking in cannabis.
Aside from the merits, the State argues that the writ is
due to be quashed for two reasons: (1) Pines did not raise the
entrapment issue in his initial brief on appeal, and (2) Pines
allegedly does not comply with the procedural requirements of
Rule 39, Ala. R. App. P., in making his conflict argument.
As to the State's first argument, Pines's counsel filed
a no-merit brief in the Court of Criminal Appeals pursuant to
Anders v. California, 386 U.S. 738 (1967). Anders provides the
following procedure when appellate counsel finds his or her
client's appeal to be without merit:
"[I]f counsel finds his case to be wholly frivolous,
after a conscientious examination of it, he should
so advise the court and request permission to
withdraw. That request must, however, be accompanied
by a brief referring to anything in the record that
might arguably support the appeal. A copy of
counsel's brief should be furnished the indigent and
time allowed him to raise any points that he
13
1130871
chooses; the court--not counsel--then proceeds,
after a full examination of all the proceedings, to
decide whether the case is wholly frivolous. If it
so finds it may grant counsel's request to withdraw
and
dismiss
the
appeal
insofar
as
federal
requirements are concerned, or proceed to a decision
on the merits, if state law so requires. On the
other hand, if it finds any of the legal points
arguable on their merits (and therefore not
frivolous) it must, prior to decision, afford the
indigent the assistance of counsel to argue the
appeal."
386 U.S. at 744 (emphasis added).
It is usually true that "[m]atters not argued in
appellant's brief on original submission cannot be raised for
the first time on application for rehearing." SouthTrust Bank
v. Copeland One, L.L.C., 886 So. 2d 38, 43 (Ala. 2003)
(opinion on application
for
rehearing). However, in this case,
newly appointed counsel raised the issue of entrapment in the
brief filed on application for rehearing in the Court of
Criminal Appeals. Under Anders, the Court of Criminal Appeals
had the responsibility to appoint new counsel for Pines before
rehearing to argue the issue, which I believe has merit; it
failed to do so. I do not agree that this Court should quash
the writ on that basis.
Secondly, the State argues that Pines did not adequately
state a conflict between the decision below and Davis. The
14
1130871
essence of the State's argument is that the Court of Criminal
Appeals held in its unpublished memorandum merely that it had
"reviewed the record and [could] find no basis for reversing
the judgment of the trial court." Thus, according to the
State, this Court would have to speculate as to why the Court
of Criminal Appeals could find no reason to reverse Pines's
conviction. I disagree. Whatever the Court of Criminal
Appeals' reasons were for finding Pines's entrapment defense
meritless, that court nonetheless affirmed Pines's conviction
and sentence. That affirmance conflicted with Davis because
Pines's motion for a judgment of acquittal should have been
granted.
Under the evidence discussed above, I do not believe that
the State had sufficient evidence to prove beyond a reasonable
doubt that Pines was predisposed to commit the crime of
trafficking in cannabis for which he was convicted. If this is
true, then "the law requires that [Pines's] conviction be
reversed and judgment rendered in his favor." Davis, 570 So.
2d at 796. I believe that Pines's motion for a judgment of
acquittal was due to be granted. I respectfully dissent.
Murdock, J., concurs.
15 | April 3, 2015 |
6d1b1616-52c6-4b96-abb9-34000204268e | Ellis v. Pope | 709 So. 2d 1161 | 1961789 | Alabama | Alabama Supreme Court | 709 So. 2d 1161 (1997)
Jim ELLIS, as circuit clerk of Coffee County; and Frank Gregory, as director of the Administrative Office of Courts
v.
Larry POPE, et al.
1961789.
Supreme Court of Alabama.
November 13, 1997.
Rehearing Denied January 23, 1998.
*1163 Bill Pryor, atty. gen., and Tori L. Adams-Burks, asst. atty. gen., for appellants.
Jeff W. Kelley of Lindsey, Kelley & McClung, Elba; Paul A. Young, Enterprise; and J. Stafford Pittman, Jr., Enterprise, for appellees.
PER CURIAM.
Larry Pope, Billy Ray Farris, and James Keith Johnson, civil and criminal defendants in actions presently pending in Coffee County, filed a declaratory judgment action asking that Act No. 96-454, Acts of Alabama 1996, be declared unconstitutional. That Act concerns the manner in which juries are selected in Coffee County, which has two judicial divisions: the Elba Division and the Enterprise Division. Jim Ellis, the circuit clerk of Coffee County, and Frank Gregory, the administrative director of courts, appeal from the trial court's judgment declaring Act No. 96-454 unconstitutional.
Thus, Act No. 96-454 requires that a Coffee County jury be drawn from the entire county's population, rather than from the population of that division of Coffee County wherein the trial is being held, i.e., the Elba Division or the Enterprise Division.
The trial court held that Act 96-454 violated Art. I, § 6, and Art. IV, § 105, of the Alabama Constitution. Art. I, § 6, provides, in part:
Art IV, § 105, provides:
The general act with which the trial court found Act 96-454 to conflict, § 12-16-44, Ala. Code 1975, requires that a jury venire be drawn from the division where the action is tried, rather than from the county at large. Section 12-16-44 provides:
On appeal, Ellis and Gregory argue that the trial court erred in declaring Act No. 96-454 unconstitutional; they also argue that the declaratory judgment action was an improper vehicle for deciding this issue. We hold that the declaratory judgment action was a proper method for testing the constitutionality of Act No. 96-454. See Ala.Code 1975, § 6-6-223; Tillman v. Sibbles, 292 Ala. 355, 294 So. 2d 436 (1974). Regarding the constitutionality of Act No. 96-454, we refer to the well-reasoned and thorough order of the trial court, a portion of which we quote below and adopt as this Court's opinion on the issues regarding Act No. 96-454:
The judgment of the trial court is affirmed.
AFFIRMED.
SHORES, KENNEDY, and BUTTS, JJ., concur.
ALMON, COOK, and SEE, JJ., concur in the result.
HOOPER, C.J., and MADDOX J., dissent.
SEE, Justice, concurring in the result.
Act No. 96-454, Acts of Alabama 1996, requires courts in Coffee County to draw *1168 jury venires from the county at large, even though Coffee County is divided into two territorial divisions. Although I concur with the result reached by the majority, I write separately to clarify my view of the only provision of the Constitution of Alabama of 1901 that Act No. 96-454 violates.[3]
Article IV, § 105, of the Constitution of Alabama of 1901 provides:
(Emphasis added.) This Court has held that § 105 prohibits the enactment of a local law that deals with a subject subsumed by a general statute. Peddycoart v. City of Birmingham, 354 So. 2d 808 (Ala.1978).
Section 12-16-44, Ala.Code 1975, a general statute, provides in pertinent part:
(Emphasis added.)[4] Thus, under § 12-16-44, a court sitting in a territorial subdivision of a county must draw its jurors from that territorial subdivision and not from the county at large. Coffee County is divided into two territorial subdivisions: the Elba Division and the Enterprise Division. Under § 12-16-44, the Coffee County Circuit Court, when sitting in the Elba Division, may draw jurors only from the territorial jurisdiction of that division and not from the county at large.
*1169 The Legislature also enacted Act No. 96-454, a local law,[5] which provides in pertinent part:
(Emphasis added.) Clearly, local Act No. 96-454 deals directly with the same subject as the general statute § 12-16-44, that is, the designation of the geographic area within a county from which jury venires are to be drawn.[6] I agree, therefore, with the main opinion that local Act No. 96-454 deals with a subject subsumed by § 12-16-44, and thus violates the prohibition of § 105 of the Constitution of Alabama of 1901 against certain local laws.[7]
I cannot agree with Justice Maddox's argument that the Legislature's enactment of Act No. 594, Acts of Alabama 1978, had the effect of repealing the general act, § 12-16-44, thereby avoiding a conflict between it and local Act No. 96-454. Although § 12 of Act No. 594 provides that inconsistent laws are repealed,[8] such repeals by inconsistency, that is, by implication, are not favored. Fletcher v. Tuscaloosa Fed. Sav. & Loan Ass'n, 294 Ala. 173, 177, 314 So. 2d 51, 54-55 (1975). The courts allow repeal by implication only when two statutes are in such conflict that the Legislature must have intended the latter to repeal the former. See id. (stating that implied repeals are not favored and will be allowed only when a conflict between a prior act and a subsequent act shows a clear intention to repeal the prior act). For example, in Vaughn v. State, 370 So. 2d 339 (Ala. Crim.App.1979), the Court of Criminal Appeals held that Act No. 594, Acts of Alabama 1978, which sets forth various jury service requirements other than age, did not impliedly repeal § 12-16-150(8), which provides that persons under the age of 19 or over the age of 65 may be challenged for cause.
Similarly, in this case Act No. 594, Acts of Alabama 1978, sets forth various requirements for juries other than drawing venires from territorial subdivisions. This creates no irreconcilable conflict with § 12-16-44, which provides that jury venires in counties with territorial subdivisions are to be drawn solely from those subdivisions. Section 12-16-57, which was added to the Code of Alabama 1975 by Act No. 594, provides that "[t]he *1170 jury commission for each county shall compile and maintain an alphabetical master list of all persons in the county who may be called for jury duty." (Emphasis added.)[9] Section 12-16-44 provides that "[w]henever a court ... is ... held in a territorial subdivision of the county, the jury commission shall... keep a separate roll ... for ... jurors residing in that territory." Section 12-16-44 merely requires that in those counties with courts that sit in territorial subdivisions, the jury commissions must keep separate territorial subdivision lists of jurors in addition to the county-wide master lists required by § 12-16-57. Section 12-16-57 does not mandate that jurors living in one territorial subdivision must be allowed to serve in another territorial subdivision in contradiction to § 12-16-44. Thus, there is no irreconcilable conflict between § 12-16-44 and the subsequently enacted § 12-16-57 such that the latter impliedly repeals the former.
An examination of those sections specifically repealed by Act No. 594, Acts of Alabama 1978, reinforces the conclusion that no irreconcilable conflict exists between a requirement for a county-wide list of jurors and the requirement that jury venires be drawn from territorial subdivisions. Section 11 of Act No. 594 expressly repealed, among others,[10] § 12-16-42, which provided in pertinent part:
(Emphasis added.) Like current § 12-16-57, prior law§ 12-16-42required the jury commission to keep a roll of all the qualified jurors in the county. Yet this Court never held that the requirement of § 12-16-42 for a county-wide list of jurors created an irreconcilable conflict with the requirement of § 12-16-44 that jury venires be drawn from territorial subdivisions in those counties with such subdivisions. The current law, § 12-16-57, creates no more conflict with § 12-16-44 than did the prior law, § 12-16-42, and we are bound to construe those provisions so as to avoid conflict. See Ex parte Jackson, 625 So. 2d 425, 428 (Ala.1992) (stating that sections of the Code originally constituting single act must be read in pari materia in order to produce a harmonious whole); League of Women Voters v. Renfro, 292 Ala. 128, 131, 290 So. 2d 167, 169 (1974) (stating that sections of the Code dealing with the same subject matter are in pari materia and, as a general rule, such statutes should be resolved in favor of each other to form one harmonious plan and give uniformity to the law). Accordingly, § 12-16-57 did not repeal § 12-16-44 by implication.
Section 12-16-44 is a general statute that specifically requires courts in counties with *1171 territorial subdivisions to draw their jury venires from those subdivisions. Section 12-16-44 remains a valid law. Because local Act No. 96-454 deals with the subject subsumed by § 12-16-44, it violates § 105 of the Constitution of Alabama of 1901 and must be declared invalid.[11]
HOOPER, Chief Justice, dissenting.
This is to be a "government of laws and not of men." Ala. Const. of 1901, § 43. The plain wording of the Alabama Constitution and of Act No. 96-454 indicates there is no conflict between the two. I join Justice Maddox's dissent, but add specifically that Act No. 96-454 does not violate Article I, § 6, of the Alabama Constitution of 1901. This provision reads in pertinent part:
Ala. Const.1901, art. I, § 6 (emphasis added). Under the main opinion, Coffee County jurors must reside in both the county and the district where the offense occurred.
This reading violates the plain language of § 6. The drafters of our Constitution inserted a disjunctive into the provision, making it clear that the jury pool need only be drawn from the appropriate county or district. The reading adopted by the main opinion has the effect of rewriting our Constitution by adding the conjunctive "and." Section 6 was not drafted to read "county and district," but reads "county or district." Clearly, a juror may be drawn from either political subdivision.
Moreover, I would note that the trial court's construction effectively paralyzes counties that, like Coffee County, might decide a divisional pool is no longer feasible. It appears that a county using a countywide pool may draw its jurors from anywhere in the county, but once a county is split into divisions, the jury pool must forevermore be drawn from the individual divisions or else the drawing will violate the Constitution. Apparently, under this new version of § 6, the decision to divide a county into divisions has become irrevocable.
MADDOX, Justice, dissenting.
In a special concurring opinion in General Motors Corp. v. Hopper, 681 So. 2d 1373 (Ala. 1996), I stated unequivocally that I believed that the practice of selecting jurors from only a division of a court within a county is contrary to the policy and intent the people of Alabama expressed when they ratified the Judicial Article to the Alabama Constitution and is contrary to the legislative intent expressed in Act No. 594, Ala. Acts 1978 (the 1978 Jury Selection Act), codified at Ala. Code 1975, §§ 12-16-55 through 12-16-64, which is patterned after the Uniform Juror Selection and Service Act.
In my special concurrence in Hopper, I stated that I was of the opinion that the public policy of this State relating to jury service contemplated a uniform system in each county throughout the State. This public policy is evidenced by § 12-16-57, which specifically provides that the jury commission for each county "shall compile and maintain an alphabetical master list of all persons in the county who may be called for jury duty, with their addresses and any other necessary identifying information." I also explained that any local acts of the Legislature providing for the selection and service of jurors other than one consistent with the general policy of selecting jurors on a county-wide basis would not be uniform.
The policy of Act No. 594 was stated in § 1 of that Act; it now appears in the Code as § 12-16-55, which reads as follows:
(Emphasis added.) On several occasions, this Court has addressed the purpose of Act No. 594. Although most of what this Court has written has been written in criminal cases, the policy is equally applicable to civil cases. In Beck v. State, 396 So. 2d 645 (Ala. 1980), this Court discussed the policy of that Act, as follows:
396 So. 2d at 653-54 (emphasis added).
In other cases, this Court, in addressing this latest expression of legislative policy regarding jury selection and service as it was expressed in Act No. 594, has stated:
Ex parte Branch, 526 So. 2d 609, 618-19 (Ala. 1987).
The main opinion, in affirming the decision of the trial court, substantially adopts the reasoning used by the trial court in holding that Act No. 96-454 is unconstitutional. I believe the opinion errs because Act No. 96-454 is not only consistent with the public policy of this State as expressed in Act No. 594, Ala. Acts 1978, but is also consistent with federal constitutional requirements of due process.
In summary, I am of the opinion that when the Legislature passed Act No. 594, it intended to adopt a uniform policy for juror selection and service, to be applied in every county of this state. I realize that § 12-16-44 contains language referring to a "territorial subdivision" and that that language seems to conflict with the provisions of Ala.Code 1975, § 12-16-55, and I am aware that § 12-16-44 was not specifically repealed by Act No. 594. However, I believe, in view of the many references to "county" in Act No. 594, that the provisions of Act No. 59, Acts of Alabama 1939 (now appearing as Ala.Code 1975, § 12-16-44), were repealed by the general repealer clause. Act No. 594 substantially adopted the provisions of the Uniform Juror Selection and Service Act, and the whole intent of the Judicial Article and the acts the Legislature adopted pursuant thereto was to provide uniformity of procedure. To hold that an act of the Legislature that attempts to foster uniformity violates the State Constitution seems incongruous.
HOOPER, C.J., concurs.
[1] The appellants and the appellees agree that the trial court's reference to Act No. 183, Acts of Alabama 1909, was an apparent miscitation, and that the trial court must have intended to cite Act 227, Acts of Alabama 1909, which concerns the selection of jurors from territorial subdivisions to which the trial court refers. Act No. 227, Acts of Alabama 1909, was examined and discussed at the trial of this action.
[2] We note that the trial court also held Act No. 96-454 to violate the 6th and 14th Amendments to the United States Constitution. Because the judgment was adequately and properly grounded on the Alabama Constitution of 1901, we need not consider the holding regarding the 6th and 14th Amendments.
[3] I agree with Chief Justice Hooper that Act No. 96-454 does not violate § 6 of the Constitution of Alabama of 1901.
[4] Section 12-16-44 provides in its entirety:
"Whenever a court requiring grand and petit juries or petit juries is established for and held in a territorial subdivision of the county, the jury commission shall make and keep a separate roll and make a separate box for that court and territorial subdivision, on which roll and in which box only the names of jurors residing in that territory shall be placed, which box shall be kept by the clerk of said court and the key thereof by the judge of said court, and all jurors for that court shall be drawn by the judge of said court as provided in this article from the separate jury box provided under this section and shall be summoned as provided by law for summoning jurors otherwise drawn. The names of jurors whose names are required to be placed on the roll and in the box provided for in this section shall not be placed on any other roll nor in any other box nor shall any such person be authorized or required to serve as a juror in any court outside of said territorial subdivision.
"If there is more than one court requiring grand and petit juries or petit juries established for and held in such territorial subdivision of the county, all of such courts shall procure their juries from the box provided for in this section.
"This section is intended to apply to any division of a court that is held in such territorial subdivision, including the probate court. It is not the object or effect of this section to repeal or affect any local law."
(Emphasis added.) The reference to "a court ... established for" a territorial subdivision could arguably be read to apply only to a court, or a division of a court for which a separate judge is elected, that is legally established for a geographic portion of a county (consider the Bessemer Division of the Circuit Court of Jefferson County, Act No. 213, Acts of Alabama 1919). However, the subsequent statement that "[t]his section is intended to apply to any division of a court that is held in such territorial subdivision" makes it clear that the Legislature intended also to require that jury venires in those counties where a single court sits in territorial subdivisions (e.g., the Elba Division of the Circuit Court of Coffee County, Act No. 569, Acts of Alabama 1907) be drawn from the territorial subdivision in which the court is sitting.
[5] As the trial court held, Act No. 96-454 is a local act because it deals solely and specifically with Coffee County. Peddycoart v. City of Birmingham, 354 So. 2d 808, 813-14 (Ala.1978).
[6] Ala.Code 1975, § 12-16-44, also provides: "It is not the object or effect of this section to repeal or affect any local law." The defendants argue that this language means that § 12-16-44 does not exclusively occupy the field of jury selection, and thus does not subsume the subject dealt with by local Act No. 96-454. Section 105 of the Constitution of Alabama of 1901 expresses a policy favoring general statutes over local laws. Unless the Legislature plainly states that it intends general and local laws dealing with the same subject to coexist, § 105 sets aside the local law in favor of the general law. The use of the term "repeal" in the language quoted from § 12-16-44 indicates that the phrase was intended to operate only on local laws in existence at the time the language was adopted in 1919. See Act No. 387, Acts of Alabama 1919. Because the Legislature did not precede the verb "affect" with any language indicating an intention to allow the future adoption of local laws on the same subject, the quoted language does not overcome the constitutional presumption favoring general laws. See generally Ross Jewelers v. State, 260 Ala. 682, 687, 72 So. 2d 402, 405 (1953). Cf. Baldwin County v. Jenkins, 494 So. 2d 584 (Ala. 1986) (respecting the nonexclusivity of a general statute only after the Legislature amended that statute to add the words "[u]nless otherwise provided by local law" for the express purpose of eliminating the § 105 issue with local laws dealing with the same subject as the general statute). Consequently, local Act No. 96-454 addresses a subject exclusively dealt with by § 12-16-44, a general statute, and is therefore invalid.
[7] Moreover, the defendants fail to establish satisfactorily that local Act No. 96-454 serves any particular local needs in Coffee County not addressed by § 12-16-44. See Miller v. Marshall County Bd. of Educ., 652 So. 2d 759, 761 (Ala. 1995) (stating that special local needs may save a local act from invalidity under § 105 if those needs are not served by a general statute dealing with the same subject).
[8] Section 12 of Act No. 594 provides: "All laws and parts of laws in conflict with the provisions of this act are to the extent of such conflict hereby repealed." Because a direct inconsistency will in any event effect a repeal, "[a]n express general repealing clause to the effect that all inconsistent enactments are repealed, should legally be a nullity." 1A Sutherland Stat. Constr. § 23.08, p. 334 (5th ed.1993).
[9] Ala.Code 1975, § 12-16-57, provides in its entirety:
"(a) The jury commission for each county shall compile and maintain an alphabetical master list of all persons in the county who may be called for jury duty, with their addresses and any other necessary identifying information. This list may include all registered voters, persons holding drivers' licenses and registering motor vehicles, and may include other lists, such as lists of utility customers and persons listing property for ad valorem taxation, which will include persons whose listing will foster the policy and protect the rights provided in Sections 12-16-55 and 12-16-56. The list shall avoid duplication of names. The list shall be reviewed and corrected and new names added from time to time, but at least once every four years.
"(b) Whoever has custody, possession or control of any lists used in compiling the master list shall make the list available to the jury commission for inspection, reproduction and copying at all reasonable times.
"(c) The master list shall be open to the public for inspection at all reasonable times."
[10] Section 11 of Act No. 594, Acts of Alabama 1978, provides: "Sections 12-16-2 [persons exempted from jury duty], 12-16-4 [excusing unfit persons from jury service], 12-16-5 [excusing of exempt or disqualified persons from jury service], 12-16-39 [clerk of the jury commission duties], 12-16-41 [duty of jury commission to prepare jury roll], 12-16-42 [preparation, maintenance, etc., of jury roll, cards and box], and 12-16-43 [qualifications of persons to be placed on jury roll] of the Code of Alabama 1975 are hereby expressly repealed." I note that the Legislature had the opportunity to expressly repeal § 12-16-44 in Act No. 594, but chose not to do so. See 1A Sutherland Stat. Constr. § 23.11, p. 362 (5th ed. 1993) ("[T]he existence of a specific repealer is considered to be some evidence that further repeals by implication are not intended by the legislature.").
[11] Of course, under current precedent, if the Legislature wished to allow local laws requiring county-at-large jury venires in counties with territorial subdivisions, it could simply amend § 12-16-44 to include the words "unless otherwise provided by local law." See Baldwin County v. Jenkins, 494 So. 2d 584 (Ala.1986) (holding that the Legislature's amendment of a general statute dealing with the term of office for county commissioners to add the words "[u]nless provided by local law" allowed a subsequently enacted local law dealing with the same subject to survive a challenge under § 105). | November 13, 1997 |
e9c025e4-db69-4e3e-b98c-3f94aa745bd2 | Warehouse Home Furnishing Distributors, Inc. v. Whitson | 709 So. 2d 1144 | 1950534 | Alabama | Alabama Supreme Court | 709 So. 2d 1144 (1997)
WAREHOUSE HOME FURNISHING DISTRIBUTORS, INC., d/b/a Farmers Furniture
v.
Jackie E. WHITSON, et al.
1950534.
Supreme Court of Alabama.
October 10, 1997.
Rehearing Denied January 23, 1998.
*1146 William S. Pritchard III, James G. Henderson, and Nina M. LaFleur of Pritchard, McCall & Jones, L.L.C., Birmingham; and B. Clark Carpenter, Jr., of Wooten, Thornton, Carpenter, O'Brien, Lazenby & Lawrence, Talladega; Allen I. Hirsch, J. Randolph Evans, and Debra G. Buster of Arnall, Golden & Gregory, Atlanta, GA, of counsel, for appellant.
*1147 Lanny S. Vines, Lloyd W. Gathings, and Michael L. Allsup of Emond & Vines, Birmingham, for appellees (brief on application for rehearing filed by Floyd W. Gathings, of Gathings & Associates, Birmingham).
John R. Chiles and Richard H. Sforzini, Jr., of Sirote & Permutt, P.C., Birmingham, for amici curiae Alabama Retailers Ass'n and the Alabama Financial Services Ass'n.
KENNEDY, Justice.
Warehouse Home Furnishing Distributors, Inc., d/b/a Farmers Furniture ("Farmers Furniture") is a Georgia corporation that sells furniture, jewelry, and appliances. It operates 10 stores in Alabama, all of which provide financing if the customer requests it.
According to Farmers Furniture, until May 1986, its practice was to file a UCC-1 financing statement in order to protect its security interest in items that it financed for customers. Beginning in May 1986, Farmers Furniture began charging its customers a premium for what it called "nonfiling insurance," rather than filing a UCC-1 statement. When financing an item for a customer, Farmers Furniture also charged the customer for property insurance, unemployment insurance, accident and health insurance, and credit life insurance. The insurance premiums were included in the amount financed. Farmers Furniture then paid the premiums to its insurance company and was entitled to make certain claims on the insurance if a customer defaulted on the loan.
Jackie Whitson, Aubrey Strickland, Robin Gamble, and Rena Yates, seeking to act as representatives of a class made up of Farmers Furniture customers who had paid certain insurance premiums when they financed goods, sued Farmers Furniture. They alleged that Farmers Furniture had charged premiums for nonfiling insurance, property insurance, credit life insurance, accident and health insurance, and unemployment insurance in violation of the Alabama Consumer Credit Act, § 5-19-1 et seq., known as the "Mini-Code." They also alleged that Farmers Furniture had committed fraud in charging these premiums.
The certification excluded from the class the following persons:
The plaintiffs moved for a partial summary judgment holding that it was a violation of the Mini-Code for Farmers Furniture to charge a nonfiling insurance premium for customers who purchased and financed goods having a purchase price of $2,000 or less and whose financing contract had a scheduled payment on or after April 25,1993. The trial court entered a partial summary judgment declaring that violation; voided the contracts in which the violation had occurred; and assessed damages for the violations. It made the partial summary judgment final pursuant to Rule 54(b), Ala.R.Civ.P. Farmers Furniture appealed the certification of the class and the partial summary judgment.
We note that the plaintiffs' claims regarding fraud and the other insurance premiums charged to customers seeking financing are still pending in the trial court and that our review is limited to whether the court properly certified the class and whether the partial summary judgment was proper.
First, we will address the class certification. Rule 23, Ala.R.Civ.P., states certain prerequisites to be met in order for one to proceed with a class action: (1) the class must be so numerous that joinder is impracticable; (2) there must be questions of law or fact common to the class; (3) the claims or *1148 defenses of the class representatives must be typical of the claims or defenses of the class; and (4) the class representatives must be able to fairly and adequately protect the interests of the class.
We note that Rule 23 of the Alabama Rules of Civil Procedure reads the same as Rule 23 of the Federal Rules of Civil Procedure and that we consider federal case law on class actions to be persuasive authority for the interpretation of our own Rule 23. Adams v. Robertson, 676 So. 2d 1265 (Ala. 1995), writ dismissed, 520 U.S. 83, 117 S. Ct. 1028, 137 L. Ed. 2d 203 (1997).
The prerequisites of a class action are commonly referred to as "numerosity," "commonality," "typicality," and "adequacy." Numerosity and commonality concern the entire class, while typicality and adequacy concern the nexus of the named class representatives with the class itself. Georgine v. Amchem Products, Inc., 83 F.3d 610 (3d Cir.1996), aff'd. sub nom. Amchem Products, Inc. v. Windsor, ___ U.S. ___, 117 S. Ct. 2231, 138 L. Ed. 2d 689 (1997). The United States Supreme Court noted in General Tel. Co. of the Southwest v. Falcon, 457 U.S. 147, 157-58 n. 13, 102 S. Ct. 2364, 2370-71 n. 13, 72 L. Ed. 2d 740 (1982):
The first prerequisite has been met, given that the class as defined has over 13,000 members. The exact number is not now known, because Farmers Furniture apparently has not complied with the trial court's order to provide the names and addresses of the persons who would be members. However, Farmers Furniture does not dispute that at least this many customers financed their purchases and were charged certain insurance premiums.
The second prerequisite is met by the fact that there are common questions of fact with regard to the insurance premiums charged by Farmers Furniture, including the nonfiling insurance premium to which the partial summary judgment relates. See DeBoer v. Mellon Mortgage Co., 64 F.3d 1171 (8th Cir.1995) (commonality requirement met even though each customer had a separate contract with the bank, where main point of contention centered on allegation that the bank demanded too high an escrow balance for its mortgage loans), cert. denied, 517 U.S. 1156, 116 S. Ct. 1544, 134 L. Ed. 2d 648 (1996).
The conduct that is common to the class, according to the plaintiffs' arguments, is that Farmers Furniture created the "nonfiling insurance" charge to surpass the maximum finance charges allowed by the Mini-Code, to defraud the customer, and thereby to illegally increase its profits. Other conduct common to the class as a whole concerns the other credit insurance fees charged to financing customers that the plaintiffs say the Mini-Code did not allow Farmers Furniture to include in the amount a customer could finance and/or for which illegally high premiums were charged. As stated earlier, the claims regarding the other kinds of insurance are still pending, along with the fraud claim related to the charge for "nonfiling insurance."
Farmers Furniture contends that some of the class members' claims regarding the Mini-Code and the insurance premiums are barred by the statute of limitations. However, this does not mean that the class certification is barred. "The fact that questions peculiar to each individual member of the class may remain after the common questions have been resolved does not, by itself, mandate a refusal to grant class certification." Cosgrove v. First & Merchants National Bank, 68 F.R.D. 555, 560 (E.D.Va. 1975). Even if the limitations period has run on some of the class members' claims with regard to the Mini-Code violations, there is still a fraud claim based on this same conduct. *1149 See, e.g., Kennedy v. Tallant, 710 F.2d 711 (11th Cir.1983).
As to the third prerequisite, that the claims of the class representatives must be typical of the claims of the class, the plaintiffs met this requirement. All of the plaintiffs have had Farmers Furniture finance their purchase of consumer goods and have been charged for certain insurance premiums that the plaintiffs allege were fraudulent and/or in violation of the Mini-Code.
Farmers Furniture argues that only one of the class representatives has claims typical of the claims adjudicated by the partial summary judgment. We disagree. All of the class representatives have financed purchases through Farmers Furniture and as part of their finance transactions have paid for the nonfiling insurance that is the subject of the summary judgment, and all of them have paid those premiums to which the pending claims relate. The essence of the typicality requirement is that the relationship between the injury to the class representative and the conduct affecting the entire class of plaintiffs must be sufficient for the court to properly attribute a collective nature to the challenged conduct. In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir.1996).
Typicality exists when a plaintiff/class representative's injury arises from or is directly related to a wrong to a class and that wrong to the class includes the wrong to the plaintiff. Andrews v. American Tel. & Tel. Co., 95 F.3d 1014 (11th Cir.1996) (class representatives did not have to participate in a wide variety of "900" telephone number games of chance and credit-card offers to suffer harm typical of the class as a whole). Farmers Furniture charged each of the class representatives the very same insurance premiums (nonfiling insurance and the several types of credit insurance) that it charged to each class member; this fact makes the class representatives' claims "typical" of the claims of the class.
We find nothing in Farmers Furniture's brief to indicate that the class representatives are not adequately representing the class as a whole. The class representatives have appeared for depositions and are knowledgeable about the facts and the basic legal theories. Based on their individual deposition testimony, we conclude that each of them understands the theory behind the lawsuit, and we find nothing to indicate that any class representative has an interest that conflicts with the interests of the absent class members. See C.R. 1724-1824, 1830-1970, 1981-2124, 2131-2228.
As support for its argument concerning adequacy, Farmers Furniture cites Rothenberg v. Security Management Co., 667 F.2d 958 (11th Cir.1982), for the proposition that a named plaintiff who admittedly lacked any familiarity with the complaint or personal knowledge of the complaint was inadequate to serve as a representative. However, the facts in Rothenberg differ from the facts of this present case. First, in Rothenberg, the underlying action was a shareholder's derivative action and not a class action under Rule 23, Fed.R.Civ.P. The plaintiff in Rothenberg also showed an obvious refusal to become informed about her case, in that, during her third deposition, she still knew little about the lawsuit.
Farmers Furniture contends that "none of the named plaintiffs knows the first thing about this litigation, nor do they seem to care." (Appellant's brief, at 43.) We find, after reviewing the record, that all of the class representatives have indicated a knowledge of the charges imposed by Farmers Furniture against them and a willingness to proceed with the lawsuit on behalf of the class.
Farmers Furniture contends that two of the named representatives have criminal histories and, therefore, should not be class representatives. In support of this argument, it cites Armour v. City of Anniston, 89 F.R.D. 331 (N.D.Ala.1980), aff'd, 654 F.2d 382 (5th Cir.1981). Armour is easily distinguishable from the present case because in Armour the named representative perjured herself during the trial. The court held that her perjury with regard to the lawsuit barred her from representing the class. Additionally, the court held that the representative's *1150 claims were not typical of the claims of the entire class.
One of the two class representatives with criminal histories was charged with shoplifting many years ago and was arrested for assault after she and her ex-husband got into a fistfight. The assault charge was later dropped. The other representative was charged with DUI and with making harassing communications to a man who had threatened his wife. These charges also occurred several years before this lawsuit was filed. Unlike the perjured testimony in Armour, these two representatives' criminal activity was totally unrelated to the case and had happened years before the case was filed. We find nothing to indicate that these two representatives would not be fully capable of representing the class as a whole. Of course, evidence of the criminal activity may be admissible to impeach the representatives if the proper predicate is laid.
Farmers Furniture argues that certain of the class representatives should not be allowed to represent the class because, Farmers Furniture says, two of them had given away the goods they had purchased and another had purchased the goods for commercial use without telling Farmers Furniture of that fact. Farmers Furniture contends that these actions destroyed its security interest in the goods, and, therefore, it argues that these representatives do not have standing. We disagree. The crux of the plaintiffs' argument is that Farmers Furniture charged the nonfiling fee as protection against bad debt and not in lieu of filing a UCC-1 financing statement, as Farmers contends. Neither perfecting a security interest through the filing of a UCC-1 financing statement nor automatic perfection would protect a lender against bad debt. Therefore, such alleged action by the class representatives does not affect their standing to challenge the "nonfiling" fee.
Farmers Furniture presented evidence indicating that some of the class representatives had purchased additional consumer goods through "add-on" contractscontracts by which if a consumer has signed a financing contract for an item and later decides to finance the purchase of more items, the new contract would list as the amount financed the debt owed on the old purchase and the amount of the new purchase, but would list as collateral only the new goods. Farmers Furniture contends that its purchase money security interest in the old goods would be destroyed by the add-on contracts and the unpaid amount that had been financed under the original contract would not be secured under the add-on contract. It further argues that the class representatives with add-on contracts and any other class members with add-on contracts should not be part of the class.
However, add-on contracts do not always destroy perfection. If the add-on contract provides some method for determining the extent to which each item of collateral secures its purchase money, then an additional sale does not destroy perfection. Southtrust Bank v. Borg-Warner Acceptance Corp., 760 F.2d 1240 (11th Cir.1985); In re Freeman, 124 B.R. 840 (N.D.Ala.1991),aff'd, 956 F.2d 252 (11th Cir.1992); In re McCall, 62 B.R. 57 (M.D.Ala.1985).
The Farmers Furniture contract provided for a "first in, first out" method of allocating payments to debts in the order in which those debts were incurred. A purchase money security interest can survive an "add-on" sale when express contractual language allocating payments is present. In re Campbell, 129 B.R. 1020, 1023 (Bankr. S.D.Ala.1991) (add-on contract with first in, first out system of allocating payments to debts in the order in which those debts were incurred creates a properly perfected security interest).
Once the prerequisites have been met, the class action must fit within one of the types of classes described in Rule 23(b). The trial court found that the class and the relief sought by the class fell within Rule 23(b)(2), which relates to the situation in which "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole."
*1151 In Adams v. Robertson, we held that so long as the relief sought is primarily equitable or injunctive, a class action settlement that also includes money damages with a mandatory non-opt-out provision is proper. 676 So. 2d at 1271. We noted that simply because a class action settlement may ultimately result in an award of money damages does not prevent class certification under Rule 23(b)(1) or (b)(2).
We find persuasive DeBoer v. Mellon Mortgage Co., 64 F.3d 1171 (8th Cir.1995), cert. denied, 517 U.S. 1156, 116 S. Ct. 1544, 134 L. Ed. 2d 648 (1996), wherein the Court of Appeals for the Eighth Circuit dealt with a case involving excess escrowing of mortgage accounts. In DeBoer, some class members argued that the class should be certified under Rule 23(b)(3), thus allowing class members to opt out. The court held that whenever subsection (b)(1) or (b)(2) is applicable, subsection (b)(3) should not be used, so as to avoid unnecessary inconsistencies and compromises in future litigation. DeBoer, 64 F.3d at 1175, citing Reynolds v. National Football League, 584 F.2d 280 (8th Cir.1978) (discussing (b)(1)); 7A Charles A. Wright et al.,Federal Practice and Procedure §§ 1772, 1775, and 1777 (1986) (discussing (b)(1) and (b)(2) and noting that the privilege to opt out should be operable only when the class action is maintainable under Rule 23(b)(3) alone).
The DeBoer court held that certification under Rule 23(b)(2) was appropriate because the class sought injunctive relief against the alleged overescrowing practices. 64 F.3d at 1175, quoting 7A Wright et al., supra, § 1775, at 470 ("If the Rule 23(a) prerequisites have been met and injunctive or declaratory relief has been requested, the action usually should be allowed to proceed under subdivision (b)(2)"). The DeBoer court noted that any prejudice as to a class member's ability to opt out was "`outweighed by the purposes behind class actions: eliminating the possibility of repetitious litigation and providing small claimants with a means of obtaining redress for claims too small to justify individual litigation.'" 64 F.3d at 1175, quoting Wetzel v. Liberty Mut. Ins. Co., 508 F.2d 239, 249 (3d Cir.), cert. denied, 421 U.S. 1011, 95 S. Ct. 2415, 44 L. Ed. 2d 679 (1975).
In the instant case, the plaintiffs asked that the loans be voided and that money damages be awarded. (C.R.49.) The plaintiffs also request any other appropriate relief, which might include injunctive relief as to the pending claims in order to prevent the alleged misconduct.
Based on the foregoing, we find no error in the trial court's certification of the class.
Farmers Furniture charged the nonfiling insurance premium and included it as part of the money financed in regard to the loan for the consumer good. The plaintiffs contend that including the $10 nonfiling fee as part of the loan violated the Mini-Code because, they argue, the nonfiling fee was not "insurance." The plaintiffs argue that Farmers Furniture's charging a premium for insurance, in lieu of perfecting a security interest by filing a UCC-1 statement, violated the Mini-Code and was fraudulent because, they say, the security interest was already perfected by operation of law. Therefore, the plaintiffs say the nonfiling premium was not "insurance," there being no risk for Farmers Furniture. (As stated earlier, the claims regarding the other types of insurance, and the fraud claim involving nonfiling insurance, are still pending in the trial court.)
To enter a summary judgment, the trial court must determine that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ.P. In determining whether a summary judgment was properly entered, the reviewing court must view the evidence in a light most favorable to the nonmoving party. Rule 56 is read in conjunction with the "substantial evidence rule" stated in § 12-21-12, Ala.Code 1975, for actions filed after June 11, 1987. Under the substantial evidence rule, once the movant makes a prima facie showing that there is no genuine issue of material fact, the nonmovant must rebut that showing by presenting "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West *1152 v. Founders Life Assurance Co., 547 So. 2d 870, 871 (Ala.1989).
The purpose of the Mini-Code is to protect members of the public when they are dealing with those who make consumer loans; it seeks to achieve this purpose through strict regulation and supervision of the creditors themselves. Derico v. Duncan, 410 So. 2d 27 (Ala.1982).
Farmers Furniture included the $10 nonfiling insurance premium in the amount of money financed by the customer; it subsequently remitted the premium to its insurance company. The plaintiffs contend that the nonfiling premium was, at best, a "finance charge," and therefore, was not to be included in the amount financed.
The Mini-Code defines a "finance charge" as:
§ 5-19-1(1).
The Federal Truth-in-Lending Act, cited in § 5-19-1(1), excludes from computation of a finance charge premiums for "insurance in lieu of perfecting any security interest" in the property. 15 U.S.C. § 1605(d).
According to Farmers Furniture, it charged the nonfiling insurance premium in order to protect its interest in the goods financedit says it chose to protect its interest in this manner rather than by filing a UCC-1 financing statement. Accordingly, Farmers Furniture contends that if the customer defaulted on the loan it would be insured against any losses due to its inability to repossess the goods because it had not filed the UCC-1 financing statement.
A UCC-1 financing statement perfects a security interest in personal property. That is, Farmers Furniture lends money to the customer to buy a piece of personal property and, in exchange for the loan, the customer gives Farmers Furniture an interest in the personal property while the customer repays the loan principal plus interest. If the customer defaults on the loan, Farmers Furniture can repossess the personal property.
However, in the case of a purchase money security interest in consumer goods, the security interest is automatically perfected under § 7-9-302(d)(1), Ala.Code 1975, and no UCC-1 financing statement has to be filed in order for the security interest to be perfected. Farmers Furniture argues that the nonfiling insurance premium it charged to its financing customers was intended to protect it against loss due to the inability to repossess the goods because no financing statement had been filed. However, under Alabama law, it already had a security interest in the goods. Therefore, Farmers Furniture was charging the customer for nonfiling insurance in lieu of perfecting a security interest by filing a UCC-1 financing statement, when the security interest was automatically perfected by law.
Insurance exists when a contractual relationship between the insurer and the insured shifts the risk of loss from the insured to the insurer. Strength v. Alabama Dep't of Finance, 622 So. 2d 1283 (Ala.1993). There was no shifting of risk from Farmers Furniture to its insurance company because there was absolutely no risk of loss due to an unperfected security interest, i.e., there was no need for Farmers Furniture to insure itself for not filing a UCC-1 financing statement (presumably to protect its interest in the property), because its security interest was automatically perfected.
*1153 Because Farmers Furniture's security interest was automatically perfected, the nonfiling insurance "premium" cannot be a "charge in lieu of perfecting any security interest" and is, thus, part of the finance charge and not a part of the amount to be financed. See Tumlin v. Wedlo, Inc. (In re Tumlin), Ch. 13 Case No. 94-41320, Adv. No. 94-40584 (N.D. Ala., April 17, 1995) (because the defendant's security interest in jewelry was automatically perfected, the nonfiling insurance could not qualify as a "charge in lieu of perfecting any security interest" and, therefore, was a finance charge). The nonfiling insurance premium cannot be considered insurance, because there was no shifting of the risk; Farmers Furniture had no risk, because of its automatically perfected security interest.
Additionally, the charge for "nonfiling insurance" cannot be considered an insurance premium because of the language in the contract between Farmers Furniture and its insurance company. That contract contained a clause that stated:
This clause means that the insurance company would never have to pay out more in claims than 93% of the nonfiling insurance premiums paid to the insurance company by Farmers Furniture. Any payout on claims is based entirely on the amount of premiums remitted by Farmers Furniture; it would not come from a pool of premiums collected from similarly situated creditors. The insurance company retained 7% of the premiums, calling it an "administrative fee."
Here is an example of how the policy worked. If Farmers Furniture financed 10 items, each costing $75, for 10 different customers, each customer paid $10 for the nonfiling insurance premium; that $10 was included in the amount financed. Farmers Furniture would remit $100 to the insurance company (10 customers × $10). If a customer defaulted, Farmers Furniture could make a claim against its policybut its total claims could be no more than 93% of the premiums paid.
Assume that all 10 customers defaulted. Farmers Furniture could make a claim under the policy and could receive $93. However, each of the items was worth $75, making the total value $750 (10 items × $75). Remember that the purpose of charging the nonfiling premium was to protect Farmers Furniture against the risk incurred as a result of its not filing UCC-1 financing statements and, presumably, its being unable therefore to repossess the item itself in case of a default. All Farmers Furniture would receive would be 93% of the premiums it had paid, not 93% of the value of the item financed.
The insurance company had no risk, because it never paid out more in "claims" than it collected in premiumsthat is because in regard to the aggregate claims it would not have paid Farmers Furniture what all the items were worth but rather would have paid a total amount no greater than 93% of the total premiums paid by Farmers Furniture. Similarly, Farmers Furniture had no risk, because it had an automatically perfected security interest; this meant it could repossess the item financed without having filed a UCC-1 financing statement.
The plaintiffs argue in the alternative that if the nonfiling premium was indeed insurance, it was "default" insurance and was not insurance "in lieu of perfecting any security interest." The losses on which claims would be paid under this default policy included losses due to "bankruptcy, skips, and destroyed goods." (C.R.1341.) Thus, claims made under the policy were not made to cover losses occurring because Farmers Furniture could not repossess the item; the actual claims made under the policy were made on items that could not be repossessed because the customer had filed for bankruptcy protection, had skipped town, or had somehow *1154 destroyed the goods. Therefore, the policy as applied did not provide insurance to cover losses that occurred because there was no financing statement; rather, it would have been insurance to cover losses occurring because it was impossible to repossess the item. The Mini-Code allows a lender to exclude from the "finance charge" an insurance premium that insures the creditor for losses occurring as a result of the lender's not "perfecting any security interest," but it does not allow the lender to exclude a charge for "default" insurance. In sum, Farmers Furniture's nonfiling premiums were used to create a reserve for bad debts and were not used to provide insurance.
Farmers Furniture cites Mitchell v. Industrial Credit Corp., 898 F. Supp. 1518 (N.D.Ala.1995), for the proposition that the nonfiling fees it charges are insurance premiums and, therefore, are properly included in the amount of money financed, rather than part of the finance charge. First, we note that Mitchell did not involve purchase money security interests in consumer goods (i.e., it did not involve lending the consumer money to buy a particular good). Rather, in Mitchell, the defendant was making loans secured by collateral already owned by the plaintiffs, for which collateral the nonfiling insurance was appropriate. However, the Mitchell court entered a partial summary judgment for one of the plaintiffs, as to whose property a security interest already had been perfected when he was subsequently charged a nonfiling insurance premium:
898 F. Supp. at 1528 (emphasis added).
In Mitchell, the court held that including the nonfiling insurance premium as part of the amount financed violated the Mini-Code because the security interest was already perfected and, thus, the nonfiling insurance premium was not an insurance charge, but was a finance charge. Stated differently, the security interest was already perfected and the defendant therefore should not have charged the plaintiff for nonfiling insurancethere was no need to file, given the existing perfection.
We find persuasive a recent Florida case in which consumers were charged $7 in relation *1155 to the purchase and financing of consumer goods. The consumers sued Badcock Furniture, alleging that the $7 charge was in reality part of the charge for credit and thus was part of the "finance charge" and thus that Badcock had violated the Florida Deceptive Trade Practices Act and the Truth-in-Lending Act. The court held:
W.S. Badcock Corp. v. Myers, 696 So. 2d 776, 782-83 (Fla.Dist.Ct.App.1996).
Accordingly, the trial court did not err in holding that there was no genuine issue of material fact as to whether the nonfiling insurance premium was a finance charge rather than a charge for insurance in lieu of perfecting a security interest.
The next question is whether the plaintiffs' evidence required the holding that Farmers Furniture acted "deliberately" when it included the nonfiling premium as part of the amount to be financed rather than as part of the finance charge. Again, by including the nonfiling premium in the amount to be financed, it increased the amount of the loan to be financed by Farmers Furniture and the amount of interest that could be earned.
If the nonfiling premiums are taken out of the "amount financed" and, instead, are included as a "finance charge," as they should have been, then the financing charge exceeds what is allowed under the Mini-Code, § 5-19-3. The plaintiffs contend that Farmers Furniture acted deliberately in making the excessive finance charges and that because it did so damages pursuant to § 5-19-19 should be imposed. The trial court agreed; it ordered that the loan contracts that charged nonfiling premiums be voided and that the class members be reimbursed for all the money they had paid under those contracts.
We think that the question whether Farmers Furniture deliberately violated the Mini-Code should be answered by a jury. We agree with what the Court of Civil Appeals stated in Ingram v. Bank of Brewton, 340 So. 2d 815, 817 (Ala.Civ.App.1976): "Whether *1156 the making of an excess charge was made with deliberateness or reckless disregard is a question of fact to be answered from the evidence." The judgment is affirmed to the extent it holds that the charge was not a charge for insurance in lieu of filing and holds that the charge violated the Mini-Code. It is reversed to the extent it voided the contracts that included that charge and assessed damages for the violation.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
ALMON, SHORES, and COOK, JJ., concur.
BUTTS, J., concurs in the result.
MADDOX, HOUSTON, and SEE, JJ., concur in part and dissent in part.
HOOPER, C.J., dissents.
HOUSTON, Justice (concurring in part and dissenting in part).
The mere fact that the lien insurance Farmers bought from an insurance company had a 93% stop-loss feature did not make the lien insurance any less insurance. Ala.Code 1975, § 27-1-2; Schoepflin v. Tender Loving Care Corp., 631 So. 2d 909 (Ala.1993); Metmor Financial, Inc. v. Commonwealth Land Title Insurance Co., 645 So. 2d 295 (Ala.1993). Farmers had a written insurance contract with Voyager Guaranty Insurance Company (which contract had been approved by the Alabama Department of Insurance) pursuant to which Farmers turned over to Voyager the nonfiling premiums obtained from the named plaintiffs and the members of the plaintiff class. Voyager placed these premiums into a fund against which Farmer was entitled to make claims for losses occasioned by nonfiling of UCC-1 financing statements.
The trial court's conclusion that the automatic perfection of certain purchase money security interests obviates the need for lien insurance, must naturally lead to automatic perfection obviating the need to perfect liens by filing a UCC-1 financing statement. However, there are situations in which the purchase money security interest does not arise. For example, if the item purchased was not for home use. Ala.Code 1975, § 7-9-302(1)(d). One of the named plaintiffs bought a washer and dryer from Farmers to use in her home tanning salon. Did Farmers have a purchase money security interest in the washer and dryer? Likewise, Farmers would lose its purchase money security interest if the purchaser gives the purchased goods away as a gift. Ala.Code 1975, §§ 7-9-307, 7-1-201(32), and 7-1-201(44)(d). One of the named plaintiffs made purchases from Farmers for the express purpose of giving the goods away as a gift. Another named plaintiff gave furniture she had purchased from Farmers to a friend. Did Farmers have a purchase money security interest in the goods that were given away? If a purchaser filed a bankruptcy petition or made additional purchases through add-on contracts, Farmers would lose its purchase money security interest. In re Freeman, 124 B.R. 840 (N.D.Ala.1991), aff'd, 956 F.2d 252 (11th Cir.1992). Three of the four named plaintiffs had add-on contracts. Did Farmers have a purchase money security interest in the property originally purchased? If the named plaintiffs' claims are typical of the class (and they must be for this to be properly certified as a class action), then it is obvious that Farmers had a need for lien insurance.
I am of the opinion that the class was properly certified under Rule 23(b), Ala. R.Civ.P.; however, I think the trial court erred in making Farmers pay the cost of notice. Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 98 S. Ct. 2380, 57 L. Ed. 2d 253 (1978); Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974). I do not believe that notice is mandatory, since this involves a Rule 23(b)(2) class.
I agree that it is for the trier of fact to determine whether Farmers acted "deliberately" when it included the nonfiling premium as a part of the amount financed rather than as a finance charge.
MADDOX and SEE, JJ., concur.
HOOPER, Chief Justice (dissenting).
I dissent. Once again, the Court seems to be creating a cause of action specifically for the use of plaintiffs in class actions. The *1157 $10.00 charge for nonfiling insurance was not a finance charge. It was a charge intended to provide for the seller-creditor protection in lieu of the protection provided by a UCC filing, and, therefore, it is excluded from the calculation of the finance charge. Federal Truth-In-Lending Act, 15 U.S.C. § 1605(d). It costs the purchaser no more to pay this fee for nonfiling insurance than he or she would pay if the lender filed a UCC financing statement and imposed on the purchaser the charge for filing.
If this Court is trying to stop businesses from selling to people who can buy only on credit, then it is doing a good job. With rulings like this, the Court seems to be attempting to become a babysitter for people in every walk of society.
The nonfiling fee is not a finance charge. It is a protection charge. Therefore, I dissent. | October 10, 1997 |
f8bb6e8b-2252-4cf0-8e20-1bf02e9b2e31 | Safeway Ins. Co. v. Amerisure Ins. Co. | 707 So. 2d 218 | 1951122, 1951123 | Alabama | Alabama Supreme Court | 707 So. 2d 218 (1997)
SAFEWAY INSURANCE COMPANY OF ALABAMA, INC.
v.
AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Greg Acton and Sherry Acton.
SAFEWAY INSURANCE COMPANY OF ALABAMA, INC.
v.
AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Ray Williams and Martha Williams.
1951122, 1951123.
Supreme Court of Alabama.
November 7, 1997.
Tom R. Ellis and Ronald C. Wall, Jr., of Kracke, Thompson & Ellis, Birmingham, for appellant.
*219 H.L. Ferguson, Jr., and Terry McElheny of Dominick, Fletcher, Yeilding, Wood & Lloyd, P.A., Birmingham, for appellee.
Russell Jackson Drake of Cooper, Mitch, Crawford, Kuykendall & Whatley, Birmingham, for amicus curiae Alabama Trial Lawyers Ass'n, in support of appellee Amerisure Ins. Co.
SEE, Justice.
In these appeals from two garnishment actions, Amerisure Insurance Company ("Amerisure") seeks post-judgment interest from Safeway Insurance Company of Alabama, Inc. ("Safeway"). The claim for post-judgment interest arises from a judgment in an automobile-accident case in which Safeway, the insurer for one of the defendants, was held liable for a portion of the judgment. The trial court held: (1) that Safeway's conditional offers to pay its policy limits to the plaintiffs in the earlier case did not prevent post-judgment interest from accruing; and (2) that Safeway was liable for interest on the entire amount of the judgment, including the amount in excess of its policy limits. We affirm.
In 1991, Robert Caldwell was driving a vehicle owned by Paul Dunn when that vehicle collided with a vehicle in which Greg and Sherry Acton were riding. The accident also involved a vehicle in which Ray and Martha Williams were riding.[1] The Actons and the Williamses filed actions against Caldwell and Dunn.
Amerisure insured Caldwell, and Safeway insured Dunn. Amerisure and Safeway secured counsel to represent Caldwell and Dunn. Before the trial of the two cases, which were tried together, counsel for the Actons and the Williamses offered to settle the case for the policy limits of the insurance coverage provided by Amerisure ($50,000) and by Safeway ($50,000), provided that counsel for Caldwell and counsel for Dunn accepted the offer at least seven days before trial. After the offer by the Actons and the Williamses had expired, and before a judgment was entered, counsel for Caldwell and counsel for Dunn made two offers of the insurance policy limits. These offers were conditioned on the Actons and the Williamses' releasing Caldwell and Dunn from all liability in excess of the policy limits. Counsel for the Actons and the Williamses refused these late offers and tried the case.
In March 1992, the trial court entered a judgment against Caldwell and Dunn, jointly, for a total of $353,000. Caldwell and Dunn filed for bankruptcy protection. Counsel for Caldwell and counsel for Dunn made two post-judgment offers to pay the total insurance policy limits of $100,000. These offers were conditioned on the Actons and the Williamses' releasing Caldwell and Dunn from all liability in excess of the policy limits. Counsel for the Actons and the Williamses refused these conditional offers. The judgment was appealed to this Court, which affirmed without an opinion. Caldwell v. Acton and Caldwell v. Williams (Nos. 1911830 and 1911831, August 20, 1993) 629 So. 2d 814 (Ala.1993) (table).
In May 1995, the Actons and the Williamses filed garnishment actions against Amerisure and Safeway, seeking to recover the amount of the outstanding judgments, plus accumulated post-judgment interest. Amerisure and Safeway admitted liability for their respective policy limits, but denied any liability for post-judgment interest. After a hearing, the trial court entered a judgment holding Amerisure and Safeway liable for their respective $50,000 policy limits and jointly and severally liable for post-judgment interest on the entire amount of the judgment, $353,000, which included the amount in excess of the $50,000 limit of each of the policies.
Amerisure settled with the Actons and the Williamses in exchange for an assignment of their rights against Safeway. Amerisure, now realigned as a plaintiff/appellee in these appeals, seeks to enforce the trial court's order holding Safeway jointly and severally liable for post-judgment interest on the entire amount of the judgment, not only on its $50,000 policy limits.
Safeway first argues that under the terms of its policy it is not liable for any post-judgment interest because it made two prejudgment offers to pay its policy limits to the plaintiffs. Safeway's policy provides in pertinent part: "Our duty to pay [post-judgment interest] ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage." (Emphasis added.) Safeway argues that under this language its liability for post-judgment interest ended when it made the prejudgment offers, even though the offers were conditioned on the release of all claims for damages in excess of the amount of the policy limits. See Farmers Alliance Mut. Ins. Co. v. Bethel, 812 F.2d 412 (8th Cir. 1987); Insurance Co. of Pennsylvania v. Giles, 196 Ga.App. 271, 395 S.E.2d 833, cert. denied, 196 Ga.App. 908 (1990). We disagree.
A close examination of the cases cited by Safeway convinces us that these cases do not support Safeway's contention that an offer conditioned on settlement is sufficient to terminate its obligation to pay post-judgment interest. In Farmers Alliance, 812 F.2d at 413, the insurer's counsel made several offers to pay the insurer's policy limits to the plaintiffs. The Court of Appeals for the Eighth Circuit held that these offers, which were not conditioned on the plaintiffs' abandonment of claims for damages in excess of the policy limits, terminated the insurer's liability to pay post-judgment interest. Id. ("[The insurer's counsel's] offers were refused through no fault of the insurer."). Similarly, in Giles, 196 Ga.App. at 271-72, 395 S.E.2d at 834, the insurer's counsel made several offers to pay the insurer's policy limits, but the plaintiffs agreed to delay receipt of the insurance proceeds until after final judgments were obtained in several actions so that the insurance proceeds could be prorated among the plaintiffs accordingly. Id. at 273, 395 S.E.2d at 835. The Court of Appeals of Georgia held that the offers, which were not conditioned upon a release of all liability in excess of policy limits, relieved the insurer of its obligation to pay post-judgment interest. Id. at 274, 395 S.E.2d at 836 (citing Farmers Alliance, supra).
In contrast to the offers in Farmers Alliance and Giles, supra, every prejudgment and post-judgment offer made by Safeway was expressly conditioned on the Actons and the Williamses' releasing all claims against Dunn in excess of the policy limits. Safeway, thus, did not offer its policy limits, but instead offered something substantially less its policy limits minus all claims for damages in excess of those limits.[2] See Cochran v. Auto Club Ins. Ass'n, 169 Mich.App. 199, 425 N.W.2d 765 (1988) (holding that insurer's offer to pay policy limits, conditioned on a full release of the defendants, was insufficient to stop the running of post-judgment interest); see generally Equitable Life Assurance Soc. of the United States v. Roberts, 232 Ala. 539, 168 So. 569 (1936) (holding that an offer containing material conditions was ineffective to terminate an obligation to pay interest on life insurance proceeds owed to the plaintiff).[3] Thus, we hold that because Safeway imposed a material condition on its offers to pay the policy limits, those offers did not terminate Safeway's contractual liability *221 for post-judgment interest.[4]
Safeway next argues that its joint and several liability for post-judgment interest should not extend to the entire amount of the judgment, $353,000, but should be confined to the interest on $50,000, the amount of its policy limits. In interpreting an insurance policy, we will construe ambiguities against the insurer that drafted the clause in question, but will give effect to the reasonably determined intent of the parties. See Alabama Ins. Guaranty Ass'n v. Magic City Trucking Serv., Inc., 547 So. 2d 849, 855-56 (Ala.1989); Employers Ins. Co. of Alabama, Inc. v. Jeff Gin Co., 378 So. 2d 693, 695 (Ala.1979); Billups v. Alabama Farm Bureau Mut. Cas. Ins. Co., 352 So. 2d 1097, 1102 (Ala.1977). The relevant portion of Safeway's policy provides:
(Emphasis added.)
If the first sentence of paragraph 3 had stated that Safeway was liable for "all interest" or "interest on the entire judgment," we could easily conclude that it was liable for post-judgment interest on the entire amount of the judgment. Alternatively, if the first sentence had stated that Safeway would pay only the interest accruing on "that part of the judgment which does not exceed our limit of liability," a phrase we know Safeway was fully capable of using because it did so in the very next sentence, we could easily conclude that Safeway was liable only for post-judgment interest on an amount equal to its policy limits. Instead, Safeway's "supplementary payments" clause is ambiguous. It simply does not define the numerical base on which post-judgment interest is to be computed. Thus, the general rule that requires the construction of ambiguous insurance policy language against the insurer militates in favor of requiring payment of post-judgment interest on the entire amount of the judgment.
We would not lightly hold, however, that an insurer is liable for post-judgment interest on a potentially unlimited judgment based solely on a general canon of construction without substantial authority reasonably showing that the insurer intended such a result. Some courts have considered it reasonable to require the insurer to pay interest on the entire judgment because it is the insurer, not the insured, who controls the decision to appeal, that is, the decision to incur post-judgment interest. Thus, it might be reasonable to conclude that the insurer intended to pay the interest that it alone determined to incur. See C.T. Drechsler, Annotation, Liability Insurer's Liability for Interest and Costs on Excess of Judgment Over Policy Limit, 76 A.L.R.2d 983, 985 (1961); see, e.g., United Services Auto. Ass'n v. Russom, 241 F.2d 296 (5th Cir.1957). On the other hand, some courts have considered it unreasonable to require the insurer to pay post-judgment interest on the entire judgment because interest represents payment for the use of money, and it is the policyholder, not the insurer, that during the pendency of the appeal has use of the money in excess of the policy limits. Thus, it might be reasonable to conclude that the insurer did not intend to pay for the use of money that it did not enjoy. See Drechsler, Liability for Interest, 76 A.L.R.2d at 986; see, e.g., United *222 States Fidelity & Guaranty Co. v. Hotkins, 8 Misc.2d 296, 170 N.Y.S.2d 441 (Sup.Ct.1957).
These conflicting judicial rationales produced a reaction by the insurance industry:
B.G. Ramsey, Interest on Judgments Under Liability Insurance Policies, 414 Ins. L.J. 407, 411 (1957) (quoting a directive from the National Bureau of Casualty Underwriters to its members). The National Bureau recommended that the language of standard "supplementary payments" clauses be changed to make the numerical base on which post-judgment interest should be computed perfectly clear. Id. See Norman E. Risjord, Underwriting Intent, 7 Fed. of Ins. Counsel Q. 41 (1956) (noting that after a divergence of interpretations by courts, a standard clause was developed that made it clear that the intent of the insurers was to pay interest on the entire amount of the judgment).
Both commentators and courts have now adopted the rationale that the insurer's control of whether post-judgment interest is incurred requires the insurer to pay such interest on the entire amount of the judgment. For example, an author of a leading insurance treatise states:
John Alan Appleman & Jean Appleman, Insurance Law and Practice § 4894.25 (1981). The significance of control of the litigation is evidenced in Safeway's own policy, which limits its liability for post-judgment interest to that interest incurred in a "suit we defend."[5]
Since the 1950s, a clear majority of the courts that have addressed the issue have held the insurer liable for interest on the entire judgment. Compare, e.g., Providence Washington Ins. Co. v. Fireman's Fund Ins. Cos., 778 P.2d 200, 203 (Alaska 1989) (holding insurer liable for post-judgment interest on entire judgment amount, not just on policy limits); Southern Farm Bureau Cas. Ins. Co. v. Robinson, 236 Ark. 268, 275-76, 365 S.W.2d 454, 459 (1963) (same); Security Ins. Co. v. Houser, 191 Colo. 189, 552 P.2d 308 (1976) (same); Aetna Cas. & Sur. Co. v. Protective Nat'l Ins. Co. of Omaha, 631 So. 2d 305, 309 (Fla.Dist.Ct.App.1993) (same), rev. denied, 641 So. 2d 1346 (Fla.1994); Southeast Atl. Cargo Operators, Inc. v. First State Ins. Co., 216 Ga.App. 791, 795, 456 S.E.2d 101, 104 (1995) (same); Hartford Acc. & Indem. Co. v. Aetna Ins. Co., 173 Ill.App.3d 665, 123 Ill.Dec. 312, 527 N.E.2d 950 (1988) (same), aff'd, 132 Ill. 2d 79, 138 Ill.Dec. 145, 547 N.E.2d 114 (1989); Farm Bureau Mut. Ins. Co. v. Milne, 424 N.W.2d 422, 424 (Iowa 1988) (same); Glenn v. Fleming, 247 Kan. 296, 309, 799 P.2d 79, 87-88 (1990) (same); McLemore v. Fox, 565 So. 2d 1031, 1037-38 (La.App.) (same), cert. denied, 569 So. 2d 966 (La.1990); Matich v. Modern Research Corp., 430 Mich. 1, 25-27, 420 N.W.2d 67, 77-78 (1988) (same); Stibal v. Carland, 381 N.W.2d 855, 857-58 (Minn.App.1986) (same); Coventry v. Steve Koren, Inc., 1 Ohio App.2d 385, 205 N.E.2d 18 (same), aff'd, 4 Ohio St.2d 24, 211 N.E.2d 833 (1965); Bossert v. Douglas, 557 P.2d 1164, 1168 (Okla.App.1976) (same); Incollingo v. Ewing, 474 Pa. 527, 537-38, 379 A.2d 79, 84-85 (1977) (same); Western Cas. & Sur. Co. v. Preis, 695 S.W.2d 579 (Tex.App.1985) (same); and McPhee v. American Motorists Ins. Co., 57 Wis.2d 669, 205 N.W.2d 152, 159 (1973) (same), with, e.g., Faulkner v. Smith, 747 S.W.2d 592 (Ky.1988) *223 (holding that insurer's liability for interest was limited to interest on policy limits); Shnarch v. Empire Mut. Ins. Co., 144 A.D.2d 795, 535 N.Y.S.2d 180 (1988) (same); Crook v. State Farm Mut. Auto. Ins. Co., 235 S.C. 452, 112 S.E.2d 241 (1960) (same).[6] The Supreme Court of Colorado stated the majority view as follows:
Houser, 191 Colo. at 192, 552 P.2d at 310 (internal quotation marks and citations omitted).
Given that the insurer drafted the policy, that it controlled the decision whether to incur post-judgment interest, and that it had the option to avoid such interest by paying its policy limits, we are compelled to conclude that Safeway's ambiguous supplementary payments clause requires that Safeway pay post-judgment interest on the entire amount of the judgment. The judgment of the trial court is affirmed.
1951122AFFIRMED.
1951123AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
[1] The accident also involved a vehicle in which Mark and Susan Jacks were riding. The Jackses filed a separate action against Caldwell and Dunn that is not part of these appeals.
[2] We also note that when the Actons and the Williamses made a prejudgment offer to Safeway to settle for the policy limits, Safeway did not accept. The offer expired by its express terms seven days before trial. See generally Cater v. Haralson, 362 So. 2d 242 (Ala.Civ.App.) (stating that an offeror may establish conditions as to acceptance of the offer), writ denied, 362 So. 2d 244 (Ala.1978); Martin v. Black, 21 Ala. 721 (1852) (noting that time of acceptance is a term of the offer and if a certain time for acceptance is not specified, a reasonable time will be implied by the court). Thus, Safeway's offer of its policy limits after the plaintiffs' offer had expired was not an acceptance of that offer.
[3] We note that the use of the term "offer" in Safeway's policy to effect an end to its contractual liability to pay interest, rather than the term "tender" or "payment," does not affect our conclusion. The interest clauses in the policies dealt with in Farmers Alliance, 812 F.2d at 413, and Giles, 196 Ga.App. at 273, 395 S.E.2d at 835, used language identical to that in the Safeway policy, and the rationale of those opinions supports the conclusion that Safeway cannot append material conditions to its offer and still terminate its liability to pay interest.
[4] Safeway also contends that the garnishment proceedings below were deficient in two respects: (1) it says the trial court based its order on disputed facts; and (2) the Jackses, who Safeway says may have an interest in the proceeds of Safeway's policy because of a separate action, were not notified of the proceeding. The record, however, shows that the dispositive facts, including Safeway's conditioning of its offers on the plaintiffs' release of all claims for damages in excess of its policy limits, are undisputed. Further, the record shows that the Jackses' attorney was fully apprised of the garnishment proceedings.
[5] Safeway does not argue that it lacked control of the litigation on behalf of Dunn.
[6] The majority of these cases have interpreted "standard" interest clauses that require payment of "all interest accruing after a judgment," instead of "interest accruing after a judgment," as used in Safeway's supplementary payments clause. In view of the multitude of jurisdictions that have embraced the control-of-the-litigation rationale, which applies with equal force to Safeway, the mere omission of the word "all" is insufficient to express a clear intent to restrict Safeway's liability for post-judgment interest to interest on the amount of its policy limits. Instead, the omission of the word "all," which leaves undefined the base on which post-judgment interest is computed, only emphasizes the ambiguity of Safeway's supplementary payments clause.
Moreover, in Insurance Co. of Pennsylvania v. Giles, 196 Ga.App. 271, 395 S.E.2d 833, cert. denied, 196 Ga.App. 908 (1990), the Georgia Court of Appeals dealt with a supplementary payments clause identical to that contained in Safeway's policy"interest accruing after the judgment." In Giles, 196 Ga.App. at 274-75, 395 S.E.2d at 836, Judge Deen dissented regarding a separate issue, but noted that the great weight of authority, which relies on the control-of-the-litigation rationale, should also govern the interpretation of a supplementary payments clause that did not contain the word "all." A majority of the Court of Appeals of Georgia subsequently embraced Judge Deen's analysis. Southeast Atl. Cargo Operators, Inc. v. First State Ins. Co., 216 Ga.App. 791, 795, 456 S.E.2d 101, 104 (1995). Accord Pinto v. Buckeye Union Ins. Co., 193 Mich.App. 304, 484 N.W.2d 9, 11 (1992) (holding insurer liable for post-judgment interest on entire judgment amount under nonstandard supplementary payments clause). | November 7, 1997 |
b74ea1d8-3223-4df4-9efc-533d4203ca9c | Pace v. State | 714 So. 2d 332 | 1960029 | Alabama | Alabama Supreme Court | 714 So. 2d 332 (1997)
Ex parte State of Alabama.
(In re Levi PACE
v.
STATE).
1960029.
Supreme Court of Alabama.
August 29, 1997.
Rehearing Denied November 14, 1997.
*333 Bill Pryor, atty. gen., and Joseph G. L. Marston III, asst. atty. gen., for petitioner.
J. Timothy Kyle, Decatur; and Arthur Orr, Decatur, for respondent.
BUTTS, Justice.
We granted the State's petition for a writ of certiorari in order to answer a question of criminal law we believe has been not fully resolved by the Court of Criminal Appeals. In Pace v. State, 714 So. 2d 320 (Ala.Cr.App. 1996), that court reversed Levi Pace's conviction for capital murder[1] on the following grounds: (1) that black persons were discriminated against in the selection of grand jury forepersons in Morgan County and Pace's indictment should have been dismissed by the trial court;[2] (2) that the trial court should have struck two prospective jurors for cause based on their answers to questions during voir dire that indicated they would have voted to impose the death penalty even if the court's instructions called for a sentence of life imprisonment without parole under the facts of the case; (3) that when Pace indicated to the trial court that he wanted to represent himself during arraignment *334 the trial court should have held a hearing on Pace's request and the court erred in unilaterally denying it; and (4) that the trial court erred in admitting into evidence during the penalty phase of the trial a case action summary sheet indicating that Pace had previously been charged with murder, that on that previous charge he had pleaded not guilty, and that that charge had been dismissed.
This case has had an unusual history in the Court of Criminal Appeals. In a May 26, 1995, opinion, that court remanded the case for the trial court to hold a hearing, in accordance with Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986), regarding Pace's allegation that the prosecutor's strikes of black prospective jurors during voir dire examination was motivated by racial reasons. That opinion was later withdrawn on application for rehearing; the substituted opinion, released on July 28, 1995, remanded the case for not only a Batson hearing, but also a hearing on Pace's allegation that black persons had been systematically discriminated against in the selection of grand jury forepersons in Morgan County solely on the basis of their race. In that opinion, the Court of Criminal Appeals stated, with regard to the issue involving the selection of the grand jury foreperson: "There is no question that [Pace's] motion [to dismiss his indictment] was not timely. However, this is a case involving the death penalty and this court is obliged to search the record for plain error. Rule 45A, Ala.R.App.P." 714 So. 2d at 320.
On return to the Court of Criminal Appeals following remand, that court on July 3, 1996, issued an opinion reversing Pace's capital murder conviction and his death sentence, based on his having proven racial discrimination in the selection of grand jury forepersons in Morgan County, and based on other findings of reversible error. In relation to the issue involving the selection of the grand jury foreperson, the court quashed Pace's capital murder indictment and stated that he could be reindicted. However, in that opinion the Court of Criminal Appeals did not say whether it had applied a "plain error" analysis to the issue involving discrimination in the selection of the grand jury foreperson. On application for rehearing, the Court of Criminal Appeals, on September 27, 1996, withdrew its July 3, 1996, opinion and substituted a new opinion; that September 27, 1996, opinion also reversed Pace's conviction and sentence and quashed his indictment based on his showing of racial discrimination in the selection of grand jury forepersons. The September 27 opinion also failed to state whether the Court of Criminal Appeals had applied a "plain error" analysis to that issue.
The State contends that the Court of Criminals Appeals applied a "plain error" analysis to the issue involving discrimination in selection of grand jury forepersons, but that the error in the selection of the grand jury foreperson was not "plain error" and, therefore, that the Court of Criminal Appeals erred in reversing Pace's conviction on that ground and erred in quashing his indictment. We granted the State's petition for a writ of certiorari to determine whether, on the basis of that particular allegation of error, the Court of Criminal Appeals correctly reversed Pace's conviction and quashed his indictment. We also consider certiorari review necessary in this case to prevent confusion among the members of the bench and bar of Alabama in an important area of criminal law.
Based on our own review of the trial court record, we conclude that Pace's motion to dismiss his indictment based on alleged racial discrimination was not timely. Rule 12.9, Ala.R.Cr.P., requires that a motion to dismiss an indictment be filed before the defendant is arraigned on the charge stated in the indictment. The only exceptions in Rule 12.9 to the pre-arraignment timing for moving to dismiss an indictment are that when the trial court sets a later deadline or when counsel is appointed for the first time at arraignment, an additional reasonable length of time is allowed for the defendant to move to dismiss the indictment. In this case, the trial court did not set a post-arraignment deadline for Pace to move to dismiss his indictment, and, although Pace had a change of appointed counsel after his arraignment, his original appointed counsel was appointed before arraignment and had the opportunity *335 to file a motion to dismiss Pace's indictment prior to arraignment, but did not do so.
Generally, absent a timely objection to an alleged error and a ruling by the trial court, there is nothing for this Court to review. Biddie v. State, 516 So. 2d 846 (Ala. 1987). However, because Pace was sentenced to death following his conviction on the charge of capital murder, his failure to make a timely motion to dismiss his indictment does not preclude our review of this issuein death penalty cases, both the Court of Criminal Appeals and this Court take notice of any "plain error." Rules 39(k), 45A, Ala.R.App.P.
In Lee v. State, 631 So. 2d 1059 (Ala.Cr. App.1993), and Locke v. State, 631 So. 2d 1062 (Ala.Cr.App.1993), the Court of Criminal Appeals held that a criminal defendant's constitutional right to equal protection under the law has been violated if racial discrimination occurred in the selection of the foreperson of the grand jury that returned the indictment and that that error requires that the indictment be quashed. Quoting from Johnson v. Puckett, 929 F.2d 1067 (5th Cir.), cert. denied, 502 U.S. 898, 112 S. Ct. 274, 116 L. Ed. 2d 226 (1991), the Court of Criminal Appeals also held that because the denial of equal protection caused by such discrimination is an injury to society as a whole, it does not matter whether the defendant is a member of the racial group discriminated against.[3]
In both Lee and Locke the defendants had been convicted of murder, but neither had been sentenced to death. In Lee and Locke, a timely objection preserved for appellate review the issue of discrimination in the selection of grand jury forepersons; thus, the issue whether discrimination in the selection of grand jury forepersons is "plain error" under Rule 45A was not decided by the Court of Criminal Appeals in those cases. Nor has this Court previously determined whether such discrimination constitutes the "plain error" we are required by Rule 39(k), Ala.R.App.P., to recognize.
Plain error is "error that has or probably has adversely affected the substantial rights of the petitioner." Rule 39(k). "[T]he plain-error exception to the contemporaneous-objection rule is to be `used sparingly, solely in those circumstances in which a miscarriage of justice would otherwise result.'" United States v. Young, 470 U.S. 1, 15, 105 S. Ct. 1038,1046, 84 L. Ed. 2d 1 (1985), quoting United States v. Frady, 456 U.S. 152, 163, n. 14, 102 S. Ct. 1584, 1592, n. 14, 71 L. Ed. 2d 816 (1982).
We take guidance from two landmark opinions from the United States Supreme Court that discussed discrimination in the selection of grand jury forepersons. In Rose v. Mitchell, 443 U.S. 545, 99 S. Ct. 2993, 61 L. Ed. 2d 739 (1979), the Supreme Court assumed, without deciding, that discrimination in the selection of a grand jury foreperson from among the members of the grand jury violates a criminal defendant's rights under the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and requires that a conviction be set aside. However, several years later, in Hobby v. United States, 468 U.S. 339, 104 S. Ct. 3093, 82 L. Ed. 2d 260 (1984), the Supreme Court held that discrimination in the selection of a federal grand jury foreperson did not violate the Due Process Clause of the Fifth Amendment. The Supreme Court stated that when the role of a grand jury foreperson is merely ministerial in nature, "discrimination in the selection of one person from among the members of a properly constituted grand jury can have little, if indeed any, appreciable effect upon the defendant's due process right to fundamental fairness." 468 U.S. at 345, 104 S. Ct. at 3096-97. In discussing the Rose opinion, the Hobby Court noted that the role of the Tennessee grand jury foreperson at issue in Rose differed substantially from the ministerial role of a federal grand jury foreperson in that the Tennessee foreperson is charged with substantial power, including the duty to assist the district attorney in investigating the crime and the privilege of a virtual veto over *336 the indictment process. The Hobby Court distinguished Rose as follows:
468 U.S. at 349, 104 S. Ct. at 3098. Thus, while Rose held that discrimination in the selection of a grand jury foreperson is an equal protection violation, Hobby held that such discrimination is not a due process violation where the role of the foreperson is ministerial.
In Lee, supra, the Court of Criminal Appeals noted the holding in Hobby, but stated: "The argument that a black defendant's due process rights were not violated because the grand jury foreman's responsibilities were largely ministerial was rejected in Johnson [v. Puckett], 929 F.2d at 1071 [(5th Cir.), cert. denied, 502 U.S. 898, 112 S. Ct. 274, 116 L. Ed. 2d 226 (1991)]." 631 So. 2d at 1061. This Court granted a petition for the writ of certiorari, to review the Lee opinion, but later quashed the writ as having been improvidently granted. Given today another opportunity to review Lee, we overrule it, for the reason explained below, to the extent that it holds that a criminal defendant's due process rights are violated by racial discrimination in the selection of a grand jury foreperson from a properly constituted Alabama grand jury.
In this state, the function of a grand jury foreperson is almost entirely ministerial in nature, very similar to that of a federal grand jury foreperson. See Noah v. State, 494 So. 2d 870 (Ala.Cr.App.1986). Thus, as the United States Supreme Court held in Hobby, if there is no discrimination in the selection of the members of the grand jury, any discrimination in the selection of a foreperson from among those members can have no more than an incidental effect on the defendant's due process right and does not rise to the level of a violation of that right. We conclude that the Court of Criminal Appeals misinterpreted Johnson, which specifically dealt with an allegation of violation of a defendant's right to equal protection of the laws, not his right to due process.[4] Thus, Johnson cannot be relied on for the proposition for which the Court of Criminal Appeals cited it in Lee.
The voluminous record of this case discloses that the Court of Criminal Appeals correctly held that Pace has proven that Morgan County engaged in a lengthy history of racial discrimination in selecting grand jury forepersons, including the foreperson of the grand jury that indicted him. Thus, based on the United States Supreme Court's opinion in Rose, and following the reasoning of the Court of Criminal Appeals in Lee and Locke, we conclude that Pace's constitutional right to equal protection was violated. However, as we have noted above, because Pace failed to make a timely motion to quash his indictment on that basis, the "contemporaneous *337 objection rule" does not apply, and we must determine whether the equal protection violation raised by Pace rises to the level of "plain error" under Rule 39(k), Ala.R.App.P.
After thorough consideration, we conclude that it does not. We addressed this issue to a certain extent in Ex parte Robin Myers, 699 So. 2d 1285 (Ala.1997); in that case, the defendant Myers, who was sentenced to death for capital murder, had been indicted by a Morgan County grand jury seven months before Pace was indicted by a Morgan County grand jury. Myers argued for a reversal of his conviction and a dismissal of his indictment, based on the Court of Criminal Appeals' opinion in Pace, supra. We stated in Ex parte Robin Myers:
Myers, 699 So. 2d at 1296 (footnote omitted). However, in a footnote in Myers, this Court noted the United States Supreme Court's opinions in Rose and Hobby and stated, in dicta, that "a review under the plain error rule, which guarantees a defendant a fundamental right to fairness, is tantamount to a due process review."[5]Id. at 1298, n. 4. In further dicta based on Hobby, we concluded that any discrimination in the selection of the foreperson of Myers's grand jury did not rise to the level of plain error, because Myers had not shown that the grand jury was itself improperly constituted and because the role of a grand jury foreperson in Alabama is primarily ministerial. Id.
We now hold what we implied in Myersthat if there was no discrimination in the selection of the members of a particular grand jury, then racial discrimination in the selection of a grand jury foreperson from among the members of that properly constituted grand jury may be a violation of a criminal defendant's equal protection rights, but it is not "plain error" that mandates reversal of a capital murder conviction in a case in which the defendant did not make a timely motion to quash the indictment. As we noted above, an error is not "plain error" unless a failure to reverse the defendant's conviction on the basis of that error would be a "miscarriage of justice." See United States v. Young, 470 U.S. at 15, 105 S. Ct. at 1046. Because the role of an Alabama grand jury foreperson is almost entirely ministerial, we conclude that discrimination in the selection of the foreperson of the otherwise properly constituted grand jury that indicted Pace did not deprive him of a fundamentally fair grand jury hearing or of a subsequent fair trial.
First, the discriminatory selection of the foreperson in this case did not impact the integrity of the indictment process through the composition of the grand jury panel. Unlike the Tennessee grand jury foreperson in Rose, the grand jury foreperson selected in this case was selected from among a panel of impartially chosen grand jurors. Thus, like the selection of federal grand jury forepersons in Hobby, the selection of the foreperson in this case did not change the composition of the grand jury venire. See 443 U.S. at 548, n. 2, 99 S. Ct. at 2996, n. 2. Thus, Pace could not have suffered any prejudice arising from the foreperson's membership in the grand jury panel, which was admittedly chosen from a fair cross-section of the community.
Second, the discriminatory selection of the foreperson in this case did not substantially impact the integrity of the indictment process through the involvement of the foreperson. Unlike the Tennessee grand jury foreperson in Rose, the grand jury foreperson selected in this case had only a clerical *338 involvement with the indictment process. In Rose, the Supreme Court noted that Tennessee grand jury forepersons, in addition to the ministerial functions of presiding over the grand jury, administering oaths to witnesses, and signing indictments and subpoenas, had a substantive duty to assist the district attorney in the investigation of crimes. 443 U.S. at 548, n. 2, 99 S. Ct. at 2996, n. 2. In contrast, Alabama grand jury forepersons have no duty to assist the district attorney in the investigation of crimes and are generally limited to merely reporting grand jury votes and signing the appropriate paperwork prepared by the court or the district attorney. Rule 12.5, Ala.R.Cr.P.
Third, the discriminatory selection of the foreperson in this case did not impact the integrity of the indictment process through the foreperson's influence over the grand jury panel. Unlike the dominant and authoritative role the Tennessee grand jury foreperson played in Rose, the role of the grand jury foreperson in this case was to perform merely ministerial tasks. The Tennessee grand jury foreperson in Rose had a virtual veto power over the indictment process because under Tennessee law the failure of the foreperson to sign an indictment renders the indictment "fatally defective." 443 U.S. at 548, n. 2, 99 S. Ct. at 2996, n. 2. In contrast, the role of a grand jury foreperson in Alabama is so ministerial that even his or her failure to participate in deliberations and to vote with the panel is not fatal to the indictment if the requisite 12 members of the panel concur in the indictment. Noah, supra. In sum, we conclude that any prejudice suffered by Pace because of the foreperson's involvement in the judicial process was not substantial and, thus, did not rise to the level of plain error.
Although the Court of Criminal Appeals erred in holding that Pace's indictment must be quashed and that he must be reindicted, that court's holding that Pace is entitled to a new trial based on reversible error that occurred in relation to other issues this Court has not reviewed is not affected by this certiorari review. Accordingly, we reverse the judgment of the Court of Criminal Appeals to the extent that it holds that discrimination in the selection of the foreperson of Pace's otherwise properly constituted grand jury is "plain error." We remand this cause to the Court of Criminal Appeals for an order or proceedings consistent with this opinion.
Although we hold that no plain error occurred in this case, we are nonetheless adamant in our view that racial discrimination of any kind is utterly repugnant to the judicial process and the basic concepts of equal treatment under the law enshrined in our federal and state Constitutions.[6] See Rose, 443 U.S. at 555-56, 99 S. Ct. at 2999-3000. If a defendant makes a timely and valid challenge to his or her indictment based on a violation of equal protection rights occurring as the result of discriminatory selection of the foreperson of the grand jury that returned the indictment, this Court will dismiss the indictment and require that if the State reindicts the accused it do so with a grand jury selected and acting free of any racial discrimination.
REVERSED IN PART AND REMANDED.[7]
MADDOX, SHORES, and HOUSTON, JJ., concur.
HOOPER, C.J., and ALMON and SEE, JJ., concur in the result.
COOK, J., dissents.
COOK, Justice (dissenting).
I respectfully dissent. The Alabama Court of Criminal Appeals correctly reversed Pace's capital murder conviction and death *339 sentence based upon the presence of racial discrimination in the selection of grand jury forepersons in Morgan County. The plurality concludes that although Pace's equal protection rights were violated, this discriminatory process had little if any affect on his due process right to fundamental fairness because "the function of [an Alabama] grand jury foreperson is almost entirely ministerial." 714 So. 2d at 336. Therefore, the plurality concludes, the long history of racial discrimination in the selection of grand jury forepersons in Morgan County did not constitute "plain error." I strenuously disagree. A criminal defendant's equal protection rights cannot be violated by a discriminatory practice without also violating the defendant's due process right to fundamental fairness.
The Ala. Const. of 1901, Art. I, § 6, provides in pertinent part:
(Emphasis added.)
Pace proved that Morgan County had engaged in a prolonged tradition of racial discrimination in selecting grand jury forepersons.
Under the plain error rule provided for in Rule 39(k), Ala.R.App. P., we will "notice any plain error or defect in the proceeding under review, whether or not [it was] brought to the attention of the trial court, and take appropriate appellate action ... whenever such error has or probably has adversely affected the substantial rights of the petitioner." See Ex parte McNair, 653 So. 2d 353, 360 (Ala.1994), cert. denied, 513 U.S. 1159, 115 S. Ct. 1121,130 L. Ed. 2d 1084 (1995).
The plurality relies on Hobby v. United States, 468 U.S. 339, 104 S. Ct. 3093, 82 L. Ed. 2d 260 (1984), in holding that discrimination in the selection of a foreperson whose duties are ministerial, in an otherwise properly constituted grand jury, does not violate the Due Process Clause of the United States Constitution and is not "plain error." Although the Court in Hobby described the role of a federal grand jury foreperson, Hobby addressed a context of a due process challenge that was different from that of the constitutional challenge in this case. In Hobby, a white male challenged the under-representation of blacks and women as forepersons. The United States Supreme Court held that discrimination against blacks and women in the selection of a federal grand jury foreperson may violate the right to equal protection but did not violate a white male defendant's due process rights. However, in this case, the defendant, a black male, challenges the under-representation of other blacks as grand jury forepersons in Morgan County.
Additionally, this case is more analogous to Lee v. State, 631 So. 2d 1059 (Ala.Crim.App. 1993), since, in Lee, a black defendant challenged the under-representation of blacks selected as grand jury forepersons in Monroe County. The Alabama Court of Criminal Appeals held that the criminal defendant's due process rights were violated by racial discrimination in the selection of the grand jury foreperson from a properly constituted Alabama grand jury. The plurality overrules the holding in Lee, stating that the function of an Alabama grand jury foreperson is similar to the ministerial function of a federal grand jury foreperson. However, the function of an Alabama grand jury foreperson is not merely ministerial, as that of a federal grand jury foreperson is. An Alabama grand jury foreperson has an immense impact on grand jurors, as grand jurors look to the foreperson as their leaderand rightly so. Pursuant to Rule 12.5, Ala.R.Cr.P., the influence a grand jury foreperson possesses is evident by the required duties to "preside over the grand jury proceedings and act as the court's representative by maintaining order, administering oaths, excluding unauthorized persons and persons acting in an unauthorized manner, appointing such officers within the grand jury as are necessary for its orderly functioning," and initiating contempt proceedings. Therefore, the authority of an *340 Alabama grand jury foreperson extends far beyond the strictly clerical duties that a federal grand jury foreperson performs. Therefore, I maintain that Hobby is inapplicable to this case.
In Johnson v. Puckett, the Fifth Circuit Court of Appeals held that a black male defendant's equal protection and due process rights were violated by the discriminatory selection of grand jury forepersons in Panola County, Mississippi. The court reasoned:
Johnson v. Puckett, 929 F.2d 1067 at 1071 (5th Cir.1991), cert. denied, 502 U.S. 898, 112 S. Ct. 274, 116 L. Ed. 2d 226 (1991). (Emphasis added.)
The ministerial duties of a federal grand jury foreperson are insignificant but an Alabama grand jury foreperson possesses significant authority. A grand jury composed of a cross-section of the community will not cure the stigma left by the discriminatory selection of the grand jury foreperson. That discrimination not only casts doubt on our whole judicial system, it perpetuates stereotypes and prejudices, thereby adversely affecting a person's basic right to fundamental fairness.
Given the authority of an Alabama grand jury foreperson, I maintain that if a racially discriminatory practice occurs in the selection of a grand jury foreperson, this discriminatory selection constitutes "plain error." Not only has a miscarriage of justice occurred, but a criminal defendant's due process right to fundamental fairness has been violated.
Because I would hold that the discrimination in the selection of the grand jury foreperson substantially violated Pace's equal protection rights, as well as his due process rights, I would also hold that the Court of Criminal Appeals properly reversed Pace's conviction and quashed his indictment in order to cure these constitutional violations.
[1] Levi Pace was convicted of murder made capital because the murder was committed during the course of a robbery. See Ala. Code 1975, § 13A-5-40(a)(2).
[2] Although the Court of Criminal Appeals' opinion did not specifically state which constitutional provision was violated by the manner in which Morgan County selects grand jury forepersons, we assume that the Equal Protection and Due Process Clauses were implicated.
[3] But see State v. Campbell, 661 So. 2d 1321 (La.1995) (holding that a white defendant did not have standing to raise the equal protection claims of black persons discriminated against in the selection of grand jury forepersons).
[4] The first sentence of the Johnson opinion of the Court of Appeals for the Fifth Circuit states:
"A black state prisoner, indicted for murder in 1979 and thereafter convicted, contends that he was denied equal protection of the law because for a twenty year period up to and including his indictment, 42 grand jury foremen, all of them white, had been appointed by the circuit judges of the county in which he was indicted, although the population of the county was 43% black."
929 F.2d at 1068 (emphasis added). The court noted that Johnson's habeas corpus petition had not cited a specific constitutional provision as the basis for the relief he requested; however, the court understood Johnson to have alleged a violation of his right to equal protection under the Fourteenth Amendment. Id. at 1070. In fact, the court noted that a due process analysis was not applicable. Id. at 1071.
[5] This statement in Myers is not to be taken as meaning that this Court will not or cannot recognize as "plain error" violations of constitutional provisions other than the Due Process Clause.
[6] We note that since Pace was indicted, Morgan County has changed its method of selecting forepersons from among the members of the grand jury. Instead of the judge and the district attorney selecting the foreperson, the members of the grand jury select a foreperson from among themselves. This new procedure should limit any appearance of discrimination in the judicial process.
[7] We have not reviewed that portion of the Court of Criminal Appeals' judgment reversing Pace's conviction and ordering a new trial. Therefore, that reversal and new trial order are not affected by our order reversing in part. | August 29, 1997 |
2e22207f-ecf0-4894-84ad-1c1c5585cc27 | Ex Parte Sonnier | 707 So. 2d 635 | 1960685 | Alabama | Alabama Supreme Court | 707 So. 2d 635 (1997)
Ex parte Marc Q. SONNIER, M.D.; Robert van der Meer, M.D.; and Flowers Hospital, Inc.
(Re Tammy TALLEY and Lawrence Talley v. Marc Q. SONNIER, M.D., et al.).
1960685.
Supreme Court of Alabama.
October 3, 1997.
*636 Fred W. Tyson and Patrick M. Shegon of Rushton, Stakely, Johnston & Garrett, P.A. Montgomery, for petitioners.
Lister H. Proctor and Wanda J. Batson of Proctor & Vaughn, Sylacauga; and Sybil Shainwald, New York City, for respondents.
ALMON, Justice.
This Court granted the petition of the defendants Marc Q. Sonnier, M.D., Robert van der Meer, M.D., and Flowers Hospital, Inc., for a writ of certiorari to review the judgment of the Court of Civil Appeals. That court reversed a summary judgment in favor of the defendants in an action filed by Tammy Talley and Lawrence Talley[1] based on allegations that the defendant doctors had performed an unnecessary hysterectomy and had later misrepresented that Mrs. Talley had had cancer. See Talley v. Sonnier, 707 So. 2d 631 (Ala.Civ.App.1996). The question is whether the reversal by the Court of Civil Appeals conflicts with Jones v. McDonald, 631 So. 2d 869 (Ala.1993), regarding the application of § 6-5-482, Ala.Code 1975, the statute of limitations for medical liability actions.
Because the Talleys were the nonmovants in the summary judgment proceedings, we must consider the evidence in the light most favorable to their position. Renfro v. Georgia Power Co., 604 So. 2d 408, 411 (Ala.1992). Mrs. Talley alleges that the defendants performed an unnecessary hysterectomy on her on April 1, 1991. For the sake of removing a supposed cervical cancer, the defendants removed Mrs. Talley's uterus. Mrs. Talley also alleges that the defendants falsely represented to her, both before and after the hysterectomy, that she had had cancer and that the hysterectomy was necessary because of the cancer. In December 1994, Mrs. Talley read a magazine article about unnecessary hysterectomies. She asserts that she then obtained her 1991 hospital records and discovered that the 1991 diagnosis of cancer was incorrect. The Talleys filed this action on April 5, 1995, four years and four days after the hysterectomy. The *637 circuit court entered a summary judgment for the defendants, who had moved for a summary judgment on the basis that the period of limitations had expired four days before the Talleys filed their complaint. The Court of Civil Appeals reversed, holding that "the evidence of these misrepresentations created a genuine issue of fact as to the date on which the claims would have been barred and that a jury could determine that on each visit a separate act of malpractice occurred."
Sections 6-5-480 et seq. and 6-5-540 et seq., Ala.Code 1975 (the "Alabama Medical Liability Act," hereinafter "AMLA"), govern medical malpractice actions in Alabama. Section 6-5-482(a) provides:
Subsection (b) states that the tolling provisions appearing elsewhere in the Code shall apply to medical malpractice actions, but reiterates the rule that "no action shall be commenced more than four years after the act, omission, or failure complained of." This Court has held that the four-year period of repose in the AMLA is an "absolute bar to all medical malpractice claims which are brought more than four years after the cause of action accrues." Bowlin Horn v. Citizens Hospital, 425 So. 2d 1065, 1070 (Ala.1982).
There is no dispute that the complaint was filed more than two years after the date of the alleged malpractice. Therefore, if the complaint was timely, it was because of the operation of the provision that where the cause of action is not discovered within the two-year period an action may be commenced within six months after the discovery. The defendants do not dispute Mrs. Talley's claim that she did not discover, and could not reasonably have discovered, before December 1994 that she had a cause of action arising from the hysterectomy and the subsequent treatment. It is also undisputed that the Talleys did file the complaint within six months after this discovery. The defendant doctors continued to treat Mrs. Talley until October 1991, less than four years before the complaint was filed on April 5, 1995.
The limitations period for a medical malpractice action begins to run upon the accrual of a cause of action. Mobile Infirmary v. Delchamps, 642 So. 2d 954, 958 (Ala. 1994). Accrual occurs when the wrongful act "results in legal injury to the plaintiff." Id. In Delchamps, the plaintiff received a jaw implant and subsequently suffered bone degeneration. This Court held that the key inquiry in determining the accrual date of her claim was not the date of her surgery, or the date on which she became aware of the degeneration, but the time at which she first suffered the degeneration. 642 So. 2d at 958. Mrs. Talley suffered the alleged legal injury caused by the performance of the hysterectomy not later than April 1, 1991. Therefore, any claims arising from the performance of the hysterectomy itself are barred by the four-year period of repose. The remaining question is whether the summary judgment was proper as to the claims based on alleged misrepresentations by Mrs. Talley's doctors after her surgery.
The defendant Flowers Hospital, Inc., has not been accused of making any false representations after the surgery; therefore, the claims against Flowers Hospital fall outside the four-year period of repose. The Talleys argue that as to the hospital the summary judgment was improper, on the ground that the hospital has respondeat superior liability for the actions of "its physicians." However, the Talleys did not produce substantial evidence of any agency relationship between Sonnier or van der Meer and Flowers Hospital. For that reason, no claim against Flowers Hospital arose within four years of the filing of the complaint, and the summary judgment was properly entered as to the hospital. Therefore, the judgment of the Court of Civil Appeals is *638 due to be reversed as to the claim against Flowers Hospital.
To allow the subsequent misrepresentations to extend the statute of limitations as to malpractice relating to the hysterectomy, as the Talleys ask us to do, we would have to adopt the "continuing treatment rule," which was once accepted under Alabama law. At one time, the law was that "the statute begins to run when the relation of surgeon and patient ends with reference to the ailment treated." Hudson v. Moore, 239 Ala. 130, 133, 194 So. 147, 149 (1940). That law may still apply except in actions governed by the AMLA. In Moore v. Averi, 534 So. 2d 250 (Ala.1988), an action against a podiatrist, this Court held that "the statute of limitations commences to run when the improper course of examination, and treatment if any, ... terminates." 534 So. 2d at 254.
Neither Hudson nor Averi was governed by the AMLA. This Court considered the continuing treatment rule in Jones v. McDonald, 631 So. 2d 869 (Ala.1993), and held that it did not apply in actions brought under the AMLA. In fact, the Court held that application of the continuing treatment rule would be inconsistent with the provision that allowed for tolling the statute of limitations during periods before the injury could be discovered, concluding that the continuing treatment rule and the statutory tolling provision served virtually the same purpose. 631 So. 2d at 872.
The Talleys argue that the subsequent misrepresentations were separately actionable incidents of malpractice. These alleged misrepresentations took place after the surgery, from April 1991 until October 1991. Claims alleging misrepresentations made during the course of a doctor-patient relationship are claims of malpractice and are governed by the AMLA. Benefield v. F. Hood Craddock Clinic, 456 So. 2d 52, 54 (Ala. 1984). Therefore, the statutory limitations period for these alleged incidents of malpractice is also two years, although the running of that period would be tolled by Mrs. Talley's inability to discover the fact that she had a cause of action. Because the Talleys allege that several of the misrepresentations were made after April 5, 1991, the four-year period of repose would not bar claims based on those incidents, if those incidents do give rise to actionable claims of malpractice.
Because the Talleys timely filed the complaint with respect to the misrepresentations Mrs. Talley says the doctors made subsequent to the surgery, this Court must determine whether the Talleys presented substantial evidence to support their malpractice claims. Although the circuit court appears to have entered the summary judgment for the defendants on the basis that the statute of limitations barred the action, this Court would affirm the judgment if it was proper for some other reason. Bama Budweiser of Montgomery, Inc. v. Anheuser-Busch, Inc., 611 So. 2d 238, 246 (Ala.1992). To defeat a properly supported summary judgment motion by the doctors, the Talleys had to present substantial evidence indicating that the doctors breached the applicable standard of care and that their breach injured Mrs. Talley. Ala.Code 1975, § 6-5-548(a).
To establish that the doctors breached the standard of care, Talley offered the affidavit of Dr. Michael Bruck, who is a board-certified physician. Dr. Bruck stated, among other things:
(Emphasis added.) As we have held above, claims based on the assertions of malpractice stated in paragraphs i. and ii. are barred by the statute of limitations. It is only the malpractice asserted in paragraph iii. with which we are now concerned. Exhibit A, the post-operative "tissue report" by a pathologist, was dated April 2, 1991; it concludes: "No invasive carcinoma is demonstrated."[2] Thus, after Mrs. Talley's surgery, the pathologist's report to Drs. Sonnier and van der Meer indicated that she had not had cancer.
The defendants argue that Dr. Bruck's testimony is inadmissible because Dr. Bruck is not a certified specialist in obstetrics and gynecology, as the defendant doctors are, and is therefore not a "similarly situated health care provider" qualified to give evidence in this case. See Ala.Code 1975, § 6-5-548(c). Generally speaking, that section provides that, when the defendant health care provider is a board-certified specialist trained and practicing in a particular specialty, a "similarly situated health care provider" is one trained, certified, and practicing in the same specialty. Section 6-5-548(e) provides that to testify against a health care provider an expert witness must be a "similarly situated health care provider."
This Court considered a similar issue in Medlin v. Crosby, 583 So. 2d 1290 (Ala. 1991), and held that the first inquiry in determining whether a witness is a "similarly situated health care provider" is "What is the standard of care alleged to have been breached?" 583 So. 2d at 1293. In Medlin, a doctor who was certified in internal medicine was deemed "similarly situated," for purposes of testifying against a doctor who was certified in family medicine, because the subject of the testimony was an alleged breach of the standard of care in emergency treatment. Because the alleged breach of the standard of care was unrelated to the defendant doctor's specialty, the statute did not require that the testifying doctor be certified in that specialty.
In Rodgers v. Adams, 657 So. 2d 838 (Ala. 1995), this Court held that the affidavit of a prosthodontist[3] should have been considered as expert testimony admissible to prove an alleged breach of the standard of care to be observed by a general dentist, because the prosthodontist was familiar with the standard of care relevant to the particular breach alleged to have been committed. 657 So. 2d at 842. This Court held that, because the alleged breach of the standard of care involved general dentistry, if the prosthodontist had been the defendant the general dentist could have testified against him, even though the general dentist was not a specialist in prosthodontics. Id. This result would have obtained because the general dentist was familiar with the particular standard of care alleged to have been breached; the standard was common to both disciplines. Id. (citing Craig v. Borcicky, 557 So. 2d 1253, 1256 (Ala.1990)).
Similarly, in Olsen v. Rich, 657 So. 2d 875 (Ala.1995), this Court held that it was proper for a doctor who was not a board-certified cardiologist to testify regarding an alleged breach of the standard of care committed by a certified cardiologist regarding "the standard *640 of care ... of a `health care provider' intravenously administering medications during a medical procedure." 657 So. 2d at 880. The witness, a vascular, cardiac, pulmonary, and esophageal surgeon, was qualified to testify as to the proper administration of intravenous medication because his experience included extensive involvement with the administration of intravenous drugs. Therefore, he could testify in an action against a doctor who was alleged to have improperly administered such medication, even if he did not possess the same certifications as the defendant cardiologist. Id. This Court held that, because the witness was "at least as qualified in the area of the alleged negligence" as the defendant, 657 So. 2d at 882, he met the statutory definition of a "similarly situated health care provider" for purposes of testifying about that alleged negligence.
The alleged malpractice here was the doctors' continuing to tell Mrs. Talley that she had cancer, even after the results of the hysterectomy showed that she did not have cancer. From all that appears in the record, we conclude that Dr. Bruck was qualified to testify as a similarly situated health care provider as to this alleged breach of the standard of care. In opposition to the defendants' summary judgment motion, the Talleys submitted substantial evidence indicating that the alleged breach is not relevant to the specialty of obstetrics or gynecology. Instead, the Talleys allege a breach that virtually requires no expert testimony: after the issuance of a tissue report showing no evidence of cancer, the defendant doctors continued to tell Mrs. Talley that she had had cancer of the uterus. This is substantial evidence that the defendant doctors made material false representations to Mrs. Talley as their patient. The circuit court's judgment should not be affirmed based on any conclusion that, to give the pertinent opinions in his affidavit, Dr. Bruck would have to be certified in obstetrics and gynecology. At least absent any countervailing evidence by the defendants, Dr. Bruck's testimony is substantial evidence of a breach of the standard of care.
The remaining issue is whether the Talleys alleged an actionable injury resulting from the alleged false representations. Mrs. Talley stated in an affidavit that the representations caused her to suffer emotional distress and that the defendant doctors also convinced her to return more often for checkups, because, thinking she had suffered from cancer, she thought she was more likely to have cancer than someone who had never had cancer. Her affidavit states:
The Talleys presented substantial evidence of a cognizable injury.
Therefore, Mrs. Talley's failure to discover the injury can operate to toll the running of the limitations period and to extend the last date for filing a complaint to six months after the discovery of the injury, although it cannot operate to extend that date beyond the four-year period of repose provided in Ala.Code 1975, § 6-5-482. Because of this period of repose, the summary judgment was proper as to those claims related to the alleged acts of malpractice that occurred more than four years before April 5, 1995 (the date the complaint was filed). However, in regard to the claims of malpractice based on the allegations of false representations made on or after April 5, 1991, the circuit court erred in entering the summary judgment for the defendant doctors, and the *641 judgment of the Court of Civil Appeals reversing the summary judgment is due to be affirmed as to those claims.
The judgment of the Court of Civil Appeals is affirmed as to those claims against the defendant doctors based on allegations of malpractice occurring on or after April 5, 1991. It is reversed as to the remaining claims. The cause is remanded for further proceedings.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
HOOPER, C.J., and SHORES, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
MADDOX and SEE, JJ., concur in part and dissent in part.
SEE, Justice (concurring in part and dissenting in part).
I concur with the majority's opinion to the extent it holds the Talleys' claim against Drs. Sonnier and van der Meer is time-barred and to the extent it holds the Talleys did not state a cognizable claim against Flowers Hospital under the doctrine of respondeat superior. However, I must respectfully dissent from the portion of the opinion that, while purporting to reject the "continuing treatment" rule in medical malpractice cases governed by the Alabama Medical Liability Act ("AMLA"), in fact adopts that rule.
Mrs. Talley's hysterectomy occurred on April 1, 1991. The Talleys did not file this AMLA action until April 5, 1995more than four years after her alleged injury. Section 6-5-482, Ala.Code 1975, provides in pertinent part:
(Emphasis added.) A plain reading of § 6-5-482 indicates that the Talleys' medical malpractice claim falls outside the maximum four-year limitations period and is therefore time-barred.
Nevertheless, the majority notes the evidence of Mrs. Talley's subsequent visits to the defendant doctors and the resulting misrepresentations concerning her medical condition and then holds that the claims based on those misrepresentations are not barred by § 6-5-482. The majority appears to be applying the "continuing treatment" rule, under which the Talleys' malpractice claims would not be barred because the limitations period would begin to run "when the relation of surgeon and patient ends with reference to the ailment treated." Hudson v. Moore, 239 Ala. 130, 133, 194 So. 147, 149 (1940). Given the four-year limitations period of § 6-5-482, the viability of the Talleys' April 5, 1995, claims of misrepresentation depends on the applicability of the continuing treatment rule to those misrepresentations that arose from Ms. Talley's April 1, 1991, hysterectomy.
In Jones v. McDonald, 631 So. 2d 869 (Ala. 1993), this Court held that § 6-5-482, enacted in 1975, abrogated the continuing treatment rule in actions brought under the AMLA. This Court observed that while § 6-5-482(a) expressly adopts a tolling provision that extends the limitations period to a point six months beyond the reasonable discovery of the injury, it did not expressly adopt the continuing treatment rule, which serves the *642 same function as the discovery rule: to postpone the running of the statutory limitations period because a plaintiff is not likely to discover the malpractice while under the defendant doctor's care. Jones, 631 So. 2d at 872. This Court stated that "with the discovery rule in § 6-5-482, the need for judicial adoption of a continuing treatment rule is lessened, if not altogether removed." Id. Accord Street v. City of Anniston, 381 So. 2d 26, 29 (Ala.1980) (concluding that "the legislature, by enacting Code 1975, § 6-5-482(a), intended to shorten the time period within which [medical malpractice actions] could be brought").
In Jones, 631 So. 2d at 871, this Court further noted that § 6-5-482(b) incorporates numerous tolling provisions, including § 6-2-3, which tolls the running of the limitations period on fraud claims until the fraud is discovered, but that § 6-5-482(b) does not incorporate the "continuing treatment" rule. In addition, § 6-5-482(b) limits the scope of operation of the various tolling provisions by stating that "notwithstanding any provisions of such sections, no action shall be commenced more than four years after the act, omission, or failure complained of." The Jones Court concluded:
631 So. 2d at 873 (emphasis added).
Although the majority concedes that the continuing treatment rule cannot apply to this action, it nonetheless applies that rule by characterizing Mrs. Talley's subsequent visits to the defendant doctors, at which she received diagnoses and advice, as "subsequent misrepresentations [which are] separately actionable incidents of malpractice." 707 So. 2d at 638. To the extent, however, that these alleged misrepresentations were not separate and distinct from Mrs. Talley's hysterectomy, but intrinsically related to it, they are part and parcel of the same cause of action. Each of Mrs. Talley's subsequent visits to the defendant doctors directly concerned the conditions leading to and resulting from her hysterectomy. Thus, the majority's holding that claims based on the alleged misrepresentations are not time-barred is effectively an application of the continuing treatment rule to Mrs. Talley's original hysterectomy, even though this rule was specifically rejected by this Court in Jones, supra. Amendment of § 6-5-482 to adopt the continuing treatment rule lies within the prerogative of the Legislature, not this Court. I therefore dissent from the majority's contrary holding.
MADDOX, J., concurs.
[1] Lawrence Talley's only claim is based on an allegation of loss of consortium caused by Tammy Talley's alleged personal injuries.
[2] Because the statute of limitations bars any liability stemming from the pre-operative diagnosis, the March 12 tissue report, Exhibit B to Dr. Bruck's affidavit, is not relevant to the claim we are now considering. It does not, however, state a diagnosis of carcinoma, but rather of "mild dysplasia associated with condylomatous change."
[3] Prosthodonty is a "branch of dentistry dealing with artificial dental structures, as teeth, crowns, etc." Rodgers, 657 So. 2d at 841 (citing 3 J.E. Schmidt, M.D., Attorney's Dictionary of Medicine and Word Finder P-346 (1990)). | October 3, 1997 |
5392c3f8-7da8-4bc9-a9b6-15b38f7e466e | Ex Parte Pointer | 714 So. 2d 971 | 1961778 | Alabama | Alabama Supreme Court | 714 So. 2d 971 (1997)
Ex parte Kenneth W. POINTER.
(In re Kenneth W. POINTER
v.
REGAL NISSAN COMPANY, et al.).
1961778.
Supreme Court of Alabama.
November 21, 1997.
Julia T. Cochrun and Clark Morris Denney of Pate, Lloyd, Fuston & Cochrun, L.L.P., Birmingham, for petitioner.
Thomas R. Robinson and Jeffrey T. Kelly of Lanier Ford Shaver & Payne, P.C., Huntsville, for respondent Regal Nissan Co.
Richard E. Smith, Rhonda Pitts Chambers, and Michael E. Hollingsworth of Rives & Peterson, P.C., Birmingham, for respondent Nissan Motor Acceptance Corp.
SHORES, Justice.
Kenneth Pointer petitions for a writ of mandamus directing the trial court to vacate its order compelling arbitration of his claims against Regal Nissan Company and Nissan Motor Acceptance Corporation. We grant the petition.
Ex parte Jones, 686 So. 2d 1166, 1166 (Ala. 1996).
Pointer sued Regal Nissan Company and Nissan Motor Acceptance Corporation, alleging misrepresentation, fraud, breach of contract, deceit, and conversion; his claims arose out of his purchase of a 1995 Nissan 200 SX automobile from the Regal Nissan dealership on April 10, 1995. Pointer entered into an agreement with Regal Nissan to trade in his 1992 Chevrolet Silverado truck on the purchase of the 1995 Nissan 200 SX. The contract provisions show that Regal Nissan agreed to pay Pointer $7,000 for his equity in the Silverado truck. Pointer financed the purchase of the Nissan 200 SX through Nissan Motor Acceptance Corporation.
Several days after Pointer had contracted for the purchase of the Nissan 200 SX, he was contacted by the Regal Nissan salesman he had dealt with; the salesman told him that the Silverado truck was not worth the trade-in amount that Regal Nissan had agreed to pay. The salesman gave Pointer *972 two options: Pointer could either rescind the deal and return the Nissan 200 SX to Regal Nissan, or sign a new agreement whereby he would be given less money for the Silverado truck. After having a conversation with the salesman and the manager, and after receiving a subsequent letter from Regal Nissan, Pointer refused to return the Nissan 200 SX to Regal Nissan or to sign a new agreement. Regal Nissan sent Pointer a check for $4,000 rather than the $7,000 agreed upon in the contract.
The provisions of the contract show that upon entering into the sales agreement, Regal Nissan was aware that the truck had received both major body work and major paint work. The trade-in disclosure form also indicates that Pointer disclosed to Regal Nissan that the truck had been repainted and that the hood and fender had been replaced. Only after inspecting the truck and getting a disclosure of damage from Pointer, did Regal Nissan enter into the contract with Pointer. The printed contract form includes numerous sections set off in boxes. Each of the sections contains a location for the purchaser's signature or initials. The only section left not signed or initialed is one entitled "Arbitration Clause."
Relying on Crown Pontiac, Inc. v. McCarrell, 695 So. 2d 615 (Ala.1997), Pointer argues that the unsigned arbitration clause is not a binding term of the contract. In Crown Pontiac, the purchaser of an automobile signed two separate "retail buyer's order" forms. This Court held that the second form superseded the terms in the first form because the purchaser, McCarrell, had signed a merger clause in the second form. Id. at 618. The second retail buyer's order form contained an arbitration clause, which McCarrell did not sign. Crown Pontiac argued that the arbitration clause was enforceable simply because it had been included in the retail buyer's order. Regal Nissan makes the same argument in this case.
The Crown Pontiac Court, in addressing the question of the enforceability of the unsigned arbitration clause, stated:
Id. at 618-19. (Emphasis original.) The Crown Pontiac Court held that the unsigned arbitration clause did not become a part of the overall agreement of the parties. Id. at 619.
Regal Nissan and Nissan Motor Acceptance Corporation argue that the signature line in the section entitled "Arbitration Clause" does not apply to the arbitration terms. We do not agree. The different terms of the contract are divided into boxes, with each box containing a boldface heading. If the signature line that is included in the box entitled "Arbitration Clause" was for some other term or clause of the contract, it would have been set off with a boldface heading, as was every other term or clause. For these reasons, the unsigned arbitration clause did not become a part of the agreement between the parties. Crown Pontiac, supra.
Pointer also argues that the contract was induced by fraud and that the contract is therefore voidable and the arbitration clause unenforceable. It is unnecessary to address this argument, because we have determined that the arbitration clause is not enforceable as part of the agreement.
Accordingly, the trial court erred in compelling arbitration of Pointer's claims against Regal Nissan and Nissan Motor Acceptance Corporation. There was no mutual agreement to submit to arbitration the claims Pointer has made against Regal Nissan and Nissan Motor Acceptance Corporation. Pointer has shown a clear legal right to an order directing the trial court to set aside its order compelling arbitration.
WRIT GRANTED.
*973 MADDOX, ALMON, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
HOOPER, C.J., and SEE, J., dissent.
HOOPER, Chief Justice (dissenting).
I must respectfully dissent. The majority misinterprets the contract for the sale of the automobile. I believe that the signature blank that Pointer failed to sign related to the fact that a used car is sold with no warranty. He was purchasing a new car. Therefore, the portion of the contract dealing with the fact that a used car comes with no warranty was not applicable to Pointer's purchase. I believe that this is the reason Pointer did not sign the signature block for that portion of the contract. He was not buying a used car. I do not think Pointer left that blank unsigned because he did not want to arbitrate any claims that he might have against Regal.
The used-car warranty provision was within a small box that was separated from the "Arbitration Clause" box by another clause relating to "window forms." See the copy of that form appearing as an appendix to this dissenting opinion. The contract highlighted the words "Arbitration Clause" only to bring the arbitration clause to the reader's attention. However, the unsigned signature blank relates to the statement regarding the warranty. The fact that the blank was below the warranty statement is enough for me to deny the petition for the writ of mandamus, because I see no abuse of discretion by the trial judge. There was some reasonable basis for the decision of the trial judge. In granting the motion to compel arbitration, the trial judge must have determined that the signature blank referred to the statement regarding the used car warranty. Because a writ of mandamus is extraordinary in nature, I would deny the petition.
*974
*975 | November 21, 1997 |
89ddd93a-cd35-4c6d-b684-bab9aa2be7bb | Ford Motor Co. v. Sperau | 708 So. 2d 111 | 1931473, 1931591, 1931629 | Alabama | Alabama Supreme Court | 708 So. 2d 111 (1997)
FORD MOTOR COMPANY
v.
Dee-Witt SPERAU and Samuel R. Foster II.
1931591.
Supreme Court of Alabama.
September 5, 1997.
Rehearing Denied January 23, 1998.
*113 Tabor R. Novak, Jr., and Clyde C. Owen, Jr., of Ball, Ball, Matthews & Novak, P.A., Montgomery; C.C. Torbert, Jr., of Maynard, Cooper & Gale, Montgomery; and Andrew L. Frey and Evan M. Tager of Mayer, Brown & Platt, Washington, DC, for Ford Motor Co.
Maston E. Martin, Jr., of Fazekas & Martin, Montgomery; John A. Taber, Fairhope; Lee H. Copeland of Copeland, Franco, Screws & Gill, Montgomery; and H. Lewis Gillis of Thomas, Means & Gillis, Montgomery, for Sperau et al.
PER CURIAM.
This case is on remand from the Supreme Court of the United States. The question before us is whether the $6 million punitive damages award assessed against Ford Motor Company is excessive under the Due Process Clause of the Fourteenth Amendment to the United States Constitution, in light of the guidelines established by the Supreme Court of the United States in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).
The facts of this case are set forth in detail in our original opinion, Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995). We note them here briefly: In the period 1987-1988, employees of the defendant Ford Motor Company ("Ford") sought to convince the plaintiff Samuel R. Foster II, who is African-American, to purchase a Ford automobile dealership in Selma, Alabama. Ford viewed Foster as an attractive candidate for Ford's Minority Dealer Program, a voluntary affirmative action policy established to increase the number of minority Ford dealers. At that time, Foster owned and operated a commercial construction business in Charlotte, North Carolina, but had no experience in the automobile industry. Because of his inexperience, Foster took on the plaintiff Dee-Witt C. Sperau, who is white, as a partner in seeking to acquire a Ford dealership. Sperau was then an employee of Foster's company; he assisted in obtaining construction bonds for that company. Sperau had had some bookkeeping experience at three Ford dealerships between 1968 and 1971, but had not been involved in the automotive industry since then.
In connection with the prospective purchase of the Selma dealership, Ford representatives presented to Foster and Sperau a "sales and profit forecast" that had been prepared on the dealership. This initial sales and profit forecast indicated that Foster and Sperau would have to make a capital investment of $632,000 to run the dealership, and it projected profits of $292,000 and $358,000 in the first two years of operation, which translated to returns on investment of 46.2% and 56.6%, respectively. After visiting the dealership, Foster and Sperau decided not to invest. Ford's Atlanta District market representation manager, Don Kitchens, then prepared a second sales and profit forecast on the Selma dealership and presented it to Foster. The revised forecast, which was made with the plaintiffs specifically in mind, reduced the required investment to $535,000 and listed as reasonable expected profits of $274,000 and $350,000, returns on investment of 51.2% and 65.4%.
Relying upon the revised forecast, Foster and Sperau ultimately decided to purchase the dealership, which they operated under the name "River City Ford." Unfortunately, the forecast profits failed to materialize. The plaintiffs began operating the River City Ford dealership in May 1988. For the remainder of 1988, the dealership did record a profit of approximately $103,000. But in 1989 and 1990, the dealership posted net losses of roughly $4,000 and $6,000, respectively. Finally, River City Ford filed a bankruptcy petition, and the dealership closed in January 1991.
Soon after that collapse, Foster and Sperau filed this action against Ford; Ford Motor Credit Company ("Ford Credit"), which is Ford's wholly owned subsidiary financing corporation; and a Ford Credit employee. Foster and Sperau claimed, among other *114 things, that, in an effort to induce them to purchase the Selma dealership, Ford had committed intentional misrepresentations and fraudulent suppression. The plaintiffs alleged that through the monitoring of its Minority Dealer Program, in which Foster's dealership was a participant, Ford was aware that its minority dealers did not perform as well as the average Ford dealer and that its minority dealers experienced smaller average returns on investment and were more likely to lose money each year. Reports to Ford's board of directors show that for the years 1984 through 1987, the four years preceding the sale of the Selma dealership to the plaintiffs, the Ford dealer body experienced yearly returns on investment of 53%, 44%, 42%, and 45%, compared with returns for minority dealers over the same period of 25%, 20%, 16%, and 27%. Similarly, for 1985 through 1987, the percentage of Ford dealerships reporting a yearly net loss was 16%, 16%, and 9%, while for black dealers the percentages for the same years were 34%, 39%, and 23%. Ford was also aware that prospects were even worse for newly appointed dealers, both black and white. Fifty-eight percent of minority Ford dealers who had been in business for one year or less were in a loss position for the year-to-date as of July 1986, while 22% of white dealers with similar experience posted losses for that year-to-date period. Conversely, only 15% of white Ford dealers in business for more than one year were in a loss position for that same year-to-date period, although 26% of minority owners, even among this experienced group, posted losses.
Ford's reports also recognized that minority dealers often possessed certain characteristics that Ford believed accounted for the lower achievement, such as "considerably less retail management experience, ... a typically high initial turnover of people, ... higher fixed costs, and ... difficulty in attracting qualified management personnel." The reports repeatedly noted that many minority dealerships were in the early stages of development and were still encountering start-up costs in the "difficult launch period" and that all the more profitable dealers had been in business over two years and were the most experienced. Finally, the 1987 report, the last report prepared before the plaintiffs purchased the dealership, also displays that Ford was aware that more "black loss dealers" could be expected in the immediate future, predicting: "Because of the marginal profitability of newly appointed dealers, and our aggressive black dealer appointment target, we will continue to have a high number of black loss dealers until they have gained more retail experience."
Foster and Sperau contended that because the Selma dealership would be a minority owned dealership, Ford's estimates of potential profits and of the amount of capital required were intentionally misleading, given the information in Ford's possession. The plaintiffs' fraudulent suppression claim stemmed from Ford's failure to disclose to them the information on the past performance of minority dealers. At trial, Ford denied that it had a duty to reveal the information concerning the average performance of black-owned dealerships and denied that that information was material to the plaintiffs' decision to purchase the dealership. Ford further claimed that its forecast projections were reasonable and that River City Ford's failure was proximately caused by severe mismanagement on the part of the plaintiffs. Ford Credit counterclaimed against Foster and Sperau, as guarantors, for debts owed to it by the dealership.
The jury's verdict awarded Foster and Sperau $992,000 in damages for economic losses relating to debts they had incurred to purchase and operate River City Ford, and awarded $635,000 to Ford Credit on its counterclaim against the plaintiffs for loans Ford Credit had made to the dealership. The jury found that Foster and Sperau were entitled to damages in the amounts of $2.5 and $1 million, respectively, as compensation for mental anguish. And finally, the jury assessed punitive damages of $6 million against Ford for its fraudulent conduct. After Ford had filed numerous post-trial motions, the trial court conducted a hearing pursuant to Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and § 6-11-23(b), Ala.Code 1975. The trial court determined that Foster and Sperau's respective awards *115 for mental anguish should be reduced to $500,000 and $200,000, but concluded that the $6 million punitive damages award was justified. On appeal, this Court affirmed the judgment of the trial court in its entirety, specifically holding that the $6 million punitive damages award was not excessive. Ford petitioned to the Supreme Court of the United States for certiorari review. In a memorandum, Ford Motor Co. v. Sperau, 517 U.S. 1217, 116 S. Ct. 1843, 134 L. Ed. 2d 945 (1996), the Supreme Court granted certiorari review, vacated our judgment, and remanded the case for further consideration in light of its decision in BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). On remand, we again affirm the judgment of the trial court, conditioned upon the plaintiffs' filing in this Court a remittitur reducing the punitive damages award to the sum of $1,792,000.
In its 5-4 decision reversing the judgment of this Court in BMW, supra, the Supreme Court of the United States concluded, for the first time, that the amount of a punitive damages award rendered it violative of the Due Process Clause of the Fourteenth Amendment, notwithstanding that the punitive award was the product of procedures that had previously passed constitutional muster. BMW, 517 U.S. at 573-74, 116 S. Ct. at 1598; see Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991). The Supreme Court stated that, under the Due Process Clause, a defendant has the right to "fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose" for such conduct. BMW, 517 U.S. at 574, 116 S. Ct. at 1598. The Court recognized that "[p]unitive damages may properly be imposed to further a State's legitimate interests in punishing unlawful conduct and deterring its repetition." Id., 517 U.S. at 568, 116 S. Ct. at 1595 (citations omitted). "Only when an award can fairly be categorized as `grossly excessive' in relation to these interests," the Court continued, "does it enter the zone of arbitrariness that violates the Due Process Clause of the Fourteenth Amendment." Id. (citation omitted). In order to help reviewing courts better identify punitive damages awards that cross the line into constitutional impropriety, the Supreme Court identified the following three "guideposts": (1) the degree of reprehensibility of the defendant's conduct, (2) the ratio of punitive damages to the amount of actual or potential harm suffered by the plaintiff, and (3) a comparison of the amount of the punitive damages award with civil or criminal penalties authorized or imposed in comparable cases. Id., 517 U.S. at 573-76, 116 S. Ct. at 1598-99.
In this Court's opinion on remand, BMW of North America, Inc. v. Gore ("BMW II"), 701 So. 2d 507 (Ala.1997), this Court pointed out that the United States Supreme Court majority did not dismiss the review process already established by this Court in Hammond and Green Oil, supra, and upheld as constitutional in Haslip, supra. BMW II, 701 So. 2d at 509. Indeed, we recognized that the first two "guideposts" set out by the United States Supreme Court, the degree of reprehensibility of the defendant's conduct and the ratio of the punitive award to actual or potential harm suffered by the plaintiff, are already encompassed within the Hammond-Green Oil review. Id. Thus, rather than supplanting our established review procedures,
Id. at 510.
Accordingly, in this case, we comply with the Supreme Court's mandate to reconsider the excessiveness question, by employing the factors enumerated in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), as we view them now in light of the Supreme Court's decision in BMW. However, before reexamining the question of excessiveness of the award, we note that Ford also contends that the imposition upon it of any punitive *116 damages violates the Due Process Clause of the Fourteenth Amendment. We conclude that this argument is without merit.
The evidence in this case would have permitted the jury to find, by a clear and convincing standard, that Ford "consciously or deliberately engaged in oppression, fraud, wantonness, or malice with regard to the plaintiff[s]," § 6-11-20(a), Ala. Code 1975, by intending to deceive and mislead them by overestimating the true profit potential of the dealership and underestimating the amount of capital required to run it, in order to increase Ford's minority dealer count. It has been the rule in Alabama that upon a finding of an intent to deceive or defraud, punitive damages may be awarded. German Auto, Inc. v. Tamburello, 565 So. 2d 238, 240 (Ala.1990). See also Carnival Cruise Lines, Inc. v. Goodin, 535 So. 2d 98 (Ala.1988); American Honda Motor Co. v. Boyd, 475 So. 2d 835 (Ala.1985); Ex parte Lewis, 416 So. 2d 410 (Ala.1982) (Jones, J., concurring specially).[1] For, as this Court has stated, "Once an intent to deceive has been established, it is difficult to understand that the fraud was not committed grossly." Alabama Farm Bureau Mut. Cas. Ins. Co. v. Griffin, 493 So. 2d 1379, 1384 (Ala.1986), citing Shiloh Constr. Co. v. Mercury Constr. Corp., 392 So. 2d 809 (Ala.1980). We now proceed to the substantive factors enumerated in Green Oil, supra.
In discussing the first guidepost, the United States Supreme Court stated:
BMW, 517 U.S. at 575-76, 116 S. Ct. at 1599 (citations omitted). The reprehensibility of the defendant's conduct is one of the factors Alabama courts consider in the common-law excessiveness review required by Green Oil:
539 So. 2d at 223. As we noted in BMW II, while this factor has been part of the Hammond-Green Oil review, it perhaps has not heretofore been given the weight in the analysis that the Supreme Court suggested in BMW that it should receive. 701 So. 2d at 508-09.
Applying this guidepost to Ford's conduct in this case, we hold that, while the reprehensibility of Ford's conduct justifies a substantial penalty, Ford's conduct does not exhibit the extremely high degree of reprehensibility that would indicate a $6 million punitive damages award. We first note that the record does not reveal that Ford had been punished for similar misconduct prior to this case. As in BMW, the injury inflicted upon the plaintiffs was purely economic in *117 nature, with the conduct indicating no "disregard for the health and safety of others." See 517 U.S. at 576, 116 S. Ct. at 1599. Given that Foster and Sperau were both college educated, possessed substantial business experience, and had the financial capacity to purchase an automobile dealership, it is difficult to conceive that they were especially "financially vulnerable," as that term is commonly understood. See id.; compare Life Ins. Co. of Georgia v. Johnson, 701 So. 2d 524 (Ala.1997). However, given Ford's knowledge of the plaintiffs' limited personal wealth in relation to the large amounts they had to borrow to invest, Ford was aware not only that the plaintiffs ran a substantial risk of losing their investment, but also that they might face complete financial ruin if the dealership failed.
We reject the suggestion that Ford's failure to employ or disclose all information in its possession that was purely "race based" was especially reprehensible, or even necessarily unlawful at all. Clearly, much of the information in Ford's possession regarding the past performance of its minority dealerships was not material to the plaintiffs' particular circumstances and did not necessarily bear upon the potential of the specific Selma dealership. Neither Foster nor Sperau ever asked for, or ever showed any interest in, the history of black dealerships generally, despite their substantial investigation into whether they should purchase the dealership. We find their lack of interest in this area unsurprising, for dealers are, of course, individuals, each one bringing to the table a certain amount of capital to invest, relevant experience, diligence, intelligence, contacts within the industry, etc. Similarly, dealerships also exist within a concrete context of a location with a certain market size and economic conditions, sales and profit history, costs, etc. These factors, and undoubtedly others, have an impact, to varying degrees, on the potential and actual performance of a given Ford dealership, and the evidence showed that the plaintiffs' inquiries focused upon these kinds of considerations, to allow them to determine whether they, as individual investors, could run this particular dealership in Selma, Alabama, to produce income at a level to their satisfaction.
Because the sole defining trait of minority dealerships is the race of the dealer, the data on their history ignore the wide range of aspects of both the individual dealers and the specific dealerships they operate that are encompassed within the population and the business environment. But if one accepts that Foster's race alone entitles him to be told the known history of all minority dealers or requires the preparation of a "race-specific" forecast, then one is also recognizing that a primary determining factor of a potential dealer's ability to compete and succeed in operating a particular dealership is race. We do not acknowledge such a proposition, nor have we ever held that all information on black dealers was "material" within the context of this case.
If one hypothesizes that Ford attempted to rationalize a discriminatory policy against qualified minority members seeking to purchase dealerships by pointing to the data showing that, on average, black dealers were much less successful than white dealers, one can imagine the swift and harsh response. The admonition would likely be, in effect, "Such statistics, even if true, are not material because Ford is not permitted to evaluate potential dealers based upon racial generalizations or stereotypes. Rather, it must judge each by using criteria regarding the potential dealer's individual abilities and qualifications that are reasonably thought to bear upon the capacity to successfully operate a particular retail automobile establishmentand race is, emphatically, not one of those qualities deemed material to that capacity." But if, on the other hand, Ford demonstrated that it denied approval to a minority dealer on the specific "race-neutral" grounds that the applicant lacked sufficient capital and experience in the automobile industry, such reasons, if not merely pretextual, would be legitimate. See Brown v. American Honda Motor Co., 939 F.2d 946 (11th Cir.1991), cert. denied, 502 U.S. 1058, 112 S. Ct. 935, 117 L. Ed. 2d 106 (1992).
So too in this case. If the fact that an applicant is African-American would not be material to the applicant's ability to operate the dealership in the hypothetical discriminatory *118 context stated above, that same fact cannot be material to that issue here either. The information on the history of minority dealers cannot be material because of what it might show about the outlook for a prospective dealer because he is of a racial minority, but rather only for what it might reveal about characteristics other than race that are thought to have a bearing on the plaintiffs' chances for successful operation of the dealership.[2] When Ford prepared the revised forecast that purported to be a reasonable prediction for the plaintiffs' operation of the Selma dealership, the minority dealership data alerted Ford to the fact that the plaintiffs shared with the minority-dealer body some of the most significant traits, most notably a sharp lack of experience in automobile sales, that Ford itself had identified as impeding performance. In addition, the minority dealer reports revealed that newly appointed dealers, such as these plaintiffs, regularly experienced "marginal profitability" because of start-up problems and higher fixed costs. These factors, as Ford was aware, weighed very heavily against its forecast of immediate and substantial improvement over the performance of an experienced, established dealer in the same market.
The evidence of the specific history of the Selma dealership known to Ford also would allow the jury to reasonably infer that Ford knew its forecast was misleading. In the prior owner's seven years of operation, the Selma dealership had never generated more than a $193,000 profit (or 55% return on the prior owner's smaller capital investment) in any year and had averaged only about $96,000 annually.[3] Referring to this performance, Bill Stang, Ford's Atlanta District sales manager, stated that "from the profitability standpoint [the Selma dealership] was a very, very excellent dealership under the prior owner." Yet, Ford represented to the plaintiffs that it was reasonable to expect profits of $274,000 and $350,000, and returns of 51.2% and 65.4%, for the plaintiffs' first two years of operation in the same market. In addition, the plaintiffs' expert economist, Dr. Charles Carter, stated that the forecast figures were unreasonable and, as an example, pointed out Ford's use of what he called "fairly heroic growth rates" for projected new vehicle sales. Carter noted that in 1987, the prior owner's last year of operation, which Stang conceded was a "good year" for Ford, the dealership had sold 381 new vehicles and had cleared $732 per vehicle. Ford's forecast, however, projected that Foster and Sperau could be expected immediately to increase the number of new vehicles sold to 465 and 557 in the first two years, while simultaneously increasing the profit on each to $926. Carter indicated that, in his opinion, the chances of such immediate and significant increases over the performance of the established dealer both in the number of units sold and in the profit per unit, in the same market, were extremely remote.
Further, there was evidence suggesting that even Ford Credit representatives did not find that Ford's sales and profit forecast or capital requirement for Selma was reasonable and that it recognized that the plaintiffs would be in an exceedingly precarious financial situation in operating the dealership. After the plaintiffs had raised approximately half of the required capital investment, they sought financing for the rest in a loan from *119 Ford Credit. Gary Birdsong, a Ford Credit employee in Dothan, performed an initial credit analysis on the plaintiffs' file and recommended that the loan application be rejected, concluding, "The debt structure will be high and ability to meet monthly expenses is based primarily on the Sales and Profit Forecast as prepared by Ford Motor Company. Risk to Ford Credit appears to be poor." Birdsong also noted that Foster and Sperau's "tangible-based capital," basically a measure of net worth, and "working capital," the money with which the business has to operate, both appeared to be "inadequate"; and he later stated that the percentages were "extremely low" in relation to recommended guide amounts. Birdsong's superiors at Ford Credit's main office in Dearborn, Michigan, similarly concluded that the loan should be rejected. David Cottingham, the Ford Credit staff operations manager, recommended rejection, primarily based upon Foster and Sperau's lack of experience in the automotive industry, their limited net worth, and what would be a heavy debt. Cottingham's superior, John Chadwick, similarly agreed that the loan request should be rejected because, he said, River City was not "really a minority dealer, [the] operators lack... experience and ... ability to get operating capital if they have start up problems [and they] have borrowed to their capacity now."
Based on the foregoing evidence, the jury could have reasonably inferred that Ford knew that its forecast for the particular Selma dealership was unreasonable and that it made the representations with the intent to mislead and deceive the plaintiffs, for the purpose of inducing the plaintiffs to purchase the dealership when they would not have done so otherwise. Clearly, this case is unusual, though, in that many of the interests of Ford and the interests of the plaintiffs were closely aligned. This is not a situation where a defendant fraudulently induced the plaintiffs to invest for the malicious purpose of wrongfully appropriating for itself the plaintiffs' property. The evidence gives every indication that Ford intended and hoped that the Selma dealership would flourish under the plaintiffs' direction and would stand as a shining example of the success of its Minority Dealer Program. As the jury found, Ford Credit, Ford's wholly owned subsidiary, was owed $635,000 on loans it had made to the dealership; these loans were made, as the plaintiffs themselves emphasize, only because of urging by the parent Ford corporation, despite unanimous initial recommendations by Ford Credit employees to reject the application because of the likelihood that the funds could never be repaid. Thus, it was only because of Ford's commitment, despite its knowledge that the plaintiffs had limited assets with which to secure the loans, that the plaintiffs were able to borrow in the first place most of the funds that are the basis for the actual damages award. It is undisputed that, far from deriving a benefit from the failure of the plaintiffs' dealership, Ford would absorb losses associated with locating a replacement dealer and that its own image, and that of its Minority Dealer Program specifically, would suffer as well as the result of such a failure.[4] Based upon the evidence, we conclude that the only "injury" Ford could be said to have actually intended is that the plaintiffs would acquire a dealership that Ford knew possessed a smaller profit potential than forecast and placed the plaintiffs at greater financial risk than represented.
We conclude that Ford's conduct manifests only a moderate degree of reprehensibility. The fraud in this case will support a significant punitive damages award only because, by purposefully and intentionally deceiving the plaintiffs about the true prospects of the dealership, Ford knowingly exposed them to the substantial possibility of financial catastrophe. While only some of the data on the minority dealers were actually material to the plaintiffs' operation of the Selma dealership, the reports on the minority dealer program did indicate "race neutral" considerations material to the plaintiffs' circumstances that Ford recognized *120 would very likely hinder their chances of achieving the forecast performance. Further, there was also evidence presented that contrasted the forecast with the past profitability of the Selma dealership itself; this evidence strongly indicated the forecast was unreasonable. However, the record does not show that Ford persisted in fraudulent conduct despite prior punishment, and its actions threatened neither health nor safety. The evidence shows that Ford did not intend to wrongly or maliciously appropriate the plaintiffs' property or intend that they lose their investment. Indeed, despite Ford's knowledge that its wholly owned subsidiary would probably not be able to recover much of the loan amounts if the dealership failed, Ford made it possible for the plaintiffs to borrow the amounts that form the basis of the awards of actual damages.
As to the second guidepost, the Supreme Court noted that the "perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff" and it noted the "principle that exemplary damages must bear a `reasonable relationship' to compensatory damages." 517 U.S. at 580, 116 S. Ct. at 1601. The Court stated:
517 U.S. at 582-83, 116 S. Ct. at 1602-03. (Citations omitted; emphasis original).
The ratio of the $6 million punitive damages award to the $992,000 of actual monetary damage is approximately 6:1. When the plaintiffs' awards for mental anguish, as remitted by the trial court, are included, the total of $1,692,000 gives a punitive:compensatory ratio of about 3.5:1. This ratio is obviously far smaller than the 500:1 ratio in BMW, see 517 U.S. at 581-84, 116 S. Ct. at 1602-03, and is even below the approximately 4:1 ratio that the United States Supreme Court found might be "close to the line" in Haslip, supra. 499 U.S. at 23, 111 S. Ct. at 1046. Thus, it is somewhat difficult to say that in this case the ratio alone "must surely `raise a suspicious judicial eyebrow.'" BMW at 583, 116 S. Ct. at 1603, quoting TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 481, 113 S. Ct. 2711, 2732, 125 L. Ed. 2d 366 (1993) (O'Connor, J., dissenting). This factor does not, in itself, seem to indicate that a substantial remittitur is required. However, given that Ford lacked a malicious intent to wrongfully deprive the plaintiffs of any of their investment, given that Ford made it possible for the plaintiffs to initially borrow most of funds they eventually lost, and given the substantial amount of compensatory damages, we conclude that the conduct in this case indicates that the ratio should not be much greater than 1:1.
The third guidepost stated by the United States Supreme Court in BMW is "[c]omparing the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." 517 U.S. at 583, 116 S. Ct. at 1603. State courts making this comparison should "`accord "substantial deference" to legislative judgments concerning appropriate sanctions for the conduct at issue.'" BMW, 517 U.S. at 583, 116 S. Ct. at 1603, quoting Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301, 109 S. Ct. 2909, 2934, 106 L. Ed. 2d 219 (1989) (O'Connor, J., concurring in part and dissenting in part).
The plaintiffs contend that the Alabama Securities Act, § 8-6-1 et seq., Ala.Code *121 1975, provides the legislative sanction for misconduct most similar to Ford's in this case. That Act prohibits fraudulent conduct by "any person, in connection with the offer, sale, or purchase of any security," § 8-6-17, Ala.Code 1975. The Securities Act designates that a conviction for a knowing violation of the Act is punishable as a Class C felony and also provides for civil liability for damages, costs, and attorney fees. See §§ 8-6-18(a), 8-6-19, Ala.Code 1975. The plaintiffs emphasize that Ford's Don Kitchens, the employee who prepared the revised forecast, testified that a sales and profit forecast is "used more or less as a prospectus for that dealership point."
We recognize that the Alabama Securities Act does protect investor interests somewhat similar to those at issue in this case. Thus, it perhaps could be said that the Securities Act is relevant to demonstrate that the legislature has decided that a serious criminal penalty may be warranted in cases of fraud involving investments generally. However, the assets of the Selma dealership purchased by the plaintiffs are not a "security," as that term is broadly defined by § 8-6-2(10), Ala.Code 1975.[5] This Court has also specifically held that an "investment contract" was not a "security" where a promoter exercised only remote control over a franchisee who conducted his business independently, and, therefore, that in such a situation the Securities Act did not apply. Burke v. State, 385 So. 2d 648 (Ala.1980). Given that the subject of the transaction in this case, i.e., the assets of the Selma dealership, so clearly falls outside the subject matter regulated by the Securities Act, we conclude that the Securities Act, and the penalties provided for in that Act, might provide Ford with only limited notice of the severity of the punitive award in this case.
Ford, on the other hand, argues that we should look to the Deceptive Trade Practices Act ("DTPA"), § 8-19-1 et seq., Ala.Code 1975, as providing due process notice of the severity of the possible punishment. Ford claims that its conduct, as found by the jury, could be compared with the conduct prohibited by § 8-19-5(20), which declares unlawful the following:
Ford contends that the Selma dealership is not technically a "seller-assisted marketing plan," but that this section is analogous in that Ford sells vehicles to the dealer and provides the dealer with assistance in reselling the vehicles at retail to the public.[6] Ford emphasizes that a knowing violation of the DTPA carries only a civil fine, of not more than $2,000. § 8-19-11(b), Ala.Code 1975.
Assuming that Ford is correct in arguing that the DTPA provides the best example of *122 a legislative sanction for comparable misconduct, it must be recognized that the Act also grants a statutory private right of action that permits a recovery of up to three times any actual damage, in the court's discretion, plus costs and a reasonable attorney fee. Section 8-19-10(a)(2) and (3), Ala.Code 1975. Ford contends that the proper focus for due process purposes should be upon what the maximum civil fine could be under § 8-19-11(b), rather than on what the maximum recovery might have been had a plaintiff pursued a private action under § 8-19-10. Ford correctly points out that when the United States Supreme Court conducted its analysis under this guidepost in BMW, the Court mentioned only the possible maximum $2,000 civil fine under § 8-19-11(b), not the approximately $12,000 the plaintiff might have recovered in a private action under the DTPA, given the $4,000 in actual damage he had suffered in that case. See BMW, 517 U.S. at 583-84, 116 S. Ct. at 1603. However, we discern no reason why the $2,000 civil fine, rather than the potential liability delineated under § 8-19-10, is a more reliable expression of the legislature's judgment as to what is the appropriate punishment for conduct comparable to Ford's. Indeed, given that the legislature specifically granted the private right of action with the possible recovery of treble damages and, as well, preserved the availability of common law and statutory remedies for fraud,[7] it could easily be argued that the legislature implicitly recognized that a maximum $2,000 civil fine per violation is affirmatively not an appropriate penalty for all such violations because the varying degrees of plaintiffs' injuries and defendants' culpability dictate a greater degree of flexibility in punishment. We also do not see why the civil fine would provide materially superior notice to a defendant who might be equally subject to the liability that has been legislatively established under the private right of action.
As we recognized in BMW II, a $2,000 statutory penalty for deceitful conduct is so meager that there is little basis for comparing it with any meaningful punitive damages award. 701 So. 2d at 512-13. However, we conclude that the statutory maximum liability that would potentially exist under the DTPA's private right of action in this case does provide an amount that can be meaningfully compared to the punitive damages award. The plaintiffs' actual economic damage in this case, as found by the jury, amounted to $992,000. So the maximum total recovery permitted for a violation of the DTPA under the private right of action of § 8-19-10, treble damages plus costs and reasonable attorney fees, would be somewhat over $3 million. A punitive award of $1,792,000, added to the $992,000 award for economic loss and the $700,000 award for mental anguish, results in a total recovery of $3,484,000.
In a Hammond-Green Oil review, we are required to determine whether, if the wrongful conduct was profitable to the defendant, the punitive damages removed that profit and were in excess of the profit, so that the defendant recognizes a loss. Green Oil, 539 So. 2d at 223. The plaintiffs argue that Ford derived from its fraud an amount of money exceeding $15 million, which was the total amount of Ford products sold and interest paid by the River City dealership. The plaintiffs also emphasize that Ford obtained substantial benefits through its recruitment of minority dealers, such as the plaintiffs. They cite, for example, that the 1987 report to Ford's board of directors recognized that the minority dealers had sales that year totaling approximately $1 billion. Finally, the plaintiffs allege that the Minority Dealer Program provided Ford the added benefits of positive corporate image and allowed Ford to keep dealerships in less desirable geographical locations in business.
We conclude that Ford did derive at least some temporary benefits as a result of its fraudulent misrepresentation and suppression in this case but that determining a specific *123 dollar amount of profit is difficult. We find the $15 million figure cited by the plaintiffs to be highly exaggerated, for it simply represents the gross sales of River City Ford, not the profits to Ford itself. The profits flowing to Ford from those retail sales would have been only some unknown fraction of the gross sales. But even if that direct profit was discernible, more problematic for the plaintiffs' position is the fact that there is no evidence to suggest that no one else would have run the Selma dealership had the plaintiffs decided not to invest. It is true that the evidence indicates that Ford was having trouble attracting a minority dealer to Selma. But as the plaintiffs themselves emphasize, Ford, in insisting that the Selma dealership be operated by a minority dealer, had blocked at the last moment a proposed sale to a local white Lincoln-Mercury dealer who had sought to expand his business. Thus, there is every indication that Ford, absent its fraud, might have had to settle for a white dealer in Selma, but nothing suggests anything approaching a $15 million direct profit to Ford. As Ford points out, if there is any reasonable inference to be drawn from the evidence it is that Ford probably surrendered some immediate profits from sales of Ford products that likely would have resulted from having a more experienced dealer than the plaintiffs operating in Selma.
In addition, the issue we address here is the profit Ford derived from its specific fraudulent conduct in this case, not the benefits Ford may have obtained from its lawful, indeed laudable, voluntary affirmative action program as a whole. We agree that the evidence would reasonably allow the finding that the Minority Dealer Program sooner or later improves Ford's overall profits by providing Ford a positive corporate image, by increasing sales to minorities, and by keeping open some of its dealerships that otherwise might close. But adding a single minority Ford dealer in Selma, Alabama, translates only into some small incremental benefit to the program as a whole. Concentrating on benefits to Ford from the entire Minority Dealer Program may help one to understand Ford's motivation for attempting to attract minority investment, but such a focus can be misleading to one attempting to assess Ford's profit in this case.
It does appear, however, that Ford valued the Selma dealership as especially attractive for its potential to advance the image of both Ford generally and the Minority Dealer Program specifically. Given Selma's national association with the civil rights movement, Ford believed that the operation of a successful minority dealership there would demonstrate both the viability of minority dealerships in the program and Ford's resolve in giving opportunities to minorities. Thus, a minority dealer in Selma might have increased Ford sales to minorities locally and perhaps would have encouraged other minorities to similarly invest in a Ford dealership, although, as noted above, the record does not suggest that the consistently profitable Selma dealership was in any danger of closing absent the plaintiffs' investment. However, in terms of "removing" the defendant's wrongfully obtained profit in this case, it is difficult to see that Ford has still retained any significant profit it might have anticipated. An attempted minority dealership in Selma might allow Ford to be viewed as having extended an opportunity to a minority dealer, but the dealership's visible failure would likely only discourage future minority investment.
This Court has acknowledged that a defendant's financial position is relevant to determining the propriety of an amount of punitive damages. Green Oil, 539 So. 2d at 223. "[F]or punitive damages to be effective the amount of damages `ought to be large enough to hurt. It ought to sting in order to deter[; this] is its purpose.'" Associates Financial Services Co. of Alabama, Inc. v. Barbour, 592 So. 2d 191, 199 (Ala.1991), quoting Ridout's-Brown Service, Inc. v. Holloway, 397 So. 2d 125, 127 (Ala.1981) (Jones, J., concurring specially). However, as the United States Supreme Court has stated, "plaintiffs [should] not enjoy a windfall because they have the good fortune to have a defendant with a deep pocket." Haslip, supra, 499 U.S. at 22, 111 S. Ct. at 1045. Thus, in BMW *124 II this Court recognized that "where a defendant has not committed an act that would warrant a large punitive damages award, such an award should not be upheld upon judicial review merely because the defendant has the ability to pay it." 701 So. 2d at 514. Also in BMW II, we suggested that a punitive damages award that exceeds 10% of the defendant's net worth could indicate that the award should be reduced, particularly where the defendant's conduct is not highly reprehensible. 701 So. 2d at 514.
It is obvious that a punitive damages award of even $6 million does not begin to approach 10% of the net worth of Ford Motor Company. The trial court noted that Ford's net income for 1993 alone was approximately $2.5 billion. Accordingly, a punitive damages award of even $6 million would not have a devastating impact upon Ford's financial position. However, as we have previously noted, Ford's conduct in this case exhibited only a moderate degree of reprehensibility.
Green Oil mandates that a court consider the plaintiff's costs of litigation when reviewing a punitive damages award for excessiveness. 539 So. 2d at 223. This policy encourages bringing wrongdoers to trial. Independent Life & Accident Ins. Co. v. Harrington, 658 So. 2d 892, 905 (Ala.1994), cert. pet. dismissed, 517 U.S. 1164, 116 S. Ct. 1587, 134 L. Ed. 2d 662 (1996). As this Court acknowledged in its original opinion, the costs associated with this trial, in time and money, were substantial. 674 So. 2d at 40. However, "all of the costs of litigation would be more than adequately covered" by even a $1,792,000 punitive award in this case. Principal Financial Group v. Thomas, 585 So. 2d 816, 818 (Ala.), cert. denied, 502 U.S. 1009, 112 S. Ct. 649, 116 L. Ed. 2d 666 (1991).
Green Oil requires that a court reviewing a punitive damages award for excessiveness consider whether the defendant has suffered any criminal sanctions for the wrongful conduct. Any such sanctions might be taken into account to suggest a reduction of the punitive damages award that otherwise would be appropriate. 539 So. 2d at 223-24. No criminal sanctions have been imposed upon Ford for its conduct in this case, so this factor does not suggest a reduction of punitive damages.
Finally, Green Oil states that if there have been other civil actions against the same defendant, based on the same conduct, this also should be taken into account to suggest a reduction of the punitive damages award that otherwise would be appropriate. 539 So. 2d at 224. The record does not reveal that there have been other civil actions against Ford for the same conduct.
We initially determined that Ford's right to due process was not violated by the imposition of a $6 million punitive damages award. However, after reconsidering the amount of the award, in light of the Supreme Court's decision in BMW, we decide that the punitive damages award should be reduced from $6 million to $1,792,000, an amount slightly greater than the amount of compensatory damages assessed by the jury, as reduced by the trial court. Further, a punitive award of $1,792,000 results in a total recovery of $3,484,000, which is fairly indicated by the maximum recovery specifically authorized for the statutory private right of action under the Deceptive Trade Practices Act. Finally, given our conclusion that Ford has not retained significant profit from its fraudulent conduct in this particular case, the reduced punitive award is appropriate. As with the original award, a $1,792,000 punitive award more than covers the plaintiffs' costs of litigation.
The trial court's judgment is affirmed on the condition that the plaintiffs file with this Court within 21 days a remittitur of punitive damages to the sum of $1,792,000; otherwise, the judgment will be reversed and this cause remanded for a new trial.
*125 AFFIRMED CONDITIONALLY.[*]
HOOPER, C.J., and SHORES, KENNEDY, and COOK, JJ., concur.
ALMON, J., concurs in the result.
MADDOX, HOUSTON, and SEE, JJ., dissent.
BUTTS, J., recuses himself.
HOUSTON, Justice (dissenting).
I dissent, for reasons I expressed when this Court released its opinion in Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995):
** "James Russell Lowell, The Present Crisis."
674 So. 2d at 42.
SEE, Justice (dissenting).
Because of the striking absence of reprehensibility in this case, I respectfully dissent from the award of $1,792,000 in punitive damages.
I would determine the appropriate amount of punitive damages in this case by applying a strict state law reasonableness standard based on the factors established in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), as reinvigorated in Justice Houston's special concurrence in BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) ("BMW II") (Houston, J., concurring specially).[8] Because the trial judge placed sufficient facts and analysis in the record to permit appellate review of the reasonableness of the punitive damages award, it is not necessary to remand this case.[9]
*126 Since the 1960s, the defendant Ford Motor Company ("Ford") has voluntarily conducted a nationwide "Minority Dealer Program," under which it has tried to promote minority participation in the ownership and operation of one of America's largest and most important industries, the automobile industry. Sperau v. Ford Motor Co., 674 So. 2d 24, 28 (Ala.1995). In 1988, as part of the Minority Dealer Program, Ford sold an automobile dealership in Selma, Alabama, to Samuel Foster, a black man, and Dee-Witt Sperau, a white man. Id. at 30-32. In an effort to achieve its self-imposed goal for minority dealerships, Ford lowered the price of the dealership and lent Foster and Sperau capital, even though they did not meet the ordinary experience and net worth qualifications for purchasing the dealership. Id. at 31. Ford gave Foster and Sperau a profit forecast that showed profits could potentially reach $274,000 in the first year and $350,000 in the second year of operation, after an initial investment of $535,000. Ford did not reveal to Foster and Sperau that, in the past, the average Ford minority dealer had earned less in profits and had experienced more losses than the average white dealer. Id. at 29. Nor did Ford disclose data showing that new dealers appointed under the Minority Dealer Program usually made only marginal profits. Id. Also, Ford did not disclose to Foster and Sperau that on a smaller capital investment of $348,000 the prior owner of the Selma dealership had earned $193,000 in 1986 and $180,000 in 1987.
Foster and Sperau are college-educated, experienced businessmen. They purchased the Selma dealership from Ford and earned approximately $103,000 in 1988, but lost approximately $4,000 in 1989 and $6,000 in 1990. Id. at 32. The dealership filed a bankruptcy petition in 1991. Id. Foster and Sperau sued Ford, alleging, among other things, fraud and fraudulent suppression, contending that "because the Selma dealership would be a minority-owned dealership, Ford's estimates of potential profits and of the amount of capital required were intentionally misleading, given the information in Ford's possession." 708 So. 2d at 114.
The Lowndes County jury returned a verdict for Foster and Sperau. After the trial court reduced the mental anguish awards for Foster and Sperau, the total award was:
Sperau, 674 So. 2d at 27-28.
On appeal, this Court adopted the trial court's order and refused to make any reduction in the $6 million punitive award, in large part because:
Id. at 38-39. The Supreme Court of the United States vacated this Court's judgment and remanded this case for reconsideration in light of BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996) ("BMW"). Ford Motor Co. v. Sperau, 517 U.S. 1217, 116 S. Ct. 1843, 134 L. Ed. 2d 945 (1996).
Today, this Court approves a punitive award of $1,792,000. Based on the following analysis, I disagree.
1. Ratio of Punitive Damages to Compensatory DamagesThe jury awarded $6,000,000 in punitive damages, and, after the trial court's offset of loans due to Ford, $1,057,000 in compensatory damages. Sperau, 674 So. 2d at 27-28. Because this greatly exceeds the three-to-one benchmark ratio of punitive to compensatory damages, the record must demonstrate clear and specific justification for such a punitive award.
2. ReprehensibilityTo justify a punitive damages award of more than three times compensatory damages, the reprehensibility of the defendant's actions must include: (1) endangerment of the physical health and safety of others; or (2) economic harm resulting from an intentional misrepresentation, deceit, or concealment of a material fact, as set out in Ala.Code 1975, § 6-11-20(b)(1), coupled with either (a) conduct repeated in spite of prior punishment, or (b) a substantial number of similar misrepresentations or acts of concealment. BMW II, 701 So. 2d at 517 (Houston, J., concurring specially). Ford's conduct did not endanger the physical health or safety of anyone, and Foster and Sperau did not demonstrate that Ford had engaged in repeated fraudulent conduct despite prior punishment. The record fails to reflect a substantial number of similar misrepresentations of profit potential in Alabama. Ford may not have disclosed the minority dealer performance statistics to black dealer candidates elsewhere in the nation, but there is no indication that such nondisclosure was illegal outside Alabama. This conduct cannot, therefore, be considered in the computation of the punitive award. See BMW, 517 U.S. at 572-73, 116 S. Ct. at 1597 ("Alabama does not have the power, however, to punish BMW for conduct that was lawful where it occurred and that had no impact on Alabama or its residents."). Thus, an award of more than three times compensatory damages is unwarranted. The question before us, then, is what punitive award, not in excess of three times compensatory damages, is reasonable.
The gist of Foster and Sperau's case was that Ford should have told them that they were likely to fail because Foster was black and most of Ford's black dealers do not perform as well as most of Ford's white dealers. See Sperau, 674 So. 2d at 27 ("The plaintiffs claimed that the representations [regarding forecasts of potential profits] were made in order to induce them to purchase the Ford dealership and with an intent to deceive them, based upon Ford Motor Company's knowledge that minority dealerships were less successful than the average dealership.") (emphasis added). In short, Foster and Sperau contend that because most black dealers in Ford's Minority Dealer Program did not perform as well as most of Ford's white dealers, Foster himself was less likely to succeed. Absent a showing, which was not made here, that Foster personally, and his partner Sperau, could not expect to run as profitable a dealership as could an average white dealer, and that Ford knew or should have known this, but suppressed it, I cannot agree with the majority's holding that Ford's minority recruitment effort was reprehensible.
Instead of selling the Ford dealership to an experienced white Lincoln-Mercury dealer in Selma who had offered to buy it, Ford chose to include Foster in its family of dealers so that Ford could achieve social goals that it viewed as more important than a quick profit. Instead of requiring Foster and Sperau to invest $632,000 of capital for the dealership, Ford reduced the required capital investment to $535,000. Sperau, 674 So. 2d at 31. Instead of accepting the recommendation of Ford Motor Credit Company ("FMCC") to deny Foster and Sperau extensions of credit, Ford instructed FMCC to make the loans to them. Id. at 31-32. Only *128 by forensic gymnastics can these facts be construed as "reprehensible."[11]
Foster and Sperau were mature, experienced businessmen who engaged in arm'slength negotiations with Ford for the purchase of an automobile dealership under Ford's Minority Dealer Program. The dealership failed. Ford's hopes for profits, like those of Foster and Sperau, went unrealized.
The facts of this particular case, with its absence of genuinely reprehensible acts, justifies only a de minimis punitive award.[12]
3. Civil and Criminal Sanctions for Similar ConductSection 8-19-11(b), Ala.Code 1975, provides a maximum civil fine of $2,000 for a violation of the Deceptive Trade Practices Act, which punishes "fraudulent" conduct similar to that alleged in this case. The level of this fine supports a de minimis punitive award of no more than a few thousand dollars.[13]
4. Profitability of ConductAs the plurality recognizes, Ford made little, if any, discernible profit on the failed dealership. *129 708 So. 2d 119. Any reputational benefit Ford received from assisting minorities by advancing its Minority Dealer Program in Selma derives from the admirable nature of Ford's actions. Thus, this factor also supports the imposition of only a de minimis punitive damages award.
5. Financial Position of the Defendant The plurality notes that Ford's nationwide net income for 1993 was approximately $2.5 billion. 708 So. 2d 124. Although the net income generated by Ford's operation of its Minority Dealer Program in Alabama would be a more relevant number in this case, the lack of reprehensibility of Ford's conduct supports only a de minimis punitive award and a corresponding de minimis impact on its financial condition.
6. Costs of Litigation The plaintiffs' attorneys tried the case to a jury and did a thorough job of handling the direct appeal and the application for rehearing in this Court. Sperau, 674 So. 2d 24-42. There was no evidence of abuse of the legal process. Given the particular facts of this case, a de minimis punitive damages award, combined with the award of $1,057,000 in compensatory damages, including $700,000 for mental anguish, should amply cover the reasonable costs of litigation.
Because of the lack of reprehensibility, and because of Ford's admirable voluntary efforts to include minority dealers in the ownership and operation of its business, I conclude that only a de minimis punitive damages award is reasonable in this case.
I dissent.
MADDOX, J., concurs.
[1] The defendant's intent to deceive or mislead, or "scienter," has been the standard prerequisite for imposing punitive damages in fraud cases. See, e.g., Cartwright v. Hughes, 226 Ala. 464, 147 So. 399 (1933); Munroe v. Pritchett, 16 Ala. 785 (1849).
In addition, § 6-5-104(a), Ala.Code 1975, which defines the tort of fraudulent deceit, provides as follows: "One who willfully deceives another with intent to induce him to alter his position to his injury or risk is liable for any damage which he thereby suffers." (Emphasis added.) "`Deceit'... results from either a willful or a reckless misrepresentation or a suppression of material facts with an intent to mislead." Hughes v. Hertz Corp., 670 So. 2d 882, 888 (Ala. 1995), citing Whitlow v. Bruno's, Inc., 567 So. 2d 1235 (Ala.1990). Deceit is an intentional tort that, when proved to the satisfaction of the finder of fact, will support an award of punitive damages. American Honda Motor Co. v. Boyd, supra.
[2] This may be illustrated by the fact that it becomes more difficult to conceive of the minority dealer data as material as one imagines plaintiffs who do not share traits of the minority-dealer body generally. If one were to assume, for example, that Foster and Sperau were experienced Ford dealers who could transfer in an experienced staff and had large surpluses of capital, it becomes questionable whether any of the minority-dealer data would be at all indicative of their chances to successfully operate a dealership. In fact, under such circumstances, providing a "race-specific" forecast of lower profits or disclosing discouraging information on minority dealers could itself be misleading as to the true potential of the dealership. In addition, Ford clearly may not offer disparate contractual terms, such as capitalization requirements, on the basis of race alone. See Runyon v. McCrary, 427 U.S. 160, 96 S. Ct. 2586, 49 L. Ed. 2d 415 (1976).
[3] There was evidence to suggest that the profits for the Selma dealership for the seven years under the prior owner, who had made an initial $348,000 capital investment, were as follows: 1981$44,200; 1982$82,000; 1983$74,000; 1984$46,000; 1985$58,000; 1986$193,000; 1987$180,000.
[4] The plaintiffs themselves point out that while Ford and Ford Credit are technically separate corporate entities, Ford Credit's profits are ultimately consolidated as income to Ford Motor Company. Thus, Ford would also indirectly lose if Ford Credit was unable to recover amounts owed to it by the dealership, a likely possibility if the dealership failed.
[5] Section 8-6-2(10) defines "security," for the purposes of the Alabama Securities Act, as follows:
"SECURITY. Any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, certificate of interest or participation in an oil, gas, or mining title or lease or in payments out of production under such a title or lease, annuity contract unless issued by an insurance company, bankers' shares, trustees' shares, investment participating bonds, investment trust debentures, units, shares, bonds and certificates in, for, respecting, or based upon any form of securities or collateral, subscriptions and contracts covering or pertaining to the sale or purchase on the installment plan of any security as herein defined, or subscription or contracts covering or pertaining to the sale or purchase of beneficial interest in title to property, profits or earnings, or any right to subscribe to any of the foregoing, or any instrument of any kind commonly known as a security."
[6] The DTPA also prohibits "[e]ngaging in any other unconscionable, false, misleading, or deceptive act or practice in the conduct of trade or commerce." Section 8-19-5(23), Ala.Code 1975.
[7] We note that the "savings clause" of the DTPA provides that the remedies under that Act do not displace remedies for fraud, misrepresentation, deceit, or suppression that are available under the common law, statute, or otherwise. However, the remedies under the Act and those otherwise available are mutually exclusive. Section 8-19-15, Ala.Code 1975.
[*] Note from the reporter of decisions: On February 10, 1998, the Supreme Court issued the following certificate of judgment:
"WHEREAS, in keeping with the former order and judgment of this Court entered on September 5, 1997, the appellee(s), Dee-Witt Sperau and Samuel R. Foster II, did on September 24, 1997, file in this Court a remittitur of punitive damages tot he sum of $1,792,000.
"IT IS NOW CONSIDERED, ORDERED AND ADJUDGED that the judgment of the circuit court be reduced to $3,484,000 and as thus reduced, the judgment of the circuit court is hereby affirmed, with interest and costs.
"IT IS FURTHER ORDERED AND ADJUDGED that the appellant, Ford Motor Company, pay the costs of appeal and the costs taxed against the defendant(s) in the court below will stand as taxed."
[8] I adopted this reasoning in Life Insurance Co. of Georgia v. Johnson, 701 So. 2d 524, 535 (Ala. 1997) (See, J., concurring in part and dissenting in part).
[9] In Hammond v. City of Gadsden, 493 So. 2d 1374, 1379 (Ala.1986), this Court required "trial courts to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of the damages."
[10] These loans were made by Ford Motor Credit Company, a subsidiary of Ford Motor Company.
[11] It is difficult to support the rationale of the majority's opinion in Sperau, 674 So. 2d at 38-39, which found liability in Ford's failure to disclose race-based statistics. If Ford had presented Foster and Sperau the statistics showing that minority dealers turned in an average financial performance that was less than that of its white dealers, Ford could have exposed itself to legal actions for the subsequent sale of the dealership to a nonminority candidate. Cf. Brown v. American Honda Motor Co., 939 F.2d 946 (11th Cir.1991), cert. denied, 502 U.S. 1058, 112 S. Ct. 935, 117 L. Ed. 2d 106 (1992). Instead of the Sperau rationale, the plurality today, on reconsideration, develops a post hoc "race-neutral" rationalization to support the $1,792,000 award. Specifically, the plurality now finds a "moderate degree" of reprehensibility in Ford's use of optimistic profit projections because of "race-neutral" factors such as a lack of experience, lack of capital, and the Selma dealership's former return on investment. 708 So. 2d at 119. It is difficult to recast these factors as wholly "race neutral," when the very purpose of a minority recruitment program is to compensate for the disadvantage of just these factors.
Moreover, although Ford's forecasts of potential profits of $274,000 in 1988 and $350,000 in 1989 appear optimistic when they are compared to the prior owner's profits of $193,000 in 1986 and $180,000 in 1987, Ford's profit forecasts assumed, and Foster and Sperau made, a greater capital investment$535,000than did the prior owner$348,000. Given the increased capital investment, Ford's forecast of a return of 51.2% and 65% for 1988 and 1989, respectively, is comparable to the previous owner's 55% return in 1986. Indeed, the past profit record of the dealership under its prior owner7 consecutive years of profits, ending with profits of $193,000 and $180,000 in 1986 and 1987, respectivelyand its first year of profits under Foster and Sperau$103,000support Ford's contention that Foster and Sperau's losses were caused not by Ford's optimistic profit forecasts, or by Foster's race, but by Sperau's, and to some degree Foster's, mismanagement. See Sperau, 674 So. 2d at 32 (stating the Sperau would be in charge of day-to-day operations, while Foster would visit the dealership once a week).
[12] In Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995), this Court decided that an award of punitive damages is appropriate in this case. The only issue properly before this Court on this remand is the determination of the amount of punitive damages. Ford Motor Co. v. Sperau, 517 U.S. 1217, 116 S. Ct. 1843, 134 L. Ed. 2d 945 (1996) (remanding for reconsideration in light of BMW).
[13] Although the plurality rejects treble damages as a benchmark for the ratio comparison called for by the Supreme Court in BMW, 517 U.S. at 579-584, 116 S. Ct. at 1601-03, it embraces the treble damages measure of § 8-19-10(a)(2)'s private right of action, as the proper basis for the fixed civil/criminal sanction comparison, also required by the Supreme Court, id. at 583-84, 116 S. Ct. at 1603-04. In BMW, however, the Supreme Court mandated that courts apply both the flexible ratio guidepost and the fixed civil/criminal sanction guidepost. The ratio factor provides a flexible measure of the relationship between actual and punitive damages, while the fixed civil/criminal sanction provides a static measure of the Legislature's judgment of the appropriate maximum fixed penalty for a certain type of wrongful conduct. In applying these distinct guideposts, the Supreme Court noted the use of treble damages as a possible ratio, id. at 581 n. 33, 116 S. Ct. at 1601-02 n. 33, and it specifically used the $2,000 civil fine imposed under Ala.Code 1975, § 8-19-11(b), not the private right of action of § 8-19-10(a)(2), for the fixed civil/criminal sanction guidepost, id. at 584 n. 39, 116 S. Ct. at 1603 n. 39. It is interesting to note that the plurality appears to embrace a 3:1 ratio only when its final punitive damages award produces a ratio of less than 3:1, not when it produces a ratio that is greater than 3:1. Compare today's plurality opinion, 708 So. 2d at 120 (embracing the 3:1 ratio as a comparative factor when the final punitive award produces an approximate 1.1:1 ratio of punitive to compensatory damages, based on the plurality's computation of gross compensatory damages) with Life Ins. Co. of Georgia v. Johnson, 701 So. 2d 524, 529 (Ala.1997) ("Johnson II") (refusing to embrace the 3:1 ratio as a comparative factor when the final punitive award produced a 12:1 ratio of punitive to compensatory damages). | September 5, 1997 |
48d988dc-4048-4743-a1e5-fb699ab31edc | CVS Caremark Corporation et al. v. Lauriello et al. | N/A | 1120010 | Alabama | Alabama Supreme Court | REL:09/12/2014
REL:02/27/2015As modified on denial of rehearing.
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
_________________________
1120010
_________________________
CVS Caremark Corporation et al.
v.
John Lauriello et al.
_________________________
1120114
_________________________
John Lauriello et al.
v.
CVS Caremark Corporation et al.
Appeals from Jefferson Circuit Court
(CV-03-6630)
1120010; 1120114
SHAW, Justice.
In
case
no.
1120010,
CVS
Caremark
Corporation
("Caremark"); American International Group, Inc.; National
Union Fire Insurance Company of Pittsburgh, PA; AIG Technical
Services, Inc.; and American International Specialty Lines
Insurance
Company
(hereinafter
sometimes
referred
to
collectively as "Caremark and the insurers") appeal from the
trial court's order certifying as a class action the fraud
claims asserted by John Lauriello; James O. Finney, Jr.; Sam
Johnson; and the City of Birmingham Retirement and Relief
System
(hereinafter
sometimes
referred
to
collectively
as
"the
plaintiffs"). In case no. 1120114, the plaintiffs cross-
appeal
from
the
same
class-certification
order,
alleging
that,
though class treatment was appropriate, the trial court erred
in certifying the class as an "opt-out" class pursuant to Rule
23(b)(3), Ala. R. Civ. P., rather than a "mandatory" class
pursuant to Rule 23(b)(1), Ala. R. Civ. P. For the reasons
discussed below, we affirm in both appeals.
Facts and Procedural History
In connection with a 1998 nationwide, securities-fraud
class
action
initiated
against
MedPartners,
Inc.,
a
physician-
2
1120010; 1120114
practice-management/pharmacy-benefits-management corporation
and the predecessor in interest to Caremark ("the 1998
litigation"), the Jefferson Circuit Court certified a class
that included the plaintiffs. Based on the alleged financial
1
distress and limited insurance resources of MedPartners, the
1998 litigation was concluded in 1999 by means of a negotiated
"global settlement," pursuant to which the claims of all class
members were settled for $56 million –- an amount that,
according to the representations of MedPartners, purportedly
exhausted its available insurance coverage. Purportedly
2
based on representations of counsel that MedPartners lacked
the financial means to pay any judgment in excess of the
negotiated settlement and that the settlement amount was thus
the best potential recovery for the class, the trial court,
The 1998 litigation originated from 21 separate suits in
1
state
and
federal
courts
based
on
allegations
that
MedPartners, in connection with a planned merger, made false
and misleading statements to both the public and the
Securities and Exchange Commission concerning its financial
condition and its anticipated performance.
This amount was, according to the class representatives,
2
a bargain, given
the
egregious –- and purportedly indefensible
-- nature of the alleged securities violations. In addition
to the $56 million settlement of the class-based litigation,
the global settlement also included an additional $9 million
payout to settle non-class-based litigation.
3
1120010; 1120114
after a hearing, approved the settlement and entered a
judgment in accordance therewith.
Thereafter,
however,
MedPartners,
now
Caremark,
allegedly
3
disclosed, in unrelated litigation, that it had actually
obtained –- and thus had available during the 1998 litigation
-- an excess-insurance policy providing alleged "unlimited
coverage" with regard to its
potential-damages
exposure in the
1998 litigation -- the existence of which it had purportedly
concealed in negotiating the class settlement. As a result,
in
2003,
Lauriello,
seeking
to
be
named
as
class
representative, again sued Caremark and the insurers in the
Jefferson Circuit Court, pursuant to a class-action complaint
alleging misrepresentation and suppression –- specifically,
that Caremark and the insurers had misrepresented the amount
of insurance coverage available to settle the 1998 litigation
and that they also had suppressed the existence of the
purportedly unlimited excess policy -- on behalf of himself
and all others similarly situated, i.e., the members of the
class certified in the 1998 litigation. Alternatively,
Nothing before this Court suggests that Caremark, as
3
successor in interest to MedPartners, did not assume all of
MedPartners' assets and liabilities.
4
1120010; 1120114
Lauriello sought relief from the judgment pursuant to Rule
60(b), Ala. R. Civ. P. Frank G. McArthur, Bill Greene, and
Virginia Greene, also members of the class certified in the
1998 litigation, filed a separate but substantially similar
action in the Jefferson Circuit Court; their proposed class-
action complaint
asserted
claims
almost identical
to
Lauriello's but named, as additional defendants, plaintiffs'
counsel from the 1998 litigation.
In January 2005, the trial court issued an "Order on
Class Certification," in which it concluded that it was
unnecessary to certify a new class because, pursuant to the
terms of the settlement agreement in the 1998 litigation, it
retained jurisdiction of all matters relating to the
settlement,
including
Lauriello's
newly
asserted
fraud
claims.
Subsequently, Caremark and the insurers simultaneously
appealed the trial court's January 2005 order and filed a
petition for a writ of mandamus seeking relief therefrom. See
Ex parte Caremark RX, Inc., 956 So. 2d 1117 (Ala. 2006).
Also in response to the trial court's order, McArthur,
Bill Greene, and Virginia Greene (hereinafter sometimes
referred to collectively as "the intervenors") sought to
5
1120010; 1120114
intervene in the Lauriello litigation, challenging the
qualifications of both Lauriello and his counsel to represent
the class and specifically adding as defendants in the
complaint in intervention both Lauriello and plaintiffs'
counsel from the 1998 litigation. The trial court denied that
request as untimely; the intervenors appealed.
This Court, in considering the consolidated appeals and
petition for the writ of mandamus, concluded that the petition
for the writ of mandamus was the appropriate avenue by which
to challenge the trial court's order. As a result, we
4
dismissed the direct appeal filed by Caremark and the
insurers. 956 So. 2d at 1119-20. We further granted the
mandamus petition and directed the trial court to vacate the
challenged order on the ground that any action by Lauriello
purportedly filed pursuant to Rule 60(b) was untimely in that
it had not been filed within four months after the judgment
from which Lauriello sought relief as mandated by Rule 60(b).
956 So. 2d at 1124. In addition, we noted that because
Lauriello had added new defendants, namely insurers that had
In reaching this conclusion, we specifically noted that
4
the "the trial court's ... order was not one certifying or
refusing to certify a class...." 956 So. 2d at 1119.
6
1120010; 1120114
not been named in the 1998 litigation, "Lauriello [was] not
seeking merely to
reopen
the settlement
agreement [therein] to
renegotiate the amount of damages payable to the class ...."
956 So. 2d at 1125. Therefore, despite the fact that the
class identified by Lauriello was indisputably identical to
the class certified by the trial court in the 1998 litigation,
we nonetheless concluded that, in order to certify the class
in the new action, Rule 23, Ala. R. Civ. P., and § 6-5-641,
Ala. Code 1975, required the trial court's performance of a
"rigorous analysis" to consider, as to the proposed class
members, "their relationship to the particular claims and
defenses to be asserted in the [new] class action," which the
trial court had clearly failed to evaluate with regard to the
suitability for class treatment. 956 So. 2d at 1125. As to
the intervenors' appeal, we reversed the trial court's order
denying them intervention based on our findings that "none of
the parties [would] be prejudiced by the intervention, ...
justice [might] not be attained if intervention [was] not
allowed, and ... intervention at this stage of the litigation
would not prejudice the ... parties." 956 So. 2d at 1129.
7
1120010; 1120114
Following the release of our opinion, proceedings resumed
in the trial court in accordance with that opinion, including
the trial court's entry of an order deeming the intervenors'
"Class Action Complaint in Intervention" filed. Lauriello
amended
his
class-action complaint to add Finney, Johnson, and
the City of Birmingham Retirement and Relief System ("the
Retirement System") as additional named plaintiffs; the newly
added
plaintiffs
later
moved
to
be
named
as
class
representatives.
Following the defendants' answers to the amended
complaint, the trial court entered an order dismissing with
prejudice "the lawyer defendants" added by the intervenors'
5
complaint in intervention on the ground that the four-year
statute of repose applicable under the Alabama Legal Services
Liability Act, see § 6-5-574, Ala. Code 1975, barred all
claims against them. The trial court certified that judgment
as final pursuant to Rule 54(b), Ala. R. Civ. P., and the
This designation includes the following lawyers and/or
5
firms who served as plaintiffs' counsel in the 1998
litigation: Yearout & Traylor, P.C.; Lowey, Danenberg,
Bemporad, Selinger & Cohen, P.C.; Milberg Weiss & Bershad LLP
(formerly known as Milberg Weiss Bershad & Schulman LLP,
formerly known as Milberg Weiss Bershad Hynes & Lerach LLP);
William S. Lerach; Neil L. Selinger; Steven E. Cauley; Stephen
E. Cauley, P.A.; D'Amato & Lynch; and Richard George.
8
1120010; 1120114
intervenors again timely appealed. The trial court,
thereafter, denied Lauriello's motion seeking to similarly
dismiss the remaining claims asserted against him by the
intervenors' complaint. This Court subsequently affirmed,
without an opinion, the trial court's dismissal of the lawyer
defendants. See McArthur v. Yearout & Traylor, P.C. (No.
1070513, Sept. 12, 2008), 34 So. 3d 737 (2008) (table).
Following our no-opinion affirmance, proceedings again
resumed in the trial court, including the voluntary dismissal
of intervenor Bill Greene as a party and the withdrawal by the
remaining intervenors, McArthur and Virginia Greene, of their
complaint in intervention, including the claims against
Lauriello, and their motion seeking to disqualify Lauriello
and Lauriello's counsel
pursuant
to a "Lead Counsel Agreement"
reached between the two plaintiff groups and their respective
counsel. In addition, Lauriello withdrew his previous
6
request to be appointed a class representative.
McArthur was, in fact, later dismissed on his own motion
6
as a party; therefore, of the three original intervenors, only
Virginia Greene, whose current legal name, according to the
record on appeal, is now Virginia Greene Hoffman, remains a
party.
9
1120010; 1120114
Thereafter,
discovery as
to
the
class-certification issue
commenced. The record reflects numerous discovery-related
disputes, which ultimately necessitated the trial court's
appointment of a special master to oversee the process. The
7
plaintiffs, thereafter, sought certification pursuant to Rule
23(b)(1) and (b)(3), Ala. R. Civ. P. The plaintiffs'
certification request was supported by an accompanying brief
and numerous evidentiary exhibits and was opposed on various
grounds by Caremark and the insurers.
The trial court, as directed by this Court in Ex parte
Caremark,
subsequently
conducted
a
lengthy
class-certification
hearing during which it both heard testimony and received
numerous evidentiary submissions. Following the parties'
further submission of post-hearing briefs, the trial court
issued
an
order
granting
class-action
certification
under
Rule
23(b)(3) based upon its purported rigorous analysis, which
resulted in the following findings:
"Alabama Rule of Civil Procedure 23(a) --
Prerequisites to a Class Action -- states that:
At or around this time, the plaintiffs again amended
7
their class-action complaint to more accurately reflect
Caremark's corporate name as "CVS Caremark Corporation."
10
1120010; 1120114
"'One or more members of a class may sue or
be sued as representative parties on behalf
of all only if (1) the class is so numerous
that
joinder
of
all
members
is
impracticable, (2) there are questions of
law or fact common to the class, (3) the
claims or defenses of the representative
parties are typical of the claims or
defenses of the class, and (4) the
representative parties will fairly and
adequately protect the interests of the
class.'
"1. Numerosity
"'The test is whether the number of members in
the class is so numerous as to make joinder
impracticable. Ala. R. Civ. P. 23(a)(1); State Farm
Fire & Cas. Co. v. Evans, 956 So. 2d 390 (Ala.
2006).' American Bar Association Survey of State
Class Action Law: Alabama § 5 (database updated Dec.
2011). From the administration of this class's
Fifty Six Million and No/100 ($56,000,000.00) Dollar
settlement in 1999, it is clear there are about
80,000 potential class members, and it is certain
that approximately 18,000 actually filed claims that
were verified and approved. Thus, Plaintiffs have
carried
their
burden
of
proving
numerosity.
Furthermore, Defendants do not dispute the issue.
"2. Commonality
"'Commonality
requires
only
that
there
be
common
questions of law or fact.... [W]here essentially
identical representations are made at different
times to different class members but share a common
thread and are redressable under the same theory of
recovery, the test of commonality may be met.' ABA
Survey, supra, at Alabama § 5. As shown by facts
presented above and the evidence presented to the
Court during the certification hearing, the Court is
convinced that there are common questions of law and
11
1120010; 1120114
fact regarding every class member. Furthermore,
like numerosity, Defendants do not dispute the
issue.
"3. Typicality
"The typicality element is satisfied only if
'the relationship between the injury to the class
representative and the conduct affecting the entire
class of plaintiffs [is] sufficient for the Court to
properly attribute a collective nature to the
challenged conduct.' Warehouse Home Furnishing
Distributors, Inc. v. Whitson, 709 So. 2d 1144, 1149
(Ala. 1997). To meet the typicality requirement,
there must be 'a sufficient nexus ... between the
legal claims of the named class representatives and
those individual class members to warrant class
certification.' Prado-Steiman v. Bush, 221 F.3d
1266, 1278 (11th Cir. 2000).
"The
three
proposed
class
representatives,
James
O. Finney, Jr., Sam Johnson and the City of
Birmingham Retirement and Relief System, have claims
typical of the proposed class as each was a member
of the 1999 Settlement Class.
"Defendants
argue
that
the
typicality
requirement cannot be met on this record because of
the three subclasses -- common stock, TAPS and
tender offer -- which existed in the underlying 1999
Settlement
Class.[ ]
It
is
Defendants'
position
that
8
each of the proposed class representatives is a
The original class included three subclasses of
8
purchasers
of
MedPartners'
securities:
purchasers
of
MedPartners
common
stock
during
the
applicable
period;
persons
who purchased MedPartners 6 ½% Threshold Appreciation Price
Securities ("TAPS") in a September 15, 1997, public offering
or who purchased TAPS thereafter that were traceable to the
public offering; and purchasers who tendered common shares of
Talbert
Medical
Management
Holdings
Corporation
to
MedPartners
in a tender offer.
12
1120010; 1120114
member of the common stock subclass and, therefore,
they do not have claims which are typical of the
TAPS and tender offer subclasses.
"When examining whether these proposed class
representatives present claims typical of the entire
class, it is critical to understand that the parties
are not re-litigating the underlying securities
fraud claims. The claim presented in this action is
for fraud-in-the-settlement. The alleged fraud did
not vary depending on whether one owned common
stock, TAPS or a tender offer. Any alleged fraud
touched all class members identically.
"It is the Court's determination that any
conflicts between the subclasses were resolved in
the 1999 class settlement. The three subclasses,
with representation, and with joint participation of
Defendants, settled all differences in Judge Wynn's
court. The subclasses agreed in 1999 on a formula
that defined how any class action recovery was to be
distributed. All conflicts between the subclasses
have been litigated and resolved.
"Given the 1999 class settlement and the nature
of the allegations in this action, it is this
Court's conclusion that James O. Finney, Jr., Sam
Johnson and the City of Birmingham Retirement and
Relief System present claims typical of the proposed
class."
Applying an identical rationale, the trial court similarly
found that Finney, Johnson, and the Retirement System "are
adequate to represent this class."
In addition, noting that "[a]lthough all parties agree
that proposed class counsel are adequate to prosecute class
actions, the parties disagree on whether these attorneys are
13
1120010; 1120114
competent and/or able to adequately represent this proposed
class," the trial court considered and rejected, in turn, each
challenge by Caremark and the insurers to proposed class
counsel. Ultimately, as to this issue, the trial court
concluded:
"In opposition of proposed class counsel,
Defendants have raised every possible roadblock and
issue to endeavor to influence this Court to find
proposed class counsel inadequate, as such is their
duty. In their endeavor to have proposed class
counsel disqualified, Defendants know full well that
if this Court rules with them on this issue
Defendants will have gained a victory without having
to adjudicate this case before an Alabama jury.
"Litigation
is
combative,
particularly
where
the
damages sought may exceed Three Billion and No/100
($3,000,000,000.00)
Dollars.
These
plaintiff
attorneys [sic] have labored thousands of hours
since 2003 seeking to represent and protect this
proposed
class,
and
have
done
so
without
remuneration for their time and monumental expenses
incurred. Here, adequacy, not perfection, is the
trait that this Court and the Supreme Court are
seeking based upon the statute, the caselaw and
Alabama Rule of Civil Procedure 23. This civil
action spanning into its tenth year is so complex
and replete with filings, depositions and rulings,
it is a virtual certainty that no lawyer and/or law
firm would now invest the time and incur the expense
to represent this class.
"Finally, Alabama Rule of Civil Procedure 1
states that '[the] rules shall be construed and
administered to secure the just, speedy and
inexpensive determination of every action.' Given
this mandate to apply the Alabama Rule of Civil
14
1120010; 1120114
Procedure 23 justly, it is this Court's considered
judgment, as laid out above, that the Hare Wynn,
North and Somerville firms are deemed adequate to
represent this proposed class."
Finally, having concluded that the plaintiffs satisfied
the initial prerequisites to maintaining a class action, as
set out in Rule 23(a), Ala. R. Civ. P., the trial court next
determined
that the plaintiffs had likewise met the
additional
requirement of satisfying Rule 23(b)(3). See, e.g.,
University Fed. Credit Union v. Grayson, 878 So. 2d 280, 286
(Ala. 2003). In reaching that conclusion, the trial court
specifically rejected the objections of Caremark and the
insurers to class certification, i.e., the alleged individual
reliance
of
each
class
member
on
the
purported
misrepresentation and the potential for the necessity of
applying conflicting laws from various states. Noting both
that the conflict-of-law argument raised by Caremark and the
insurers was untimely and that the parties' stipulation of
settlement provided that Alabama law controlled, the trial
court concluded that the only real challenge to Rule 23(b)(3)
certification was the claim by Caremark and the insurers that
issues of individual reliance predominated over common
questions of law and fact.
15
1120010; 1120114
In sum, in consideration of the foregoing findings, the
trial court appointed Finney, Johnson, and the Retirement
System as class representatives; appointed Hare, Wynn, Newell
& Newton; North & Associates; and Somerville, LLC, as class
counsel, and certified a class consisting of the following:
"All Persons who (i) purchased MedPartners, Inc.
('MedPartners') common stock [including, but not
limited
to,
through
open-market
transactions,
mergers or acquisitions in which MedPartners issued
common stock, acquisition through the Company's
Employee Stock Purchase Plan ('ESPP'), and any other
type of transaction in which a person acquired one
or more shares of MedPartners stock in return for
consideration] during the period from October 30,
1996,
through
January
7,
1998,
inclusive
(MedPartners employees who purchased shares through
the ESPP in January 1998 being deemed to have
purchased their shares on December 31, 1997); (ii)
purchased call option contracts on MedPartners
common stock during the period October 30, 1996,
through January 7, 1998, inclusive; (iii) sold put
option contracts on MedPartners common stock during
the period October 30, 1996, through January 7,
1998, inclusive; or (iv) purchased MedPartners
Threshold Appreciation Price Securities ('TAPS') in
the September 15, 1997, offering or thereafter
through January 7, 1998; or (v) tendered shares of
Talbert Medical Management Holdings Corporation to
MedPartners between August 20, 1997, and September
19, 1997 ('The Settlement Class'); excluding all
those members who opted out of the 1999 Class
Settlement."9
The description of the certified class is, excepting the
9
addition of the final phrase excluding members who opted out
of the class certified in the 1998 litigation, identical to
the class certified by the trial court in the 1998 litigation.
16
1120010; 1120114
The parties appeal from the trial court's class-
certification order. See § 6–5–642, Ala. Code 1975 ("A
court's order certifying a class or refusing to certify a
class action shall be appealable in the same manner as a final
order to the appellate court which would otherwise have
jurisdiction over the appeal from a final order in the
action.").
Standard of Review
"'This Court has stated that "class actions may
not be approved lightly and ... the determination of
whether the prerequisites of Rule 23 have been
satisfied
requires
a
'rigorous
analysis.'"'
Mayflower Nat'l Life Ins. Co. v. Thomas, 894 So. 2d
[637] at 641 [(Ala. 2004)] (quoting Ex parte
Citicorp Acceptance Co., 715 So. 2d 199, 203 (Ala.
1997)). 'In reviewing a class-certification order,
this Court looks to see whether the trial court
exceeded its discretion in entering the order;
however, we review de novo the question whether the
trial court applied the correct legal standard in
reaching its decision.' University Fed. Credit
Union v. Grayson, 878 So. 2d 280, 286 (Ala. 2003).
Furthermore,
"'[w]e note that an abuse of discretion in
certifying a class action may be predicated
upon a showing by the party seeking to have
the class-certification order set aside
that "the party seeking class action
certification failed to carry the burden of
producing sufficient evidence to satisfy
the requirements of Rule 23." Ex parte
Green Tree Fin. Corp., 684 So. 2d 1302,
1307 (Ala. 1996). Thus, we must consider
17
1120010; 1120114
the sufficiency of the evidence submitted
by the plaintiff[s]....'
"Compass Bank v. Snow, 823 So. 2d 667, 672 (Ala.
2001). See also Smart Prof'l Photocopy Corp. v.
Childers–Sims, 850 So. 2d 1245, 1249 (Ala. 2002)
(holding that if plaintiffs fail to meet the
evidentiary burden as required by Rule 23, Ala. R.
Civ. P., then the trial court exceeds its discretion
in certifying a class action). If the plaintiffs
here have failed to meet the evidentiary burden as
required by Rule 23, then the trial court exceeded
its discretion in certifying a class action."
Eufaula Hosp. Corp. v. Lawrence, 32 So. 3d 30, 34-35 (Ala.
2009).
Discussion
I. Case No. 1120010
"In order to obtain class certification, the
plaintiffs must establish all the criteria set forth
in Rule 23(a), Ala. R. Civ. P., and at least one of
the criteria set forth in Rule 23(b). University
Federal Credit Union v. Grayson, 878 So. 2d [280] at
286 [(Ala. 2003)]. Rule 23(a) provides:
"'(a) Prerequisites to a Class Action.
One or more members of a class may sue or
be sued as representative parties on behalf
of all only if (1) the class is so numerous
that
joinder
of
all
members
is
impracticable, (2) there are questions of
law or fact common to the class, (3) the
claims or defenses of the representative
parties are typical of the claims or
defenses of the class, and (4) the
representative parties will fairly and
adequately protect the interests of the
class.'
18
1120010; 1120114
"Rule 23(b) provides, in pertinent part:
"'(b) Class Actions Maintainable. An
action may be maintained as a class action
if the prerequisites of subdivision (a) are
satisfied, and in addition:
"'....
"'(2) the party opposing the
class has acted or refused to act
on grounds generally applicable
to the class, thereby making
appropriate
final
injunctive
relief
or
corresponding
declaratory relief with respect
to the class as a whole; or
"'(3) the court finds that
the questions of law or fact
common to the members of the
class
predominate
over
any
questions
affecting
only
individual members, and that a
class action is superior to other
available methods for the fair
and efficient adjudication of the
controversy.
The
matters
pertinent
to
the
findings
include: (A) the interest of
members
of
the
class
in
individually
controlling
the
prosecution
or
defense
of
separate actions; (B) the extent
and nature of any litigation
concerning
the
controversy
already commenced by or against
members of the class; (C) the
desirability or undesirability of
concentrating the litigation of
the claims in the particular
forum;
(D)
the
difficulties
19
1120010; 1120114
likely to be encountered in the
management of a class action.'"
Lawrence, 32 So. 3d at 35. In the instant case, the trial
court certified the class action under Rule 23(b)(3). On
appeal, Caremark and the insurers present several challenges
to the trial court's class-certification order.
A. Alleged Predomination of Individual Issues
First, Caremark and the insurers contend that the trial
court
exceeded its discretion in certifying the class
pursuant
to Rule 23(b)(3) because, they argue, the individual issues
necessarily attendant to fraud claims predominate and render
class
certification
inappropriate.
More
specifically,
relying
on past decisions of this Court indicating that "fraud claims
are
uniquely unsuited for class treatment," see, e.g.,
Compass
Bank v. Snow, 823 So. 2d 667, 673 (Ala. 2001) (internal
citations and quotation marks omitted), Caremark and the
insurers argue that each member of the class must be
individually questioned –- purportedly pursuant to the rules
applicable in their various jurisdictions -- regarding the
circumstances of that member's alleged knowledge of and
reliance on the alleged misrepresentations regarding the
insurance proceeds available to MedPartners. The plaintiffs
counter that authorities cited
20
1120010; 1120114
by Caremark and the insurers are inapposite in that they
"deal[] with individual fraud scenarios," whereas, here, it
was the class itself [–- an 'entity' separate from the
individual members comprising the class –-] that was
defrauded" as a result of the fraud perpetrated on the class's
appointed agent. Plaintiffs' brief, at p. 26.
"As noted above, Rule 23(b)(3) requires a
finding that 'questions of law or fact common to the
members of the class predominate over any questions
affecting only individual members, and that a class
action is superior to other available methods for
the
fair
and
efficient
adjudication
of
the
controversy.' This requirement '"tests whether
proposed classes are sufficiently cohesive to
warrant adjudication by representation."' Reynolds
Metals [Co. v. Hill], 825 So. 2d [100] at 104 [(Ala.
2002)] (quoting Amchem Prods., Inc. v. Windsor, 521
U.S. 591, 623, 117 S. Ct. 2231, 138 L. Ed. 2d 689
(1997)). In making this determination, '[c]ourts
examine the substantive law applicable to the claims
and determine whether the plaintiffs presented
sufficient proof that common questions of law or
fact predominate over individual claims.' Voyager
Ins. Cos. v. Whitson, 867 So. 2d 1065, 1071 (Ala.
2003). 'When individual issues predominate over the
common claims, manageability of the action as a
class is not possible.' Voyager Ins., 867 So. 2d at
1077. Therefore, this Court must determine whether
[the plaintiffs] presented sufficient evidence that
common questions of law or fact predominate over
individual issues as to [the plaintiffs' fraud-
based] claims."
Grayson, 878 So. 2d at 286.
21
1120010; 1120114
The parties' counsel acknowledge that they were unable to
find a decision directly on point with the factual
circumstances of the present case, i.e., a decision involving
allegations of a fraud perpetrated on a certified class in
connection with the settlement of the class action in which
that class had previously been certified. Regardless,
however, there are available certain established principles
that guide our resolution of this issue.
First, it is undisputed that both the plaintiffs'
misrepresentation and suppression claims include, as the
plaintiffs contend, a reliance element. See Grayson, supra,
at 286-87, 289 (noting that the elements of a fraud action
necessarily include a demonstration that the plaintiff
reasonably relied on the alleged misrepresentation to his or
her detriment and that the elements of a fraudulent-
suppression claim include a demonstration that the alleged
suppression "induced the plaintiff to act or to refrain from
acting"). See also Regions Bank v. Lee, 905 So. 2d 765, 774
(Ala. 2004) ("The element of a duty to disclose in a
fraudulent-suppression case is analogous to the element of
reliance
in a misrepresentation case." (citing Mack v.
General
22
1120010; 1120114
Motors Acceptance Corp., 169 F.R.D. 671, 677 (M.D. Ala.
1996))).
Additionally, it is true, as this Court has previously
acknowledged, that the reliance element in fraud claims
generally renders such claims unsuitable for class treatment.
See, e.g., Snow, supra. That general principle, however, is
not a hard and fast rule applicable in all fraud cases, as we
have explained:
"We agree with the [In re] Memorex [Security Cases,
61 F.R.D. 88, 98 (N.D. Cal. 1973) (securities-fraud
cases),] court and hold that the issue whether proof
of reliance involves so many individual questions of
fact
that
the
individual
questions
of
fact
predominate should be addressed at the initial stage
of the proceeding.
"As noted above, two other schools of thought
exist as to whether proof of reliance raises too
many individual questions of fact to certify a fraud
action as a class action. One school prohibits the
certification of fraud class actions, and the other
examines the facts of each case according to the
applicable rule of civil procedure.
"Without addressing the issue of class-action
treatment of the issue of reliance, this Court has
affirmed the certification of fraud class actions.
See Warehouse Home Furnishing Distributors, Inc. v.
Whitson, 709 So. 2d 1144 (Ala. 1997); Ex parte Gold
Kist, 646 So. 2d 1339 (Ala. 1994); Harbor Ins. Co.
v. Blackwelder, 554 So. 2d 329 (Ala. 1989).
Significantly, in Harbor Insurance Co., this Court
held that '[w]here plaintiffs allege and prove a
standard claim for fraud based on misrepresentations
with a common thread, as is the case here, their
23
1120010; 1120114
cause is maintainable as a class action.' 554 So. 2d
at 335. But, in Butler v. Audio/Video Affiliates,
Inc., 611 So. 2d 330 (Ala. 1992), this Court
affirmed the denial of certification in a fraud
class action, where the denial was based, in part,
on varying oral representations that created too
many individual issues of reliance and damages.
Butler, 611 So. 2d at 332. The differences in these
cases indicate that this Court has not thus far
adopted
a
blanket
prohibition
against
the
certification of a fraud class action. Therefore,
as with other courts that have addressed the issue,
we must consider whether proof of reliance in this
case involves predominating individual issues of
fact. In so doing, we use the same standard as the
federal courts, i.e., whether there 'was a material
variation in the representations made or in the
kinds or degrees of reliance by the persons to whom
they were addressed.' Advisory Committee Notes to
Rule 23(b)(3) (on 1966 amendments to rules), Fed. R.
Civ. P."
Ex parte Household Retail Servs., Inc., 744 So. 2d 871, 881
(Ala. 1999) (emphasis added).
Further, we have stated:
"'Whether a fraud claim is suitable for class-action
treatment depends on the degree of similarity
between the representations made to the class
members.... Courts have often found that cases
involving written misrepresentations distributed to
all members of the class are suitable for class
treatment.' Ex parte Household Retail Servs., 744
So.
2d
at
877;
see
also
Ex
parte
AmSouth
Bancorporation, 717 So. 2d 357, 365 (Ala. 1998)
('questions of fraud based on documents are more
typically suited for class-action determination').
Grayson argues, and the trial court noted, that the
alleged fraud in this case stems from a common,
uniform 'core' or nucleus of facts, namely, that a
uniform misrepresentation was made to each and every
24
1120010; 1120114
member of the putative class: i.e., that they were
paying a $2.50 'filing fee' when, in fact, nothing
was actually filed with a government agency.
Because this alleged misrepresentation is uniform,
Grayson argues, common issues predominate.
"Even if the alleged misrepresentations in a
fraud case are uniform or have a 'common core,' the
action may still be unsuited for class-action
treatment if the degree of reliance varies among the
persons to whom the representations were made. See
Alfa Life Ins. Corp. v. Hughes, 861 So. 2d 1088,
1097 (Ala. 2003) ('Even if numerous representations
have a "common core," an action may still be
unsuited for class-action treatment if material
variations exist in the representations or if the
degree of reliance varies among the persons to whom
the representations were made.' (emphasis added));
see also Committee Comments, Rule 23(b)(3), Fed. R.
Civ. P. ('although having some common core, a fraud
case may be unsuited for treatment as a class action
if
there
was
material
variation
in
the
representations made or in the kinds or degrees of
reliance
by
the
persons
to
whom
they
were
addressed'). In Hughes, an insurance policyholder
alleged that his insurer, Alfa Life Insurance
Corporation,
had
made
certain
fraudulent
misrepresentations to him and to members of a class
of policyholders. Hughes, 861 So. 2d at 1098. This
Court stated:
"'Even if we were to find that the
misrepresentations the Alfa agents made to
the plaintiff policyholders were uniform,
the
issue
of
each
class
member's
"reasonable
reliance"
precludes
class
c e r t i f i c a t i o n
o f
t h e
fraudulent-misrepresentation claim. See
Foremost Ins. Co. v. Parham, 693 So. 2d 409
(Ala. 1997). The plaintiff policyholders
contend that there was common reliance by
the class members and that "[e]veryone
acted the same." Plaintiff policyholders'
25
1120010; 1120114
brief, p. 62 n. 22. The trial court agreed
and concluded that because of the objective
"reasonable
reliance"
standard,
individualized inquiries would not be
necessary. However, a determination of
each class member's reliance would require
individualized inquiry as to whether that
reliance was reasonable "'based on all of
the
circumstances
surrounding
[the]
transaction,
including
the
mental
capacity,
educational
background,
relative
sophistication,
and
bargaining
power
of
the
parties.'" Reynolds Metals [Co. v. Hill],
825 So. 2d [100] at 108 [(Ala. 2002)]
(quoting Foremost Insurance, 693 So. 2d at
421)).'
"861 So. 2d at 1100. See also Voyager Ins. [Cos. v.
Whitson], 867 So. 2d [1065] at 1070 [(Ala. 2003)]
(recognizing that the plaintiff's failure to prove
whether
class
members
had
relied
on
misrepresentations
or
omissions
made
class
certification inappropriate)."
Grayson, 878 So. 2d at 287-88 (first emphasis added). Thus,
as Caremark and the insurers argue, "a fraud claim is not
certifiable as a class action when individual reliance is an
issue." Lee, 905 So. 2d at 775 (emphasis added).
Here, however, the class-based fraud claim rests upon the
purported representation by the defendants and/or their
representatives
to counsel for the original class certified in
the 1998 litigation to induce counsel to accept a reduced
settlement offer on behalf of the entire class. Thus, the
alleged misrepresentation was uniform and the class members'
26
1120010; 1120114
individual
reliance irrelevant.
See Ex parte
Household Retail
Servs., 744 So. 2d at 877 ("Courts have often found that cases
involving written misrepresentations distributed to all
members of the class are suitable for class treatment.");
Grainger v. State Sec. Life Ins. Co., 547 F.2d 303, 307 (5th
Cir. 1977) ("[T]he key concept in determining the propriety of
class action treatment is the existence or nonexistence of
material variations in the alleged misrepresentations.").
This fact distinguishes the present case from the authorities
cited by Caremark and the insurers, in which a finding of
liability
is
necessarily
dependent
upon
varying
communications
to individual class members and the class members' varying
reliance on those communications. Compare Ex parte Household
Retail Servs., 744 So. 2d at 878-79 (concluding that the trial
court erred in certifying a fraud claim for class treatment
when the evidence demonstrated that oral representations made
to the class members were not standardized but, instead, that
the class members had dealt with different salespersons
employed by different dealers); Compass Bank v. Snow, 823 So.
2d at 674-76 (concluding that the plaintiff customers failed
to
satisfy the predominance requirement of Rule 23(b)(3), Ala.
R. Civ. P., as to their fraudulent-suppression claim when
27
1120010; 1120114
individual issues regarding each customer's knowledge of the
posting order used by the bank defendant and the extent to
which
each customer relied on that knowledge predominated
over
common issues); Reynolds Metals Co. v. Hill, 825 So. 2d 100
(Ala. 2002) (holding, despite the alleged uniform nature of
the oral representation, that evidence disputing common
reliance by the plaintiff employees on that representation
demonstrated
that
individualized
issues
necessarily
predominated); Alfa Life Ins. Corp. v. Hughes, 861 So. 2d
1088, 1100 (Ala. 2003) (reversing the trial court's class
certification of a fraudulent-suppression claim on the ground
that, even assuming the alleged misrepresentations were
uniform, "a determination of each class member's reliance
would require individualized inquiry as to whether that
reliance was reasonable '"based on all of the circumstances
surrounding [the] transaction, including the mental capacity,
educational
background,
relative
sophistication,
and
bargaining power of the parties"'" (quoting Reynolds Metals,
825 So. 2d at 108)); Voyager Ins. Cos. v. Whitson, 867 So. 2d
1065, 1074 (Ala. 2003) (affirming the trial court's denial of
class treatment as to fraud-based claims when the record
failed to establish "whether the customers relied on varying
28
1120010; 1120114
representations made by the sales representatives instead of
on the alleged nondisclosure or ... whether the information
allegedly not disclosed would have made a difference ....");
Grayson, 878 So. 2d at 288-89 (vacating the trial court's
certification order on the ground that the evidence
demonstrated material variations in individual class members'
reliance on alleged misrepresentation); Lee, 905 So. 2d at
775-76 (holding, despite the collective nature of the duty
owed by the bank to bondholders and the collective nature of
the bondholders' remedy, that individual issues nonetheless
predominated, as "the trial court would have to determine
whether the individual bondholders received notice of the
occurrence of an event of default, if a majority of the
bondholders would have agreed to take action upon notice of
the default ... and what specific action they would have
elected to take").
Under the present circumstances, we find persuasive the
following rationale:
"[In] In re Baldwin-United Corp. Litig. [122 F.R.D.
424, 426-27 (S.D.N.Y. 1986) ], a class of investors
10
Because the Alabama Rules of Civil Procedure were
10
patterned after the Federal Rules of Civil Procedure, cases
construing the federal rules are considered authority in
29
1120010; 1120114
asserting federal securities, RICO, and state law
claims against broker-dealers and a promotional
corporation in a fraud action was certified despite
the defendants' contention that the core issues in
the plaintiffs' complaint turned on largely oral
rather than written representation or on nonuniform
documents that would require greater investigation
and analysis of individual facts than class
treatment would allow:
"'This Court disagrees. The nub of
plaintiffs'
claims
is
that
material
information was withheld from the entire
putative class in each action, either by
written
or
oral
communication.
[Essentially, this is a course-of-conduct
case, which as pleaded satisfies the
commonality requirement of Rule 23, Fed. R.
Civ. P.] ... Plaintiffs allege not that the
promotional
materials
themselves
were
uniform, but rather that the information
they contained -- and hence that the
broker-dealers
disseminated
--
was
uniformly
misleading.
...
Liability
in
this
case does not depend on proof of the
individual, face-to-face dealings between
the class members and the registered
representatives of the broker-dealers....
As a result, the relevant questions are
readily susceptible to class-wide proof.'"
4 Herbert B. Newberg & Alba Conte, Newberg on Class Actions
§ 22.15 at 22–46 (3d ed. 1992) (emphasis added; footnotes
omitted). Indeed, we have previously noted that "[w]here
plaintiffs allege and prove a standard claim for fraud based
construing the Alabama rules. Cutler v. Orkin Exterminating
Co., 770 So. 2d 67, 70 n.2 (Ala. 2000).
30
1120010; 1120114
on misrepresentations with a common thread, as is the case
here, their cause is maintainable as a class action." Harbor
Ins. Co. v. Blackwelder, 554 So. 2d 329, 335 (Ala. 1989). See
also Ex parte Household Retail Servs., 744 So. 2d at 877
("Whether a fraud claim is suitable for class-action
treatment
depends
on
the
degree
of
similarity
between
the
representations made to the class members."). Further, there
is nothing to suggest that any of the class members ever
engaged in any type of oral communication with Caremark and
the
insurers and/or any representative thereof; thus, there
is
no danger of the individualized oral misrepresentations that
have rendered the cases relied on by the plaintiffs unsuitable
for class treatment.
Instead, here, the class's fraud claims result from the
fact that the class as a whole –- not each individual member
-- was defrauded. As noted by Professor William B.
Rubenstein, the plaintiffs' retained expert and the current
editor of Newberg on Class Actions, supra –- an authority on
which this Court has often relied -- "[i]n settling the [1998
litigation], the defendants did not negotiate with individual
class members" but, instead, "negotiated solely with the
class's agents and then sought approval of that settlement
31
1120010; 1120114
from the class's fiduciary." Thus, as Professor Rubenstein
further explained:
"[T]he normal problems that plague certification of
fraud cases do not ... apply here for one simple
reason related to the unique nature of this case:
this is a class action lawsuit about a class action
lawsuit, not about a set of individual market
transactions. The nature of the underlying
transaction -- the class action lawsuit -- renders
individual class member reliance irrelevant."
In consideration of the foregoing, we hold that the
evidence supports the trial court's conclusion that the
plaintiffs satisfied the predominance requirement of Rule
23(b)(3) in that the fraud claims present questions of law and
fact that are common to the class and that they are therefore
suitable for trial pursuant to a single adjudication.
Therefore, Caremark and the insurers have failed to
demonstrate that the trial court exceeded its discretion in
certifying the class based on its conclusion that common
issues predominate. See In re Warfarin Sodium Antitrust
11
Litig., 212 F.R.D. 231, 249 (D. Del. 2002), aff'd, 391 F.3d
In making this determination, we express no opinion as
11
to the merits of the newly asserted fraud claims. See
Mayflower Nat'l Life Ins. Co. v. Thomas, 894 So. 2d 637, 641
(Ala. 2004) ("On a motion for class certification, the sole
issue before the trial court is whether the requirements of
Rule 23 have been met ....").
32
1120010; 1120114
516 (3d Cir. 2004) ("The fact that plaintiffs alleged purely
economic harm from a common cause ... further supports
certification of the class."); In re Towers Fin. Corp.
Noteholders Litig., 177 F.R.D. 167, 171 (S.D.N.Y. 1997) ("The
predominance inquiry tests 'whether proposed classes are
sufficiently
cohesive
to
warrant
adjudication
by
representation.' Amchem Prods., Inc. v. Windsor, 521 U.S.
[591] at 621, 117 S.Ct. [2231] at 2249 [(1997)]. As the
Advisory Committee Notes make clear, 'a fraud perpetrated on
numerous persons by the use of similar misrepresentations may
be an appealing situation for a class action....' Fed. R.
Civ. P. 23(b)(3) Advisory Committee's Note; accord, e.g.,
Green v. Wolf, 406 F.2d [291] at 300-01 [(C.A.N.Y. 1968)].").
The unique facts of this case -– the alleged representations
were made to the class's agents (counsel) –- distinguishes
this case from those in which the reliance of individual class
members was at issue. In reaching this conclusion we
specifically reject the importance of the pre-settlement
differences among class members, which Caremark and the
insurers emphasize. Cf. Walco Invs., Inc. v. Thenen, 168
F.R.D. 315, 325 (S.D. Fla. 1996) (noting, in recognizing the
similarity of the common-issue requirement of Rule 23(a)(2)
33
1120010; 1120114
and the predominance requirement of 23(b)(3), that, "[w]hile
it may be true ... that unique defenses will be asserted by
the Defendants in this action, this fact alone is insufficient
to destroy the commonality requirement," because "the
commonality prerequisite does not require that all of the
questions of law and/or fact be common").
B. Class Counsel as Necessary Witnesses
Caremark and the insurers also argue on appeal that
current
class
counsel cannot meet the adequacy requirements
of
Rule 23(a)(4), Ala. R. Civ. P., because, they say, "[c]lass
counsel ... will be necessary witnesses for the defense, and
their testimony will be adverse to the class." Caremark and
the insurers' brief, at p. 63. Therefore, they contend, the
trial court erred in failing to address this particular
challenge in the context of its class-certification order.
The plaintiffs dispute the fact that any of the current class
counsel
are
necessary
witnesses
and
therefore
disqualified,
as
Caremark and the insurers urge. They further contend that,
even if certain lawyers might ultimately be disqualified,
that
disqualification would not necessarily affect the ability of
the disqualified lawyer's firm or remaining counsel to
represent the class.
34
1120010; 1120114
Clearly, the trial court, in its certification order,
made the necessary finding that proposed class counsel were
adequate; however, it specifically declined to make a final
ruling on the issue whether, despite their adequacy, counsel
might be subject to disqualification on the ground that they
might also be necessary witnesses at trial. The trial court's
rationale was that discovery was not complete and that the
issue was, therefore, not ripe for adjudication. We initially
question whether, in the absence of an adverse ruling on the
record below, Caremark and the insurers have adequately
preserved this issue for appellate review; indeed, the record
makes it abundantly clear that the trial court specifically
reserved its ruling on this issue for future consideration in
the event the matter actually proceeds to trial. See, e.g.,
CSX Transp., Inc. v. Day, 613 So. 2d 883, 884 (Ala. 1993)
("[I]t is familiar law that an adverse ruling below is a
prerequisite to appellate review."). Additionally, the
testimony
of
both
parties'
expert
witnesses
at
the
certification hearing indicated that, pursuant to advisory
authority
issued
by
the
Alabama
Bar
Association,
consideration
of disqualification issues during pretrial proceedings is
premature. In fact, Caremark and the insurers' own expert,
35
1120010; 1120114
Professor Tom Morgan, although attempting through his
testimony to remove this case from within the ambit of that
general rule, clearly acknowledged during the certification
hearing that the exclusion of a lawyer as a potential witness
is evaluated, not during pretrial proceedings, but at the time
of trial. In light of that acknowledgment and the failure of
Caremark and the insurers to actually cite any authority
requiring the trial court's consideration of this issue at the
time the class is certified, we find no error in the trial
court's reservation of this issue for future consideration.
C. Past Conduct of Appointed Counsel
Caremark and the insurers next argue that alleged
unethical conduct exhibited by class counsel in connection
with both the 1998 litigation and the present case precludes
their representation of the certified class. Therefore,
according to Caremark and the insurers, the trial court erred
in concluding that appointed counsel's representation would
fairly and adequately protect the interest of the class as
required by Rule 23(a)(4). Specifically, in support of this
12
It is undisputed that the challenge of Caremark and the
12
insurers in this regard is not based on the experience,
ability, or credentials of class counsel, the high level of
which all parties concede.
36
1120010; 1120114
claim, Caremark and the insurers identify the following
instances of alleged disqualifying conduct: the alleged
failure of class counsel to fulfill their fiduciary duty to
class members by ascertaining the fairness of the settlement
concluding the 1998 litigation by means of confirmatory
discovery; the alleged unethical division of class counsel's
fee with their client, Lauriello, in violation of Rule 5.4(a),
Ala. R. Prof. Cond.; the alleged unethical division of class
counsel's fee with their cocounsel in the 1998 litigation, in
violation of Rule 1.5(e), Ala. R. Prof. Cond.; the alleged
unethical representation of Lauriello by class counsel in his
capacity –- at one time, at least –- as both a named plaintiff
and a named defendant in this action, in violation of Rule
1.7(a), Ala. R. Prof. Cond.; and the execution in the present
litigation
of
the
lead-counsel
agreement
between
class
counsel
and counsel for the intervenors.
As Caremark and the insurers note, the trial court's
class-certification order reflects that it considered -– and
ultimately
rejected
pursuant
to
its
rigorous
analysis
-–
each
13
Reliable Money Order, Inc. v. McKnight Sales Co., 704
13
F.3d 489, 498 (7th Cir. 2013) ("So long as the district court
employs the 'rigorous analysis' required by Rule 23, it enjoys
broad leeway in deciding the adequacy of class counsel. See
37
1120010; 1120114
of the inadequacy grounds advanced by Caremark and the
insurers below. Our review of the transcript of the class-
certification hearing reflects that the instances of alleged
misconduct
were
hotly
contested,
with
the
plaintiffs
providing
expert testimony establishing that each of the purported
violations was not, as Caremark and the insurers allege,
actually unethical when considered in the context in which the
conduct occurred.
Moreover, Caremark and the insurers cite no authority
demonstrating that any of the alleged instances of misconduct
automatically disqualifies class counsel from serving in the
present case or renders them, as a matter of law, inadequate.
The record further establishes, despite Caremark and the
insurers' arguments to the contrary, that there was no
evidence before the trial court suggesting the type of
egregious self-dealing and/or dishonesty aimed at class
members, which appears in the authorities on which Caremark
and the insurers rely and which would require a denial of
class certification. Compare Creative Montessori Learning
Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718, 728 (11th
Cir. 1987) (noting 'adequacy of class representation is
primarily a factual issue').").
38
1120010; 1120114
Ctrs. v. Ashford Gear LLC, 662 F.3d 913, 917 (7th Cir. 2011)
(observing that class counsel's undisputed misconduct in both
obtaining
material
on
the
basis
of
a
promise
of
confidentiality while concealing counsel's true intent and
falsely implying to a potential named plaintiff that there
already was a certified class to which the plaintiff belonged
"demonstrated a lack of integrity that casts serious doubt on
[counsel's] trustworthiness as representatives of the class"
of which they were fiduciaries); In re Mid-Atlantic Toyota
Antitrust Litig., 93 F.R.D. 485, 490 (D.C. Md. 1982) (holding
that an agreement between named plaintiffs and class counsel
was both unethical and prejudicial to unnamed class members in
that, to the extent that counsel agreed to bear ultimate
responsibility for all costs of litigation, counsel acquired
a financial stake in the litigation that was "tantamount to
the unacceptable situation of the attorney being a member of
the class of litigants while serving as class counsel"). See
also Reliable Money Order, Inc. v. McKnight Sales Co., 704
F.3d 489, 498 (7th. Cir. 2013) (noting that "[n]ot any ethical
breach
justifies
the
grave
option
of
denying
class
39
1120010; 1120114
certification"). Therefore, we decline to hold that the
14
trial court exceeded its discretion in approving class
counsel.
D. Alleged Overbreadth of the Certified Class
Finally, Caremark and the insurers contend that the
class, as defined in the trial court's class-certification
order, is "impermissibly broad." Caremark and the insurers'
brief, at p. 88. Specifically, according to Caremark and the
insurers,
the
class
definition
improperly
includes
stockholders who did not opt into participation in the 1998
litigation
and
also
improperly
consolidates
the
three
separate
categories of stockholders identified in the 1998 litigation.
They further note, however, that, although all three of the
class representatives appointed by the trial court did submit
a claim in the 1998 litigation, all three were holders of
MedPartners common stock, i.e., from a single one of the
original three classes included in the 1998 litigation.
Therefore, Caremark and the insurers maintain, the appointed
Further, although not determinative, we do note the
14
absence
of
the
institution
of
disciplinary
proceedings
against
class counsel as a result of the alleged misconduct.
Additionally, the interests of the class may also be
adequately protected by means of the trial court's inherent
supervisory role in class-based litigation.
40
1120010; 1120114
representatives fail to satisfy the adequacy and typicality
requirements of Rule 23 in that they have a purported conflict
as a result of the difference in their interests from those of
other class members. Contrary to this claim, however, the
plaintiffs contend, as the trial court concluded in its
certification
order, that the current fraud claims "are common
to each and every class member" and that the previous
designation of the various classes of shareholders is
irrelevant.
Caremark and the insurers cite authority indicating that
the Rule 23(a)(4) requirement of adequate representation is
unsatisfied when the interests of the named plaintiffs and the
class
members
conflict.
See,
e.g.,
Cutler
v.
Orkin
Exterminating Co., 770 So. 2d 67, 71 (Ala. 2000). However,
although Caremark and the insurers attempt to argue that the
potential weakness of the underlying security-based claims of
certain classes of shareholders may affect the determination
of those shareholders' damages in the present fraud case, we
fail to see the identified danger. Instead, it appears to
this Court that the merits of the underlying claims of each
group in the 1998 litigation are largely irrelevant in that
the present fraud claims were perpetrated on the group as a
41
1120010; 1120114
whole, irrespective of their original, potentially individual
interests. Moreover, as occurred by means of the percentage
distribution in the 1998 litigation, we emphasize the trial
court's ability to fashion any class-based recovery so as to
prevent the excess recovery of any particular group within the
class.
We do agree, however, with the contention of Caremark and
the insurers that the alleged fraud perpetrated by them in
connection with the settlement of the 1998 litigation could
not have damaged those shareholders who had previously opted
out of participation therein and that their inclusion in the
present class would render it impermissibly broad. The trial
court's
certification
order,
however,
as
quoted
above,
appears
to specifically "exclud[e] all [potential class] members who
opted out of the 1999 Class Settlement." Thus, the trial
court appears to have, on its own directive, limited the class
to actual participants in the prior settlement process.
Caremark and the insurers also advance the possibility that
"[t]he class, as certified, ... includes individuals who did
not submit claims in the 1998 litigation." Caremark and the
insurers' brief, at p. 93. Even assuming that to be true, we
fail to agree that such inclusion renders the class, as
[substituted p. 42]
1120010; 1120114
certified, overly broad. We, therefore, conclude that the
court did not exceed its discretion as to the designation of
the class included in its certification order.
II. Case No. 1120114
The plaintiffs' sole contention in their cross-appeal
from the trial court's class-certification order is that the
trial court exceeded its discretion in also failing to certify
the class, as the plaintiffs had requested, pursuant to Rule
23(b)(1), Ala. R. Civ. P. Although acknowledging, as did the
trial court, the contrary and well established legal
principles demonstrated by this Court's decision in Funliner
of Alabama, L.L.C. v. Pickard, 873 So. 2d 198, 217 (Ala.
2003), in
which
we clearly indicated that "certification under
Rule 23(b)(1)
is
inappropriate when a plaintiff seeks monetary
damages," the plaintiffs contend that "[Rule 23](b)(1) is a
15
better 'fit' to these unique facts" than is Rule 23(b)(3).
Plaintiffs' brief, at p. 65. More specifically, they argue
that the separate legal status afforded the class certified in
the 1998 litigation
makes a mandatory class certified pursuant
See also Ex parte Government Emps. Ins. Co., 729 So. 2d
15
299, 306 (Ala. 1999) ("'Class suits seeking damages
exclusively are prime candidates for Rule 23(b)(3) classes.'"
(quoting 1 H. Newberg & A. Conte, Newberg on Class Actions §
4.08 (3d ed. 1992))).
[substituted p. 43]
1120010; 1120114
to Rule 23(b)(1) more appropriate than the opt-out class
certified by the trial court pursuant to Rule 23(b)(3).
16
First, we note the plaintiffs' admitted inability to
provide
authority
supporting
the
requested
departure
from
this
Court's established application of either provision of Rule
23(b)(1). Moreover, the plaintiffs similarly fail to
demonstrate
the
potential
danger
of
inconsistent
adjudications
of class members' rights, which they assert exists. See Ex
parte Government Emps. Ins. Co., 729 So. 2d 299, 306-07 (Ala.
1999)
("'"Rule
23(b)(1)(A)
class
actions
involve
those
classes
formed if the prosecution of separate lawsuits would create
the risk of inconsistent adjudications."'" (quoting Ex parte
Holland, 692 So. 2d 811, 815 (Ala. 1997), quoting in turn
Adams v. Robertson, 676 So. 2d 1265, 1269 (Ala. 1995))).
Indeed, we see nothing to suggest the existence of such a risk
in the present matter. Additionally, there is also nothing
suggesting that the present case is a limited-fund case as was
true in the 1998 litigation; therefore there is also no
indication –- at least in the arguments before us –- that
In support of their claim, the plaintiffs analogize the
16
present situation to one in which individuals, who are
shareholders of the same corporate entity, seek collective
redress: "If a corporation has been defrauded, the law does
not permit each shareholder to file individual fraud claims."
Plaintiffs' brief, at p. 67.
44
1120010; 1120114
adjudication of one class member's interest would necessarily
either "be dispositive of the interests of the other members
not parties to the adjudications or substantially impair or
impede their ability to protect their interests." Rule
23(b)(1)(B).
Conclusion
Based on the foregoing, we conclude that the trial court
properly
certified
the
plaintiffs'
claims
for
class
treatment;
that judgment is, therefore, due to be affirmed in all
respects.
1120010 -- AFFIRMED.
Moore, C.J., and Stuart, Parker, Murdock, Main, Wise, and
Bryan, JJ., concur.
1120114 -- AFFIRMED.
Moore, C.J., and Stuart, Parker, Main, Wise, and Bryan,
JJ., concur.
Murdock, J., dissents.
45
1120010; 1120114
MURDOCK, Justice (dissenting in case no. 1120114).
I disagree with the holding in the cross-appeal to the
effect that certification of the class as an "opt-out" class
under Rule 23(b)(3), Ala. R. Civ. P., is appropriate. We hold
in the appeal (case no. 1120010) that individual-reliance
issues are not material (thus justifying class certification
at all) because it was "the class" that was defrauded. That
is, the same misrepresentation was received and relied upon by
the same persons on behalf of all the members of the class.
By the same token, certification under Rule 23(b)(3) is
inappropriate. The claims of the class members in this
unusual case do not vary, and we therefore should not make
possible a multitude of individual lawsuits that all seek to
vindicate the same wrong with the same injury
(proportionally)
to each class member. Such a certification would allow
inconsistent outcomes, even as to the most basic question of
liability. The risk of such inconsistency is a key reason for
certifying a "non-opt-out" class under Rule 23(b)(1), Ala. R.
Civ. P. See, e.g., Ex parte Government Emps. Ins. Co., 729
So. 2d 299, 306 (Ala. 1999) (observing that "'"Rule
23(b)(1)(A) class actions involve those classes formed if the
prosecution of separate lawsuits would create the risk of
46
1120010; 1120114
inconsistent adjudications"'" (quoting Ex parte Holland, 692
So. 2d 811, 815 (Ala. 1997), quoting in turn Adams v.
Robertson, 676 So. 2d 1265, 1269 (Ala. 1995))).
The trial court expressly stated that it felt obligated
in its role as a lower court to follow precedent from this
Court preferring Rule 23(b)(3) "opt-out" certification where
money damages are involved but that it questioned whether this
was the correct approach in this unusual case. With regard to
our precedent, I note that this Court has not instituted a
blanket
prohibition
on
class
certification
under
Rule
23(b)(1)
where monetary relief is sought by the class in question. In
Ryan v. Patterson, 23 So. 3d 12, 20 (Ala. 2009), we noted:
"'[C]lose scrutiny is necessary if money damages are
to be included in any mandatory class in order to
protect the individual interests at stake ....'
Coleman v. General Motors Acceptance Corp., 296 F.3d
443, 448 (6th Cir. 2002). This Court has observed
that '[a]s a general rule, certification of a class
pursuant to Rule 23(b)(2) is improper if the primary
relief sought is money damages,' Compass Bank v.
Snow, 823 So. 2d 667, 678 (Ala. 2001); it is also
true that 'the fact that a Rule 23(b)(1) or (b)(2)
suit may ultimately result in a monetary recovery
from a defendant does not prevent certification
under those subdivisions.' First Alabama Bank of
Montgomery, N.A. v. Martin, 425 So. 2d 415, 423
(Ala. 1982)."
Both the trial court and the main opinion agree that the
situation presented in this case is a novel one. Given the
47
1120010; 1120114
nature and uniqueness of the claims presented, an exception to
our
general policy of not permitting class certification
under
Rule 23(b)(1) for actions seeking monetary relief is both
prudent and permissible. In short, this is a novel case not
governed by any indistinguishable precedent to the contrary;
it therefore stands to reason that we can, indeed must, simply
apply the language and policy underlying Rule 23 to decide
this novel case. Doing so would require a reversal of the
decision of the trial court in the cross-appeal.
48 | February 27, 2015 |
78126113-caea-42fc-b632-e516d20bb355 | Ex Parte Hsu | 707 So. 2d 223 | 1961470 | Alabama | Alabama Supreme Court | 707 So. 2d 223 (1997)
Ex parte Mark HSU, M.D., and Southeastern Cardiology Consultants, P.C.
(In re David Daniel BLACKMON and Anne Blackmon v. Mark HSU, M.D., and Southeastern Radiology Consultants, P.C.).
1961470.
Supreme Court of Alabama.
November 7, 1997.
*224 Richard B. Garrett and Patrick M. Shegon of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for petitioners.
David B. Norton, Selma, for respondents.
W. Stancil Starnes and Sybil Vogtle Abbot of Starnes & Atchison, Birmingham, for amicus curiae Medical Ass'n of the State of Alabama, in support of petition.
BUTTS, Justice.
Dr. Mark Hsu and Southeastern Cardiology Consultants, P.C. ("Southeastern Cardiology"), have petitioned this Court for a writ of mandamus directing Judge Charles Price, of the Montgomery Circuit Court, to set aside his order granting David Blackmon and Anne Blackmon's motion to compel production of certain financial documents. For the reasons discussed below, we grant the petition.
In August 1996, the Blackmons filed a medical malpractice complaint containing counts alleging negligence, wantonness, and negligent supervision on the part of Dr. Hsu and Southeastern Cardiology in relation to Dr. Hsu's treatment of David Blackmon for a heart condition. When the Blackmons served their complaint on the defendants, they also served a request for production of documents. Paragraph 12 of the discovery request asked for "Any and all financial documents, showing the assets and liabilities of the Defendants."
The defendants objected to production of much of the discovery sought by the Blackmons, and in relation to the financial information sought by the Blackmons the defendants objected on the basis that the request was "irrelevant, immaterial, overly broad, vague, and beyond the scope of discovery permitted by the Alabama Rules of Civil Procedure." The Blackmons then moved the trial court to compel production of the requested discovery. With respect to the financial information requested in paragraph 12 of the Blackmons' discovery request, the trial court's order on the motion to compel stated: "Granted; however, none of the said records produced in response to this request shall be disclosed by the Plaintiffs or their *225 attorney without further leave of Court." Dr. Hsu and Southeastern Cardiology responded by filing this petition for the writ of mandamus.
Mandamus is a drastic and extraordinary writ that will be issued only when the following elements are met: (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty to perform; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court. Ex parte United Service Stations, Inc., 628 So. 2d 501 (Ala.1993). A trial court is vested with broad discretion to control discovery, and its ruling on discovery matters will not be reversed absent a clear abuse of discretion. Ex parte Wal-Mart Stores, Inc., 682 So. 2d 65 (Ala.1996). A mandamus petition is a proper means of review to determine whether a trial court has abused its discretion in discovery matters. Ex parte Life Ins. Co. of Georgia, 663 So. 2d 929 (Ala.1995). Thus, if Dr. Hsu and Southeastern Cardiology have a "clear legal right" to withhold the financial information requested by the Blackmons, we will grant Dr. Hsu and Southeastern Cardiology's petition.
Both the arguments made to this Court by the plaintiffs and those made by the defendants relate to when evidence of a defendant's wealth would be admissible in the bifurcated trial procedure adopted by this Court in Life Ins. Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996) (Johnson I); under that procedure, the jury would decide the issues of liability and damages in separate trials. However, that bifurcated trial procedure is no longer the law. Following a remand from the United States Supreme Court (see Life Ins. Co. of Georgia v. Johnson, ___ U.S. ___, 117 S. Ct. 288, 136 L. Ed. 2d 207 (1996)), for reconsideration in light of that Court's opinion in BMW of North America v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), this Court recently released a second opinion in the Johnson caseLife Ins. Co. of Georgia v. Johnson, 701 So. 2d 524 (Ala.1997) (Johnson II). In Johnson II this Court held that, given the standard of judicial review of punitive damages verdicts required by Gore, coupled with the procedural safeguards already established by this Court in Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), the bifurcated trial procedure adopted in Johnson I was no longer necessary. 701 So. 2d at 534. Thus, the arguments relating to the Johnson I bifurcated trial procedure are no longer relevant to the issue before us.
Accordingly, we turn to long-standing Alabama law on the issue of admissibility of evidence of a defendant's wealth. Under that law, "evidence of a defendant's wealth is highly prejudicial and, therefore, inadmissible [during trial]." Southern Life & Health Ins. Co. v. Whitman, 358 So. 2d 1025, 1026 (Ala.1978), citing Alabama Fuel & Iron Co. v. Williams, 207 Ala. 99, 91 So. 879 (1921); Long v. Seigel, 177 Ala. 338, 58 So. 380 (1912); Southern Car & Foundry Co. v. Adams, 131 Ala. 147, 32 So. 503 (1902); Ware v. Cartledge, 24 Ala. 622, 60 Am. Dec.489 (1854). See Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991). However, evidence of a defendant's wealth is considered relevant and admissible in a post-verdict hearing on alleged excessiveness of a punitive damages award, held before the trial judge pursuant to the procedure this Court adopted in Hammond v. City of Gadsden, supra.
The post-verdict timing for admission of evidence of a defendant's wealth, first established by this Court, is also reflected in Ala. Code 1975, § 6-11-23(b) (adopted following Hammond):
(Emphasis added.) That portion of § 6-11-23(b) emphasized above prohibits a plaintiff's discovery of evidence of a defendant's wealth until after a verdict awarding punitive damages has been returned.
Based on the authorities cited above, we conclude that the trial court erred in ordering the defendants to provide the financial information sought by the plaintiffs in paragraph 12 of their discovery request, and we conclude that the defendants have a clear legal right to the extraordinary relief they seek. However, we note that when Judge Price entered his order on this discovery matter we had not yet released our opinion in Johnson II, which eliminated the bifurcated trial procedure established in Johnson I. We are further aware that when Judge Price made his ruling many questions remained as to how the bifurcated trial procedure would actually work. Accordingly, although we grant the defendants' petition for a writ of mandamusbecause the defendants have a clear legal right to the relief they seekwe are hesitant to say that Judge Price "abused his discretion."
PETITION GRANTED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
SEE, J., concurs in the result. | November 7, 1997 |
8c48d022-e915-4d39-b92e-6a0cee5853ee | City of Wetumpka v. Central Elmore Water Auth. | 703 So. 2d 907 | 1951162 | Alabama | Alabama Supreme Court | 703 So. 2d 907 (1997)
CITY OF WETUMPKA; and Water Works and Sewer Board of the City of Wetumpka
v.
CENTRAL ELMORE WATER AUTHORITY; and Elmore County Commission.
1951162.
Supreme Court of Alabama.
September 12, 1997.
*909 Keith A. Howard of Howard, Dunn, Howard & Howard, Wetumpka, for appellants (on rehearing).
Ronald G. Davenport and William H. Webster of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellees (on rehearing).
Robert E. Sasser, Dorothy W. Littleton, and Tamara A. Stidham of Sasser & Littleton, P.C., Montgomery, for amicus curiae Alabama Water and Wastewater Institute (on rehearing).
Kenneth Smith, League counsel, and Joseph Kettler, asst. League counsel, Montgomery, for amicus curiae Alabama League of Municipalities, in support of the appellants (on rehearing).
James R. Seale and Charles B. Paterson of Robison & Belser, P.A., Montgomery, for amicus curiae Water Works and Sanitary Sewer Board of the City of Montgomery (on rehearing).
MADDOX, Justice.
The opinion of May 16, 1997, is withdrawn, and the following substituted therefor.
This appeal involves a dispute between, on the one side, a public water authority, incorporated under provisions of state law, and, on the other side, the City of Wetumpka and the Water Works and Sewer Board of the City of Wetumpka. The dispute is over which entity or entities have the right to serve a newly developed subdivision, which was within the service area of the public water authority, but which was also located within the city limits of the City of Wetumpka after having been annexed by the City on August 7, 1995, before this action was filed.
The Central Elmore Water Authority ("Central Elmore"), a public water authority created under the provisions of § 11-88-1 et seq., Ala.Code 1975, filed an action for injunctive relief and a declaratory judgment. In that action, it claimed that the City of Wetumpka and the Water Works and Sewer Board of the City of Wetumpka ("the Water Board") had infringed upon its territorial jurisdiction.
The trial court entered a summary judgment in favor of Central Elmore and the Elmore County Commission (which had been added as a plaintiff). The City and the Water Board appeal, raising these questions:
The evidence indicates that the Wetumpka City Council incorporated and formed the Water Board on March 21, 1949, and gave *910 the Water Board the authority to operate in "the City of Wetumpka, Alabama, and in the territory in the vicinity thereof." (Excerpt from the Articles of Incorporation of the Water Board, March 1949.)
In April 1973, the Redland Water and Fire Protection Authority was incorporated and given a specific designated jurisdiction, and in April 1974, a certificate of incorporation was issued to the Wallsboro-Santuck Water and Fire Protection Authority. The jurisdiction of the Wallsboro-Santuck Water and Fire Protection Authority included what eventually became known as the "Crutchfield property," which is the property that is the subject of this dispute. Central Elmore was created in June 1988 by the merger of the Redland Water and Fire Protection Authority and the WallsboroSantuck Water and Fire Protection Authority.[1]
The City of Wetumpka is a municipal corporation subject to the prohibition of § 11-50-1.1, Ala.Code 1975, and the Elmore County Commission is duly elected pursuant to the provisions of §§ 11-3-1 through 11-3-26, Ala.Code 1975. The Commission is the body legally empowered "[t]o direct, control and maintain the property of [Elmore County] as it may deem expedient according to law." § 11-3-11(a)(1), Ala.Code 1975.
The Water Board and Central Elmore entered into a Water Purchase Agreement on or about March 29, 1993, whereby Central Elmore agreed to construct and operate a water treatment facility and the Water Board agreed to purchase a guaranteed amount of the water treated at that facility. The Water Purchase Agreement provides, in part, as follows:
In December 1994, Donald Estes approached Central Elmore about the possibility of extending service to a new subdivision he intended to develop on U.S. Highway 231 North; this property is known as the Crutchfield property. It is undisputed that the Crutchfield property lies within Central Elmore's service area. Central Elmore agreed to share the cost of extending an eight-inch water main from the existing main.
Donald Estes died soon thereafter, and Earl Crutchfield was named executor of the estate of Donald Estes. Crutchfield telephoned Danny Ingram, general manager of Central Elmore, in February 1995 and asked the status of Central Elmore's plan to run a water main to the Crutchfield property. Ingram explained to Crutchfield that an agreement had been reached between Estes and the board of Central Elmore and that he was going to abide by the agreement.
Ingram sent Crutchfield an estimate of the cost of extending the water main and told him that Central Elmore could have the water main installed by October 1995. In February 1995, Crutchfield suggested to the Wetumpka City Council that he would allow the City to annex the Crutchfield property if the City would provide water service to it. Crutchfield sent Ingram a letter stating that Crutchfield had contacted the City about running the line because, Crutchfield said, Central Elmore had indicated that it would be unable to install the line by what he claimed was a May deadline. Ingram then telephoned Crutchfield and told him that he had not thought or understood that there was a May deadline and that he had operated under the assumption that they had agreed that the line was to be placed by the October date that had been given to Central Elmore by Estes. Ingram also told Crutchfield that the property was within the jurisdiction of Central Elmore Water Authority and that in his opinion the City of Wetumpka did not have authority or jurisdiction to run a water line to his property. Ingram said he then thought that Crutchfield understood the situation and understood that Central Elmore would have the water line run to his property.
In the interim, the Wetumpka City Council discussed Crutchfield's proposal and decided to act. On August 7, 1995, seventy acres of land, including the Crutchfield property, were annexed into the City. Following the annexation, the City contracted with an engineering firm to draw plans for providing water to the Crutchfield property. The City made the contract and was the one in direct contact with the contractor; the City had solicited bids by advertising in the newspaper. Ingram read the City's newspaper solicitation for bids to lay a water line to the Crutchfield property.
Joe Lambrecht, the chairman of the Central Elmore board, telephoned Bill Sahlie, who was a City Council member and the mayor pro tem., in August 1995 and informed him that Central Elmore was in the process of extending service to that particular area and that it was part of Central Elmore's jurisdiction. Sahlie was aware that Estes and Crutchfield had sought water service from Central Elmore and that Crutchfield had made an arrangement with Central Elmore to provide service to the property. A meeting was held in the Wetumpka Water Board's office and was attended by the Central Elmore board members and Ingram, as well as the Wetumpka Water Board members. Each party stated its position concerning its jurisdiction and territory. Before the line was installed, Lambrecht and Dr. Beau Dunn, a member of the Wetumpka Water Board, discussed the possibility of halting construction on the water line until the parties could resolve their differences.
In the middle of September, Ingram contacted Ms. Elizabeth Gober, the City's clerk, treasurer, and personnel officer, and asked that the City not award the contract because, he said, the territory belonged to Central Elmore. She told the Water Board of Ingram's request, but also told the Water Board that the City was planning to lay a water main to the Crutchfield property in accordance with its agreement with Crutchfield.
By October 1995, Central Elmore's water pipe for the Crutchfield property had been *912 ordered and delivered, and arrangements had been made for a contractor to begin laying the water main. After those arrangements had been made, Lambrecht learned that the City was planning to lay a water main to the Crutchfield property; upon learning that, he telephoned Dr. Dunn to suggest that neither party begin digging until the matter could be discussed. Dr. Dunn agreed to that suggestion. Lambrecht informed Ingram about the agreement he and Dr. Dunn had reached. Ingram had made arrangements with Paul East for East to lay the water line, but, in reliance upon the agreement with Dunn, he stopped East from going forward with that project until a further meeting could be held. However, a few days after Lambrecht's conversation with Dr. Dunn, and before the scheduled meeting, the City began laying its water line; it did not stop that project.
The City paid for the installation of the water line to the Crutchfield property. Dr. Dunn testified by deposition testimony that he was not aware that any money was contributed by the Water Board. Although there is no documentation of such an intent, it appears it was the City's intent to turn the water line over to the Water Board immediately after it was installed. Dr. Dunn further testified that the City and the Water Board act in concert with one another.
Central Elmore sued in the circuit court on October 17, 1995, seeking a declaratory judgment and injunctive relief against the City and the Water Board, alleging that they had wrongfully infringed upon Central Elmore's territorial jurisdiction. Central Elmore further alleged that the defendants had violated § 11-50-1.1, Ala.Code 1975, and 7 U.S.C. § 1926(b). The circuit court set a hearing for October 31, 1995, on Central Elmore's request for a temporary restraining order, but that hearing was canceled at Central Elmore's request.
On November 1, 1995, Central Elmore amended its complaint by adding the Elmore County Commission as a party plaintiff. The plaintiffs filed a motion to amend the complaint, and the defendants filed a response and an objection to the motion to amend. On January 12, 1996, the court granted the motion to amend, and on February 1, 1996, the defendants answered the amended complaint and filed a counterclaim alleging that Central Elmore had breached the Water Purchase Agreement. Each side moved for a summary judgment, and on March 18, 1996, the court entered a summary judgment in favor of Central Elmore and the Elmore County Commission. This appeal followed.
The appellants, the City and the Water Board, contend that the trial court erred in failing to hold that 7 U.S.C. § 1926(b)[2] preempted § 11-50-1.1, Ala.Code 1975. The Omnibus Budget Reconciliation Act ("OBRA"), Pub.L. No. 99-509, § 1001, 100 Stat. 1874 (1986) (codified at 7 U.S.C. § 1929a (1994)), directed the FmHa to sell notes and bonds in its hands without destroying the protection provided for rural water districts and their lenders pursuant to § 1926(b). By enactment of the Agricultural Credit Act of 1987 ("ACA"), Pub.L. No. 100-233, § 803, 101 Stat. 1714 (1988), § 1001 of OBRA was amended to provide that the FmHA would offer the issuer of the "note or other obligation" the right of first refusal in purchasing the note or other obligation; the ACA further stated, in subsection (g):
As the Colorado Supreme Court held in City of Grand Junction v. Ute Water Conservancy Dist., 900 P.2d 81 (Colo.1995), the protection afforded by § 1926(b), which preempts contrary state law, continues to apply despite refinancing or repurchasing of the loan through a bond issue, as a result of the operation of § 803 of the ACA.
At the time of the merger to form Central Elmore, both Redland and Wallsboro-Santuck had outstanding loans with the FmHA. Although these loans were refinanced, there is no evidence that Central Elmore does not continue to enjoy the protection afforded to FmHA loan customers under 7 U.S.C. § 1926(b). The City and the Water Board assert that they have protection afforded by § 1926(b); however, this subsection was not created to afford protection to entities such as the City and the Water Board, which are either municipalities or already "within the boundaries of [a] municipal corporation." The trial court held that the statute is to protect associations from outside aggression, not to protect them in their own attempts to engage in aggression toward other public water systems. Thus, the trial court held that this statute has no application favorable to the City and the Water Board. We agree.
The evidence indicates that Central Elmore's predecessor in interest, Redland Water Authority, received a letter from the FmHA on or about March 14, 1988, notifying it of its right to participate in the Discount Purchase Program, by which FmHA's borrowers could purchase their loans at a discount. Redland responded to this offer by filling out and sending a notice that it intended to purchase its existing FmHA loan, and it submitted a good faith deposit.
The City contends that Central Elmore cannot enjoy the protection of the provisions of § 1926(b) because it never took out a loan with the FmHA, citing Scioto Co. Regional Water Dist. No. 1 v. Scioto Water, Inc., 103 F.3d 38 (6th Cir.1996), and arguing that that decision is controlling on the interpretation of federal law. We believe that the rationale of the Colorado City of Grand Junction decision is superior to that used by the Scioto court. One court has held that a successor entity resulting from the merger of two FmHA loan holders retains the protections of the subsection. See CSL Utilities, Inc. v. Jennings Water, Inc., 16 F.3d 130 (7th Cir. 1993), cert. denied, 513 U.S. 812, 115 S. Ct. 65, 130 L. Ed. 2d 22, (1994), holding, with regard to a water utility's assumption of an FmHA loan, that "such a transfer does not alter the statute's scope of protection," 16 F.3d at 131.
Furthermore, the City contends that Central Elmore did not have the protection of § 1926(b) because it paid off the loan. Such an interpretation would not be consistent with the evidence, which shows conclusively that the loan from the FmHA was not satisfied and that the protection of § 1926(b) survives. The Merger Agreement shows that the debt of the predecessor systems was being "refinanced" and that the indebtedness was being "transferred" to the new system; the context reveals that retiring the debt would be accomplished by this means rather than by paying off the loan and abrogating the statutory protection. The bonds were not terminated, but the Merger Agreement states that the "Notices of Statutory Mortgage Lien" are "discharged, satisfied, and terminated." The mortgages are only security on the bonds and not the bonds themselves. Furthermore, as the trial court noted, the "Satisfaction of the Mortgage Lien" presented by the appellants does not appear to have been filed and therefore has no legal effect.
The City and the Water Board further argue that they have not violated the territorial integrity of Central Elmore as ensured by § 11-50-1.1, Ala.Code 1975, which reads as follows:
It is apparent to us that the City has "acquired" and "duplicated" the "services" of Central Elmore. Central Elmore is a "corporation or association which has been organized under Sections 11-88-1 through 11-88-21."
It is undisputed that Central Elmore was already serving an area within the vicinity of the Crutchfield property. When the City paid to have the water line installed on the Crutchfield property there was already a line owned and operated by Central Elmore across the road from that property. The Water Board's own superintendent, William Allen, admitted that having a pipe on one side of the road is considered as providing service to both sides of the road. See North Shelby Water Co. v. Shelbyville Municipal Water & Sewer Commission, 803 F. Supp. 15 (E.D.Ky.1992).[3]
The City and the Water Board contend that the activities of the Water Board are not limited by § 11-50-1.1, which by its terms applies only to "municipalities," such as the City of Wetumpka, citing East Montgomery Water, Sewer & Fire Protection Authority v. Water Works & Sanitary Sewer Bd. of the City of Montgomery, 474 So. 2d 1088 (Ala. 1985), where this Court affirmed a decision of the trial judge in which the trial judge made the statement that "the term `municipalities' excludes a public corporation like the Plaintiff Board since it is well established that `a public corporation organized under the Water Board Statute ... is an entity separate and independent from the city which it serves.'" 474 So. 2d at 1091. This Court has held, however, before and after the decision in the East Montgomery Water case, that a water works board organized and operating pursuant to §§ 11-50-230 through XX-XX-XXX is an agency of the municipality it serves. See City of Montgomery v. Water Works & Sanitary Sewer Bd. of the City of Montgomery, 660 So. 2d 588, 594 (Ala.1995) ("Although the Water and Sewer Board is a corporation, it is so organized to perform its functions as an agency of the City. Accordingly, such a board is treated in the same light as the City itself."); Water Works Bd. of the Town of Parrish v. White, 281 Ala. 357, 362, 202 So. 2d 721, 725 (1967) ("The supplying of water to a city and its inhabitants is a municipal function and a Water Works Board incorporated under the provisions of [§§ 11-50-230 through XX-XX-XXX] is in that sense an agency of the city."); and Water Works Bd. of City of Birmingham v. Stephens, 262 Ala. 203, 209, 78 So. 2d 267, 272 (1955) ("The city water works board is a corporation organized by law to perform that undertaking [supplying water service] as an agency of the city."). Basically, these last three cases hold that a municipal water works board performs as an agent for the city, and the evidence in this case shows, among other things, that the City of Wetumpka laid the lines to the Crutchfield property, one witness stating that the City "made the call" to lay the lines, and the chairman of the Water Board stating that the City and the Water Board acted "in concert," a fact noted by the trial judge in his order. The trial court also noted that the City of Wetumpka appointed the Water Board members.
If we accepted the argument of the City and the Water Board that the activities of the Water Board here are not limited by § 11-50-1.1, because that section refers only to "municipalities," we would have to ignore the fact that the Legislature, in 1982, amended Chapter 50 of Title 11 of the Code, dealing with public utilities, to include the prohibition that is the subject of this action. Before the adoption of § 11-50-1.1, a municipality had great powers to acquire and operate public utilities. Did the Legislature, in adopting § 11-50-1.1, intend to permit municipalities to do indirectly what they could not do directly? We think not. We believe that the Legislature, in 1982, was placing a limitation on the powers that had theretofore *915 been granted to municipalities and was establishing limitations on what they could acquire and what they could duplicate. To the extent that East Montgomery Water, Sewer & Fire Protection Authority v. Water Works & Sanitary Sewer Bd. of City of Montgomery, 474 So. 2d 1088 (Ala.1985), conflicts with this holding, it should no longer be followed. If our interpretation of legislative intent is incorrect, the Legislature can specifically provide that water boards are not prohibited from duplicating services of other water works systems.
The Alabama League of Municipalities, as amicus curiae, argues that the trial court's judgment violates Art. I, § 22, Ala. Const. 1901, which prohibits the legislature from, among other things, passing a law "making irrevocable or exclusive grants of special privileges." Central Elmore does not contend that it has an exclusive right to its service area in the sense that no other entity may ever overlap or replace it. The legislature made provision in § 11-88-19 for another water authority, under certain circumstances, to overlap or acquire a water authority's service area; however, the legislature has not provided, as it could have, if such had been its intent, that municipalities or water works boards may encroach upon an existing water authority's service area.
The trial court held that the Water Purchase Agreement between Central Elmore and the Water Board was a valid, binding contract. Central Elmore has the power, pursuant to § 11-88-7(a)(6), Ala.Code 1975, to "make, enter into and execute such contracts, agreements, leases and other instruments and to take such other actions as may be necessary or convenient to accomplish any purpose for which the authority was organized or to exercise any power expressly granted under this section." The Water Board also has the power to make such purchases as are deemed "necessary or convenient" for the carrying out of the purposes of the Water Board. § 11-50-235(4), Ala.Code 1975.
The Water Purchase Agreement was entered into in the spring of 1993. The agreement is a binding contract that prohibits either party from encroaching upon the other's territory without express permission. The terms of the agreement show the intent of the parties; the City and the Water Board have, for three years, without protest, enjoyed the benefit of Central Elmore's commitment to respect their territorial integrity and the benefit of Central Elmore's obligation under the contract to provide water.
The City and the Water Board assert that the agreement is void because, they argue, it was not properly signed on behalf of the Water Board. The Water Purchase Agreement specified that it was to be signed by the parties' "duly appointed officers." By unanimous consent of the Water Board, whether given by telephone or in person, and whether at a regular meeting or not, this contract was signed, and it has been enforced for three years. The City and the Water Board attempt to invoke the "Sunshine Law," § 13A-14-2; however, given the terms of § 11-88-21, we conclude that Central Elmore is not required to hold a public hearing as a prerequisite to entering into a transaction such as this Water Purchase Agreement. See Ex parte Alabama Public Service Commission, 376 So. 2d 665 (Ala.1979); Hargett v. Franklin County Bd. of Education, 374 So. 2d 1352 (Ala.1979).
The trial court held that the City and the Water Board violated an agreement between the Water Board and the chairman of Central Elmore to refrain from installing the water line until the two bodies had an opportunity to meet and possibly negotiate a compromise. When an officer of a public agency makes an agreement or gives an assurance upon which another relies to his detriment, that public agency is estopped from denying the existence of the agreement or the truth of the assurance. See Ex parte Mathers, 541 So. 2d 1110 (Ala.1989) (holding that a board was estopped from denying the truth of an assurance given by the board's chairman and an employee of the board).
In this case, Dr. Dunn, chairman of the Water Board, assured Mr. Lambrecht *916 that the Water Board would hold off installing the water line to the Crutchfield property until after the two bodies had met. In reliance on this assurance from Dr. Dunn, and based on his apparent authority to speak for the Water Board, Central Elmore delayed its plans to lay the water line to the Crutchfield property, even though it already had had the pipe delivered to the site and had only to begin digging in order to have the line installed. The City did not delay, but installed its line before the agreed meeting date. The trial court did not err in holding that the City is estopped from denying that it was bound by Dr. Dunn's assurance.
It is clear by the testimony and other evidence presented that the City and the Water Board breached the Water Purchase Agreement and the oral agreement to discontinue laying the water line to the Crutchfield property.
In conclusion, we hold that the trial court was authorized to find that the City had permitted Central Elmore to be formed and to service part of Elmore County and that the City and the Water Board cannot now encroach on Central Elmore's territory without its permission.
Based on the foregoing, the summary judgment for Central Elmore and the Elmore County Commission is due to be affirmed.
OPINION OF MAY 16, 1997, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; AFFIRMED.
HOOPER, C.J., and SHORES, HOUSTON, and SEE, JJ., concur.
ALMON and COOK, JJ., concur in the result.
COOK, Justice (concurring in the result).
I concur with the majority opinion holding that Central Elmore falls within the confines of, and is protected by, 7 U.S.C. § 1926(b), and that the City of Wetumpka and the Wetumpka Water Board violated Ala.Code 1975, § 11-50-1.1.1926(b). The City of Wetumpka and the Water Board argue that they are also protected by § 1926(b), as they are both "associations" under that section. Section 1926(b) provides protection to associations. "Associations" is broadly defined to encompass any entity that has received an FmHA loan. See Pinehurst Enterprises, Inc. v. Town of Southern Pines, 690 F. Supp. 444, 452 (M.D.N.C.1988). Although the Wetumpka Water Board has an outstanding FmHA loan and is, therefore, an association and may assert the protection of § 1926 under appropriate circumstances, its status as an association does not change the result or preclude the summary judgment in this case.
As reflected in the majority opinion, it is undisputed that Central Elmore was serving the area across from the Crutchfield property. Central Elmore had previously installed a water line across the highway from the newly developed subdivision in order to service another area located near the Crutchfield property. The water line across the highway from the Crutchfield property is viewed as if Central Elmore was providing service to both sides of the road. See North Shelby Water Co. v. Shelbyville Municipal Water & Sewer Commission, 803 F. Supp. 15 (E.D.Ky.1992). Therefore, Central Elmore had the dominant right to provide water service to the Crutchfield property.
The majority opinion today clarifies the statement in the now withdrawn May 16, 1997, opinion that the Water Board performs its functions as an agency for the city.[4] Although the Water Board is organized to perform its function as an agency of the city it serves, it remains an entity separate from that municipality. Not until the Water Board acts in collaboration with a municipality, as occurred in this case, does it also fall within the purview of § 11-50-1.1, which limits its activities. Had the Water Board acted alone, it would not be restricted by § 11-50-1.1.
The Water Board falls within the purview of § 11-50-1.1 only because it acted "in concert" with the City of Wetumpka, a municipality. *917 Both entities acting together agreed to lay the water line, thereby duplicating the services of Central Elmore. Because the Water Board and the City acted in concert, § 11-50-1.1 applies to the Water Board, and, under the facts of this case, the activities of the Water Board violated § 11-50-1.1.
[1] Central Elmore retains jurisdiction over a specified geographic area granted and approved by the Elmore County Commission and the probate judge of Elmore County. A concise legal description of the geographic area to be served by Central Elmore is contained in its Articles of Incorporation, filed in the Elmore County Probate Court on June 13, 1988, as amended on August 29, 1995.
[2] Pursuant to 7 U.S.C. § 1926, the Secretary of Agriculture is authorized "to make or insure loans" to "associations." The term "associations" has been defined broadly to include any entity that has received an FmHA loan. Pinehurst Enters., Inc. v. Town of Southern Pines, 690 F. Supp. 444, 452 (M.D.N.C.1988). Subsection (b) of 7 U.S.C. § 1926 provides certain protections to such associations:
"The service provided or made available through any such association shall not be curtailed or limited by inclusion of the area served by such association within the boundaries of any municipal corporation or other public body, or by the granting of any private franchise for similar service within such area during the term of such loan; nor shall the happening of any such event be the basis of requiring such association to secure any franchise, license, or permit as a condition to continuing to serve the area served by the association at the time of the occurrence of such event."
[3] The court held that a water association having water lines running adjacent to properties had the dominant right to provide water service to the areas in question.
[4] The majority cites City of Montgomery v. Water Works & Sanitary Sewer Bd. of the City of Montgomery, 660 So. 2d 588, 594 (Ala.1995). | September 12, 1997 |
eb8b2347-118e-44b5-ac55-f27e83ebb6dd | Ex Parte State | 703 So. 2d 333 | 1961371 | Alabama | Alabama Supreme Court | 703 So. 2d 333 (1997)
Ex parte State of Alabama.
(In re STATE of Alabama
v.
Robert J. BAKER, Jr.).
1961371.
Supreme Court of Alabama.
August 29, 1997.
Bill Pryor, atty. gen., and Cedric Colvin, asst. atty. gen., for petitioner.
Robert J. Baker, Jr., pro se.
BUTTS, Justice.
The State petitions for a writ of mandamus directing the Court of Civil Appeals to rescind an order it entered in Ex parte Baker, (No. 2960613, May 13, 1997) ___ So.2d ___ (Ala.Civ.App.1997) (table). We grant the petition.
Robert J. Baker, Jr., was convicted in the Circuit Court of Marshall County of robbery in the first degree. His conviction resulted from his participation in the robbery of a branch of First Alabama Bank in which a total of $8,480 was taken. On the day Baker was arrested, $1,955 in currency was seized as evidence from the home of Baker's father, *334 pursuant to a validly executed consent to search the premises. The money was subsequently entered into evidence at Baker's criminal trial as evidence of his involvement in the bank robbery. Baker petitioned the Court of Civil Appeals for a writ of mandamus directing Marshall County Circuit Judge William G. Gullahorn to order law enforcement officials to turn over to him $1,942 of the money seized. He alleged in his petition that $1,942 of his personal property had been wrongfully taken from the home of his father; that he had repeatedly asked Judge Gullahorn for an order directing the return of his personal property; and that the judge had refused to set a civil forfeiture hearing. The Court of Civil Appeals granted Baker's petition and issued the writ of mandamus.
The attorney general moved for a stay in the Court of Civil of Appeals, requesting an opportunity to file an answer to Baker's mandamus petition; the attorney general argued that the State had not been given an opportunity to respond to the petition. The Court of Civil Appeals granted the stay. The attorney general then filed a response on behalf of the State, asserting that the Court of Civil Appeals did not have jurisdiction to issue a writ in this case. The Court of Civil Appeals, apparently rejecting that assertion, dissolved the stay. The State responded by filing this petition, asking this Court to direct the Court of Civil Appeals to rescind the writ.
The State argues that the Court of Civil Appeals had no jurisdiction to issue the writ because, it says, the Court of Civil Appeals has no jurisdiction over matters that arise solely out of criminal prosecutions. The State argues that there was no civil forfeiture proceeding involved in this case; that the Rules of Criminal Procedure specifically provide a procedure for the return of property seized during a criminal investigation; and that the State has no other adequate remedy because if the evidence is returned to Baker, it will be futile for the State to appeal. The State further contends that because the money was seized as evidence in a criminal case, and was introduced as evidence in a criminal trial, the Court of Civil Appeals had no jurisdiction to issue the writ, and that jurisdiction over the case is vested exclusively in the Court of Criminal Appeals or this Court.
In response, Baker argues that the property was his; that the seizure of that property amounted to a civil forfeiture; and, thus, that he should have been given notice by the State of a civil forfeiture hearing. He contends that his only recourse was to petition the Court of Civil Appeals for a writ of mandamus.
The issue before us is whether the Court of Civil Appeals has jurisdiction to issue a remedial writ related to property seized in a criminal investigation and introduced as evidence in a criminal trial. The State argues that the Court of Civil Appeals had no jurisdiction to issue the writ because the money that was seized was used as evidence in a criminal trial; that the seizure of the money was thus a criminal law matter; and that appellate jurisdiction over criminal matters is vested exclusively in the Court of Criminal Appeals. Based on our interpretation of Ala.Code 1975, §§ 12-3-9, 12-3-10, and 12-3-11, we agree with the State.
Sections 12-3-9 and 12-3-10 further provide that the Court of Criminal Appeals has exclusive appellate jurisdiction over all criminal matters and that the Court of Civil Appeals has exclusive appellate jurisdiction over all civil matters in which the amount in controversy does not exceed $50,000. When these sections are read together, it is clear that the Court of Civil Appeals has jurisdiction to issue writs of mandamus only as to matters arising out of civil proceedings.
*335 The Court of Civil Appeals granted Baker's petition for writ of mandamus on the authority of Adams v. State ex rel. Whetstone, 598 So. 2d 967 (Ala.Civ.App.1992). It is unclear to us how that case gives the Court of Civil Appeals jurisdiction to issue the writ it issued in this case. In Adams, the action arose strictly out of a civil forfeiture proceeding initiated by the State, and there was no question regarding the court's jurisdiction. However, in this case, there was no civil forfeiture proceeding involved and the State did not seek forfeiture of the money as proceeds of the robbery. Instead, the State simply seized the money pursuant to a validly executed search warrant and introduced it as evidence in Baker's criminal trial for firstdegree robbery.
Given the Court of Civil Appeals' reliance upon Adams, it is apparent that that court mistakenly determined that there had been a civil forfeiture of Baker's property and that it thus assumed jurisdiction based upon its having exclusive jurisdiction over all civil matters. However, because this action arose solely out of a criminal prosecution and because the Court of Civil Appeals has no appellate jurisdiction over criminal matters, that court had no jurisdiction to issue a writ of mandamus ordering the return of property seized in a criminal investigation and introduced as evidence in a criminal trial. Had this case arisen from a civil forfeiture proceeding, as Adams did, the Court of Civil Appeals could have issued the writ of mandamus pursuant to its jurisdiction over civil matters.
We conclude that Baker's petition to the Court of Civil Appeals sought relief in regard to a purely criminal law matter, a matter over which the Court of Civil Appeals has no jurisdiction. The Court of Civil Appeals is directed to rescind its May 13, 1997, order in Baker v. State, case no. 2960613.
WRIT GRANTED.
HOOPER, C.J., and MADDOX, ALMON, SHORES, HOUSTON, KENNEDY, COOK, and SEE, JJ., concur. | August 29, 1997 |
36561da2-6774-4627-b745-5c13a3c0f1c2 | Hansel v. Head | 706 So. 2d 1142 | 1951859 | Alabama | Alabama Supreme Court | 706 So. 2d 1142 (1997)
Glinda HANSEL
v.
Daniel T. HEAD, Sr., et al.
1951859.
Supreme Court of Alabama.
November 7, 1997.
*1143 John M. Bolton III of Robison & Belser, P.A., Montgomery, for appellant.
J. Doyle Fuller, Montgomery, for appellees.
SEE, Justice.
This case arises from a dispute over the construction of the joint will of Earl and Ernestine Head. The trial court held that an unwitnessed codicil to the will was a nullity and that an attempted partial revocation of the will by the testators had effected a revocation of the entire will. Because we conclude that the unwitnessed codicil was a nullity, but that the attempted partial revocation did not effect a revocation of the entire will, we affirm in part, reverse in part, and remand.
In 1966, Earl Head and his wife Ernestine prepared a joint will, without the benefit of legal counsel. The will was handwritten by Ernestine, duly attested by two witnesses, and notarized. Ernestine died in 1987; Earl died in 1989, and the will was admitted to probate that year.
In October 1989, Daniel T. Head, Dorothy Head Johnson, and Birdie Ruth Schoening (the "Contestants"), who would benefit if Earl Head had died intestate, filed a petition with the circuit court contesting the Heads' will. They contested it on the grounds that it lacked the requisite statements of testamentary intent. Glinda Summerlin Hansel, as executrix (the "Proponent"), filed a motion for summary judgment. The circuit court entered a summary judgment for the Proponent and remanded the case to the probate court for administration. After remand, the Proponent filed this action with the circuit court, seeking a construction of certain provisions of the will. The circuit court held that an unwitnessed codicil to the will was a nullity and that an attempted partial revocation had effected a revocation of the entire will. The Proponent appealed.
The will offered for probate reads in pertinent part:
(Emphasis added.)[1]
The main part of the will was written longhand in cursive characters in ink. The "EXCEPTIONS" clause was written in a different ink from that used in the main part of the will. The evidence indicates that sometime after they had executed the will Ernestine received stock in a mutual fund, and that she and Earl attempted to bequeath the stock to their heirs by modifying their will and adding the "EXCEPTIONS" clause. They neglected, however, to have the will properly re-executed.
The term "VOID" was printed (i.e., not in cursive longhand) in the margin, and was also in a different ink. Correcting fluid had been used to cover a name, and the Heads' names had been written on top of the correcting fluid. The circuit court found that the original name covered by the correcting fluid cannot now be determined.
The Contestants argue that the circuit court correctly held that the subsequently added and unwitnessed "EXCEPTIONS" clause is a nullity. We agree. The formalities of execution and witnessing are essential to the validity of a codicil. Calhoun v. Thomas, 274 Ala. 111, 114, 145 So. 2d 789, 792 (1962). See Barnewall v. Murrell, 108 Ala. 366, 389, 18 So. 831, 841 (1895) (stating that attempted changes and alterations to a will made after its execution cannot affect the validity of the will); 2 William J. Bowe & Douglas H. Parker, Page on Wills § 22.2 (1960) (stating that "changes added after the original execution constitute no part of the will").[2]
The Contestants also argue that the Heads' obliteration of the name of a class member who was to receive a portion of one-half of the net cash assets of the estate effected a revocation of the entire will.[3] The circuit court could not determine the content of the obliterated portion of the will. The Contestants argue that because Alabama does not allow partial revocation, the entire will must be revoked and the estate distributed pursuant to the intestacy statutes. We disagree.
In Alabama, the law is well settled that "the intention of the testator is always the polestar in the construction of wills, and that the cardinal rule is to give that intention effect if it is not prohibited by law." deGraaf v. Owen, 598 So. 2d 892, 895 (Ala.1992); Mastin v. First Nat'l Bank of Mobile, 278 Ala. *1145 251, 177 So. 2d 808 (1965); O'Connell v. O'Connell, 196 Ala. 224, 72 So. 81 (1916). This fidelity to the testator's intent applies to the intent to revoke a will. The intent to revoke a will in its entirety may be given effect if that intent is expressed in a subsequent will or by a physical act. Section 43-8-136, Ala.Code 1975, provides in pertinent part:
(Emphasis added.)
In Law v. Law, 83 Ala. 432, 3 So. 752 (1888), this Court held that the statutory predecessor of § 43-8-136 did not allow partial revocation by physical act, and thus created a narrow exception to the general rule that courts should effect the intent of the testator. In Law, 83 Ala. at 436, 3 So. at 754, this Court cited the New York decision of Lovell v. Quitman, 88 N.Y. 377 (1881), for the proposition that, under a statute very similar to Alabama's revocation statute, an attempted partial revocation by physical act is ineffective. Accord Calhoun v. Thomas, 274 Ala. at 114, 145 So. 2d at 791. Thus, where the testator intends a partial revocation by physical act, the will is probated in its original form, disregarding the attempted obliteration, if possible. Id. at 114, 145 So. 2d at 792; Law, 83 Ala. at 436, 3 So. at 754.
In this case, however, the original name obliterated by the Heads cannot be determined. In this circumstance, commentators have opined:
2 William J. Bowe & Douglas H. Parker, Page on Wills § 22.3, 565-66 (1960) (footnotes omitted). This Court has not addressed this specific issue, and the courts of other states are not in accord. Compare In re Ross' Will, 107 N.Y.S.2d 185 (Sur.Ct.1951) (allowing balance of will to be probated when obliterated portion could not be discerned) with Todd v. Rennick, 13 Colo. 546, 22 P. 898 (1889) (voiding entire will when obliterated portion could not be discerned) and In re Johannes' Estate, 170 Kan. 407, 227 P.2d 148 (1951) (same).
In our view, the better approach is that of the New York courts:
In re Kent's Will, 169 A.D. 388, 391, 155 N.Y.S. 894, 897 (1915). Accord Ross' Will, 107 N.Y.S.2d 185. This view best reconciles *1146 the overall intent of the testator with the intent of the Legislature.
The Heads did not intend to revoke their entire will. For a physical act to effect a revocation of the entire will, the intent to revoke must strike at the "existence of the whole instrument," not just a part thereof. Board of Trustees of the University of Alabama v. Calhoun, 514 So. 2d 895, 898 (Ala. 1987). This case is different from Law, supra, in that there was no proffered testimony to the effect that the Heads intended the correction fluid or the word "VOID" to effect a revocation of the entire will. Because the word "VOID" was written in the margin with two arrows pointing to the obliterated legacy, as opposed to being written over the signatures of the testators or over the entire face of the document, we hold that the revocatory intent of the Heads was directed only to the obliterated legacy, not to the entire will. See Woodruff v. Hundley, 127 Ala. 640, 29 So. 98 (1900) (stating that a will must be materially mutilated so that intent to revoke the entire will can be inferred); cf. Board of Trustees, 514 So. 2d at 898 (holding that the obliteration of a signature page effects revocation of the entire will); Franklin v. Bogue, 245 Ala. 379, 17 So. 2d 405 (1944) (holding that sufficient revocatory intent was present where the words "annulled" and "void" were written in testator's handwriting with intent of revoking the entire will being shown at time of writing such words).
The Heads did, however, intend to revoke a portion of their will. But § 43-8-136 proscribes a partial revocation by physical act, i.e., a revocation of a portion of the will by burning, tearing, cancelling, obliterating, or destroying with the intent of the testator to effect a revocation of that part of the will touched by the physical act. See, e.g., Ala.Code 1975, § 43-8-136(b); In re Mechler's Will, 246 Wis. 45, 16 N.W.2d 373 (1944); L.S. Tellier, Annotation, Effect of Testator's Attempted Physical Alteration of Will After Execution, 24 A.L.R.2d 514, 538-41 (1952). Had the Legislature not proscribed a partial revocation, the portion of a class gift originally allocable to a party whose name was obliterated might have been redistributed to the remaining members of that class. In re Lindeman's Estate, 141 Pa.Super. 225, 14 A.2d 837 (1940); Brown v. Brown, 91 S.C. 101, 74 S.E. 135 (1912); Tellier, Annotation, Effect of Testator's Attempted Physical Alteration, 24 A.L.R.2d at 551-54. However, § 43-8-136 prevents the effectuation of the Heads' intent to revoke one portion of a class bequest of their net cash assets.
On the one hand, it is clear that we should give effect to the testators' intent with respect to the disposal of their property. Anderson v. Griggs, 402 So. 2d 904, 909 (Ala. 1981) ("`[I]t is not to be presumed that the testator intended to die intestate as to any portion of his property, unless the contrary intention is so plain as to compel a different conclusion.'") (quoting Baker v. Wright, 257 Ala. 697, 703, 60 So. 2d 825, 830-31 (1952)). On the other hand, it is also clear that we may not give effect to their intent to revoke that portion of the bequest that is obliterated, but that we should, if possible, enforce the will in its original form. Ala.Code 1975, § 43-8-136; Calhoun v. Thomas, 274 Ala. at 114, 145 So. 2d at 792; Law, 83 Ala. at 436, 3 So. at 754.
When the obliterated portion of a will is undiscernible, the question becomes one more of evidence than of intent. When the question concerning a portion of a will is a lack of evidence, the remainder of the will should be upheld. In Skeggs v. Horton, 82 Ala. 352, 356, 2 So. 110, 113-14 (1887), this Court held that when a will had been lost or destroyed and competent evidence as to all but one legacy was available, the remainder of the will, as proven, should be admitted to probate. Here, the evidence is sufficient as to all but one legacy. The will itself exists. Only the evidence with respect to a portion of the class gift of one-half of the net cash assets of the estate is insufficient.
Constriction of the class by omitting the obliterated name and increasing the bequest to the other class members would approach the effect of a partial revocation or an alteration, without the requisite re-execution of the will. See, e.g., In re Lindeman's Estate, 141 Pa.Super. 225, 14 A.2d 837; Tellier, Annotation, Effect of Testator's Attempted Physical Alteration, 24 A.L.R.2d at 551-54; W.W. Allen, *1147 Annotation, Interlineations and Changes Appearing on Face of Will, 34 A.L.R.2d 619, 669-73 (1954). Instead, the subject matter of the obliterated portion of the will should be disposed of through intestacy.[4] See Ala. Code 1975, §§ 43-8-40 to -58.
The attempted revocation of a portion of a will not material to the overall testamentary plan allows the will to be admitted to probate with the property that would have passed by the obliterated portion passing by intestacy. In this case, the obliteration of the name of one member of the class that is to receive one-half of the Heads' net cash assets is not material to the testators' overall testamentary plan. See Abbey's Goods, 5 Notes of Cases 614 (Eng.1847); James's Goods, 1 Swabey & T. 238, Eng. Reprint 709 (1858); see generally In re Tighe's Will, 24 Misc. 459, 53 N.Y.S. 718 (Sur.Ct.1898).[5] Thus, we hold that the will should be admitted to probate and the share allocable to the person whose name was obliterated should be disposed of through intestacy.
Accordingly, that portion of the circuit court's judgment holding the codicil invalid is affirmed, that portion of the judgment holding the entire will revoked is reversed, and the cause is remanded for further proceedings not inconsistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, COOK, and BUTTS, JJ., concur.
[1] The Contestants do not assert that any of the markings on the will were made by persons other than the Heads.
[2] Similarly, the Heads' writing of their own names on top of the correcting fluid that covers the original disposition to the children of the party whose name was obliterated was ineffective as an unwitnessed addition to the will. See Barnewall; 2 William J. Bowe & Douglas H. Parker, Page on Wills § 22.2. In any event, we note that the Heads had no children.
[3] The Proponent argues that the Contestants' assertion concerning revocation of the will in this action is barred by the doctrines of res judicata and collateral estoppel, because of the prior action contesting the will. In Adams v. Carpenter, 566 So. 2d 236, 242 (Ala.1990), this Court held that the doctrines of res judicata and collateral estoppel do not apply when the cases are filed to "resolve two entirely different and distinct causes of action." In Adams, 566 So. 2d at 238, the executors filed a complaint seeking construction of a will even though the will had previously been contested and held to be valid. This Court held that an action contesting a will and an action seeking the trial court's construction of the terms of the will are separate and distinct actions. Id. at 241. Thus, this present action is not barred, because it is more in the nature of an action seeking the circuit court's construction of the will than in the nature of an action contesting the will's validity.
[4] In Skeggs v. Horton, 82 Ala. 352, 356-57, 2 So. 110, 114 (1887), this Court did not reach the issue of the disposition of the missing portion of the testator's plan.
[5] Even if the Heads' obliteration had destroyed two names, though the spacing in the will indicates otherwise, distribution of the assets pursuant to the remaining portion of the will does less violence to the purpose of the law of descent and distribution than would revocation of the entire will. See Abbey's Goods and James's Goods; see generally In re Tighe's Will. | November 7, 1997 |
7f467860-5efc-420c-a95a-e146461cc063 | Ex Parte Bean | 703 So. 2d 329 | 1951996 | Alabama | Alabama Supreme Court | 703 So. 2d 329 (1997)
Ex parte Martha BEAN.
(Re Martha BEAN
v.
SPARTAN FOOD SYSTEMS, INC., d/b/a Hardee's).
1951996.
Supreme Court of Alabama.
August 29, 1997.
*330 Jay E. Emerson, Jr., of Higgs & Emerson, Huntsville, for petitioner.
Rocco J. Leo and Joseph Lee Owen of Newman, Miller, Leo & O'Neal, Birmingham, for respondent.
ALMON, Justice.
The plaintiff, Martha Bean, petitions for a writ of mandamus directing Marshall County Circuit Judge Wiliam G. Gullahorn, Jr., to grant her motion to compel production of certain documents. In the underlying action, Bean alleges that the defendant Spartan Food Systems, Inc., d/b/a Hardee's, discharged her from employment in retaliation for her having filed a workers' compensation claim. She alleges that her discharge violated Ala.Code 1975, § 25-5-11.1.[1] Bean asserts that the documents sought in her discovery requests are relevant to her claim of retaliatory discharge.
*331 After filing her complaint, Bean filed a request for production of documents described in six numbered requests. When Spartan did not produce the documents for a period of time, Bean filed a motion to compel production. The circuit court granted the motion, whereupon Spartan filed a motion to reconsider. Spartan specifically objected to the production of the items sought in requests 1, 2, and 3:
Spartan asserted that these three requests sought "personal and confidential" matters that were "irrelevant, immaterial, and not reasonably calculated to lead to admissible evidence in a retaliatory discharge action."
The circuit court heard oral argument on the motion to reconsider, and it granted the motion to the extent of ruling that Spartan did not have to produce the documents sought in requests 1, 2, and 3. Bean filed this petition for the writ of mandamus.
Ex parte Rowland, 669 So. 2d 125, 127 (Ala. 1995) (citations omitted).
Ex parte Thomas, 628 So. 2d 483, 485 (Ala. 1993).
Mark Sanders, manager of the Hardee's restaurant where Bean worked, participated in the decision to discharge Bean. Bean asserts that the items at issue may provide evidence that Sanders terminated Bean as a result of Spartan's pressuring its restaurant managers to reduce costs associated with workers' compensation, which, in turn, Bean says, resulted in Sanders's putting pressure on Bean as a means to reduce those costs in the future.
According to Bean, after her workers' compensation claim was settled, Sanders was informed by his supervisor that the workers' compensation costs at Sanders's restaurant were too high. She alleges:
Bean asserts that Sanders's deposition testimony supports her argument that she is entitled to the discovery she seeks. During his deposition, Sanders testified that the cost of workers' compensation affects the profit margin at his restaurant and that, during a quarterly job performance evaluation, his supervisor told him he needed to reduce his workers' compensation costs. Sanders stated that his restaurant's profits were reflected in monthly profit and loss statements, and that those statements were reviewed by his supervisor when his job performance was evaluated every six months. Sanders also testified that his quarterly bonus was based on the profit his restaurant showed.
Spartan responds by arguing that Bean's employment was terminated because she violated Spartan's policy regarding fighting and using profanity on company premises. Spartan claims that Bean admitted in deposition testimony both that she continued to work at the Hardee's restaurant after her workers' compensation case was settled and that on a particular occasion she used profanity and threatened to hit co-employees. Additionally, Spartan attaches to its response the deposition testimony of Bean's co-employees at the Hardee's restaurant, from which Spartan points to testimony that Bean was a good worker and was always complimented on her work until the time of the incident leading to her termination. It argues that this evidence proves that Bean's employment was terminated because she violated Spartan's company policy.
The issue here, however, is not whether the evidence supports Bean's claim or supports Spartan's defense. Rather, the issue is whether the circuit court has unduly limited Bean's opportunity to discover evidence that may tend to prove her claim. Bean carries the burden of establishing a prima facie case of retaliatory discharge by proving, by substantial evidence, that her employment was terminated solely because she had filed a workers' compensation action against Spartan. Motion Industries, Inc. v. Pate, 678 So. 2d 724 (Ala.1996); § 25-5-11.1. Thus, it is not difficult "to determine the particularized need for discovery, in light of the nature of the claim." Ex parte Rowland, 669 So. 2d at 127.
In Ex parte Mobile Fixture & Equipment Co., 630 So. 2d 358 (Ala.1993), this Court denied a mandamus petition seeking discovery, on the basis that the petitioner "did not limit its request, but sought investigations, management reviews, and field audits of `all' [of the respondent's] employees." 630 So. 2d at 361 (emphasis added). Bean, however, limited her request to documents pertaining to Sanders, as one who allegedly had had a part in Bean's termination, and she further limited the request to documents dated from January 1992, which was just before her injury, to the present.
In Ex parte Heilig-Meyers Furniture Co., 684 So. 2d 1292 (Ala.1996), the Court found a discovery request to be reasonable because it was limited to relevant evidence; however, the Court further limited the scope of the request so as to "eliminate the burdensome nature of the request and help to ensure that any information provided is relevant." 684 So. 2d at 1295. There is no indication that compliance with Bean's discovery request would be burdensome.
Finally, in Ex parte Thomas, 628 So. 2d 483 (Ala.1993), this Court ordered the discovery of a defendant's medical records and other evidence pertaining to the defendant's medical condition before and on the day of the incident in question, but disallowed the plaintiff's request for records regarding the defendant's medical condition after the incident. It is difficult to conceive of a record more personal and confidential than an individual's medical records; yet, these records are discoverable when they contain information that the petitioner cannot obtain elsewhere and when there is "a reasonable possibility that the information sought will lead to other evidence that will be admissible." 628 So. 2d at 485. The documents sought by Bean would not be any more personal or confidential than those that were ordered disclosed in Ex parte Thomas, and they seem equally likely, or more likely, to lead to admissible evidence.
*333 Based on the foregoing, this Court concludes that the circuit court should not have limited discovery by ordering that Spartan did not have to produce the items sought in paragraphs 1, 2, and 3 of Bean's request for production. The petition for the writ of mandamus is therefore due to be, and it is hereby, granted.
WRIT GRANTED.
HOOPER, C.J., and SHORES, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
MADDOX and SEE, JJ., dissent.
[1] The statute provides, in pertinent part: "No employee shall be terminated by an employer solely because the employee has instituted or maintained any action against the employer to recover workers' compensation benefits under this chapter...." | August 29, 1997 |
c36d938c-aae4-4261-b63d-250c412185e8 | Ex Parte Howard | 710 So. 2d 460 | 1960372 | Alabama | Alabama Supreme Court | 710 So. 2d 460 (1997)
Ex parte Robert HOWARD, Jr.
(In re Robert Howard, Jr. v. State of Alabama).
1960372.
Supreme Court of Alabama.
October 31, 1997.
*461 Raymond C. Bryan, Anniston, for petitioner.
Bill Pryor, atty. gen., and Cecil G. Brendle, Jr., asst. atty. gen., for respondent.
HOUSTON, Justice.
Robert Howard, Jr., pleaded guilty to, and was convicted of, robbery in the second degree. The trial court sentenced him to 15 years in prison. The Court of Criminal Appeals reversed and remanded, holding that the trial court lacked jurisdiction to accept Howard's guilty plea as to the offense of robbery in the second degree when the State had indicted him on charges of robbery in the first degree. Howard v. State, 710 So. 2d 456 (Ala.Crim.App.1996). We granted Howard's petition for certiorari review.
The issue presented on this certiorari review, however, is whether the defendant's prior conviction for receiving stolen property *462 in the first degree, based upon a guilty plea, precludes his prosecution for robbery concerning the same stolen property. Based upon his guilty plea as to the former offense, Howard asserts that the corollary doctrines of double jeopardy and collateral estoppel bar prosecution for the latter.
The Court of Criminal Appeals stated the facts as follows:
"On or about September 21, 1992, [Howard] allegedly robbed at gunpoint a salesperson for Norwood Hodges Motor Company of Anniston, taking, in the course of the robbery, an automobile owned by Norwood Hodges. Approximately five days later, [Howard] was arrested in Birmingham, in possession of the same automobile. On February 5, 1993, [he] was indicted by a Jefferson County grand jury for the offense of receiving stolen property in the first degree, the property being the same automobile he had allegedly taken in the armed robbery in Calhoun County. Shortly thereafter, [he] entered a guilty plea in the Jefferson Circuit Court and was convicted of receiving stolen property in the first degree. There is no indication in the record that prosecutors in Jefferson County were aware of the possibility that a robbery charge regarding the stolen automobile might subsequently be lodged against [Howard] by Calhoun County authorities.
710 So. 2d at 458.
The Fifth Amendment to the United States Constitution and § 9 of the Alabama Constitution provide protection against being prosecuted twice for the same offense. "The double jeopardy provisions confer three separate guarantees: (1) protection against a second prosecution for the same offense after acquittal; (2) protection against a second prosecution for the same offense after conviction; and (3) protection against multiple punishments for the same offense." Ex parte Wright, 477 So. 2d 492, 493 (Ala.1985); see Brown v. Ohio, 432 U.S. 161, 165, 97 S. Ct. 2221, 2225, 53 L. Ed. 2d 187 (1977); North Carolina v. Pearce, 395 U.S. 711, 717, 89 S. Ct. 2072, 2076, 23 L. Ed. 2d 656 (1969).
Howard asserts that to allow the prosecution for robbery, based on a taking of the same property that was involved in the "receiving" charge to which he had pleaded guilty and for which he had been punished, would violate his constitutional right not to be placed in jeopardy twice. In the alternative, Howard argues that the doctrine of collateral estoppel prevents a second prosecution on an ultimate issue of fact previously determined.
The United States Supreme Court in Blockburger v. United States, 284 U.S. 299, 52 S. Ct. 180, 76 L. Ed. 306 (1932), set forth the test for determining whether two charges constitute the "same offense" for double jeopardy purposes. Blockburger established the "same elements" test, which is as follows: "where the same act or transaction constitutes a violation of two distinct statutory provisions, the test to be applied to determine whether there are two offenses or only one, is whether each provision requires proof of a fact which the other does not." 284 U.S. at 304, 52 S. Ct. at 182. In other words, if each offense contains an element not contained in the other, the two offenses are not the same and the double jeopardy rule does not bar any additional prosecution or punishment. United States v. Dixon, 509 U.S. 688, 696, 113 S. Ct. 2849, 2855-56, 125 L. Ed. 2d 556 (1993).
*463 A person is guilty of receiving stolen property, under Ala.Code 1975, § 13A-8-16, if that person "intentionally receives, retains or disposes of stolen property knowing that it has been stolen" and does so with the intent to permanently deprive the true owner of possession of that property. See Sledge v. State, 40 Ala.App. 671, 673, 122 So. 2d 165 (1960). A person commits robbery if in the course of committing a theft that person "(1) [u]ses force ... or (2)[t]hreatens the imminent use of force," with the intent to compel the owner to relinquish possession of the property. Ala.Code 1975, § 13A-8-43(a); see Williams v. State, 546 So. 2d 705 (Ala. Crim.App.1989). Robbery in the first degree adds an additional elementusing a deadly weapon or causing serious physical injury. § 13A-8-41.
It is clear that the crime of robbery and the crime of receiving stolen property each requires proof of elements that the other does not. Indeed, the two offenses are mutually exclusivethe former requires theft and the latter requires receipt. Thus, the double jeopardy prohibitions do not apply here.
Therefore, we must turn to the issue of collateral estoppel. The doctrine of collateral estoppel also "emanates from both the double jeopardy clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment to the United States Constitution." S.W. v. State, 703 So. 2d 427 (Ala.Crim.App.1997); see Ashe v. Swenson, 397 U.S. 436, 90 S. Ct. 1189, 25 L. Ed. 2d 469 (1970); United States v. Sanchez, 992 F.2d 1143, 1154 (11th Cir.1993), on reconsideration, 3 F.3d 366, cert. denied, 510 U.S. 1110, 114 S. Ct. 1051, 127 L. Ed. 2d 373 (1994). In Ashe v. Swenson, the Supreme Court expounded this modified doctrine, stating:
397 U.S. at 443, 90 S. Ct. at 1194. Simply put, it is "a branch of the broader principle of res judicata, [which bars the] relitigation, between the same parties, of an ultimate issue of fact." Daniels v. State, 534 So. 2d 628, 638 (Ala.Crim.App.1985), aff'd, 534 So. 2d 656 (Ala.1986), cert. denied, 479 U.S. 1040, 107 S. Ct. 898, 93 L. Ed. 2d 850 (1987). Indeed, "[w]here successive prosecutions are at stake, the guarantee serves `a constitutional policy of finality for the defendant's benefit.' "Brown v. Ohio, 432 U.S. 161, 165, 97 S. Ct. 2221, 2225, 53 L. Ed. 2d 187 (1977) (quoting United States v. Jorn, 400 U.S. 470, 479, 91 S. Ct. 547, 554, 27 L. Ed. 2d 543 (1971)).
In Ashe, several persons had robbed six men who were in a poker game. At a trial based on the robbery of one of the poker players, the jury found that the defendant was not one of the persons who had committed the robbery. The Supreme Court held that the doctrine of collateral estoppel precluded a later trial of that defendant. The Court stated that "[t]he single rationally conceivable issue in dispute before the jury [in the first trial] was whether [that defendant] had been one of the robbers. And the jury by its verdict found that he had not. The federal rule of law, therefore, would make a second prosecution for the robbery of [a second poker player] wholly impermissible." Ashe v. Swenson, 397 U.S. at 445, 90 S. Ct. at 1195.
Alabama has a firmly established rule of law recognizing that a person cannot be convicted of buying and receiving stolen property if that person actually stole the property in question. Ex parte Thomas, 445 So. 2d 939 (Ala.1983); Scott v. State, 374 So. 2d 316 (Ala.1979); Wasp v. State, 647 So. 2d 81, 83 (Ala.Crim.App.1994); Dixon v. State, 536 So. 2d 959, 961 (Ala.Crim.App. 1988); Ogle v. State, 386 So. 2d 493 (Ala.Crim. App.1980); Nicholson v. State, 369 So. 2d 304 (Ala.Crim.App.1979). Where it is undisputed that a person stole property, that person may not be convicted of receiving or concealing the same property. See Poole v. State, 651 So. 2d 1081, 1083-84 (Ala.Crim.App.1994); George v. State, 410 So. 2d 476 (Ala.Crim.App. 1982); Ex parte Wilcox, 401 So. 2d 794, 795 (Ala.1981). Thus, if it is established, as a matter of factual adjudication, that a person is guilty of receiving stolen property, then it *464 is a "logical impossibility" that the defendant also stole the property in question. See Ogle v. State, supra, at 494.
When determining whether the doctrine of collateral estoppel applies, a court must consider two questions: (1) whether an ultimate issue of fact has already been determined by a court of competent jurisdiction; and (2) whether that prior determination effectively precludes a later prosecution. See generally Ex parte Wright, supra; State v. Patton, 669 So. 2d 1002 (Ala.Crim.App.1993) (addressing the analogous proposition of whether jeopardy has attached and whether the two offenses are the same for jeopardy purposes).
The Court of Criminal Appeals stated that Howard's conviction of receiving stolen property, based upon a plea of guilty, "places him in a very different posture than if the conviction were pursuant to a jury verdict." Howard v. State, 710 So. 2d at 460 (citing Ohio v. Johnson, 467 U.S. 493, 104 S. Ct. 2536, 81 L. Ed. 2d 425 (1984)); cf. Jeffers v. United States, 432 U.S. 137, 97 S. Ct. 2207, 53 L. Ed. 2d 168 (1977) (holding that a defendant may not raise a double jeopardy claim based on successive prosecutions when the defendant has insisted on separate trials). The Court of Criminal Appeals also stated:
Howard v. State, 710 So. 2d at 460. Therefore, the question now is whether a guilty plea is equivalent to a jury verdict for purposes of collateral estoppel.
In Ohio v. Johnson, supra, the Supreme Court held that the double jeopardy bar did not prohibit the State from continuing its prosecution for greater offenses after a defendant's plea of guilty to lesser offenses included in the same indictment. More specifically, the trial court's acceptance of guilty pleas to involuntary manslaughter and grand theft, over the State's objection, did not prohibit the State from continuing its prosecution on the charges of murder and aggravated robbery. 467 U.S. at 502, 104 S. Ct. at 2542-43.
Howard argues that the principles of collateral estoppel enunciated in Ashe v. Swenson apply to bar his prosecution for the charge of robbery. Indeed, the Supreme Court, in Ohio v. Johnson, makes this very distinction between a conviction based on a guilty plea and a conviction based on a jury verdict. In a footnote, the Court stated:
467 U.S. at 500 n. 9, 104 S. Ct. at 2541 n. 9. Admittedly, it seems that the Supreme Court in Ohio v. Johnson relied on the fact that the indictments were encompassed in a single prosecution so that no "governmental overreaching" could occur. 467 U.S. at 502, 104 S. Ct. at 2542. The Court did not distinguish the defendant's guilty plea as carrying less weight than a jury verdict. Instead, the Court relied on the existence of the remaining charges in the indictment. That is, the prosecution did not attempt surreptitiously to bring additional charges against the defendant so as to infringe upon his rights against double jeopardy. On the contrary, the charges against the defendant in Ohio v. Johnson included four related charges brought under a single indictment, and ultimately a single prosecution. In fact, in another footnote the Court mentions that the principles of collateral estoppel did not even apply to that case. 467 U.S. at 497-98, n. 6, 104 S. Ct. at 2539-40, n. 6.
In United States v. Oppenheimer, 242 U.S. 85, 37 S. Ct. 68, 61 L. Ed. 161 (1916), the Supreme Court addressed the preclusive effects a judgment has on subsequent prosecutions. Justice Holmes stated:
242 U.S. at 87, 37 S. Ct. at 69 (citations omitted); see also S.W. v. State, supra.
Howard pleaded guilty in Jefferson County, under the initial indictment, to the offense of receiving stolen property, unaware of any potential indictment from Calhoun County for the crime of robbery involving the same automobile. In order for a criminal prosecution to give rise to an estoppel, the court in which the prosecution occurs must have jurisdiction. Cox v. State, 462 So. 2d 1047, 1051 (Ala.Crim.App.1985); see also Ex parte Wright, 477 So. 2d 492, 493 (Ala.1985) (entry of guilty plea taken by magistrate with proper jurisdiction constituted an adjudication on the merits). The Jefferson Circuit Court had jurisdiction to receive Howard's guilty plea as to the offense of receiving stolen property, and Jefferson County was a proper venue for the prosecution of that offense. Watts v. State, 435 So. 2d 135 (Ala. 1983).
Howard entered a plea of guilty to the charge of receiving as stolen property the automobile in question. Because of that guilty plea, Howard asserts that his conviction for robbery should have been barred, in accordance with Russell v. State, 428 So. 2d 131 (Ala.1982). Russell states:
428 So. 2d at 134 (citations omitted). A guilty plea is "as conclusive as a verdict of a jury; it admits all material fact averments of the accusation, leaving no issue for the jury." 21 Am.Jur.2d § 490 (1975). In Boykin v. Alabama, 395 U.S. 238, 242, 89 S. Ct. 1709, 1711-12, 23 L. Ed. 2d 274 (1969), the Supreme Court stated: "A plea of guilty is more than a confession which admits that the accused did various acts; it is itself a conviction; nothing remains but to give judgment and determine punishment." In other words, "[i]t supplies both evidence and verdict, ending controversy." Woodard v. State, 42 Ala. App. 552, 558, 171 So. 2d 462, 469 (1965) (citations omitted).
Under Russell, Howard's guilty plea is not only an admissionit also establishes as fact that he did not obtain the property by theft. That is, while the Court of Criminal Appeals indicates that Howard did, in fact, take the automobile in a robbery, his conviction for receiving the same stolen property has not been set aside. Thus, if in fact Howard did commit robbery, his prior guilty plea would operate to establish inconsistent facts. The doctrine of collateral estoppel bars such a result.
We have not reviewed the Court of Criminal Appeals' holding that the second-degree robbery conviction must be reversed on the basis that "robbery in the second degree could not have been a lesser included offense [as to] robbery in the first degree charged in the indictment," 710 So. 2d at 459, and that the Calhoun Circuit Court therefore had no jurisdiction to accept Howard's guilty plea on this robbery charge. Nevertheless, the reversal was proper, because we have concluded that the robbery prosecution was barred *466 by the doctrine of collateral estoppel; the Court of Criminal Appeals erred in holding otherwise. Therefore, we affirm the judgment of the Court of Criminal Appeals reversing the robbery conviction. However, on remand, the Court of Criminal Appeals should modify its judgment so as to bar any further prosecution on the robbery charge.
JUDGMENT OF REVERSAL AFFIRMED, BUT CASE REMANDED WITH INSTRUCTIONS.
HOOPER, C.J., and MADDOX, SHORES, KENNEDY, BUTTS, and SEE, JJ., concur.
ALMON, J., concurs specially.
COOK, J., concurs in the result.
ALMON, Justice (concurring specially).
I agree that Howard's conviction for robbery must be reversed for the reasons stated in the main opinion. That conviction also violates Ala.Code 1975, § 15-3-8,[1] which reads:
Howard's conviction for receiving stolen property was a result of his being placed in jeopardy for an offense involving his coming into possession of the automobile. Robbery and receiving stolen property are not the "same offense" under the Blockburger "same elements" test (on the contrary, they are mutually exclusive offenses). Nevertheless, they involve "[an] act or omission declared criminal and punishable in different ways by different provisions of law," namely, the act of obtaining the automobile.
Receiving stolen property is included among the general theft offenses of Chapter 8 of Title 13A. "Theft of property" occurs when a person "[k]nowingly obtains or exerts unauthorized control over the property of another, with intent to deprive the owner of his property," § 13A-8-2(1). "A person commits the crime of receiving stolen property if he intentionally receives, retains or disposes of stolen property knowing that it has been stolen or having reasonable grounds to believe it has been stolen ...," § 13A-8-16. Because receiving stolen property is included with the "theft" offenses in the Criminal Code, it could be said that the phrase "receives, retains, or disposes of" is included within the general phrase "obtains or exerts unauthorized control over," and that, therefore, an act of receiving stolen property will always, for purposes of § 15-3-8, be the same act of "theft" that could be prosecuted under one of the other theft-crime statutes.
Under § 15-3-8, "a conviction or acquittal under any one [provision] shall bar a prosecution for the same act or omission under any other provision," and, here, "the same act" is Howard's act of obtaining or receiving the car. Although the definition of "theft" uses the phrase "obtains or exerts unauthorized control over [the property in question]," and the definition of "receiving stolen property" uses the phrase "receives, retains or disposes of [the property in question]," the two phrases must be deemed to refer equally to the act of coming into possession of the property. Thus, for purposes of § 15-3-8, Howard's act of coming into possession of the automobile is an "act ... declared criminal and punishable in different ways by different provisions of law."
The plain terms of § 15-3-8 prohibit double punishment or successive prosecutions for "[a]ny act or omission." This Code section provides protections for accused persons over and above those provided by the double jeopardy clauses of Article I, § 9, of the Alabama Constitution of 1901 and Amendment 5 to the United States Constitution, as applied to the States through Amendment 14. Baldwin v. State, 47 Ala.App. 136, 251 So. 2d 633 (Ala.Crim.App.1971). As to Howard's convictions, I would hold that § 15-3-8 precluded prosecuting him for "obtaining" the automobile, §§ 13A-8-2(1) and 13A-8-41, after he had been convicted of "receiving" it, *467 § 13A-8-16. However he came into possession of the automobile, he did so by a single act, for which he may not be subjected to successive prosecutions.
[1] This statutory provision, in the same language, appeared in the 1923 Code as § 5204 and in the 1940 Code as T. 15, § 287. | October 31, 1997 |
186eb4fa-a29a-448f-95d3-00bfe0aefc4b | Ex Parte Dunlop Tire Corp. | 706 So. 2d 729 | 1951184, 1960105 | Alabama | Alabama Supreme Court | 706 So. 2d 729 (1997)
Ex parte DUNLOP TIRE CORPORATION.
(Re Eddie SANDERS v. DUNLOP TIRE CORPORATION.
DUNLOP TIRE CORPORATION v. Alton Ray PITTS).
1951184, 1960105.
Supreme Court of Alabama.
August 29, 1997.
*730 John O. Cates and Evelyn R. Maiben of Wilmer & Shepard, P.A., Huntsville, for petitioner (1960105).
Thomas R. Robinson and Jeffrey T. Kelly of Lanier Ford Shaver & Payne, P.C., Huntsville, for petitioner (1951184).
J. Zach Higgs, Jr., of Higgs & Emerson, Huntsville, for Eddie Sanders.
Jay E. Emersom, Jr., of Higgs & Emerson, Huntsville, for Alton Ray Pitts.
John J. Coleman III and Gregory C. Cook of Balch & Bingham, Birmingham, for amicus curiae Business Council of Alabama, in support of petitioner.
ALMON, Justice.
This Court granted these two petitions for the writ of certiorari to decide, as a matter of first impression, whether the Court of Civil Appeals correctly interpreted and applied Ala.Code 1975, § 25-5-57(c)(1). That Code section provides:
In both Sanders v. Dunlop Tire Corp., the subject of the petition in case number 1951184, and Dunlop Tire Corp. v. Pitts, the subject of the petition in case number 1960105, the Court of Civil Appeals held that Dunlop did not provide or pay for the disability plan benefits because they were fringe benefits of Sanders's and Pitts's employment and that, therefore, Dunlop was not entitled to set those benefits off against the awards of compensation.
Section 25-5-57(c) was added by Act No. 92-537, 1992 Ala. Acts p. 1082. Section 17 of that Act amended § 25-5-57, including the addition of § 25-5-57(c); there was no previously existing provision for "setoff for other recovery."
We recognize that § 25-5-57(c)(1) actually states that "[t]he employer may reduce... the amount of benefits paid pursuant to a disability plan ... by the amount of compensation paid." However, it is clear that the legislature intended to say that the employer may reduce the amount of workers' compensation by the amount of disability benefits paid pursuant to a plan provided or paid for by the employer. Section § 25-5-57(c) pertains to "calculating the amount of workers' compensation due." The end of § 25-5-57(c)(1) *731 refers to "the plan or plans providing the benefits deducted;" this phrase, in context, can mean only that the amount of benefits paid under employer-provided disability or retirement plans is to be deducted from workers' compensation benefits that would otherwise be payable. Section 25-5-57(c)(2) provides for the forfeiture of "all [workers'] compensation paid for any period to which is attributed any award of back pay." Section 25-5-57(c)(3) provides for a setoff against workers' compensation for any salary paid "during the benefit period." Thus, all three of these provisions are clearly intended to provide for reduction of workers' compensation benefits by a setoff of the amount of the specified other payments to the employee. The fact that § 25-5-57(c)(1) literally states that it provides for a reduction of disability or retirement plan benefits is a self-correcting error of drafting, probably caused by the awkward attempt to provide in the same sentence for the employer to "accept an assignment from an employee of the amount of benefits paid pursuant to a disability plan." We read § 25-5-57(c)(1), therefore, as allowing an employer to reduce the amount of workers' compensation benefits due by the amount of benefits paid or payable under a qualifying disability, retirement, or sick pay plan.
The question before us, therefore, is whether Dunlop "provided the benefits or paid for the plan or plans providing the benefits deducted."
At the trial of Sanders's claim, Dunlop's attorney examined Rick Ledsinger, Dunlop's labor relations manager:
Sanders's attorney cross-examined Mr. Ledsinger, as follows:
Dunlop introduced exhibits showing the cost of the benefits it provides its employees. The cost per hour of the "sickness and accident disability premium" was $0.144 in 1993. This was grouped in a category of "voluntary or negotiated payments"; that category includes other insurance and pension benefits that, together with the disability premium, cost $3.354 per hour in 1993 and $3.037 per hour in 1992.
In Ex parte Murray, 490 So. 2d 1238 (Ala. 1986), this Court interpreted the following sentence, which is the last sentence of Ala. Code 1975, § 25-5-57(b): "Whatever allowances of any character made to an employee in lieu of wages are specified as part of the wage contract shall be deemed a part of his or her earnings." This Court held that fringe benefits, such as the premiums and pension benefits discussed above, "are includable in the computation of the employee's average weekly wage," 490 So. 2d at 1241, for purposes of calculating workers' compensation benefits due.
In deciding Sanders's appeal, the Court of Civil Appeals cited Murray and held that "Sanders paid for the medical disability retirement plan by accepting the fringe benefits in lieu of additional wages of $3.03 and $3.54 [sic] per hour." Sanders v. Dunlop Tire Corp., 706 So. 2d 716 (Ala.Civ.App.1996). However, the fact that fringe benefits are part of an employee's earnings for purposes of § 25-5-57(b), as held in Murray, does not answer the question whether "the employer provided the benefits or paid for the plan or plans providing the benefits" for purposes of § 25-5-57(c)(1).
Section 25-5-57(c)(3) provides instructive language that is part of the 1992 *732 amendment to the Workers' Compensation Law that also added § 25-5-57(c)(1):
Ala.Code 1975, § 25-5-57(c)(3) (emphasis added). There is no contention here that the medical disability plan from which Sanders and Pitts are receiving benefits is a § 125 cafeteria plan. See 26 U.S.C. § 125. The specification that contributions to a § 125 cafeteria plan are not to be considered to be "provided by the employer" implies that other similar types of benefits are to be considered to be provided by the employer, even if they are part of the employee's wages and other benefits. This implication may be expressed as a corollary of the "expressio unius est exclusio alterius" rule of statutory construction[1]: the express exclusion of cafeteria plans from the category of offsetting benefits is the implied inclusion of other disability, retirement, or sick pay plans.
Even aside from the comparison to § 25-5-57(c)(3), we are persuaded by Dunlop's argument that the construction advocated by Sanders and Pitts would render § 25-5-57(c)(1) virtually inoperative. The plaintiffs argue that their position applies only to fringe benefits that are negotiated as part of a collective bargaining agreement, as is the case with the disability plan provided by Dunlop to its employees. Pitts offered the testimony of Max Wright, the union benefits representative at Dunlop, who gave evidence that the Dunlop employees gave up cost-of-living adjustments in exchange for increased pension benefits. He testified that, therefore, he considered that the employees paid for the disability plan, because it was one of the benefits that were increased in return for giving up the cost-of-living adjustment. However, the failure to take the cost-of-living adjustment is equivalent to accepting the disability plan in lieu of a raise in wages, and is not reasonably to be considered as a situation in which the employee pays for the disability plan. The following exchange between the court and Wright shows how the circuit court viewed the matter:
We agree with the circuit court's view that the employee does not "pay for" the plan simply by virtue of the fact that it is provided as part of his or her compensation.
We see no reason why fringe benefits that are provided to nonunion employees should not be treated the same as fringe benefits for union employees, both for purposes of § 25-5-57(b) and for purposes of § 25-5-57(c)(1). Rather, it seems that, as Dunlop argues, if the judgment of the Court of Civil Appeals is affirmed, then the setoff provision cannot apply in any case involving fringe benefits, but could apply only when retirement and disability plans are provided strictly as a gratuity by the employer. Such a situation would be rare and would be difficult for an employer to establish. Certainly, if an employer were trying to avoid Murray and to establish, for purposes of "average weekly wages" under § 25-5-57(b), that a disability, retirement, or other such plan was only a gratuity and not part of an employee's compensation, the plan would properly be considered *733 compensation for the employee's labor and therefore would be "earnings" under the holding of Murray. Similarly, for purposes of § 25-5-57(c)(1), such a plan should be considered a fringe benefit, either for union employees or nonunion employees, and, under the holding of the Court of Civil Appeals, the setoff provision of § 25-5-57(c)(1) would have little or no field of operation.
Junkins v. Glencoe Volunteer Fire Department, 685 So. 2d 769, 771 (Ala.Civ.App.1996). See, also, Bama Budweiser of Montgomery, Inc. v. Anheuser-Busch, Inc., 611 So. 2d 238 (Ala.1992); Studdard v. South Central Bell Telephone Co., 356 So. 2d 139 (Ala.1978).
"A law will not be interpreted in such a way as to make it meaningless," Reserve National Insurance Co. v. Crowell, 614 So. 2d 1005, 1010 (Ala.1993), cert. denied, 510 U.S. 824, 114 S. Ct. 84, 126 L. Ed. 2d 52 (1993). Courts must liberally construe the workers' compensation law "to effect its beneficent purposes," although such a construction must be one that the language of the statute "fairly and reasonably" supports. Ex parte Beaver Valley Corp., 477 So. 2d 408, 411 (Ala. 1985).
In deciding the appeal in Sanders, the Court of Civil Appeals held that the rationale of Scriven v. Industrial Commission of the State of Colorado, 736 P.2d 414 (Colo.App. 1987), a case cited by Dunlop in support of its argument, is not applicable. However, the rationale for the decision in Scriven is instructive and is clear authority for Dunlop's argument.
In Scriven, an injured employee appealed from a decision that the employer was entitled to set off against its workers' compensation liability the amount of benefits the employee had received from a pension trust fund. The Scriven court had to determine the source of the funding for the pension plan because the Colorado workers' compensation statute provided that, when benefits have been paid to an injured employee
Scriven, supra, 736 P.2d at 415 (quoting Colo.Rev.Stat., § 8-51-101(1)(d) (1986 Repl. Vol. 3B)).
736 P.2d at 415-16 (emphasis added). We have found a number of cases that are consistent with Scriven, principally Darling v. Inter City Trucking, 221 Mich.App. 521, 561 N.W.2d 865 (1997); Western Elec., Inc. v. Ferguson, 371 So. 2d 864 (Miss.1979); and Cowan v. Southwestern Bell Tel. Co., 529 S.W.2d 485 (Mo.App.1975).
In Cantrell v. Electric Power Bd., 811 S.W.2d 84 (Tenn.1991), the Supreme Court of Tennessee disallowed a setoff, overruling an earlier case. However, the question there was whether disability benefits in the amount of Cantrell's full salary that were paid to him during the time he missed work could be set off against his workers' compensation benefits for permanent partial disability. The court held that the disability plan benefits could be set off against his workers' compensation benefits for temporary disability, because those two forms of benefits were both designed to continue at least part of a worker's salary during the worker's recuperation from a workplace injury. However, the court held that the employer could not credit the plan benefits for temporary disability, which paid the worker's full salary during his recuperation, against the amount due as workers' compensation for permanent partial disability, which compensation is intended to compensate for future loss of income. That situation is not present here, because the medical disability plan benefits Dunlop is paying Sanders and Pitts will continue until they are age 65, and the permanent disability benefits under workers' compensation pertain to the same period.
Pennsylvania law on this subject provides a well-reasoned resolution of some of the questions involved in such a setoff against workers' compensation benefits. In Toborkey v. Workmen's Comp. App. Bd. (H.J. Heinz), 655 A.2d 636 (Pa.Commw.Ct.1995), appeal denied, 541 Pa. 655, 664 A.2d 544 (1995), the Commonwealth Court cited Temple v. Pennsylvania Dep't of Highways, 445 Pa. 539, 285 A.2d 137 (1971), for the following holding:
Toborkey, 655 A.2d at 638. Because the two disability benefits that Toborkey received both served to reduce other benefits that he had earned and could have received if he had not become disabled, the commonwealth court disallowed a credit or setoff, holding that "the benefits in question were wages for services performed, rather than payments in relief of Claimant's inability to labor." 655 A.2d at 641.
We think such considerations could be appropriate under § 25-5-57(c)(1). If, because of a workplace injury, an employee receives benefits, but the receipt of those benefits will diminish other benefits that he would otherwise receive, the employee may be said to have "paid for" those disability benefits by the reduction in the employee's nondisability benefits. For example, if a 55-year-old employee suffers a disabling workplace injury and receives a 10-year disability retirement under a plan provided or paid for by the employer, but the employee's taking that disability retirement causes the employee's normal retirement benefits to be reduced, the reduction of the normal retirement benefits can be considered to diminish the extent to which the employer "pays for" the disability retirement plan. In such a case, the employee would partially "pay for" the disability retirement plan by having the normal retirement benefits reduced.
However, there is no evidence in these cases of such a reduction in benefits that would have been payable to Sanders or Pitts if they had not suffered the workplace injuries that are the subjects of these actions. In Toborkey, the disability pension Toborkey received was one of three options in the employer's retirement plan, the other two being normal retirement and early retirement. The disability option provided benefits that were reduced from the full normal retirement option. Here, the evidence indicates *735 that the disability plan is separate and apart from the retirement benefits that Sanders and Pitts are receiving or will later receive. We do not suggest that any diminution in normal retirement benefits caused by an inability to work during the intervening years constitutes payment for the disability retirement benefits by the employees. Such a loss would be suffered whether the employees receive workers' compensation benefits to age 65 or employer-provided disability benefits to that age, and so is not attributable to the receipt of the disability benefits. Rather, it is only if the receipt of disability benefits directly reduces the other benefits that this question will come up.
For the reasons stated above, we conclude that the characterization of a benefit provided by an employer as a "fringe benefit" or as a benefit resulting from a union-negotiated contract does not remove that benefit from the rule of § 25-5-57(c)(1). The Court of Civil Appeals erred in holding that Dunlop was not entitled to a § 25-5-57(c)(1) setoff, and, both in the Sanders case and in the Pitts case, as to that issue its judgment is due to be reversed.
Several other decisions of the Court of Civil Appeals have also construed § 25-5-57(c)(1). See Dunlop Tire Corp. v. Allen, 659 So. 2d 637 (Ala.Civ.App.1995); Scott Paper Co. v. Taylor (Ms. 2950251, October 25, 1996) (rehearing pending)[*]; Louallen v. Dunlop Tire Corp., [Ms. 2950187, November 22, 1996] ___ So.2d ___ (Ala.Civ.App.1996) (cert. granted, May 8, 1997, Supreme Court no. 1960745); and Dunlop Tire Corp. v. Robinson, [Ms. 2951025, Feb. 21, 1997] ___ So.2d ___ (Ala.Civ.App.1997) (cert. petition pending, Supreme Court no. 1961248). Louallen and Robinson are inconsistent with our decision here today, because in those cases the Court of Civil Appeals relied on its decision in Sanders. Allen and Taylor are distinguishable. In Allen, the Court of Civil Appeals held that "Dunlop provided no evidence that it paid or provided these benefits to Allen." 659 So. 2d at 639. To the extent that this was simply a failure of proof, it is distinguishable, but to the extent that Allen is inconsistent with our decision today, it is overruled. Taylor simply held that the phrase "providing for sick pay" in § 25-5-57(c)(1) does not modify the phrases "disability plan" and "retirement plan," but modifies only the phrase "other plan." ___ So.2d at ___. That question is not presented here, and Taylor is not affected by this decision.
As to the issues Dunlop attempts to present on the merits of the compensation awards to Sanders and Pitts, we see no ground on which to reverse the judgments of the Court of Civil Appeals. On those factual matters, the judgments are affirmed. On the issue of the applicability of § 25-5-57(c)(1), the judgments are reversed.
1951184 AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
1960105 AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
SHORES,[**] HOUSTON, KENNEDY,[**] and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE,[***] JJ., concur in the result.
[1] See, e.g., Weill v. State ex rel. Gaillard, 250 Ala. 328, 34 So. 2d 132 (1948).
[*] On September 19, 1997, the Court of Civil Appeals, on application for rehearing, withdrew its October 25, 1996, opinion and substituted another. See ___ So.2d ___ (Ala.Civ.App.1997).
[**] Although Justice Shores and Justice Kennedy were not present at oral argument in case no. 1951184, they have listened to the tape of that oral argument.
[***] Justice See was not a member of this Court when case no. 1951184 was orally argued; however, he has listened to the tape of that oral argument. | August 29, 1997 |
c187e5b5-c0da-4ec4-a513-7e17ca53117a | Dawson v. State | 710 So. 2d 472 | 1960533 | Alabama | Alabama Supreme Court | 710 So. 2d 472 (1997)
Ex parte State of Alabama.
(Re Homer Gene DAWSON
v.
STATE).
1960533.
Supreme Court of Alabama.
August 1, 1997.
Rehearing Denied October 24, 1997.
*473 Bill Pryor, atty. gen., and Yvonne A. H. Saxon, asst. atty. gen., for petitioner.
Bryce U. Graham, Jr., Tuscumbia, for respondent.
SHORES, Justice.
On October 17, 1995, a jury convicted Homer Gene Dawson on four counts of distributing a controlled substance in violation of § 13A-12-211, Ala.Code 1975. Dawson was sentenced as a habitual offender to 35 years' imprisonment on each count, the sentences to run concurrently. On May 22, 1996, Dawson petitioned for post-conviction relief under Rule 32, Ala. R.Crim. P., alleging that juror misconduct had deprived him of a fair trial. The trial court denied the petition, concluding that if any unfair prejudice resulted from the juror misconduct it was to the prosecution, not the defense. Dawson appealed. The Court of Criminal Appeals reversed and remanded for a new trial; a juror had improperly viewed the crime scene, and the Court of Criminal Appeals held that that misconduct might have affected the jury's verdict. Dawson v. State, 710 So. 2d 467 (Ala.Cr.App.1996). We granted the state's petition for certiorari review. We now reverse the judgment of the Court of Criminal Appeals and remand the case for action consistent with this opinion.[1]
At trial, Wanda Gray, an undercover agent of the Colbert County Drug Task Force, testified that she met with Dawson on February 16 and 18, 1993, at an apartment complex in Florence. Gray stated that at those two meetings, which she said lasted at least 30 minutes each, Dawson sold controlled substances to her. While these drug transactions occurred, two officers of the Florence Police Department "staked out" the scene in a van in a lot across the street from the complex. Using hidden microphones, the stake-out officers were able to hear and record conversations occurring inside the apartment; an audiotape of those conversations was played for the jury. The two stake-out officers admitted that they could not see Dawson and Gray during the meetings, but one of those officers, Jim Staggs, did testify that on February 18, the date of the second transaction, from the point where he had parked his vehicle he saw Dawson leave the apartment, enter a vehicle, and drive out of the complex.
After Dawson was convicted and sentenced, his attorney became aware that juror misconduct might have occurred in the case; he petitioned for post-conviction relief. At the hearing on the petition, juror L.C. admitted that after the jury had retired for deliberations he had, without court authorization, gone to the apartment complex where the drug transactions had allegedly occurred. L.C. also confirmed that he had tried to park his automobile in the same location where the police stake-out vehicle would have been parked, in order to determine whether there *474 would have been sufficient light to enable Officer Staggs to identify Dawson leaving the apartment on February 18, as Officer Staggs had claimed he had done. L.C. did not testify as to what conclusions he might have drawn from viewing the scene and said he could not recall whether he had made comments on the subject to his fellow jurors. L.C. did affirmatively state, though, that his improper visit did not influence his decision in the case.
P.B., the jury foreman, stated, however, that juror L.C. had in fact told the other jurors about his viewing of the crime scene. P.B. testified that during deliberations L.C. explained to the other jurors that he had visited the scene and that L.C. expressed to them the opinion that Officer Staggs's location would not have permitted him to see the apartment door so as to be able to identify Dawson. P.B. also stated that L.C.'s remarks did not affect her verdict.
The sole issue presented to this Court for review is whether the Court of Criminal Appeals erred in reversing Dawson's conviction and remanding this case for a new trial based upon juror L.C.'s unauthorized viewing of the crime scene and his sharing with other jurors the information he gathered as a result.
It is undisputed that L.C.'s viewing of the scene violated the trial court's admonition to consider only the evidence presented at trial and that it constituted juror misconduct. However, not every instance of juror misconduct warrants a new trial. Reed v. State, 547 So. 2d 596 (Ala.1989). "Each case involving juror misconduct must be judged by its own peculiar facts, and the conduct, when found to be prejudicial, will require a reversal." Id. at 597, citing Bell v. State, 227 Ala. 254, 256, 149 So. 687, 689 (1933). The standard for determining whether juror-misconduct is prejudicial to the defendant in a criminal case and, thus, requires a new trial is set forth in Roan v. State, 225 Ala. 428, 435, 143 So. 454, 460 (1932):
The state concedes that the Roan test is applicable to the juror-misconduct issue in this case. However, the state contends that the trial court correctly determined that no unfair prejudice against Dawson could have resulted from L.C.'s improper viewing of the crime scene. The state argues that the stake-out officer's identification of Dawson was not crucial to the outcome of the case, and that, in any event, the evidence indicated that L.C. was persuaded from his visit to the scene that the officer could not have identified Dawson from his location. Thus, the state claims, the extraneous information in this case could only be beneficial to the defense. We agree that the juror misconduct in this case does not warrant the granting of a new trial.
In reversing Dawson's conviction, the Court of Criminal Appeals found Ex parte Lasley, 505 So. 2d 1263 (Ala.1987), to be controlling. In that case, the defendant was charged with assault for causing severe burns to two young boys by placing or holding them in a bathtub of scalding water. The defendant testified that while he was giving the children a bath he had been distracted by a knock at the door. He alleged that the children turned on the hot water faucet themselves and that he returned later to find them in the scalding water. To assess the credibility of the defendant's version of events, at least three jurors separately conducted their own home experiments, filling their bathtubs with hot water to test how quickly the water temperature would increase. At least some of the experiments seemed to support the defendant's position at trial. One juror also consulted law books to aid her understanding of the element of intent. Despite this misconduct, the jurors expressly testified that their verdict was not influenced by any of the extraneous information. Id. at 1264.
After the Court of Criminal Appeals affirmed Lasley's conviction, Lasley v. State, 505 So. 2d 1257 (Ala.Cr.App.1986), this Court reversed and ordered a new trial, despite the fact that the jurors testified that they had not been influenced and the fact that at least *475 some of the jurors' home experiments appeared to be favorable to the defense. Ex parte Lasley, 505 So. 2d at 1264. As to the results of the experiments, this Court acknowledged that at least some of the results appeared to support the defense theory, but the Court also specifically noted that the Court of Criminal Appeals had stated that the record did not reveal the extent of one juror's experiment, nor the persons with whom the juror had discussed it. Id. We further held that jurors' testimony denying that their verdict was improperly influenced is not always conclusive on the issue of prejudice:
Id.
In its opinion in this present case, the Court of Criminal Appeals stated:
Dawson v. State, supra, 710 So. 2d at 469-70.
It could appear from these statements that the Court of Criminal Appeals found that, because one juror disobeyed the trial judge's instructions, other instances of juror misconduct, not proven and not even alleged, might be inferred to support the argument that a new trial was required. However, "[a]t a hearing on a motion for a new trial, the defendant has the burden of proving the allegations of his motion to the satisfaction of the trial court." Miles v. State, 624 So. 2d 700, 703 (Ala.Cr.App.1993), citing Anderson v. State, 46 Ala.App. 546, 547, 245 So. 2d 832, 833 (1971), and Jones v. State, 31 Ala.App. 504, 507, 19 So. 2d 81, 84 (1944). Thus, a defendant seeking a new trial on the basis of juror misconduct has the initial burden to prove that a juror or jurors did in fact commit the alleged misconduct.
Ex parte Lasley is distinguishable from Dawson's case. Ex parte Lasley does stand for the proposition that some kinds of juror misconduct in criminal cases may allow a court to presume prejudice as a matter of law, notwithstanding the fact that jurors deny that any actual prejudice resulted from exposure to extraneous matters. However, presumption of prejudice as a matter of law has generally been restricted to cases in which the jury's consideration of the extraneous facts was "crucial in resolving a key material issue in the case." See Hallmark v. Allison, 451 So. 2d 270, 271 (Ala.1984); Ex parte Thomas, 666 So. 2d 855 (Ala.1995); see also Pearson v. Fomby, 688 So. 2d 239 (Ala. 1997). In Lasley, jurors conducted the experiments to test the viability of the defense's version of principal events; thus, prejudice might be presumed and that prejudice would warrant a new trial. Here, however, the question whether Officer Staggs was able to identify Dawson from his stakeout position was relatively minor, given that Agent Wanda Gray, the undercover agent who conducted the two face-to-face drug transaction meetings inside the apartment, had already positively identified Dawson. Further, it appears that the jury did not regard Officer Staggs's corroborating identification as crucial to its decision. The jury returned a conviction notwithstanding the fact that juror L.C. said he did not believe an identification would have been possible from the officer's stake-out location; this leads us *476 to the final substantial difference between this case and Ex parte Lasley.
In both Lasley and this case, the prosecution argued that the extraneous information considered by jurors could only have benefited the defense, and, therefore, that the prejudice required to justify the granting of a new trial did not exist. However, whereas in Lasley the Court noted that "we do not know the extent of [one juror's] experiment, nor with whom she discussed it," Ex parte Lasley, 505 So. 2d at 1264, quoting Lasley v. State, 505 So. 2d at 1261, the record in this present case discloses more completely the substance of the juror's improper actions and what he said to the other jurors. Given the ambiguous impact in Lasley of the one juror's experiment regarding a "key material issue in the case," a new trial was warranted. See also Ex parte Troha, 462 So. 2d 953 (Ala. 1984) (a new trial was required where a juror asked his brother, a minister, for spiritual guidance and biblical references to aid his decision in the case). But here, the evidence reveals that the conclusions reached by juror L.C. from his improper viewing and later communicated to the jury could only serve to undercut the credibility of Officer Staggs, a prosecution witness. Thus, no prejudice to the defendant could have resulted from the extraneous information.
We find this case to be more analogous to Reed v. State, 547 So. 2d 596 (Ala.1989). In Reed, a police officer identified the defendant as the person he had purchased cocaine from. Another officer corroborated that identification, testifying that he had observed the transaction, which occurred at night, through the tinted windows of a van. One juror testified that after the jury began deliberations she returned home that night and looked out the tinted windows of her van to see if she could see out as the officer had testified he had done. She further testified that the results of her experiment were consistent with the officer's testimony, but that she told the other jurors of her experiment only after the guilty verdict was returned. In reversing the judgment of the Court of Criminal Appeals, this Court held that a new trial was not warranted where the trial court had properly investigated the misconduct and had determined that the juror's verdict had not been influenced by the experiment. Reed, 547 So. 2d at 598.
In both Reed and this present case, the trial court investigated juror misconduct, which involved corroborating a police identification of a defendant, and found that the extraneous matters did not prejudice the defendant. In Reed, a new trial was not required even where the juror's unauthorized experiment produced results that were consistent with the officer's identification testimony. Here, the information learned by the unauthorized viewinginformation suggesting that the officer would have been unable to identify Dawsonwas inconsistent with the officer's testimony in this case; this distinction between this case and Reed reinforces the conclusion that no prejudice could have resulted to Dawson and that a new trial is not required.
Because Dawson failed to show that the juror's viewing of the crime scene resulted in the introduction of facts that might have unlawfully influenced the jury's verdict, a new trial is not warranted.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, ALMON, HOUSTON, KENNEDY, COOK, BUTTS, and SEE, JJ., concur.
[1] The Court of Criminal Appeals' opinion addressed both Dawson's direct appeal from the convictions and his appeal from the denial of his Rule 32 petition. The Court of Criminal Appeals' judgment of reversal was based on an issue raised on the appeal from the denial of the Rule 32 petition. This certiorari review, based on the state's petition, addresses only the issue that the reversal was based on. We further note that the Court of Criminal Appeals' judgment reversed Dawson's convictions on all four counts, even though the juror misconduct seems to have been directly related to only two of those counts. | August 1, 1997 |
f0f477dc-d855-4fad-a3c4-3e3b6f43ad63 | Ogle v. Gordon | 706 So. 2d 707 | 1941989 | Alabama | Alabama Supreme Court | 706 So. 2d 707 (1997)
Anthony Joe OGLE, as Administrator of the Estate of Margaret Ogle, deceased
v.
Raymond GORDON, et al.
1941989.
Supreme Court of Alabama.
September 12, 1997.
Rehearing Denied November 7, 1997.
Steven A. Martino and Robert J. Hedge of Jackson, Taylor & Martino, P.C., Mobile, for appellant.
J. Garrison Thompson of Pitts, Pitts & Thompson, Selma; and Ronnie E. Keahey, Grove Hill, for appellees.
MADDOX, Justice.
The plaintiff in this wrongful death action was not issued letters of administration until more than two years after the death of his wife. However, he filed this action, based on his wife's death, within the two years allowed by the Wrongful Death Statute, § 6-5-410, Ala.Code 1975. The legal question presented is whether the failure of the probate court to issue letters of administration within the two-year period after the death requires the dismissal of a wrongful death action that was timely filed by the person later issued letters of administration.
The trial court entered a summary judgment for the defendants, holding that, even though the plaintiff, Anthony Ogle, petitioned the Clarke County Probate Court for letters *708 of administration four months after the death occurred and filed the wrongful death action within the two-year period allowed by the statute, his action was barred by § 6-5-410 because the letters were not issued by the probate court until after the two years had run. We disagree.
Margaret Ogle, the wife of Anthony Ogle, was killed on May 28, 1992, when the car in which she was traveling collided with a vehicle being driven by Raymond Gordon. At the time of the accident, Gordon was employed by Johnson Logging Company ("Johnson"), and the vehicle he was driving was owned by Johnson. On September 30, 1992, Anthony Ogle filed a personal injury action against Gordon and Johnson, based on his own injuries, and a wrongful death action based on his wife's death. In both actions Ogle alleged that Gordon had operated Johnson's vehicle negligently or wantonly and that Johnson had negligently or wantonly entrusted its vehicle to Gordon.
The following dates and events are undisputed:
We must first recognize that this Court has held that the wrongful death statute, which provides a two-year limitations period, is a statute of creation, otherwise known as a nonclaim bar to recovery, and that it is not subject to tolling provisions. See, Cofer v. Ensor, 473 So. 2d 984, 992 (Ala.1985); Ivory v. Fitzpatrick, 445 So. 2d 262, 264 (Ala.1984).
The plaintiff argues that because he filed his petition for letters of administration within the two-year limitations period, any subsequent action by the probate court should relate back to the date on which the petition was filed. Consequently, we must determine whether the doctrine of relation *709 back applies to our wrongful death limitations provision.
The doctrine of relation back with respect to the powers of a personal representative has been in existence for approximately 500 years,[1] and this Court first recognized it in Blackwell v. Blackwell, 33 Ala. 57 (1858). See also, McAleer v. Cawthon, 215 Ala. 674, 112 So. 251 (1927), and Nance v. Gray, 143 Ala. 234, 38 So. 916 (1905). In McAleer v. Cawthon, this Court stated:
215 Ala. at 675-76, 112 So. at 251. In Griffin v. Workman, 73 So. 2d 844 (Fla.1954), the Florida Supreme Court, citing this Court's opinion in McAleer, supra, discussed the doctrine and stated:
73 So. 2d at 846-47.
In 1993, the Alabama Legislature codified this doctrine by adopting Act No. 93-722, § 2, Ala. Acts 1993, codified at § 43-2-831, Ala.Code 1975. That Act became effective on January 1, 1994. Section 43-2-831, provides:
(Emphasis added.)
The defendants cite Strickland v. Mobile Towing & Wrecking Co., 293 Ala. 348, 303 So. 2d 98 (1974), a case construing federal statutes (and holding that the plaintiff who filed the wrongful death claim was not the personal representative at the time the action was filed), for the proposition that the doctrine of relation back does not apply in this case, on the basis that the appointment, coming beyond the two-year limitations period, gave the plaintiff no capacity to sue and was a nullity and that, therefore, there is nothing to relate back to. Our decision in Strickland, however, came long before the Legislature's codification of § 43-2-831. We, therefore, overrule Strickland`s holding regarding the application of the doctrine of relation back, insofar as it is inconsistent with what we hold today, but we note that Strickland correctly points out that under the doctrine of relation back one must have something to relate back to, and we note that in the present case the filing of the original petition is the event to which the appointment would relate back.
This doctrine is especially applicable in this case for the reason that the probate court has no discretion in issuing letters of administration when there is no question relating to the qualification of the person requesting the letters. The probate court had no right to delay the issuance of the letters for 27 1/2 months. Section 43-2-42, Ala. Code 1975, provides, in pertinent part:
(Emphasis added.) It is well established that a probate court has no discretion in matters concerning appointment, except as to matters of qualification. In Burnett v. Garrison, 261 Ala. 622, 626, 75 So. 2d 144, 147 (1954), this Court concluded:
Likewise, in Smith v. Rice, 265 Ala. 236, 248, 90 So. 2d 262, 274 (1956), this Court held:
See also, Hollis v. Crittenden, 251 Ala. 320, 37 So. 2d 193 (1948); Loeb v. Callaway, 250 Ala. 524, 35 So. 2d 198 (1948); Griffin v. Irwin, 246 Ala. 631, 21 So. 2d 668 (1945); Calvert v. Beck, 240 Ala. 442, 199 So. 846 (1941); Bivin v. Millsap, 238 Ala. 136, 189 So. 770 (1939); Starlin v. Love, 237 Ala. 38, 185 So. 380 (1938); Johnston v. Pierson, 229 Ala. 85, 155 So. 695 (1934); Marcus v. McKee, 227 Ala. 577, 151 So. 456 (1933); Murphy v. Freeman, 220 Ala. 634, 127 So. 199 (1930); and Castleberry v. Hollingsworth, 215 Ala. 445, 111 So. 35 (1927).
It is undisputed that the plaintiff complied fully with § 43-2-42, Ala.Code 1975, when he filed a petition for letters of administration in the Clarke County Probate Court on September 30, 1992, and it is undisputed that there was no question of qualification in this case. The probate court, through inadvertence, did not issue the letters of administration until January 19, 1995, the day after the plaintiff notified the court of its dereliction. That dereliction should not bar the plaintiff's action.
Based on these facts, we hold that Ogle's January 19, 1995, appointment relates back to the date he filed his petition, September 30, 1992; consequently, we reverse the judgment of the trial court and remand the cause for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and KENNEDY, BUTTS, and SEE, JJ., concur.
COOK, J., concurs in the result.
[1] J.B.G., Annotation, Relation Back of Letters Testamentary or of Administration, 26 A.L.R. 1359, 1360 (1923). | September 12, 1997 |
572cb0ea-b00e-44c6-b213-cf178ad518e8 | Watkins v. BOARD OF TRUST. OF AL. UNIV. | 703 So. 2d 335 | 1960930 | Alabama | Alabama Supreme Court | 703 So. 2d 335 (1997)
Donald V. WATKINS
v.
BOARD OF TRUSTEES OF ALABAMA STATE UNIVERSITY and Dr. Joe Reed, in his official capacity as chairman of the Board of Trustees of Alabama State University.
1960930.
Supreme Court of Alabama.
August 29, 1997.
*336 Joe R. Whatley, Jr., and Peter H. Burke of Cooper, Mitch, Crawford, Kuykendall & Whatley, L.L.C., Birmingham, for appellant.
W. Troy Massey, Montgomery; Solomon S. Seay, Jr., Montgomery; Fred D. Gray of Gray, Langford, Sapp, McGowan, Gray & Nathanson, Tuskegee; and Edward Still, Birmingham, for appellees.
John F. Knight, State Representative, pro se, amicus curiae in support of the appellant.
HOUSTON, Justice.
Donald V. Watkins appeals from a judgment in favor of the Board of Trustees of Alabama State University ("the Board") and Dr. Joe Reed, in his official capacity as chairman of the Board, declaring that Watkins is not a member of the Board. We reverse and remand.
The following pertinent facts are not disputed by the parties: 1) On March 3, 1994, while the Legislature was in session, then Governor Jim Folsom, Jr., appointed Watkins to the Board for a term expiring on January 31, 2002, and then submitted the appointment to the State Senate for its consideration; 2) the Senate's Standing Committee on Confirmations unanimously approved Watkins's appointment and reported the appointment to the full Senate for a vote; and 3) the legislative session ended before the full Senate had voted to confirm or to reject Watkins's appointment.
Watkins filed this action, alleging that the Board had refused to recognize him as a duly appointed member of the Board, and seeking injunctive and declaratory relief. The trial court entered an order in favor of the Board, stating, in pertinent part, as follows:
The sole issue presented is whether Watkins was still a member of the Board after the 1994 legislative session had ended. Resolution of this issue turns on the proper construction of Ala.Code 1975, § 16-50-20(a) and § 16-50-25.
(Emphasis added.) Section 16-50-25, relating to the appointment of successor trustees at Alabama State University, reads:
(Emphasis added.) The emphasized portions of these two sections lie at the heart of this controversy.
We note, initially, that the parties agree that § 16-50-20(a) and § 16-50-25 should be construed in pari materia and that these sections create a procedure for an appointment process that should operate as follows: 1) if a vacancy on the Board occurs while the Legislature is not in session, the Governor has the authority to make an interim appointment, which ends when the Legislature reconvenes (§ 16-50-25); 2) the termination of the interim appointment creates a new vacancy on the Board; 3) if a vacancy on the Board occurs while the Legislature is in session, whether by the termination of an interim appointment or otherwise, the procedure for filling the vacancy is set out in § 16-50-20(a); and 4) the Governor's "in-session" appointee begins to serve immediately, before the end of the legislative session, and continues to serve unless the Senate adversely acts upon the appointment (§ 16-50-20(a)). After carefully examining § 16-50-20(a) and § 16-50-25, we conclude, for the reasons that follow, that this is a correct construction of these two sections.
The fourth sentence of § 16-50-20(a) provides, in pertinent part, that "[t]he trustees shall be appointed by the Governor, by and with the advice and consent of the Senate." Section 16-50-25 provides, in pertinent part, that an interim appointee "shall hold office until the next session of the Legislature, when the vacancy shall be filled by the Governor by and with the consent of the Senate." These two sections read together, as they must be, in accordance with our wellestablished rules of statutory construction, see McRae v. Security Pacific Housing Services, Inc., 628 So. 2d 429 (Ala.1993) (the statute as a whole must be considered and construed reasonably so as to harmonize its provisions), clearly require that any appointment to the Board made during a legislative session be by and with the consent of the *339 Senate. If this were the only language in these two sections dealing with the Senate's role in the appointment process, we would be constrained to hold that James v. Langford, 695 So. 2d 1158 (Ala.1997), controls and that no appointment to the Board would be effective until confirmation by the full Senate.[1] However, unlike the constitutional provision at issue in James v. Langford, § 16-50-20(a), which provides the basic procedural formula for making an appointment to the Board, contains the following sentence: "All appointments shall be effective until adversely acted upon by the Senate." This language, which appears as the sixth sentence in § 16-50-20(a), follows two sentences after the sentence that provides for an appointment to be made "by and with the advice and consent of the Senate." These two sentencesthe fourth and the sixthare clearly at odds with each other and create an ambiguity within § 16-50-20(a) as to the Senate's proper role in the appointment process. The fourth sentence contemplates that there can be no valid appointment without Senate confirmation; the sixth sentence contemplates an appointment by the Governor without Senate confirmation. In essence, the sixth sentence contemplates a procedure whereby the Governor has the authority to make an appointment to the Board and the Senate has the authority to nullify that appointment by "adversely act[ing] upon [it]." Applying well-established rules of statutory construction, basic to which is effectuating legislative intent, we agree with the parties that § 16-50-20(a) provides a mechanism whereby the Senate's supervisory role in the appointment process (its role of providing "advice" and "consent") is performed by virtue of its exercise of what amounts to a veto power over the Governor's appointment. We cannot conclude that the sixth sentence, providing that "[a]ll appointments shall be effective until adversely acted upon by the Senate," was mere surplusage, given the fact that the Legislature is quite adept at creating an appointment procedure requiring an affirmative vote of the Senate to effectuate an appointment to a public university's board of trustees. See Dunn v. Alabama State University Board of Trustees, 628 So. 2d 519 (Ala.1993), discussing the creation of a board of trustees for Alabama A & M University. Instead, we must give effect to every word in § 16-50-20(a), if possible, and that can be done, in keeping with our understanding of legislative intent, by holding that the sixth sentence modifies and controls the fourth sentence. See Alabama State Board of Health ex rel. Baxley v. Chambers County, 335 So. 2d 653 (Ala.1976) (where two sections or provisions of an act are conflicting, the last in order of arrangement controls).
What the parties disagree on in this case is the meaning to be given to the words "adversely acted upon" in the sixth sentence of § 16-50-20(a). The Board contends that the Senate took adverse action by initially postponing and then not voting on Watkins's appointment before adjourning sine die. Relying on Dunn, the Board argues, and the trial court agreed, that anything less than an affirmative vote by the full Senate confirming an appointment by the Governor constitutes adverse action nullifying the appointment. Watkins contends that the sixth sentence of § 16-50-20(a) clearly contemplates affirmative adverse action, not inaction, to nullify an appointment. According to Watkins, to construe the sentence as the Board suggests would "do violence to the plain language and meaning of [the] statute."
The Board points out, and the trial court held, that the failure of the Legislature to act on a pending bill or on other matters needing legislative approval, before the Legislature adjourns sine die, effectively "kills" that bill or matter. We agree. However, we are not persuaded that that situation is analogous to the situation here, or that it is particularly helpful in resolving the issue presentedwhether § 16-50-20(a), which requires adverse action to nullify an appointment to the Board, may be satisfied by *340 inaction on the Senate's part. Instead of attempting to guess at what the Legislature meant when it provided that all appointments shall be effective "until adversely acted upon by the Senate," we think it more appropriate to look to the Senate's own internal rules for a better understanding of what the Senate considers to be adverse action. We did exactly that in Dunn, supra, wherein this Court, holding that the action of the Committee on Confirmations rejecting the appointment of Ross Dunn and Jo Ann Paddock was an adverse action of the Senate, stated:
"Rules of the Senate of the State of Alabama 33 (1991) (emphasis added [in Dunn]).
628 So. 2d at 524-25. (Emphasis added.)
The clear import of Dunn and of what is now Senate Rule 32 is that the Senate has created a procedure for acting adversely on the Governor's appointments. That procedure, which is embodied in Senate Rule 32 and the Senate resolution passed on September 9, 1991, delegates to the Committee on Confirmations the authority to formally reject an appointee, in which case the full Senate is not called on to act. The Committee's rejection, under the holding in Dunn, constitutes adverse action by the Senate. However, if the Committee on Confirmations *341 approves an appointee and reports his or her name to the full Senate for further consideration, as happened here to Watkins, Senate Rule 32 contemplates that the full Senate will either approve or reject the appointee. The Rule provides further that "[i]f the Senate rejects a nomination or appointment, it will either forward its rejection to the Secretary of the Senate who shall forward the rejection to the appointing authority and request a new nominee [or appointee] be submitted, or, in the event that the pertinent statute permits, the Senate may select a substitute appointment." Nothing in Senate Rule 32 or in any of the other internal rules of the Senate suggests that a gubernatorial appointment to the Board can be "adversely acted upon" by the Senate's not voting on an appointee before adjourning sine die. One would expect this, because, unlike a pending bill, which is of no legal import until approved by the Legislature, an appointment to the Board is effective by action of the Governor alone. We cannot logically hold that inaction on the Legislature's part can "kill" or "undo" something that the Governor has done pursuant to statutory authority.[2]
We are aware that the following paragraph in Dunn suggests that the full Senate must vote to confirm an appointee or else the appointment is nullified:
628 So. 2d at 525. (Emphasis added.) The trial court and the Board relied on this paragraph, and their reliance is certainly understandable. However, the emphasized portion of this paragraph, which is clearly inconsistent with the provision requiring Senate disapproval to nullify an appointment to the Board, and which is inconsistent with most of the discussion preceding it in Dunn, did not set out the principal holding in Dunn. The holding in Dunn was as follows:
628 So. 2d at 525. To the extent that this dictum relied on by the trial court and the Board is contrary to our holding in the present case, it is disapproved.
For the foregoing reasons, the judgment is reversed and the cause is remanded for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
*342 HOOPER, C.J., and ALMON, KENNEDY, and SEE, JJ., concur.
COOK, J., concurs specially.
MADDOX and BUTTS, JJ., dissent.
COOK, Justice (concurring specially).
I agree in all respects with the Court's opinion. I write specially, however, to distinguish the statutory scheme under review in this case from the constitutional and statutory provisions regulating appointments of trustees for other state schools and to distinguish this case from Dunn v. Alabama State University Board of Trustees, 628 So. 2d 519 (Ala.1993).
The following provisions relate specifically to the appointment of trustees of Alabama's state universities: Ala.Code 1975, § 16-47-30 (University of Alabama); Ala. Const.1901, amend. 161 (Auburn University); § 16-49-20 (Alabama Agricultural and Mechanical University); § 16-50-20 (Alabama State University); § 16-51-3 (University of North Alabama); § 16-52-3 (Jacksonville State University); § 16-53-3 (Livingston University); § 16-54-2 (University of Montevallo); § 16-55-2 (University of South Alabama); and § 16-56-3 (Troy State University). Comparison of these provisions reveals that the operative language of the statute governing appointments to the board of trustees of Alabama State University ("ASU") is unique.
Of the provisions relating to these 10 state universities, the provisions relating to 8 of them, namely, Auburn University, Alabama Agricultural and Mechanical University, the University of North Alabama, Jacksonville State University, Livingston University, the University of Montevallo, the University of South Alabama, and Troy State University, provide, in functionally identical terms, that appointments made during any legislative session shall be made "by the governor, by and with the advice and consent of the senate." The procedure employed under these constitutional and statutory provisions gives the Governor the power to make an appointment, or, in effect, a nomination, that must be confirmed or approved by the Senate before the nominee or appointee becomes appointed. As to the other two institutions, namely, the University of Alabama and ASU, the statute relating to the University of Alabama provides that the position of trustee is to be filled by a vote of the remaining trustees, with the trustee-elect holding office "until his confirmation or rejection by the Senate." Section 16-47-30. Of the trustees of these institutions that are appointed during a legislative session, only those of ASU hold office "until adversely acted upon by the Senate." Section 16-50-20(a) (emphasis added).
Unquestionably, the statutory procedure under which ASU trustees hold office "until [the appointment is] adversely acted upon by the Senate" is a substantial departure from the statutory and constitutional processes governing the appointment of trustees at Alabama's other state universities. "[W]here there is a `material alteration in the language used in the different [sections], it is to be inferred' that the alterations were not inadvertent." House v. Cullman County, 593 So. 2d 69, 75 (Ala.1992) (emphasis added). "This Court is not permitted to `legislate by construction.'" Id. Therefore, I cannot conclude as the Court does, that this phrase, which is unique among the provisions governing appointments to the boards of Alabama's state universities, has no field of operation. In other words, the Legislature must have intended by this additional phrase to distinguish the procedure at ASU from the procedures applicable in regard to the other universities. This peculiar phrase was the subject of the Court's attention in Dunn v. Alabama State University Board of Trustees, 628 So. 2d 519 (Ala.1993).
In Dunn, we considered this provision in the context of the appointments of "Ross Dunn and Jo Ann Paddock to the board of trustees of ASU." 628 So. 2d at 521. Their appointments were referred to the Senate Committee on Confirmations (the "Committee"), which "voted against the appointments." Id. (emphasis added). When the Committee "declined to `report' the appointments *343 to the full senate for a vote," that body adjourned sine die without "further action on the appointments." Id. Thus, the issue we considered in Dunn was whether the Committee's rejection of the appointments constituted "adverse[] act[ion]" within the meaning of that phrase in § 16-50-20(a). We held that it did. Dunn, 628 So. 2d at 525.
This case, however, involves no adverse action, either by the whole Senate or by the Committee. On the contrary, the whole Senate never considered the nomination of Donald Watkins, and the Committee voted to approve his nomination. This case is unlike Dunn in that in this case the only action taken in the Senate was favorablenot adverse; it is adverse action that the statute requires to invalidate a nomination. Thus, Dunn is distinguishable from this case.
In this connection, I conclude that, in regard to the appointment process under § 16-50-20(a), adjournment sine die is not adverse actionit is merely inaction. In that respect, the process is not, as was suggested by ASU during oral argument, analogous to the process by which a bill becomes law. In the latter case, Ala. Const.1901, § 63, provides that "no bill shall become a law, unless ... a majority of each house be recorded ... as voting in its favor." (Emphasis added.) See also Ala. Const.1901, § 125 ("Every bill which shall have passed both houses of the legislature, except as otherwise provided in this Constitution, shall be presented to the governor...."). Obviously, a bill is of no force or effect until the extensive legislative process expressly set forth in the Constitution has been exhausted.
Section 16-50-20(a), however, contemplates that an in-session gubernatorial appointment is effective until, and unless, there is affirmative, adverse action by the Senate. In this connection, it was conceded by all parties that Watkins assumed the duties of trustee immediately upon his appointment by the Governor and that he was entitled to do so. Thus, the process governed by § 16-50-20(a) has no functional similarity to the ordinary process of enacting legislation.
Also inapplicable to this case is James v. Langford, 695 So. 2d 1158 (Ala.1997), which involved the appointment of Auburn University trustees, pursuant to Ala. Const.1901, Amend. No. 161. As I pointed out in Part I of this writing, Amend. No. 161 does not contain the unique language involved in this case. For these reasons, I agree that the Senate's adjournment sine die, without having confirmed Watkins's appointment by an affirmative vote, does not invalidate his appointment.
The question whether the Senate can again consider the appointment is not ripe for decision in this case. The issue presented has been resolved without our addressing the procedure of the Senate; thus, there is no basis for the Court to reach and address the question whether the Senate can again consider this appointment. However, Watkins contended in the trial court that there is no way for the Senate to again bring up his name for a vote in a subsequent session, and that he therefore can now serve out the remainder of the term to which he was appointed. I do not view our opinion today as deciding that issue. Nonetheless, I believe Watkins was quite correct in stating at oral argument in this Court that the language of the statute does not prevent the Senate from again considering the appointment.
MADDOX, Justice (dissenting).
The trial court, citing Dunn v. Alabama State Univ. Board of Trustees, 628 So. 2d 519 (Ala.1993), held that "adjournment [of the Senate] sine die constituted the adverse action contemplated by [Ala.Code 1975, § 16-50-20(a)], which provides, in part, that `[a]ll appointments shall be effective until adversely acted upon by the Senate,' and ended Mr. Watkins's appointment by force of law."[3] I *344 believe that the trial court was eminently correct in so ruling, and I must respectfully disagree with holding of this Court, which I believe is directly contrary to the central holding in the Dunn case.[4]
In my opinion, when a constitutional or statutory provision requires that a gubernatorial appointment have "advice and consent of the Senate," the power of appointment is conferred upon the Governor and the Senate jointly. For a thorough discussion of the question of the authority of a gubernatorial appointee whose appointment requires "advice and consent" of the Senate, to serve as a member of a board of trustees of a state educational institution pending that advice and consent, see State ex rel. Little v. Foster, 130 Ala. 154, 30 So. 477 (1901), involving an appointment to the board of trustees of the University of Alabama. See also, James v. Langford, 695 So. 2d 1158 (Ala.1997).
The majority recognizes that the fourth sentence of § 16-50-20(a) requires, in pertinent part, that "[t]he trustees shall be appointed by the Governor, by and with the advice and consent of the Senate," and that § 16-50-25 provides, in pertinent part, that an interim appointee "shall hold office until the next session of the Legislature, when the vacancy shall be filled by the Governor by and with the consent of the Senate," and that these two sections, when read together, "clearly require that any appointment to the Board made during a legislative session be by and with the consent of the Senate," 703 So. 2d at 338, and the majority admits that these two sections dealing with the Senate's role in the appointment process would constrain them "to hold that James v. Langford... controls and that no appointment to the Board would be effective until confirmation by the full Senate," 703 So. 2d at 339, which obviously Watkins never received.
The majority concludes that a provision in § 16-50-20(a), stating that "[a]ll appointments shall be effective until adversely acted upon by the Senate," has precedence over the requirement of senate confirmation. The majority says:
703 So. 2d at 339.
Applying the same rules of statutory construction applied by the majority, I come to exactly the opposite conclusion. I do not believe the clause stating that "[a]ll appointments shall be effective until adversely acted upon by the Senate" is a clause that "modifies and controls" the provision stating that all appointments shall be made "by and with the advice and consent of the Senate." Requiring "advice and consent" of a legislative body to effectuate an executive appointment is a formula long used by the people or their representatives to balance power between the executive and legislative branches, or, as this Court said in the Little case, "when we go back to our constitution and laws in this State, from the beginning of the State government to the present, we find it has been the policy to distribute this appointing power among the several departments of the State." 130 Ala. at 161, 30 So. at 479.
Writing to the very issue involved in this case, this Court, in Dunn, construing the very provisions of the Code that are involved here, held that "unless the Governor's appointee is confirmed by vote of the entire Senate in the next session of the legislature, the trustee's appointment is ended by force of law." 628 So. 2d at 525. So what do the words "All appointments shall be effective until adversely acted upon by the Senate" mean, in view of this holding? It seems clear to me that they mean that an appointee holds office until the "the entire Senate in the next session of the legislature" either gives its advice and consent, refuses to give its advice and consent, or adjourns sine die without acting on the appointment. Any other reading of the statute, in view of the specific holding in Dunn, would give the legislature the power to prevent a vote on a Governor's appointee, thereby creating an imbalance of the traditional power that requires the executive branch and the legislative branch to exercise the power jointly.
If the sentence "All appointments shall be effective until adversely acted upon by the Senate" means what the majority has now interpreted it to mean, then Ross Dunn and Jo Ann Paddock (the appointees involved in the Dunn case) should be reinstated on the Board, because "the entire Senate in the next session of the legislature" did the same thing in Dunn that the Senate did hereit adjourned sine die without giving its advice and consent.
In Dunn, the defendants contended that the sentence in § 16-50-20(a) stating that "[a]ll appointments shall be effective until adversely acted upon by the Senate" meant that if the Senate adjourned sine die without a floor vote on the appointments then that action would have constituted constructive *346 consent by the Senate. The majority sets out the two arguments on that same language in today's opinion:
703 So. 2d at 339. The majority then quotes from Dunn, where this Court discusses Senate Rule 32. Unfortunately, the majority does not point out the reason why it refuses to accept the holding of the Dunn Court that the sentence reading "Such appointee shall hold office until the next session of the Legislature, when the vacancy shall be filled by the Governor by and with the advice and consent of the Senate" was clear and not ambiguous. In Dunn, this Court specifically said:
628 So. 2d at 525. (Emphasis added.)
I agree with the holding in Dunnthe holding that today's majority calls "dictum." The provisions of § 16-50-25 are clear. The Governor's appointee here was not confirmed by the entire Senate in the next session of the Legislature. Hence, his appointment was, in the words of Dunn, "ended by force of law." 628 So. 2d at 525.
BUTTS, J., concurs.
[1] In Langford, this Court unanimously held that the new appointees, Richardson and McDonald, had not been validly appointed to serve new terms on the Board of Trustees of Auburn University because they had not been appointed by the Governor and the Senate. See Ala. Const. 1901, Amendment 161 (requiring that members of the Board of Trustees of Auburn University be "appointed by the governor, by and with the advice and consent of the senate").
[2] We note that both the Legislative Reference Service and the attorney general have come to the same conclusion. In an opinion to Senator Charles D. Langford, dated August 14, 1991, the attorney general concluded: "Under the unique wording of the Alabama State University statute a nominee [appointee] to the Board of Trustees serves on that Board unless and until affirmative rejection by the Alabama Senate upon nomination [appointment] to that body by the Governor." In an opinion to Senator Langford, dated April 13, 1994, the director of the Legislative Reference Service stated in part:
"You have asked what happens to an individual who has been nominated to serve on Alabama State University's Board of Trustees while the Legislature is in session, and the individual receives a favorable recommendation from the Senate Confirmations Committee but the Senate takes no further action.
"Section 16-50-20(a) states in relevant part: `All appointments shall be effective until adversely acted upon by the Senate.'
"In light of the fact that the Senate Committee on Confirmations favorably recommended and reported the nominee to the full Senate and that body has taken no further action on the nomination, it would appear that the nomination is effective until the Senate takes action contrary to the committee's recommendation."
We note that the Senate apparently had the benefit of this opinion from the Legislative Reference Service approximately 12 days before it adjourned on April 25, 1994, without voting on Watkins's appointment. In light of this, it would be speculative at best to assume that the Senate's adjourning without voting on Watkins's appointment was intended by the Senate to constitute "adverse action."
[3] Section 16-50-20(a), in its entirety, provides:
"(a) There is hereby created a board of trustees for Alabama State University, the state educational institution at Montgomery, Alabama. The board of trustees shall consist of two members from the congressional district in which the institution is located and one member from each of the other congressional districts in the state as constituted on October 6, 1975, and who shall reside in that district, four members from the state at large who shall reside in different districts, and the Governor, who shall be ex officio president of the board. Except for a trustee at large, the position of any trustee shall be vacated at such time as he shall cease to reside in the district from which he was appointed. The trustees shall be appointed by the Governor, by and with the advice and consent of the Senate, in such manner that the membership shall consist of at least a majority who are alumni and who have received a bachelor's degree from the said university; at least one-half of the board shall be from the prevailing minority population of the state according to the last or any succeeding federal census. Trustees shall hold office for staggered terms of three, six, nine and 12 years with an equal number appointed to like terms, such period of terms designated by the appointing authority, with one-fourth to expire every three years, or until their successors are appointed. All appointments shall be effective until adversely acted upon by the Senate. Provided, however, no trustee who is currently serving on the board or whose term has just expired, who has been previously confirmed by the Senate, shall be required to be reconfirmed for the new term under this section, once appointed by the Governor. A member may be appointed to serve a second term of 12 years, but no member shall be appointed to serve as trustee for more than a total of two terms. The first members, however, shall be eligible to serve for two full additional terms in addition to their initial terms. No trustee shall receive any pay or emolument other than his actual expenses incurred in the discharge of his duties as such. No member of the governing board or employee or student of any public postsecondary education institution, no elected or appointed official having the power of review of the Alabama State University budget, other than the Governor and no employee of the State of Alabama shall be eligible to serve on the board. No member shall serve past September 30 following his seventieth birthday." (Emphasis added.)
[4] Although I recognize that a headnote in a reported case does not control of the holding in a case, I do note that the trial court's holding in this case is identical with headnote 4 in the report of the Dunn case in Southern Reporter 2d:
"Unless Governor's appointee to state university's board of trustees is confirmed by vote of entire Senate in next session of legislature, trustee's appointment is ended by force of law. Code 1975, § 16-50-25."
628 So. 2d at 519. | August 29, 1997 |
3669881d-51a4-4a46-a4e8-2ae3e499a494 | Talent Tree Personnel Serv., Inc. v. Fleenor | 703 So. 2d 917 | 1951954, 1952087 | Alabama | Alabama Supreme Court | 703 So. 2d 917 (1997)
TALENT TREE PERSONNEL SERVICES, INC., and Brenda Harris
v.
Cathy FLEENOR.
Cathy FLEENOR
v.
TALENT TREE PERSONNEL SERVICES, INC., and Brenda Harris.
1951954, 1952087.
Supreme Court of Alabama.
September 12, 1997.
*918 David B. Anderson and Julia Boaz-Cooper of Walston, Stabler, Wells, Anderson & Bains, Birmingham; and Stephen Wagner of Gratch, Jacobs & Brozman, P.C., New York City, for appellants/cross appellees.
Richard Jordan, Randy Myers, and Benjamin L. Locklar, Montgomery, for appellee/cross appellant.
SHORES, Justice.
Cathy Fleenor sued her employer, Talent Tree Personnel Services, Inc. (hereinafter "Talent Tree"), and the employer's office manager, Brenda Harris, for damages based on fraudulent misrepresentation and fraudulent suppression; she alleged that the defendants *919 had manipulated her quarterly sales figures in order to cheat her out of sales commissions. As to Talent Tree, she also alleged breach of contract. The jury found for Fleenor, awarding her $300,000 in compensatory damages and $3 million in punitive damages under the fraud counts; the trial court ordered a reduction of the punitive damages to $2 million. The defendants appeal from the resulting $2.3 million judgment. Fleenor appeals the trial court's order requiring a remittitur of the $3 million punitive damages award.
Talent Tree is an employment agency. It hires individuals and sells their services to purchasing companies for a flat fee. The fee enables Talent Tree to make a profit over the costs of paying the employees' salaries, benefits, workers' compensation insurance, federal withholding tax, etc. Harris was Talent Tree's market manager for the State of Alabama and was Fleenor's immediate supervisor. The two women worked together in the company's Birmingham office.
Fleenor began working for Talent Tree in 1992 as an account representative. In 1994, she earned commissions on her sales that exceeded a quarterly quota set by Talent Tree and that exceeded a profit margin of 20% (the difference between the costs to Talent Tree for the employees' salaries, etc., and the fee charged to the purchasing company). The amount of the commissions was calculated from her quarterly sales, her yearto-date sales, and her salary. Most of her compensation came from the commissions that she earned when she established enough new accounts to meet the quarterly sales quotas set by Talent Tree.
Fleenor excelled in her position. She became the number one salesperson for Talent Tree in Alabama. Following the first quarter of fiscal year 1994, she was paid a commission of $19,440 for that quarter. In the second quarter, she again did well, and for that quarter she received a commission of $27,229. She did not receive any information showing how the commissions for these two quarters were calculated, but she had no reason to doubt that she was receiving the total commissions owed her.
At the end of the third quarter, Fleenor's husband was transferred to Atlanta, Georgia, and she moved there with him. Around this time, Harris "promoted" Fleenor from account representative to account executive. An employee being promoted to account executive typically received a step-up in salary, but the employee's quota was also increased, so that the employee had to produce a higher volume of sales before Talent Tree would pay a commission. Fleenor, however, did not receive an increase in salary, and she protested the title change that raised her quota without any corresponding benefit to her. After completing the move to Atlanta, Fleenor telephoned Harris to check on the payment of her third-quarter commission. Her sales during the third-quarter had increased, and she expected her commission for the third quarter to exceed her commissions for either of the first two quarters. Brenda Harris told her that her third quarter commission would be approximately $4,000.
Suspecting that her third quarter commission was too low, Fleenor began requesting information from Talent Tree to support the commission figures. During this process, she expressed her concerns to her immediate supervisor, Harris; to Talent Tree's vice president of human resources, David Seaver; to a company clerk, Eva Chen; and to Talent Tree's chief executive officer, Manjit Singh. When Fleenor spoke with Seaver, he initially responded with the statement "[I]f you want to play games, we can play games." Fleenor persevered, and the documents that she began receiving showed that her sales figures had been reduced without her knowledge; that upper-level management of Talent Tree had merely crossed out some figures and replaced them arbitrarily with lower figures; that her commission calculations had been retroactively reduced by applying the higher quota requirements of an account executive; and that certain new accounts Fleenor had established either had not been credited to her commission calculation or had been removed from that calculation after the fact. The result was that Talent Tree had underpaid her commissions for each of the three quarters of 1994. Talent Tree admitted that it owed Fleenor some amount, at most $69,000. Fleenor claimed that Talent Tree owed *920 her about $186,000 as underpaid commissions for three quarters. After settlement negotiations failed, Fleenor sued.
The evidence produced during discovery showed that the Birmingham branch, during the period of the alleged misconduct, had incurred an uncollectible account receivable, for employee services provided to a business known as Psychiatric Day Care; that uncollectible account amounted to $1 million. Harris's husband worked at Psychiatric Day Care as its chief financial officer. He had arranged with Harris to purchase employee services from Talent Tree, including his own services. Essentially, Talent Tree paid Mr. Harris a salary of $300,000 a year to work at Psychiatric Day Care. The Talent Tree account representative in charge of the Psychiatric Day Care account, Vicki Self, testified that Brenda Harris did not tell her that the account was in arrears, in violation of Talent Tree's policy of putting the responsibility on the representative in charge of the account either to collect or to withdraw Talent Tree's employees after a delinquency period of 60 days. In October 1994, Vicki Self began trying to learn as much about the account as possible; on November 1, 1994, she was fired by Harris.
Harris earned commissions based on the profit or loss of her office. She testified that she had initially thought that paying a commission to Fleenor would reduce her own commission, because the expenses the office incurred from paying the commission, she thought, cut into the office's profit and thereby reduced her own commission. The uncollectible Psychiatric Day Care account, in combination with Harris's understanding of the method by which her commission was calculated, Fleenor argued, provided the motive behind the manipulation of her sales figures.
Talent Tree and Harris argued that the errors in Fleenor's commission payments occurred because of what they characterized as a cumbersome and complicated bonus plan. They alleged that the errors were innocent mistakes, and they denied that they had fraudulently suppressed the errors. At trial, however, counsel for the defendants stated that "in the second quarter there was a calculation that said her bonus will be $36,000." Counsel continued, "There were strikeouts that [plaintiff's counsel] showed you, and she was paid $27,000. And quite frankly, we can't figure out why."
The defendants argue: 1) The compensatory damages award of $0 for the breach of contract claim and the compensatory damages award of $300,000 on the fraud claim create an inconsistency in the jury verdict as a matter of law; 2) the trial court committed reversible error by admitting evidence of the Psychiatric Day Care account; 3) the compensatory damages award of $300,000 does not justify, by clear and convincing evidence, an award of punitive damages; and 4) the award of $2 million is unconstitutionally excessive.
The defendants argue that the jury's verdict is inconsistent as a matter of law. The jury awarded $0 on the breach of contract claim. They argue that because the jury awarded no damages under the contract claim, the jury did not find that Talent Tree had breached its contract with Fleenor. They argue that in order for Fleenor to recover under her fraud claims, the jury would have to find that Talent Tree breached its contract with her. The verdict, they argue, was therefore inconsistent as a matter of law and entitles them to a new trial. United States Fidelity & Guaranty Co. v. McKinnon, 356 So. 2d 600 (Ala.1978).
The verdict form the jury selected, the closing arguments of the plaintiff's counsel, and the trial court's charge to the jury, however, do not support the defendants' argument. The verdict form read:
In explaining this verdict form to the jury, the plaintiff's counsel told the jury that, if the jury found for Fleenor, it would assign to the fraud count any award of compensatory damages:
The trial court also charged the jury that it could assign to the fraud count an amount for compensatory damages that it found Talent Tree owed Fleenor:
"[C]ourts do not favor the setting aside of verdicts for damages if it can be avoided...." Stinson v. Acme Propane Gas Co., 391 So. 2d 659, 661 (Ala.1980). In Stinson, we rejected the argument that a verdict awarding no compensation to a prevailing party is, in fact, a verdict for the defendant. Stinson, 391 So. 2d at 660. Accordingly, we reject the defendants' argument that the jury's award of no compensation under the contract count means that the jury did not find that Talent Tree had breached its contract with Fleenor. Based on the verdict form, the argument of plaintiff's counsel, and the trial court's charge, we conclude that the jury awarded compensatory damages, including the amount of the commissions Talent Tree admitted at trial it owed Fleenor, and put the amount in the space for compensatory damages under the fraud count. Heeding the warning by plaintiff's counsel, the jury put the compensatory award under the fraud count out of an abundance of caution, in order to avoid awarding a double recovery. See Deupree v. Butner, 522 So. 2d 242 (Ala. 1988). The jury's verdict was consistent with the trial court's charge and was consistent with the jury's determination as to liability. Moreover, we are not inclined to remand this case for another jury to determine matters that were not determined in the first instance because of a situation that the parties agreed to; namely, the use of this verdict form. City Realty, Inc. v. Continental Casualty Co., 623 So. 2d 1039 (Ala.1993); E & S Facilities, Inc. v. Precision Chipper Corp., 565 So. 2d 54 (Ala.1990).
The defendants next argue that the trial court committed reversible error by allowing the introduction of what the defendants consider prejudicial evidence concerning the Psychiatric Day Care account. Specifically, they argue that Harris had no motive to defraud Fleenor; that the evidence concerning Psychiatric Day Care was irrelevant and inflammatory; and that it was used to create bias against Harris by portraying her as a "bad character."
In Associates Financial Services Co. v. Barbour, 592 So. 2d 191, 196 (Ala.1991),[1] we *922 addressed the limits of admissible evidence in fraud cases:
The trial court considered a motion in limine on this issue. After listening to the arguments of both parties, it ruled that the evidence concerning the Psychiatric Day Care account, including evidence of Don Harris's salary and of his relationship with Brenda Harris, was admissible to show a motive to defraud on the part of Brenda Harris and Talent Tree. The record showed that after a few months Psychiatric Day Care owed Talent Tree more than $1 million, which was the largest debt ever owed to the Birmingham office; that Talent Tree would typically shut down an account after it had been in arrears more than 60 days; and that Harris was paying her husband a salary of $300,000 a year. Harris admitted on cross-examination that the Psychiatric Day Care account would affect the commissions of her staff and, to her knowledge, would have a negative impact on her bonus. When this evidence was offered, Talent Tree and Harris did not object to most of it. We conclude that this evidence was admissible to show a motive for defrauding Fleenor and that it did not exceed the wide scope of admissibility that is applicable in fraud actions. Accordingly, the trial court did not abuse its discretion by admitting this evidence.
Next, the defendants argue that the compensatory damages award of $300,000 on the fraud claim is grossly excessive, because, they contend, the award is composed only of damages for mental anguish. The record, on the other hand, clearly refutes that contention. Fleenor presented evidence that Talent Tree and Harris had underpaid her by as much as $186,000. Talent Tree and Harris admitted at trial that Fleenor is owed some amount, which they admitted could have been as much as $69,000.
In Duck Head Apparel Co. v. Hoots, 659 So. 2d 897, 907 (Ala.1995), we quoted the postjudgment order of the trial court as a statement of the applicable law:
In Pitt v. Century II, Inc., 631 So. 2d 235, 240 (Ala.1993), we held:
Here, the jury awarded the plaintiff a total of $300,000 for compensatory damages. The award included the actual amounts owed to Fleenor for the commissions the defendants had wrongfully withheld and also included an amount for mental anguish. Fleenor testified that the anguish she had suffered as a result of the defendants' conduct had interfered with her relationship with her husband and her son. She testified that the ordeal had uncontrollably absorbed her thoughts; had brought her to tears on several occasions; had disturbed her life generally and her ability to sleep, specifically; and had thoroughly upset her during the course of discovery as the evidence of the defendants' fraud was brought to light. She testified that she had become furious with Talent Tree because she felt that she had been cheated after working diligently to become the number one salesperson in Alabama. She testified that after working a year to earn the money she "had to work another year just to try to collect it." She testified that the resulting stress and strain she had endured had made it difficult for her to control her emotions. We conclude that there is substantial evidence in the record to support the jury's award of compensatory damages.[2]
Next, the defendants argue that the jury could not have found by clear and convincing evidence that an award of punitive damages was justified, because, they contend, the record shows that the nondisclosure in this case was not gross, oppressive, or malicious and was not committed with the intention of depriving Fleenor of her property. Ex parte Norwood Hodges Motor Co., 680 So. 2d 245 (Ala.1996). We must determine whether the jury could have found by clear and convincing evidence that the defendants' conduct amounted to
§ 6-11-20(b)(1), Ala.Code 1975. This Court will not disturb a jury verdict on the ground of insufficiency of the evidence unless it appears that the verdict was plainly and palpably wrong and unjust. Gold Kist, Inc. v. Griffin, 657 So. 2d 826 (Ala.1994).
"Clear and convincing evidence," for purposes of punitive damages awards, is "[e]vidence that, when weighed against evidence in opposition, will produce in the mind of the trier of fact a firm conviction as to each essential element of the claim and a high probability as to the correctness of the conclusion." § 6-11-20(b)(4), Ala.Code 1975. The "clear and convincing standard" is a higher standard than a "preponderance of the evidence" standard or a "substantial weight of the evidence" standard, but it is lower than the criminal standard, which requires proof "beyond a reasonable doubt." Id. "Malice" is defined as "[t]he intentional doing of a wrongful act without just cause or excuse, either: a. With an intent to injure the *924 person or property of another person ..., or b. Under such circumstances that the law will imply an evil intent." § 6-11-20(b)(2), Ala. Code 1975. "Oppression" is defined as "[s]ubjecting a person to cruel and unjust hardship in conscious disregard of that person's rights." § 6-11-20(b)(5). "Gross" is defined as inexcusable, flagrant, or shameful. Ex parte Norwood Hodges Motor Co., 680 So. 2d at 249.
The evidence showed that the defendants had retroactively applied a method that reduced the plaintiff's commissions, without her knowledge. Not only were Fleenor's commissions reduced; numbers on her quarterly sales reports were arbitrarily struck out and replaced with lower numbers. Manjit Singh, the chief executive officer of Talent Tree, testified:
The defendants admit that they did not pay Fleenor the full amounts Talent Tree owed her for commissions for the three quarters of 1994. We conclude that the jury could have found, by clear and convincing evidence, that the defendants acted with the malicious intent or gross conduct required to justify the imposition of punitive damages.
The defendants' final argument is that the award of $2 million in punitive damages is unconstitutionally excessive in light of BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), and in light of this Court's precedent. In BMW, the Supreme Court of the United States emphasized that state courts must provide a "meaningful" judicial review of a punitive damages award, when such an award is challenged by a tortfeasor as excessive, to ensure that the tortfeasor's right to due process of law is not violated. See BMW, 517 U.S. at 564, 587, 116 S. Ct. at 1593, 1605 (Breyer, J., concurring), on remand, 701 So. 2d 507, 510 (Ala.1997). The Supreme Court stated that "[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose" for such conduct. BMW, 517 U.S. at 574, 116 S. Ct. at 1598. The Court utilized three "guideposts" to conclude that BMW had not received adequate notice of the magnitude of the sanction that Alabama might impose for BMW's nondisclosure policy. BMW, 517 U.S. at 574-75, 116 S. Ct. at 1598-99. The three guideposts are: (1) the degree of reprehensibility of the defendant's conduct, (2) the ratio of punitive damages to the amount of actual or potential harm suffered by the plaintiff, and (3) a comparison of the amount of the jury's verdict with civil or criminal penalties (if any) that could be imposed under the law for comparable misconduct.[3]BMW, 517 U.S. at 574-84, 116 S. Ct. at 1598-1603. The BMW Court concluded that the $2 million award was "grossly excessive" in light of the low level of reprehensibility of BMW's conduct; in light of the 500:1 ratio between the punitive award and the actual harm to the plaintiff, Dr. Ira Gore, Jr., who had purchased the repainted BMW automobile; and in light of the statutory fines available in Alabama and elsewhere for similar malfeasance. BMW, 517 U.S. at 574-76, *925 579-83, 116 S. Ct. at 1598-99, 1601-03. The BMW case came to this Court on remand, and this Court discussed these guideposts in its remand opinion BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) ("BMW II").
In discussing the first guidepost, the United States Supreme Court called the degree of reprehensibility "[p]erhaps the most important indicium of the reasonableness of a punitive damages award." BMW, 517 U.S. at 575, 116 S. Ct. at 1599. Given the importance of this guidepost, courts must consider what evidence, taken in a light most favorable to the plaintiff,[4] would have permitted the jury to find that the amount of the punitive damages award accurately reflected the "enormity of the offense." See BMW, 517 U.S. at 575, 116 S. Ct. at 1599. Mitigating factors are important to this determination, as are aggravating factors.
Reprehensibility of the defendant's conduct is one of the factors that Alabama courts consider in the common law excessiveness review required by Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986). As stated by this Court in Green Oil, considerations applicable to determining reprehensibility include the duration of the conduct; the degree of the defendant's awareness of any hazard that his conduct was causing or was likely to cause; and any concealment or "cover up" of the hazards created. 539 So. 2d at 223. An Alabama statute adds these considerations: whether the defendant has been guilty of similar acts in the past; the nature and extent of efforts on the part of the defendant to remedy the wrong; and the opportunity or lack of opportunity the plaintiff gave the defendant to remedy the wrong. § 6-11-23(b), Ala.Code 1975. In BMW II, we noted that, to these factors, the Supreme Court in BMW added two others that principally determine reprehensibility: (1) the defendant's awareness of his acts or omissions causing harm and (2) the quality and quantity of rights of others that were disregarded by the defendant. See BMW II, supra, 701 So. 2d at 512. Repeated misconduct is more reprehensible than a single instance of misconduct, and, as recognized by the Supreme Court in BMW, some tortious conduct is more blameworthy than other tortious conduct. 517 U.S. at 576-77, 116 S. Ct. at 1599-1600.
The trial court reviewed the evidence and stated:
So far as we are aware, no other action, civil or criminal, has been taken against the defendants for their misconduct, and there is no evidence of prior misconduct. The malfeasance in this case lasted about three months. Upon its discovery, the defendants began to respond in a timely manner to Fleenor's requests for information. As indicated by the trial court, Talent Tree provided most of the relevant documents when Fleenor initially asked for them. One document, however, showed that her sales figures had been inexplicably struck out and replaced with lower figures. This document was not produced until a month before trial. When negotiations broke down, Talent Tree offered to hire an independent analyst. Because Fleenor strongly disagreed with the amount offered by Talent Tree, she was forced to sue.
Fleenor also gave the defendants a reasonable opportunity to remedy the misconduct, especially considering the sensitive nature of the case. David Seaver first scorned her allegations by saying, "If you want to play games, we can play games." In due course, the president of the company was made fully aware of the problems, including the fact that Talent Tree owed Fleenor some amount.
Because this case was mostly an argument over money, the rights affected were largely economic in nature; but this characterization is not meant to belittle the injury. Additionally, during the course of trial and on appeal, Talent Tree has accused Fleenor of committing fraud, of padding her sales figures, and of manipulating her accounts. Based on those accusations, Talent Tree has argued that Fleenor actually owes it money, although at the same time it admits that it owes her money.
In conclusion, Fleenor's commissions were retroactively reduced for a three-month period without her knowledge. The misconduct was undisclosed and was deliberately aimed at manipulating Fleenor's sales figures and her accounts in order to reduce the amount that Talent would pay her for commissions. This affirmative misconduct amounts to concealment and is evidence of an improper motive. See Duck Head Apparel Co., supra; BMW II, supra (Houston, J., concurring in the result). As stated by the United States Supreme Court in BMW, 517 U.S. at 576, 116 S.Ct. at 1599:
The record fully supports the trial court's findings that the defendants' activities were not merely the result of accidents and mistakes and that the defendants were simply unable to answer the evidence of wrongdoing. Duck Head Apparel Co., 659 So. 2d at 914. Additionally, when Fleenor first questioned the accuracy of the commission payments Talent Tree had made to her, she received most, but not all, of the documents necessary to reveal the misconduct. Contrary to Talent Tree's assertion that such information was made available as soon as she asked for it, Fleenor instead was forced to invoke the discovery provisions of the Alabama Rules of Civil Procedure before she could get the most important document necessary to establishing her claim.
*927 The Supreme Court stated in BMW that the "perhaps most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff" and noted the principle "that exemplary damages must bear a `reasonable relationship' to compensatory damages." 517 U.S. at 580, 116 S. Ct. at 1601. The Supreme Court expressly stated that due process does not require a purely mathematical formula and that in most cases, a remittitur will not be justified on the basis of the ratio. 517 U.S. at 582-83, 116 S. Ct. at 1602-03. However, "a high ratio might indicate excessiveness, particularly if the conduct of the defendant was not especially reprehensible." BMW II, 701 So. 2d at 513. We are today ordering a further reduction of the amount of $2 million to $1.5 million. We conclude that an award of $1.5 million in punitive damages is not excessive, is not unreasonable in relation to the compensatory damages awarded, and is reasonable under the circumstances of this case.[6]
Last, in BMW the Supreme Court announced that state courts, when reviewing punitive damages awards for excessiveness, must "compar[e] the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." BMW, 517 U.S. at 583, 116 S. Ct. at 1603. The aim of this endeavor is to "`accord "substantial deference" to legislative judgments concerning the appropriate sanctions for the conduct at issue.'" 517 U.S. at 583, 116 S. Ct. at 1603 (citations omitted).
Alabama citizens who become victims of fraud in employment situations such as this have little recourse other than private litigation. Punitive damages have historically been part of the remedy for such victims of fraud. See Duck Head Apparel Co., supra. As to criminal penalties, theft by deception of more than $1,000 is a Class B felony, punishable by 2 to 20 years' imprisonment. § 13A 8-3, Ala.Code 1975. In comparing the verdict in this case to the criminal sanctions that might be imposed under the facts, we cannot say that $1.5 million in punitive damages exceeds the outer limits imposed by the Due Process Clause of the Constitution.
Having independently reviewed the evidence in this case in light of BMW, we now consider specifically the additional factors set forth in Green Oil Co. v. Hornsby, 539 So. 2d 218, 223-24 (Ala.1989), cited in Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991), and quoted in Northwestern Mut. Life Ins. Co. v. Sheridan, 630 So. 2d 384 (Ala. 1993), which are not addressed by the Supreme Court in BMW:
Northwestern Mut. Life Ins. Co. v. Sheridan, 630 So. 2d at 394.
First, we consider "whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant's conduct as well as the harm that actually has occurred." As stated earlier in this opinion, it is likely that Fleenor's mental suffering will strain her future *928 relationships with employers. Her relationship with her family may also have suffered lasting setbacks. Talent Tree's conduct showed an indifference to, and a reckless disregard for, her economic rights, and Talent Tree breached her trust. Talent Tree admitted that it owes Fleenor as much as $69,000. Alabama, by statute, provides that theft by deception of more than $1,000 is punishable by 2 to 20 years' imprisonment. Consequently, the award of $1.5 million in punitive damages has a reasonable relationship to the harm that occurred and that was likely to occur. Clearly, the defendant stood to profit from its wrongful conduct. The verdict, even without the remittitur in the trial court, would have little or no impact on Talent Tree, by admission of its own corporate officers. Additionally, any award in this case will have no impact whatever on Harris, because Talent Tree has paid all of her legal expenses and will pay the full amount of the judgment. As indicated previously, the defendants have not been criminally sanctioned for their misconduct, nor are we aware of any other civil awards against the defendants for the same conduct.
Having examined the record in this case and reviewed the verdict for excessiveness under our established standards, plus the additional factors required by the Supreme Court in BMW, we conclude that a $1.5 million punitive damages award does not exceed the outer limit permissible under the Due Process Clause of the United States Constitution or the limit permissible under Alabama law. Accordingly, the judgment of the trial court is affirmed, conditioned upon the plaintiff's accepting a further reduction of the punitive award to $1.5 million. If the plaintiff does not, within 28 days of the date of this opinion, file in this Court a remittitur of punitive damages to the sum of $1.5 million, then the defendants shall be granted a new trial.
In view of this disposition of the case, we need not address the cross appeal.
AFFIRMED CONDITIONALLY.[*]
ALMON, KENNEDY, and COOK, JJ., concur.
HOUSTON, J., concurs specially.
MADDOX and BUTTS, JJ., concur in the result.
HOOPER, C.J., concurs in part and dissents in part.
HOUSTON, Justice (concurring specially).
If I adhered to my concurrence in the result in BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) (BMW II), I would vote to approve a punitive damages award of no more than $900,000. However, the majority opinion in BMW II, and not my concurrence in the result, is the law of the State of Alabama; therefore, I concur in the judgment approving a punitive damages award of $1.5 million.
HOOPER, Chief Justice (concurring in part and dissenting in part).
I believe that the punitive damages award, even as reduced by this Court, is excessive. For this reason, I must respectfully dissent as to the punitive damages award. A jury awarded Ms. Fleenor $300,000 in compensatory damages. I concur in the affirmance of this compensatory award. I believe that any punitive damages award in excess of $1 million, however, is a violation of the defendant's right to due process.
[1] Accord, Potomac Leasing Co. v. Bulger, 531 So. 2d 307, 310 (Ala.1988) ("`In passing upon the admissibility of such collateral matters, great latitude must be extended so as to afford the admission of any relevant evidence bearing upon the ultimate issue of fraud.'") (quoting Dorcal, Inc. v. Xerox Corp., 398 So. 2d 665, 671 (Ala.1981)); Valentine v. World Omni Leasing, Inc., 601 So. 2d 1006, 1009 (Ala.Civ.App.1992) ("The commission of similar wrongs by a party to civil actions has been allowed to prove knowledge, design, intent, motive, malice and wantonness to show a fraudulent intent, plan or scheme."); Old Southern Life Ins. Co. v. Roberts, 290 Ala. 8, 272 So. 2d 891 (1972) (holding that proof of a person's motive is admissible even though such proof is weak and inconclusive).
[2] Fleenor, in describing her mental anguish, testified:
"[I]t's just escalated throughout. I've had such stress on me and the negative emotions that I've experienced, like anger, disillusionment, disappointment. I've spent a lot of time crying, and I've had trouble controlling my emotions. I spent a lot of time having trouble sleeping at night. I just can't turn this off. I just keep thinking about it, and it's very upsetting. And the more that I discover, the more upsetting it's become, because they're now contending that I didn't sell the accounts that I sold. And Brenda Harris is taking credit for selling a lot of my accounts. And I worked very hard under this program, and I was very motivated by the potential.... I worked very hard in 1994 for it, and now I've had to work another year just to try to collect it. And I've had to hire attorneys to do this.... I was so preoccupied with all of this and in trying to get these numbers together that I really my whole family has suffered.... It's been very disruptive to my life...."
[3] The review should also ensure that the jury's verdict was focused on "the State's interest in protecting its own consumers and its own economy," rather than those of other states or those of the entire nation. BMW, 517 U.S. at 571, 116 S. Ct. at 1597. We note that Fleenor's case does not present any of the concerns of state sovereignty, comity, or interstate commerce addressed by the United States Supreme Court in BMW.
[4] King Motor Co. v. Wilson, 612 So. 2d 1153 (Ala. 1992).
[5] During trial, the defendants made no issue about the impact of the verdict on Talent Tree.
[6] The reasonableness of the 5:1 ratio is further supported by the ratios in cases in which the United States Supreme Court denied certiorari review within a short time after it released its BMW decision. See Liberty Mutual Ins. Co. v. Chemstar, Inc., ___ U.S. ___, 116 S. Ct. 1847, 134 L. Ed. 2d 948 (1996) (5:1 ratio); Wolfberg v. Greenberg, ___ U.S. ___, 116 S. Ct. 1847, 134 L. Ed. 2d 948 (1996) (8:1 ratio); Murray v. Laborers Union Local No. 324, 55 F.3d 1445 (9th Cir.1995), cert. denied, ___ U.S. ___, 116 S. Ct. 1847, 134 L. Ed. 2d 948 (1996) (800:1 ratio); Fraidin v. Weitzman, 93 Md.App. 168, 611 A.2d 1046 (1991), cert. denied, 329 Md. 109, 617 A.2d 1055 (1993), ___ U.S. ___, 116 S. Ct. 1846, 134 L.Ed2d 948 (1996) (15:1 ratio).
[*] Note from the reporter of decisions: The Supreme Court on October 6, 1997, entered a "certificate of Judgment of affirmance," noting that "the appellee/cross appellant, Cathy Fleenor, did on September 22, 1997, file in this Court a remittitur reducing the punitive damages to $1,500,000." The certificate ordered "that the judgment of the circuit court for punitive damages be reduced to $1,500,000 and as thus reduced, the judgment of the circuit court is hereby affirmed, with interest and costs." | September 12, 1997 |
55783668-d4fb-4b8c-a86b-d6435fb280d3 | Ex Parte Watley | 708 So. 2d 890 | 1961331 | Alabama | Alabama Supreme Court | 708 So. 2d 890 (1997)
Ex parte Billie Jean WATLEY and John S. Watley.
(Re Billie Jean WATLEY and John S. Watley
v.
TRANSAMERICA FINANCIAL SERVICES, INC.).
1961331.
Supreme Court of Alabama.
November 7, 1997.
*891 J. Gusty Yearout, William R. Myers, and John G. Watts of Yearout, Myers & Traylor, P.C., Birmingham; and A. Dwight Blair III of Blair, Holladay & Parsons, P.C., Pell City, for petitioners.
Charles E. Robinson of Charles E. Robinson, P.C., Ashville; and Andrew J. Noble III and Stewart M. Cox of Bradley, Arant, Rose & White, L.L.P., Birmingham, for respondent.
George W. Finkbohner III and Royce A. Ray III of Finkbohner & Lawler, L.L.C., Mobile, for amicus curiae plaintiff class members in Autrey v. UCLC (Mobile Circuit Court, CV-94-1316), in support of the petition.
H. Hampton Boles and Gregory C. Cook of Balch & Bingham, L.L.P., Birmingham, for amicus curiae Alabama Bankers Ass'n, in opposition to the petition.
PER CURIAM.
This Court has granted Billie Jean Watley and John S. Watley's petition for certiorari review of the judgment of the Court of Civil Appeals in Watley v. Transamerica Financial Services, Inc., 708 So. 2d 889 (Ala.Civ. App.1997). The Court of Civil Appeals affirmed a summary judgment for Transamerica Financial Services, Inc., in the Watleys' action against Transamerica alleging a violation of the cap on discount points imposed by § 5-19-4(g), Ala.Code 1975. This Court granted the petition to review the Watleys' argument that the affirmance conflicts with United Companies Lending Corp. v. McGehee, 686 So. 2d 1171 (Ala.1996) cert. denied, ___ U.S. ___, 117 S. Ct. 1555, 137 L. Ed. 2d 703 (1997), and Smith v. First Family Financial Services, Inc., 626 So. 2d 1266 (Ala.1993). The question is whether the points cap imposed by § 5-19-4(g) applies to mortgage loans for amounts of $2,000 or more, notwithstanding the provision of § 8-8-5(a), Ala.Code 1975, that allows parties to agree to such an interest rate as they may determine, provided that the loan is for an amount not less than $2,000.
Subsection (g) was added to § 5-19-4 on March 11, 1988, effective "from and after June 30, 1988," by Act No. 88-87, 1988 Ala. Acts p. 112. Subsection (g), as set out in the Act, read as follows:[1]
Thus, § 5-19-4(g) prohibits the charging or collecting of points in excess of 5% of the original principal balance of a consumer loan secured by an interest in real property.
The Court of Civil Appeals held, however, that this prohibition does not apply to loans of $2,000 or more, because of the operation of § 8-8-5(a), which reads, in pertinent part:
The Court of Civil Appeals also quoted the last sentence of § 8-8-5(c), which provides: "The term `interest' as used herein shall include all direct or indirect charges imposed as an incident to a loan, forbearance of money, or credit sales." That court concluded: "Therefore, because the loan in this case was greater than $2,000, the Mini-Code provisions relating to the points charged on this loan do not apply; rather, § 8-8-5 applies." 708 So. 2d at 890.
As we understand its opinion, the Court of Civil Appeals held that the points limitation of § 5-19-4(g) is superseded by § 8-8-5(a) because discount points are "interest," defined in § 8-8-5(c) as "direct or indirect charges imposed as an incident to a loan." However, even the assumption that points are includable among the "direct or indirect charges" contemplated by § 8-8-5(c) does not put § 5-19-4(g) into conflict with § 8-8-5(a), because the two statutes can be reconciled simply by interpreting them to mean that discount points cannot constitute the entire interest on a loan, but may only be a component of the total finance charge, not to exceed five percent. This is the only reasonable construction of the two statutes' operation in pari materia, as we shall explain below.
Section 8-8-5 was last amended in 1984, by Act No. 84-308, 1984 Ala. Acts p. 683, which "reduce[d] the amount on which interest may be negotiated" from $5,000 to $2,000.[2] Thus, § 8-8-5(a) appeared in its present form when the legislature adopted § 5-19-4(g) in 1988. The construction by the Court of Civil Appeals would mean that the legislature, when it adopted a cap of 5% on points, intended for that cap to apply to loans "secured by an interest in real property," but only to loans of amounts less than $2,000.
This amounts to saying that the legislature intended for § 5-19-4(g) to have virtually no application at all. Virtually no purchase-money mortgages for residential property would be for such small amounts. The median cost of a house and land in Alabama in 1990, just two years after § 5-19-4(g) was enacted, was $53,700, according to the U.S. Bureau of the Census, County and City Data Book: 1994, p. 8. Even a second mortgage or other consumer loan would not ordinarily be made for an amount less than $2,000. Loans secured by an interest in real property require payment of expenses for such items as title searches or abstract updates, title insurance, recording of mortgages, appraisals, surveys, attorney fees, mortgage preparation, and other such costs. A charge for these costs is specifically allowed by § 5-19-4(f). These costs would be prohibitively high in relation to the amount financed if the loan amount is less than $2,000.
The legislature will not be presumed to have done a futile thing in enacting a statute. "[I]t is presumed that the legislature does not enact meaningless, vain or futile statutes." Druid City Hospital Bd. v. Epperson, 378 So. 2d 696, 699 (Ala.1979). Indeed, in one of the earliest cases interpreting the Mini-Code, this Court said: "There is a strong presumption that the legislature did not do a futile thing when it expressly brought real estate mortgage loans within the regulatory purview of the Mini-Code." Fletcher v. Tuscaloosa Federal Savings & *893 Loan Ass'n, 294 Ala. 173, 176, 314 So. 2d 51, 53 (1975).
Ex parte Meeks, 682 So. 2d 423, 428 (Ala. 1996).
No departure from the literal language of § 5-19-4(g) is needed. It may be given full effect, and § 8-8-5(a) may be given full effect, without any deviation from the terms of either Code section. Section 8-8-5(a) applies to the total amount of interest on a loan; § 5-19-4(g) applies only to points, which are simply one example of a "finance charge" as defined by § 5-19-1(1).[3] They presumably may be one component of a permissible rate of "interest" as defined by § 8-8-5(c). Thus, although the total "interest" may be at such a rate as the parties may determine, § 8-8-5(a), the points included in a "finance charge" may not exceed 5% of the original principal balance or the total line of credit, § 5-19-4(g).
Statutes should be construed to operate in harmony with each other, if possible.
Sullivan v. State ex rel. Attorney General, 472 So. 2d 970, 973 (Ala.1985). Sections 8-8-5 and 5-19-4(g) can be construed together without limiting or modifying either.
The enactment of Act No. 88-87 in 1988 should be looked at in light of the facts and circumstances shown in Williams v. E.F. Hutton Mortgage Corp., 555 So. 2d 158 (Ala. 1989). Before 1986, First American Mortgage Company had been making mortgage loans that included nonrefundable prepaid finance charges of 40%. E.F. Hutton had purchased these loans. On February 17, 1986, a class action, Murphree v. E.F. Hutton, was filed against E.F. Hutton in the Jefferson County Circuit Court. On May 21, 1987, Brenda Williams and others filed a similar action, which was the subject of the opinion in Williams v. E.F. Hutton. Both of these actions alleged "that First American had imposed excessive, prepaid finance charges." 555 So. 2d at 161. For reasons we will not repeat here, this Court in Williams affirmed a summary judgment for E.F. Hutton.
Our point here is that Williams and Murphree both concerned allegations that nonrefundable prepaid charges of 40% were excessive and unconscionable. After those two actions were filed, and before this Court decided the appeal in Williams, the Legislature enacted Act No. 88-87, amending § 5-19-4 to expressly allow mortgage lenders to charge and collect points, but to limit those points at 5%. Any allegation, such as was made in Williams, that points are unconscionable simply because they are nonrefundable, is precluded by the enactment of Act No. 88-87.
However, if this Court were to hold that § 5-19-4(g) does not apply to loans of $2,000 or more because of the operation of § 8-8-5, would that mean that there is no express provision allowing mortgage lenders to charge and collect points? A creditor could answer this question by arguing that § 5-19-4(g) allows a creditor to charge and collect points on all mortgage loans but, by reference to § 8-8-5, caps those points only as to loans of less than $2,000. This would be a strained and unnatural reading of § 5-19-4(g), requiring the first part of the sentence to apply to all loans and the second part, with *894 no qualifying language, to apply only to mortgage loans of less than $2,000. We will not attribute such a deceptive drafting technique to the legislature.
Section 2 of Act No. 88-87 is also instructive:
(Emphasis added.) As explained above, this Act may be read in pari materia with § 8-8-5 so as to give effect to both provisions, without repealing, amending, or modifying § 8-8-5. As the legislature said, Act No. 88-87 was merely cumulative to § 8-8-5, providing for and limiting the charging and collecting of points, as to which § 8-8-5 is silent.
Moreover, the last sentence of § 5-19-4(g), as adopted by Act 88-87, § 1, states that "Points shall be in addition to all other charges and are fully earned on the date of the loan or credit sale and may be excluded from the finance charge for the purpose of computing the finance charge refund." Thus, the prohibition against denominating more than 5% of the total finance charge or interest as points is a reasonable purpose for the legislature to have intended, because of the fact that points are "fully earned on the date of the loan or credit sale," § 5-19-4(g), and therefore are not refundable if the loan is paid before its due date. Even though § 8-8-5 allows the interest rate to be as high as the market will bear and as high as the doctrine of unconscionability will allow, § 5-19-4(g) prevents a creditor from charging an excessive portion of that rate as "points" and thereby making the "interest" nonrefundable.
The Mini-Code is a consumer protection statute, and is due to be construed with consumer protection in mind.
McCullar v. Universal Underwriters Life Ins. Co., 687 So. 2d 156, 163 (Ala.1996) (citations omitted). Construction of the Mini-Code "must be made with the protection of the consumer in mind." Spears v. Colonial Bank of Alabama, 514 So. 2d 814, 816 (Ala. 1987). Allowing § 5-19-4(g) to have the application that it appears on its face to have (i.e., an application to all loans secured by an interest in real property, not just to those that are for less than $2,000) will provide the protection to consumers that the legislature intended for the Mini-Code to provide.
For the foregoing reasons, the Court of Civil Appeals erred in holding that § 8-8-5(a) precludes § 5-19-4(g) from applying to loans of $2,000 or more that are secured by an interest in real property.
We make no decision whether Cantrell v. Walker Builders, Inc., 678 So. 2d 169 (Ala. Civ.App.1996), on which the Court of Civil Appeals relied in affirming the circuit court's judgment for Transamerica, was correctly decided. Cantrell concerned the limitation imposed by § 5-19-4(a) on late fees. It is distinguishable if only because § 5-19-4(a) reads essentially as it did before § 8-8-5 was amended to reduce the amount on which interest rates were negotiable from $100,000 to $5,000 and then to $2,000. The application of § 5-19-4(a) could therefore be governed by the subsequent amendment of § 8-8-5, whereas § 5-19-4(g) was enacted after those amendments to § 8-8-5. Furthermore, the Court of Civil Appeals relied in Cantrell on an attorney general's opinion, which that court quoted as stating, in part:
Cantrell, 678 So. 2d at 173, quoting "Banks and BankingInterest RatesDelinquent, Op. Att'y Gen. of Alabama (Aug. 31, 1987)."[4]*895 The attorney general concluded that interest-bearing loans could not be assessed a late charge pursuant to § 5-19-4(a), but that such a late charge could be negotiated pursuant to § 8-8-5. These questions are beyond the scope of the issues presented by the Watleys' certiorari petition, and we do not decide them.
Because it ruled as a matter of law that § 5-19-4(g) does not apply to the Watleys' loan, the Court of Civil Appeals did not rule on the merits of their claim that the points charged by Transamerica exceeded the 5% limit imposed by § 5-19-4(g). The circuit court entered a summary judgment for Transamerica, based on a holding that the loan does not in fact violate § 5-19-4(g):
Section 5-19-4(g), as it applied to the Watleys' loan, read:
Act No. 88-87, 1988 Ala. Acts pp. 113-14 (emphasis added).
This language allowed the points to be included as part of the "original principal balance," meaning that the "proceeds" plus the points equaled the original principal balance. The amount of allowable points was to be calculated on the basis of this total, not simply on the proceeds or some other smaller amount. Section 5-19-4(g), as it applied to the Watleys' loan, therefore expressly provided that the 5% maximum amount of points was 5% of the total amount borrowed, including the points. If a creditor wished to collect the maximum allowable amount of points, the calculation of the amount of points would require a formula that took into account the creditor's intention that the proceeds would be 95% of the original principal balance of the loan, and the points would be the other 5%. Once an "original principal balance" and an amount to be charged and collected as points were established, the question of whether the points exceeded the 5% maximum would be answered by the calculation provided by Mr. Floyd as quoted by the circuit court.
In short, the circuit court correctly interpreted § 5-19-4(g) as it applied to this case. The Watleys argue that this impermissibly allows the creditor to collect "points on points," but the plain language of the statute permitted this, if the debtor borrowed the amount that was charged and collected as points.
The above analysis may have been modified by an amendment to § 5-19-4(g). Act No. 96-576, 1996 Ala. Acts p. 887, adopted a comprehensive amendment to the Mini-Code. It reenacted § 5-19-4(g) to read:
(Emphasis added.) The first sentence still allows the creditor to charge points "in an amount not to exceed five percent of the original principal balance in the case of a closed-end consumer credit transaction." The next sentence now allows the creditor to deduct the points from the proceeds of the loan and to include the amount of the points "in the original amount financed." We do not decide in this case whether the term "original principal balance" has a meaning different from the term "original amount financed," but it appears that this use of different terms may mean that for loans after the effective date of Act No. 96-576, points may be included in the amount financed, but may be calculated so as not to exceed 5% of a smaller amount, the original principal balance, which presumably would not include the points.
However, the prior version of § 5-19-4(g) clearly supports the circuit court's judgment holding that the points charged on the Watleys' loan did not exceed the 5% maximum. For that reason, the judgment of the Court of Civil Appeals is due to be affirmed. For the reasons stated earlier in this opinion, however, we disapprove and overrule the rationale given by the Court of Civil Appeals in its opinion affirming the judgment.
AFFIRMED.
ALMON,[*] SHORES, KENNEDY,[*] COOK, and BUTTS, JJ., concur.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., concur in the result, but disagree with part of the rationale, with opinions by HOOPER, C.J., and HOUSTON, J.
HOOPER, Chief Justice (concurring in the result, but disagreeing with part of the rationale):
The majority's opinion purports to harmonize § 8-8-5 and § 5-19-4, Ala.Code 1975. In truth, this "harmony" eviscerates portions of § 8-8-5 and very well may permanently scar Alabama's consumer loan industry. Section 8-8-5 specifically defines "interest" as including "all direct or indirect charges imposed as an incident to a loan," and allows unlimited interest rates on loans of amounts "not less than $2,000." Ala.Code 1975, § 8-8-5(a), (c). Loan "points" are obviously charges incident to a loan and, under this statute, are limited only by consumer preference in the loan market and the laws of unconscionability. Because consumers may freely negotiate charges on loans of amounts over $2,000, they may freely negotiate loan points. Such a reading comports with the bedrock principle of statutory interpretation that "[w]ords used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says." IMED Corp. v. Systems Engineering Associates Corp., 602 So. 2d 344, 346 (Ala.1992) (emphasis added). The per curiam opinion purports to effectuate the "literal language" of both statutes by allowing unlimited interest, while capping loan points. Clearly, however, this reading is not borne out by the "literal language" of § 8-8-5.
As Justice Houston points out in his special writing, § 5-19-4(g) has no effect on the provisions of § 8-8-5. The plain language of § 5-19-31(b) states that the Mini-Code "shall not be construed to amend or repeal, without limitation, ... Section 8-8-5." Yet the majority deletes from § 8-8-5 the Legislature's clear mandate that charges incident to a loan of an amount over $2,000 are to *897 remain freely negotiable. The per curiam opinion states that by construing the statutes in pari materia, the majority has managed to "give effect to both provisions, without repealing, amending, or modifying § 8-8-5." 708 So. 2d at 894. In reality, the opinion modifies the provisions of § 8-8-5 to say that charges incident to a real estate loan over $2,000 are not freely negotiable.
This reading conflicts not only with the clear statutory language of § 5-19-4(g), but with Justice Almon's conclusion in Williams v. E.F. Hutton Mortgage Corp., 555 So. 2d 158, 160 (Ala.1989), that "§ 8-8-5 exempts such loans [of $2,000 or more] from the application of `any law of this state otherwise prescribing or limiting [the] rate or rates of interest' paid on such loans." There can be no reasonable doubt that § 8-8-5 is the exclusive authority in this case.
The per curiam opinion not only violates the fundamental principle of statutory construction that words are to be given their plain meaning; it also disregards the principle of expressio unis est exclusio alterius. This long-standing principle holds that in statutes the expression of one specific thing implies the exclusion of other specific things. Section 8-8-5 allows parties to negotiate the rates of interest in a transaction, with the caveat:
Ala.Code 1975, § 8-8-5(a). The Legislature specified that the only law that could control § 8-8-5 is the unconscionability law of the Mini-Code. The other provisions of the Mini-Code, including § 5-19-4(g), are thereby excluded.
The construction of § 8-8-5 and § 5-19-4(g) adopted by the Court of Civil Appeals is the correct one. However, this Court's per curiam opinion refuses to adopt this most natural construction. Instead, the majority makes loan points out to be some sort of bizarre creature reminiscent of the Minotaur, the half-man, half-bull of Greek mythology. According to the per curiam opinion, loan points are at once a finance charge and an interest rate. The opinion states:
708 So. 2d at 893. If loan points are "one component of a permissible rate of `interest' as defined by § 8-8-5(c)," then the natural assumption is that they are also controlled by § 8-8-5(a). But the majority then reads them to be "one example of a `finance charge'" subject to the restrictions of § 5-19-4(g). Such an interpretation is convoluted at best and disregards the plain meaning rule.[5]
The per curiam opinion's justification for this interpretation is that the interpretation by the Court of Civil Appeals would leave § 5-19-4(g) without application. On the contrary, § 5-19-4(g) is left to operate in the territory for which the Legislature created itsmall consumer loans. I would contend that every day in this state consumers borrow amounts under $2,000 with the loans being secured by mortgages on real property. One example of such a mortgage would be one given when a person borrows money to pay for home repairs; the consumer may not have the necessary cash but borrows a small amount of money with the loan being secured by a mortgage on his home. Consumers who do not have even a relatively small amount of ready cash are often forced to borrow amounts under $2,000. These are the consumers the Legislature intended to protect with the points cap of § 5-19-4(g). They will still be protected by § 5-19-4(g). The per curiam opinion, though, seems unable to accept the idea that the Legislature might pass a statute of limited scope. The *898 Justices concurring with that opinion would rather substitute their own judgment and expand § 5-19-4(g) into the areas they deem proper rather than follow the Legislature's own statute.
While consumers borrowing less than $2,000 are protected by § 5-19-4(g), consumers like the Watleys, who borrow more than $2,000, are protected under § 8-8-5 by our free market system. In our laissez-faire economy, creditors respond to the demands of their customers. Quite simply, a creditor who charges excessive loan points will not have customers. This Court's opinion, however, prefers government intervention in the mortgage loan marketplace to the operation of the free market.
In a very cogent amicus curiae brief, the Alabama Bankers Association, which consists of 168 banks doing business in Alabama, highlighted the practical impact a reversal of the Court of Civil Appeals judgment would have on the mortgage-loan marketplace. These banks know better than anyone else the need for clarity in the application of § 8-8-5 and § 5-19-4(g). As their brief stated:
The confused reading this Court has given those Code sections today will not provide the guidance the banks seek.[6] With a ruling that loan points, while a "component" of interest, are excluded from the operation of § 8-8-5(a), the obvious question becomes: What other loan charges are excluded as well? The amicus brief further elaborates on the daily implications of the majority's decision, stating:
I fear that the majority's ruling will injure all concernedharming not just our loan industry, but also the consumers of this state who will find it much more difficult to obtain credit.
This Court today has taken upon itself the job of amending the clear language of § 8-8-5. The majority feels that this is necessary under the "golden rule of statutory interpretation that unreasonableness of the result produced by one among alternative possible interpretations of a statute is reason for rejecting that interpretation in favor of another which would produce a reasonable result." Fletcher v. Tuscaloosa Federal Savings & Loan Ass'n, 294 Ala. 173, 176, 314 So. 2d 51, 53 (Ala.1975). What is reasonable to this Court may be very unreasonable to the banking and mortgage lending industry. And in following a court-made rule of statutory interpretation, the majority has violated a fundamental principle of our state government that the power to legislate lies with the Legislature, not this Court.
In sum, I would affirm the Court of Civil Appeals' holding that the points cap of § 5-19-4(g) has no application to loans over $2,000 secured by real property. Section 8-8-5 is the exclusive authority for such loans. This Court is bound to adopt such a construction because it comports with the plain meaning of the statutes. Any change to this plain meaning must be made by the Legislature, not by this Court. I disagree with the rationale of the per curiam opinion because it disregards this plain meaning and clearly modifies § 8-8-5 by applying § 5-19-4(g), in violation of § 5-19-31(b).
SEE, J., concurs.
HOUSTON, Justice (concurring in the result, but disagreeing with part of the rationale).
Section 5-19-31(b), Ala.Code 1975, provides in pertinent part:
Section 5-19-4, Ala.Code 1975, is part of Chapter 19; therefore, § 8-8-5 is not "amended" by § 5-19-4. The per curiam opinion has § 5-19-4 amend § 8-8-5, in violation of the Legislature's plain, unambiguous language. When language is ambiguous and must be construed to ascertain its meaning, we should construe; but, whether the statute's language is plain or ambiguous, we should never legislate. The Legislature has more than once said what it meant. See 1989 Acts of Alabama, Act No. 89-541, § 2 ("Nothing in this chapter [Chapter 19] shall be construed to amend or repeal ... § 8-8-5...."); 1988 Acts of Alabama, Act No. 88-87, § 2 ("The provisions of this section ... shall not in any way repeal, amend or modify the provisions of Section 8-8-5, Code of Alabama 1975, as amended.").
In Williams v. E.F. Hutton Mortgage Corp., 555 So. 2d 158, 160 (Ala.1989), Justice Almon wrote for the Court: "Alabama Code 1975, § 8-8-5(a), allows persons to agree to pay such a rate of interest as they may determine, provided that the original principal balance of the loan is not less than $2,000...." Excepting only the application of unconscionability law (which was not applicable in Williams and is not applicable in the present case), "§ 8-8-5 exempts such loans from the application of `any law of this state otherwise prescribing or limiting [the] rate or rates of interest' paid on such loans." Id.
Section 8-8-5(c) provides: "The term `interest' as used herein shall include all direct or indirect charges imposed as an incident to a loan, forbearance of money, or credit sales."
MADDOX, J., concurs.
[1] Subsection (g) now reads differently, because of a 1996 amendment by Act No. 96-576, 1996 Ala. Acts. See the discussion near the end of this opinion.
[2] When the Mini-Code was enacted in 1971, the amount of a loan on which interest was unlimited stood at $100,000. Act No. 27, 1970 Extraordinary Session, 1969-70 Ala. Acts p. 2628. This amount was reduced to $5,000 in 1980. Act No. 80-435, 1980 Ala. Acts p. 659. Thus, the interest rate limitation imposed by § 5-19-3 on loans above $2,000 was superseded by § 8-8-5 from 1980 until 1996, when § 5-19-3 was amended by Act No. 96-576, 1996 Ala. Acts p. 887.
[3] See Smith v. First Family Financial Services, Inc., 626 So. 2d 1266, 1271 (Ala.1993).
[4] This Court has obtained a copy of this informal opinion bearing the number 87-00293.
[*] Although Justice Almon and Justice Kennedy were not present at oral argument, they have reviewed the videotape of the oral argument.
[5] The per curiam opinion characterizes loan points as being one more example of a § 5-19-1(1) "finance charge." I would note that § 5-19-3(e) limits the maximum finance charge allowed, but also clearly states that its limitation does not apply to loans over $2,000 because those loans are controlled by § 8-8-5.
[6] I question how the banking industry can find any guidance at all in an opinion that states, "[D]iscount points cannot constitute the entire interest on a loan, but may only be a component of the total finance charge, not to exceed five percent." 708 So. 2d at 892. (emphasis original). | November 7, 1997 |
0898ca58-a5f0-4a2a-a797-7360b4290f82 | Ex Parte Turpin Vise Ins. Agency, Inc. | 705 So. 2d 368 | 1960427, 1961243 | Alabama | Alabama Supreme Court | 705 So. 2d 368 (1997)
Ex parte TURPIN VISE INSURANCE AGENCY, INC.
Ex parte FOREMOST INSURANCE COMPANY GRAND RAPIDS, MICHIGAN.
(Re Lewis McNEAL, et al. v. FOREMOST INSURANCE COMPANY, et al.).
1960427, 1961243.
Supreme Court of Alabama.
July 18, 1997.
Rehearing Denied October 24, 1997.
*369 Vernon L. Wells II and N. Christian Glenos of Walston, Wells, Anderson & Bains, L.L.P., Birmingham, for Turpin Vise Insurance Agency, Inc.
S. Allen Baker, Jr., and N. DeWayne Pope of Balch & Bingham, L.L.P., Birmingham, for Foremost Insurance Company Grand Rapids, Michigan.
Dwayne L. Brown of Chestnut, Sanders, Sanders, Pettaway & Campbell, P.C., Selma, for Respondents.
KENNEDY, Justice.
The petitioners seek writs of mandamus directing the Greene County Circuit Court to sever certain claims from a fraud action filed in that court. Turpin Vise Insurance Agency, Inc. ("Turpin Vise"), a defendant as to claims by the plaintiff Tommy Johnson, seeks a writ of mandamus ordering the circuit court to sever Johnson's claims from those of four other plaintiffs in this action. Foremost Insurance Company ("Foremost") seeks a writ of mandamus ordering the severance of the plaintiff Lewis McNeal's claims from those alleged by the other plaintiffs.
The writ of mandamus is an extraordinary writ that applies "where a party seeks emergency and immediate appellate review of an order that is otherwise interlocutory and not appealable." Rule 21(e)(4), Ala.R.App.P. In order for this Court to issue a writ of mandamus, the petitioner must show: "(1) a clear legal right ... to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Bloodsaw, 648 So. 2d 553 (Ala.1994).
In 1986, Turpin Vise, a Hale County business, sold Johnson a homeowner's insurance policy issued by Foremost; the insurance policy insured a mobile home Johnson had purchased from Factory Home Center, Inc., a Marion County business. Johnson is a resident of Hale County, and he purchased the policy in Hale County. Johnson has sued Foremost, Turpin Vise, and Factory Home Center, alleging fraud in connection with the sale of the policy. Johnson's claims center around allegations that he was sold a comprehensive policy providing broad coverage of adjacent structures, coverage for medical payments, and other features, without being asked whether he wanted or needed that kind of policy. Johnson also alleged that he was misled to believe that the policy would pay its face amount in the event of a total loss of the mobile home.
Johnson was joined in his action by four other purchasers of Foremost mobile home insurance policies who alleged that they had been defrauded through the actions of several other defendants in connection with the sale of their policies. Those plaintiffs were Lewis McNeal, Joe Jones, Carlton Hogue, and Queen Etta Grayson. The facts surrounding their claims can be summarized as follows:
*370 McNeal, a resident of Greene County, purchased a new mobile home in 1985 from Piggy Bank Homes in Tuscaloosa, at the same time purchasing a Foremost insurance policy from Foremost Policy Services, which does business by agent in Greene County. McNeal alleged that he was sold a comprehensive policy providing coverage on adjacent structures, liability coverage, and medical payments coverage, without being asked whether he wanted that kind of policy; the policy provided more coverage, and cost more, than one not providing that kind of coverage.
In 1993, Jones, a resident of Dallas County, purchased a mobile home from Gordon Hallman, a Bibb County resident. He then purchased a Foremost insurance policy from Green Tree Agency, Inc., which does business by agent in Greene County. Jones also alleged that he had been sold a Foremost comprehensive policy providing coverage for adjacent structures and providing liability and medical payments coverage, without being asked whether he wanted that kind of policy.
In 1987, Hogue, a resident of Perry County, purchased both a mobile home and a Foremost insurance policy from Piggy Bank Homes. Hogue alleged the same claimthat he was sold a Foremost comprehensive policy without being asked whether he wanted that kind of policy.
In 1980, Grayson, a resident of Dallas County, purchased a new mobile home from Harlan's Trailer Sales in Dallas County. In 1989, Grayson was sold a Foremost comprehensive policy by L.N. Fulmer, a Tuscaloosa County resident, without being asked whether she needed that kind of policy.
Johnson, McNeal, Jones, Hogue, and Grayson all alleged that they had been damaged as a result of the defendants' misrepresentations and that the defendants had engaged in a scheme to defraud them by selling them coverage they did not want or need. Each alleged that he or she was told that, in the event of a total loss, they would receive the face amount of the policy; they alleged that this was a false representation and that the defendants knowingly made that misrepresentation. They further alleged that, when they were sold the policies they did not have adjacent structures for which they needed coverage and that they were not told that there would be an additional cost for coverage of adjacent structures, liability coverage, coverage for medical payments, or coverage for damage to the property of others.
Turpin Vise moved for a change of venue and moved to sever Johnson's claims from those of the other plaintiffs; the trial court denied its motions. In its mandamus petition, Turpin Vise first argues that the trial court erred in failing to sever Johnson's claims, because, it argues, Johnson's claims do not fall under the Rule 20, Ala.R.Civ.P., provisions for permissive joinder. It further contends that Johnson is not an "indispensable, necessary or proper" party for whom joinder is required under Rule 19, Ala. R.Civ.P. In the alternative, Turpin Vise argues that Johnson's claims should be transferred under our statutory doctrine of forum non conveniens. In its petition, Foremost also argues that the joinder in this case was improper and, in the alternative, that the claims should be transferred under the doctrine of forum non conveniens.
Rule 20, Ala.R.Civ.P., provides for the permissive joinder of parties. Rule 20(a) states:
The Committee Comments to Rule 20 state that that rule "is intended to promote trial convenience, prevent a multiplicity of suits, and expedite the final determination of litigation by inclusion in one suit of all parties directly interested in the controversy." See *371 S.E.B. v. J.H.B., 605 So. 2d 1230, 1232 (Ala. Civ.App.1992).
If the requirements for permissive joinder under Rule 20 are not satisfied and there are no grounds for compulsory joinder pursuant to Rule 19, Ala.R.Civ.P., then there can be no joinder of the parties in the action. This Court, in Ex parte Rudolph, 515 So. 2d 704 (Ala.1987), stated:
515 So. 2d at 706. (Citations omitted.)
In exercising its discretion in deciding whether to sever claims, the trial court should consider the prejudice that may result to the parties if the claims are severed. Considerations of practicality, judicial economy, and the possibility of inconsistent results are also relevant in that regard. Rudolph, 515 So. 2d at 707; see also Ex parte Jenkins, 510 So. 2d 232 (Ala.1987). The Rudolph court noted that "[t]hough the rules allow virtually unlimited joinder of parties," the Committee Comments to Rule 20 "make it clear that the trial court has `ample powers, under Rules 20(b), 21 and 42(b), to ensure that the trial is conducted in the most convenient and least prejudicial manner.'" 515 So. 2d at 706.
As noted above, what constitutes "a series of transactions or occurrences" is determined on a case-by-case basis and that determination is left to the discretion of the trial judge. Under these circumstances, we cannot hold that the trial court abused its discretion in this case. Foremost issued the policy involved in every claim stated in this action, and it is a common defendant as to each of the plaintiffs in this action. The complaint alleges that all of the defendant sellers of the policies were acting as agents of Foremost. Each of the allegations in the complaint relates to the same claimthat the failure of the defendants to inform the plaintiffs that they were purchasing Foremost comprehensive mobile home insurance that would not pay the face value of the policy constituted fraud under Alabama law. Johnson and the other plaintiffs have alleged a conspiracy among Foremost and the other defendants regarding the sale of the Foremost insurance policies; that allegation will require not only individualized proof of fraud, but also proof of the conspiracy to defraud. We note that the face values of the Foremost policies are at issue as well. The representations claimed by each plaintiff are inseparably linked to the same kind of comprehensive insurance policy issued by Foremost. The circumstances of this case are thus distinguishable from those of Papagiannis v. Pontikis, 108 F.R.D. 177 (N.D.Ill.1985), upon which both Turpin Vines and Foremost strongly rely.[1]
There is certainly the possibility that inconsistent results could occur regarding Foremost's liability if these claims were severed. Although, for purposes of their arguments, Turpin Vise and Foremost would like for the events leading to this action to be viewed as several distinct, unrelated events, it is clear that the similarities among the alleged misrepresentations found in the plaintiffs' complaint, made by alleged agents of the same insurance company, far outweigh the differences between them. The misrepresentations are alleged to have been part of a conspiracy. The trial court here attempted "to ensure that the trial is conducted in the most convenient and least prejudicial manner," see Committee Comments to Rule 20, Ala.R.Civ.P., supra, and it did not err in denying Turpin Vise's motion to sever Johnson's claims from those stated by the other plaintiffs, nor in denying Foremost's severance motion. Contrary to Turpin Vise's argument, *372 we do not foresee "tremendous mischief" and "utter judicial chaos" resulting from the trial of these related claims before the same court. Because the joinder of the claims in this action was proper under Rule 20, Ala.R.Civ.P., we need not address whether it was required under Rule 19.
Venue was proper in Greene County, because, where several claims or parties have been joined, an action may be brought in any county in which any one of the claims could properly have been brought. Rule 82(c), Ala. R.Civ.P.; see also Committee Comments to Rule 82(c). ("[t]he correct principle seems to be that once venue is properly laid, other claims and parties may be joined as ancillary to the original action regardless of venue requirements").
As noted above, Turpin Vise argues, in the alternative, that Johnson's claims should be transferred to Hale County on the basis of the Alabama forum non conveniens statute, Ala.Code 1975, § 6-3-21.1. However, it has failed to show that this issue was raised before the trial court or that it was considered by the trial court. Therefore, we need not address this issue. See Ex parte AU Hotel, Ltd., 677 So. 2d 1160 (Ala.1996). We would note, however, that Turpin Vise has clearly failed to demonstrate that Hale County would be significantly more convenient than Greene County for the trial of Johnson's claims or that the interests of justice require a transfer of their claims. See Ex parte United Brotherhood of Carpenters, 688 So. 2d 246 (Ala.1997); Ex parte Bloodsaw, supra; Ex parte Townsend, 589 So. 2d 711 (Ala.1991). We also conclude that Foremost has failed to demonstrate that the plaintiffs' claims should be transferred under the forum non conveniens statute. Ex parte United Brotherhood of Carpenters, supra; Ex parte Bloodsaw, supra; Ex parte Townsend, supra.
Turpin Vise and Foremost do not have a clear legal right to the relief they seek. Ex parte Bloodsaw, supra. For the foregoing reasons, their petitions for the writ of mandamus are hereby denied.
1960427 WRIT DENIED.
1961243 WRIT DENIED.
ALMON, SHORES, COOK, and BUTTS, JJ., concur.
HOOPER, C.J., and MADDOX and HOUSTON, JJ., dissent.
HOUSTON, Justice (dissenting).
Turpin Vise Insurance Agency's Petition for the Writ of Mandamus.
Section 6.11 of Amendment No. 328 to the Constitution of Alabama of 1901, provides in pertinent part:
The Legislature, which has the constitutional power to provide for the proper venue of actions, has provided, in Ala.Code 1975, § 6-3-5, that Foremost Insurance Company may be sued in the county "where the holder of the policy or certificate resides" (Hale County). Knowing that the majority of this Court, in spite of the constitutional restriction on judicial power over venue, has chosen to expand venue in actions against insurance companies beyond the legislatively prescribed limits of § 6-3-5 (see Ex parte Gauntt, 677 So. 2d 204 (Ala.1996)), I look to the next possible legislatively prescribed venue for Turpin Vise Insurance Agency, Inc., and (in accordance with Ex parte Gauntt) for Foremost: Ala.Code 1975, § 6-3-7. Under § 6-3-7, Turpin Vise and Foremost may be sued in the county where the injury allegedly occurred (Hale County), or in the county where the plaintiff Tommy Johnson resides, if those defendant corporations do business by agent in the county of the plaintiff Johnson's residence (Hale County). Because Johnson's alleged injury occurred in Hale County, and both Turpin Vise and Foremost do business in Hale County where Johnson resides, venue is proper in Hale County. This Court has no constitutional right to change venue by rules of practice or procedure. Therefore, Turpin Vise's petition for the writ of mandamus should be granted and the trial court should sever Johnson's claims and transfer them to the legislatively prescribed venue, Hale County.
*373 Foremost Insurance Company's Petition for the Writ of Mandamus:
For the reasons stated above, venue is not proper against Foremost in Greene County for the claims alleged by Johnson, Joe Jones, Carlton Hogue, or Queen Etta Grayson. Therefore, Foremost's petition for the writ of mandamus should be granted, and the trial court should transfer Johnson's case to Hale County; Joe Jones's case to Bibb County; Carlton Hogue's case to Bibb County; and Queen Etta Grayson's case to Dallas County. Venue is proper as to Lewis McNeal in Greene County.
This Court is prohibited by § 6.11 of Amendment No. 328 of the Constitution from doing what the majority of this Court has done here; and in doing what it has done here the majority violates the separation of powers demanded by the Alabama Constitution (Article III, §§ 42 and 43). The evidence of the transaction, occurrence, or series of transactions or occurrences (Rule 20, Ala.R.Civ.P.) that will be offered to prove Lewis McNeal's cause of action will not in any way prove Johnson's, Jones's, Hogue's, or Grayson's cause of action.
HOOPER, C.J., and MADDOX, J., concur.
[1] The Papagiannis court, in finding an improper joinder, noted that no linkage existed between the representations made to the plaintiffs. 108 F.R.D. at 178. It should be noted that there are numerous conflicting federal cases on the subject of permissive joinder under Fed.R.Civ.P. Rule 20(a). See Papagiannis, supra; Kenvin v. Newburger, Loeb & Co., 37 F.R.D. 473 (S.D.N.Y. 1965); Nor-Tex Agencies, Inc. v. Jones, 482 F.2d 1093 (5th Cir.1973); Russo v. Bache Halsey Stuart Shields, Inc., 554 F. Supp. 613 (N.D.Ill. 1982); Dougherty v. Mieczkowski, 661 F. Supp. 267 (D.Del.1987). Of course, Papagiannis and other federal cases interpreting federal procedural rules are persuasive, not binding, authority on this Court. First Baptist Church of Citronelle v. Citronelle-Mobile Gathering, Inc., 409 So. 2d 727 (Ala.1981). | July 18, 1997 |
e56649c8-c81a-4a5e-80ed-fe69e1d74924 | MISS. VALLEY TITLE INS. v. Hooper | 707 So. 2d 209 | 1950564, 1950565 | Alabama | Alabama Supreme Court | 707 So. 2d 209 (1997)
MISSISSIPPI VALLEY TITLE INSURANCE COMPANY
v.
Perry O. HOOPER, Sr.
Ex parte MISSISSIPPI VALLEY TITLE INSURANCE COMPANY.
(In re MISSISSIPPI VALLEY TITLE INSURANCE COMPANY v. Perry O. HOOPER, a/k/a Perry O. Hooper, Sr.).
1950564, 1950565.
Supreme Court of Alabama.
October 31, 1997.
*210 J. Knox Argo of J. Knox Argo, P.C., Montgomery, for appellant/petitioner.
*211 Richard A. Lawrence, Montgomery, for appellee/respondent.
Jere L. Beasley, Frank M. Wilson, and P. Leigh O'Dell of Beasley, Wilson, Allen, Main & Crow, P.C., Montgomery, for amicus curiae Beasley, Wilson, Allen, Main & Crow, P.C.
S.A. WATSON, Jr., Special Justice.[1]
The plaintiff, Mississippi Valley Title Insurance Company ("Mississippi Valley"), appeals from an order dismissing its complaint against Perry O. Hooper, Sr. The plaintiff also petitions for a writ of mandamus directing the trial judge to allow a second amendment to the complaint. We affirm the dismissal and deny the petition.
Mississippi Valley alleged in its original complaint that Hooper had acted as an attorney-at-law to render title opinions, and as an insurance agent to issue title insurance, on behalf of Mississippi Valley. Mississippi Valley alleged that Hooper had certified that certain mortgagees who were seeking title insurance from Mississippi Valley would have a "first mortgage lien" on certain parcels of real property that had been the subjects of a series of real estate closings, and that Hooper issued title insurance to the mortgagees based on his certifications. The complaint further alleged that the certifications were not correct, and that as a result the mortgagees filed claims against Mississippi Valley, causing Mississippi Valley to incur damage, including assessments for attorney fees and court costs. In the complaint, Mississippi Valley listed 38 transactions in which it claimed Hooper had issued Mississippi Valley title insurance policies based on faulty certifications, along with the date of each. The earliest such transaction occurred in July 1985, and the latest occurred in February 1988. The complaint was filed in August 1994. Based on these allegations, Mississippi Valley sought damages, based on claims of breach of contract, negligence, wantonness/recklessness, intentional misconduct, and fraudulent misrepresentation.
Hooper moved to dismiss the complaint, pursuant to Rule 12(b)(6), Ala.R.Civ.P., alleging that it failed to state a claim upon which relief could be granted. His motion pointed out that the complaint indicated on its face that the statutory limitations period applicable to claims against a legal service provider (see Ala.Code 1975, § 6-5-574(a)), had expired. The trial judge, D. Al Crowson, dismissed the complaint. In his order, Judge Crowson stated that the limitations period applicable to actions brought pursuant to the Alabama Legal Services Liability Act ("ALSLA") had, indeed, expired. He further stated that, in order to assert a cause of action against Hooper based on acts or omissions that occurred outside Hooper's capacity as a lawyer, Mississippi Valley would have to demonstrate that Hooper owed Mississippi Valley a duty that did not require legal expertise. In the order of dismissal, dated November 17, 1994, Judge Crowson specifically stated:
After the dismissal, Mississippi Valley filed a "First Amendment to Complaint." That amendment added another count that expressly incorporated the factual allegations of *212 the original complaint,[2] "except as such may be interpreted to be a cause of action for `any legal service' as such may be barred by the Alabama Legal Services Liability Act ... and this Court's Order dated November 17, 1994." The plaintiff then set out a series of allegations concerning the duty of an authorized agent for Mississippi Valley. This alleged duty apparently required Hooper, as an agent, to obtain from "an approved examining attorney" a certificate concerning the title, based on a search of the public records. Mississippi Valley made no further allegations of any duty on the part of Hooper, as an agent and not as a lawyer, other than as relating to the title examination, title opinion, and attorney's certification. The amended complaint claimed only breach of contract, a right of indemnity, and some sort of "intentional" breach of contractual duties.
Hooper filed another motion to dismiss, quoting from the court's original dismissal order and contending that a person other than a licensed practicing attorney may not issue a title opinion. According to Hooper, the amended complaint did not set forth any duties, or breach of duties, not covered by the ALSLA. Judge Crowson, on January 26, 1995, again dismissed the complaint, noting that the plaintiff had failed to abide by the original order of dismissal. In the second order of dismissal, Judge Crowson did not mention anything with regard to a further amendment.
In response to the second order of dismissal, the attorney for the plaintiff wrote a letter to the judge stating that, because in the amendment the plaintiff did not reassert its fraud claims, he did not believe the plaintiff had to comply with the terms of the order regarding the dates. The plaintiff then offered a second amendment to the complaint, incorporating by reference all of the counts of the first amendment to the complaint, with the exception of one paragraph, which was restated to allege that the plaintiff first learned of the title problem in 1990. Within 30 days after the second dismissal, the plaintiff filed a "Motion for Reconsideration or for Leave to Amend or such other Appropriate Relief."[3] In the motion, the plaintiff claimed an automatic right to amend the complaint a second time, but "without waiving or abandoning its position, but out of an abundance of caution," the plaintiff filed the motion asking Judge Crowson to set aside his order of dismissal and to allow the second amendment to the complaint. Judge Crowson denied the motion. The plaintiff filed an appeal of that denial order, as well as a petition for a writ of mandamus directing Judge Crowson to allow the amendment.
This case presents two issues: First, did Judge Crowson commit reversible error when he dismissed the complaint? Stated another way, did the record support Judge Crowson's holding that, as a matter of law, the actions described in the complaint were covered by the ALSLA? Second, did Judge Crowson abuse his discretion by refusing Mississippi Valley's attempt to amend its complaint a second time?
Mississippi Valley argues that the trial court erred in dismissing the complaint because, it says, there was not sufficient information on the face of the complaint, or in the amendment, from which the trial court could have reasonablyand inescapablyconcluded that the statute of limitations barred the claims. Mississippi Valley bases its argument *213 on the assumption that on the date Hooper completed his work there had been no damage. Mississippi Valley contends that it incurred damage only when it began to incur costs, i.e., when it had to start paying claims made under its policies; Mississippi Valley apparently insists that, because the complaint did not allege the date on which Mississippi Valley first incurred costs, the trial court could not have reasonably concluded, based on the pleadings before the court, that the limitations period had run. However, the major premise of that syllogism is flawed. We reject the argument that Mississippi Valley incurred legal injury only when it had to pay claims made under its policies.
Generally, the statutory limitations period applicable to a claim based on a breach of duty runs from the date the plaintiff is first entitled to maintain an action based on the breach of duty, regardless of whether the full amount of damage is apparent on that date. Home Ins. Co. v. Stuart-McCorkle, Inc., 291 Ala. 601, 285 So. 2d 468 (1973). The limitations period begins to run when the plaintiff first suffers "legal injury," not when the plaintiff may later pay damages or suffer some compounding of the original injury. Michael v. Beasley, 583 So. 2d 245 (Ala.1991). In a breach of contract action, for example, the limitations period runs from the time the contract is broken, although substantial damage or loss from the breach is not sustained until afterward. Stephens v. Creel, 429 So. 2d 278 (Ala.1983). Even if the plaintiff is ignorant of the injury at the time (except in fraud cases), the limitations period begins to run. Garrett v. Raytheon Co., 368 So. 2d 516 (Ala.1979). This Court has specifically distinguished between the word "damage," which means "loss, injury or deterioration," and the word "damages," which means "a compensation in money for a loss." Boswell v. Liberty National Life Insurance Co., 643 So. 2d 580 (Ala.1994). The statute runs from the date of first "damage," not when "damages" are later paid.
Based on the cases cited in the preceding paragraph, we conclude that any cause of action Mississippi Valley had against Hooper for issuing insurance policies based on a faulty title opinion accrued when the policies were issued, and not when Mississippi Valley later settled lawsuits filed against it based on the policies. Because the complaint set out in detail the date on which each policy was issued, Judge Crowson had a sufficient basis for determining that the statutory limitations period had expired. After all, the latest date alleged by the plaintiff as a date on which Hooper's culpable action occurred was February 23, 1988, and the complaint was not filed until August 13, 1994, more than six years later. Moreover, the cause of action, if any, clearly involved actions taken by Hooper "in whole or in part" as a "legal service provider," as that term is defined in the ALSLA.[4] See § 6-5-572, Ala.Code 1975. Therefore, § 6-5-574 applied, including the provision stating that, notwithstanding the provisions of other statutes of limitations, "no action shall be commenced more than four years after the act, omission, or failure complained of." Section 6-5-574(b). The first amendment incorporated by reference the allegations of the original complaint.[5] Judge *214 Crowson did not err in dismissing the complaint and the first amended complaint.
Mississippi Valley contends that it had an "automatic right" to amend its complaint a second time, and it asks this Court either to reverse Judge Crowson's order denying the second amendment or, through a writ of mandamus, to compel Judge Crowson to allow the second amendment. Mississippi Valley relies primarily upon Ala.R.Civ.P. 15 and 78 and United Handicapped Industries of America v. National Bank of Commerce, 386 So. 2d 437 (Ala.Civ.App.1980).
We note that this present case is somewhat different from the cases relied upon by Mississippi Valley. Mississippi Valley did have the right to amend its complaint after a dismissal. Judge Crowson's original order specifically instructed Mississippi Valley to amend its complaint "to show a viable cause of action under an agency theory" and to "allege dates, in order for the Court to be able to ascertain whether Plaintiff's action is time-barred or not." So, the actual issue confronting this Court can be expressed in two questions: First, does the law give a plaintiff "successive" automatic rights to amend a complaint, without limitation? Second, if so, is Mississippi Valley's "automatic" right to amend affected by the instructions expressed in Judge Crowson's original order of dismissal?
Dismissal of an action is a drastic remedy. Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 78 S. Ct. 1087, 2 L. Ed. 2d 1255 (1958). Nevertheless, trial courts must strive to bring finality to judgments. This Court has stated:
Helms v. Helms' Kennels, Inc., 646 So. 2d 1343, 1347 (Ala.1994). The Court in Helms went on to quote from a federal case:
Id., quoting United States v. Cirami, 563 F.2d 26, 33 (2d Cir.1977). Given those principles stated in Helms, this Court does not interpret the Rules of Civil Procedure to grant litigants an infinite succession of automatic rights to amend pleadings after successive dismissals. A proper analysis of this case requires a scrutiny of the exercise of Judge Crowson's discretion. United Handicapped Industries, supra. In reviewing the exercise of his discretion, this Court must contemplate the policy interests favoring the finality of judgments. Johnston v. Bridges, 288 Ala. 156, 258 So. 2d 866 (1972).
The difference between this case and the cases cited by Mississippi Valley is significant. After all, Mississippi Valley acknowledges in its brief that the right to amend expressed both in Ala.R.Civ.P. 15 and in Ala.R.Civ.P. 78 is conditioned by the language "[u]nless a court has ordered otherwise." Mississippi Valley urges a construction of that language that would give the trial court only two choices: either, by silence, to allow an amendment, or, by express direction, specifically to deny an amendment. This Court cannot accept that construction.
Trial courts have the inherent power to dismiss cases under certain circumstances. Link v. Wabash R.R., 370 U.S. 626, 82 S. Ct. 1386, 8 L. Ed. 2d 734 (1962). Ala.R.Civ.P. 41(b), for example, authorizes a court to dismiss an action with prejudice whenever a *215 plaintiff fails to comply with an order of the court. Furthermore, "deeply rooted in the common law is the court's power to manage its affairs in order to achieve the orderly and expeditious disposition of cases." Iverson v. Xpert Tune, Inc., 553 So. 2d 82, 87 (Ala.1989). Because the Rules of Civil Procedure clearly give a trial court the power to prohibit an amendment after a dismissal if it "orders otherwise" (see Rule 78) and because the trial court has inherent powers to make orders to facilitate the orderly functioning of the judicial system, a trial court clearly has the authority to fashion some remedy that falls between the extremes of granting an automatic right to amend, by its silence, or prohibiting an amendment outright. The trial court can make the right to amend after dismissal subject to certain narrow conditions. This Court regards communication between the trial court and counsel to be of great value in the litigation process, and clearly within the inherent power of the trial court. Trial courts not only should be permitted, but should be encouraged, to point out the legal deficiencies in pleadings, in order to promote "the just, speedy and inexpensive determination of [the] action." Ala. R.Civ.P. 1(c).
This is precisely what Judge Crowson did. Rather than prohibit an amendment to the complaint, in his original order of dismissal Judge Crowson granted the plaintiff the right to amend if the plaintiff met certain conditions. That is, the plaintiff was granted the right to amend in order to show "a viable cause of action under an agency theory." So, the question becomes whether the plaintiff abided by the court's order by showing, in its amendment to the complaint, "a viable cause of action under an agency theory." The resolution of this question is the key to determining whether Judge Crowson abused his discretion in refusing the second amendment to the complaint.
Not only did Mississippi Valley's "First Amendment to the Complaint" fail to set forth such a "viable cause of action"; even its proffered "Second Amendment to Complaint" failed to do so. That second amendment would have incorporated by reference all of the factual allegations of the original complaint and the first amendment to the complaint, with the exception of a paragraph that was reworded to aver that Mississippi Valley first learned in 1990 of Hooper's alleged omissions. The first amendment to the complaint expressly omitted any "cause of action for `any legal service.'" Mississippi Valley's attorney, in his memorandum supporting the "motion for reconsideration," conceded that "neither the first amendment to [the] complaint nor the second amendment to [the] complaint attempts to state any claim [based on] fraud [or based on Hooper's providing] legal services." In its brief filed in this Court, Mississippi Valley acknowledges that it chose to "drop the fraud claims." It further acknowledges that its claims alleging legal malpractice "would be controlled by the [ALSLA] statute of limitations." Thus, the only conceivable cause of action left in the pleadings, according to Mississippi Valley, would have been based on Hooper's "non-attorney role as the agent of Mississippi Valley."
Mississippi Valley is not correct, however, when it asserts that its complaint was dismissed solely because of the statute of limitations. Instead, the trial court clearly indicated in its original dismissal order that, as to the "non-lawyer" claims, "plaintiff must show the duty owed in each count and the breach of such duty, bearing in mind that such causes cannot be complained of which require legal expertise." In other words, the trial court found that the plaintiff had failed to allege any duty, other than Hooper's duty as a licensed, practicing attorney, to support any other cause of action. Thus, in order to reverse the order of the trial court, this Court would have to identify some duty of an independent, nonlawyer title insurance agent that Hooper was alleged to have breached.
The only act or omission alleged involved Hooper's alleged reliance on a faulty title opinion. It is well settled that a nonlawyer's rendering a title opinion regarding real property amounts to the unauthorized practice of law. Upton v. Mississippi Valley Title Insurance Co., 469 So. 2d 548, 556 (Ala.1985). As Justice Jones noted in his concurring opinion in Land Title Co. of Alabama v. State ex rel. Porter, 292 Ala. 691, 703, 299 So. 2d 289, 299 (1974), "an expression of opinion as to title," if "not based *216 upon an independent opinion of an attorney duly authorized to practice law in this state... [constitutes the] unauthorized practice of law." Justice Jones went on to say that the rule allowing only "duly authorized" practicing lawyers to give opinions as to title relates to the public interest and is based on the fact that issuing such opinions requires "legal expertise ... [that] could hardly be relegated to the perfunctory or the routine." 292 Ala. at 703, 299 So. 2d at 300. If a nonlawyer title insurance agent attempts to give advice concerning the effect or manner of taking title to real estate, he or she engages in an activity prohibited by the statute governing the practice of law. Coffee County Abstract & Title Co. v. State ex rel. Norwood, 445 So. 2d 852 (Ala.1983).
Yet, the plaintiff in this case alleges only that Hooper breached some duty as an agent because, the plaintiff says, he relied upon a faulty title opinion when he issued title insurance. The plaintiff admits that, for it to have a cause of action, Hooper's duties as the title insurance agent must be divorced from Hooper's duty as an attorney. The allegations stated by the plaintiff, however, seek to impress upon title insurance agents the duty to "look behind" the title opinion rendered by the attorney, to ensure that the attorney's opinion is correct. This Court, however, has studiously avoided placing on title companies a duty that would require them to engage in the unauthorized practice of law. Lawyers Title Ins. Corp. v. Vella, 570 So. 2d 578 (Ala. 1990).[6] If the title insurance agent were required to undertake to render an opinion regarding title to the property separate and apart from the opinion rendered by the lawyer, the title company would be guilty of engaging in the unauthorized practice of law and the public interest safeguarded by the regulations imposed upon the legal profession would be circumvented. "To impose such a duty would place an undue burden on title insurance companies...." Upton at 557. Because it would clearly violate both the law and public policy to require the nonlawyer agent to issue a title opinion, the parties could not create such a duty by contract, in spite of Mississippi Valley's assertions to the contrary. Existing Alabama law does not recognize such a duty, nor will this Court create one in this case.
The plaintiff, in spite of the trial court's order, did not allege any other duty that it says Hooper breached. In the original complaint and in the amendment, the plaintiff alleged no duty separate and apart from Hooper's duty as a legal service provider.
Because Judge Crowson's original order of dismissal set out conditions regarding the amendment to the complaint and the plaintiff did not comply with those conditions, Judge Crowson did not abuse his discretion in denying a second amendment that also failed to state a cause of action. Had Judge Crowson allowed the second amendment, it would have been subject to yet another order of dismissal. So, even if, as the plaintiff asserts, Judge Crowson erred by denying the second amendment, the error would, at most, be "error without injury" (see Ala.R.App.P. 45) or "harmless error" (see Ala.R.Civ.P. 61).
Mississippi Valley failed to demonstrate an abuse of discretion or any other reversible error. There was ample information in the original complaint to indicate that the statute of limitations barred the claims, and the plaintiff, in spite of Judge Crowson's direction, was not able to state a cause of action based on any breach of duty by Hooper not covered by the ALSLA. Because Judge Crowson, in his original order, had already addressed the plaintiff's right to amend, there was no reason for him to make a subsequent order regarding amendment. Instead, Judge Crowson had "ordered otherwise," as contemplated by Ala.R.Civ.P. 15 and 78, thus precluding further amendments. Accordingly, the judgment of the trial court is affirmed and the petition for the writ of mandamus is denied.
1950564 AFFIRMED.
1950565 PETITION DENIED.
*217 ROBERT M. PARKER, H.E. HOLLADAY, HARRY J. WILTERS, Jr., WALTER G. BRIDGES, CARL D. NeSMITH, and STUART LEACH, Special Justices, concur.
JOHN N. BRYAN, Special Justice, concurs in the result.
JOHN DAVID SNODGRASS, Special Chief Justice, dissents.
JOHN N. BRYAN, Special Justice (concurring in the result).
I concur with the result reached by the majority. Applying a strict interpretation of the pleadings justifies such a result. I write specially, however, to express my concern for the possibility of an incorrect interpretation of the majority opinion.
The Alabama Legal Services Liability Act ("ALSLA") is very broad. It creates one form of action against any "legal service provider" and exclusively governs any and all actions brought against a legal service provider for damages. The ALSLA embraces all claims, based on either contract or tort, and supersedes any inconsistent provisions of the law.
Clearly, if the relationship of attorney/client was ever established between the defendant Hooper and the plaintiff Mississippi Valley Title Insurance Company, then this action is time-barred. The record does not include a copy of an employment contract between the parties, if such a document existed; therefore, the only way the plaintiff could prevail would be to allege and factually prove that at no time did the relationship of attorney/client exist. If such a relationship did in fact exist, then all claims, whether related to Hooper's providing legal services or to his providing services of a nonlegal nature, would be embraced by the provisions of the ALSLA and could not be separated. The plaintiff's argument that some of the services performed by the defendant were services of a nonlegal nature that could be performed by a layperson must be rejected.
Often an attorney is hired to perform services that a layperson could provide but for which the party wishes the skill and experience of an attorney. The test is whether the relationship of attorney/client developed. Clearly, once the attorney/client relationship exists, almost anything the attorney does can be brought within the purview of the ALSLA. I reject the plaintiff's attempt to divide the services performed by the defendant into "legal" and "nonlegal" categories.
My point in writing is to observe that the plaintiff's attorney may have been confused by the instructions of the trial court. I can conclude from the record that the plaintiff's attorney felt that he had cured any problems when he dismissed all claims that had been brought under the ALSLA. By doing so, was he saying that an attorney/client relationship did not exist, knowing that if such a relationship did in fact exist the action would be time-barred? Was it not his intention thereby to dismiss all allegations that the defendant was employed to perform legal services? Did he not fall into the pleading trap of adopting too much of the original complaint in the first amendment?
Mississippi Valley's lawsuit was dismissed on the pleadings, after Mississippi Valley had been allowed only one amendment. This is not an appeal from a summary judgment. I do not question the authority of the trial judge to cut off further pleadings, and I certainly do not know what dialogue took place between the plaintiff's attorney and the court during the hearings conducted in this case.
I would be more comfortable with the final judgment of dismissal on the pleadings if the plaintiff had been allowed one further amendment. I do not wish the majority's opinion to be interpreted as an endorsement of the early cut-off of further pleadings by way of amendments.
JOHN DAVID SNODGRASS, Special Chief Justice (dissenting).
I respectfully dissent.
This is an appeal from a judgment entered on the grant of a Rule 12(b)(6), Ala.R.Civ.P., motion to dismiss. The majority says the plaintiff pleaded itself out of court by alleging a claim that, on its face, shows it is time-barred. A reading of the complaint does not lead to the inescapable conclusion that the plaintiff's contract and indemnification claims are time-barred. The complaint alleges dates on which the title policies were issued.
*218 Those dates do not preclude claims for indemnification, which could arise well past the expiration of any two- or six-year limitations period. Ala.Code 1975, § 6-2-6, provides:
(Emphasis added.)
The complaint alleges a cause of action by a principal against its agent. The applicable statute of limitations may be raised as a defensive matter. The plaintiff should have been allowed to proceed until or unless an applicable defense defeated its claim.
The plaintiff's claims under the Alabama Legal Services Liability Act (Ala.Code 1975, § 6-5-570 et seq.) against Hooper as an attorney may be legally separated from those against him as an agent. Ticor Title Insurance Co. v. Smith, 794 S.W.2d 734 (Tenn. App.1990).
[1] The appellee/respondent, Perry O. Hooper, Sr., is Chief Justice of the Alabama Supreme Court. He became Chief Justice on October 20, 1995; before becoming Chief Justice he was a retired circuit judge and was engaged in the private practice of law. He and all the Associate Justices recused themselves in these two cases. The Chief Justice and the Senior Associate Justice individually determined that they were disqualified to make an assignment of a Special Supreme Court to hear these cases. By order of September 13, 1996, amended March 10, 1997, the next most senior Associate Justice, with the advice, consent, and concurrence of the other Associate Justices who were not recused or disqualified, assigned a retired circuit judge to serve as a Special Chief Justice and assigned eight other retired circuit judges to serve as Special Justices. See § 6.10, Amend. No. 328, Ala. Const. 1901.
[2] The allegations of the original complaint, which were incorporated in the amendment to the complaint, as well as a proffered second amendment, referred to Hooper as "an individual licensed to practice law," as "engaged in the practice of law," as "an approved examining attorney," and "as a licensed attorney, [who] was also an approved examining attorney."
[3] Although a "motion for reconsideration" is not technically a motion contemplated by Ala. R.Civ.P. 59, the plaintiff did request, as part of the relief sought, that the original order be modified. Thus, this Court will treat the plaintiff's motion as a Rule 59 motion, which would toll the running of the time for filing an appeal. Although Judge Crowson originally denied the post-trial motion on March 17, 1995, he set aside the denial order ex mero motu. Hooper contends that the appeal time should have been measured from the March 17, 1995, order. This Court does not agree, because Rule 59 clearly contemplates action by the trial court "of its own initiative." Ala.R.Civ.P. 59(d). See Holland v. State, 615 So. 2d 1313 (Ala.Cr.App.1993).
[4] This Court has held in analogous medical malpractice cases that the form of the action is not the decisive test for determining whether the malpractice statute applies. Instead, it is the substance of the claims asserted against the medical professionals. E.g., Sellers v. Edwards, 289 Ala. 2, 265 So. 2d 438 (1972). The same is true of claims against legal service providers. In fact, although Mississippi Valley has not mentioned the application of Ala.Code 1975, § 6-2-6, this Court notes that this statute is specifically mentioned in, and therefore subsumed by, the ALSLA. Because the substance of the claims against Hooper involves the provision of legal services "in whole or in part," the limitations provisions of the ALSLA would apply.
[5] Of course, in dismissing the first complaint, Judge Crowson also instructed Mississippi Valley to include specific dates in any amendment so that he could determine whether the amendment would be subject to a different statute of limitations. As we understand Mississippi Valley's argument before this Court, it is that because the amendment did not include specific dates, the trial court's judgment should be reversed, on the basis that there was not sufficient information in the amended complaint for the court to determine the date of injury. In other words, Mississippi Valley seeks to use its own failure to comply with the trial court's order to put the trial court in error. As discussed in the next section of this opinion, however, we conclude that Judge Crowson had the authority to allow an amendment subject to certain conditions and that Mississippi Valley's failure to meet those conditions precludes a finding of reversible error. After all, a party "cannot by his own voluntary conduct invite error and then seek to profit thereby." Slaton v. State, 680 So. 2d 879, 892 (Ala.Cr.App. 1995); Phillips v. State, 527 So. 2d 154 (Ala. 1988).
[6] This present case is distinguishable from a situation where a title opinion, rendered by a lawyer, reveals a defect and the title company has actual knowledge of the defect but fails to communicate it. See Vella. There is no allegation that Hooper, as the title insurance agent, had any knowledge separate and apart from the knowledge he had as Hooper the attorney, that he failed to communicate. | October 31, 1997 |
3270539a-0b0e-4237-89e1-09a4abe156a1 | NAT. AMERICAN INS. CO. v. Boh Bros. Const. Co. | 700 So. 2d 1363 | 1960173 | Alabama | Alabama Supreme Court | 700 So. 2d 1363 (1997)
NATIONAL AMERICAN INSURANCE COMPANY
v.
BOH BROTHERS CONSTRUCTION COMPANY, INC.
1960173.
Supreme Court of Alabama.
July 25, 1997.
*1364 James P. Green and Thomas H. Nolan, Jr., of Brown, Hudgens, P.C., Mobile, for appellant.
Douglas L. Brown and Clifford C. Brady of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, L.L.C., Mobile, for appellee.
MADDOX, Justice.
The central legal issue presented in this case is whether the Alabama principle that a foreign corporation cannot sue on a contract claim if it has not qualified to do business in this Statecommonly referred to as Alabama's "door-closing statute," Ala.Code 1975, § 10-2A-247would bar a surety, which had qualified to do business in the state, from maintaining an action in which it seeks to establish its right of equitable subrogation to recover for claims it paid as required by a payment and performance bond.
This case involves a dispute over a portion of more than a half million dollars awarded by the State of Alabama Highway Department because of delay damages incurred by certain subcontractors and suppliers on a highway construction project for improvements to a section of Interstate Highway I-165 in Mobile, Alabama.
Boh Brothers Construction Company ("Boh") had a contract with the Highway Department to construct a section of I-165 in Mobile. Pursuant to this contract, Boh agreed "to furnish and deliver all the material and to do and perform all the work and labor required to be furnished and delivered" in the performance of the project. Boh entered into a subcontract with Mike Mitchell & Associates, Ltd. ("MMA"). MMA agreed to perform certain treatment and remediation work on the I-165 project. At the time, MMA was a foreign corporation that had not qualified with the Alabama secretary of state to do business in Alabama.
As part of its agreement with MMA, Boh required MMA to obtain a subcontract payment bond and subcontract performance bond. National American Insurance Company ("National American") issued a subcontract performance bond and a subcontract payment bond in favor of Boh as obligee. MMA was named as principal for the work MMA was to perform on the I-165 project.
MMA proceeded with work on the project and entered into a subcontract with Williams Environmental Services, Inc. ("Williams"), by which Williams was to perform, among other things, the hydrocarbon remediation of the soil. During the course of its work on the *1365 project, Williams discovered pesticide contamination on the job site. As a result of the discovery of the pesticides, the Alabama Highway Department instructed all parties to stop work on the job site until it was determined how to remedy the pesticide contamination. The discovery of the pesticides caused a substantial delay on the project, and this delay generated claims by Boh, MMA, Williams, and others working on the project. In addition to the claims resulting from the delay, several laborers, materialmen, and suppliers of MMA asserted claims against MMA and National American resulting from MMA's nonpayment of these laborers, materialmen, and suppliers. These laborers, materialmen, and suppliers also notified Boh of their claims and their intent to assert a claim against Boh and its surety.
Pursuant to its contractual obligation with Boh, National American, as surety for MMA, admittedly paid the following claims: (1) Aaron Oil Company, Inc., $58,442.52; (2) Oil Recovery Services, Inc., $14,841.12; and (3) Trax, Inc., $12,886.28. Each of these claimants executed assignments to National American of any rights it might have had to proceed against others.
After the work on the project had been halted, MMA, through Boh, asserted a delay claim with the Alabama Highway Department for delay costs and other claims that it alleged arose out of its subcontract with Boh. The delay claim consisted of MMA's delay costs, delay costs of Williams and other subcontractors, as well as other costs. The claim was presented to the Alabama Highway Department claims committee, and, after exhausting all its administrative appeal processes, Boh accepted the amount of $545,527.44 from the Alabama Highway Department as settlement of the claim. This is the fund that has created the legal dispute involved in this appeal.
MMA, National American's principal, initially sued in the United States District Court for the Southern District of Alabama alleging breach of contract, relating to claims arising out of its subcontract with Boh. That court entered a summary judgment in favor of Boh on the ground that MMA was a foreign corporation not qualified to do business in Alabama, and, therefore, could not enforce its contract with Boh. Mike Mitchell & Associates, Ltd. v. Boh Bros. Constr. Co. (CV-94-0099, S.D. Ala. June 14, 1994). MMA did not appeal that decision.
Williams, one of MMA's subcontractors, filed this action in the Circuit Court of Mobile County, against MMA, National American, Boh, and Fidelity & Deposit Company of Maryland ("F & D"), Boh Brothers' surety, asserting claims for payment for work and labor performed on the project. Boh subsequently entered into a pro tanto settlement agreement with Williams regarding Williams's claim against Boh.
MMA, although having lost in its action against Boh in the federal court, asserted a cross-claim against Boh, alleging both tort and contract claims arising out of its subcontract with Boh. National American also filed a cross-claim against Boh. MMA's claim against Boh also included allegations involving the claim for delay damages that is the subject of National American's cross-claim. Boh moved for a summary judgment on MMA's cross-claim in this action on the same ground that it had asserted in the federal action; the trial court entered a summary judgment in favor of Boh against MMA, holding that MMA's contract with Boh was unenforceable because of MMA's failure to qualify to do business in Alabama, just as the federal court had held.
National American's cross-claim against Boh is the subject of this appeal. In its cross-claim, National American claimed that it was equitably subrogated to funds due from Boh to MMA under MMA's subcontract with Boh, and argued that it should be permitted to maintain its claim of equitable subrogation, even though its principal, whose obligations it had paid, had not qualified to do business in Alabama. It sought as damages $86,169.92, plus $176,000 paid by it to Williams. National American, filing copies of the release and subrogation agreements executed by the subcontractors and suppliers that it had paid under the terms of its bond, moved for a summary judgment on its cross-claim. Boh responded to the motion by agreeing that there were no material issues of fact to decide and that only a question of *1366 law was presented. The trial court denied National American's motion for summary judgment and entered a judgment in favor of Boh on National American's cross-claim, holding that National American could not maintain its cross-claim against Boh, because MMA, as the principal on the payment and performance bonds, was a foreign corporation that had not qualified to do business in Alabama, even though National American, as surety, was qualified to do business in Alabama, and even though Boh was the obligee on the bond that Boh required MMA to execute, and even though National American had paid claims on behalf of its principal, MMA.
National American filed a motion to alter, amend, or vacate the judgment, raising several new issues. The trial court denied the motion and this appeal ensued.
National American's argument, summarized, is that Boh made a claim with the Highway Department and recovered $545,527.44; that most of that money was earned by subcontractors and suppliers of MMA, its principal; that MMA had failed to pay its subcontractors and suppliers; and that National American had made payments on its behalf. National American contends that if it had not paid those debts of MMA, then Boh, or its surety, F & D, would have had to make those payments, and that those claimants had a right to assert equitable liens and a constructive trust on any funds received by Boh from the Highway Department in connection with the project. In short, National American contends that it does not stand in the shoes of MMA, but is a subrogee of the subcontractors and suppliers that it paid under the bond that it executed with Boh as the obligee.
Boh's argument, summarized, is that National American cannot be subrogated to the proceeds Boh received from the Highway Department as delay damages, because, Boh says, "it has been determined by two courts that MMA has no claim against Boh and that its subcontract with Boh is unenforceable"; and that "[s]ince National American seeks to be subrogated to the proceeds of MMA's subcontract with Boh and MMA's subcontract with Boh has been determined to be unenforceable, i.e., there are no contract proceeds, then there are no funds to which National American can be subrogated." The substance of Boh's argument is based upon Alabama's door-closing statute. In fact, Boh argues that "[i]f National American is allowed to proceed against Boh under its theory of `equitable subrogation,' the public policy of Alabama's qualification statutes and Constitution will be circumvented."
Based on our reading of the briefs, our understanding of the oral arguments in this case, and the applicable law, we agree with National American's argument. We reverse the judgment of the trial court and remand for further proceedings consistent with this opinion.
Suretyship is a three-party relationship among a principal, its surety, and the obligee to whom the principal and surety are jointly and severally bound for performance. Balboa Insurance Co. v. United States, 775 F.2d 1158, 1160 (Fed.Cir.1985), citing United States v. United States Fidelity & Guaranty Co., 236 U.S. 512, 35 S. Ct. 298, 59 L. Ed. 696 (1915). In Maryland Casualty Co. v. Cunningham, 234 Ala. 80, 83, 173 So. 506, 509 (1937), this Court said:
In Fidelity & Casualty Co. of New York v. Central Bank of Birmingham, 409 So. 2d 788, 790 (Ala.1982), this Court stated that "[t]he surety's right to equitable subrogation exists whether a surety steps in and physically completes the contract or whether it merely pays the laborers and materialmen under that contract." In Maryland Casualty Co. v. Dupree, 223 Ala. 420, 423, 136 So. 811, 814 (Ala.1931), the Court held that the surety on a bond issued on a public contract "has an equity akin to the doctrine of subrogation."
Under the facts of this case, two suretyships are important. First, Boh tendered to the Highway Department statutory payment, as required by § 39-1-1(a), Ala.Code *1367 1975. The performance done by Boh and its surety, F & D, was to complete the construction contract between Boh and the Department. The payment bond required Boh, and F & D, to pay all those third parties who supplied labor, materials, services, or equipment for the project, whether at Boh's instance or that of one of Boh's subcontractors. Second, Boh subcontracted part of its construction contract to MMA and required MMA to obtain payment and performance bonds, which National American issued, that required MMA to complete its subcontract with Boh, including the payment of subcontractors and suppliers for any labor, materials, services, or supplies furnished at MMA's direction in connection with the project. Because of the two suretyship relationships, it is our opinion that an unpaid subcontractor or supplier of MMA could pursue claims against Boh, or its surety, and could pursue claims against MMA and its surety, which is what Williams did in this case.
In view of the fact that the highway project experienced delays that were not shown to be the fault of MMA or its subcontractors or suppliers, and in view of the fact that the Highway Department awarded $545,527.44 to Boh and that Boh normally would have been required to pass that award down through its subcontract with MMA to those subcontractors and suppliers who suffered delay damage, Boh, in equity and good conscience, should not be permitted to use MMA's failure to qualify to do business in Alabama to prevent recovery by one who has paid claimants pursuant to the terms of the suretyship. Furthermore, National American has obtained assignments of any rights that those who were paid might have had to proceed against others.
There is another reason why we believe the trial court erred in applying Alabama's door-closing statute in this casethe Interstate Commerce Clause of the Federal Constitution prohibits the application of that door-closing statute in this case. In Cornwall & Stevens Southeast, Inc. v. Stewart, 887 F. Supp. 1490 (M.D.Ala.1995), a Georgia corporation and its parent corporation, a Tennessee corporation, sued their former employee to enforce a covenant not to compete that appeared in an employment contract. The employee moved for a partial summary judgment. The Court held that, although the two corporations were not registered to do business in Alabama, the corporations were engaged in interstate commerce and, therefore, the Commerce Clause prevented the application of Alabama's door-closing provisions. In Cornwall & Stevens, the plaintiffs contended that they were exempt from the registration requirement by virtue of the fact that they were engaged in interstate commerce, arguing that the Federal Constitution, specifically Art. I, § 8, cl. 3 (the Commerce Clause), prevented Alabama from prohibiting plaintiffs from using the state courts. Additionally, the plaintiffs noted that the statute relied upon by the defendant had recently been repealed and a new statute adopted in its place. 1994 Ala. Acts, Act. No. 94-245, § 3; Ala.Code 1975, § 10-2B-15.02. We note the same. In Cornwall & Stevens, the court found that the plaintiffs were in fact engaged in interstate commerce, and it held, therefore, that the Federal Constitution barred the application of Article XII, § 232, of the Alabama Constitution, and either § 10-2A-247 or § 10-2B-15.02, Ala. Code 1975. The court said: "Because the court has determined that the plaintiffs are engaged in interstate commerce, and that [the] door closing provisions of Alabama law are precluded by the Commerce Clause, the court does not reach the plaintiffs' argument based on the recent changes regarding § 10-2A-247."[1] 887 F. Supp. at 1491.
*1368 National American raises other issues on this appeal,[2] but we find it unnecessary to address them, in view of our holding that the trial court erred in entering the summary judgment against National American and that National American is, in fact, entitled to subrogation rights.
Based on the foregoing, the judgment is reversed and the case is remanded for proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and SHORES, HOUSTON, and SEE, JJ., concur.
COOK, J., concurs in the result.
KENNEDY, J., dissents.
COOK, Justice (concurring in the result).
I concur in the Court's holding that the summary judgment was improper. I write specially, however, to point out, in Part I of this special writing, the rationale on which I base my concurrence and to note specifically in Part II my disagreement with that portion of the opinion addressing the constitutionality of Ala.Code 1975, § 10-2A-247, the "doorclosing" statute.
The trial court entered a summary judgment in favor of Boh Brothers Construction Company ("Boh"), thereby denying National American Insurance Company ("National American")the surety under a contract with Mike Mitchell & Associates, Ltd. ("MMA")the right to be reimbursed for payments National American made under the surety contract to creditors of MMA upon MMA's default. It held that National American was not entitled to subrogationbecause MMA had not qualified to do business in Alabama, as required by Ala.Code 1975, § 10-2A-247, the "door-closing statute," and, consequently, could not itself have enforced its contracts in our courts.
The trial court, however, appears to have overlooked Ala.Code 1975, § 8-3-2, which provides:
(Emphasis added.)
Section 8-3-2 is part of Chapter Three, "Suretyship," §§ 8-3-1 to -42; Chapter Three, in turn, constitutes a portion of Title Eight, "Commercial Law and Consumer Protection." Section 8-3-2 expressly authorizes National American to be subrogated to the claims of MMA's creditors, namely, (1) Williams Environmental Services, Inc.; (2) Aaron Oil Company; (3) Oil Recovery Services; and (4) Trax, Inc.; MMA's these were "subcontractors, materialmen, or suppliers," whose claims against MMA in the amount of $262,169.92, National American paid. The Court's opinion correctly points out that MMA's creditors could have pursued their claims against Boh or Boh's surety, Fidelity & Deposit Company of Maryland ("F & D"). Thus, National American, having authority, pursuant to § 8-3-2, to be subrogated to the *1369 rights of MMA's creditors, can also prosecute an action against Boh or F & D.
Nothing in Chapter Three of Title Eight suggests that the rights of a surety are in any manner restricted or limited by the provisions of § 10-2A-247. On the contrary, it is a fundamental rule of statutory construction that the general is limited by the specific. The specific statute in this case is § 8-3-2 and the other applicable provisions of Title Eight, Chapter Three, dealing with suretyship. The general section is, of course, the door-closing statute. Thus, it is unnecessary to base the holding in this case on general equitable principles. To the extent there is a conflict between these provisions, the more specific, namely, § 8-3-2, prevails, authorizing the result sought by National American.
Because the Court holds as it does, it is clearly unnecessary to reach the question whether § 10-2A-247 implicates United States Const. art. I, § 8, cl. 3, the "Commerce Clause." I think the Court should not address that issue; therefore, I do not agree with the opinion to the extent it holds that § 10-2A-247 violates the Commerce Clause.
[1] Section 10-2A-247, Ala.Code 1975, was repealed by Ala. Acts 1994, No. 94-245, p. 457, § 3, effective January 1, 1995. Act No. 94-245 repealed Chapter 2A relating to business corporations and replaced that chapter with Chapter 2B. Portions of Chapter 2B were subsequently repealed, and new provisions added by Ala. Acts 1995, Act No. 95-663, p. 1374, § 3, effective August 1, 1995. The current statute, § 10-2B-15.02(a), states:
"A foreign corporation transacting business in this state without a certificate of authority or without complying with Sections 40-14-1 to 40-14-3, inclusive, 40-14-21, or 40-14-41, may not maintain a proceeding in this state without a certificate of authority [sic]. All contracts or agreements made or entered into in this state by foreign corporations prior to obtaining a certificate of authority to transact business in this state shall be held void at the action of the foreign corporation or any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity."
[2] National American raised the issue whether Alabama's door-closing statute, to the extent it might be applied to bar the subrogation claims of a surety, violates the Contracts Clause of Article I, § 10, of the Constitution of the United States, and Article I, § 22, and Article IV, § 95, of the Alabama Constitution of 1901; and the issue whether Alabama's door-closing statute violates the Due Process Clause of the Constitution of the United States and §§ 6, 13, and 22 of Article I of the Alabama Constitution of 1901 and the Equal Protection Clause of the Fourteenth Amendment of the Constitution of the United States and §§ 1, 6, and 22 of the Alabama Constitution of 1901. | July 25, 1997 |
e2e878e9-93d1-4ace-927c-3d967834c59d | Ex Parte American Bankers Life Assur. Co. | 715 So. 2d 186 | 1950705 | Alabama | Alabama Supreme Court | 715 So. 2d 186 (1997)
Ex parte AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA.
(In re Douglas WALTERS and Linda Walters v. MERCURY FINANCE CORPORATION and American Bankers Life Assurance Company of Florida).
1950705.
Supreme Court of Alabama.
December 16, 1997.
Michael L. Bell, John P. Dulin, Jr., and Wynn M. Shuford of Lightfoot, Franklin & White, L.L.C., Birmingham, for American Bankers Life Assurance Company of Florida.
*187 Garve Ivey, Jr., Clatus Junkin, Charles E. Harrison, and Barry A. Ragsdale of King, Ivey & Junkin of Jasper, Fayette, and Birmingham, for Douglas Walters and Linda Walters.
Dennis R. Bailey of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for Mercury Finance Corporation of Alabama, Inc.
HOOPER, Chief Justice.
The defendants in a fraud action petition for a writ of mandamus directing the trial court to rescind a class action certification. The defendants argue that the trial judge abused his discretion in certifying a class. We grant the petition.
The plaintiffs, Douglas Walters and Linda Walters, alleged that, to finance a consumer purchase, they had borrowed money from the defendant Mercury Finance Corporation and that in regard to that consumer purchase they had bought credit life insurance from the defendant American Bankers Life Assurance Company of Florida. They alleged that the defendants fraudulently induced them and other consumers to purchase a larger amount of credit life insurance than was necessary.
The rules governing the writ of mandamus are well settled:
Ex parte Johnson, 638 So. 2d 772, 773 (Ala. 1994). See also Ex parte Preston Hood Chevrolet, Inc., 638 So. 2d 842 (Ala.1994); and Ex parte Liberty Nat'l Life Ins. Co., 631 So. 2d 865 (Ala.1993).
This Court has stated:
Thomas v. Liberty Nat'l Life Ins. Co., 368 So. 2d 254, 256 (Ala.1979). While the federal interpretation is "persuasive," Rowan v. First Bank of Boaz, 476 So. 2d 44, 46 (Ala. 1985), it is not "binding." First Baptist Church of Citronelle v. Citronelle-Mobile Gathering, Inc., 409 So. 2d 727, 729 (Ala. 1981).
In 1982, the United States Supreme Court stated the standard a trial judge must apply in determining whether to certify a class. "[A] Title VII class action, like any other class action, may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) [F.R.Civ.P.] have been satisfied." General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 160, 102 S. Ct. 2364, 2372, 72 L. Ed. 2d 740 (1982) (emphasis added). See also Walker v. Jim Dandy Co., 747 F.2d 1360, 1362-63 (11th Cir.1984). Federal courts have held that the standard for reviewing a trial court's class certification order is whether the trial court abused its discretion in certifying the class. Washington v. Brown & Williamson Tobacco Corp., 959 F.2d 1566, 1569 (11th Cir.1992); Griffin v. Carlin, 755 F.2d 1516, 1531 (11th Cir. 1985); Walker v. Jim Dandy Co., supra, 747 F.2d at 1363; Shipes v. Trinity Industries, 987 F.2d 311, 316 (5th Cir.1993), cert. denied, 510 U.S. 991, 114 S. Ct. 548, 126 L. Ed. 2d 450 (1993).
This Court has followed the federal approach. See Ex parte Blue Cross & Blue Shield of Alabama, 582 So. 2d 469, 475 (Ala. 1991) (one seeking class certification bears the burden of proof as to each of the four prerequisites of Rule 23(a), Ala.R.Civ.P.). Also, In Rowan v. First Bank of Boaz, supra, 476 So. 2d at 45-46, this Court stated:
*188 "Certification of class actions is controlled by Rule 23, A.R.Civ.P., which provides in part:
(Emphasis added.) Rowan states that the trial court must apply the "relevant criteria"it must begin with a full analysis of all four elements of Rule 23(a). Clearly, an appellate court cannot determine whether the trial court has applied the relevant criteria, without looking at the order of the trial court. If it attempts to do so, it will be left to speculate as to whether the trial court applied the four elements of Rule 23(a).
In Rowan, when this Court stated that a trial court must apply the "relevant criteria" in determining whether to certify a class, it cited Duncan v. Tennessee, 84 F.R.D. 21 (M.D.Tenn.1979). The order in Duncan is an example of how a trial court must apply the relevant criteria in denying or approving class certification. The order in Duncan contains a rigorous analysis of the elements of Rule 23(a). The order itself is 26 columns long in the F.R.D. volume, and 16 of those columns are devoted to a discussion of the four elements of Rule 23(a). Each of the elementsnumerosity, commonality, typicality, and representativenessis discussed under its own subheading, and the order gives a full explanation as to how the proponents of the class certification had met their burden of proving those elements.[1]
We do not require that every trial court order certifying a class be as meticulous and lengthy as the order in Duncan. However, every order must provide a rigorous analysis of the four elements of Rule 23(a). At a minimum, the order must identify each of the four elements and explain how the proponents of the class certification have met their burden of proving those elements. If the trial court does not meet this basic requirement, then an appellate court cannot determine whether the trial court complied with Rowan and applied the relevant criteria.[2]
The trial court in this present case did not comply with the requirements of Rowan; its order does not identify each of the four elements of Rule 23(a) and does not give us sufficient information to determine how the proponents of class certification met their burden of proving those elements. The trial court's order provides us with information on only the fourth element of Rule 23(a)representative parties. The trial court stated:
Order at 2. The trial court order does not identify the other three elements of Rule 23(a)numerosity,[3] commonality, and typicality. Neither can this Court determine from the record whether the trial court applied a rigorous analysis to support its finding as to each of those elements. Therefore, the trial court has not met the requirements of Rowan.
The proponents of the class action certification argue that the class was certified only "conditionally" and that the lack of finality precludes this Court from issuing the writ. We agree that the certification order was conditional; this is evidenced by the order itself,[4] as well as by the following discussion at the certification hearing:
The issue, therefore, is whether this Court should treat a "conditional" order certifying a class in a manner different from the manner in which it would treat a class-certification order such as that discussed in Ex parte Blue Cross & Blue Shield, supra.
At first blush, federal law and Alabama law appear to conflict on this question. The defendants argue that labeling the certification order as "conditional" does not authorize the circuit court to disregard the rigorous-analysis requirement of Rule 23 or to eliminate the plaintiff's burden of proof. The defendants rely heavily on In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir.1996). In that case, the Court of Appeals for the Sixth Circuit, following a class certification *190 hearing, certified a conditional class, just as the circuit court in this present case conditionally certified the Walters class. Like the judge in this present case, the judge in American Medical Systems declared that the class certification was "conditional" and was "subject to decertification at any time." Id. at 1075. Although it held a hearing, the district court in American Medical Systems made no factual findings and did not apply the elements of Rule 23 to the plaintiffs' claims.
The defendants in American Medical Systems petitioned the Sixth Circuit Court of Appeals for writs of mandamus, arguing, among other things, that the district court had failed to satisfy the standards for class certification and had not created a factual record establishing the elements of Rule 23. The Sixth Circuit noted that the party seeking certification bears the burden of proof and that "[a] class is not maintainable as a class action by virtue of its designation as such in the pleadings." Id. at 1079. The court reviewed the record and found "not even the hint of any serious consideration by the judge of commonality," id. at 1081, and the court stated that "the district judge gave no serious consideration to [typicality], but simply mimicked the language of the rule." Id. at 1082. Similarly, the district judge in American Medical Systems failed to make essential factual findings with respect to the adequacy of the named plaintiffs, and, the Sixth Circuit concluded, "[g]iven the absence of evidence that common issues predominate, certification [under Rule 23(b)(3)] was improper." Id. at 1085. Thus, the defendants maintain that the conditional order in this present case, like the order in American Medical Systems, should have included the rigorous Rule 23 analysis required in all other certification orders.
The plaintiffs, in opposition to this argument, cite Ex parte Voyager Guaranty Insurance Co., 669 So. 2d 198 (Ala.Civ.App. 1995), and Ex parte Masonite Corp., 681 So. 2d 1068 (Ala.1996). They argue that those two cases support their view that we should not impose the same requirements for conditional certification orders that we have applied to final orders of certification.
In Voyager, the trial court certified a class, stating that the certification and the court's findings were "conditional pending further discovery and procedures with regard to final certification of the class." 669 So. 2d at 199. The defendant Voyager Guaranty Insurance Company petitioned the Court of Civil Appeals for a writ of mandamus directing the trial court to vacate its order of class certification. Voyager argued that in its order the trial court had not properly reviewed the elements of Rule 23 and that the trial court had "`rushed to judgment in designating the class.'" 669 So. 2d at 200 (quoting Ex parte Blue Cross & Blue Shield of Alabama, 582 So. 2d 469 (Ala.1991)). However, Voyager did not object in the trial court to the conditional certification. Concurring in the result in Voyager, 669 So. 2d at 201, Judge Crawley quoted this Court's statement in Sea Calm Shipping Co., S.A. v. Cooks, 565 So. 2d 212, 216 (Ala.1990): "This Court will not hold a trial court to be in error unless that court has been apprised of its alleged error and has been given the opportunity to act thereon."
The plaintiffs also cite Masonite, which can be distinguished from this present case. The issues presented in Masonite focused on recusal of the trial judge and whether it was proper for the judge to certify a nationwide class. The opinion in that case did not address the question raised in this case, which is the amount of analysis required for a trial judge to conditionally certify a class under Rule 23(a).
The importance of making sure that a class is appropriate for certification outweighs any need to certify the class so quickly that the appropriate analysis is left undone. American Bankers argues that the trial judge did not analyze two of the elements required for certification of a class action. In addition, the trial court placed the burden on the defendants to disprove the existence of the elements of a class, even though that court made no true analysis of the elements of commonality and typicality. This was tantamount to shifting the burden of proof with respect to class actions from the plaintiff to the defendant.
*191 We hope that through this opinion we will alleviate some of the problems inherent in the "race to the courthouse" mentality that recent Rule 23 practice has tended to encourage. Attorneys should not be able to obtain in one county a hastily ordered conditional certification and then have that certification order abate the order of a court in another county that is performing the rigorous analysis required by Rule 23. A "rush to judgment" in the form of a hurried conditional certification order undermines the goal of performing a complete analysis to determine the appropriateness of the class action litigation. As the Court of Appeals for the Fifth Circuit wrote in Castano v. American Tobacco Co., 84 F.3d 734, 741 (5th Cir.1996), "`[c]onditional certification is not a means whereby the District Court can avoid deciding whether, at that time, the requirements of [Rule 23] have been substantially met.'" (Quoting In re Hotel Telephone Charges, 500 F.2d 86, 90 (9th Cir.1974).) Alabama circuit courts must conduct the same careful analysis, regardless of whether the class certification order is labeled "conditional" or is labeled "final."
We conclude that the defendants have shown (1) a clear legal right to the order sought; (2) an imperative duty upon the respondent trial judge to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court. See Ex parte Johnson, supra, 638 So. 2d at 773.
Therefore, we grant the mandamus petition. The trial court is directed to vacate its November 9, 1995, order certifying a class in this cause and to make further findings as to whether the proponents of class certification have met their burden of proving each of the four elements of Rule 23(a). Any further conditional order of the trial court must identify each of the four elements of Rule 23(a). The order must not simply parrot the language of Rule 23(a) but must provide a written rigorous analysis of each element and explain how the proponents of class certification have met their burden of proving these elements. Finally, a trial court should not issue a conditional certification order that shifts the burden of proof with respect to the Rule 23 elements required for certifying a class. The burden of proving the Rule 23 elements remains with the plaintiff until the trial court has made the requisite finding as to each of the four elements.
PETITION GRANTED.
MADDOX, HOUSTON, and SEE, JJ., concur.
ALMON, SHORES, KENNEDY, COOK, and BUTTS, JJ., concur in the result.
ALMON, Justice (concurring in the result).
I concur with Justice Cook's opinion concurring in the result. In reading the lead opinion, I am not sure exactly what is meant by "rigorous analysis." It seems likely that the level of analysis and the requirements of proof or other substantiation of the class allegations will vary from case to case. In Ex parte First National Bank of Jasper, 717 So. 2d 342 (Ala.1997), also decided today, this Court has applied the rule that the first class action that is filed takes precedence, rather than the first one that is certified. Therefore, any perceived need for a hasty certification without notice, a hearing if necessary, and careful consideration of the application of Rule 23 to the circumstances of the case should cease to exist. I hesitate to address generally the standard for certification in a case such as this one, where the driving influence seems to have been a perceived need for haste because of the effect of cases such as Ex parte First National Bank of Jasper, 675 So. 2d 348 (Ala.1995), First National Bank of Jasper v. Crawford, 689 So. 2d 43 (Ala.1997), and Ex parte Voyager Guar. Ins. Co., 669 So. 2d 198 (Ala.Civ.App.1995). After this case had been pending for some time, the plaintiffs sought an expedited certification because of information they had received indicating that certification might be imminent in a class action that the plaintiffs believed to be a "friendly" action that would usurp their claims if certified first.
I agree, given all the circumstances, that the petition for the writ of mandamus is due to be granted.
*192 KENNEDY, Justice (concurring in the result).
I concur in the result. See my opinion concurring specially in Ex parte First National Bank of Jasper, 717 So. 2d 342 (Ala. 1997).
COOK, Justice (concurring in the result).
This is a petition for a writ of mandamus to the trial court. Although I agree that a trial court's order must demonstrate the court's analysis of the prerequisites of Rule 23(a), Ala. R. Civ. P., in its order conditionally certifying a class, I believe we must clarify what is meant by "a rigorous analysis," so that courts and parties may discern what is necessary for a class to be conditionally certified.
Even though a trial court is certifying a class "conditionally," the court must proceed with a Rule 23(a) analysis in order to assure that the prerequisites of Rule 23(a) are satisfied for class certification. To support the certification of a conditional class, parties must present evidence of such quality and weight as to satisfy the prerequisites of Rule 23(a). The "rigorous analysis" standard does not require the trial court to conduct a "precertification evidentiary hearing ... in every caseor even in most cases." Ex parte First National Bank of Jasper, 717 So. 2d 342 (Ala.1997). The "`issues [may be] plain enough from the pleadings to determine whether the interests of the absent parties are fairly encompassed within the named plaintiff's claim.'" Id. at 354 (quoting General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 160, 102 S. Ct. 2364, 2372, 72 L. Ed. 2d 740 (1982)). Such issues must be decided on a case-by-case basis and not according to any rigid rule.
After reviewing the briefs in this case, I believe that the plaintiffs presented evidence of such quality and weight, in their memorandum in support of the motion for class certification, that the trial court could have analyzed each Rule 23(a) prerequisite in its order; could have found evidence of numerosity, commonality, typicality, and adequate representation; and could have conditionally certified a class. However, the trial court's order does not reflect any evaluation of this evidence, and it is therefore deficient, as the court failed to address the prerequisites of commonality and typicality.[5]
I agree that this class should be decertified and the case remanded for a new certification hearing so that the plaintiffs may present evidence showing that the prerequisites of Rule 23(a) are met. Furthermore, in its order the trial court should address each prerequisite and indicate how the plaintiffs have met it. See also Ex parte First National Bank of Jasper, which thoroughly addresses the concerns raised by the class-action litigants in this case regarding the necessity of conditional certification to ensure that the court will not be ousted of its jurisdiction by the subsequent filing in another court of a complaint containing identical class allegations.
ALMON, SHORES, and BUTTS, JJ., concur.
[1] "The proponent of the class action status bears the burden of proof as to each of the ... prerequisites [i.e., the four elements of Rule 23(a)]." Rowan, 476 So. 2d at 46 (citing Duncan v. Tennessee).
[2] In Butler v. Audio/Video Affiliates, Inc., 611 So. 2d 330 (Ala.1992), this Court reviewed a trial court's order denying class certification. The Court stated: "In its order, the trial court held that the Butlers had failed to satisfy the requirements of Rule 23, and it painstakingly set forth the findings on which it based that holding ...." 611 So. 2d at 331. This Court then quoted, in its entirety, the order of the trial court; that order identified each of the four elements of Rule 23(a) and explained how the proponents of class certification had failed to meet their burden of proving those elements. This Court concluded:
"The trial court's findings are clearly supported by the evidence, and its holding that the Butlers failed to satisfy the requirements of Rule 23 is clearly supported by the record. The trial court did not abuse its discretion in denying the Butlers' motion for class certification."
611 So. 2d at 332.
[3] The parties stipulated that the requirement of "numerosity" was satisfied in this present case.
[4] The trial court's order states that "[c]lass certification is by definition conditional, and the Defendant may, if applicable, test this ruling by motion for summary judgment, and in the event of the defendant persuading the Court otherwise, the classes can at that time be redefined." This order appears to shift to the defendant the burden of presenting to the trial court evidence concerning the appropriateness of class certification.
[5] The trial court's order addressed the element of adequate representation, and the parties stipulated to the element of numerosity. | December 16, 1997 |
8ab846f2-359b-436c-84be-650613ce70ad | Robinson v. State | 698 So. 2d 1165 | 1960962 | Alabama | Alabama Supreme Court | 698 So. 2d 1165 (1997)
Ex parte State of Alabama.
(Re Edward J. ROBINSON, Emmette Robinson, Victor Keith Robinson[1]
v.
STATE).
1960962.
Supreme Court of Alabama.
June 27, 1997.
Bill Pryor, atty. gen., and Rosa H. Davis, asst. atty. gen., for petitioner.
No brief filed for respondents.
Prior report: Ala.Cr.App., 698 So. 2d 1160.
*1166 COOK, Justice.
WRIT DENIED.
ALMON, SHORES, and KENNEDY, JJ., concur.
SEE, J., concurs specially.
HOOPER, C.J., and MADDOX, J., dissent.
HOUSTON, J., recused.
SEE, Justice (concurring specially).
The State's petition for certiorari review fails to make a sufficient showing that the defendant Victor Keith Robinson waived his previously asserted right to counsel before making a statement to the police. Michigan v. Jackson, 475 U.S. 625, 106 S. Ct. 1404, 89 L. Ed. 2d 631 (1986).
MADDOX, Justice (dissenting).
The Court of Criminal Appeals found that the defendant Victor Keith Robinson's confession to a robbery was given after he had indicated that he wanted an attorney and that the State failed to prove that the defendant initiated the contact that led to his confession.
I have examined the State's brief and the facts before this Court. I believe that the State is probably right in stating that all the evidence presented by the State relating to who made the initial contact after the defendant had said he wanted an attorney was hearsay but was not objected to, and that some of the evidence on that question was elicited by the defendant's counsel during his cross-examination of the police officer. The extracts from the record quoted in the State's brief suggest to me that the State is probably right in arguing that not only did defendant's counsel not object to the admission of the hearsay, but that defense counsel actually asked questions of the police officers that further elicited evidence indicating that the defendant made the initial contact. Although I realize that the defendant testified that he did not make the initial contact, it appears to me that testimony only presents a credibility issuethe question being whether the trial judge believed the testimony of the police officers, although it was hearsay that was not objected to, or whether he believed the defendant, who the officer said was read his rights again before he made his confession.
I would issue the writ in this case and examine the record and the legal issues. Consequently, I must dissent.
HOOPER, C.J., concurs.
[1] This petition relates only to the defendant Victor Keith Robinson. | June 27, 1997 |
dae07924-8e8b-4ad5-8e43-fd89248d143b | Ex Parte Cothren | 705 So. 2d 861 | 1961250 | Alabama | Alabama Supreme Court | 705 So. 2d 861 (1997)
Ex parte Timothy Scott COTHREN.
(In re Timothy Scott Cothren v. State of Alabama).
1961250.
Supreme Court of Alabama.
August 22, 1997.
Rehearing Denied October 24, 1997.
Certiorari Denied March 23, 1998.
*862 William R. Hill, Jr., of Boggs & Hill, Clanton; and William F. Mathews, Pelham, for petitioner.
Bill Pryor, atty. gen., and Paul H. Blackwell, Jr., asst. atty. gen., for respondent.
Certiorari Denied March 23, 1998. See 118 S. Ct. 1319.
HOUSTON, Justice.
A jury in the Circuit Court of Shelby County convicted Timothy Scott Cothren of capital murder and the court sentenced him to death. In a unanimous decision, the Court of Criminal Appeals affirmed Cothren's conviction and sentence. See Cothren v. State, 705 So. 2d 849 (Ala.Crim.App.1997), for a detailed statement of the pertinent facts. We affirm.
The Court of Criminal Appeals discussed six issues in its opinion. It is necessary for this Court to write to only one of those issueswhether the trial court erred in allowing Cothren's confession to be admitted into evidence.
Cothren contends that his confession to police officers, following his arrest in Louisiana, was obtained in violation of his rights under Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), and, therefore, that it should not have been introduced into evidence for consideration by the jury. Specifically, Cothren argues that immediately after he was arrested, when he was asked about the .25 caliber pistol that had been used to commit the murder, he made an unequivocal statement that he wanted an attorney, and he argues that he made it clear that he did not want to answer any further questions without the advice of an attorney. According to Cothren, the evidence indicates that one of the arresting officers, Capt. Murphy Meyers, understood his statement to be a request for an attorney and that Meyers asked no further questions after he made the statement. Cothren contends, however, that his statement was not relayed to the other investigating officers who later interrogated him. Cothren maintains that even though on several occasions he clearly indicated, both orally and in writing, a desire to waive his Miranda rights and to speak with the investigating officers, that action on his part was ineffective as a matter of law because, he says, the investigating officers initiated a conversation with him after he had made an unequivocal statement that he did not want *863 to talk without an attorney being present. Cothren further contends that Capt. Meyers's testimony at the suppression hearing, with respect to the nature of Cothren's statement concerning an attorney, was inconsistent with Meyers's incident report and that Meyers changed his story in order to create an inference that Cothren's statement was not unequivocal. Capt. Meyers's incident report stated in part:
Meyers testified at the suppression hearing that Cothren had said, "I think I want to talk to an attorney before I answer that." Cothren contends that his confession was perhaps the most important aspect of the State's case and that its admission, if found to be erroneous, would not constitute harmless error.
The State contends (and the Court of Criminal Appeals held) that Cothren's statement to Meyers was not unequivocal. The State argues that the trial court correctly found that Capt. Meyers's testimony was not inconsistent with his incident report and that it indicates that Cothren stated in response to Meyers's specific question concerning when Cothren had last possessed the .25 caliber pistol that he thought he wanted an attorney before responding to that question. The State takes the position that Cothren later made his earlier intentions clear when he spoke with the investigating officers after clearly indicating, both orally and in writing, that he wished to waive his Miranda rights.
After carefully reviewing the record and the briefs, we conclude that Cothren's confession was properly admitted into evidence. In Edwards v. Arizona, 451 U.S. 477, 101 S. Ct. 1880, 68 L. Ed. 2d 378 (1981), the United States Supreme Court held that police officers must immediately cease interrogating a suspect who has clearly asserted his right to have an attorney present during custodial interrogation and that interrogation may not resume unless the suspect initiates and consents to further questioning. Later, in Davis v. United States, 512 U.S. 452, 114 S. Ct. 2350, 129 L. Ed. 2d 362 (1994), the Court, addressing the question of how police officers should respond when a suspect makes a reference to an attorney that is insufficiently clear to invoke the Edwards prohibition on further questioning, stated:
512 U.S. at 458-61, 114 S. Ct. at 2354-56.
Capt. Meyers testified at the suppression hearing as follows:
*866 We agree with the State that the trial court could have reasonably concluded from Capt. Meyers's testimony that Cothren stated, just after his arrest, "I think I want to talk to an attorney before I answer that." Meyers's credibility was a matter for the trial court to resolve. Therefore, the dispositive issue is whether that statement, under the circumstances, was sufficiently clear to Capt. Meyers to invoke the Edwards prohibition on further questioning.
In Coleman v. Singletary, 30 F.3d 1420 (11th Cir.1994), cert. denied, 514 U.S. 1086, 115 S. Ct. 1801, 131 L. Ed. 2d 727 (1995), the Eleventh Circuit Court of Appeals, addressing a similar issue, set out the general dictionary definitions of "equivocal," as that word was used in Davis:
30 F.3d at 1425. Based on our review of the record, we conclude that Cothren's statement to Meyers is capable of equally plausible, differing interpretations and, therefore, that it is equivocal. The record indicates that Cothren had been fully apprised of his Miranda rights and that he was responding to Capt. Meyers's questions just before Meyers asked him when he had last possessed the .25 caliber pistol that had been used to commit the murder. In response to that particular question, Cothren stated, "I think I want to talk to an attorney before I answer that." It is, of course, impossible for us to glean from a cold record the intonations of Cothren's voice as he made the statement. Capt. Meyers testified that Cothren made the statement in a "normal voice." However, Meyers also testified that he did not understand Cothren's statement to be a blanket refusal to speak further to the police without the presence of an attorney. Without being privy to the manner in which Cothren made the statement, i.e., without knowing whether Cothren had an equivocal tone in his voice, we find two aspects of the statement that suggest to us that Capt. Meyers could reasonably have believed that Cothren was willing to talk further without the assistance of an attorney. First, Cothren stated, "I think I want to talk to an attorney ...." Although the word "think," in and of itself, is of sufficiently clear import, its use here tends to diminish the forcefulness of the statement. In this respect, we agree with the conclusion reached by the Arizona Supreme Court in State v. Eastlack, 180 Ariz. 243, 883 P.2d 999 (Ariz. 1994), cert. denied, 514 U.S. 1118, 115 S. Ct. 1978, 131 L. Ed. 2d 866 (1995). In that case, the court concluded that the statement "I think I better talk to a lawyer first" was not an unequivocal request for an attorney. Cothren's use of the word "think" could have led Capt. Meyers to conclude that Cothren was not certain as to what he should do. Second, Cothren stated, "I think I want to talk to an attorney before I answer that." Capt. Meyers could have reasonably concluded from Cothren's use of the word "that" that Cothren was hesitant to respond to the specific question asked about the .25 caliber pistol, but that he might be willing to submit to other questions at a later time. The Davis Court made it very clear that it was unwilling to adopt a rule that would force police officers in "the real world of investigation and interrogation," 512 U.S. at 461, 114 S. Ct. at 2356, to make difficult judgment calls about whether a suspect in fact wants an attorney before speaking to the police. The Court succinctly noted that "if a suspect makes a reference to an attorney that is ambiguous or equivocal in that a reasonable officer in light of the circumstances would have understood only that the suspect might be invoking the right to counsel, our precedents do not require the cessation of questioning." 512 U.S. at 459, 114 S. Ct. at 2355. (Emphasis original.) We recognize that reasonable judges and attorneys may have differing opinions as to what Cothren actually meant by his statement. However, as we read Davis, the proper standard to be used in resolving this issue is an objective one whether a police officer in the field reasonably could have concluded from the circumstances that a suspect was not absolutely *867 refusing to talk without the assistance of an attorney.
Although it does not form the primary basis for our holding with respect to the admissibility of Cothren's confession, we also conclude, based on our review of the record, that even if Cothren's statement to Capt. Meyers were to be construed to be unequivocal as a matter of law, there was credible evidence supporting the admission of Cothren's confession. Nathan DeRouen, the chief criminal investigator for the Iberia Parish, Louisiana, Sheriff's Department, testified as follows with regard to his initial conversation with Cothren after Cothren and the other suspects had been transported to police headquarters:
(Emphasis added.) Neither DeRouen, nor any of the other investigators involved in the investigation of the Alabama and Mississippi murders, was aware that Cothren had previously made the statement to Capt. Meyers indicating that he thought he wanted an attorney before answering a particular question. The trial court could have found that Cothren was not mistreated by the investigating officers and that he willingly (after being advised of his Miranda rights a number of times) gave incriminating statements concerning his involvement in both the Alabama murder and the Mississippi murder.
The Supreme Court set out the facts in Edwards, as follows:
451 U.S. at 478-79, 101 S. Ct. at 1881-82.
Holding that Edwards had not effectively waived his right to counsel, the Court, citing a number of cases, including Johnson v. Zerbst, 304 U.S. 458, 58 S. Ct. 1019, 82 L. Ed. 1461 (1938), noted that "[i]t is reasonably clear under our cases that waivers of counsel must not only be voluntary, but must also constitute a knowing and intelligent relinquishment or abandonment of a known right or privilege, a matter which depends in each case `upon the particular facts and circumstances surrounding that case, including the background, experience, and conduct of the accused.'" 451 U.S. at 482, 101 S. Ct. at 1884, quoting Johnson v. Zerbst, 304 U.S. at 464, 58 S. Ct. at 1023. The Court then went on to state:
* If, as frequently would occur in the course of a meeting initiated by the accused, the conversation is not wholly one-sided, it is likely that the officers will say or do something that clearly would be `interrogation.' In that event, the question would be whether a valid waiver of the right to counsel and the right to silence had occurred, that is, whether the purported waiver was knowing and intelligent and found to be so under the totality of the circumstances, including the necessary fact that the accused, not the police, reopened the dialogue with the authorities."
451 U.S. at 484-87, 101 S. Ct. at 1885-86.
The United States Supreme Court has indicated that Edwards established a "bright-line" rule that prevents the police from "approaching" a suspect for further "interrogation" after the suspect has clearly requested the assistance of an attorney. See McNeil v. Wisconsin, 501 U.S. 171, 111 S. Ct. 2204, 115 L. Ed. 2d 158 (1991); Michigan v. Jackson, 475 U.S. 625, 106 S. Ct. 1404, 89 L. Ed. 2d 631 (1986); Solem v. Stumes, 465 U.S. 638, 104 S. Ct. 1338, 79 L. Ed. 2d 579 (1984); Smith v. Illinois, 469 U.S. 91, 105 S. Ct. 490, 83 L. Ed. 2d 488 (1984). However, we do not read Edwards and its progeny as establishing a rigid "per se rule, requiring a threshold inquiry as to precisely who opened any conversation between an accused and state officials." Edwards, 451 U.S. at 489-90, 101 S. Ct. at 1887 (Chief Justice Burger, concurring in the judgment) (emphasis added). In determining whether there has been a knowing and intelligent relinquishment of the right not to speak without an attorney being present, the Edwards Court explained that the focus should be on the totality of the circumstances, specifically on whether the suspect was subjected against his will to police-initiated interrogation. Although the Court appears to have abandoned the Johnson v. Zerbst "totality of the circumstances" test for determining the voluntariness of a waiver of the right to an attorney in the Edwards context, see, e.g., Solem v. Stumes, supra, we are not convinced that Edwards rendered totally irrelevant the circumstances surrounding a police officer's conversation with an accused, such as the conversation initiated by investigator DeRouen in the present case. In Edwards, the defendant Edwards was clearly requestioned under coercive circumstances incompatible with a voluntary waiver of his right to an attorney. However, the circumstances surrounding Cothren's confession are not remotely similar to those in Edwards. Here, investigator DeRouen, who had no knowledge that Cothren had made a statement to Capt. Meyers concerning an attorney, merely asked Cothren if he wished to talk with investigators from Mississippi and Alabama. We do not view DeRouen's routine inquiry in this regard as police-initiated interrogation, within the meaning of Edwards or Rhode Island v. Innis, 446 U.S. 291, 100 S. Ct. 1682, 64 L. Ed. 2d 297 (1980):
446 U.S. at 300-01, 100 S. Ct. at 1689-90. True, Cothren himself did not initiate the conversation with investigator DeRouen; however, Cothren clearly wanted to talk (as is evidenced by the videotape and the audiotapes contained in the record), and it was Cothren who readily consented to, and, thus, invited further interrogation by the Mississippi and Alabama investigators. The Court in Davis noted that the Edwards rule was "`designed to prevent police from badgering a defendant into waiving his previously asserted Miranda rights.'" 512 U.S. at 458, 114 S. Ct. at 2355, quoting Michigan v. Harvey, 494 U.S. 344, 350, 110 S. Ct. 1176, 1180, 108 L. Ed. 2d 293 (1990). The Davis Court also noted that the Edwards rule was not a constitutional command and that it was not inclined to extend Edwards beyond its specific holding.
In the present case, the trial court could have found that investigator DeRouen, with no knowledge that Cothren had stated to Capt. Meyers that he thought he wanted to speak with an attorney, fully informed Cothren of his Miranda rights and then merely asked him if he wished to relinquish those rights and speak with investigators from Mississippi and Alabama. Cothren responded, "Yeah. No problem." The trial court could also have found that Cothren was never mistreated by the investigating officers or "badgered" into giving a confession. We fear that reading Edwards as broadly as Cothren suggests "`would transform the Miranda safeguards into wholly irrational obstacles to legitimate police investigative activity,' " 512 U.S. at 460, 114 S. Ct. at 2356, quoting Michigan v. Mosley, 423 U.S. 96, 102, 96 S. Ct. 321, 326, 46 L. Ed. 2d 313 (1975). This we will not do, in the absence of a clarifying opinion from the United States Supreme Court stating that Cothren's confession was inadmissible under the circumstances here presented.
Based on the above, we agree with the Court of Criminal Appeals that Cothren's confession was admissible. However, we do not agree with the Court of Criminal Appeals that if the admission of the confession had been error the error could be held to be harmless. Cothren's confession was the centerpiece of the State's case and it was extremely prejudicial to Cothren. Therefore, its erroneous admission would have adversely affected Cothren's right to a fair trial. Rule 45, Ala.R.App.P.
Cothren has also raised here a number of issues that were not addressed by the Court of Criminal Appeals. Although we have considered all of those issues, we find it necessary to address only one of them whether during the sentencing phase of the trial the court erred in instructing the jury with respect to weighing the aggravating and mitigating circumstances.
Cothren contends that the following portion of the trial court's instructions constituted reversible error:
Cothren correctly argues that Alabama law requires that the jury find the aggravating circumstances to outweigh the mitigating circumstances before it can recommend a death sentence. However, according to Cothren, that portion of the trial court's instructions set out above created an impermissible presumption in favor of a death sentence, a presumption that, he says, he had to attempt to overcome. The State contends that the trial court's instructions, taken as a whole, sufficiently informed the jury that it had to weigh the aggravating and mitigating circumstances and that it had to find that the aggravating circumstances outweighed the *871 mitigating circumstances before it could recommend a death sentence.
After reviewing the trial court's instructions, we hold that those instructions, taken as a whole, sufficiently informed the jury of the weighing process required under the law. We specifically reject Cothren's contention that the trial court created a presumption in favor of a death sentence by informing the jury that they could consider whether "any mitigating circumstances exist that outweigh those aggravating circumstances." See Ala. Code 1975, § 13A-5-46, which provides in part as follows:
Alabama law requires a weighing process. If the jury finds that the aggravating circumstances outweigh the mitigating circumstances, it must recommend a death sentence. If the jury finds that the mitigating circumstances outweigh the aggravating circumstances, it must recommend a sentence of life imprisonment without parole. The trial court's instructions did not create a presumption in favor of a verdict recommending a death sentence.
We have fully considered each of the issues raised by Cothren. Furthermore, we have independently searched the record for error. Having carefully read and considered the record, together with the briefs of counsel, we can find no reversible error in the proceedings below. The judgment of the Court of Criminal Appeals is due to be affirmed.
AFFIRMED.
HOOPER, C.J., and SHORES and SEE, JJ., concur.
BUTTS, J., concurs in the result. | August 22, 1997 |
0f77eb44-4af5-42b4-9f1d-1a067c807f45 | Ex Parte Janezic | 723 So. 2d 725 | 1960708 | Alabama | Alabama Supreme Court | 723 So. 2d 725 (1997)
Ex parte Eileen JANEZIC.
(Re Eileen Janezic v. State).
1960708.
Supreme Court of Alabama.
November 14, 1997.
*726 Robert E. Willisson of Simpson, Simpson & Willisson, Huntsville, for Petitioner.
Bill Pryor, atty. gen., and Joseph G.L. Marston III, asst. atty. gen., for respondent.
MADDOX, Justice.
We granted the writ of certiorari in this case to review a determination by the Court of Criminal Appeals that a defendant, who had previously been found competent by a jury to stand trial, was not entitled to another competency hearing despite evidence presented at the defendant's sentencing suggesting that the defendant's mental condition had deteriorated during the course of her trial to the extent that she had become incompetent to stand trial.
On August 26, 1993, the Reverend Jerry Simon was shot and killed while leaving the Valley Fellowship Church in Huntsville. Eileen Janezic was convicted of murdering Simon and was sentenced to life imprisonment. The Court of Criminal Appeals affirmed Janezic's conviction, with two Judges dissenting. Janezic v. State, 723 So. 2d 696 (Ala. Crim.App.1996). Janezic petitioned for certiorari review, arguing that the evidence demonstrated: (1) that she was legally insane at the time of the murder and (2) that she was incompetent to stand trial and that this was evidenced by the fact that a mental health professional had changed his opinion about Janezic's mental condition. We hold that Janezic is entitled to a hearing, if feasible, to determine her competency during the guilt-determination phase of her trial.[1]
Janezic suffers from a serious mental disease and has been diagnosed as having such a disease since at least 1989, when she was involuntarily committed to a mental institution.[2]*727 Partly because of her prior commitment, Janezic's competency was at issue at the beginning of the proceedings in this case; therefore, in June 1994, pursuant to Rule 11.6(b), Ala. R.Crim. P., the trial judge conducted a separate jury trial in order to determine whether Janezic was competent to stand trial.
Two psychologists testified at this pre-trial competency hearing: Dr. Lawrence Maier and Dr. Roger Rinn. Both experts agreed that Janezic was hampering her defense by not helping her counsel formulate an insanity defense, but they disagreed on the reasons behind Janezic's refusal to enter a plea of not guilty by reason of mental disease or defect.
Dr. Maier, a private practitioner under contract with the Alabama Department of Mental Health and Mental Retardation, had been appointed by the trial court to examine Janezic pursuant to the State's request. Dr. Maier testified that he believed Janezic was competent to stand trial because, in his opinion, Janezic had sufficient understanding of the proceedings and charges against her and sufficient ability to cooperate with her attorneys. Dr. Maier acknowledged that Janezic was hampering her defense by refusing to assist her counsel in formulating an insanity defense, but he did not believe that Janezic's resistance to an insanity defense was based on her mental illness. Instead, he believed that Janezic had deliberately chosen to resist an insanity plea because she believed that such resistance was the most effective way to avoid being convicted.
Dr. Rinn, a private practitioner, testified for the defense. Dr. Rinn testified that he believed Janezic was not competent to stand trial. Specifically, he believed that Janezic's mental disease was the cause of her refusal to help formulate an insanity defense; therefore, Dr. Rinn believed, Janezic's mental disease made her unable to assist her attorney.
Faced with this conflicting expert testimony, the jury determined that Janezic was competent, and the trial judge ordered the trial to commence. Janezic has not challenged this initial competency determination.
Janezic having been adjudged competent, her trial began on October 17, 1994. On October 25, 1994, at the close of the trial, the judge instructed the jury on the verdicts of guilty, not guilty, and not guilty by reason of mental disease or defect. The jury returned a verdict of guilty, and the trial judge scheduled a sentencing hearing for November 15, 1994.
On November 15, 1994, at the beginning of the sentencing hearing, Janezic's attorneys notified the trial judge that they had, without court approval, asked Dr. Lawrence Maier to reexamine Janezic's mental state. They stated that they wished to offer Dr. Maier's testimony to address both Janezic's competency for purposes of sentencing and, possibly, her competency during the course of the guilt-determination phase of her trial. The trial judge allowed Dr. Maier to testify, but limited the area of examination to whether Janezic was competent for purposes of sentencing. The trial judge specifically stated that he would not revisit the issue of Janezic's competency to stand trial in the earlier proceedings. Therefore, although Dr. Maier briefly referred to observations he had made during the course of the trial, he directly testified only as to Janezic's competency on November 15, 1994, for purposes of sentencing.[3]
Dr. Maier testified that he had examined Janezic the day before the sentencing hearing and had formed a new opinion regarding her competency. Specifically, he stated:
Dr. Maier also testified that he observed Janezic during the guilt-determination phase of the trial, while he was giving his testimony relating to Janezic's insanity plea. He explained that, at that time, Janezic seemed to possess "marked disinterest and very little awareness or concern about what was going on." However, he also stated that "my evaluation was quite brief, and my concern was to testify, not to observe at that time."
Based on this testimony, the trial judge postponed sentencing and committed Janezic to the custody of the Alabama Department of Mental Health and Mental Retardation to receive appropriate medical treatment and for further evaluation as to her competency to be sentenced.
On July 6, 1995, the trial court conducted another hearing to determine whether Janezic was competent to be sentenced. At this hearing, Dr. Wilburn Rivenbark, a forensic psychologist employed by the State of Alabama, testified that Janezic's condition had improved in response to medication and that she was competent to be sentenced. The trial court agreed, and it sentenced Janezic to life imprisonment. Janezic has not challenged this decision.
In July 1995, Janezic filed a motion for a new trial, alleging, among other things, that she had been incompetent to stand trial and that the evidence overwhelmingly demonstrated that she was insane at the time of the killing. The trial judge did not rule on the motion, and it was denied by operation of law under Rule 24.4, Ala. R.Crim. P.
Janezic argues that she was entitled to a competency hearing because, she says, the evidence demonstrated that her mental condition had deteriorated during the course of her trial to the extent that she was incompetent to stand trial.[4] The Court of Criminal Appeals, in a split decision, affirmed Janezic's conviction, without addressing the issue of Janezic's competency to stand trial; however, Judge Patterson, in his dissent, asserted that the case should, at a minimum, be remanded to the circuit court for a hearing to address Janezic's motion for a new trial. We agree; we conclude that this case should be remanded for further consideration of the question of Janezic's competency to stand trial during the guilt-determination phase of her trial.
Trial of a person who is incompetent violates the due process guarantees. Davis v. Alabama, 545 F.2d 460 (5th Cir. 1977). Therefore, when a trial court is faced with facts that create a reasonable and bona fide doubt as to the mental competency of the defendant to stand trial, the trial court must take steps to assure that a reasonable legal determination of competency is reached. See, e.g., Atwell v. State, 354 So. 2d 30, 35 (Ala.Crim.App.1977), cert. denied, 354 So. 2d 39 (Ala.1978). In other words, in such situations, the trial court must inquire into the defendant's competency, generally by conducting a competency hearing. Ex parte LaFlore, 445 So. 2d 932 (Ala.1983). In this case, Janezic was afforded a competency hearing, but it appears to be uncontroverted that the only mental health professional who had testified at the pre-trial competency hearing that Janezic was competent changed his opinion after she was convicted and that this change in opinion was based in part on what he had observed while testifying during the guilt-determination phase of Janezic's trial.
In her motion for a new trial, Janezic referred to Dr. Maier's change of opinion, and Judge Patterson's dissent similarly focused on Dr. Maier's decision to come forward at the sentencing hearing. We view Dr. Maier's change of opinion as the heart of Janezic's incompetency claim.[5] Dr. Maier *729 was the only expert who had testified that Janezic was competent to stand trial; indeed, in light of the wealth of evidence regarding Janezic's mental condition, it appears that Dr. Maier's earlier testimony was the only ground supporting a determination that Janezic was competent.
By the middle of November 1994, Dr. Maier's opinion regarding Janezic's competency had changed and, in fact, was different from the opinion he had expressed in June 1994 at the pre-trial competency hearing. Dr. Maier's change of opinion was, at least in part, motivated by his observations of Janezic during the guilt-determination phase of the trial. At the sentencing hearing, the trial court was informed of this change in opinion, and Janezic's counsel specifically indicated that Dr. Maier's testimony could address Janezic's competency during the guilt-determination phase of the trial. In addition, the trial court also knew that Dr. Maier's change in opinion was prompted, at least in part, by his observations of Janezic during the guilt-determination phase of the trial. Although the evidence on record does not conclusively prove that Janezic had become incompetent during the course of her trial, we believe that Dr. Maier's shift of opinion, especially when considered in the context of the other evidence related to Janezic's mental health, created a reasonable and bona fide doubt as to Janezic's competency during the guilt-determination phase of her trial.
This conclusion is not affected by the fact that the trial court did not learn of Dr. Maier's possible change of opinion until after Janezic had been convicted. The duty to protect against trying an incompetent person applies even when the facts that question the defendant's competency become available after a verdict has been reached. Cf. United States v. Mason, 52 F.3d 1286 (4th Cir.1995) (explaining that the trial court should have conducted a competency hearing even though the competency issue was not raised until after the phase of trial in question and was triggered by suicide attempt that occurred after conviction).
We recognize that it is easier to make a determination of a defendant's current competency than an after-the-fact determination, but this does not excuse a trial court from its duty to protect against the trial of an incompetent person. See Mason, 52 F.3d at 1293 n. 8. In addition, most of the problems associated with retrospective competency hearings are less troublesome when the facts that question the defendant's competency are made known promptly, here less than a month after the conviction and before the defendant had been sentenced.
Because the trial court erred in failing to conduct further inquiry into Janezic's competency during the guilt-determination phase of her trial, we conclude that this case should be remanded to the circuit court for a hearing to determine this issue. See Edgar v. State, 646 So. 2d 683, 687 (Ala.1994);[6] cf. *730 Ex parte Gordon, 556 So. 2d 363 (Ala.1988) (remanding case for further inquiry into the defendant's mental competency during trial). In remanding this case, rather than granting a new trial, we are aware of the problems inherent in retrospective competency hearings,[7] but we believe the feasibility of a retrospective competency hearing is an issue that is better left to the discretion of the trial court on a case-by-case basis. See, e.g., Moran v. Godinez, 57 F.3d 690 (9th Cir. 1994); James v. Singletary, 957 F.2d 1562 (11th Cir.1992); United States v. Mason, 52 F.3d 1286 (4th Cir.1995); United States v. Renfroe, 825 F.2d 763 (3d Cir.1987); Bryan v. State, 935 P.2d 338 (Okla.Crim.App.1997); James v. State, 489 So. 2d 737 (Fla.1986). The factors that should be considered in determining whether it is feasible at this point to conduct a meaningful inquiry into Janezic's competency during her trial include, but are not limited to, the passage of time, the availability of witnesses, and the existence of evidence in the record about Janezic's mental state at the time. See Miller v. Dugger, 838 F.2d 1530, 1544 (11th Cir.1988), cert. denied, 486 U.S. 1061, 108 S. Ct. 2832, 100 L. Ed. 2d 933 (1988).
If the circuit court concludes that a meaningful retrospective determination is still possible, and it appears to be, the circuit court shall conduct a competency hearing. At that competency hearing, the State will bear the burden of proving that Janezic was competent. See Lackey v. State, 615 So. 2d 145, 152 (Ala.Crim.App.1992) ("Once the defendant has met his burden of production by presenting evidence that he is incompetent to stand trial, the State must then prove that the defendant is competent"). If the circuit court properly concludes that Janezic was competent, no new trial will be necessary. On the other hand, if the circuit court determines that a meaningful retrospective determination is no longer possible, then Janezic's conviction must be reversed and a new trial may be granted when and if Janezic is competent to stand trial.
We reverse the judgment of the Court of Criminal Appeals and remand this case for proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and ALMON, SHORES, HOUSTON, COOK, and SEE, JJ., concur.
[1] Because of our disposition of this case, we decline to address at this time Janezic's argument that she was legally insane at the time of the killing.
[2] Janezic has received a variety of diagnoses. In 1989, Janezic was diagnosed as suffering from bipolar disorder. Since that time, she has been diagnosed as suffering from schizophrenia, and schizo-affective disorder with psychotic features. As of November 1994, the psychiatrists and psychologists with the Alabama Department of Mental Health agreed that Janezic suffered from acute paranoid schizophrenia. Regardless, it is undisputed that Janezic suffers from a severe mental disease that is incurable.
[3] We emphasize that this lack of testimony may be at least partially explained by the fact that the trial court specifically ruled that it would not revisit the issue of Janezic's competency during the guilt-determination phase of the trial.
[4] In other words, Janezic argues that the trial court should have, at a minimum, conducted a competency hearing upon learning that Dr. Maier had changed his opinion regarding Janezic's competency. This type of claim is based on Pate v. Robinson, 383 U.S. 375, 86 S. Ct. 836, 15 L. Ed. 2d 815 (1966), a case in which the defendant alleged that the trial court denied him procedural due process by failing to sua sponte hold a competency hearing.
[5] In her motion for new trial, Janezic made the following allegations regarding her competency to stand trial:
"6. The Court erred in failing to exercise its ongoing duty to prevent a trial of a defendant who was obviously unable to assist in her defense. (Gothard v. State, 452 So. 2d 889 [Ala. Crim.App.1984]).
"7. The Court erred in failing to consider defendant's conduct after the alleged event and during the trial in relation to its duty to guard against an incompetent being tried, when she demonstrated in open court that she was unable to cooperate with her lawyers in the presentation of her case (Bernard[Berard] v. State, 486 So. 2d 458 [Ala.Crim.App.1984]).
"8. The Court erred in allowing an incompetent defendant to stand trial; thereby violating her right under the constitutions of Alabama and the United States (Anderson v. State, 510 So. 2d 578 [Ala.Crim.App.1987]).
"9. As a matter of law, the un-rebutted testimony and evidence received in this case, establishes that defendant was suffering from a mental illness or defect prior to and during the trial of the case, and that she could not effectively participate in the preparation and presentation of her defense.
"....
"13. A new trial may be granted when a material witness admits his testimony was mistaken, but if the true facts are corroborated by other evidence, then a new trial must be granted, particularly since the finding of competence was based upon the recanted testimony (Robinett v. State, 494 So. 2d 952 [Ala.Crim. App.1986])."
[6] In Edgar, this Court held that when a criminal defendant's motion for new trial is supported by new evidence not controverted by the State that would entitle the defendant to a new trial and that motion is denied by operation of law, the defendant is entitled only to a hearing on the motion for new trial, not an automatic reversal and new trial. Edgar, 646 So. 2d at 687. When the defendant's motion for new trial raises a claim of incompetency to stand trial, this rule may be applied only if the circuit court determines that a meaningful retrospective hearing into the defendant's competency can be held.
[7] In Pate v. Robinson, 383 U.S. 375, 387, 86 S. Ct. 836, 843, 15 L. Ed. 2d 815 (1966), the United States Supreme Court noted the dangers inherent in retrospective competency hearings, including the passage of time, expert witnesses limited to information contained in the printed record, and the new jury's inability to observe the defendant at the time of trial. However, that case did not forbid such hearings. See also Miller v. Dugger, 838 F.2d 1530, 1543 (11th Cir.1988). | November 14, 1997 |
453dc8c9-6884-457f-9079-b97d179a38ab | Nissan Motor Acceptance Corp. v. Ross | 703 So. 2d 324 | 1960389 | Alabama | Alabama Supreme Court | 703 So. 2d 324 (1997)
NISSAN MOTOR ACCEPTANCE CORPORATION
v.
Bernette B. ROSS[1].
1960389.
Supreme Court of Alabama.
August 22, 1997.
*325 Richard E. Smith and Rhonda Pitts Chambers of Rives & Peterson, Birmingham, for appellant.
Yvonne Green Davis, Birmingham, for appellee.
SEE, Justice.
This arbitration case arises out of Bernette Ross's purchase of an automobile, sold to her by Jim Burke Automotive, Inc. ("Jim Burke"), and financed by Nissan Motor Acceptance Corporation ("Nissan"). Ross sued Jim Burke and Nissan, alleging, among other things, fraud. Jim Burke and Nissan moved to stay the proceeding below and to compel arbitration. The trial court granted Jim Burke's motion to compel arbitration, but denied Nissan's motion. Nissan appealed.[2] We reverse and remand.
In January 1995, Ross purchased a new car from Jim Burke. The purchase transaction involved two pertinent documents: (1) a retail buyer's order, which contained an arbitration clause signed by Ross and Jim Burke; and (2) a retail sales contract, which was assigned to Nissan. The retail buyer's order specifically incorporates the retail sales contract.
Ross alleges that Jim Burke used a rebate, or incentive payment, to artificially lower her payments from $468 per month to $125 per month for approximately 7 months. Ross further alleges that Jim Burke misrepresented that at the end of the 7-month period, she could trade in her new vehicle for another vehicle and continue to make payments of only $125 per month. After the 7 months expired, no trade-in occurred. Ross's payments rose to $468 per month; she had difficulty making those higher payments, and in February 1996 she returned the car to Jim Burke. Nissan sold the car at a private auction and then sought to collect the $7,000 balance due on Ross's note. In response, Ross sued Jim Burke and Nissan, alleging, among other things, misrepresentation of material facts in the sale of the automobile.
Section 2 of the Federal Arbitration Act ("FAA") provides in pertinent part:
9 U.S.C. § 2 (emphasis added).[3]
The retail buyer's order signed by Ross and Jim Burke provides in pertinent part:
(Emphasis added.)
Ross's retail sales contract, signed by Ross and assigned to Nissan, provides:
(Emphasis added.)
Nissan contends simply that under the retail buyer's order Ross agreed to arbitrate "all disputes"; that the order specifically incorporated the retail sales contract; and that Nissan became a party to the retail sales contract when Jim Burke assigned it to Nissan. Nissan argues that through the assignment it steps into the shoes of Jim Burke, the assignor, and is entitled to arbitration, under the express provisions of the arbitration clause. We agree.
As an assignee, Nissan simply steps into the shoes of the assignor, Jim Burke, a signatory to the arbitration agreement. Upchurch v. West, 234 Ala. 604, 609, 176 So. 186, 190 (1937), overruled on other grounds, Dominex, Inc. v. Key, 456 So. 2d 1047 (Ala.1984). A valid assignment gives the assignee the same rights, benefits, and remedies that the assignor possesses. Id. Accord John D. Calamari & Joseph M. Perillo, The Law of Contracts, § 18-3 at 633, 634 (2d ed.1977). Thus, Nissan has the right to compel arbitration. See, e.g., I.S. Joseph Co. v. Michigan Sugar Co., 803 F.2d 396, 400 (8th Cir.1986) (stating that, assuming a valid assignment, the assignee could enforce an arbitration provision entered into by the assignor); Chatham Shipping Co. v. Fertex S.S. Corp., 352 F.2d 291, 294 (2d Cir.1965) (stating that "absent contrary expression, assignment of a contract carries with it a right to arbitration therein provided"); Gruntal & Co., v. Steinberg, 843 F. Supp. 1 (D.N.J.1994) (stating that "a successor to or assignee of a contract containing an arbitration clause may be obligated to arbitrate pursuant to that arbitration clause"); Banque de Paris et des Pays-Bas v. Amoco Oil Co., 573 F. Supp. 1464 (S.D.N.Y.1983) (stating that an assignee may pursue the claims of the assignor and may enforce an arbitration provision the assignor had agreed to).
The trial court improperly denied Nissan's motion to compel arbitration. We therefore reverse the trial court's order and remand the cause for further proceedings not inconsistent with this opinion.[4]
REVERSED AND REMANDED.
*327 HOOPER, C.J., and MADDOX, SHORES, and HOUSTON, JJ., concur.
COOK, J., concurs specially.
BUTTS, J., concurs in the result.
COOK, Justice (concurring specially).
Although Nissan Motor Acceptance Corporation is a nonsignatory as to the contracts in this case, this case is distinguishable from recent cases in which we held that a nonsignatory could not compel arbitration. See Ex parte Martin, [Ms. 1951420, November 8, 1996] 703 So. 2d 883 (Ala.1996); Ex parte Jones, 686 So. 2d 1166 (Ala.1996).
The distinction between this case and Martin and Jones represents a significant difference. Nissan became an assignee of the Jim Burke contract; therefore, it can assert the terms of that contract, including the arbitration clause.
[1] Some documents in the record refer to the plaintiff as "Bernette B. Ross"; other documents refer to the plaintiff as "Bernetta B. Ross."
[2] A direct appeal is the generally accepted method of review when a trial court denies a motion to compel arbitration. A.G. Edwards & Sons, Inc. v. Clark, 558 So. 2d 358, 360 (Ala.1990). A petition for a writ of mandamus is the generally accepted method of review when the trial court grants a motion to compel arbitration. Ex parte Alexander, 558 So. 2d 364, 365 (Ala.1990).
[3] Neither party has alleged that the transaction did not involve interstate commerce. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995) (holding that all arbitration provisions dealing with transactions involving interstate commerce are subject to the FAA).
[4] Although Ross argued before the trial court that she was fraudulently induced by Jim Burke to sign the arbitration agreement, the trial court held that Ross was not fraudulently induced and that the arbitration agreement was valid. Ross did not challenge that decision below, nor did she cross appeal. Therefore, that issue is not properly before us. Metro Bank v. Henderson's Builders Supply Co., 613 So. 2d 339 (Ala.1993). In any event, under the language of the arbitration clause ("any claim alleging ... fraud in the inducement ... shall be submitted to binding arbitration"), whether Ross was fraudulently induced to sign the arbitration agreement is also a matter to be determined by the arbitrator. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S. Ct. 1920, 1923-24, 131 L. Ed. 2d 985 (1995).
Further, Ross failed to raise to the trial court her claim that Nissan waived its right to arbitrate by substantially participating in the litigation process. Therefore, we will not address it on appeal. Shadwrick v. State Farm Fire & Cas. Co., 578 So. 2d 1075, 1077 (Ala.1991). In any event, Nissan included the defense of arbitration in its amended answer to Ross's amended complaint. Further, mere participation in discovery does not constitute a substantial invocation of the litigation process. Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So. 2d 1 (Ala.1986). | August 22, 1997 |
3bd258ca-6995-42b1-acfd-09ad36b52ce2 | Hornsby v. Sessions | 703 So. 2d 932 | 1950376 | Alabama | Alabama Supreme Court | 703 So. 2d 932 (1997)
Sonny HORNSBY
v.
Jeff SESSIONS, as attorney general of the State of Alabama; and Jimmy H. Baker, as acting director of the Department of Finance of the State of Alabama.[1]
1950376.
Supreme Court of Alabama.
September 19, 1997.
*934 J. Doyle Fuller, Montgomery, for appellant.
*935 Bill Pryor, atty. gen., and William P. Gray, legal advisor to Governor Fob James, for appellee.
JOHN M. KARRH, Special Justice.[2]
E.C. "Sonny" Hornsby, former Chief Justice of the Alabama Supreme Court, appeals the dismissal of an action in which he had sought a judgment declaring that he was holding the office of Chief Justice in a de jure capacity during the period following the expiration of his elective term, while no successor had been elected and qualified, and that during that period he had all the powers, rights, functions, duties, obligations, and benefits attendant upon the office of Chief Justice. The Montgomery Circuit Court dismissed Hornsby's declaratory judgment action as moot, on motion of the defendants, Jimmy H. Baker, who was then acting director of the Department of Finance of the State of Alabama, and Jeff Sessions, who was then attorney general of the State of Alabama. Before the action was dismissed, the parties had agreed that the sole issue in the case was whether Hornsby had de jure been Chief Justice of the Alabama Supreme Court for the period beginning at the end of his elective term and running through October 20, 1995. We hold that Hornsby was holding the office of Chief Justice in a de jure capacity during that period; we reverse the judgment of the trial court and render a judgment for Hornsby.
In 1988, Sonny Hornsby was elected to the office of Chief Justice of the Alabama Supreme Court. He assumed the duties of that office in January 1989. Chief Justice Hornsby sought re-election to that office in the November 1994 general election. His opponent in that race was Perry O. Hooper, Sr. As of February 1995, when this declaratory judgment action was filed, no winner had been certified in the race for the position of Chief Justice. In the interim between the election and the filing of this declaratory judgment action, actions had been filed in state and federal courts regarding the validity of certain absentee ballots cast in the November 1994 general election. In one of those actions, Roe v. Alabama, CV-94-0885, the United States District Court for the Southern District of Alabama on December 5, 1994, enjoined the counting of contested absentee ballots. An appeal to the United States Court of Appeals for the Eleventh Circuit followed. Perry O. Hooper, Sr., was a named plaintiff in the Roe action. Sonny Hornsby was not a named defendant.
By letter of January 16, 1995, Baker, as acting director of finance, requested an opinion from the attorney general as to whether the state comptroller could legally issue state warrants to pay the salaries or expenses of Chief Justice Hornsby and state treasurer George C. Wallace, Jr., after January 16, 1995, and until the winners of the races for the offices of Chief Justice and state treasurer had been officially certified and installed in office. The winner of the 1994 election to the office of state treasurer had not been certified at the time the acting director of finance requested the attorney general's opinion. On February 1, 1995, Attorney General Sessions issued an opinion, stating that the terms of the offices of the Chief Justice and the treasurer had expired and, thus, that the state comptroller could not legally issue state warrants to pay the salary or expenses of Hornsby or Wallace.
On February 2, 1995, Hornsby filed his declaratory judgment action in the Circuit court of Montgomery County. He sought a judgment declaring that by virtue of §§ 12-2-1, 17-2-6, and 36-3-2, Ala. Code 1975, his term of office continued until his successor was "elected and qualified" or until he was declared the winner of the November 1994 election for Chief Justice, and declaring that during that period he had all the powers, rights, functions, duties, obligations, and benefits attendant upon the office of Chief Justice of the Supreme Court of Alabama; and *936 he further asked that the circuit court issue an injunction permanently enjoining Sessions and Baker from interfering or attempting to interfere with his performance of the duties of the office of Chief Justice and from attempting to withhold from him the attendant benefits of that office.
On March 9, 1995, Hornsby moved for a summary judgment. On that same day, the parties jointly stipulated that there were no material facts in dispute in this cause; that Hornsby had previously been duly elected and qualified as Chief Justice of the Supreme Court of Alabama, having taken the oath of office on January 17, 1989; that in the general election of November 8, 1994, Hornsby had sought reelection and had been opposed in that election by Perry O. Hooper, Sr.; that although the election took place on November 8, 1994, no winner of the race for Chief Justice had been determined; that there was then pending other litigation relating to the counting of certain absentee ballots in the November 1994 election; that the result of the election for the office of Chief Justice had not been certified; that no election contest had been filed; that no one had qualified for the office of Chief Justice; and that no one could predict with certainty when the other litigation would be resolved or when the result of the election would be certified. Based on the stipulated facts, the parties agreed that the questions presented by the case "are... purely questions of law and may be decided by this court pursuant to Rule 12(c), Alabama Rules of Civil Procedure, or Rule 56, Alabama Rules of Civil Procedure."
On April 21, 1995, Sessions and Baker moved for recusal of the trial judge assigned to the case, Circuit Judge Eugene Reese, because of an order Judge Reese had issued in a separate case, Odom v. Bennett, CV-94-2434. In Odom v. Bennett, certain absentee voters had sought an order requiring Secretary of State Jim Bennett to count their ballots cast in the November 1994 election. Judge Reese issued an order in Odom v. Bennett requiring that the ballots be counted if they met a standard adopted by prior Alabama caselaw. Sessions and Baker argued that the issuance of that order in Odom v. Bennett gave an appearance of impropriety in this case.
On May 1, 1995, the trial court entered a consent order stating that during the course of a hearing the defendants had acknowledged that, pursuant to § 36-1-2 et seq., Chief Justice Hornsby's actions taken in performance of the duties of the office of Chief Justice, since the expiration of the elective term that had begun in 1989, were lawful actions and, therefore, that his actions and decisions were binding and valid: "[T]his Court ORDERS, ADJUDGES AND DECREES that the Honorable Sonny Hornsby is performing the duties and functions of the Office of Chief Justice of the Supreme Court of Alabama, and that all acts performed by him in that capacity are at a minimum valid and binding acts." All remaining issues were taken under advisement for disposition by further order of the court.
On May 26, 1995, Sessions and Baker filed a memorandum in opposition to Hornsby's motion for summary judgment.
On September 18, 1995, Hornsby filed a second motion for summary judgment. On October 24, 1995, Sessions and Baker filed a motion to dismiss, citing in support thereof an order of the United States District Court for the Southern District of Alabama, issued September 29, 1995, in the case of Roe v. Alabama; that order in Roe permanently enjoined the State of Alabama from counting any of the contested absentee ballots; ordered Secretary of State Bennett to certify (nunc pro tunc December 5, 1994) the election of Perry O. Hooper, Sr., as Chief Justice of the Supreme Court of Alabama; ordered the State of Alabama to swear in Hooper "as soon after certification as practicable"; and ordered that Hooper "receive all of the emoluments and benefits, including all compensation, that accompany his office nunc pro tunc January 16, 1995." The district court also ruled: "Any orders issued by any Court of the State of Alabama that in any way conflict with the ruling of this Court are null and void and of no effect." Roe v. Alabama, 904 F. Supp. 1315, 1336 (S.D.Ala.), aff'd, 68 F.3d 404 (11th Cir.1995). On October 20, 1995, Hooper was certified as the winner of the election for Chief Justice and on that same *937 day was sworn in as Chief Justice. Thus, asserted Sessions and Baker in their motion to dismiss, the question whether Hornsby had served as a de jure officer after the expiration of his elective term was moot.
On November 2, 1995, Judge Reese entered an order denying the motion to recuse and dismissing the case as moot. Hornsby appealed.
Hornsby makes two arguments on appeal: (1) that the trial court erred to reversal in dismissing the action as moot and (2) that the trial court erred in not granting his motion for summary judgment. In support of his argument that the trial court erred in dismissing the action as moot, Hornsby contends that not all of the issues raised in his complaint in this action were resolved by the final judgment in Roe. Hornsby contends that the action of the trial court in delaying a ruling on the summary judgment motion by six months cannot change the fact that under the facts and the law at the time of submission the motion was due to be granted. Hornsby asks that this Court, based on the law and the facts of the case, enter an order granting his motion for summary judgment. The defendants contend that because Hornsby did not respond to their motion to dismiss, he acquiesced in the dismissal. They argue that this Court may not consider Hornsby's argument that his declaratory judgment action was not rendered moot by the order in Roe because, they say, he is raising that argument for the first time on appeal. They also argue that Hornsby is bound by the Roe judgment. Alternatively, the defendants argue that the case should be remanded for the trial court to consider the motion to recuse and Hornsby's motion for summary judgment.
We first address the defendants' contention that Hornsby did not object to the motion to dismiss and, therefore, that the trial court did not err dismissing the case. An appellate court will not review questions not decided by the trial court. McWhorter v. Clark, 342 So. 2d 903 (Ala.1977). "`Courts of last resort are without authority to put the lower court in error, in the absence of some ruling of such court showing or containing error.'" Defore v. Bourjois, Inc., 268 Ala. 228, 230, 105 So. 2d 846, 848 (1958), quoting Warren v. State, 18 Ala.App. 245, 90 So. 277 (1921).
The trial court had been advised of each party's position regarding the question whether the ruling in the Roe case would render this declaratory judgment action moot. In a letter of August 7, 1995, to the trial judge, Hornsby's counsel contended that none of the legal issues raised in this litigation would be mooted by the action of the federal courts in the absentee-ballot litigation, regardless of who the federal courts eventually found to have won the election. Thereafter, the defendants moved for a dismissal on the ground that the rulings of the federal courts in Roe rendered this case moot. Their motion to dismiss asserted, in part, "The sole question before this Court... has been adjudicated and preempted by the judgment of the Roe court, which has ruled that Perry Hooper is the Chief Justice of Alabama as of January 16, 1995." We must reject the defendants' argument because Hornsby did address in the trial court the issue whether an adverse ruling by the federal court would impact his declaratory judgment action, albeit prior to the filing of the motion to dismiss.
At the outset, it is necessary to determine the standard of review applicable in this case. Hornsby's action was initiated as a declaratory judgment action; as such, it is subject to the conventional rules of procedure. Campbell v. Shell, 289 Ala. 115, 266 So. 2d 272 (1972); Rule 57, Ala. R. Civ. P. "[T]he lack of a justiciable controversy may be raised either by a motion to dismiss, Rule 12, [Ala. R. Civ. P.], or a motion for summary judgment." Smith v. Alabama Dry Dock & Shipbuilding Co., 293 Ala. 644, 649, 309 So. 2d 424, 427 (1975). Before it entered the dismissal, the trial court had taken under advisement Hornsby's first motion for summary judgment and Hornsby had filed a second motion for summary judgment. When matters outside the pleadings are considered on a motion to dismiss, the motion is converted into a motion for summary judgment, Rule 12(b), Ala. R. Civ. P.; this is the case regardless of what the motion has been called or how it was treated by the trial *938 court, Papastefan v. B & L Constr. Co., 356 So. 2d 158 (Ala.1978); Thorne v. Odom, 349 So. 2d 1126 (Ala.1977). "Once matters outside the pleadings are considered, the requirements of Rule 56, A.R. Civ. P., become operable and the `moving party's burden changes and he is obliged to demonstrate that there exists no genuine issue as to any material fact and that he is entitled to a judgment as a matter of law.' C. Wright & A. Miller, Federal Practice & Procedure, Civil, § 1366 at 681 (1969)." Boles v. Blackstock, 484 So. 2d 1077, 1079 (Ala.1986). The effect of converting the defendants' motion to dismiss into a motion for summary judgment was to impose upon the defendants the burden of meeting the two-part summary judgment standard, that is, the burden of showing that there is no genuine issue of material fact and that the defendants are entitled to a judgment as a matter of law. Rule 56, Ala. R. Civ. P.; see, Houston v. McClure, 425 So. 2d 1114 (Ala.1983).
In reviewing a summary judgment, an appellate court looks at the same factors that the trial court considered in ruling on the motion. Tolbert v. Gulsby, 333 So. 2d 129 (Ala.1976). Ruling on a summary judgment motion is a "nondiscretionary function of the trial court," and on appeal a summary judgment carries no presumption of correctness. Hightower & Co. v. United States Fidelity & Guaranty Co., 527 So. 2d 698, 701 (Ala.1988).
"`The declaratory judgment statutes do not empower courts to decide moot questions [or] abstract propositions or to give advisory opinions, however convenient it might be to have the questions decided for the government of future cases.'" Wallace v. Burleson, 361 So. 2d 554, 555 (Ala.1978), quoting State ex rel. Baxley v. Johnson, 293 Ala. 69, 300 So. 2d 106 (1974). See, also, Graddick v. McPhillips, 448 So. 2d 333, 336 (Ala.1984). In deciding whether a case is moot, a court must consider "whether decision of a once living dispute continues to be justified by a sufficient prospect that the decision will have an impact on the parties." 13A C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3533, at 212 (1984). "[I]f a case has become moot, or [if a] judgment would not accomplish an end recognized as sufficient in law, there is no necessity for the judgment, the court will decline to consider the merits, and [the court will] dismiss the case." Chisolm v. Crook, 272 Ala. 192, 194, 130 So. 2d 191 (1961).
In this case, there was no genuine issue as to any material fact. On March 9, 1995, the parties entered into a joint stipulation stating that there were no material facts in dispute. Thereafter, the order was issued in the Roe case. The initial question we must decide is whether the Roe order made moot the declaratory judgment action. This is a question of law.
The question before the trial court at the time the motion to dismiss was filed was whether Hornsby's tenure as Chief Justice had continued beyond the expiration of his six-year elective term, on the basis that no successor had been determined. That question remains: Did Hornsby's tenure as Chief Justice continue beyond his six-year term, where no successor had been determined before the end of that term or during the time between the end of that term, and the date the Roe judgment was entered by the federal court? We conclude that that question is not moot. A judgment in this case will accomplish an end recognized as sufficient in law; thus, there is a necessity for a judgment. See, Chisolm v. Crook, supra. Thus, with regard to the first issue raised by Hornsby, whether the trial court erred in dismissing the action as moot, we conclude that the trial court did so err.
We now look to the second issue raised by Hornsby, whether the trial court erred in not granting his motion for summary judgment. Our review of that issue is de novo. Hightower & Co. v. United States Fidelity & Guaranty Co., supra. Because the facts are not in dispute, this is a question of law.
Hornsby says there would have been three possible resolutions of his request for a determination of the nature of his service as Chief Justice during the time beginning at the end of his elective term and running until his successor took office: (1) a holding that he served in a de jure capacity, (2) a holding that he served in a de facto capacity, or (3) a *939 holding that he was unlawfully in office. Hornsby contends that he served in a de jure capacity, pursuant to Amend. No. 328, Ala. Const.1901, and §§ 12-2-1, 17-2-6, and 36-3-2, Ala.Code 1975. Specifically, Hornsby argues that the office of Chief Justice is created and mandated by § 6.02(a), Amend. No. 328, and he says that this office is the only judicial position created by the Constitution in a self-executing manner. Because the Constitution is silent, however, as to what happens if no one is elected to serve at the expiration of the term of the Chief Justice, Hornsby argues that it is the obligation of the legislature to implement the constitutional mandate and that the legislature has done so in §§ 12-2-1, 17-2-6, and 36-3-2, Ala. Code 1975. Each of these statutes provides that the Chief Justice and the Associate Justices shall hold their offices for a term of six years "and until their successors are elected and qualified." Hornsby argues that even though the federal court in Roe held that Perry Hooper, Sr., was entitled to the office of Chief Justice of the Alabama Supreme Court nunc pro tunc January 16, 1995, that decision does not invalidate the law of Alabama, under which, Hornsby says, he was the de jure Chief Justice until Hooper took the oath of office on October 20, 1995. Hornsby says that there sometimes arise situations in which two people receive pay for the same position for the same time, citing Parker v. Jefferson County Comm'n, 347 So. 2d 1321 (Ala.1977).
The defendants contend that § 6.15 of Amend. No. 328, providing that "[t]he term of office of each judge of a court of the judicial system of this state shall be six years," is more restrictive than the former constitutional article governing terms of judges, and is to be strictly construed. Because § 6.15 does not include the holdover language provided in the former constitutional article, Art. VI, § 155, Ala. Const.1901, the defendants argue that the Chief Justice serves a term of six years, no more and no less. The defendants also take the position that even if it is determined that § 6.15 is not self-executing because it does not provide when the terms of office begin and end, and that §§ 12-2-1 and 36-3-2 constituted the enabling legislation, the plain language of § 6.15 shows that the framers intended for the term of the Chief Justice to expire after six years. In the alternative, the defendants argue that if it is determined that "enabling legislation" provides for the holdover of the Chief Justice, it is well established that the holdover period may not be for an indefinite period of time.
As a general proposition, constitutional provisions are given mandatory effect. Singer, 3 Sutherland Statutory Construction, § 57.13, p. 35 (1992). "Whenever a constitutional provision is plain and unambiguous, when no two meanings can be placed on the words employed, it is mandatory, and courts are bound to obey it." State ex rel. Robertson v. McGough, 118 Ala. 159, 166, 24 So. 395, 397 (1898). "A constitutional provision, as far as possible, should be construed as a whole and in the light of [the] entire instrument and to harmonize with other provisions, [so] that every expression in such a solemn pronouncement of the people is given the important meaning that was intended in such context and such part thereof." State Docks Commission v. State ex rel. Cummings, 227 Ala. 414, 417, 150 So. 345, 346 (1933).
Amendment No. 328, Ala. Const. 1901, governs the judicial system in this state. Amendment No. 328 repealed the original Article VI of the Constitution and created the Unified Judicial System. Section 6.01 of Amend. No. 328 vests the judicial power of the state in a unified judicial system, which "shall consist of a supreme court" and other courts. Section 6.02(a) provides that "[t]he supreme court shall be the highest court of the state and shall consist of one chief justice and such number of associate justices as may be prescribed by law." (Emphasis added.) In searching for the proper construction of a constitutional provision, we must look to the language of that provision. The word "shall" is considered presumptively mandatory unless something in the character of the provision being construed requires that it be considered differently. Singer, 3 Sutherland Statutory Construction, § 57.02, p. 4 (1992). Reading § 6.02(a) strictly, and *940 in the light of the entire instrument,[3] we conclude that the language of that section is mandatory. The constitution requires that the supreme court shall consist of a chief justice and associate justices.
Another constitutional provision at issue in this case, § 6.15, provides that the "term of office" for all judges "of the judicial system of this state," including the Chief Justice, "shall be six years." This provision is also mandatory, but not self-executing. It makes no provision for when the term of office begins and ends, and no provision for how the mandate that there be a Chief Justice is to be carried out in a case with facts such as the one before us now.
"[T]he function of constitutions is to establish the framework and general principles of government," and often the topics are couched in broad phrases. Summers v. State, 244 Ala. 672, 673, 15 So. 2d 502 (1943). "For this reason, a `"Constitution is not to receive a technical construction, like a common-law instrument, or statute."'" House v. Cullman County, 593 So. 2d 69, 72 (Ala. 1992); citing and quoting earlier cases, including Dorman v. State, 34 Ala. 216, 235 (1859). When a constitutional mandate is not self-executing, it is for the legislature to implement the mandate. Brown & Co. v. Seay, 86 Ala. 122, 5 So. 216 (1889). Section 6.21(h) of Amend. No. 328 specifies:
Thus, we turn to statutory authority for guidance with regard to when judges' terms begin and end.
Section 12-2-1, Ala.Code 1975, provides, in pertinent part:
Section 17-2-6 provides, in pertinent part:
Section 36-3-2 provides, in pertinent part:
Sections 12-2-1, 17-2-6, and 36-3-2 are not inconsistent with § 6.15, Amend. No. 328. These statutes implement § 6.15, so as to provide for the number of Associate Justices on the Supreme Court and for the time when the terms of office of the Associate Justices and the Chief Justice begin and end. In fact, the recodification of Alabama law into the 1975 Code, including §§ 12-2-1, 17-2-6, and 36-3-2, confirms that the legislature intended to provide for the technical aspects not provided for in the constitutional provisions. Section 17-2-6 implements § 6.15 by setting an initial "start" date of the terms of the Justices:
The defendants argue that should the holdover provisions of these statutes become applicable, then the cases of City Council of Montgomery v. Hughes, 65 Ala. 201 (1880), Prowell v. State ex rel. Hasty, 142 Ala. 80, 39 So. 164 (1905), Ham v. State ex rel. Blackmon, 162 Ala. 117, 49 So. 1032 (1909), and State ex rel. Benefield v. Cottle, 254 Ala. 520, 49 So. 2d 224 (1950), limit the time of holdover, on the principle that prolonged terms by holdover are disfavored. The defendants claim that the result of the election for Chief Justice continued long undetermined because of what they call vexatious litigation on the part of Hornsby, which they say was a result of holding over discouraged by the Court in City Council of Montgomery v. Hughes, supra; and the defendants say that to determine what would be a "reasonable" time for holding over the Court should look to § 17-15-50 and Amend. No. 57, Ala. Const.1901, governing election contests, for applicable time periods. The defendants argue that because the Constitution and the Code contemplate that disputed results of statewide elections will be settled during the organizational session of the legislature, a reasonable time for the holdover would have expired in January 1995, upon the end of the organizational session. Further, the defendants argue that a Chief Justice is not an indispensable element of the judicial system, because an Associate Justice may perform the duties of the Chief Justice, under § 12-2-6, Ala. Code 1975.
Under the facts of this case, we find unpersuasive the defendants' argument. Section 12-2-6 applies only to instances where the Chief Justice is "disabled from actively performing his duties as chief justice or those ex officio duties imposed upon him by law," because of "disability or absence," not to instances where the election results cannot be certified and the successor in office, whether it be the incumbent or the incumbent's opponent, cannot be installed.
The Supreme Court of Alabama has stated "that the words `until his successor is elected and qualified' [were] never intended to prolong the term of office beyond a reasonable time, after an election, to enable the newly elected officer to qualify." Prowell v. State ex rel. Hasty, 142 Ala. 80, 83, 39 So. 164, 166. Indeed, as pointed out by the defendants, the Supreme Court has expressed concern that a different construction might tempt defeated candidates to use "vexatious litigation to prolong their official terms." City Council of Montgomery v. Hughes, 65 Ala. 201, 207. However, the cases cited by the defendants for the proposition that Hornsby held over for an unreasonable period of time are distinguishable. City Council of Montgomery v. Hughes was an action upon a bond executed by a city clerk who claimed that the bond he executed at the beginning of a two-year term of office did not expire until his successor was elected and qualified, four years later. It was unclear from the pleadings whether Hughes was reelected after his first term, or whether no election was held and Hughes held over in office for another two years. In determining the liability of the sureties, the Court considered two things: (1) the time period expressly stated in the bond (2 years), and (2), assuming Hughes was not reelected, whether an elected official could indefinitely hold over at the end of his term. The Court stated:
65 Ala. at 207. Under the particular and distinctive facts of this case, there was no vacancy. In Prowell v. State ex rel. Hasty, Ham v. State ex rel. Blackmon, and State ex rel. Benefield v. Cottle, there were successors *942 ready and qualified to take office, either because they had been elected or because they had been appointed by the Governor to a vacancy in office. In the case before us, there was no successor to the office. Rather, a federal court had enjoined the counting of contested absentee ballots in this close race, thereby preventing the certification and installation of a successor.
Recently, in James v. Langford, 695 So. 2d 1158 (Ala.1997), the Supreme Court addressed a case with a situation analogous to that now before us. In that case, Governor James had attempted to oust two trustees of Auburn University who were holding over in office, and to seat two persons of his choosing. The Senate, however, would not confirm the trustees chosen by the Governor; confirmation by the Senate is required by Amend. No. 161, Ala. Const.1901. One question addressed by the Court was whether the trustees were entitled to hold over pursuant to a constitutional provision with language similar to the language found in §§ 12-2-1, 17-2-6, and 36-3-2. The Court held that the language found in Amend. No. 161 "shall hold office for a term of twelve years, and until their successors shall be appointed and qualified" does permit a holding over until appointments of successors are made, and even though in the Langford case several years had passed, the Court stated that "the constitutionally allowed holdover period has not been terminated." 695 So. 2d at 1160.
We conclude that, under the unique circumstances of this case, Hornsby's tenure as Chief Justice continued beyond his sixyear term, under the provisions of §§ 12-2-1, 17-2-6, and 36-3-2, and Amend. No. 328, Ala. Const.1901, and that his continued tenure was, therefore, de jure. Under the facts of this case, there was no "newly elected officer," as there was in Prowell. There was no "vacancy," as existed in the public offices at issue in Ham and Cottle. The defendants agree that Hornsby's performance of the duties of the office of the Chief Justice was lawful and binding, pursuant to § 36-1-2, Ala.Code 1975. With regard to the defendants' argument that the results of the election continued to be undetermined because of "vexatious litigation," we note that the litigation that was pending, Roe v. Alabama, in which the injunction was issued, was not initiated by Hornsby to prolong his term; thus, this case did not raise the concern expressed by the Court in Hughes. The Roe litigation, which resulted in an order enjoining the secretary of state from certifying the results of the election of the Chief Justice, was initiated by Hooper and others. Moreover, Hornsby promptly sought a determination of his rights, duties, obligations, and status as Chief Justice of the Supreme Court, by filing a declaratory judgment action in the Circuit Court of Montgomery County. Thereafter, he sought a resolution of the controversy concerning whether he was lawfully holding office, by filing a motion for summary judgment on March 9, 1995.
The defendants argue that in the Roe case the federal district court resolved the sole issue in this case, that being the question who was the de jure Chief Justice in Alabama after Hornsby's elective term ended. The defendants state that a holding by this Court that Hornsby held the office of Chief Justice de jure after his elective term ended, would be contrary to the order of the federal district court and null and void under that court's order. "There are at least two distinct varieties of judgments nunc pro tunc: those to correct errors in a judgment already entered; and those to protect parties from the court's delay in entering judgment during which [delay] a party has died. Federal law recognizes both varieties of judgments nunc pro tunc." Middleton v. Dan River, Inc., 617 F. Supp. 1206, 1222 (M.D.Ala.1985), aff'd in part, rev'd in part on other grounds, 834 F.2d 903 (11th Cir.1987). The United States Supreme Court, in Mitchell v. Overman, 103 U.S. (13 Otto) 62, 64-65, 26 L. Ed. 369 (1880), stated:
As pointed out by Justice William O. Douglas in his dissent in Parker v. Ellis, 362 U.S. 574, 598, 80 S. Ct. 909, 922-23, 4 L. Ed. 2d 963 (1960), "Any judgment nunc pro tunc indulges in a fiction. But it is a useful one, advancing the ends of justice."
In the Roe case, the federal court, in addition to determining that the secretary of state should be permanently enjoined from counting the contested absentee ballots cast in the November 8, 1994, election and determining that Hooper should be certified the winner and sworn in as Chief Justice, apparently decided that, in order to advance the ends of justice, Hooper should be sworn in nunc pro tunc January 16, 1995. That court also held that Hooper was entitled to "receive all of the emoluments and benefits, including all compensation, that accompany his office nunc pro tunc January 16, 1995." Roe v. Mobile Appointing Board, supra, 904 F. Supp. 1315, 1336. Our holding that after the end of his elective term Sonny Hornsby served in the office of Chief Justice de jure in no way contravenes the order of the District Court of the Southern District of Alabama in Roe. There is precedent in Alabama law for paying two different people an amount payable at law as salary for a government position. In Parker v. Jefferson County Comm'n, 347 So. 2d 1321 (Ala.1977), Horace Parker, a county treasurer, was impeached. After his impeachment, Parker was suspended from office and another person was appointed to the position of treasurer. The newly appointed treasurer, while serving in that position, was paid "an amount equal to that payable by law to the Treasurer of Jefferson County." 347 So. 2d at 1324. On appeal, Parker's impeachment conviction was overturned by the Supreme Court. Thereafter, the Jefferson County commissioners did not allow Parker to assume office; he sued for a judgment declaring that he was the lawful treasurer and sought back pay and allowances for the time he was out of office because of the impeachment conviction. The Court held that Parker was entitled to pay and allowances for the period running from the date of the certificate of judgment reversing his impeachment conviction until the end of his term, but not for the period during which he was suspended pending appeal of the conviction. 347 So. 2d at 1326-27.
We conclude, based on the peculiar facts of this case, that Sonny Hornsby served in a de jure capacity as Chief Justice of the Alabama Supreme Court from the time his elective term ended until Chief Justice Perry O. Hooper, Sr., was sworn into office as Chief Justice on October 20, 1995, and that during that period, he had all the powers, rights, functions, duties, obligations, and benefits attendant upon the office of the Chief Justice. Therefore, we reverse the judgment of the circuit court and hereby enter a judgment declaring that Sonny Hornsby is entitled to the benefits of the office of Chief Justice during that period of time.
REVERSED AND JUDGMENT RENDERED.
THOMAS N. YOUNGER, BILLY C. BURNEY, JEROME B. BAIRD, FRED C. FOLSOM, J. RICHMOND PEARSON, and WILLIAM H. BALDWIN, Special Justices, concur.
ROBERT E. L. KEY, Special Chief Justice, and ROBERT L. BYRD, Special Justice, dissent.
ROBERT E. L. KEY, Special Chief Justice (dissenting):
I dissent from the majority's holding that Chief Justice Hornsby held over in a de jure capacity.
Amendment 328, Ala. Const.1901, was adopted by the people of Alabama on December 18, 1973, as the new Judicial Article (Art. VI) of the Alabama Constitution. Section 6.15(a) of Amendment 328 provides:
Section 6.15(a) omits the language "and until their successors are elected or appointed, and qualified," which was found in the former constitutional provision governing terms of office of judges in the state.[4] Constitutional provisions are to be strictly construed, and courts have "no right to broaden or restrict the meaning of words used." City of Birmingham v. City of Vestavia Hills, 654 So. 2d 532, 538 (Ala.1995). "When construing the Constitution of Alabama, [courts are] to ascertain and effectuate the intent and object originally intended to be accomplished." Brown v. Longiotti, 420 So. 2d 71, 74 (Ala. 1982). The language of § 6.15(a) is clear and unambiguous. Therefore, there is no room for construction, and the clearly expressed intent must be given effect. State ex rel. Robertson v. McGough, 118 Ala. 159, 166, 24 So. 395 (1898).
Because language included in the original constitutional provision was omitted from the amended version, it must be concluded that the omission was intended. I would also note that the statutes on which the majority relies in support of its conclusion that Hornsby held over in a de jure capacity predate the new Judicial Article. Constitutional provisions "are of a higher order of law than statutes"; such provisions "are more basic and permanent than statutes." Gafford v. Pemberton, 409 So. 2d 1367, 1373 (Ala.1982). Where the Constitution and a statute are in conflict, the Constitution controls. Williams v. Schwarz, 197 Ala. 40, 72 So. 330 (1916). I think it clear that the term of office of the Chief Justice is for six years, pursuant to § 6.15, and that the term cannot be extended by legislative act. For that reason, Hornsby could not have held the office of Chief Justice in a de jure capacity.
Moreover, the fact that Hornsby could not have held over in a de jure capacity is clear because of settled caselaw construction of the phrase "and until their successors are elected and qualified." Although it is my opinion that § 6.15 restricts the term of office of judges to six years only, had the constitutional article included the phrase "and until their successors are elected and qualified," it is well established that the time period for holdover is limited to a reasonable time. See, e.g., City Council of Montgomery v. Hughes, 65 Ala. 201 (1880), Prowell v. State ex rel. Hasty, 142 Ala. 80, 39 So. 164 (1905), Ham v. State ex rel. Blackmon, 162 Ala. 117, 49 So. 1032 (1909), and State ex rel. Benefield v. Cottle, 254 Ala. 520, 49 So. 2d 224 (1950). Thus, even assuming, arguendo, that the enabling legislation provided the right of holdover to Hornsby, I think it clear that he stayed in office beyond a reasonable time. Because the defendants agreed that Hornsby's performance of the duties of the office of Chief Justice were lawful actions and, therefore, that his actions and decisions were binding and valid, pursuant to § 36-1-2 et seq., I would hold that he served in a de facto capacity pursuant to § 36-1-2, Ala.Code 1975, after January 16, 1995.
ROBERT L. BYRD, Special Justice, concurs.
[1] The two persons named as appellees no longer hold the public offices indicated in this style. Their successors have been "automatically substituted" as parties. See Rule 43(b), Ala. R.App. P.
[2] The Chief Justice of the Supreme Court and all of the Associate Justices recused themselves in this case. The Chief Justice and the Senior Associate Justice individually determined that they were disqualified to make an assignment of a Special Supreme Court to hear this case. The next senior Associate Justice, with the advice, consent, and concurrence of the other Associate Justices who (as to the matter of assigning Special Justice) were not recused or disqualified, assigned a retired circuit judge to serve as a Special Chief Justice and assigned eight other retired circuit judges to serve as Special Justices. See § 6.10, Amend. No. 328, Ala. Const.1901.
[3] Section 6.10 of Amend. No. 328, for instance, provides that "[t]he chief justice of the supreme court shall be the administrative head of the judicial system" and that the Chief Justice "shall appoint an administrative director of courts and other needed personnel to assist ... with ... administrative tasks." (Emphasis added.)
[4] The former constitutional section governing terms of office for judges, § 155, Art. VI, Ala. Const.1901, had provided, in part:
"Except as otherwise provided in this article, the chief justice and associate justices of the supreme court, circuit judges, chancellors, and judges of probate, shall hold office for the term of six years, and until their successors are elected or appointed, and qualified; ...." (Emphasis added.) | September 19, 1997 |
05de2e58-a1c6-40d7-8b63-d12d265a1386 | American Pioneer Life Ins. Co. v. Williamson | 704 So. 2d 1361 | 1921796 | Alabama | Alabama Supreme Court | 704 So. 2d 1361 (1997)
AMERICAN PIONEER LIFE INSURANCE COMPANY and Jerry Curtis
v.
Freddy J. WILLIAMSON.
1921796.
Supreme Court of Alabama.
September 5, 1997.
Stanley A. Cash and Walter J. Price III of Huie, Fernambucq & Stewart, Birmingham, for appellants.
W. Michael Atchison and Jeffrey E. Friedman of Starnes & Atchison, Birmingham, for appellee.
COOK, Justice.
This case is on remand from the United States Supreme Court for reconsideration of the punitive damages award in light of BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996). On original deliverance, this Court affirmed a compensatory award for Freddy Williamson against American Pioneer Life Insurance Company and its employee Jerry Curtis in the amount of $250,000 and affirmed a punitive *1362 damages award against American Pioneer and Curtis conditioned on Williamson's acceptance of a reduction of that award from $3,000,000 to $2,000,000. See American Pioneer Life Ins. Co. v. Williamson, 681 So. 2d 1040 (Ala.1995). On remand, we re-affirm the compensatory award; we also re-affirm the punitive damages award, but, upon our reconsideration of that award in light of the United States Supreme Court's opinion in BMW, we condition our affirmance on the plaintiff's acceptance of a further reduction of the punitive damages award to $750,000.
In BMW, supra, the jury awarded $4,000 in compensatory damages and $4,000,000 in punitive damages against BMW for fraudulently failing to disclose to Dr. Ira Gore that the BMW automobile he was purchasing had been repainted. On appeal, this Court ordered a reduction of the $4,000,000 punitive award to $2,000,000. See BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala. 1994). The United States Supreme Court vacated our $2,000,000 judgment, partly because that Court concluded that BMW had not received "fair notice not only of the conduct that [would subject it] to punishment but also of the severity of the penalty that [this] State [would] impose." 517 U.S. at 574, 116 S. Ct. at 1598. The Supreme Court also cited three guideposts a court should use to scrutinize a punitive damages award for excessiveness: the degree of reprehensibility; the ratio between the punitive damages award and the compensatory damages award; and a comparison of the punitive damages award to the civil or criminal penalties that could be imposed for comparable misconduct. 517 U.S. at 574-576, 116 S. Ct. at 1598-99.
The first and most important factor to be considered is the degree of reprehensibility of the conduct of the defendant. Considering this factor helps ensure that the punitive damages award is not "`grossly out of proportion to the severity of the offense.'" 517 U.S. at 576, 116 S. Ct. at 1599. The second factor to be considered is the ratio of the punitive damages award to the harm inflicted. 517 U.S. at 580, 116 S. Ct. at 1601. In setting out this factor, the Supreme Court was quick to state that it has "consistently rejected the notion that the constitutional line is marked by a simple mathematical formula, even one that compares actual and potential damages to the punitive award." 517 U.S. at 582, 116 S. Ct. at 1602, citing TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443 at 458, 113 S. Ct. 2711 at 2720, 125 L. Ed. 2d 366 (1993). The Supreme Court pointed out that the ratio of punitive damages to actual damages in BMW was 500 to 1. 517 U.S. at 583, 116 S. Ct. at 1603. This ratio, coupled with the fact that "there [was] no suggestion that Dr. Gore or any other BMW purchaser was threatened with any additional potential harm by BMW's nondisclosure policy," resulted in an unjustified great disparity between the actual damages and the punitive damages awarded. 517 U.S. at 582, 116 S. Ct. at 1602. A third critical factor to be considered with regard to the question of excessiveness is the potential imposition of criminal or civil penalties for comparable misconduct. 517 U.S. at 583, 116 S. Ct. at 1603. The Supreme Court determined that the maximum statutory civil penalty in Alabama for violations similar to those committed by BMW was $2,000, leaving much disparity between the civil penalty and the $2,000,000 punitive damages award sanctioned by this Court in its first opinion in this case.
In the BMW case, on remand from the United States Supreme Court, we addressed the concerns of that Court as follows:
BMW of North America, Inc. v. Gore, 701 So. 2d 507, 509 (Ala.1997) (BMW II).
With regard to the requirement that a defendant have notice of the conduct that will result in a large punitive damages penalty, as well as knowledge of the severity of that penalty, we wrote on remand:
"(Emphasis added [in BMW II].)
BMW II, 701 So. 2d at 510 - 511.
On remand in BMW II, this Court ordered a remittitur of the punitive damages award from $2,000,000 to $50,000. As we did in that case, we will now reevaluate the punitive damages award in this present case in light of the United States Supreme Court's decision in BMW and our subsequent opinion in BMW II on remand. The facts of this case, as stated in our earlier opinion, are as follows:
American Pioneer Life Ins. Co. v. Williamson, 681 So. 2d 1040, 1041 (Ala.1995). According to the evidence, the forfeiture-of-commissions clause was invoked without any investigation on the part of APL to determine if Williamson had "induced" the client to replace the APL policy. 681 So. 2d at 1043-44. The forfeiture-of-commissions clause invoked by APL read:
See 681 So. 2d at 1042. (Emphasis added.) After his commissions were terminated, Williamson sued APL, alleging breach of contract and fraud. He was awarded compensatory damages and punitive damages.
First, we will consider the degree of reprehensibility of APL's conduct. This factor was cited by the United States Supreme Court in BMW as perhaps the most important factor for a court to consider when reviewing an award for excessiveness. The degree of reprehensibility is also one of the Green Oil factors. Green Oil Co. v. Hornsby, 539 So. 2d 218 at 223 (Ala.1989). In considering the reprehensibility of APL's conduct, we note that the damage suffered by Williamson was economic and did not endanger his health or safety.
Continental Trend Resources, Inc. v. OXY USA Inc., 101 F.3d 634 (10th Cir.1996). Here, the economic harm was the forfeiture of commissions on insurance policies that Williamson, an obviously experienced insurance agent, was to receive as he continued to service policies already in place. Because Williamson was no longer actively selling policies for APL, his commissions from APL would, no doubt, have declined over time, even if the forfeiture provision had not been invoked. In addition, although Williamson argued at trial that APL had treated 12 other agents similarly with regard to forfeiture of commissions, the trial judge directed a verdict for APL as to Williamson's "pattern and practice" allegations. American Pioneer *1366 v. Williamson, 681 So. 2d at 1045. The granting of the directed verdict is not challenged on appeal. Certainly, the degree of reprehensibility of APL's actions would be seen as much greater if Williamson had proven that American Pioneer had treated other agents similarly. We find that APL's actions against Williamson were reprehensible enough to justify a punitive damages award; however, considering APL's conduct in light of the guideposts set out in BMW, we conclude that the $2,000,000 punitive damages award merits further reduction.
Next, we compare the punitive award to the compensatory award. This second guidepost set out in BMW is also a Green Oil factor. The originally remitted punitive award of $2,000,000 is 8 times the $250,000 compensatory damages award. The United States Supreme Court, in BMW, reiterated that there is no exact mathematical formula for determining when a punitive damages award is excessive. 517 U.S at 582, 116 S. Ct. at 1602. We, too, have rejected the adoption of a mathematical formula:
BMW II, 701 So. 2d at 513. However, considering the low degree of reprehensibility in this case, the 8:1 ratio suggests a further reduction would be appropriate.
In our original opinion in this case, we noted that "in 1992 APL's total assets were valued at $49,787,497 and that the company had just over $7,000,000 in surplus cash reserves". American Pioneer, 681 So. 2d at 1045. Any punitive damages award should remove any profit realized by APL as a result of its misconduct. Any punitive damages award should also sting a company with assets valued at just under $50,000,000 ($7,000,000 of which is held in surplus cash reserves), but should not prevent APL from meeting its obligations to its insureds. APL's financial position or its ability to pay a large award should not, however, result in an affirmance of an unjustified award "simply because the defendant has the ability to pay it." BMW II, 701 So. 2d at 514. The $2,000,000 punitive award originally affirmed in this case constitutes approximately 4% of APL's net worth, but 28% of its cash reserves. In our original opinion, we stated:
American Pioneer Life Ins. Co. v. Williamson, 681 So. 2d 1040 (Ala.1995). While APL could, no doubt, pay the $2,000,000 award without significant hardship, its actions were not nearly as reprehensible as the misconduct in Northwestern Mutual Life Insurance Co. v. Sheridan. The comparison of the two cases supports a further reduction of the $2,000,000 award.
In our original opinion, we also observed that "there have been no other civil awards against APL for the same conduct and no criminal sanctions for its conduct."[1] 681 So. 2d at 1046. While the existence of other civil awards or criminal sanctions for the same conduct as existed in this case could support a remittitur, the evidence does not establish that there has been any other civil or criminal punishment for APL's conduct here.
Despite the fact that the record does not suggest an amount relating to the cost of litigation, we recognize that litigation costs *1367 are high in protracted cases such as this one. Nevertheless, "where other Green Oil factors do not support a large punitive damages award, substantial litigation costs borne by the plaintiff will not alone justify the award." BMW II, 701 So. 2d at 514.
Considering all of the foregoing factors, we make the following observations and findings: A reduction of the punitive damages award from $2,000,000 to $750,000 would leave an award more than adequate to remove any profit realized by APL as a result of its actions. A $750,000 award would represent approximately 1% of the net worth of APL at the time of the wrongful conduct. A $750,000 punitive damages award, in our opinion, would also make APL very reluctant to repeat its conduct in the future and, thus, would thereby meet the objective of encouraging deterrence of future wrongful conduct. Green Oil, 539 So. 2d at 222. A $750,000 award would represent approximately 11% of APL's cash surplus reserves and would not, in our opinion, impair APL's ability to conduct business with its insureds. By reducing the $2,000,000 punitive award to $750,000, the ratio of punitive damages to compensatory damages is reduced from 8:1 to 3:1, which is in line with the degree of reprehensibility discussed above. That portion of the judgment based on the jury award of $250,000 in compensatory damages is affirmed. The punitive damages award is affirmed, conditioned on Williamson's filing a remittitur of that award to $750,000 within 28 days of the release of this opinion; if he does not file such a remittitur within that time, the judgment will be reversed and this cause will be remanded for a new trial.
AFFIRMED IN PART; AFFIRMED CONDITIONALLY IN PART.
SHORES and KENNEDY, JJ., concur.
HOOPER, C.J., and MADDOX, HOUSTON, BUTTS, and SEE, JJ., concur in the result.
HOUSTON, Justice (concurring in the result).
I concur in the result. See my special opinion in BMW of North America, Inc. v. Gore, 701 So. 2d 507, 516 - 523 (Ala.1997) (Houston, J., concurring in the result).
HOOPER, C.J., and MADDOX and SEE, JJ., concur.
[1] These are additional factors to be considered under Green Oil, 539 So. 2d at 223-24. | September 5, 1997 |
1a6b011f-2414-490d-ad77-5d1657ef5854 | ATTYS. INS. v. Smith, Blocker & Lowther, PC | 703 So. 2d 866 | 1950420, 1950511 | Alabama | Alabama Supreme Court | 703 So. 2d 866 (1996)
ATTORNEYS INSURANCE MUTUAL OF ALABAMA, INC.
v.
SMITH, BLOCKER & LOWTHER, P.C.
SMITH, BLOCKER & LOWTHER, P.C.
v.
ATTORNEYS INSURANCE MUTUAL OF ALABAMA, INC.
1950420, 1950511.
Supreme Court of Alabama.
August 2, 1996.
Rehearing Dismissed July 3, 1997.
*867 Michael L. Edwards and R. Bruce Barze, Jr., of Balch & Bingham, Birmingham, for appellant/cross appellee Attorneys Insurance Mutual of Alabama, Inc.
Frank M. Bainbridge and Alfred F. Smith, Jr., of Bainbridge, Mims, Rogers & Smith, Birmingham, for appellee/cross appellant Smith, Blocker & Lowther, P.C.
Michael L. Edwards and R. Bruce Barze, Jr., of Balch & Bingham, Birmingham; and Broox G. Holmes of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, for appellant/cross appellee Attorneys Insurance Mutual of Alabama, Inc., on rehearing.
Frank M. Bainbridge and Alfred F. Smith, Jr., of Bainbridge, Mims, Rogers & Smith, Birmingham, for appellee/cross appellant Smith, Blocker & Lowther, P.C., on rehearing.
Bibb Allen and Rhonda Pitts Chambers of Rives & Peterson, P.C., Birmingham, for DPIC Companies, amicus curiae, on rehearing.
Elizabeth Golson McGlaughn for the firm of Inzer, Stivender, Haney & Johnson, P.A., Gadsden, amicus, on rehearing.
Patrick W. Richardson, amicus, of Bell Richardson, P.A., Huntsville, on rehearing.
Joseph C. Espy III of Melton, Espy, Williams & Hayes, P.C., Montgomery; and R. Joseph DeBriyn and Harry W.R. Chamberlain II of Musick, Peeler & Garrett, L.L.P., Los Angeles, CA, for amici National Ass'n of Bar-Related Insurance Companies, American Insurance Ass'n and Reliance National Insurance Company, on rehearing.
Joe C. Cassidy, Sr. and R. Rainer Cotter III, for the firm of Cassidy, Fuller & March, Enterprise, amicus.
Ollie L. Blan, Jr., amicus, Birmingham, on rehearing.
George M. Higginbotham, amicus, Bessemer, on rehearing.
William J. Donald, Jr., amicus, of Donald, Randall, Donald & Tipton, Tuscaloosa, on rehearing.
James R. Knight, Stephen K. Griffith, S. Lynn Marie McKenzie, Jason P. Knight, and D. Todd McLeroy for the firm of Knight & Griffith, Cullman, amicus, on rehearing.
INGRAM, Justice.
Smith, Blocker & Lowther, P.C. ("Smith, Blocker"), sued Attorneys Insurance Mutual of Alabama, Inc. ("Attorneys Mutual"), its professional liability insurance carrier, seeking *868 a judgment declaring that Attorneys Mutual had a duty to defend and indemnify it in regard to a malpractice claim. Smith, Blocker also sought damages, alleging that Attorneys Mutual had in bad faith refused to provide coverage under the policy. The trial court entered a summary judgment in favor of Smith, Blocker as to the question of the insurance coverage claim and in favor of Attorneys Mutual on the bad faith claim. Both parties appealed.
On a motion for summary judgment, the burden is initially on the movant to make a prima facie showing that there is no genuine issue of material fact (i.e., that there is no dispute as to any material fact) and that the movant is entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ.P.; McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So. 2d 957 (Ala.1992); Elgin v. Alfa Corp., 598 So. 2d 807 (Ala.1992). "The burden does not shift to the opposing party to establish a genuine issue of material fact until the moving party has made a prima facie showing that there is no such issue of material fact." McClendon, at 958; Elgin, at 810-11.
Rule 56 must be read in conjunction with the "substantial evidence rule," § 12-21-12, Ala. Code 1975, for actions filed after June 11, 1987. See Bass v. SouthTrust Bank of Baldwin County, 538 So. 2d 794, 797-98 (Ala.1989). In order to defeat a defendant's properly supported motion for summary judgment, the plaintiff must present substantial evidence, i.e., "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989). On an appeal from a summary judgment, this Court reviews the record in a light most favorable to the nonmovant and resolves all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, 613 So. 2d 359 (Ala.1993).
W. Wheeler Smith, a partner in Smith, Blocker, was employed to form a Subchapter S corporation for B.R.E. Associates, Inc. ("BRE"), and to file the necessary documentation with the Internal Revenue Service. In December 1992, Smith formed the corporation, prepared the Subchapter S election, and secured the necessary signatures to obtain Subchapter S tax treatment for the corporation. However, he failed to file the Subchapter S election by March 15, 1993, as required by the Internal Revenue Service.
In October 1993, BRE made a demand upon Smith for $12,060 for additional income tax that was due because of his failure to file the Subchapter S election. On November 10, 1993, rather than reporting the claim to Attorneys Mutual, Smith, Blocker paid BRE directly for the additional income tax. Smith, Blocker believed that the matter had ended, but failed to obtain a release from BRE.
However, on September 26, 1994, some 10 months later, BRE made an additional demand upon Smith, based on his failure to properly file the Subchapter S election form, for $270,000; this claim was based upon BRE's discovery that it would also be liable for additional capital gains tax on the sale of real estate BRE was attempting to sell. The following day, Smith, Blocker notified Attorneys Mutual of BRE's claim and also informed it of the previous payment it had made to BRE. On December 16, 1994, after conducting an investigation into the claim, Attorneys Mutual denied coverage for the claim based upon Smith, Blocker's failure to give timely notice of the "omission" by Smith discovered by BRE in 1993. Attorneys Mutual contends that when BRE notified Smith, Blocker of the "omission" in 1993, Smith, Blocker was required to give notice. Therefore, because Smith, Blocker waited until BRE made an additional demand in 1994, Attorneys Mutual contends that Smith, Blocker failed to satisfy the condition precedent in the policy requiring Smith, Blocker to give timely notice of a claim.
The trial court disagreed, holding (1) that because the policy was a "claims made" policy rather than an "occurrence" policy, Smith, Blocker was allowed to pay the first claim at its own personal cost and (2) that Smith, Blocker gave prompt notice of the second claim. Therefore, the trial court held that Attorneys Mutual was required to defend *869 and indemnify Smith, Blocker for BRE's second claim.
The Attorneys Mutual policy is a "claims made" policy; by such a carrier agrees to assume liability for any errors, including those made before the inception of the policy, as long as the claim is made during the policy period. On the other hand, an "occurrence" policy provides coverage for any acts or omissions that arise during the policy period, even though the claim is made after the policy has expired. Homestead Ins. Co. v. American Empire Surplus Lines Ins. Co., 44 Cal. App. 4th 1297, 52 Cal. Rptr. 2d 268 (1996).
In order to reduce exposure to an unpredictable and perhaps lengthy "tail" of lawsuits brought long after an "occurrence" policy period has ended, insurance carriers developed "claims made" policies. Such policies limit an insurer's risk by restricting coverage to the policy in effect when a claim is asserted against the insured, without regard to the timing of the damage or injury. This restriction allows the carrier to establish reserves despite inflation, upward-spiraling jury awards, or enlarged tort liability occurring after the policy period. "Claims made" policies permit insurers to predict more accurately both the limits of their exposure and the premium needed to accommodate the risk undertaken. Homestead, supra.
The hallmark of a "claims made" policy is that exposure for claims terminates with the expiration or termination of the policy, thereby providing certainty in gauging potential liability; this certainty in turn leads to more accurate calculation of reserves and premiums. "Claims made" policies benefit insureds by making coverage cheaper and more widely available. Homestead, supra.
Thus, a "claims made" policy limits coverage to claims made against the insured during the policy period. Coverage does not depend on when the "actual or alleged negligent act, error or omission" occurs. Instead, coverage depends on when the claim is made against the insured. Under a "claims made" policy, the insurer generally is responsible for loss resulting from claims made during the policy period, no matter when the liability generating event took place. An "occurrence" policy may be triggered in one of several ways. The event that triggers a "claims made" policy, by contrast, is transmission of notice of the claim. Homestead, supra.
Attorneys Mutual relies on a portion of the policy appearing in the "limits of liability" section, which provides for multiple insureds, claims, and claimants:
(Emphasis added.)
Attorneys Mutual argues that the policy is plain and unambiguous and that this portion of the policy means that all claims arising out of a single act, error, or omission shall be treated as a single claim.
Because this Court has never addressed the issue presented here, Attorneys Mutual relies on Bay Cities Paving & Grading, Inc. v. Lawyers' Mutual Ins. Co., 5 Cal. 4th 854, 855 P.2d 1263, 21 Cal. Rptr. 2d 691 (1993). In Bay Cities, a general contractor retained an attorney to represent it in connection with construction work it was performing. The attorney filed a mechanic's lien on behalf of Bay Cities. However, he did not serve a "stop notice" on the construction lenders and did not timely seek to foreclose the mechanic's lien, i.e., he committed two separate acts of negligence. Bay Cities made a demand on the attorney, stating that it was asserting "two separate claims," but sought payment of a single amount. Therefore, Bay Cities made a single "demand for money against *870 the Insured." The trial court held that there were two separate acts of legal malpractice and, therefore, that the limits of liability were doubled. Lawyers Mutual appealed, contending that there was but one claim being asserted and, thus, that the limits of liability should not be doubled. The California Supreme Court held that the two errors were related and arose out of a specific transaction, the collection of a single debt. Therefore, it held, there was but one claim for purposes of applying the policy provision limiting coverage for claims arising out of a series of related acts, errors, or omissions.
Attorneys Mutual contends that Bay Cities is dispositive of the issue presented in this case. We disagree. Bay Cities was attempting to create two separate claims in order to double the policy limits. In the present case, Smith, Blocker paid the first demand for money at its own personal cost, as the policy permits it to do. Smith, Blocker has not asked Attorneys Mutual to reimburse it for the first claim, nor is it attempting to portray BRE's demands as two separate claims in an attempt to double its policy limits.
Insurance contracts, like other contracts, are construed so as to give effect to the intention of the parties, and, to determine this intent, a court must examine more than an isolated sentence or term; it must read each phrase in the context of all other provisions. Hall v. American Indemnity Group, 648 So. 2d 556 (Ala.1994). The policy clearly states that it is a claims-made policy and that coverage is limited to liability for those claims that are made against the insured and are reported to the company during the policy period. Furthermore, the policy states that the insured shall, as soon as practicable, give Attorneys Mutual written notice of any claim made against the insured. The policy also states that the insured shall not, except at personal cost, make any payment, admit any liability, or settle any claims, without the written consent of Attorneys Mutual. Finally, the policy defines a claim as "[a] demand received by the Insured for money."
Smith, Blocker received from BRE two separate demands for money. It chose to pay the first demand at its own personal cost. However, it chose to notify Attorneys Mutual when presented with the second demand. Despite the language in the limits of liability section, and reading that language in the context of all the other provisions of the policy, we find it clear that this is a "claims made" policy and that it is irrelevant whether the two demands arose from one "omission."
Therefore, the trial court correctly entered that portion of the summary judgment in favor of Smith, Blocker requiring Attorneys Mutual to defend and indemnify Smith, Blocker in the malpractice claim.
In its cross-appeal, Smith, Blocker contends that the trial court erred in entering that portion of the summary judgment in favor of Attorneys Mutual on the bad faith claim.
This Court created the tort of bad faith failure to pay an insurance claim in Chavers v. National Security Fire & Casualty Co., 405 So. 2d 1, 7 (Ala.1981), stating:
Later, in National Security Fire & Casualty Co. v. Bowen, 417 So. 2d 179, 183 (Ala. 1982), this Court held:
This Court has held that the plaintiff must go beyond a mere showing of nonpayment. Instead, the plaintiff must prove a bad faith nonpayment, a nonpayment without any reasonable ground for dispute that the insurer, with no legal or factual defense to the claim, refused to pay it. Bush v. Alabama Farm Bureau Mut. Casualty Ins. Co., 576 So. 2d 175 (Ala.1991).
In National Savings Life Ins. Co. v. Dutton, 419 So. 2d 1357 (Ala.1982), this Court *871 emphasized the heavy burden a plaintiff bears in a bad faith case. In the normal case, in order for a plaintiff to make out a prima facie case of bad faith refusal to pay an insurance claim, the proof must show that the plaintiff is entitled to a directed verdict on the contract claim. Ordinarily, if the evidence produced by either side creates a fact issue with regard to the validity of the claim, the tort claim must fail and should not be submitted to the jury.[1]Dutton, 419 So. 2d at 1362. The characterization of a plaintiff's burden of proof as a "heavy" one was no doubt prompted by the Court's previous recognition in Chavers of the necessity for allowing insurers a broad range of freedom to thoroughly evaluate claims and to decline payment in nonmeritorious cases.
After thoroughly reviewing the record, we find no evidence that Attorneys Mutual denied Smith, Blocker's claim in bad faith. The record reflects that Attorneys Mutual attempted to determine, legitimately and in good faith, whether there had been two separate claims, understanding that if there had been two separate claims then its policy would provide coverage for the second one. Although Attorneys Mutual incorrectly determined that there was but one claim arising from one occurrence, we cannot say that it acted in bad faith in making that determination and that there was no reasonable ground for dispute.
Therefore, the trial court correctly entered the summary judgment in favor of Attorneys Mutual on the bad faith claim.
The judgment of the trial court is affirmed, both as to the appeal and as to the cross appeal.
1950420 AFFIRMED.
1950511 AFFIRMED.
HOOPER, C.J., and ALMON, HOUSTON, and BUTTS, JJ., concur.
[1] This is known as the "directed verdict on the contract claim" standard. | July 3, 1997 |
53189a7b-5e5a-46dd-9528-ac0299c14c92 | Ex Parte American Carpet Sales, Inc. | 703 So. 2d 950 | 1961127 | Alabama | Alabama Supreme Court | 703 So. 2d 950 (1997)
Ex parte AMERICAN CARPET SALES, INC.
(Re Kerry PLATT and Angela Platt
v.
AMERICAN CARPET SALES, INC., et al.).
1961127.
Supreme Court of Alabama.
October 3, 1997.
*951 Philip H. Partridge and Winston R. Grow of Brown, Hudgens, P.C., Mobile, for petitioner.
C.S. Chiepalich and John R. Spencer of C.S. Chiepalich, P.C., Mobile, for respondents.
MADDOX, Justice.
In a discovery order issued in a fraud action pending in the Mobile Circuit Court, the trial judge required the defendant, American Carpet Sales, Inc. ("American Carpet"), to produce for the plaintiffs all invoices regarding sales it had made over the past five years. Producing those invoices could require American Carpet to manually review at least 30,000 customer files, at a minimum cost of $12,000. American Carpet petitions for a writ of mandamus directing the trial judge to rescind that discovery order, contending that it is overly oppressive, unduly burdensome and expensive, and not calculated to lead to the discovery of admissible evidence. We grant the petition to the extent of requiring a modification of that discovery order.
The plaintiffs, Kerry Platt and Angela Platt, sued American Carpet; Associates Financial Company, Inc. ("Associates"); and Paul Grant, an employee of American Carpet. They alleged that they had bought carpeting and flooring for their home from American Carpet; that American Carpet had fraudulently increased the invoice price for that carpeting and flooring from the original price $2,165 to $2,408; and that it had done so without their consent. The Platts further alleged that American Carpet had forged Kerry Platt's signature to a security agreement with Associates related to the financing of the carpeting and flooring. The plaintiffs served American Carpet with a request for production of 15 items of information. In response, American Carpet objected to production of the following items:
After American Carpet failed to respond to the requests for production, the Platts filed a motion to compel production. The trial court granted that motion. American Carpet then *952 moved to reconsider that order and further moved for a protective order. The trial court denied the motion to reconsider and the motion for a protective order, and again ordered production as to items 11, 13, and 14.
American Carpet argues that the production of all invoices over the past five years that it adjusted upward after the agreement had been entered would be overly oppressive, unduly burdensome and expensive, and not calculated to lead to the discovery of admissible evidence. It contends that the production of all invoices would require that its employees manually review at least 30,000 customer files, at a minimum cost of $12,000, and that the request is not reasonably calculated to provide the plaintiffs with any evidence in support of their "pattern and practice" allegations. American Carpet says that often the measurements provided by a customer are incorrect and that the measurements, as well as the price on the customer's invoice, will be adjusted either up or down to reflect the actual measurements. American Carpet also asserts that on the Platts' invoice appeared a statement indicating that "price [is] subject to change if customer supplies specification."
American Carpet states that it does not keep a separate list of purchase orders that have been adjusted within the past five years; that its invoices for each year are filed alphabetically by purchaser in individual file folders, with no notation on the folders to indicate which invoices have been adjusted; that within the past five years it has generated approximately 6,000 to 9,000 invoices each year for purchases of carpeting and flooring; and that to provide the information requested, it would have to review manually each one of those files. American Carpet says that in order for it to comply with the request, at a minimum someone would have to review approximately 30,000 invoices and that to do so would require approximately 1,500 man-hours, or 37.5 weeks, for one of its employees. American Carpet also says that the production of those invoices would invade the privacy of its customers by revealing their names and addresses and purchases, and it says that producing those invoices would mean releasing business secrets (specifically its customers' identities).
American Carpet argues that the discovery request should be denied, based on Ex parte Compass Bank, 686 So. 2d 1135 (Ala.1996). In that case, this Court issued a writ of mandamus requiring that the trial court vacate a discovery order; we noted that even in fraud cases justice requires the trial court to protect a party from oppression or undue burden or expense. In that case, this Court held that the defendant had made a clear showing that the trial court's discovery order was overly broad and would impose on the defendant an undue burden and undue expenses because that order failed to limit discovery to the putative class members and to the type of annuity purchased by the plaintiff and would require production of over 21,000 customer files and would involve review of files on 35,000 transactions.
In Ex parte Finkbohner, 682 So. 2d 409 (Ala.1996), the plaintiffs sued Principal Mutual Life Insurance Company for damages based on an alleged breach of contract and bad faith refusal to pay benefits under a medical insurance policy. In that case, the plaintiffs sought discovery of other Alabama claims and lawsuits since 1992 alleging bad faith denial of a claim, as well as the name, address, and telephone number of each insured whose claim had been denied based on the same policy language, for the preceding five-year period. The trial judge refused to require production of the requested discovery; the plaintiffs petitioned this Court for a writ of mandamus directing the trial court to order that discovery. This Court held that the plaintiffs were entitled to discover the previous bad faith actions against the defendant, but it did not allow discovery of evidence of other claims, holding that it would be unduly burdensome on the defendant to have to sift through possibly hundreds or thousands of letters or other items of correspondence to determine whether any one of the complainants was charging it with bad faith denial of a claim.
American Carpet argues that it is undisputed that production of security agreements by which Associates Financial Services provided financing to American Carpet's customers *953 would likewise be unduly burdensome and expensive, and it argues that the request for that information is not reasonably calculated to lead to the discovery of admissible evidence. Furthermore, American Carpet asserts that the request for production of the security agreements relates only to the alleged forgery of the plaintiff Kerry Platt's signature on the security agreement with Associates. In Ex parte Mobile Fixture & Equipment Co., 630 So. 2d 358 (Ala.1993), this Court indicated that absent allegations of a fraudulent scheme a plaintiff should not be entitled to discovery of alleged similar fraudulent acts. American Carpet contends that the plaintiffs have alleged a fraudulent scheme as to their claims of adjustments to customers' invoices, but have not alleged a fraudulent scheme in terms of forgery; without such an allegation, American Carpet says, the plaintiffs are not entitled to this type of "pattern and practice" discovery.
It is well established that the rules regarding discovery are to be broadly and liberally construed, to ensure that the spirit of the rules is carried out. Assured Investors Life Ins. Co. v. National Union Associates, Inc., 362 So. 2d 228 (Ala.1978). This Court has held that if there is any likelihood that the information sought by a party will aid that party in pursuing a claim or in defending a claim, then discovery should be allowed. See Ex parte AMI West Alabama General Hospital, 582 So. 2d 484 (Ala.1991). The Court has also said that the particular details of the discovery process must necessarily be left to the sound discretion of the trial court. Ex parte Old Mountain Properties, Ltd., 415 So. 2d 1048 (Ala.1982).
Considering the evidence before us, we hold that the trial judge did abuse his discretion in compelling the discovery for a period of five years; consequently, we issue a writ directing the trial court to limit its order compelling discovery, so as to require production only as to a two-year period. As to items 13 and 14, the writ shall direct the trial court to set aside its discovery order until it has conducted an in camera inspection of the records requested to determine whether, as American Carpet contends, those items constitute nondiscoverable trade secrets.
The petition for the writ of mandamus is granted.
WRIT GRANTED.
HOOPER, C.J., and SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
SEE, J., concurs in the result.
BUTTS, J., dissents. | October 3, 1997 |
e073fe19-2705-48ac-b665-8df0a24cd97f | Harper v. Gremmel | 703 So. 2d 346 | 1960656 | Alabama | Alabama Supreme Court | 703 So. 2d 346 (1997)
Freddie Wayne HARPER, as conservator and guardian of Freddie Lee Harper,
v.
Warren GREMMEL, M.D.
1960656.
Supreme Court of Alabama.
August 29, 1997.
Patrick M. Lamar of Siniard, Lamar & McKinney, P.C., Huntsville, for appellant.
Robert L. Williams of Spain & Gillon, L.L.C., Birmingham, for appellee.
MADDOX, Justice.
AFFIRMED. NO OPINION.
HOOPER, C.J., and SHORES, HOUSTON, BUTTS, and SEE, JJ., concur.
COOK, J., dissents.
COOK, Justice (dissenting).
I respectfully dissent. The plaintiff, Freddie Wayne Harper, appeals from a summary judgment entered in favor of Dr. Warren Gremmel in an action against Dr. Gremmel alleging malpractice in the medical treatment of F.L. Harper, while the latter was a patient at Huntsville Hospital, a private institution.
*347 According to undisputed evidence, F.L. Harper was admitted to Huntsville Hospital through its emergency room on August 26, 1992. At that time, he was suffering from "seizures and alcohol withdrawal." Throughout the night of August 27-28, Dr. Gremmel was the "on-call resident" at Huntsville Hospital, and he undertook to treat Harper.
At that time, Dr. Gremmel was a resident at the University of AlabamaHuntsville ("UAH"), a governmental entity. Through an "affiliation agreement" between UAH and Huntsville Hospital, Dr. Gremmel and other UAH personnel treated patients admitted to Huntsville Hospital. In the early morning hours, Harper leaped, or fell, from a window and suffered permanent injuries.
Freddie Wayne Harper, as F.L. Harper's conservator and guardian, sued Dr. Gremmel; Donna Payne, a registered nurse; and Huntsville Hospital, alleging medical malpractice. The trial court based its judgment in favor of Dr. Gremmel on the ground of qualified immunity. Dr. Gremmel was immune, the court concludednotwithstanding the fact that the alleged malpractice occurred at the facility of a nongovernmental institutionbecause of Dr. Gremmel's affiliation with UAH. The Court affirms that judgment, without an opinion.
I have been unable to locate any controlling Alabama authority. Dr. Gremmel cites Smith v. Arnold, 564 So. 2d 873 (Ala.1990). However, Smith involved claims against a "consulting psychiatrist to the [Thomasville Adult Adjustment] Center," which was a "minimum-security facility operated by the Department [of Mental Health and Mental Retardation]." 564 So. 2d at 874. Also, I note that Barnes v. Dale, 530 So. 2d 770 (Ala.1988), involved claims against employees of "Bryce Hospitala mental health facility owned and operated by the State of Alabama." Id. at 771-72. Thus, the applicationas a matter of lawof the doctrine of qualified immunity to physician services performed at private institutions would require a substantial extension of the holdings of Smith and Barnes. I disagree with this extension for two reasons.
First, I believe the facts in this case present a jury question as to whether Dr. Gremmel, in treating F.L. Harper, was essentially a "loaned servant" of Huntsville Hospital. Of the loaned servant doctrine this Court has said:
Coleman v. Steel City Crane Rentals, Inc., 475 So. 2d 498, 500 (Ala.1985) (emphasis added), cert. denied sub nom., Illinois Cent. Gulf R.R. v. Coleman, 476 U.S. 1104, 106 S. Ct. 1946, 90 L. Ed. 2d 356 (1986). "Even in the case of attorneys and physicians there may be the master and servant relation, as where a firm of attorneys employs an attorney as a member of the office staff." Restatement (Second) of Agency § 223 cmt. a (1958). "[L]ikewise, while the physician employed by a hospital ... is not, in the normal case, a servant of the hospital, ... it may be found that the house physician or the internes, if subject to directions as to the manner in which their work is performed, are servants of the hospital...." Id. (emphasis added). "`[W]hether one who is usually and normally the servant of one master has become specially and temporarily the servant of another... is ordinarily a question of fact.'" United States Steel Corp. v. Mathews, 261 Ala. 120, 123, 73 So. 2d 239, 241 (1954) (quoting 2 Mechem on Agency 1447, § 1864).
Harper presented substantial evidence that Dr. Gremmel, in treating patients at Huntsville Hospital, was a servant of Huntsville Hospital. For example, the affiliation agreement vested in Huntsville Hospital "full authority for the care of all patients admitted" thereto, and it further provided that *348 "[p]hysicians and doctors of [the] Staff [should] at all times have primary responsibility and authority for the care and management of patients." (Emphasis added.) Because a jury question was presented on the issue of Dr. Gremmel's status at the time of the alleged malpractice, the summary judgment was improper.
The second reason for my disagreement with the trial court's application of the immunity defense to Dr. Gremmel as a matter of law is that, although there may be valid reasons for recognizing a qualified immunity defense, as we have done, for physicians practicing in state institutions, the application of that defense to treatment provided in private institutions creates inconsistent results. Under certain conditions, for example, a UAH physician practicing at Huntsville Hospital would be immune, while the physicians on staff at Huntsville Hospital, who are, pursuant to the affiliation agreement, primarily responsible for treatment, would not be immune. In other words, a UAH physician would be immune even while working under the direction of a Huntsville Hospital staff physician.
For these reasons, I respectfully disagree with the result in this case. A fortiori, I disagree with the majority's decision to affirm the summary judgment without a full analysis in a written opinion. | August 29, 1997 |
c2c8c0ed-7491-4e96-abab-14c6ba53aa70 | Ex Parte Assoc. Fin. Serv. Co. of Ala. | 705 So. 2d 836 | 1952073 | Alabama | Alabama Supreme Court | 705 So. 2d 836 (1997)
Ex parte ASSOCIATES FINANCIAL SERVICES COMPANY OF ALABAMA, INC.
(Re Johnnie L. FANIEL, Sr. v. ASSOCIATES FINANCIAL SERVICES COMPANY OF ALABAMA, INC.).
1952073.
Supreme Court of Alabama.
August 22, 1997.
Rehearing Denied October 24, 1997.
*837 J. Fairley McDonald III and Richard H. Gill of Copeland, Franco, Screws & Gill, P.A., Montgomery; and R. Carlton Smyly of Cabaniss, Johnston, Gardner, Dumas & O'Neal, Birmingham, for petitioner.
Charles A. McCallum III and Charles M. Elmer of Campbell & Waller, L.L.C., Birmingham, for respondent.
SHORES, Justice.
Associates Financial Services Company of Alabama, Inc., the defendant in an action pending in the Greene Circuit Court, petitions for a writ of mandamus directing the trial judge to transfer this case from Greene County to Houston or Bullock County. We deny the writ.
The plaintiff, Johnnie L. Faniel, Sr., filed his initial complaint on May 8, 1996, alleging fraudulent practices on the part of Associates in connection with consumer credit transactions; he alleged that these practices violated the Alabama Mini-Code, § 5-19-1 et seq., Ala.Code 1975. The plaintiff's claims relate specifically to the practice of "flipping."[1]
Associates responded by filing a motion to transfer, in which it sought a change of venue based upon the doctrine of forum non conveniens, relying on § 6-3-21.1, Ala.Code 1975. This motion to transfer assumed that venue was proper in Greene County. The trial court set a date for a hearing; in the interim, the plaintiff moved for class certification. The trial judge conditionally certified two statewide classes. Associates then amended its motion to transfer, alleging that, under § 6-3-7, Ala.Code 1975, venue in Greene County was improper. The plaintiff amended his complaint to allege a breach of contract.
The trial judge heard oral arguments on Associates' motion to transfer, as amended to allege improper venue, and entered an order that stated in pertinent part:
Associates claims that the trial judge abused his discretion or acted contrary to law relating *838 to the venue question by delaying his ruling on the motion to transfer based upon the forum non conveniens statute.
A writ of mandamus is a drastic and extraordinary writ to be issued only where there is a "`(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.'" Ex parte Auto-Owners Ins. Co., 548 So. 2d 1029 (Ala.1989) (quoting Ex parte Edgar, 543 So. 2d 682 (Ala.1989)); Ex parte Pearson Management Co., 667 So. 2d 48 (Ala.1995). Under the facts and circumstances of the present case, Associates has no "clear legal right" to an order transferring the case. Associates waived the right to raise the question whether venue was proper under § 6-3-7, Ala.Code 1975, and venue in Greene County was made proper by the amendment to the complaint. Rule 12(b), Ala. R. Civ. P.; Till v. State, 595 So. 2d 871 (Ala.1992).
We find no clear abuse of the trial judge's discretion, nor any arbitrary or capricious exercise thereof, in the judge's delaying a ruling on the motion to transfer pending consideration of limited discovery on issues of class certification that are relevant to the motion. A delay in ruling on a motion is not, as Associates argues, an ipso facto denial of the motion, nor is it in this case an abuse of discretion. Ex parte Ford Motor Credit Co., 561 So. 2d 244 (Ala.Civ.App.1990).
For the reasons stated above, the petition for the writ of mandamus is due to be denied.
WRIT DENIED.
ALMON, KENNEDY, and COOK, JJ., concur.
RICHARD L. HOLMES, Retired Appellate Judge, concurs.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., dissent.
BUTTS, J., recuses.
HOOPER, Chief Justice (dissenting).
I dissent, and I write to explain why I agree with Justice Maddox's dissenting opinion. The class action is a unique action at law. Unlike a normal plaintiff, the plaintiff members of the class need not even appear at court. This aspect of the class action was enough to cause at its inception a great deal of controversy.[2] It is critical that courts, in particular the highest court of this State, make sure that the rules surrounding the use of the class action be strictly enforced. The potential for abuse of procedure is accentuated in unique types of actions like the class action.
The federal courts have noticed the problem and have recently sought to restrict class actions by preventing the loose application of the rules. In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir.), cert. den., 516 U.S. 867, 116 S. Ct. 184, 133 L. Ed. 2d 122 (1995) (decertification of class because certification would effectively act to coerce defendants into settling); In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir.1996) (plaintiff class did not meet the four elements required for Rule 23, F.R.Civ.P., certification); Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir.1996) (variations in state law would control the outcome and made a *839 nationwide class unmanageable); Georgine v. Amchem Products, Inc., 83 F.3d 610 (3d Cir.1996) (settlement class must be held to the same standards as a litigation class). Recently, the Civil Rules Advisory Committee, the committee that proposed the 1966 amendments to Federal Rule 23 that created the modern class action, has been reviewing Rule 23 in an attempt to regain some control over its 1966 creation. The problem in the case at bar is perhaps unique to Alabama, but the efforts that are being made at this time to rein in federal class actions is indicative of the problems that can arise if the rules governing class actions are not strictly and carefully followed.
We have a case filed in a county where venue is patently improper. Yet, the trial judge, anticipating that a class action will be certified, has said he will not transfer the case to the proper county. The practical implication of such a decision is to encourage forum shopping. Based on such reasoning, as long as a class action may be certified sometime in the future, venue is proper wherever the plaintiff chooses to file the action. This rationale destroys the venue principle and is clearly a subversion of Alabama law regarding venue. This Court's approval of such a decision by a trial judge encourages violation of Amend. 328, § 6.11, Const. of Ala.1901, which states that, by the exercise of its rulemaking power, this Court "shall not abridge, enlarge or modify the substantive right of any party nor affect the jurisdiction of circuit and district courts or venue of actions therein" (emphasis added).
I understand that it can be argued that the defendant waived the venue issue by filing a motion for transfer based on the statutory forum non conveniens provision. I also understand why the plaintiff amended the complaint to add the contract claim. However, I see too much potential for abuse of the class action in this type of decision by a trial court. I consider the threat this case poses to Alabama's rules regarding venue to outweigh any procedural concern over waiver. This Court has a responsibility to assure the public that abuses of this kind will not continue. We must discourage forum shopping, and we must not allow the courts of this State to go beyond the mandate of Amend. 328, § 6.11.
MADDOX, Justice (dissenting).
The legal issue presented in this case is correctly stated by the petitioner: "[C]an the trial judge for a county in which the named plaintiff has never lived, where no transaction between the named plaintiff and the defendant ever occurred, and where the defendant has no office, employees, or documents, refuse to transfer the case to a county where venue is proper for the named plaintiff's claims?"
The answer to that question is obviously in the negative; therefore, I must respectfully disagree with the majority's conclusion that the trial judge did not abuse his discretion.
My dissenting view is based upon these basic legal conclusions: (1) the Legislature, not this Court, determines venue and (2) the Legislature, in adopting § 6-3-21.1, Ala. Code 1975, the so-called forum non conveniens statute, clearly intended that actions such as this one should be transferred.
The facts of this case are undisputed. On May 8, 1996, Johnnie L. Faniel, Sr., a resident of Union Springs, Bullock County, filed in Greene County an action against Associates Financial Services Company of Alabama ("Associates"), a domestic corporation incorporated in Jefferson County. Faniel alleged that Associates had fraudulently suppressed material facts and had violated the Alabama Mini-Code, § 5-19-1 et seq., Ala.Code 1975, in connection with a consumer credit transaction involving him and agents of Associates that took place at Associates' office in Houston County.[3]
In its first response, filed on June 24, 1996, Associates moved for a change of venue, based upon the doctrine of forum non conveniens, as provided for in § 6-3-21.1, Ala. *840 Code. 1975, and in support of its motion it presented the following facts, which were not challenged by Faniel: (1) Faniel, the plaintiff, does not live in Greene County, but, instead, lives in Union Springs, Bullock County, Alabama; (2) Associates has no office in Greene County; (3) the loans that are the subject matter upon which the complaint is based were obtained from Associates' office in Dothan, Houston County, Alabama; (4) no communications or actions relating to the subject matter of this dispute occurred in Greene County; and (5) no witnesses, documents, or other evidence concerning Associates' dealings with the plaintiff occurred in Greene County.
In its motion to transfer, Associates asked the Circuit Court of Greene County to transfer the cause to Houston County or, alternatively, to Bullock County.
The trial court set September 5, 1996, for a hearing on the motion to transfer. In the interim, Faniel, on August 12, 1996, filed a "Motion for Class Certification." The trial judge granted Faniel's motion on the same day it was filed; in its August 12, 1996, order, the court conditionally certified two statewide classes, stating:
On August 29, 1996, Associates amended its June 24, 1996, transfer motion to allege that under the provisions of § 6-3-7, Ala. Code 1975, Greene County was not a proper venue.[4] Subsequently, the plaintiff, on September 4, 1996, amended the original complaint to allege a claim for breach of contract.
On September 5, 1996, the date set for the hearing on the defendant's motion to transfer, the trial judge heard oral arguments on that motion, as amended, and on September 6, 1996, it entered the following order:
Faniel argues, in support of the trial court's action, that once he amended his original complaint to ask for class certification and further amended his complaint to include a contract claim, venue then became proper in Greene County, provided, of course, Associates "[did] business [there] by agent or was doing business [there] by agent at the time the cause of action arose,"[5] a fact that Associates does not dispute.
A motion for a change of venue is what was once denominated as a plea in abatement, and the Rules of Civil Procedure authorize a defendant to file such a motion before responding to a complaint. In view of the fact that the trial judge determined that Associates had waived a portion of its venue claim by not timely presenting it, I will address that point first.
This Court addressed the question of waiver in Ex parte Till, 595 So. 2d 871, 872 (Ala. 1992):
(Emphasis original.)
The procedural history of this case could be summarized as follows: Faniel filed his initial complaint, in which he primarily alleged fraud, on May 8, 1996, and this complaint was served on Associates on May 13, 1996. Associates, in its first response, filed on June 24, 1996, sought a transfer of the action based upon the doctrine of forum non conveniens, as provided for in § 6-3-21.1, Ala. Code 1975. The trial court set a date for a hearing on the initial motion to transfer on forum non conveniens grounds, for September 5, 1996. In the interim, on August 12, 1996, the plaintiff filed a motion for class certification, which the trial judge granted on the same day it was filed; in its order granting that motion, the trial judge conditionally certified two state-wide classes. After the court entered that order, Associates amended its motion to transfer, on August 29, 1996, to allege that venue was improper under the provisions of § 6-3-7.[6] On September 4, 1996, one day before the date set for a hearing on Associates' motion to transfer, Faniel amended the original complaint to allege a breach of contract claim.
The procedural history of this case, especially in regard to the timing of the various filings, indicates that this is a case of "forum shopping," a practice I believe the Legislature had in mind when it adopted § 6-3-21.1. Clearly, the facts of this case meet the criteria for applying the provisions of that statute, and they also meet the criteria for applying the provisions of Rule 1, Ala.R.Civ.P., calling for the "just" determination of every action. Unquestionably, it would be more "just" to allow Associates to defend this case in either Houston County, where the transaction took place, or in Bullock County, where the plaintiff lives.
When this Court adopted the Rules of Civil Procedure, the central theme was expressed in Rule 1, that technicalities were to be eliminated in order to do justice. In this case, the procedural matters of when things were filed, what was alleged, and whether something was waived or not, cannot change the fact that this opinion allows a trial judge for a county in which the named plaintiff has never lived, where no transaction between the named plaintiff and the defendant ever occurred, and where the defendant has no office, employees, or documents, to refuse to transfer a case to a county where venue is proper for the named plaintiff's claims. The Legislature has spoken, and this Court should not allow a trial judge to refuse to transfer a case that so obviously should be transferred.
The law states that "[t]he question of proper venue is to be determined as of the time the action is filed." Elmore County Comm'n v. Ragona, 540 So. 2d 720, 725 (Ala.1989). This Court has also held:
Ex parte New England Mut. Life Ins. Co., 663 So. 2d 952, 956 (Ala.1995).[8]
Based on my reading of the applicable law, and applying the provisions of our Rules that are designed to promote justice, I think that, in the interest of justice, Associates has a substantive right to have this action transferred to a more convenient forum.
I believe further that Associates has used the proper remedy to quicken this Court's jurisdiction. The proper procedural device for challenging the transfer of a case to another venue or the refusal to transfer a case is a petition for the writ of mandamus.[9] I recognize that a writ of mandamus is a drastic and extraordinary writ, to be issued only where there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court. I also recognize that mandamus may not be issued to control or review the exercise of discretion except where an abuse of discretion is shown. Ex parte Ford Motor Credit Co., 561 So. 2d 244 (Ala.Civ.App.1990), citing, Ex parte Auto-Owners Ins. Co., 548 So. 2d 1029 (Ala.1989). While this case, from a procedural standpoint, is complicated, and while it could be said that the trial judge has not issued a final ruling on Associates' motion to transfer, the trial judge, by refusing to enter a final transfer order, cannot change the facts, which clearly show that Associates has a clear legal right to have this action tried in the proper venue or in a venue that would be convenient for the parties and would serve the interest of justice.
Furthermore, whether this action is certified as a class action or not, Greene County is not the most convenient forum. At the time the venue issue was raised, the only parties properly before the court were the named plaintiff and defendant.[10] Before a class action can be certified, the plaintiff must establish, through sufficient evidence, that each of the requirements of Rule 23, Ala. R. Civ. P., is satisfied. Ex parte Green Tree Financial Corp., 684 So. 2d 1302 (Ala. 1996); Ex parte Exide Corp., 678 So. 2d 773 (Ala.1996); Ex parte Blue Cross & Blue Shield, 582 So. 2d 469 (Ala.1991); Rowan v. First Bank of Boaz, 476 So. 2d 44 (Ala.1985). *843 Consequently, the original parties to this action will determine the proper venue of this action and not any future members of a class.
Based upon the foregoing, I disagree with the majority. I would hold that the trial judge erroneously linked Associates' motion to transfer to a determination of Faniel's motion for class certification and thereby abused his discretion. I would grant the mandamus petition and order the trial court to grant Associates' motion to transfer.
HOOPER, C.J., and HOUSTON and SEE, JJ., concur.
[1] "Flipping" is the practice of inducing borrowers to refinance existing loans when they need more credit, rather than making new and separate loans.
[2] The traditional reference to the group litigation of equity in the 17th century has been used as a historic justification for the modern class action of the 20th century. However, Yeazell has effectively revised that history to show that early group litigation involved social groups that were already cohesive entities that chose representatives before ever appearing in court. The reasons for that early group litigation bear little resemblance to the justifications given for the modern class action. In the 18th and 19th centuries, group litigation disappeared from the reports. See Stephen C. Yeazell, Group Litigation and Social Context: Toward a History of the Class Action, 77 Col. L.Rev. 866, 867, 872, 877-78 (1977) ("every sixteenth- and seventeenth-century case of group litigation I have found involves the members of rural agricultural communities manorial tenants, villagers, and parishioners"; "early group litigation did not perform the task which it does in modern class litigationthe overcoming of transaction costs, costs which in the typical modern representative suit are insuperable"; "To the modern observer ... a requirement of individual consent in advance of the suit is at odds with the central purpose of the device [the class action]overcoming of the costs of organizing an unconnected mass of individuals into a litigative entity").
[3] Specifically, the plaintiff alleged that Associates "has engaged in the fraudulent practice of `flipping', that is, by requiring and soliciting Plaintiff... to refinance each and every loan so that [he has] one loan at a time from Defendant. [By soliciting] Plaintiff to engage in this practice and refusing to allow more than one existing loan, Defendant insured that [it] imposed higher finance charges, interest, and fees...."
[4] Section 6-3-7 states, in part: "[A]ll actions against a domestic corporation for personal injuries must be commenced in the county where the injury occurred or in the county where the plaintiff resides if such corporation does business by agent in the county of the plaintiff's residence." (Emphasis added.)
[5] Faniel cites § 6-3-7, Ala.Code 1975.
[6] Rule 15, Ala. R. Civ. P, provides, of course, that amendments to pleadings usually relate back to the date of the original filing of the pleading.
[7] Section 6-3-21.1(a) reads, in part, as follows: "(a) With respect to civil actions filed in an appropriate venue, any court of general jurisdiction shall, for the convenience of parties and witnesses, or in the interest of justice, transfer any civil action or any claim in any civil action to any court of general jurisdiction in which the action might have been properly filed and the case shall proceed as though originally filed therein."
[8] Clearly, this Court cannot change the substantive law of venue. Although this Court has been granted the power to make rules of practice and procedure, the people, when they ratified Amendment 328 to their Constitution, granting this Court rule-making power, specifically stated that this Court "shall not abridge, enlarge or modify the substantive right of any party nor affect the jurisdiction of circuit and district courts or venue of actions therein." Amend. 328, § 6.11, Const. of Ala.1901.
[9] See, e.g., Ex parte Lashley, 596 So. 2d 890, 891 (Ala.1992); Rule 82(d)(1), Ala. R. Civ. P.
[10] Ex parte First National Bank of Jasper, 675 So. 2d 348 (Ala.1995); Hall v. City of Dothan, 539 So. 2d 286 (Ala.Civ.App.1988). | August 22, 1997 |
28deea39-82ed-4b0f-b595-41b9a70d5681 | Jenkins v. US Fidelity and Guar. Co. | 698 So. 2d 765 | 1951858 | Alabama | Alabama Supreme Court | 698 So. 2d 765 (1997)
Kerry S. JENKINS
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY and Nita Simpkins.
1951858.
Supreme Court of Alabama.
June 20, 1997.
*766 Stephen D. Heninger of Heninger, Burge & Vargo, Birmingham, for Appellant.
H. H. Grooms, Jr., and Stacey L. McDuffa of Spain & Gillon, L.L.C., Birmingham, for Appellees.
SEE, Justice.
Kerry S. Jenkins sued to vacate his workers' compensation settlement agreement with United States Fidelity and Guaranty Company ("USF & G") for fraud, and also sought damages for the tort of outrage. The trial court entered a summary judgment for the workers' compensation carrier, USF & G, and its employee, Nita Simpkins, holding: (1) that the claim to set aside the settlement agreement was time-barred under Ala.Code 1975, § 25-5-56; and (2) that Jenkins had failed to produce substantial evidence of outrageous conduct. Jenkins appealed. We affirm.
The facts, viewed most favorably to the nonmovant, Jenkins, are as follows: In 1985, while working for Cahaba Tractor Company, Jenkins sustained a hernia as he lifted a battery. Jenkins underwent surgery for his injury and subsequently developed blood clots, which caused severe pain. The blood clot problem requires Jenkins to take extremely high doses of medication.
In 1990, Jenkins approached USF & G, Cahaba Tractor's workers' compensation carrier, about settling his claims for future medical expenses.[1] The trial court appointed a special master to oversee the settlement negotiations. Jenkins initially demanded a $100,000 lump sum and $1,800 a month for his medical bills. The parties finally agreed to settle Jenkins's prescription drug expenses for: (1) a lump sum of $50,000; and (2) an annuity computed to pay him monthly payments of $1,445 for his remaining life expectancy.
On November 7, 1990, the trial court held a formal hearing to review the negotiated settlement. At the hearing, the special master and Jenkins were questioned concerning the conditions of the settlement. Jenkins indicated that he understood the conditions and that he wanted the settlement. The special master received a letter from Jenkins's psychiatrist indicating that Jenkins was competent to manage his own affairs. The trial court determined that Jenkins was fully aware of his actions and that Jenkins had voluntarily entered into the settlement. The trial court approved the settlement.
Approximately 45 days after entering into the November 7,1990, settlement agreement, Jenkins telephoned the special master, alleging that USF & G had fraudulently induced him to settle for $1,445 per month. Jenkins, however, did not file a complaint against USF & G until July 16, 1992 one year and eight months after entering the agreement.
In short, Jenkins alleges that USF & G, through its employee Nita Simpkins, defrauded him by misrepresenting the amount *767 of medical expenses that it was paying for him before the settlement, thereby affecting the determination of the settlement amount. Although Jenkins's actual prescription drug expenses were approximately $1,600 per month, he alleges that USF & G represented to him that they totalled only $1,500 per month.
Jenkins contends that his claim to vacate the workers' compensation settlement for fraud, specifically USF & G's alleged misrepresentation of how much his monthly drug expenses were, is not barred by the six-month limitations provision of § 25-5-56, Ala.Code 1975, applicable to a challenge to a workers' compensation settlement. Section 25-5-56 provides in pertinent part:
(Emphasis added.) The undisputed facts show that Jenkins entered into the settlement agreement on November 7, 1990, and that he filed his claim to set aside the settlement agreement on July 16, 1992one year and eight months after entering into the settlement agreement.
Jenkins offers two reasons why the six-month limitations period should not apply to him: First, despite filing a complaint alleging fraudulent inducement, Jenkins now contends that he did not discover that USF & G fraudulently induced him to enter the settlement agreement until he had an opportunity to participate in discovery in this lawsuit. This argument is inapposite because the statute clearly begins to run on the date of settlement (November 7, 1990), not the date of discovery, and Jenkins filed his claim more than six months after the settlement.[2]
Second, Jenkins contends that under Rule 60(b), Ala. R. Civ. P., the Court has the "inherent power" to vacate a prior judgment. In Clark v. Liberty Mutual Insurance Co., 673 So. 2d 395, 397 (Ala.1995), this Court held that an employee's Rule 60(b)(3) motion to set aside her workers' compensation settlement was time-barred because it was filed after the expiration of the six-month limitations period. We stated that Ala.Code 1975, § 25-5-56, is the "exclusive method for vacating a workers' compensation settlement for fraud." Id. (citing Hawkins v. Jim Walter Resources, Inc., 600 So. 2d 1052 (Ala.Civ. App.1992)). Thus, Jenkins cannot avoid the operation of the statute of limitations by casting his claim as one for relief under Rule 60(b).[3] Jenkins's claim to vacate his workers' compensation settlement is time-barred under § 25-5-56.[4]
Jenkins next asserts that the summary judgment was improper as to his outrageous *768 conduct claim.[5] Jenkins argues that USF & G's outrageous conduct consisted of: (1) offering him $50,000 plus $1,445 per month while knowing that his entire medical expenses approximated $2,700 per month; (2) offering him this low monthly amount when it knew that he was in severe pain and was taking significant amounts of drugs for the pain; and (3) not informing him that it had established a reserve of over $700,000 for his future medical bills, while settling for less than $300,000 in projected payments.
In American Road Service Co. v. Inmon, 394 So. 2d 361, 365 (Ala.1980), this Court set forth the following elements for the tort of outrage: (1) that the defendant's conduct was intentional or reckless; (2) that it was extreme and outrageous; and (3) that it caused emotional distress so severe that no reasonable person could be expected to endure it. We stated:
Inmon, 394 So. 2d at 365 (citations omitted).
In Gibbs v. Aetna Casualty & Surety Co., 604 So. 2d 414, 415-16 (Ala.1992), this Court affirmed a summary judgment against a worker who claimed his employer's workers' compensation carrier had engaged in outrageous conduct by: (1) paying the worker less weekly compensation than the carrier knew he was due, before reaching any settlement; (2) refusing him further medical treatment and requiring him to travel, even though the carrier knew he was in severe pain; and (3) delaying reimbursement of his drug bills. This Court held that although the worker may have been inconvenienced by the alleged conduct, he had failed to show that the workers' compensation carrier had intended to cause him severe emotional distress. Id. at 416. Thus, the carrier's alleged actions fell substantially short of conduct that was "atrocious, and utterly intolerable in a civilized [society]." Id. at 417.
Before the settlement, USF & G had paid for all of Jenkins's medical expenses.[6] USF & G never refused Jenkins any medical treatment. USF & G has never required Jenkins to travel unnecessarily or to undergo any activity that would increase his level of pain. Although there were certain processing delays, USF & G paid all of Jenkins's medical bills. Further, USF & G was under no obligation to disclose its internal accounting entry for gross medical benefits reserved for Jenkins. USF & G's actions do not begin to approach the rare set of facts that are "atrocious" and "utterly intolerable in a civilized society" and, thus, they are not actionable as the "tort of outrage." See Gibbs, 604 So. 2d at 417. Accord Garvin v. Shewbart, 564 So. 2d 428 (Ala.1990).
Based on the foregoing, we hold that the trial court correctly entered the summary judgment in favor of the defendants.
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, SHORES, and HOUSTON, JJ., concur.
[1] In 1988, Jenkins settled the disability portion of his workers' compensation claim for $125,000, specifically reserving the issue of his future medical expenses. Jenkins's disability settlement is not at issue in this appeal.
[2] The record reflects that Jenkins telephoned the special master approximately 45 days after entering into the settlement agreement and in the telephone conversation stated to the special master that he had been defrauded. Even if the limitations period in § 25-5-56 began to run only on the date of discovery of the fraud, instead of the date of the settlement agreement, it would not matter; Jenkins filed his claim in 1992well over six months after his discovery of the fraud in 1990.
[3] Jenkins also argues that he was incompetent to enter into the settlement agreement. This argument lacks merit. The trial court specifically found that Jenkins was competent to enter into the settlement agreement, based on a letter from Jenkins's psychiatrist stating that Jenkins was competent, and based on Jenkins's participation in the proceedings before the trial court.
[4] We note that Jenkins, in any event, failed to present "clear and convincing" evidence of fraud. See Upchurch v. Universal Underwriters Ins. Co., 610 So. 2d 1163, 1165 (Ala.Civ.App. 1992) (requiring that evidence of fraud in workers' compensation cases be "clear and convincing," as opposed to "substantial"). Jenkins asserts that USF & G represented that his medical bills were only $1,500 per month when it knew the medical bills were, in fact, $2,700 per month. USF & G responds by asserting that the parties agreed to the $1,445 monthly figure for prescription drugs alone, not for total medical expenses, because certain government health benefits would cover Jenkins's nonprescription drug medical expenses; the record supports this assertion. Jenkins's prescription drug expenses were approximately $1,600 per month at the time of the settlement. Jenkins stated that he knew the $1,445 monthly payment might not cover all of his monthly drug expenses, but that he thought he could obtain the drugs more inexpensively than he had in the past and that he wanted to receive the lump sum payment from USF & G. Thus, there was not "clear and convincing" evidence that USF & G knowingly made a false representation to deceive Jenkins into agreeing to the settlement of his claim relating to prescription drug expenses. See Upchurch, 610 So. 2d at 1165.
[5] Unlike claims alleging "fraud, undue influence, or coercion," a claim alleging outrageous conduct is not subject to the six-month limitations provision of Ala.Code 1975, § 25-5-56. See Hawkins v. Jim Walter Resources, Inc., 600 So. 2d 1052, 1054 (Ala.Civ.App.1992). Instead, a claim alleging the tort of outrage is subject to a two-year limitations provision. Ala.Code 1975, § 6-2-38(l); Archie v. Enterprise Hosp. & Nursing Home, 508 So. 2d 693, 695 (Ala.1987).
[6] After Jenkins asked for a settlement, USF & G agreed to settle, based on his prescription drug expenses. Both parties recognized that Jenkins's other medical bills would be covered by a government health benefit plan. This left approximately $1,600 per month in prescription drug expenses. USF & G paid Jenkins $50,000 in a lump sum plus an annuity that would pay $1,445 per month for the prescription drug expenses. | June 20, 1997 |
150d5ed0-18da-427a-b607-811d74c03bc5 | Life Ins. Co. of Georgia v. Johnson | 701 So. 2d 524 | 1940357 | Alabama | Alabama Supreme Court | 701 So. 2d 524 (1997)
LIFE INSURANCE COMPANY OF GEORGIA
v.
Daisey L. JOHNSON.
1940357.
Supreme Court of Alabama.
August 15, 1997.
*525 Theodore B. Olson, Theodore J. Boutrous, Jr., and Jerry S. Fowler, Jr., of Gibson, Dunn & Crutcher, L.L.P., Washington, D.C.; and Davis Carr and James W. Lampkin II of Carr, Alford, Clausen & McDonald, L.L.C., Mobile, for appellant.
Sidney W. Jackson III and Robert J. Hedge of Jackson, Taylor & Martino, P.C., Mobile; and Wyman O. Gilmore, Jr., of Gilmore & Gilmore, Grove Hill, for appellee.
SHORES, Justice.
Our first opinion in this case was issued on November 17, 1995. On application for rehearing, this Court withdrew that opinion and issued a new opinion, dated April 26, 1996. That opinion is published at 684 So. 2d 685. On certiorari review, the Supreme Court of the United States vacated this Court's judgment and remanded this case for us to determine whether the punitive damages awarded in this case are reasonable under the guidelines established by the Supreme Court in BMW of North America, Inc. v. Gore, 517 U.S. 559,116 S. Ct. 1589,134 L. Ed. 2d 809 (1996). See Life Ins. Co. of *526 Georgia v. Johnson, ___ U.S. ___, 117 S. Ct. 288, 136 L. Ed. 2d 207 (1996)(memorandum).
In our April 26, 1996, opinion, we summarized the facts as follows:
684 So. 2d at 687-88.
Ms. Johnson sued Life Insurance Company of Georgia ("Life of Georgia"), alleging that it had engaged in intentional and reckless fraud and fraudulent suppression by selling her a Medicare supplement insurance policy that was worthless to her because she was eligible for Medicaid. The jury returned a verdict in favor of Ms. Johnson, assessing compensatory damages at $250,000 and punitive damages at $15 million. Life of Georgia moved for a new trial or for a remittitur of damages. The trial judge held a hearing pursuant to Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and § 6-11-23(b), Ala.Code 1975.[1] Following the hearing, the trial judge, pursuant to Ala.Code 1975, § 6-11-21, ordered a remittitur of the punitive damages award to $12.5 million, and this remittitur was accepted by the plaintiff. This Court affirmed, conditioned upon the plaintiff's filing in this Court a remittitur of $7.5 million, resulting in an award of $5 million in punitive damages. 684 So. 2d at 702. On remand from the United States Supreme Court, we affirm the judgment of the trial court, conditioned upon the plaintiff's filing in this Court a $9.5 million remittitur of punitive damages, reducing the punitive damages award to $3 million.
After we issued our April 26, 1996, opinion in this case, the United States Supreme Court granted certiorari review in this case, *527 along with several other cases involving jury verdicts awarding punitive damages. In its BMW opinion, the Supreme Court addressed the constitutional challenge to such verdicts and announced a decision requiring states to judicially review jury verdicts that award punitive damages, to determine whether such verdicts violate the tortfeasor's rights under the Due Process Clause of the United States Constitution. The Supreme Court emphasized that this postverdict judicial review must be meaningful, with special emphasis being given to three "guideposts": (1) the degree of reprehensibility of the defendant's conduct, (2) the ratio of punitive damages to the amount of actual or potential harm suffered by the plaintiff, and (3) a comparison of the amount of the jury's verdict with civil or criminal penalties (if any) that could be imposed under the law for comparable misconduct. BMW, 517 U.S. at ___, 116 S. Ct. at 1598-1603.[2] This Court, on the Supreme Court's remand of BMW, discussed these guideposts in BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) ("BMW II").
It is ironic, or at least curious, that the United States Supreme Court has selected mostly Alabama cases to examine for constitutional deficiencies in jury verdicts, because since 1915, long before it was thought to be mandated by the Federal constitution, Alabama has required judicial review of jury verdicts for excessiveness.[3] In reviewing the cases remanded to us for reconsideration in light of the Supreme Court's BMW opinion, we have done our best to give effect to every requirement we can read into the BMW opinion and to the requirements of Alabama law for post-verdict review as set forth in Hammond, Green Oil, and § 6-11-23(b), Ala. Code 1975.[4]
In discussing the first guidepost, the United States Supreme Court stated:
BMW, 517 U.S. at ___, 116 S. Ct. at 1599. (Citations and footnotes omitted.) Alabama courts consider this "guidepost" in the excessiveness review mandated in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989). This "guidepost" was enumerated as the second factor in the Green Oil analysis, but the factors set out there were not listed in any particular order of importance, insofar as the weight to be given them was concerned.
The trial judge wrote the following in the Hammond order:
Our independent review of the evidence indicates that it supports the trial court's characterization of the evidence. Robert M. Hayes, vice president for marketing, testified that in 1986 Life of Georgia began marketing a Medicare supplement policy and that it was not of major concern to the company that a Medicare supplement policy might be sold to customers who were on Medicaid. Hayes testified that question 12 on the application asks whether the person is covered under a state Medicaid program and that it was the responsibility of the Life of Georgia manager to give the agent materials to study in order to know how to handle a particular product. Hayes testified that, so far as he knew, Life of Georgia had undertaken no study to find out if any of the Medicare supplement policyholders were, because of Medicaid coverage, not qualified; nor had Life of Georgia reimbursed any policyholders for premiums.
Eric Peek, a former Life of Georgia agent, testified that he was told by his boss, Jack Neidermayer, not to keep the agents out of the field more than three days for training, but to get them out there and produce business. He described the "debit" business as going out to the house to collect the monthly premium from the policyholder. Peek testified that the company training was based more on the psychological aspects of persuasion than anything else. He further testified that persons aged 65 to 85 were the target group for the sale of Medicare policies. He stated that the three reasons people will buy insurance are love, greed, or fear, and that fear was the main motivation of those persons over age 65. Peek stated that while out in the field he encountered a woman who had gotten Medicaid coverage after buying a Life of Georgia Medicare supplement policy. He said he asked the Life of Georgia manager, Jack Neidermayer, what to do in that situation and that he was told to tell the woman to keep the insurance because she could come off of Medicaid and, if she did, would need the Medicare supplement. Peek testified that agents were pressured to produce the quotas required by the company or else be gone. Peek testified that on one occasion he was with the agent who was collecting premiums from Daisey Johnson. He said that on that occasion Ms. Johnson told them she could no longer afford the coverage, because, she said, the premiums were too high. Peek said he showed her an article from a Mobile *529 newspaper that told of a couple who had lost their home to a medical center because of a judgment, and that Ms. Johnson then paid the premium. Peek testified that while he was employed with Life of Georgia he suggested to the regional vice president, Jack Neidermayer, that the company should find the people who were in income brackets for Medicaid and refund their premiums. Neidermayer responded by saying that they needed to find people that would buy insurance. Peek testified that Life of Georgia never undertook any action to correct the problem of selling the Medicare supplement policy to people who were not qualified.
Another former Life of Georgia agent, James Russell Clark, testified that his training could be summed up in three words: "Get the money." He described his only training for the job as picking up information by going with other agents on sales interviews and in servicing the existing business.
Life of Georgia's corporate officers testified during the plaintiff's presentation of her case that Life of Georgia had done nothing to try to prevent the sale of Medicare supplement policies to unqualified persons even though in 1992 Life of Georgia had been faced with trial in Mobile County and had experienced an adverse verdict of $1 million. See Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994). The company continued its history of noncompliance, giving rise to the conclusion that even a million dollar sanction against the company was not sufficient to deter its misconduct.
In discussing the degree-of-reprehensibility guidepost, the United States Supreme Court stated that, just as nonviolent crimes are less serious than violent crimes, trickery and deceit are more reprehensible than negligence. BMW, 517 U.S. at ___, 116 S. Ct. at 1599. The Court went on to say that repeated misconduct is more reprehensible than an individual instance of malfeasance. Id., 517 U.S. at ___, 116 S. Ct. at 1600.
Applying the first guidepost, the reprehensibility of the defendant's conduct, we conclude that the evidence was sufficient to permit the jury to conclude that Life of Georgia's egregiously improper conduct was sufficiently reprehensible to give rise to tort liability and was sufficient to establish the high degree of culpability that warrants a substantial punitive damages award. Life of Georgia was aware that its actions or omissions were causing harm, but it did not change its policy. It consciously disregarded the rights of old, indigent, and uneducated citizens of Alabama.
As to the second guidepost, the United States Supreme Court noted that the "most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff," and it noted "[t]he principle that exemplary damages must bear a `reasonable relationship' to compensatory damages." BMW, 517 U.S. at ___, 116 S. Ct. at 1601. The Supreme Court rejected the notion that a purely mathematical formula could mark the constitutional line:
517 U.S. at___ ___, 116 S. Ct. at 1602-03. (Citations and emphasis omitted.)
In considering BMW on remand, this Court rejected the "easy answer of adopting one ratio that would apply to all." This Court stated that "[t]o do so would frustrate the purpose of punitive damages, which is to punish and deter a defendant's misconduct." BMW II, supra, 701 So. 2d at 513.
*530 It is instructive to note that within a short time after it released its BMW decision, the United States Supreme Court denied certiorari review of several cases that were before it on excessiveness claims:
See Bruce J. McKee, The Implications of BMW v. Gore for Future Punitive Damages Litigation: Observations from a Participant, 48 Ala. Law Rev. 175, 195-97 (Fall 1996) (discussing those five cases). The United States Supreme Court's disposition of those cases leads us to conclude that the Court recognizes that varying ratios might be sustainable, depending upon all of the factors, with special emphasis on the guidelines.
In Union Security Life Insurance Co. v. Crocker, [Ms. 1931672, August 15, 1997] ___ So.2d ___ (Ala.1997), also decided today, this Court affirmed a punitive damages award, conditioned upon the plaintiff's filing a remittitur reducing the award from $2 million to $1 million. This Court found in that case that while the defendant Union Security's misconduct was highly reprehensible, the misconduct was an aberration for Union Security. The conduct of Life of Georgia in this case was far more reprehensible than that of Union Security. The financial impact Life of Georgia's conduct had on Daisey Johnson greatly exceeded the financial impact Union Security's conduct had on the Crockers. Although it is not stated in the Union Security case, common sense suggests that the Crockers' payments on the premium of $1,659.61 for the credit life policy sold to them did not amount to one third of their income. If it had, the bank would not have lent them the mortgage money in the first place.
Unlike Dr. Gore and other BMW purchasers, who the United States Supreme Court concluded were not threatened with any additional potential harm by BMW's nondisclosure policy, and unlike the Crockers, who experienced an "isolated occurrence" in Union Security, the plaintiff here proved that there was a sizable group of Alabama citizens who were put at risk by the defendant's wrongful conduct. She proved that over 116,000 Alabamians have both Medicare and *531 Medicaid; given the Medicare and Medicaid eligibility standards, we can conclude that these Alabamians are both old and poor.
Applying the Supreme Court's second guidepost, we conclude that following the remittitur of punitive damages to $3 million, as we order today, the ratio of exemplary damages to the compensatory damages of $250,000 will bear a reasonable relationship, given the facts in this case.
The third guidepost stated by the United States Supreme Court in BMW is "[c]omparing the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." 517 U.S. at ___, 116 S. Ct. at 1603. The Supreme Court stated that a reviewing court engaged in determining whether a punitive damages award is excessive should "`accord "substantial deference" to legislative judgments concerning the appropriate sanctions for the conduct at issue.'" Id., 517 U.S. at ___, 116 S. Ct. at 1603, quoting Browning-Ferris Industries of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301, 109 S. Ct. 2909, 2934, 106 L. Ed. 2d 219 (1989) (O'Connor, J., concurring in part and dissenting in part).
In our April 26, 1996, opinion in this case, we took judicial notice of the fact that the Alabama Insurance Code does not provide strong sanctions for insurance fraud:
684 So. 2d at 693. A willful violation of the Alabama Insurance Code is punishable as a misdemeanor, by a fine of not more than $1,000 or by imprisonment in the county jail, or by a sentence to hard labor for the county for a period not to exceed one year or by both such a fine and imprisonment or hard labor, in the discretion of the court. Ala. Code 1975, §§ 13A-5-11, 13A-5-12(a) (part of the Criminal Code); and §§ 27-1-12, 27-12-17, and 27-12-23 (part of the Alabama Insurance Code). See Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 23, 111 S. Ct. 1032, 1046, 113 L. Ed. 2d 1 (1991). The Alabama Criminal Code provides that theft by deception of more than $1,000 of another's funds is a Class B felony, punishable by imprisonment for 2 to 20 years. § 13A-8-3; § 13A-5-6(a)(2). As this Court noted on remand in BMW II, supra, "under the Alabama Deceptive Trade Practices Act, Ala.Code 1975, § 8-19-5, the maximum sanction for committing a fraudulent act against an Alabama consumer is ... $2,000." 701 So. 2d at 514. This Court concluded: "Because the legislature has set the statutory penalty for deceitful conduct at such a low level, there is little basis for comparing it with any meaningful punitive damages award, particularly where the defendant is wealthy and the profit gained from the fraudulent act is substantial." 701 So. 2d at 514.
Applying the third guidepost, we find that in this case, as in BMW II and in Union Security, there is no basis for comparing the statutory penalty for deceitful conduct with any meaningful punitive damages award.
In its April 26, 1996, opinion reviewing the jury verdict in this case, this Court set forth procedures for bifurcating a trial in which a jury awards punitive damages, adopting the procedures recommended by Justice Houston in his special concurrence in Charter Hospital of Mobile, Inc. v. Weinberg, 558 So. 2d 909 (Ala.1990). See 684 So. 2d at 696-97. Also in our April 26, 1996, opinion, 684 So. 2d at 697-99, we held that, to prevent undeserved windfalls to successful plaintiffs, where a jury awards punitive damages a part of the award must be paid to the state general fund. We now hold that the judicial review required by the Supreme Court of the United States in BMW v. Gore, coupled with the procedure already established by this court in Hammond and Green Oil, are sufficient safeguards to assure that no tortfeasor found by a jury to merit punishment *532 by an award of punitive damages is denied due process. We also hold that bifurcation of trials is not necessary to assure that tortfeasors receive due process. We also conclude that it is not necessary to share punitive awards with the state treasury in order to prevent windfalls to those who pursue claims against tortfeasors. Therefore, that portion of our April 26, 1996, opinion establishing a bifurcation procedure, see 684 So. 2d at 696, is overruled, and that portion of the April 26, 1996, opinion requiring an allocation of punitive damages, see 684 So. 2d at 697, is also overruled. Trials of cases in which punitive damages are sought and awarded will continue to be conducted in one phase, in which the jury will determine the question of liability and, upon finding liability, will assess punitive damages. The admissibility of evidence in such trials will be determined by the same evidentiary principles that applied before we issued our April 26, 1996, opinion in this case.
Where jury verdicts are challenged as excessive, the trial courts will continue to conduct hearings pursuant to Hammond, Green Oil, BMW, and § 6-11-23(b). A trial court conducting such a hearing will then apply the Hammond, Green Oil, and BMW factors, as well as the considerations stated in § 6-11-23(b), to review the damages award and determine whether the evidence warrants a remittitur of the jury's verdict. If a punitive damages award is appealed, the appellate court will conduct its own review of the punitive damages award, in accordance with Hammond, Green Oil, and BMW.
On remand, we have thoroughly reviewed the evidence and the law in this case, in light of the United States Supreme Court's holding in BMW and this Court's holding on remand in BMW II, supra, as well as the holdings in previous cases of both this Court and the United States Supreme Court. In our April 26, 1996, opinion reviewing the jury verdict in this case, we outlined the Hammond-Green Oil factors and concluded that an award of $5 million in punitive damages was not excessive for punishment and deterrence specific to Life of Georgia, considering all of the facts of the case:
684 So. 2d at 700-01. (Footnote omitted.)
We now reconsider specifically each of the Hammond-Green Oil factors, as set forth above. First: Whether there is a reasonable relationship between the punitive damages award and the harm likely to result from the defendant's conduct, as well as the harm that actually has occurred. Justice Breyer, in his concurring opinion in BMW v. Gore, categorized "tricking the elderly out of their life savings" as among the "most serious kinds of misrepresentations." 517 U.S. at ___, 116 S. Ct. at 1605-06. Certainly, that serious kind of misrepresentation occurred in this case to Daisey Johnson, who was defrauded out of one-third of her fixed monthly income.
Second: The degree of reprehensibility of the defendant's conduct, including the duration of that conduct, the defendant's awareness, any concealment, and the existence and frequency of similar past conduct. The record establishes that Life of Georgia's corporate officers were aware that some of its salespeople were acting wrongfully, but did *533 nothing to prevent it and did not act to remedy the situation. The trial judge stated in his Hammond order:
As previously stated, theft by deception of more than $1,000 is a Class B felony that is punishable under the Criminal Code by imprisonment for 2 to 20 years. Ala.Code 1975, § 13A-8-3. The trial judge found in his Hammond order that Life of Georgia's conduct was reprehensible:
Third: The profitability to the defendant of the wrongful conduct and the desirability of removing that profit and of having the defendant also sustain a loss. While the actual profitability of the sale of these policies to Life of Georgia is not known, we do know that Life of Georgia had no risk under these fraudulently sold policies.
Fourth: The financial position of the defendant. The trial judge stated in his Hammond order:
During the Hammond hearing, Life of Georgia's president, James C. Brooks, Jr., was questioned on cross-examination: "If you are required to pay the $15 million, it would not put Life of Georgia out of business; will it?" Mr. Brooks replied, "That payment alone by itself would not put Life of Georgia out of business."
Fifth: All the costs of litigation. In reference to the costs of litigation, the trial judge stated in his Hammond order:
Sixth: The imposition of any criminal sanctions on the defendant for its conduct must be taken in mitigation. No criminal sanctions have been imposed upon Life of Georgia.[5]
*534 Seventh: The existence of other civil awards against the defendant for the same conduct, these also to be taken in mitigation. Life of Georgia suffered an adverse verdict of $1,000,000 in Foster v. Life of Georgia, supra. We must view this fact as militating against the punitive damages award.
We have reexamined the record in this case and we have reviewed the verdict for excessiveness, both under our established standards and in light of the additional factors set out by the Supreme Court in BMW. We have also reexamined the evidence to determine whether Alabama's interest in protecting its citizens from the kind of fraud practiced by Life of Georgia and in punishing tortfeasors and deterring others can be achieved by a lesser award. On reexamination, we conclude that an award of $3 million in punitive damages will advance Alabama's policy of punishing and deterring the kind of conduct of which the jury has found Life of Georgia guilty.
After careful and thoughtful consideration, we conclude that the portion of the trial court's judgment awarding compensatory damages in the amount of $250,000 is due to be affirmed. However, we conclude that the award of punitive damages should be reduced to $3 million. The judgment is affirmed, on the condition that the plaintiff, within 28 days of the date of this opinion, file in this Court a remittitur reducing the punitive damages to $3 million. If the plaintiff does not file such a remittitur, then the judgment shall be reversed and the defendant granted a new trial. Also, as indicated earlier in this opinion, our April 26, 1996, opinion is overruled to the extent it established a bifurcation procedure and required an allocation of punitive damages.
AFFIRMED CONDITIONALLY.[*]
ALMON, KENNEDY, and COOK, JJ., concur.
BUTTS, J., concurs specially.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., concur in part and dissent in part.
BUTTS, Justice (concurring specially).
Although I did so with several caveats, I originally concurred with the majority's establishment of a bifurcated trial where a plaintiff seeks punitive damages, because I believe that such a procedural change is within this Court's authority. However, based upon the judicial review of punitive damages awards required by BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), I agree with the majority that the bifurcation process is no longer necessary to protect the tortfeasor's due process rights. I originally dissented from the majority's holding requiring apportionment of a punitive damages award between the plaintiff and the State, because I did not believe that it was within this Court's authority to require that apportionment. For that reason, I now concur with the majority's holding overruling the apportionment requirement.
As to the issue of the reasonableness of the punitive damages award, I write to emphasize the well-established principle that "exemplary damages imposed on a defendant should reflect `the enormity of his offense,'" BMW, 517 U.S. 559, ___, 116 S. Ct. 1589, 1599, 134 L. Ed. 2d 809 (1996), quoting Day v. Woodworth, 54 U.S. (13 How.) 363, 371, 14 L. Ed. 181 (1852). The enormity of Life of Georgia's offense against Daisey Johnson and other elderly and financially vulnerable citizens in this state is clearly revealed in this case. Indeed, virtually every aggravating factor associated with particularly reprehensible conduct is presented here. The evidence reveals that Life of Georgia marketed its Medicare policies through a pattern of *535 trickery and deceit, carried out with affirmative acts of misconduct against those least able to defend themselves. Life of Georgia's agent intentionally exploited Mrs. Johnson's age, poverty, and lack of education, in order to sell her a worthless policy that for three years cost her almost a third of her monthly fixed income. Moreover, it is obvious that Life of Georgia regularly trained its agents to "get the money" from elderly insureds by playing upon their fears and emotions, while deliberately failing to teach its agents even the rudiments of the insurance product they were driven to sell. There is evidence that, as of the date of the verdict in this case, Life of Georgia had done nothing to correct its misconduct, and that it was undeterred by an adverse verdict returned in the Mobile Circuit Court, based upon similar misconduct. See Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994). Life of Georgia is a repeat offender, and I believe that, as the United States Supreme Court suggests, "strong medicine is required to cure the defendant's disrespect for the law." BMW, 517 U.S. at ___, 116 S. Ct. at 1599. I agree that a punitive damages award of $3 million is the proper dose.
HOUSTON, Justice (concurring in part and dissenting in part).
I concur with the reasoning of Justice See's dissent; however, based upon the reprehensibility of the defendant's conduct directed against a vulnerable plaintiff, which I do not find to be mitigated by any of the factors set forth in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), coupled with a proven pattern and practice of such conduct, I would hold that the defendant's conduct justifies a punitive award greater than Justice See would uphold. I would hold that the defendant's conduct justifies a punitive award of up to eight times the compensatory damages, or $2 million. Thus, I dissent from the award of $3 million.
I concur with Justice Shores in abolishing the proposed rule requiring bifurcated trials in punitive damages cases and in abolishing the rule that would divide certain punitive damages awards with the State. The United States Supreme Court, in BMW of North America, Inc. v. Gore, 517 U.S. 559,116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), instructed this Court as to what is necessary to "fix" any due process problems involving punitive damages. As long as this Court adheres to the BMW principled approach to punitive damages, I do not believe that a bifurcated trial is necessary to assure that a defendant receives the process he, she, or it is due. (I voted for the bifurcation procedure initially, believing, as did Justice O'Connor,[6] that this would be a way to assure that defendants received procedural due process.)
I also believe that the principled approach to the question of excessive punitive damages, required by the United States Supreme Court in BMW, will keep plaintiffs from receiving "windfalls" in punitive damages, and, therefore, that there is no longer any reason for diverting some of the punitive damages to the State.
SEE, Justice (concurring in part and dissenting in part).
I concur with the abandonment of the judicially created mechanisms of (1) the bifurcation of punitive-damages trials between liability and damages phases, and (2) the payment of a portion of punitive damages awards to the State of Alabama. I dissent, however, from the majority's pliant application of the federal due process standard for constraining awards of punitive damages and its failure to adopt a traditional state law reasonableness standard for constraining such awards.
An indispensable characteristic of a sound legal system is the production of predictable results, which guards against the arbitrary use of governmental power[7] and allows the *536 bench, the bar, and, most importantly, the people to order their affairs.[8] This Court's punitive damages jurisprudence has failed to produce predictable results.[9]
Justice Breyer observed in his concurrence in BMW of North America, Inc. v. Gore, 517 U.S. 559, ___, 116 S. Ct. 1589, 1609, 134 L. Ed. 2d 809 (1996) ("BMW"), that this Court's pliant application of the standards set forth in Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), for constraining the amount of punitive damages awards, "violate[d] the basic guarantee of nonarbitrary governmental behavior that the Due Process Clause provides." While facially the Green Oil standards provided constraints on arbitrary punitive damages awards, see Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991), as interpreted by this Court in BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala. 1994) ("BMW I"), they in fact did not. Consequently, the Supreme Court of the United States, though not injecting itself into the determination of what would be the proper state law reasonableness standard, did establish a three-factor review for courts to use in determining whether punitive damages awards are so large that they clearly exceed the "outer limit" of federal due process. BMW, 517 U.S. at ___ ___, 116 S. Ct. at 1599-1604 (determining whether punitive damages awards are excessive under the Due Process Clause by assessing the reprehensibility of the defendant's conduct, the ratio of punitive damages to compensatory damages, and sanctions for comparable misconduct).
This constitutional outer limit necessarily offers only the broadest suggestion of what is impermissible. BMW, 517 U.S. at ___, 116 S. Ct. at 1602. It is incumbent on this Court to provide Alabama trial courts, and ultimately the public, with the guidance that will produce fair, consistent, and predictable results, within the broad range of constitutional acceptability. The majority opinion fails to provide this guidance.[10]
*537 The majority recites the three due process guideposts and the Green Oil factors and restates the facts set forth in this Court's original opinion. See Life Ins. Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996) ("Johnson I"). Critically missing is the analytical connection to the $3 million punitive award. Until this Court provides a guiding rationale for trial courts and the bar, future punitive awards in Alabama may sometimes be lower, but will remain arbitrary.[11]
To provide a more predictable and ordered approach for the review of punitive damages awards, I would apply the more restrictive state law reasonableness analysis set forth in Justice Houston's special concurrence in BMW of North America, Inc. v. Gore, 701 So. 2d 507 (Ala.1997) ("BMW II"). Accordingly, I adopt the following language from that concurrence:
"509 U.S. at 458, n. 24, 113 S. Ct. at 2720, n. 24 (emphasis added). Thus, application of the stricter state law reasonableness standard has traditionally kept awards of punitive damages from exceeding the more liberal `outer limit' imposed by the federal excessiveness standard.
"Blunt v. Little, 3 F. Cas. 760, 761-62 (C.C.Mass.1822) (Story, J., sitting as Circuit Justice).
10 "See also Jones v. Sparrow, 5 T.R. 257, 101 Eng. Rep. 144 (K.B.1793) (new trial granted for excessive damages); Hewlett v. Cruchley, 5 Taunt. 277, 281, 128 Eng. Rep. 696, 698 (C.P. 1813) (`[I]t is now well acknowledged in all the Courts of Westminster-hall, that whether in actions for criminal conversation, malicious prosecutions, words, or any other matter, if the damages are clearly too large, the Courts will send the inquiry to another jury.') (emphasis in original).
11 "In his opinion in [Gore], 517 U.S. at ___, 116 S. Ct. at 1606, Justice Breyer, speaking for three members of the five-member majority, criticized this Court's application of the Green Oil factors.
12 "I note that the three due process guideposts (i.e., reprehensibility of the wrongful conduct, ratio of punitive damages to compensatory damages, and comparable civil and criminal penalties) are similar to the three protective Green Oil factors (i.e., reprehensibility of the wrongful conduct, reasonable relationship of the size of the punitive award to the actual and probable harm, and mitigation for actual civil and criminal penalties imposed). This is because the guideposts and the protective Green Oil factors protect similar interests. The three guideposts protect the defendant's due process right to receive fair notice of the severity of potential penalties against him, 517 U.S. at ___, 116 S. Ct. at 1598, and the three Green Oil factors protect the defendant from unreasonable punitive awards imposed by an impassioned or prejudiced jury, Green Oil, 539 So. 2d at 222.
13 "The principle that punitive damages should bear a reasonable relationship to compensatory damages has roots going back to the early English statutes that provided for punitive damages equal to a multiple of actual damages. See David G. Owen, A Punitive Damages Overview: Functions, Problems and Reform, 39 Vill. L.Rev. 363, 368 & n. 23 (1994). Alabama courts have consistently upheld the reasonable relationship principle. See Mobile & Montgomery R.R. v. Ashcraft, 48 Ala. 15, 33 (1872) (`punitive damages ought ... to bear proportion to the actual damages sustained`). (Emphasis added.) Such authorities plainly suggest that a reasonable ratio between punitive damages and actual damages is a hallmark of common law reasonableness.
14 "Ala. Code 1975, § 8-19-10(a)(2) (providing for treble damages for certain violations of the Deceptive Trade Practices Act); § 37-2-18 (providing treble damages for certain harm caused by common carriers); § 10-2B-15.02 (levying a penalty `equal to treble the amount of all fees and taxes' on foreign corporations that fail to obtain a certificate of authority); 18 U.S.C. § 1964(c) (providing for treble damages for civil violations of the Racketeer Influenced and Corrupt Organizations Act); 15 U.S.C. § 15 (providing for treble damages for violations of the Sherman Act's prohibition on monopolistic practices).
"....
15 "I would require further indicia of egregious conduct to justify a sizable punitive award when physical safety or health is not endangered. In Green Oil, 539 So. 2d at 223, this Court stated:
"`The degree of reprehensibility of the defendant's conduct should be considered. The duration of this conduct, the degree of the defendant's awareness of any hazard which his conduct has caused or is likely to cause, and any concealment or `cover-up' of that hazard, and the existence and frequency of similar past conduct should all be relevant in determining this degree of reprehensibility.'
16 "In Green Oil, 539 So. 2d at 223-24, this Court stated:
"`If criminal sanctions have been imposed on the defendant for his conduct, this should be taken into account in mitigation of the punitive damages award.
"`....
"`... If there have been other civil actions against the same defendant, based on the same conduct, this should be taken into account in mitigation of the punitive damages award.'
"(Quoting Aetna [Life Ins. Co. v. Lavoie], 505 So.2d [1050,] 1062 [(Ala.1987)].)"
I would apply the strict state law reasonableness standard to this case as follows: First, because the trial judge placed sufficient facts and analysis in the record to permit appellate review of the reasonableness of the punitive damages award, remand is not necessary.[12] Second, I would apply an exacting review to each of the Green Oil factors, including the reinvigorated protective factors. In this case, the defendant Life of Georgia sold Daisey Johnson, a poor and elderly woman, a Medicare supplement policy that, because she was already eligible for Medicaid, provided her no net benefits. Johnson I, 684 So. 2d at 687. Johnson introduced evidence that tended to show that Life Insurance Company of Georgia ("Life of *541 Georgia") knew she was on Medicaid but purposely misrepresented that she needed the Medicare supplement policy to pay her hospital bills if she became ill. Id. at 688. Johnson purchased the supplement policy and made premium payments for almost three years. Id. After learning that the policy was worthless to her, she brought fraud and suppression claims against Life of Georgia. Id. at 687.
1. Ratio of Punitive Damages to Compensatory DamagesIn this case, the jury awarded $15,000,000 in punitive damages and $250,000 in compensatory damages. Id. at 687. This far exceeds the three-to-one benchmark. Accordingly, the record must demonstrate clear and specific justification.
2. ReprehensibilityAlthough Life of Georgia's actions did not endanger the physical health or safety of Johnson or others, its conduct reflects infliction of economic and emotional harm on a vulnerable victim, resulting from an affirmative misrepresentation, coupled with repeated conduct after a prior punishment. Id. at 688-90. See Johnson I, 684 So. 2d at 689 (noting that after suffering an adverse verdict in 1992 for selling Medicare supplement policies to unqualified persons, Life of Georgia continued its fraudulent practices through June 1994); Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994) (approving a $1,000,000 punitive award for the same course of conduct). Daisey Johnson was an 87-year-old uneducated, black woman without a husband. She spent almost a third of her fixed income over a three-year period to pay for a worthless policy. Johnson I, 684 So. 2d at 688-89. The trial court found that Life of Georgia marketed such worthless policies to other similarly vulnerable victims. Id. at 689. Thus, a ratio of greater than 3:1 punitive damages to actual harm is appropriate. I consider as compelling, among other facts, the vulnerability of the poor and elderly victims, the major financial concern that health insurance poses for them, and Life of Georgia's continued sale of the worthless policies to these vulnerable victims even after receiving an adverse verdict in another case for similar wrongdoing. Id. at 689-90. In light of the particular egregious facts of this case, I would hold that Life of Georgia's conduct was reprehensible enough to justify a punitive award of up to five times the compensatory damages, or $1,250,000.
3. Similar Civil and Criminal SanctionsAla. Code 1975, § 27-1-12, imposes a $1,000 fine, up to one year of imprisonment, or both, for each willful violation of the Alabama Insurance Code. Because the record does not reflect a multitude of violations by Life of Georgia, the possible criminal fine would probably be well below $1,250,000. Therefore, this factor supports the reduction of the punitive award below a five-to-one ratio.[13]
4. Profitability of ConductJohnson paid a total of $3,132 in premiums to Life of Georgia with respect to the Medicare supplement policy. Johnson I, 684 So. 2d at 688. A punitive damages award of $1,000,000 to $1,250,000 would more than remove the profit earned by Life of Georgia on the $3,132 it received from Johnson. See Green Oil, 539 So. 2d at 223.
5. Financial Position of the Defendant Life of Georgia's financial reports indicate that in 1993 it earned over $173 million in investment income. Johnson I, 684 So. 2d at 691. With this level of investment income, a punitive award of $1,250,000 would sufficiently punish the company without financially devastating it. See Green Oil, 539 So. 2d at 223.
6. Costs of LitigationThe plaintiff's attorneys tried the case to a jury and did a thorough job of handling the direct appeal and application for rehearing in this Court. *542 Johnson I, 684 So. 2d 685 passim. There was no evidence of abuse of the legal process. Given the particular facts of this case, a punitive damages award of $1,250,000 should be ample.[14] See Green Oil, 539 So. 2d at 223.
I conclude that a punitive damages award of $1,250,000 would be reasonable in this case.[15] I would, therefore, affirm the judgment of the trial court, conditioned on the plaintiff's filing a remittitur of all punitive damages in excess of that amount.
HOOPER, C.J., and MADDOX, J., concur.
[1] Section 6-11-23(b) requires a trial judge to conduct a hearing or to receive additional evidence, or both, concerning an award of punitive damages, upon motion of either party. Admissible evidence includes evidence indicating whether the defendant has been guilty of the same or similar acts in the past, evidence indicating the nature and extent of any effort the defendant made to remedy the wrong, and evidence indicating the opportunity or lack of opportunity the plaintiff gave the defendant to remedy the wrong complained of.
[2] In addition, the United States Supreme Court stated that in order to avoid encroachment on the policy choices of other States, "the economic penalties that a State such as Alabama inflicts on those who transgress its laws, whether the penalties take the form of legislatively authorized fines or judicially imposed punitive damages, must be supported by the State's interest in protecting its own consumers and its own economy." 517 U.S. at ___, 116 S. Ct. at 1597. Life of Georgia now attempts to argue that the closing argument of counsel for the plaintiff was improperly based upon speculation concerning out-of-state conduct. There was no objection to the closing argument made at the time; therefore, there is nothing to review.
[3] Ala. Acts 1915, Act No. 542, now codified at § 12-22-71, Ala.Code 1975 (statute held constitutional in Alabama Power Co. v. Talmadge, 207 Ala. 86, 93 So. 548 (1921)).
[4] The parenthetical expression appearing in the last sentence of subsection (b) has been held unconstitutional. Armstrong v. Roger's Outdoor Sports, Inc., 581 So. 2d 414 (Ala.1991).
[5] We note the obvious, however. Corporations cannot be put in jail, and a corporation acts only through its agents. Alabama's policy of protecting its citizens from fraud would hardly be advanced by prosecuting debit agents for theft. It goes without saying that the only way to punish a corporation is by way of a monetary award.
[*] Note from the reporter of decisions: On September 3, 1997, the Supreme Court issued a "certificate of judgment of affirmance," noting that "the appellee, Daisey L. Johnson, did on August 20, 1997, file in this Court a remittitur reducing the punitive damages to $3,000,000." The certificate stated "IT IS NOW CONSIDERED, ORDERED AND ADJUDGED that the judgment of the circuit court for punitive damages be reduced to $3,000,000 and, as thus reduced, the judgment of the circuit court is hereby affirmed, with interest and costs. IT IS FURTHER ORDERED AND ADJUDGED that the appellant, Life Insurance Company of Georgia, pay the costs of appeal and the costs taxed against the defendant in the court below will stand as taxed."
[6] See Pacific Mutual Life Insurance Co. v. Haslip, 499 U.S. 1, 42, 111 S. Ct. 1032, 1056, 113 L. Ed. 2d 1 (1991) (O'Connor, J., dissenting). I suggested in Charter Hospital of Mobile v. Weinberg, 558 So. 2d 909, 917 (Ala.1990) (Houston, J., concurring specially), that we follow the recommendation of the American College of Trial Lawyers, "Report on Punitive Damages of the Committee on Special Problems in the Administration of Justice" (March 3, 1989), pp. 18-19.
[7] Compare, e.g., 1 William Blackstone, Commentaries *46 (describing the Roman emperor Caligula's unjust practice of writing his laws in small characters and hanging them on high pillars, thereby facilitating arbitrary enforcement) with J.B. Bury, A History of Greece 179 (Modern Lib. ed.1937) (describing the Greek lawgiver Solon's just practice of inscribing his laws on wooden tables and placing them on revolving stands in the Public Hall of Athens, thereby facilitating consistent enforcement).
[8] As Justice Holmes stated:
"People want to know under what circumstances and how far they will run the risk of coming against what is so much stronger than themselves [i.e., public enforcement of judicial decrees], and hence it becomes a business to find out when this danger is to be feared. The object of our study, then, is prediction, the prediction of the incidence of public force through the instrumentality of the courts."
Oliver Wendell Holmes, Jr., The Path of the Law, in Collected Legal Papers 167, 167 (Legal Classics Lib. ed.1982).
[9] A majority of this Court has also rejected the Legislature's attempt to provide predictability. Compare Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala.1993) (holding that a statute limiting punitive awards violated the Alabama Constitution) with BMW of North America, Inc. v. Gore, 517 U.S. 559, ___, 116 S. Ct. 1589, 1608-09, 134 L. Ed. 2d 809 (1996) (Breyer, J., concurring) (citing favorably Texas, Connecticut, Florida, and Georgia statutes that limit punitive damages awards).
[10] Indeed, the majority's application of the Supreme Court's three-factor constraint on punitive damages would permit avoidance of the Supreme Court's limit on punitive damages through the filing of numerous separate actions against a defendant in the place of the filing of a single class action. The majority indicates that a $3 million punitive award is justified to some degree on the basis of the defendant's harm to other insureds. Yet, the majority refuses to tie the punitive award to any particular ratio of punitive to compensatory damages. See generally Bruce J. McKee, The Implications of BMW v. Gore for Future Punitive Damages Litigation: Observations from a Participant, 48 Ala. L.Rev. 175 (Fall 1996) (noting that if punitive damages are tied to a given ratio of compensatory damages, then plaintiffs' lawyers will file class actions to facilitate efficient litigation in light of an aggregate limit on damages); id. at n. 371 (stating that a motion for class action certification in a case similar to BMW I had been filed as of October 12, 1996). Thus, while ostensibly approving the imposition of a $3 million punishment on Life of Georgia, the majority, in light of Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994) (approving $1 million punitive award for the same course of conduct as that punished in this case), has in fact approved at least a $4 million punishment. The majority's application invites still other punitive awards that do not, in and of themselves, violate the "outer limit" of federal due process. With 116,000 potential plaintiffs, Life of Georgia could well be exposed to an aggregate punitive liability of many multiples of the $3 million punitive award approved in this case.
[11] The way the majority applies the constitutional standard introduces into that standard the same defect that ultimately rendered the Green Oil factors ineffective and produced the verdict in BMW. See BMW, 517 U.S. at ___ ___, 116 S. Ct. at 1606-07 (Breyer, J., concurring) ("Alabama courts ... have applied the `factors' intended to constrain punitive damages awards ... in a way that belies that purpose.").
[12] In Hammond, 493 So. 2d at 1379, this Court required "trial courts to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of the damages." I reiterate the necessity for trial courts to examine with specificity each of the Green Oil factors in light of the evidence at trial and to reflect in the record how the final punitive award was determined.
[13] Because the 5:1 ratio I would adopt in this case would serve to limit aggregate punitive damages, a reduction for the $1,000,000 civil sanction in Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994), is not required. Of course, special circumstances could require a further reduction. The majority, however, sets no limit on the overall aggregate award against Life of Georgia. Instead, the majority merely states that the $1,000,000 award in Foster is "to be taken in mitigation," without detailing how the mitigation impacts the aggregate punitive award against Life of Georgia. 701 So. 2d at 534.
[14] In certain cases involving small amounts of actual damages, it may be necessary to give relatively more weight to costs of litigation, in order to ease the burden of plaintiffs with special financial needs. Properly constrained, this principle should not promote unreasonable punitive awards. See BMW, 517 U.S. at ___, 116 S. Ct. at 1607 (Breyer, J., concurring); see also Continental Trend Resources, Inc. v. OXY USA Inc., 101 F.3d 634, 642 (10th Cir.1996), cert. denied, ___ U.S. ___, 117 S. Ct. 1846, 137 L. Ed. 2d 1049 (1997) (stating that considering litigation costs in setting punitive damages awards may tend to prevent a "rich defendant" from forcing or prolonging litigation where the plaintiff cannot bear the costs of the delay).
[15] See generally, e.g., North Carolina Mut. Life Ins. Co. v. Holley, 533 So. 2d 497 (Ala.1987) (requiring remittitur to $500,000 from a $1,000,000 punitive award where insurance company knowingly sold policy to cancer victim who did not qualify for coverage, and, upon her death, refused payment); National States Ins. Co. v. Jones, 393 So. 2d 1361 (Ala.1980) (upholding remittitur to $500,000 from a $3,500,000 punitive award where insurance company fraudulently induced a woman to purchase various health policies and then canceled coverage based on allegedly incorrect application); see also Haslip, 499 U.S. at 2, 7 n. 2, 23, 111 S. Ct. at 1035-36, 1037 n. 2, 1046 (stating that an $840,000 punitive award for fraud in misappropriating premiums paid for health insurance was "close to the line" of constitutional excessiveness); Lee v. Edwards, 101 F.3d 805 (2d Cir.1996) (applying BMW guideposts to require remittitur to $75,000 from a $200,000 punitive award against police officer for malicious prosecution of a drunken driver for assault and resisting arrest).
Alabama trial court data compiled by the Administrative Office of Courts for the 1993, 1994, and 1995 fiscal years (the 1994 data include this case) show: | August 15, 1997 |
629dec6a-74ee-438f-8fff-3c4f3bcbe366 | Blaylock v. Cary | 709 So. 2d 1128 | 1952086 | Alabama | Alabama Supreme Court | 709 So. 2d 1128 (1997)
Grover R. BLAYLOCK, et al.
v.
Charles D. CARY and Katherine E. Cary.
1952086.
Supreme Court of Alabama.
August 29, 1997.
Rehearing Denied January 23, 1998.
*1129 Hobart A. McWhorter, Jr., and Jeffrey P. Lisenby of Bradley, Arant, Rose & White, Birmingham, for appellants.
M. Clay Alspaugh and J. Lee Roberts, Jr., of Hogan, Smith & Alspaugh, Birmingham, for appellees.
SEE, Justice.
This is an appeal from a preliminary injunction enjoining foreclosure of a mortgage on residential real estate. Grover Blaylock and several of his family members (the "Blaylocks")[1] sold a used house to Charles and Katherine Cary. Although the Carys had actual notice that the house had water damage, they purchased it "as is." The Carys executed a note payable to, and a mortgage to, the Blaylocks. The Carys then refused to pay the note; and they filed an action alleging, among other things, a claim of suppression arising from the Blaylocks' failure to disclose the water damage. When the Blaylocks attempted to foreclose on the mortgage, the Carys sought and obtained a preliminary injunction to stay foreclosure pending the resolution of their claims.[2] We *1130 hold that the Carys did not demonstrate a likelihood of success on the merits of their claims; therefore, we dissolve the preliminary injunction and remand the case.
The record shows that in February 1996, the Carys purchased a house from the Blaylocks by executing an "as is" sales contract; paying $30,000 down; signing a note calling for a balloon payment of $330,500 on August 1, 1996; and executing a mortgage on the real estate to secure the note. Before purchasing the property, the Carys inspected the house. In addition, Mr. Cary individually inspected the house on a number of other occasions. The Carys also hired a building inspector to inspect the house, as required by the sales contract.[3] The pertinent portion of the building inspector's report noted that part of the substructure of the house was in an unsatisfactory condition and in need of repair. The report specifically noted "extensive water in the crawlspace is causing wood rot and fungus growth." Despite this report from the building inspector, the Carys purchased the house without further investigation.
A few months after the Carys moved into the house, a neighbor approached Mr. Cary and stated that he had previously inspected the house when he had considered purchasing it. The neighbor stated that the Blaylocks' real estate agent was present when the neighbor discovered water damage.
Two days before the due date for payment of the note securing the mortgage, the Carys sued the Blaylocks. They claimed, among other things, that the Blaylocks had fraudulently suppressed the existence of the water damage. The Carys defaulted on the note. The Blaylocks discovered that the Carys had no intention of paying the note and started foreclosure proceedings. The Carys obtained a preliminary injunction staying the foreclosure. The Blaylocks appealed.
This Court reviews a trial court's order granting a preliminary injunction for abuse of discretion. Alabama Power Co. v. Drummond, 559 So. 2d 158 (Ala.1990). Before entering a preliminary injunction, the trial court must be satisfied: (1) that without the injunction the plaintiff will suffer immediate and irreparable injury; (2) that the plaintiff has no adequate remedy at law; (3) that the plaintiff is likely to succeed on the merits of the case; and (4) that the hardship imposed upon the defendant by the injunction would not unreasonably outweigh the benefit to the plaintiff. Perley v. Tapscan, Inc., 646 So. 2d 585, 587 (Ala.1994) (citing Martin v. First Fed. Sav. & Loan Ass'n, 559 So. 2d 1075 (Ala.1990)).
The Carys failed to demonstrate a likelihood of success on the merits. To succeed on the merits, they would have to prove that the Blaylocks had a duty to disclose the water damage and that the Blaylocks' failure to disclose induced the Carys to purchase the residence. Compass Point Condominium Owners Ass'n v. First Federal Sav. & Loan Ass'n, 641 So. 2d 253, 255 (Ala.1994). Because Alabama adheres to the caveat emptor rule in the sale of used residential property, a seller ordinarily has no duty to disclose to the purchaser any defects in the property. Cato v. Lowder Realty Co., 630 So. 2d 378, 382 (Ala.1993) (citing Boswell v. Coker, 519 So. 2d 493 (Ala.1987)). The sales contract in this case embraced this general rule by providing:
(Emphasis added.) Under the contract, the Blaylocks had no duty to disclose the water damage.
The Carys cite Fennell Realty Co. v. Martin, 529 So. 2d 1003, 1005 (Ala.1988), for the proposition that a duty to disclose arises, despite "as is" language in a sales contract, if the seller knows of a material defect affecting the health or safety of the buyer that is not known to or readily observable by the buyer. In this case, however, the Carys admit that they knew of the water damage defect before they purchased the house.[4] The inspection report specifically stated that the house had suffered water damage. Thus, Blaylocks, the sellers, had no duty to disclose the water damage. See Compass Point, 641 So. 2d at 255-56 (holding that no duty to disclose water damage existed where purchasers obtained property under an "as is" contract).
Moreover, the Carys failed to show that a lack of knowledge of the water damage induced them to purchase the house. See Compass Point, 641 So. 2d at 255 (stating that, to support a claim for damages, the plaintiff must show that a suppression, or fraudulent concealment, induced him to act). On the contrary, the Carys admit that they purchased the residence in spite of their knowledge of the water damage, not because of any lack of such knowledge.[5]
Because the Carys failed to demonstrate a likelihood of success on the underlying merits of their action, we dissolve the preliminary injunction and remand the case.
PRELIMINARY INJUNCTION DISSOLVED; CASE REMANDED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, and KENNEDY, JJ., concur.
COOK, J., dissents.
*1132 COOK, Justice, dissenting.
I respectfully dissent. I do not agree with the majority that the trial court did not have sufficient evidence on which to grant the preliminary injunction.
The buyers hired a building inspector, who reported that the substructure of the home was in poor condition and that water in the crawlspace was causing wood rot and fungus growth. However, the buyers say, they did not know the extent of the water problem at the time of the report and they subsequently purchased the house believing the problem to be minor. It is true that Alabama retains the caveat emptor rule regarding the sale of used residential real estate, except when the buyer makes a direct inquiry into a material defect. However, "[I]f the agent [seller] has knowledge of a material defect or condition [in the used residential property] that affects health or safety and the defect is not known to or readily observable by the buyer, the agent [seller] is under a duty to disclose the defect and is liable for damages caused by nondisclosure." Fennell Realty Co. v. Martin, 529 So. 2d 1003, 1005 (Ala.1988).
Probability of success on the merits exists in this case because there is evidence that the sellers knew the house had sustained water damage in a manner not known to, or not reasonably ascertainable by, the buyers. The buyers allege sufficient evidence of a water condition to present a health and safety issue. There is sufficient evidence to support the trial court's grant of the preliminary injunction; I find no abuse of discretion.
[1] In addition to Grover Blaylock, the "Blaylocks" include Harry Blaylock, Hendon Blaylock DeBray, and Charles Blaylock. They all are siblings who inherited from their mother the real property at issue in this case.
[2] The Carys' complaint also names the following as defendants: (1) Johnson-Rast & Hays and Peggy Oglivie, the Carys' agents; (2) Brigham-Williams and Susan Canedy, the Blaylocks' agents; (3) Building Inspection Services and Wayne Moore, the company and its employee hired by the Carys to inspect the property; and (4) Guaranty Pest Control, Inc., and John Bates, the company and its employee who inspected the property for termites and provided a termite bond and report. This appeal, however, involves only the validity of the preliminary injunction against the Blaylocks' foreclosure.
[3] The sales contract provided:
"9. NECESSITY OF INSPECTION: Purchaser acknowledges and agrees that Alabama law imposes a duty on Purchaser to thoroughly inspect a property, for defects or otherwise, in accordance with the terms of this contract and prior to the sale...."
[4] The narrow "health or safety" exception to the general no-duty-to-disclose rule is also inapplicable to this case because the Carys, failed to make a sufficient showing that the water damage to the house (i.e., wood rot and fungus growth) posed a direct threat to their health or safety. Cf. Fennell, 529 So. 2d at 1004 (holding that a duty to disclose a health hazard arose where the buyers of a house made a sufficient showing that a defect in the furnace serving the house would have, if not remedied, caused the release of carbon monoxide, resulting in the buyers' possible injury or death).
Moreover, the other two narrow exceptions to the general no-duty-to-disclose rule (i.e., fiduciary relationship and specific inquiry) are also inapplicable to this case. See Cato v. Lowder Realty Co., 630 So. 2d 378, 382 (Ala.1993) (stating that the caveat emptor rule applies to the sale of used real estate unless a fiduciary relationship exists between the seller and the buyer or a unless the buyer makes specific inquiry of the seller) (citing Commercial Credit Corp. v. Lisenby, 579 So. 2d 1291 (Ala.1991)). First, the record reflects no specific inquiry by the Carys of the Blaylocks or of the Blaylocks' real estate agent regarding the particular defect at issue the water damage. See Cato, 630 So. 2d at 382. Second, the record reflects no evidence of any relationship, much less a fiduciary relationship, between the Carys and the Blaylocks other than that of arm's-length buyers and sellers who acted through qualified agents. See generally Compass Point Condominium Owners Ass'n v. First Federal Sav. & Loan Ass'n, 641 So. 2d 253, 255 (Ala.1994) (holding that the seller had no noncontractual duty to disclose water damage to arm's-length buyers of residential real estate).
[5] The Carys also assert claims alleging fraud, negligence, and breach of warranty in support of the preliminary injunction. The record does not indicate a probability of success on the merits with respect to any of these claims. The Carys' fraud claim fails because they show no affirmative misrepresentation by the Blaylocks or the Blaylocks' real estate agent. See Ala.Code 1975, § 6-5-101 (conditioning recovery for fraud upon the showing of a misrepresentation by the defendant). The Carys' negligence claim fails, as does their suppression claim, because the Blaylocks had no duty to disclose the water damage. See Lowe's Home Centers, Inc. v. Laxson, 655 So. 2d 943, 945-46 (Ala.1994) (stating that to prove a claim of negligence, a plaintiff must establish, among other things, that the defendant owed the plaintiff a duty). The Carys' breach of warranty claim fails because under Alabama law there is no implied warranty of habitability in the sale of used residential real estate. Compass Point Condominium Owners Ass'n v. First Federal Sav. & Loan Ass'n, 641 So. 2d 253, 255 (Ala.1994). The Carys' warranty claim also fails because the sales contract specifically disclaims warranties by the seller and states that the purchaser takes the property "as is." Id. at 255. | August 29, 1997 |
ae71e788-9c12-4e91-ba23-52655097e88e | Ex Parte State | 700 So. 2d 1369 | 1961067 | Alabama | Alabama Supreme Court | 700 So. 2d 1369 (1997)
Ex parte STATE of Alabama.
(Re STATE of Alabama ex rel. S.L.
v.
S.W.)
1961067.
Supreme Court of Alabama.
July 25, 1997.
J. Coleman Campbell and Lois Brasfield, asst. attys. gen., Department of Human Resources, for petitioner.
Houston L. Brown, Birmingham, for respondent S.W.
Bill Pryor, atty. gen., and Tori L. Adams-Burks, asst. atty. gen., for respondent Judge Ralph A. Ferguson, Jr.
PER CURIAM.
The State of Alabama filed this petition for a writ of mandamus directed to Judge Ralph A. Ferguson, Jr., of the Circuit Court of Jefferson County.
On March 10, 1995, the State, on the relation of S.L., filed a child support petition against S.W. in the Juvenile Court, or Family Court, of Jefferson County. This petition asked the court to order S.W. to pay current child support and also retroactive child support. S.W. answered the petition and counterclaimed for custody of the child. The case was assigned to a referee, and on September 20, 1995, the parties met with the referee to discuss a settlement; however, this meeting took place without the presence of any representative of the Department of Human Resources. The parties reached a settlement, and the referee entered the following order: "On joint motion of the plaintiff and [the] defendant the case is dismissed. The motion to reimburse [the Department of Human Resources] *1370 is denied over objection of the State."
On September 25, the State requested a hearing before Judge Elise D. Barclay, of the District Court of Jefferson County; she granted the request. At that hearing, S.W. filed a motion to enforce the settlement agreement, and the district court granted that motion, without allowing the State to present evidence during the hearing. The State filed a motion for "reconsideration," which the court denied. The State then appealed under Rule 28(B), Ala.R.Juv.P., to the circuit court for a trial de novo.
The appeal was assigned to Judge Ferguson of the Jefferson County Circuit Court. However, on August 23, 1996, he transferred the appeal, pursuant to Rule 28(D), Ala. R.Juv.P., to the Court of Civil Appeals. Because there was no record of the juvenile court proceedings, the circuit court ordered the State to prepare a Rule 10(d), Ala.R.App. P., statement of the evidence. The State then filed with the Court of Civil Appeals a motion to transfer the case back to the circuit court for a trial de novo. The Court of Civil Appeals, without opinion, granted that motion on December 3, 1996, and returned the case to Judge Ferguson. State ex rel. S.L. v. S.W., 696 So. 2d 1098 (Ala.Civ.App. 1996) (table).
However, instead of holding the trial de novo, Judge Ferguson, on December 18, 1996, entered an order transferring the appeal back to the Family Court of Jefferson County:[1]
The State filed a motion to alter, amend, or vacate that order, which the court denied. On March 17, 1997, the State filed with the Court of Civil Appeals a petition for a writ of mandamus and a motion for an immediate stay; that court summarily denied the petition and the motion on March 18, 1997. Ex parte State ex rel. S.L. v. S.W., 696 So. 2d 1098 (Ala.Civ.App.1997) (table). The State renewed in this Court its petition for a writ of mandamus. See Rule 21(e)(1), Ala. R.App. P.
At issue here is whether Judge Ferguson erred in transferring the appeal back to the family court.
The State argues that it is clearly entitled to a trial de novo in the circuit court, under Rule 28, Ala.R.Juv.P. That rule reads:
Rule 28(A)(1) provides for direct appeals to the appropriate appellate court. However, Rule 28(B) provides for situations where an appeal from the order of the juvenile court lies to the circuit court for a trial de novo, rather than to the Court of Civil Appeals or the Court of Criminal Appeals.[2] In this case, the Court of Civil Appeals retransferred this appeal to Judge Ferguson, pursuant to Rule 28(D), for a trial de novo in the circuit court.
Instead of holding a trial de novo, Judge Ferguson transferred the appeal back to the family court, from whence the appeal had come. However, it is axiomatic that a court cannot hear an appeal from a judgment of that same court. Thus, the appeal from the family court to the circuit court for a trial de novo should not have been transferred back to the family court.
Accordingly, we grant the writ of mandamus. Judge Ferguson of the Jefferson Circuit Court is directed to vacate his order transferring the cause to the Family Court of Jefferson County.
WRIT GRANTED.
HOOPER, C.J., and MADDOX, ALMON, SHORES, HOUSTON, KENNEDY, and BUTTS, JJ., concur.
SEE, J., concurs in the result.
[1] The parties here make no issue concerning the jurisdiction of the juvenile court/family court.
[2] Until 1982, all appeals from juvenile court were to the circuit court. Ala.Code 1975, § 12-15-120. However, a 1982 amendment to Rule 20 of the Rules of Juvenile Procedure provided for the recording of testimony in the juvenile court. Rule 28 was amended at the same time to allow appeals directly to an appellate court when an adequate record existed. | July 25, 1997 |
aa142638-7fa3-4854-a563-62915d6d9195 | Ex Parte Smith | 706 So. 2d 704 | 1951127 | Alabama | Alabama Supreme Court | 706 So. 2d 704 (1997)
Ex parte Melvin SMITH, et al.
(In re Melvin SMITH, et al.
v.
ALL STAR MOBILE HOMES, INC., et al.).
1951127.
Supreme Court of Alabama.
August 29, 1997.
Rehearing Denied November 21, 1997.
Fred D. Gray and Stanley F. Gray of Gray, Langford, Sapp, McGowan, Gray & Nathanson, Tuskegee, for petitioners.
Les Hayes III of Melton, Espy, Williams & Hayes, P.C., Montgomery; and Robert Thompson, Tuskegee, for respondents All Star Mobile Homes, Inc., and Gary Spoonemore.
BUTTS, Justice.
Melvin Smith, Louise Pugh, Willie B. Johnson, and Joseph Collins, the plaintiffs in an action pending in the Macon Circuit Court, petition for a writ of mandamus directing the circuit court to vacate its order requiring arbitration of their claims against the defendant All Star Mobile Homes, Inc. We grant the petition.
The facts before us, which are minimal, indicate the following: On July 30, 1993, Joseph Collins; his wife Willie B. Johnson; his stepson Melvin Smith; and his daughter-in-law Louise Pugh traveled to a sales lot operated by All Star Mobile Homes in Columbus, Georgia; there they negotiated with agent Gary Spoonemore to purchase a certain Spring Hill mobile home. They allege that Spoonemore told them they could reserve that particular mobile home with a $300 down payment and that Johnson paid Spoonemore this amount. Spoonemore filled out a purchase agreement for the mobile home. That agreement contained an arbitration clause; however, the plaintiffs did not sign that agreement.
On August 15, 1993, the plaintiffs were told that their credit application for the purchase of the mobile home had been approved and that they were required to pay an additional $7,550 down payment on the mobile home. *705 They paid this amount to All Star on August 16, 1993; however, their credit had not actually been approved at that time.
In September 1993, All Star sold the mobile home that was the subject of the July 30 contract, i.e., the mobile home the plaintiffs had "reserved" with their down payment. All Star did not inform the plaintiffs of this until October 16, 1993, when an All Star agent at the Columbus location informed them that the mobile home had been sold to another customer and that they would have to choose another model. The plaintiffs chose a different model from All Star's sales lot in Phenix City, Alabama. They allege that an All Star agent told them that, as a down payment on this second mobile home, they could apply $5,000 of the $7,850 down payment they had already made on the first mobile home. They say the All Star agent told them that the contract for the purchase of the second mobile home would then be complete and that All Star would refund to them the remaining $2,850 from the down payment they had made on the first mobile home.
The plaintiffs went to All Star's Phenix City lot on October 16, 1993, and executed a new purchase agreement, which contained this statement: "Disputes arising out of this agreement are subject to compulsory and binding arbitration." All Star did not deliver the mobile home to the plaintiffs; rather, it later informed them that their credit application was not, after all, accepted, and it refunded $2,850 of the $7,850 down payment. All Star apparently did not return the remaining $5,000.
On January 24, 1994, the plaintiffs sued All Star, alleging fraud in the inducement, fraudulent suppression, and conversion of the unpaid portion of the down payment they had made on the mobile home. All Star answered the complaint approximately one month later, and the plaintiffs thereafter sought to begin discovery. From March 10, 1994, until November 14, 1994, the parties filed various discovery motions and conducted depositions. On November 14, 1994, All Star moved to stay the proceedings and to compel arbitration of the claims, pursuant to the arbitration agreement contained in the purchase agreement the plaintiffs had signed. The trial court granted this motion.
We first recognize that a petition for the writ of mandamus is the proper means by which to test a trial court's order compelling arbitration or an order staying proceedings pending arbitration. Long v. Industrial Development Board of the Town of Vincent, 619 So. 2d 1387 (Ala.1993). The plaintiffs argue that All Star Homes waived its right to compel arbitration. They correctly state that a party may waive its right to arbitrate a dispute if it substantially invokes the litigation process and thereby prejudices the party opposing arbitration. Companion Life Insurance Co. v. Whitesell Manufacturing, Inc., 670 So. 2d 897 (Ala. 1995). No rigid rule exists for determining what constitutes a waiver of the right to arbitration; this issue must be resolved on the particular facts of each case. Huntsville Golf Development, Inc. v. Aetna Casualty & Surety Co., 632 So. 2d 459 (Ala.1994).
The plaintiffs argue that, while waiting nearly 10 months from the filing of the complaint to ask for arbitration, All Star consistently responded to their discovery requests; answered their amended complaint; and participated in their deposition of All Star's agent Spoonemore. Moreover, during that period All Star conducted its own deposition of Melvin Smith. All Star claims that it took Smith's deposition merely to verify Smith's signature on the purchase agreement as a prerequisite to moving to compel arbitration; however, the facts before us indicate that Smith's deposition is more than 200 pages long and focused on the evidence supporting Smith's claims.
All Star relies upon several cases in which defendants' considerable delays in moving to compel arbitration were held not to constitute a waiver. In one of them, Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So. 2d 1 (Ala.1986), we held that a delay of more than one year before moving to compel arbitration was not a waiver of the defendants' right to arbitration. However, during that year, the plaintiff was simultaneously *706 litigating similar claims against the defendant as part of a class action in a Federal court. The plaintiff subsequently opted out of the Federal class action, in order to pursue his claims in the state court. Less than three months later, the defendant moved to compel arbitration of the claims. Under those circumstances, we held that the defendants had not unduly delayed in moving to compel arbitration, because they could have reasonably believed that the plaintiff's claim would be litigated in the Federal class action.
In Ex parte McKinney, 515 So. 2d 693 (Ala.1987), a defendant delayed for two years before moving to compel arbitration of claims raised in a cross-claim against another defendant, and the parties conducted discovery during that time. However, the underlying claims brought by the plaintiff in that case were not arbitrable, and the discovery between the parties was necessary to litigate the plaintiff's claims, not the one defendant's cross-claim against the other. After the plaintiff's claims were litigated, the defendant promptly moved to compel arbitration of the other defendant's claims against him. Because the long delay and considerable discovery were primarily due to having to litigate the plaintiff's claims, and because the discovery was actually helpful to the defendant seeking to avoid arbitration, this Court found no substantial prejudice that would justify a holding that the defendant had waived the right to compel arbitration.
All Star presented no evidence of circumstances that would justify its hesitation to seek arbitration of the plaintiffs' claims. Likewise, it presented no evidence that it was procedurally barred from doing so; the claims were not being litigated in another forum, as was the case in Merrill Lynch, and there were no nonarbitrable claims to be litigated before arbitration, as was the case in McKinney. The evidence indicates that All Star was fully aware of its right to compel arbitration, but delayed its request for arbitration merely because it could afford to delay, even as the plaintiffs spent time and money on litigation that All Star perpetuated. Further, even after the parties' depositions had been taken, All Star delayed moving to compel arbitration for three more months, while the plaintiffs' attorney continued to incur the expenses of developing the case for court. Once All Star finally determined that it was time to compel arbitration, the plaintiffs then incurred additional expenses to oppose the arbitration motion, both in the trial court and in this Court. The plaintiffs now owe their attorney over $1,400 for legal work that would not have been done if All Star had promptly moved to compel arbitration. Further, the plaintiffs have been obliged to add the ten-month delay into the time necessary to adjudicate their opposition to arbitration, thus unnecessarily postponing their obtaining any relief. Perhaps other consumers would be less tenacious in exercising their right to oppose arbitration, or even to seek relief at all, if the time required to obtain relief is extended by a defendant's choice to delay seeking arbitration. The fact that the plaintiffs have persisted does not change the fact that they have absorbed an unjustified delay in obtaining an adjudication of their claims.
Under these facts, we agree that All Star's delay in moving to compel arbitration constitutes a waiver of its right to arbitrate. The petition for the writ of mandamus is granted. The circuit court is directed to vacate its order compelling arbitration.
WRIT GRANTED.
ALMON, SHORES, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., dissent.
HOUSTON, Justice (dissenting).
I would deny the writ; therefore, I dissent.
In Companion Life Insurance Co. v. Whitesell Manufacturing, Inc., 670 So. 2d 897, 899 (Ala.1995), this Court held that the trial court did not abuse its discretion in denying Companion's motion to compel arbitration. "No rigid rule exists for determining what constitutes a waiver of the right to arbitrate; the determination as to whether there has been a waiver must, instead, be based on the particular facts of each case." This Court has consistently upheld the trial court on the issue whether the right to arbitrate *707 has been waived. Huntsville Golf Development, Inc. v. Aetna Casualty & Surety Co., 632 So. 2d 459 (Ala.1994); Ex parte McKinney, 515 So. 2d 693, 701 n. 2 (Ala.1987); Ex parte Merrill Lynch, Pierce, Fenner & Smith, Inc., 494 So. 2d 1 (Ala.1986). To me, there is no clear showing that the trial court abused its discretion in ordering arbitration. That is our standard of review. Ex parte Phelps, 672 So. 2d 790, 791 (Ala.1995). If I had been the trial judge, I might have found that All Star Mobile Homes, Inc., had waived its right to arbitrate; however, as a Supreme Court Justice, I can vote to issue the writ of mandamus only if the trial court clearly abused its discretion. It did not.
HOOPER, C.J., and MADDOX, J., concur. | August 29, 1997 |
ce6f5183-8fb2-4f99-b9e8-aa56c3e03423 | Ex Parte Isbell | 708 So. 2d 571 | 1951384 | Alabama | Alabama Supreme Court | 708 So. 2d 571 (1997)
Ex parte Roy ISBELL and Carroll Isbell.
(Re Roy ISBELL and Carroll Isbell v. SOUTHERN ENERGY HOMES, INC., et al.).
1951384.
Supreme Court of Alabama.
August 29, 1997.
Second Application for Rehearing Denied October 31, 1997.
*572 R. Bradford Wash of Lucas, Alvis & Wash, P.C., Birmingham, for petitioners.
A. Joe Peddy and David A. Hughes of Smith, Spires & Peddy, Birmingham, for Crest Financial Co., d/b/a American Housing, and for Doug Marshman.
John Martin Galese and Jeffrey L. Ingram of John Martin Galese, P.A., Birmingham, for Southern Energy Homes, Inc., and Judge Drayton N. James.
Opinion Corrected that date and Dissenting Opinion Modified that date.[*]
COOK, Justice.
The opinion of March 7, 1997, is withdrawn and the following is substituted therefor.
Roy Isbell and Carroll Isbell petition for a writ of mandamus directing Judge Drayton N. James, of the Jefferson County Circuit Court, to vacate his order compelling them to arbitrate their claims against Southern Energy Homes, Inc. ("Southern"), the manufacturer of a mobile home they purchased from Crest Financial Company, Inc., d/b/a American Housing ("American Housing"). We grant the petition in part and deny it in part.
In December 1993, the Isbells purchased the mobile home that is the subject of this action; they purchased it from American Housing, a mobile home dealership in Moody, Alabama, through the negotiations and actions of Doug Marshman, "secretary-treasurer" of American Housing. In connection with the purchase, the Isbells executed an instrument styled "Manufactured Home Retail Installment Contract and Security Agreement." This instrument was also signed on behalf of American Housing by Marshman. The instrument provided in pertinent part:
Also among the documents the Isbells received in connection with their purchase was a document drafted by Southern, the manufacturer of the mobile home, entitled "One Year Limited Warranty" (the "Warranty"). The Warranty stated in part: "Southern Energy Homes, Inc., is not liable for any agreement or commitment made by any employee, dealer or agent other than those expressly set forth in this warranty." (Emphasis added.)
On December 4, 1995, the Isbells sued Doug Marshman, American Housing, and Southern. Their complaint alleged that the mobile home had been delivered to their property in a damaged and defective condition and that the defendants had failed to effect satisfactory repairs. The defendants jointly moved to stay the action and to compel arbitration based on paragraphs 16 and 17 of the "Manufactured Home Retail Installment Contract and Security Agreement." *574 On March 8, 1996, the trial court entered the following order: "Southern Energy Homes, Inc.'s Motion To Stay is granted under authority of [Ex parte Gates, 675 So. 2d 371 (Ala.1996)]." On March 22, 1996, the trial court granted the joint motion to compel arbitration; the Isbells filed this mandamus petition. In this Court, the Isbells contend (1) that the arbitration provisions of the "Manufactured Home Retail Installment Contract and Security Agreement" are unconscionable or unenforceable and (2) that neither Marshman nor Southern has standing to enforce the arbitration provisions.
The sole basis for the Isbells' unconscionability-unenforceability argument is a claim that paragraph 17 lacks mutuality. Specifically, they refer to those provisions denying them the right to seek judicial relief as to their claims, but allowing the "Assignee" to seek judicial relief as to its claims against them. On the basis of Northcom, Ltd. v. James, 694 So. 2d 1329 (Ala.1997), we disagree with this contention.
Northcom involved a covenant not to compete; that covenant contained an arbitration provision. The contract considered in that case "require[d] Creative Broadcasting [Service, Inc. (`Creative Broadcasting')] and its stockholders to submit any disputes they [had] with Northcom [Ltd. (`Northcom')] to arbitration." Id. at 1339. However, it "allow[ed] Northcom in the principal situations in which it might seek reliefa failure by Creative Broadcasting to convey as agreed or a breach by its stockholders of the covenant not to competeto bring an action for equitable relief or damages." Id. at 1339. We noted that there had been "no indication that [the] contract [was] a contract of adhesion," id. at 1339, and held that, in the absence of such an indication, the contract was not unconscionable or unenforceable merely because one party was required to arbitrate its claims while the other party was entitled to judicial relief for its claims. Id. at 1339.
No contention has been made in this case that the contract is a contract of adhesion. On the authority of Northcom, therefore, we hold that the arbitration provision is not unconscionable or unenforceable merely because it requires the Isbells to arbitrate but provides the "Assignee" with a judicial forum.
The Isbells contend that neither Marshman nor Southern was a signatory to the "Manufactured Home Retail Installment Contract and Security Agreement." Consequently, they argue, neither Marshman nor Southern has standing, pursuant to that instrument, to compel the Isbells to arbitrate their claims against them.
The disposition of this question as to Marshman is controlled by Ex parte Gray, 686 So. 2d 250 (Ala.1996). That case involved an action against Crown Pontiac, Inc. ("Crown"), and "Crown's salesman, Shannon Pardue." Id. at 251. The plaintiff alleged "that Pardue, as Crown's agent, while acting within the line and scope of his agency, falsely represented the condition of the vehicle Gray was buying." Id. In refusing to direct the trial court to vacate its order staying Gray's action pending arbitration, this Court stated: "A party should not be able to avoid an arbitration agreement merely by suing an employee of a principal." Id.
In this case, Marshman stands on even better ground that did Pardue in Gray. This is so because Marshman, in fact, signed the "Manufactured Home Retail Installment Contract and Security Agreement" on behalf of American Housing. In that sense, he is a signatory. The petition is, therefore, denied to the extent it seeks to deny Marshman the benefit of the arbitration provisions.
The standing of Southern, however, to enforce the arbitration provisions is quite another matter. In granting Southern's motion to compel arbitration, the trial court expressly relied on Ex parte Gates, 675 So. 2d 371 (Ala.1996). But that case is inapposite. There, Palm Harbor Homes, Inc. ("Palm Harbor"), a mobile home manufacturer, id. at 373, successfully sought, pursuant to a contract *575 to which it was not a signatory, to compel the arbitration of claims against it in an action commenced by the purchasers of a mobile home it had manufactured. Ex parte Jones, 686 So. 2d 1166, 1170 (Ala.1996) (Maddox, J., dissenting). After the trial court ordered the arbitration of all claims involved in the action, the buyers sought a writ of mandamus directing the trial judge to vacate the order. Gates, 675 So. 2d at 372-73.
In denying the buyers' petition, this Court did not address, discuss, or even mention the fact that Palm Harbor was not a signatory. This was because the buyers failed to present that argument to the trial court. Thus, this Court in Gates merely applied the well-established rule that it "will not reverse a trial court's judgment on a ground raised for the first time on appeal." Kitchens v. Maye, 623 So. 2d 1082, 1088 (Ala.1993).
The fact that Palm Harbor was not a signatory to the contract was a nonissue in Gates. As a result, that case simply cannot be cited as support for the proposition that the manufacturer of a mobile home has standing to enforce an arbitration provision in a contract executed by the retailer and the buyers of the mobile home.[1] To be sure, Gates did not hold that a nonsignatory manufacturer did not have standing to enforce an arbitration provision in a contract between the retail seller and the buyer. But to rely on that case for the opposite proposition is to rely on it not for what it held but for what it did not hold. In short, Gates is inapposite.
Southern also contends that the Isbells' claims against it are subject to "arbitration by equitable estoppel," on the theory that their claims "are founded on and intertwined with a contract containing an arbitration clause." Answer of Respondents, Southern Energy Homes, Inc., and Honorable Drayton N. James, at 7. For this proposition, they cite Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 757 (11th Cir. 1993), cert. denied, 513 U.S. 869, 115 S. Ct. 190, 130 L. Ed. 2d 123 (1994); and McBro Planning & Development Co. v. Triangle Electrical Construction Co., 741 F.2d 342 (11th Cir.1984). However, a cursory analysis of these two cases reveals that each of the two represents a discrete class of cases involving nonsignatoriesneither of which class includes this caseand will not support the broad proposition for which it is cited.
In McBro, for example, Triangle Electrical Construction Company, Inc. ("Triangle"), and McBro Planning and Development Company ("McBro") both contracted with St. Margaret's Hospital to perform services in connection with certain "additions to and renovations of the hospital." 741 F.2d 342. McBro's contract required it to serve as "construction manager" of the renovation project, and Triangle's contract required it to provide "electrical work." Id. at 342-43. McBro and Triangle each had executed a written contract with St. Margaret's Hospital, and each contract contained an arbitration provision. However, they had executed no mutual contract. Id. at 343.
Triangle sued McBro in a complaint containing claims "under a third-party beneficiary (contract) count and intentional interference with contract and negligence (tort) counts." Id. Triangle alleged that McBro had "harassed and hampered its work" under Triangle's contract with St. Margaret's Hospital. Id. McBro sought to compel arbitration of the dispute on the basis of Triangle's contract with the hospital. It contended, among other things, that by suing under a third-party beneficiary theory, Triangle had "strongly impl[ied] if not conced[ed] privity of contract with McBro." Id. The United States District Court for the Northern District of Alabama ordered the parties to arbitrate; Triangle appealed. Id. at 342.
The Court of Appeals for the Eleventh Circuit affirmed the arbitration order. Id. It did so on the basis of the "close relationship of the three entities [there] involvedSt. Margaret's, Triangle, and McBroand the close relationship of the alleged wrongs to McBro's contractual duties to perform as construction manager." Id. at 343. The court noted that at least two counts of the complaint directly involved "Triangle's rights *576 under its contract with St. Margaret's" Count IV, alleging "interference" with those rights, and Count V, alleging "negligence `[d]uring the course of construction.'" Id. at 343 n. 4. The court also pointed out that the Triangle-St. Margaret's Hospital contract was "replete with references to McBro's duties as construction manager, on behalf of St. Margaret's, as regards supervision of the project, for which Triangle was a contractor." Id. at 344. Citing Hughes Masonry Co. v. Greater Clark County School Bldg. Corp., 659 F.2d 836 (7th Cir.1981), a case arising out of functionally equivalent facts, it reasoned that Triangle "was equitably estopped" from disclaiming the applicability to McBro of its own contract with St. Margaret's, when the essence of Triangle's claims against McBro was that McBro had "breached the duties and responsibilities assigned it" by that contract. 741 F.2d at 344.
A second class of cases favoring nonsignatories is represented by Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753 (11th Cir.1993). The dispute in Sunkist arose out of a "license agreement" between Sunkist Growers, Inc. ("Sunkist"), and Sunkist Soft Drinks ("SSD"), which, at the time of the making of the agreement, was a subsidiary of General Cinema Corporation. Id. at 755. Under that agreement, SSD could market soft drinks under the "`Sunkist' brand name." Id. The license agreement also contained a clause providing in pertinent part: "Except for any claim with respect to the ownership rights in Licensed Trademarks, any controversy or claim arising out of or relating to this Agreement or the breach thereof, including those regarding termination or failure to renew this Agreement, shall be settled by arbitration...." Id. (emphasis omitted).
Subsequently, SSD was purchased by, and essentially merged with, the Del Monte Corporation. Id. More specifically, "Del Monte absorbed SSD into its own beverage products division, known as Del Monte Franchised Beverage Products. By placing the `Sunkist' brand under a single administration with its own soft drink brands, Del Monte effectively stripped SSD of its employees and management and any other separate operating status." Id.
Eventually, a dispute arose over "SSD's performance under the license agreement," and Del Monte sought a judgment declaring that the dispute was subject to arbitration. Id. Sunkist, a signatory of the license agreement, counterclaimed against Del Monte, a nonsignatory, and its subsidiary, SSD, the other signatory. Id. Sunkist alleged that Del Monte had, "through its management and operation of SSD, caused SSD to violate various terms and provisions of the license agreement." Id. at 758. Del Monte sought to "compel arbitration on the grounds that Sunkist was contractually obligated to arbitrate its claims under the terms of the license agreement." Id. at 755-56. In the Court of Appeals for the Eleventh Circuit, the issue was "whether Sunkist [was] equitably estopped from contesting Del Monte's standing to invoke the [arbitration] clause." Id. at 757.
The court answered that question in the affirmative. Id. at 758. Without setting forth in detail the factual allegations on which Sunkist's counterclaims against the nonsignatory were based, the court explained that "[e]ach [counter]claim asserted by Sunkist [made] reference to the license agreement" and that "each [counter]claim presume[d] the existence of such an agreement." Id. The court also deemed significant the fact that SSD had, "[f]or all practical purposes,... lost its independent operating status and [become] a part of Del Monte." Id. Thus, after considering the "nexus between Sunkist's claims and the license agreement, as well as the integral relationship between SSD and Del Monte," the court concluded "that Sunkist [was] equitably estopped from avoiding arbitration of its claims." Id.
The factual dissimilarities between the Isbell's case and the two classes of cases represented by Sunkist and McBro, supra, are obvious and dispositive. The inapplicability of these cases is best demonstrated by a comparison with the following case, which does involves facts and issues functionally indistinguishable from those presented here.
In Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530 (M.D.Ala.1997), the United *577 States District Court for the Middle District of Alabama held that the manufacturer of a mobile home had no standing or estoppel grounds on which to enforce an arbitration provision contained in a contract, to which it was not a signatory, between the retail seller and the buyer. Id. at 1537. The dispute in Wilson began when Richard Wilson and Mary Wilson and Douglas Woodall and Elizabeth Woodall purchased two mobile homes from Hart's Mobile Home Sales, Inc. ("Hart's"). Id. at 1532. The mobile homes had been manufactured by Waverlee Homes, Inc. ("Waverlee"). Id. In conjunction with the Wilsons' purchase, they and Hart's executed an "installment sales and financing contract," which stated in part:
954 F. Supp. at 1532-33 n. 1 (emphasis added). In conjunction with the Woodalls' purchase, they and Hart's executed a "similar contract," which stated in part:
Id. (Emphasis added.) Waverlee was not a signatory to, and was not mentioned in, any Hart's/Wilson or Hart's/Woodall contract that contained an arbitration provision. Id. at 1532-33. Waverlee did, however, expressly warrant that the mobile "homes would be free of substantial defects in materials and workmanship for a period of one year and that Waverlee would repair or replace any such defects occurring during that period." Id. at 1532.
The Wilsons and the Woodalls sued Waverlee under various breach-of-warranty theories, alleging that their homes contained "substantial manufacturing defects" and that those defects had "gone uncured or [had] been improperly repaired." Id. Waverlee moved to compel arbitration of the claims against it on the basis of the arbitration clauses in the Hart's/Wilson and Hart's/Woodall contracts. Id. The trial court framed the issue as "whether a warrantor who is a nonsignatory to a commercial installment sales and financing contract containing an arbitration clause may use contract principles, such as equitable estoppel, to apply the [Federal Arbitration Act, 9 U.S.C. §§ 1-16] and so compel buyers complaining of breach of warranty to arbitrate their claims." Id. at 1533. The court held that it could not. Id. at 1540.
Before reaching that conclusion, the court noted with approval the general principle that "one `who is not a party to a contract has no standing to compel arbitration.'" Id. at 1534 (quoting Britton v. Co-op. Banking Group, 4 F.3d 742, 744 (9th Cir.1993)). The court then thoroughly analyzed and distinguished the class of cases represented by McBro, supra, from the case before it, stating:
954 F. Supp. at 1536-37 (emphasis added).
Wilson is directly on point with this case and demonstrates the inapplicability of Sunkist and McBro, supra, the federal cases cited by Southern. Those cases involved plaintiff-signatories, whose claims against defendant-nonsignatories actually turned on duties set forth in the contracts requiring arbitration.
By contrast, the Isbells' cause of action against Southern arose out of warranties Southern itself promulgated, most particularly from warranties set forth in the Southerngenerated Warranty, and other Southerngenerated agreements, all having nothing to do with the "Manufactured Home Retail Installment Contract and Security Agreement." The Isbells' complaint contained the following nine counts against Southern: (I) breach of warranty to repair defects; (II) breach of implied warranty of habitability; (III) breach of contract; (IV) "Negligent or Wanton Construction, Inspection and/or Repair"; (V) misrepresentation; (VI) "Deceit"; (VII) fraudulent suppression; (VIII) breach of Ala. Code 1975, § 7-2-314 (implied warranty of merchantability); and (IX) breach of Ala. Code 1975, § 7-2-315 (implied warranty of "fitness for particular purpose"). The factual allegations underlying those counts were (1) that the mobile home was a "special-order" unit that "was to be delivered directly from the factory" to the Isbells' property; (2) that the unit arrived at the Isbells' property in a defective and damaged condition; (3) that Southern misrepresented or suppressed material facts regarding the condition of the mobile home; (4) that the damage and defects were "directly attributable to the manufacturer's failure to properly construct, inspect, and transport" the mobile home; and (5) that Southern had failed to "correct" the problems with the unit as required by Southern's express and implied warranties, including those specifically set forth in the Warranty.
The breach of contract claim was based on allegations that the Isbells and Southern had agreed that Southern was to "construct[] and transport[]" the mobile home to the *579 Isbells' property. No physical evidence of that agreement has been presented to this Court. Certainly, it does not exist in the form of the "Manufactured Home Retail Installment Contract and Security Agreement," which, in fact, never mentions the manufacturer.
Indeed, the "Manufactured Home Retail Installment Contract and Security Agreement" on which Southern now attempts to rely is an unremarkable, two-page document concerned entirely with the duties and responsibilities of (1) the Isbells, (2) American Housing, and (3) Green Tree Financial Corporation ("Green Tree"), which financed the installment sale. For example, it sets forth (1) the amount financed, (2) the finance charge, (3) the annual percentage rate, (4) the total amount of payments, and (5) the total sale price; and it provides for the purchase of "optional credit life and disability insurance" and also specifically provides for assignment of the contract to Green Tree. Significantly, paragraph 9 expressly disclaims all warranties, stating:
Furthermore, paragraph 15 contained an "integration" clause, which provided: "This written Contract is the only agreement that covers my purchase of the Property. This Contract can only be modified or amended or provisions in it waived (given up) by a written modification to the Contract signed by you." (Emphasis added.) Thus, not only does the "Manufactured Home Retail Installment Contract and Security Agreement" omit all reference to the manufacturer, but it expressly disclaims all the bases for the Isbells' claims against Southern.
Moreover, there are no allegations against Green Tree, the assignee. There are no allegations involving the terms or conditions of payment or the optional credit life and disability insurance. In short, the claims against Southern have nothing to do with the terms and conditions of the "Manufactured Home Retail Installment Contract and Security Agreement." Conceivably, the Isbells' action against Southern could be prosecuted to a conclusion without that contract even being offered into evidence.
This case is, therefore, of a different species than Sunkist and McBro, supra, in which the claims of the plaintiff-signatories against defendant-nonsignatories actually turned on the terms of the contract containing the arbitration clause. Also, in Sunkist, the defendant-nonsignatory was a parent corporation seeking to invoke a contract to which its subsidiary was bound.
"[P]arties are not bound by an arbitration clause merely because it exists." Otto Wolff Handelsgesellschaft v. Sheridan Transp. Co., 800 F. Supp. 1353, 1358 (E.D.Va. 1992) (emphasis added). Any case coming before this Court that involves the right of nonsignatories to compel arbitration will, therefore, be peculiarly fact-specific and will require a penetrating analysis of the facts and an application of traditional contract principles. A party, in order to demonstrate its right to rely on provisions of a contract to which it was not a signatory, must show that the factual scenario falls within a recognized class of cases, such as the class represented by Sunkist or McBro. This is not such a case.
Instead, this case is substantially identical to Wilson, in that "[t]he warranty claims here are not intertwined with and founded upon the sales installment agreement[], except in the utterly collateral sense that if the plaintiffs had never purchased their mobile homes, they would not have been protected by the warranties that came with them." 954 F. Supp. at 1536 (emphasis added).
Before concluding our discussion of Wilson, we note in passing an alternative holding of first impression in that case, namely, that enforcement of the binding arbitration clauses by Waverlee, the nonsignatory manufacturer of the mobile homes purchased by *580 the plaintiffs, would violate the Magnuson-Moss WarrantyFederal Trade Commission Improvement Act, 15 U.S.C. §§ 2301-12 (the "Magnuson-Moss Act"). Wilson, 954 F. Supp. at 1539-40.
Not only did the plaintiffs in Wilson challenge, on general contract principles, the standing of Waverlee to enforce the arbitration clauses in their contracts with Hart's, 954 F. Supp. at 1533-37, but they also contended, on the basis of the Magnuson-Moss Act, that "because the installment sales and financing contracts between them and Hart's Mobile Home provide for final or binding arbitration, they could not be compelled to arbitrate their claims against Waverlee." 954 F. Supp. at 1537 (emphasis in original). The court agreed with those contentions, explaining:
954 F. Supp. at 1537 (emphasis added). After an exhaustive analysis of legislative and regulatory history, the court stated:
954 F. Supp. at 1539-40 (emphasis added).
Wilson's holding and rationale as to the Magnuson-Moss Act appear applicable to the facts of this case. Like the contracts in Wilson, the "Manufactured Home Retail Installment Contract and Security Agreement" provides for "binding arbitration." That issue is not before us at this time, however. Therefore, the applicability vel non of the Magnuson-Moss Act to the arbitration provisions in this case forms no part of our holding.
We do hold, however, that Southern is not entitled to rely on a theory of estoppel to compel the Isbells to arbitrate their claims against it. Indeed, to the extent that estoppel has any application in this case, and we hold that it has, it estops Southern, as it did in Ex parte Martin, 703 So. 2d 883 (Ala.1996). Martin, like this case, involved an action against, among others, Southern by the buyers of a mobile home manufactured by Southern. 703 So. 2d at 884. The claims of Barbara Martin and George Martin against Southern were based on allegations that Southern had breached certain warranties on the home. 703 So. 2d at 885. As in this case, Southern had issued to the buyers the Warranty, stating: "Southern Energy Homes, Inc., is not liable for any agreement or commitment made by any employee, dealer or agent other *581 than those expressly set forth in this warranty." Ex parte Martin, 703 So. 2d at 885 (emphasis in Martin).
At the outset of that action, namely, in its answer to the complaint, Southern asserted "that it was not `in privity with' the contract under which the Martins purchased the mobile home." 703 So. 2d at 884. Subsequently, both Southern and the seller of the mobile home moved to compel arbitration on the basis of a clause contained in that purchase contract. Thus, Southern's motion to compel arbitration was based on the contract it had previously disclaimed. Id.
This Court declared: "[T]he Martins' claims against Southern Energy Homes arise from the limited warranty that it issued on the mobile home, by which, on its face, Southern Energy Homes disclaimed any liability under the purchase agreement; it cannot now seek protection under that agreement." 703 So. 2d at 887. In other words, we held, under facts identical to those presented here, that Southern was estopped to rely on the contract it had disclaimed in its own warranty.
The Warranty given the Isbells contains the same disclaimer we addressed in Martin. The disclaimer is very broad and does not, by its terms, limit its application to warranties. It is clearly broad enough to encompass the retail agreement on which Southern now seeks to rely in order to compel arbitration. Thus, we hold that Southern is estopped to rely on the "Manufactured Home Retail Installment Contract and Security Agreement," which it has disclaimed under its own Warranty.
Finally, and most fundamentally, we hold that the arbitration provisions in this case are not broad enough to include the claims against Southern. In so holding, we consider both paragraph 16 and paragraph 17 of the "Manufactured Home Retail Installment Contract and Security Agreement." To be sure, paragraph 17 does state that "[a]ll disputes, claims, or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration." However, that provision must be read in pari materia with paragraph 16, which specifically designates those parties to whom the waiver/arbitration provisions actually were intended to apply. Paragraph 16 limits the application of the arbitration clause to (1) "I [the Isbells]," (2) "the Seller [American Housing]," and (3) "any assignee of the Seller [Green Tree]." Significantly, those are the sameand the onlyparties ever listed in that contract.
In fact, when all the relevant "arbitration" provisions in this contract are considered, one must conclude that the scope of the requirement is not functionally different from the one we considered in Martin. In Martin, before holding that Southern was estopped to rely on the contract containing the arbitration provision, we also held that the language of the arbitration provision was not broad enough to include the Martins' claims against Southern. 703 So. 2d at 886. Specifically, we explained:
Id. at 885.
The Isbells are entitled to a writ of mandamus to the extent that they can demonstrate "(1) a clear legal right ... to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) a lack of another adequate remedy; and (4) properly invoked jurisdiction of the court." Ex parte Martin, 598 So. 2d 1381, 1383 (Ala.1992). Pursuant to this standard, they are entitled to a writ directing the trial judge to vacate his order, but only insofar as that order compelled them to arbitrate their claims against Southern. To that extent, the writ shall issue. To the extent they seek to vacate the order as to the parties on the ground of lack of mutuality, and as to Doug Marshman, in particular, on *582 the ground of his employee status, it is denied.
APPLICATION GRANTED; OPINION OF MARCH 7, 1997, WITHDRAWN; OPINION SUBSTITUTED; PETITION GRANTED IN PART AND DENIED IN PART.
ALMON, SHORES, KENNEDY, and BUTTS, JJ., concur.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., dissent.
HOOPER, Chief Justice (dissenting).
I wrote the original opinion that was released March 7, 1997. That opinion affirmed the trial court's order compelling arbitration of the Isbells' claims. Justices Maddox, Houston, and See concurred in my opinion. Justice Butts concurred in the result. That opinion did not state that the Isbells had no valid claim, nor did it say that Southern had a defense to the Isbells' claims. It simply stated that the parties must arbitrate the dispute in accordance with the arbitration agreement contained in the installment sales contract with American Housing. Since March 7, 1997, the Court has changed its mind. The reason for such a radical change is the fact that the legal status of arbitration in the State of Alabama is, to put it mildly, in a state of flux. The majority opinion helps to clarify the status of arbitration agreements; however, I am afraid that clarification is in the wrong direction. That is why I write this dissent.
I must admit that there is some very thorough research in the majority opinion. Justice Cook has carefully studied the federal cases that deal with enforcement of arbitration agreements by nonsignatories. However, in the opinion I find a flaw, upon which I am compelled to focus. After giving a lengthy discussion of those federal cases, the opinion states: "Finally, and most fundamentally, we hold that the arbitration provisions in this case are not broad enough to include the claims against Southern." Majority Op. at 581. Fundamental is right. There is nothing more fundamental in a contract dispute than the language of the contract. The language of an arbitration agreement in a contract determines whether a dispute arising under the contract must be arbitrated.[2] The language illustrates the intent of the parties. Here is the arbitration provision:
The fundamental question this Court must decide is: To what did the Isbells agree? Using standard contract principles, do we conclude that they agreed to be bound by the arbitration provision to arbitrate disputes with nonsignatories? How much broader can the language be? It does not matter whether this issue was raised before this Court in Ex parte Gates, 675 So. 2d 371 (Ala.1996). This Court addressed the question of the broad language of the arbitration clause in Gates and determined that it was broad enough to allow for the nonsignatory to compel arbitration in reference to the Gateses' claims.[3] This Court has confirmed the rationale of Gates in at least one other case.[4] What more need this Court say? This Court has the opportunity to review this type of broad language again, and it should construe it to allow Southern Energy to compel arbitration of this dispute.[5]
The Isbells agreed to arbitrate all disputes arising from or relating to "the relationships which result from this Contract." What does that mean? What relationships could the clause refer to? Does it refer to family relationships? The word "relationships" does not refer to the brother of the salesman for American Housing. The word "relationships" has a contextual meaning that protects *584 the Isbells from agreeing to any conceivable relationship possible. The word "relationships" can refer only to the commercial relationships that arose from this particular sale of a mobile home to the Isbells. It would not refer to American Housing; the Isbells do not contest American Housing's right to arbitrate. What other relationships arose from this contract? The relationship with the manufacturer arose from this contract. So did the financing arrangement with Green Tree. Any expansion beyond these companies of the right to compel arbitration would be suspect even to me. But unless the majority is arguing that the language "or the relationships which result from this Contract" is entirely meaningless, it appears that it easily and logically applies to Southern Energy Homes. This Court and the federal courts have held that, in the context of an arbitration agreement, the use of the phrase "arising under" requires a narrower application of the arbitration agreement than the use of the phrase "arising under and relating to."[6] How did the Isbells, who agreed to the language, interpret it when they read that phrase? Did they ignore it? Did they think it did not apply to the manufacturer of the home they were purchasing? To what relationships did they think it applied?
Even if the arbitration clause was ambiguous, and it is not, it should be construed in favor of arbitration. Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995).
The majority's opinion implies that one cannot agree to arbitrate a dispute with a nonsignatory. Why not? I can agree with another to perform a service that benefits a third party. In certain situations, that third party can compel my performance of that service even though that party was not a party to the contract.[7] If the case involved a signatory's attempting to compel a nonsignatory to arbitrate, it would be clear that the nonsignatory did not agree to the arbitration. However, the signatories in this case, the Isbells, agreed to arbitrate. It is not a question of what Southern Energy intended; it is a question of what the Isbells intended. They intended to arbitrate "[a]ll disputes ... arising from or relating to ... the relationships which result from this Contract." Notwithstanding all the federal case analysis in the majority opinion, the language of this arbitration agreement is exceedingly broad, and the Isbells agreed to be bound by that language. That language includes nonsignatories like Southern Energy.
The majority relies on only one federal district court case that has facts that are on point with the facts in this case. See Wilson v. Waverlee Homes, Inc., 954 F. Supp. 1530 (M.D.Ala.1997). The FAA favors arbitration, and the federal courts have allowed nonsignatories to an arbitration agreement to compel arbitration with signatories. Southern Energy is not far removed from the transaction between American Housing and the Isbells. It certainly falls within a relationship "which result[s] from [the] Contract." Considering the weight of authority from the federal circuit courts of appeals favoring a nonsignatory in close relationship with the signatories to an arbitration agreement, I find it odd that this Court would follow the single decision of a federal district court.
In order to reach the result in this case, the majority ignores the language of the arbitration provision agreed to by the Isbells and simply states that paragraph 17 must be read in pari materia with paragraph 16. But the relationship between the Isbells and Southern Energy arose from the contract between the parties mentioned in paragraph 16. Therefore, according to the agreement entered into by the Isbells, any dispute with Southern Energy is subject to arbitration.
The Isbells argue that the "One Year Limited Warranty" from Southern Energy, *585 which disclaims all warranties not expressly made by Southern Energy, also disclaims Southern Energy's right to compel arbitration based on the arbitration agreement printed on the back of the sales contract. The Isbells cite a portion of the warranty:
The express warranty must be viewed in context. The express limited warranty is entitled "One Year Limited Warranty." All of the provisions in that document deal exclusively with problems that may arise with the mobile home after the sale. The warranty is a promise by the manufacturer, in which it assures the buyer that it will be liable for certain enumerated defects. The warranty is also a limiting document, informing the buyer that it will not be liable for defects that are not listed in the document, nor for any promises or agreements made outside the sales contract that would place liability upon Southern Energy.
Understanding what matters are addressed in the warranty is important to understanding what is not addressed in the warranty. Nothing in the "One Year Limited Warranty" addresses how the manufacturer will be paid, or how many days the manufacturer will have to deliver the product, or how to resolve a dispute between the parties. The parties must address these topics, as well as others, in the normal course of business. Other documents will bind the parties to certain actions in this transaction. The wording of the "One Year Limited Warranty" deals only with who will be responsible for defects discovered in the product after purchase. Thus, the language cited by the Isbells merely informs the parties that no "agreement or commitment," oral or written, will be honored except those agreements or commitments expressly set forth in this particular warranty. To hold that Southern Energy is not bound by the arbitration agreement contained in a separate document because of restrictive language in the limited warranty would essentially allow Southern Energy to escape responsibility for every promise not specifically delineated in the "One Year Limited Warranty." Such a holding would mock contract law, not follow it. The limited warranty deals with warranties and with limits upon Southern Energy's liability, and nothing more.
The agreement between the Isbells and American Housing governs the applicability of arbitration to the dispute with Southern. It is clearly broad enough to govern the issue. Courts should not so lightly do away with legitimate contracts like the one in this case. Our law requires that courts uphold contracts, that our government may be "a government of laws and not of men." Ala. Const. of 1901, § 43.
MADDOX, HOUSTON, and SEE, JJ., concur.
[*] Almon, Shores, Kennedy, Cook, and Butts, JJ., concurred in denying rehearing; Hooper, C.J., and Maddox, Houston, and See, JJ., dissented.
[1] Gates also involved no issue regarding unconscionability. Consequently, no unconscionability argument can be made from a comparison of the contract provisions set forth in the Gates opinion with those involved here.
[2] "The language of the contract entered into by the parties determines whether a particular dispute should be submitted to arbitration under the contract." Capital Investment Group, Inc. v. Woodson, 694 So. 2d 1268, 1270 (Ala.1997). See also Koullas v. Ramsey, 683 So. 2d 415, at 417 (Ala.1996), stating that in determining "whether the arbitration clause applies to this dispute, we must consider the intent of the parties, as it is expressed in the language of the ... contract."
[3] In Gates, this Court wrote:
"Did the trial court properly compel arbitration? The answer to that question is a matter of contract interpretation, which is guided by considering the intent of the parties to the mobile home sales contract. Thus, the essential question is whether the arbitration clause in that contract applies to the Gateses' claims....
"The arbitration clause ... is very broad; it provides that `[a]ll disputes, claims, or controversies arising from or relating to this Contract or the relationships which result from this Contract, or the validity of this arbitration clause or the entire Contract, shall be resolved by binding arbitration.'" 675 So. 2d at 374.
[4] Ex parte Martin, 703 So. 2d 883 (Ala.1996):
"To determine the scope of that arbitration clause, the Gates Court first noted that the issue was a matter of contractual interpretation, to be resolved by considering the intent of the parties to the agreement. Gates at 374. The Court recognized that the language of the arbitration clause was particularly broad, encompassing not only the `disputes, claims, or controversies arising from' the contract, but also `the relationships' that resulted from it. The Court concluded, based upon the agreement's expansive language as it applied to the plaintiffs' claims, that the trial court had properly determined that the claims against Palm Harbor were arbitrable, despite the fact that Palm Harbor had not signed the agreement containing the arbitration clause.
"The arbitration clause in Gates clearly contemplated arbitration of claims brought by the signatories to the agreements and also arbitration of claims brought by other, unnamed parties, if those claims arose from or related to the contract or the `relationships' that resulted from the contract."
703 So. 2d at 886. (Emphasis added.)
[5] The majority opinion discusses several federal cases dealing with nonsignatories to arbitration agreements. E.g., Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d 753, 755 (11th Cir.1993), cert. denied, 513 U.S. 869, 115 S. Ct. 190, 130 L. Ed. 2d 123 (1994), and McBro Planning & Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984). Neither of these cases quoted language from the arbitration clauses at issue regarding relationships resulting from the contract. If the federal courts found a sufficient connection between the nonsignatory and the contract to compel arbitration in those cases, how much more clearly should this Court find a relationship in this case, in which the arbitration clause is apparently so much broader than the clauses in those cases?
[6] See Old Republic Ins. Co. v. Lanier, 644 So. 2d 1258 (Ala.1994); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 398, 87 S. Ct. 1801, 1803, 18 L. Ed. 2d 1270 (1967); Mediterranean Enterprises, Inc. v. Ssangyong, 708 F.2d 1458 (9th Cir.1983); In re Kinoshita & Co., 287 F.2d 951 (2d Cir.1961); Michele Amoruso E Figli v. Fisheries Dev. Corp., 499 F. Supp. 1074 (S.D.N.Y.1980); Sinva, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 253 F. Supp. 359 (S.D.N.Y.1966).
[7] See Ex parte ReLife, Inc., 679 So. 2d 664 (Ala. 1996). | August 29, 1997 |
64ac53c3-30d9-4759-b62c-0c87df378a72 | Professional Ins. Corp. v. Sutherland | 700 So. 2d 347 | 1950372 | Alabama | Alabama Supreme Court | 700 So. 2d 347 (1997)
PROFESSIONAL INSURANCE CORPORATION, et al.
v.
James A. SUTHERLAND, et al.
1950372.
Supreme Court of Alabama.
July 18, 1997.
*348 Bruce F. Rogers and Alfred F. Smith, Jr., of Bainbridge, Mims, Rogers & Smith, L.L.P., Birmingham, for Professional Insurance Corporation and PennCorp.
James A. Byram of Balch & Bingham, Montgomery, for Jeff Sikora, Morris W. Pettit, and Homer Ray Smith.
Thomas T. Gallion III and Susan E. Kennedy of Haskell, Slaughter, Young, Johnston & Gallion, Montgomery, for appellees.
Bruce J. McKee of Hare, Wynn, Newell & Newton, Birmingham, for amicus curiae Alabama Trial Lawyers Ass'n, in support of the appellees' application for rehearing.
SHORES, Justice.
The opinion of March 28, 1997, is withdrawn, and the following opinion is substituted therefor.
This is an interlocutory appeal pursuant to Rule 5, Ala. R.App. P. The question presented is whether the Alabama courts should continue to refuse to enforce "outbound" forum selection clauses on the grounds that such clauses are against public policy and therefore void per se.[1] The trial court, relying upon precedent, refused to enforce certain forum selection clauses stating that any action brought on the contract between these parties would be brought in Florida. We now adopt the rule that such a provision should be enforced unless to do so would be unfair or unreasonable under the circumstances, and we remand the cause for further proceedings not inconsistent with this opinion.
The plaintiffs are independent insurance agents; they include four Georgia residents, James A. Sutherland, Scott Burrell, Michael Gammons, and James E. Thompson, and two Alabama residents, Goff Agency, Inc., and Anne Goff. The defendants are Professional Insurance Corporation (PIC); PennCorp Financial Group, Inc. (PennCorp), a financial holding company, which has acquired a controlling interest in PIC; and Homer Smith, a resident of Montgomery, Alabama, who is a former agent of Goff. The plaintiffs sued in the Circuit Court of Montgomery County, claiming breach of contract, interference with business relations, and fraudulent misrepresentation; *349 these claims were based on allegations that the defendants had attempted to secure insurance business and commissions away from the plaintiffs.
Each plaintiff had executed contracts with PIC to sell payroll deduction insurance plans to agencies and businesses in Alabama. All the plaintiffs and defendants are licensed to do business in Alabama, and during each respective contract period the plaintiffs did do business in Alabama for PIC. This dispute arises out of PIC's alleged scheme to terminate the plaintiffs' contracts rather than pay certain commissions owed on payroll deduction plans sold by the plaintiffs.
Each contract between PIC and the plaintiffs provided:
(R. 70.) PIC filed numerous motions to dismiss the plaintiffs' complaint on the ground that the plaintiffs had agreed that any litigation resulting from the violation of the contract would be conducted in Duval County, Florida. The trial court denied all of those motions filed by the defendants, holding that forum selection clauses are invalid and unenforceable in Alabama and that Montgomery County was the proper forum.[2]
In Redwing Carriers, Inc. v. Foster, 382 So. 2d 554 (Ala.1980), this Court adopted the "majority rule" stated in Annotation, "Validity of Contractual Provision Limiting Place or Court in Which Action May be Brought," 56 A.L.R.2d § 4, p. 306 (1957), to the effect that "contractual agreements by which it is sought to limit particular causes of action which may arise in the future to a specific place, are held invalid." Redwing Carriers, 382 So. 2d at 556.
This Court construed the "outbound" forum selection provision at issue in Redwing Carriers as "divesting all courts of the power to hear and determine the cause except the courts of [the selected forum]." Id. We concluded: "[C]ontract provisions which attempt to limit the jurisdiction of the courts of this state [are] invalid and unenforceable as being contrary to public policy. Parties may not confer jurisdiction by consent, nor may they limit the jurisdiction of a court by consent." Id. This Court has adhered to this "jurisdictional" view in a line of subsequent cases. See Conticommodity Services, Inc. v. Transamerica Leasing, Inc., 473 So. 2d 1053 (Ala.1985); Keelean v. Central Bank of the South, 544 So. 2d 153 (Ala.1989); White-Spunner Constr., Inc. v. Cliff, 588 So. 2d 865 (Ala.1991); Disctronics Ltd. v. Disc Manufacturing, Inc., 686 So. 2d 1154 (Ala.1996).
For years, American courts generally followed similar reasoning and refused to give effect to forum selection clauses:
High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 496 (Mo.1992).
However, in the wake of the United States Supreme Court's decision in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972), holding that such forum selection clauses "are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances," id. at 10, 92 S. Ct. at 1913, many jurisdictions were influenced to reconsider their positions *350 on the issue.[3] In fact, the view that forum selection clauses such as those at issue in this case are per se invalid and unenforceable is now only held in a small minority of jurisdictions. Besides Alabama, only Iowa, Idaho, and Montana appear to hold that "outbound" forum selection provisions are per se unenforceable, and the latter two states do so based upon interpretations of state statutes. See Davenport Machine & Foundry Co. v. Adolph Coors Co., 314 N.W.2d 432 (Iowa 1982); Cerami-Kote, Inc. v. Energywave Corp., 116 Idaho 56, 773 P.2d 1143 (1989); State ex rel. Polaris Indus., Inc. v. District Court, 215 Mont. 110, 695 P.2d 471 (1985).
In M/S Bremen, supra, the Supreme Court recognized that modern cases had a different concept of the operation of forum selection clauses. The Court rejected the traditional argument that forum selection clauses "ousted" a court of jurisdiction as "hardly more than a vestigial legal fiction," stating that that argument reflected "something of a provincial attitude regarding the fairness of other tribunals." 407 U.S. at 12, 92 S. Ct. at 1914.
Id. Thus, the Supreme Court reasoned that a court is not really deprived of jurisdiction by a forum selection clause. Rather, that Court said, a court exercises its jurisdiction by declining to hear the case, in recognition that it is neither unfair nor unreasonable under the circumstances to hold the parties to their bargain to litigate in the chosen forum. The M/S Bremen Court was also careful to state, however, that forum selection clauses are not always enforceable; that to be enforceable they must have been freely entered into, without the existence of fraud, undue influence, or overweening bargaining power; and that the chosen forum must be reasonable and not seriously inconvenient. Id. at 13, 17-18, 92 S. Ct. at 1916, 1917-18. See also Michael Mousa Karayanni, The Public Policy Exception to the Enforcement of Forum Selection Clauses, 34 Duq. L.Rev. 1009 (1996).
Of course, as an exercise of the Supreme Court's federal admiralty jurisdiction, see U.S. Const., Art. III, § 2, the decision in M/S Bremen does not mandate that state courts enforce forum selection provisions outside of an admiralty context. In declaring Alabama's law of contracts, this Court is free to independently assess the public policy of this state, subject only to the requirements of federal law. However, we, as have the courts of almost all other jurisdictions, do now find the Supreme Court's reasoning in M/S Bremen on this issue to be persuasive. Thus, we determine that "outbound" forum selection clauses such as those in this case are not void per se as against the public policy of Alabama.
*351 In their application for rehearing, the plaintiffs and the Alabama Trial Lawyers Association, as amicus curiae, argue that, even if the enforcement of "outbound" forum selection provisions is no longer considered contrary to the common-law public policy of Alabama, nonetheless § 6-3-1, Ala.Code 1975, operates as a statutory prohibition against the enforcement of such clauses. Section 6-3-1 provides: "Any agreement or stipulation, verbal or written, whereby the venue prescribed in this article is proposed to be altered or changed so that actions may be commenced contrary to the provisions of this article, is void." While it can hardly be doubted that the legislature has the authority to enact a statute that would prohibit the enforcement of forum selection clauses such as those at issue in this case, it is clear that § 6-3-1, Ala.Code 1975, is not such a provision.
Section 6-3-1 pertains only to agreements involving the venue statutes; it contains no reference to agreements concerning jurisdiction. In explaining the distinction between jurisdiction and venue, this Court, in Redwing Carriers, supra, recognized that jurisdiction refers to a court's inherent power to hear a case, while venue designates the geographical situs in which a court with jurisdiction may entertain an action. 382 So. 2d at 555-56. And the Redwing Carriers Court specifically determined that the "outbound" forum selection clause in that case, which required that any litigation be brought in Tampa, Florida, did not involve a question of venue, but rather concerned jurisdiction. Id. at 555. Because the forum selection clauses in this case similarly stipulate that any lawsuit on the contracts "shall be brought in Duval County, Florida," we conclude that they also do not involve venue. Because § 6-3-1 pertains to the law of venue, which determines the intrastate situs of an action, it has no application to the interstate forum selection clauses at issue in this case.
Further, even if we were to assume that § 6-3-1 has some possible application to agreements relating to jurisdiction, the statute would still not nullify the forum selection clauses in this case. By its language, § 6-3-1 does not purport to void all agreements that seek to alter or change venue as it is prescribed by statute. Rather, § 6-3-1 prohibits only those agreements that propose to change venue "so that actions may be commenced contrary to the provisions of [the venue statutes]." Thus, only agreements seeking to confer venue upon an improper forum, by allowing an action to be brought where the venue statutes would not otherwise permit one, are invalid. Section 6-3-1 does not, however, prevent parties from agreeing to restrict actions to a particular forum that is authorized under the venue statutes. The cases cited by the appellees are not to the contrary. See Ex parte Parsons & Whittemore Alabama Pine Constr. Corp., 658 So. 2d 414 (Ala.1995) (even if parties had agreed to arbitrate in Jefferson County, their agreement would not be effective to allow an action there because that county was not a proper venue); Ex parte Bailey, 410 So. 2d 402 (Ala.1982) (contract provision allowing an action "in any Court of competent jurisdiction" could not be read to allow an action in Baldwin County when venue was proper only in Mobile County). The forum selection agreements in this case do not seek to confer upon an Alabama court jurisdiction that would not otherwise exist by law or to make any place a proper venue that would not otherwise by law be a proper venue. Therefore, § 6-3-1 would not be relevant in this case even if that Code section related to jurisdiction.
Because we no longer consider "outbound" forum selection clauses to be void per se as against public policy, and because we conclude that § 6-3-1, Ala.Code 1975, does not operate as a statutory prohibition against their enforcement, we now adopt the majority rule that a forum selection clause should be enforced so long as enforcing it is neither unfair nor unreasonable under the circumstances. However, the plaintiffs argue in their application for rehearing that the newly adopted rule should not be applied to the parties in this case, but, rather, should be applied prospectively only. The plaintiffs contend that when they were negotiating their contracts they relied upon the rule making forum selection provisions invalid in Alabama and that the rule we adopt today *352 represents a fundamental change in the substantive law of this state. Therefore, they claim, an application of the "new" rule against them would be an unfair retroactive application. We disagree.
"The determination of the retroactive or prospective application of a decision overruling a prior decision is a matter of judicial discretion that must be exercised on a case-by-case basis." Ex parte Coker, 575 So. 2d 43, 51 (Ala.1990), citing City of Birmingham v. Blount County, 533 So. 2d 534 (Ala.1988); State Dep't of Revenue v. Morrison Cafeterias Consol., Inc., 487 So. 2d 898 (Ala.1985). Although circumstances occasionally dictate that judicial decisions be applied prospectively only, retroactive application of judgments is overwhelmingly the normal practice. McCullar v. Universal Underwriters Life Ins. Co., 687 So. 2d 156 (Ala.1996) (plurality opinion). "Retroactivity `is in keeping with the traditional function of the courts to decide cases before them based upon their best current understanding of the law.... It also reflects the declaratory theory of law,... according to which the courts are understood only to find the law, not to make it.'" 687 So. 2d 156, quoting James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 535-36, 111 S. Ct. 2439, 2443-44, 115 L. Ed. 2d 481 (1991). While reliance upon prior law is an "important variable that must be appraised in every case presenting questions of prospectivity," we conclude that, as a policy matter, the application of this newly adopted rule to these parties "rewards the prevailing party on the appeal, thereby providing `an incentive for litigants to challenge existing rules of law that are in need of reform.'" Hosea O. Weaver & Sons, Inc. v. Towner, 663 So. 2d 892, 899 (Ala.1995), quoting Prospective Application of Judicial Decisions, 33 Ala. L.Rev. 463, 473 (1982).
We conclude that it is fair to apply the rule enforcing forum selection clauses to the parties in this case. As noted previously, while American courts traditionally disfavored outbound forum selection clauses, the overwhelming trend, following the United States Supreme Court's decision in M/S Bremen, supra, has been toward allowing enforcement of those clauses. See n. 3, supra. That nationwide trend foreshadowed our adoption today of the rule that such clauses are not per se void, providing notice that Alabama might follow suit and thereby reducing the reliance these plaintiffs could reasonably have placed upon the continued viability of the traditional rule in Alabama. We also note that in none of those cases cited in n. 3, supra, cases from other jurisdictions rejecting the traditional rule, did a court fail to apply the rule of presumptive enforceability to the parties before the court, despite the fact that those cases also overruled prior law or involved questions of first impression. And, finally, we conclude that retroactive application would not unduly prejudice the plaintiffs, for they may still litigate their causes of action in the forum they agreed upon, even if the forum selection agreements are found to be enforceable.
Accordingly, this case must be remanded for reconsideration. On remand, the plaintiffs will have the burden of showing either (1) that enforcement of the forum selection clauses would be unfair on the basis that the contracts in this case were affected by fraud, undue influence, or overweening bargaining power or (2) that enforcement would be unreasonable on the basis that the chosen Florida forum would be seriously inconvenient for the trial of the action. We observe, however, that nothing in the record presently before us would support a refusal to enforce the forum selection clauses. The plaintiffs have not alleged fraud or undue influence or that the contracts were contracts of adhesion. All parties to this action are business entities, or business persons, that deal in the arena of insurance, where contracts are negotiated on a daily basis. The corporate defendants' headquarters are in Florida, where a majority of the witnesses and most documents related to this case are located. In fact, the trial court concluded that it was "no more inconvenient" to have the matter tried in Alabama than to have it tried in Florida, implying that the chosen Florida forum would not be seriously inconvenient.
The trial court's order denying the defendants' motion to dismiss is vacated, and this cause is remanded for further proceedings consistent with this opinion.
*353 OPINION OF MARCH 28, 1997, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; ORDER VACATED AND CAUSE REMANDED.
HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., concur in the result.
MADDOX, Justice (concurring in the result).
I concur in the result reached by the majority because it vacates an order that refused to enforce the forum selection clause. In Keelean v. Central Bank of the South, 544 So. 2d 153 (Ala.1989), I concurred specially and, citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972), I wrote the following:
544 So. 2d at 159 (Maddox, J., concurring specially).
The United States Supreme Court, in M/S Bremen, supra, adopted the view "that [forum selection] clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." 407 U.S. at 10, 92 S. Ct. at 1913. The Court further said that when "the choice of [the] forum [is] made in an arm's-length negotiation by experienced and sophisticated businessmen, and absent some compelling and countervailing reason it should be honored by the parties and enforced by the courts," id. at 12, 92 S. Ct. at 1914, and that the correct approach is to "enforce the forum clause specifically unless [the resisting party can] clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching." Id. at 15, 92 S. Ct. at 1916.
In relation to the convenience of the forum to the parties, the Court in M/S Bremen held:
Id. at 16, 92 S. Ct. at 1917 (emphasis omitted; emphasis added).
Finally, in circumstances where the resisting party claims that the agreed-upon forum is inconvenient, that party must show "that trial in the contractual forum will be so gravely difficult and inconvenient that [the resisting party] will for all practical purposes *354 be deprived of his day in court." Id. at 18, 92 S. Ct. at 1917.
I believe that the principles stated by the United States Supreme Court in M/S Bremen,[4] supra, concerning forum selection clauses are applicable to this case. Therefore, I must respectfully concur in the result.
HOOPER, C.J., and SEE, J., concur.
[1] An "outbound" forum selection clause is one providing for trial outside of Alabama, while an "inbound" clause provides for trial inside Alabama. See High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 495 (Mo.1992). In this case, we are concerned only with the former.
[2] The trial court amended that holding to state also that a controlling question of law existed upon which there is substantial ground for differences of opinion, and it permitted the defendants to request permission to appeal to this Court. This Court on January 4, 1996, granted permission to appeal.
[3] Volkswagenwerk, A.G. v. Klippan, GmbH, 611 P.2d 498 (Alaska 1980), cert. denied, 449 U.S. 974, 101 S. Ct. 385, 66 L. Ed. 2d 236 (1980); Societe Jean Nicolas et Fils v. Mousseux, 123 Ariz. 59, 597 P.2d 541 (1979); SD Leasing, Inc. v. Al Spain & Assocs., Inc., 277 Ark. 178, 640 S.W.2d 451 (1982); Smith, Valentino & Smith, Inc. v. Superior Ct. of Los Angeles County, 17 Cal. 3d 491, 131 Cal. Rptr. 374, 551 P.2d 1206 (1976); ABC Mobile Sys., Inc. v. Harvey, 701 P.2d 137 (Colo.App.1985); Funding Sys. Leasing Corp. v. Diaz, 34 Conn.Supp. 99, 378 A.2d 108 (Conn. Common Pl. 1977); Elia Corp. v. Paul N. Howard Co., 391 A.2d 214 (Del.Super.1978); Manrique v. Fabbri, 493 So. 2d 437 (Fla.1986); Calanca v. D & S Mfg. Co., 157 Ill.App.3d 85, 109 Ill.Dec. 400, 510 N.E.2d 21 (1987); Prudential Resources Corp. v. Plunkett, 583 S.W.2d 97 (Ky.App.1979); Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886 (Minn.1982); High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493 (Mo.1992); Air Economy Corp. v. Aero-Flow Dynamics, Inc., 122 N.J.Super. 456, 300 A.2d 856 (1973); Credit Francais Int'l, S.A. v. Sociedad Financiera De Comercio, C.A., 128 Misc.2d 564, 490 N.Y.S.2d 670 (N.Y.Sup.1985); United Standard Management Corp. v. Mahoning Valley Solar Resources, Inc., 16 Ohio App.3d 476, 476 N.E.2d 724 (1984); Reeves v. Chem Indus. Co., 262 Or. 95, 495 P.2d 729 (1972); St. John's Episcopal Mission Ctr. v. South Carolina Dep't of Social Services, 276 S.C. 507, 280 S.E.2d 207 (1981); Green v. Clinic Masters, Inc., 272 N.W.2d 813 (S.D.1978); International Collection Serv., Inc. v. Gibbs, 147 Vt. 105, 510 A.2d 1325 (1986).
[4] See also Michael Mousa Karayanni, The Public Policy Exception to the Enforcement of Forum Selection Clauses, 34 Duq. L.Rev. 1009 (1996); Brian Mattis, Forum Selection Clauses in Florida, 6 St. Thomas L.Rev. 247, at 258 (1994); Michael E. Solimine, Forum Selection Clauses and the Privatization of Procedure, 25 Cornell Int'l L.J. 51, at 57, 63, 91 (1992). | July 18, 1997 |
d02f0b3b-c451-4f6f-a4c9-16d10f335240 | Ex Parte TB | 698 So. 2d 127 | 1960707 | Alabama | Alabama Supreme Court | 698 So. 2d 127 (1997)
Ex parte T.B.
(In re T.B. v. State of Alabama).
1960707.
Supreme Court of Alabama.
June 13, 1997.
*128 J. Brent Burney of Burney & Burney, Decatur, for Petitioner.
Bill Pryor, Atty. Gen., and P. David Bjurberg, Asst. Atty. Gen., for Respondent.
HOUSTON, Justice.
T.B. was adjudicated to be a youthful offender, based on the trial court's finding that he had committed eight instances of unlawfully breaking and entering a vehicle with the intent to commit a theft. Alabama Code 1975, § 13A-8-11(b). He was committed to the custody of the director of the Department of Corrections for two years. The Court of Criminal Appeals affirmed, holding, in an unpublished memorandum, T.B. v. State, 698 So. 2d 802 (Ala.Crim.App.1996) (table), that it need not answer the question raised by T. B.whether the corroboration statute, Ala.Code 1975, § 12-21-222, should apply to youthful offender proceedingsbecause it considered the alleged accomplice's testimony to be corroborated "by [T. B.'s] association with [the accomplice] and [T. B.'s] proximity, chronologically and geographically[,] to the offense." T.B. petitioned for certiorari review, arguing, among other things, that the corroboration principle of § 12-21-222 applies to a youthful offender proceeding when the underlying criminal act is a felony and that his adjudication was therefore improper, being based, he says, on the uncorroborated testimony of an accomplice. We granted certiorari review to determine whether the corroboration requirement of § 12-21-222 applies to youthful offender proceedings, and, if so, whether, under the facts of this case, there was sufficient evidence to corroborate the accomplice's testimony. If we determine that § 12-21-222 does not apply to a youthful offender proceeding, then corroboration of an accomplice's testimony is not required and, therefore, whether the accomplice's testimony was corroborated would not be an issue in this case.
In Raines v. State, 294 Ala. 360, 363-65, 317 So. 2d 559, 561-63 (1975), the Court *129 explained the purpose of the Youthful Offender Act, Ala.Code 1975, § 15-19-1 et seq.:
Section 15-19-7(a), which sets out the effect of a youthful offender adjudication, provides:
(Emphasis added.) From the clear language of § 15-19-7(a), although an underlying act constitutes a felony, an adjudication of youthful offender status is not "[a] conviction of felony" within the meaning of § 12-21-222, the corroboration statute; it is not a "conviction" at all.
Section 12-21-222 reads as follows:
(Emphasis added.) The clear language of § 12-21-222 makes it applicable only in cases involving "[a] conviction of felony."
We have found no case in which the corroboration requirement of § 12-21-222 has been extended to youthful offender proceedings. But see Vincent v. State, 349 So. 2d 1145 (Ala.1977) (in which this Court refused to extend that requirement to juvenile transfer hearings); Armstrong v. State, 294 Ala. 100, 312 So. 2d 620 (1975) (in which this Court refused to extend that requirement to probation revocation hearings); and Woodberry v. State, 497 So. 2d 587, 589 (Ala.Crim.App.1986) (in which the Court of Criminal Appeals refused to impose that requirement in a delinquency adjudication, "in view of the fact that such additional proof [was required neither] by statute nor by rule of the Supreme Court"). See also, Chambers v. State, 497 So. 2d 607 (Ala.Crim.App.1986); and Burttram v. State, 448 So. 2d 497 (Ala.Crim.App. 1984). Furthermore, at common law and in the federal courts, corroboration generally has not been required. See, Alexander v. State, 281 Ala. 457, 204 So. 2d 488 (1967), cert. denied, 390 U.S. 984, 88 S. Ct. 1107, 19 L. Ed. 2d 1284 (1968).
Because the clear language of § 12-21-222 limits its corroboration requirement to felony convictions, all other adjudications, including youthful offender adjudications, are excluded from its effect. See Ex parte Holladay, 466 So. 2d 956, 960-61 (Ala.1985) (holding that "[w]here a statute enumerates certain things on which it is to operate ..., the statute must be construed as excluding from its effect all things not expressly mentioned"). The Youthful Offender Act was enacted in 1975, after the enactment of § 12-21-222. Under general rules of statutory construction, we conclude that, had the Legislature intended the corroboration principle of § 12-21-222 to apply to adjudications or *130 proceedings other than felony convictions, e.g., to misdemeanors, juvenile transfer hearings, adjudications of juvenile delinquency, probation revocation hearings, or youthful offender adjudications, it could have included a provision in the Youthful Offender Act, or could have amended § 12-21-222, to say so. This it did not do. Because § 12-21-222 and § 15-19-7(a) are plain and unambiguous on their faces, there is no room for judicial construction. When the language of a statute is plain and unambiguous, as in this case, courts must enforce the statute as written by giving the words of the statute their ordinary plain meaningthey must interpret that language to mean exactly what it says and thus give effect to the apparent intent of the Legislature. See, e.g., State Dep't of Transportation v. McLelland, 639 So. 2d 1370 (Ala. 1994).
Although T.B. questions the fairness of not requiring corroboration in youthful offender proceedings[1] when the underlying criminal act would be a felony, and although the Court of Criminal Appeals has indicated in prior cases (albeit without specifically addressing the question of the application of the § 12-21-222 corroboration principle to youthful offender proceedings, because of its holding that the testimony of any alleged accomplice was corroborated by the evidence) that there are valid policy reasons that the corroboration requirement of § 12-21-222 should be applied in juvenile proceedings, we decline to extend that corroboration requirement to youthful offender cases.
While this Court, like the Court of Criminal Appeals, recognizes that there are valid arguments and reasons for applying the corroboration requirement in youthful offender cases, it is not for the Judiciary to impose its view on the Legislature. Rather, we, as members of the Judiciary, must adhere to the fundamental rule of construction mandated by the separation of powers doctrinethat statutes be construed so as to ascertain and effectuate the intent of the Legislature.
Ex parte Holladay, 466 So. 2d at 960-61.
Because we conclude that the corroboration principle of § 12-21-222 does not apply in youthful offender proceedings, whether there was sufficient corroborating evidence is not dispositive in this case. We have, however, reviewed the evidence in this case. Although *131 we do not necessarily agree with the Court of Criminal Appeals that there was sufficient evidence to corroborate the testimony of the accomplice, we affirm that court's judgment, based on our holding that the corroboration principle of § 12-21-222 does not apply in this case.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, COOK, and SEE, JJ., concur.
BUTTS, J., concurs in the result.
[1] According to T. B., he "has never contended that § 12-21-222 or the youthful offender act expressly requires the corroboration of accomplices; instead, [he] contends that when the purpose and policy of both statutory enactments are reviewed it is clear that the corroboration requirement should be required in youthful offender proceedings when the underlying criminal actions constitute felonies." (T. B.'s reply brief in support of his certiorari petition.) | June 13, 1997 |
d5b32971-d00a-41cc-ae14-a4d0aecd150f | Continental Cas. Co. v. Brooks | 698 So. 2d 763 | 1951125, 1951786 | Alabama | Alabama Supreme Court | 698 So. 2d 763 (1997)
CONTINENTAL CASUALTY COMPANY
v.
Johnnie Mae BROOKS.
L. Sharon EGBERT
v.
Johnnie Mae BROOKS.
1951125, 1951786.
Supreme Court of Alabama.
June 20, 1997.
Robert A. Huffaker and N. Wayne Simms, Jr., of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for Continental Cas. Co.
W. Michael Atchison, Robert P. MacKenzie, and Rik S. Tozzi of Starnes & Atchison, Birmingham, for L. Sharon Egbert.
Billy J. Sheffield, Dothan, for Johnnie Mae Brooks.
PER CURIAM.
An Alabama attorney and her legal liability insurer appeal from a judgment entered in an action in which the attorney was sued for legal malpractice. The questions presented are: Did the trial judge err in finding that the parties had entered into an agreement to settle for the "policy limits," and did the trial judge err in determining that there were two occurrences instead of one?
The record shows that the parties, in the presence of the trial judge,[1] discussed settlement of the case, but subsequently got into a dispute relating to the amount agreed upon, the dispute primarily involving a disagreement over the trial court's legal determination that the "policy limits" were $500,000 instead of $250,000.
The trial court, in a written order, made several findings of fact and conclusions of law, and, based on those findings and conclusions, entered a final judgment against L. Sharon Egbert and her legal malpractice insurer, Continental Casualty Company ("CNA"), in favor of the plaintiff, Johnnie Mae Brooks, in the amount of $500,000, the maximum aggregate limits of the policy.
Although CNA and Egbert question whether the parties had a meeting of the minds on the terms of the settlement, they primarily argue that there was a single act of malpractice and that the "policy limits" were as they represented. The record shows that the parties disagreed on several points of law at the trial level; on this appeal they renew their disagreement on the applicable law.
Because of that disagreement, and for a better understanding of the legal issues presented, we have reviewed very carefully the written order issued by the trial judge in which he determined that the parties had *764 agreed, in his presence, to settle for the "policy limits."
It is apparent from a reading of the record that CNA contended at the trial level and represented to the trial judge that the policy limit was $250,000. That is the amount the trial judge initially ordered the defendants to pay. The plaintiff subsequently contended that she had been misled to believe that the policy limit was only $250,000 and that in fact it was greater, and she asked the trial judge to reopen the case. He did so, and, after conducting a hearing on the matter, stated in his final order that "the policy limit, under the facts of this case, [was] Five Hundred Thousand Dollars ($500,000.00)." He entered a judgment awarding the plaintiff $500,000 (less defense costs). CNA and Egbert appeal from that judgment.[2]
After thoroughly reviewing the record and the briefs of the parties, we think it clear that the parties, in fact, did agree, as found by the trial judge, to settle the claim for the "policy limits." It is also clear to us that the trial judge's legal conclusion was that the policy limit, under the facts of this case, was $500,000 based upon his determination that the plaintiff alleged and proved two separate claims of malpractice. Because we disagree with that determination, we must reverse the judgment of the trial court and remand the cause for further proceedings consistent with this opinion.
The determinative fact is whether the plaintiff's malpractice claims arise out of or are "connected with the same" wrongful acts or arise out of "related wrongful acts." The trial court held that the claims were not "connected" or "related." We disagree.
In her complaint, as amended, the plaintiff alleged the following:
CNA and Egbert argue that the wording of this claim shows that the alleged legal malpractice arose out of one continuing act, although the attorney made separate billings. We agree.
The trial judge held that "[a]lthough the acts of malpractice, concerning the preparation and execution of deeds on September 23, 1993 and October 22, 1993, involved the same property and parties, each act was separate and distinct." He stated that "[n]either act was dependent upon the other occurring," citing United States Fire Ins. Co. v. Safeco Ins. Co., 444 So. 2d 844 (Ala.1983), and Home Indemnity Co. v. Anders, 459 So. 2d 836 (Ala. 1984), as authority for his determination that Brooks had presented more than one malpractice claim. He also said that Bay Cities Paving & Grading, Inc. v. Lawyers' Mut. Ins. Co., 5 Cal. 4th 854, 21 Cal. Rptr. 2d 691, 855 P.2d 1263 (1993), cited by CNA and Egbert as authority for the proposition that only one claim was presented, was "easily distinguishable from the case at bar in that the two acts of malpractice therein did not cause separate and distinct damages for each act." We disagree.
As we have already pointed out, the plaintiff, in stating her claim against Egbert, alleged that "[o]n or about the 23rd day of September, 1993 through October 22, 1993, *765 defendant L. Sharon Egbert, a Dothan, Alabama attorney, prepared four quitclaim deeds and a durable power of attorney for plaintiff to sign, giving away all of her title to the aforesaid real property to Betty Cain and giving total control and partial ownership to all of plaintiff's personal assets to Betty Cain." We conclude that the principle of law set out by the Supreme Court of California in Bay Cities Paving & Grading, Inc. v. Lawyers' Mut. Ins. Co., construing policy provisions similar to those in this case, is applicable here.[3] In fact, this Court cited favorably that case in a recent opinion. See, Attorneys Insurance Mutual of Alabama, Inc. v. Smith, Blocker & Lowther, P.C., [Ms. 1950420, Aug. 2, 1996] ___ So.2d ___ (Ala. 1996). Also, see Ranger Insurance Co. v. Hartford Steam Boiler Inspection & Insurance Co., 410 So. 2d 40 (Ala.1982), Upton v. Mississippi Valley Title Ins. Co., 469 So. 2d 548 (Ala.1985).
Although the record shows that Egbert committed various acts of malpractice in connection with preparing deeds, wills, and a power of attorney, all of those acts, in our judgment, led to a single result that formed the basis of Brooks's claim: the loss of title to property.
We find no error in the trial court's finding that the parties had entered into a settlement agreement, but that court erred in holding that the attorney's various acts of malpractice did not "arise out of, or in connection with, the same or related acts." We must reverse the judgment and remand the cause for further proceeding consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, KENNEDY, COOK, and SEE, JJ., concur.
BUTTS, J., concurs in the result.
[1] The trial judge was Judge Bobby R. Aderholt, sitting by designation of the Chief Justice. Each of the judges in the Twentieth Judicial Circuit, where the case was filed, had recused himself.
[2] The parties disagree on the terms of the settlement agreement. Attorney Egbert and CNA claim that they agreed in open court with the plaintiff's counsel to pay $250,000, the "perclaim" amount of the policy; and the plaintiff, Johnnie Mae Brooks, claims that CNA and Egbert agreed to pay the "policy limits," which she maintains would be $500,000, the amount determined by the trial court to be the policy limit based on his determination that there were two separate acts of legal malpractice shown. That is not all they disagree on. The plaintiff also argues that CNA and Egbert fraudulently represented to her the amount of the policy limit.
[3] In the Bay Cities case, the attorney's malpractice policy contained the following provision regarding the limits of liability:
"Two or more claims arising out of a single act, error or omission or a series of related acts, errors or omissions, shall be treated as a single claim."
5 Cal. 4th at 857, 21 Cal. Rptr. 2d at 692, 855 P.2d at 1266. | June 20, 1997 |
6048a06e-1195-4d07-8f42-62e2b6af6b53 | Johnston v. Fuller | 706 So. 2d 700 | 1951973 | Alabama | Alabama Supreme Court | 706 So. 2d 700 (1997)
Roy Demp JOHNSTON
v.
William G. FULLER, et al.
1951973.
Supreme Court of Alabama.
June 27, 1997.
Rehearing Denied November 21, 1997.
Hobart A. McWhorter, Jr., James W. Davis, Mary Claire St. John and Matthew H. Lembke of Bradley, Arant, Rose & White, Birmingham, for appellant Roy Demp Johnston.
William A. Gunter, deputy legal counsel, Department of Conservation and Natural Resources, for appellee William G. Fuller.
Bill Pryor, atty. gen., and Mary Elizabeth Culberson, asst. atty. gen., for appellee James D. Martin.
John K. Johnson, Rockford, for appellee Judge George Jasper Fielding.
*701 SEE, Justice.
This invasion-of-privacy case arises from an investigation of complaints made about a game warden employed by the Alabama Department of Conservation and Natural Resources (the "Department"), concerning that game warden's alleged threat to kill Roy Johnston. The plaintiff, Johnston, alleges that the defendants certain employees of Department and a probate judge turned the game warden investigation, which consisted primarily of interviews of people who knew of the animosity between Johnston and the game warden, into an investigation of Johnston alone, and that this invaded Johnston's privacy. The trial court entered a summary judgment in favor of all the defendants. We affirm.
On review of a summary judgment, we must view the evidence in the light most favorable to the nonmovant, here Johnston; viewed in that light, the evidence indicates the following: Johnston had handled certain real estate matters for Hall Thompson in Coosa County. Johnston complained to Thompson that Earl Brown, the game warden in Coosa County, had, among other things, made a threat against Johnston's life. Because of the seriousness of the allegation, Thompson, who knew the Commissioner of the Department, James Martin, suggested that Martin look into the matter.
Martin informed Captain William Fuller of the Law Enforcement Section of the Department that he should talk to Johnston and proceed with an investigation of Brown. Johnston told Fuller that an unnamed third party had told him that Brown had made a statement regarding the purchase of plastic-coated bullets for the purpose of shooting Johnston. Johnston did not tell Fuller who had informed him of the threat. However, he did tell Fuller that he should talk to the people who worked with Brown. After speaking with Johnston, Fuller contacted Brown. Brown denied ever saying that he was going to kill Johnston.
Pursuant to Johnston's suggestion, Fuller continued his investigation by interviewing one of Brown's co-employees. This led to interviews of other persons whose names were given to him. Through his investigation, Fuller became aware of long-standing animosity between Brown and Johnston. Coosa County Probate Judge Jasper Fielding, on his own initiative, informed Fuller and the Commissioner of a number of incidents that called into question Johnston's character and trustworthiness, including Johnston's reputed sexual exploits and his attempt to have Brown's son charged with illegal hunting. The memoranda by which Fuller recorded the interviews indicate that Johnston was a troublemaker and that no one, other than one of Brown's co-workers, claimed to have heard Brown threaten to kill Johnston.
At some point during the investigation, Martin provided Thompson with the investigation file and asked him to keep the contents confidential. While Thompson had the file, Johnston reviewed it. Johnston then filed this tort action against Martin, Fuller, and Judge Fielding, alleging invasion of privacy.
Alabama has long recognized the tort of invasion of privacy. Smith v. Doss, 251 Ala. 250, 37 So. 2d 118 (1948). It is generally accepted that invasion of privacy consists of four limited and distinct wrongs: (1) intruding into the plaintiff's physical solitude or seclusion; (2) giving publicity to private information about the plaintiff that violates ordinary decency; (3) putting the plaintiff in a false, but not necessarily defamatory, position in the public eye; or (4) appropriating some element of the plaintiff's personality for a commercial use. Norris v. Moskin Stores, Inc., 272 Ala. 174, 132 So. 2d 321 (1961). Johnston alleges that the defendants invaded his privacy by committing the first two wrongs: (1) that the defendants intruded into his physical solitude or seclusion; and (2) that the defendants gave publicity to private information about him.
Johnston alleges that Martin and Fuller's investigation of Brown turned into an investigation of Johnston himself. Further, Johnston alleges that Martin and Fuller attempted to use the information uncovered *702 in the investigation to coerce Johnston into dropping his complaint against Brown. Johnston admits, however, that the investigation consisted solely of interviewing people about their knowledge of Johnston and of Brown.
In Phillips v. Smalley Maintenance Services, Inc., 435 So. 2d 705 (Ala.1983), this Court adopted the Restatement (Second) of Torts definition of the wrongful-intrusion branch of the invasion-of-privacy tort:
Restatement (Second) of Torts § 652B (1977). Comment c to § 652B states in part: "The defendant is subject to liability under the rule stated in this Section only when he has intruded into a private place, or has otherwise invaded a private seclusion that the plaintiff has thrown about his person or affairs." The wrongful intrusion may be by physical intrusion into a place where the plaintiff has secluded himself, by discovering the plaintiff's private affairs through wiretapping or eavesdropping, or by some investigation into the plaintiff's private concerns, such as opening private mail or examining a private bank account. Restatement (Second) of Torts § 652B cmt. b; see Vernars v. Young, 539 F.2d 966 (3d Cir.1976) (holding that invasion of privacy occurred when mail addressed to plaintiff was opened by defendant without plaintiff's consent); see generally, W. Page Keeton, et al., Prosser and Keeton on the Law of Torts, § 117, at 854-55 (5th ed.1984); 62 Am.Jur.2d Privacy §§ 51-57 (1990). Further, if the means of gathering the information are excessively objectionable and improper, a wrongful intrusion may occur. See Hogin v. Cottingham, 533 So. 2d 525 (Ala. 1988) (wrongful intrusion occurs when there has been abrupt, offensive, and objectionable prying into information that is entitled to be private).
Johnston did not allege that the defendants entered his home, searched through his private papers, wiretapped his telephone, or eavesdropped on his conversations. Johnston did not allege that the defendants obtained private records concerning his affairs. Johnston failed to present any evidence that Fuller's conduct in gathering the information was abrupt, offensive, and objectionable. Johnston admits that the defendants obtained their knowledge of him through first-hand conversations with him and through voluntary interviews with members of the community in which Johnston lived.
In Nader v. General Motors Corp., 25 N.Y.2d 560, 255 N.E.2d 765, 307 N.Y.S.2d 647 (1970), the Court of Appeals of New York dealt with a similar wrongful-intrusion claim arising in part from the defendant's voluntary interviews with acquaintances of the plaintiff. The court stated:
Nader, 25 N.Y.2d at 568-69, 255 N.E.2d at 770, 307 N.Y.S.2d at 654. Accord Nipper v. Variety Wholesalers, Inc., 638 So. 2d 778 (Ala.1994) (interviewing co-employees about their general knowledge of the plaintiff was not actionable).
Likewise, Johnston's allegations concern only voluntary interviews in which the defendants learned information already known to others. This information is not protected by *703 the limited scope of the wrongful-intrusion branch of the invasion-of-privacy tort, and we reject Johnston's invitation to create a broad privacy action, with no metes and bounds, that would extend beyond his dwelling, papers, and private records, creating unknown dangers to unsuspecting routine inquirers.[1]
Johnston also asserts that the defendants invaded his privacy by giving publicity to private information concerning Johnston when Martin delivered to Thompson the file containing the interview memoranda. Johnston admits, however, that the information in the file was not shown to the public at large or to a large number of people.
The Restatement provides:
Restatement (Second) of Torts § 652D (emphasis added). The comments to § 652D describe the key element of this tort, "publicity," as follows:
Restatement (Second) of Torts § 652D cmt. a (1977) (emphasis added). Accord Nobles v. Cartwright, 659 N.E.2d 1064, 1074 (Ind.Ct. App.1995).
Martin did not broadcast over the radio the information obtained about Johnston, he did not print it in a newspaper, and he did not tell it to a large number of people. He merely turned over the file to the person who had prompted the investigation and that person then showed the file to Johnston.[2] This was not an invasion of privacy through publicity.[3]
Based on the foregoing, we hold that the trial court correctly entered the summary judgment in favor of the defendants.[4]
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, HOUSTON, KENNEDY, COOK, and BUTTS, JJ., concur.
SHORES, J., concurs in the result.
[1] See generally Restatement (Second) of Torts § 652A cmt. c (1977) (noting that "some courts, and in particular the Supreme Court of the United States, have spoken in very broad general terms of a somewhat undefined `right of privacy' as a ground for various constitutional decisions involving indeterminate civil and personal rights").
[2] Moreover, the information publicized must be of a private nature to warrant relief. Abernathy v. Thornton, 263 Ala. 496, 498, 83 So. 2d 235, 237 (1955) (stating that there is "no privacy in that which is already public"). In this case, the information was obtained from the general knowledge of community members.
[3] Because we hold there is not a cognizable invasion of privacy in this case, we do not address the assertions of sovereign and qualified immunity by certain of the defendants.
[4] Johnston's claim that the defendants conspired to invade his privacy also fails because the alleged object of the conspiracy was not tortious in and of itself. See Keith v. Witt Auto Sales, Inc., 578 So. 2d 1269, 1274 (Ala.1991) (stating that a civil conspiracy must have a tortious object). | June 27, 1997 |
7c295bb3-aba6-490e-9f18-b0d907a793dc | Ex Parte Proctor | 712 So. 2d 328 | 1960247 | Alabama | Alabama Supreme Court | 712 So. 2d 328 (1997)
Ex parte Sheila PROCTOR.
(Re Sheila PROCTOR v. Pastal Lee PROCTOR).
1960247.
Supreme Court of Alabama.
June 27, 1997.
Rehearing Denied August 29, 1997.
Harry Montgomery, Moulton, for petitioner.
Cecil Caine, Moulton, for respondent.
SHORES, Justice.
We granted certiorari review to determine whether the Court of Civil Appeals' decision in this case conflicts with Sketo v. Sketo, 608 So. 2d 759 (Ala.Civ.App.1992), and Welch v. Welch, 636 So. 2d 464 (Ala.Civ.App.1994). The Court of Civil Appeals, without an opinion, affirmed the trial court's property division in this divorce case. Proctor v. Proctor, 696 So. 2d 1095 (Ala.Civ.App.1996) (table). We reverse and remand.
The facts stated here are taken from the statement of facts contained in the petitioner's Ala. R. App. P. 39(k) motion by reference to the "statement of facts" and "argument" portions of her original brief filed with the Court of Civil Appeals. Sheila Proctor and Pastal Lee Proctor were married on January 20, 1967, and lived together as husband and wife until they separated on January 26, 1994. During the course of their marriage, the Proctors together purchased, paid for, and held joint title to their marital home and a 79-acre parcel. Before the marriage, Pastal Lee Proctor had owned a 2 acre *329 parcel that adjoined the 79-acre parcel; he later conveyed this 2-acre parcel to himself and Sheila Proctor, so that they held title jointly. Thus, they came to be joint owners of the 81 acres.
During the marriage, Sheila Proctor worked as a homemaker and contributed to the couple's income by working 20 to 40 hours a week as a beautician and as a certified nurse's assistant with First American Health Care, Inc. She has a high school education and was 45 years old when she filed this divorce action. Pastal Lee Proctor also has a high school education; when this action was filed, he was 48 years old. He had worked for the Monsanto Company for 30 years and was earning approximately $41,847 a year.
Following the presentation of evidence ore tenus, the trial court, on February 22, 1996, entered a judgment dissolving the marriage upon grounds of incompatibility of temperament. During the trial, the wife contended that the husband had committed adultery, but the trial court did not find sufficient evidence to support her contention. In the divorce judgment, the court divided the Proctors' estate. The wife moved, alternatively, for a new trial or to vacate or amend the judgment, arguing that the trial court had abused its discretion by awarding the marital home and the entire 81-acre estate to the husband without providing for a payment to her for her contribution toward the purchase of the estate. She also argued that the trial court should have given her a portion of the husband's retirement savings, considering that she had no retirement savings of her own.
After the trial court denied her motion, the wife appealed to the Court of Civil Appeals. That court affirmed. She then filed her petition with this Court.
She argues that the trial court's division of the marital estate was in direct conflict with Sketo v. Sketo, supra, and Welch v. Welch, supra. In Sketo, the Court of Civil Appeals reversed the judgment of the trial court and remanded the cause for the trial court to enter an order equitably dividing the parties' property. 608 So. 2d at 761. The court wrote:
608 So. 2d at 761. Continuing, the court emphasized
608 So. 2d at 761. The Court of Civil Appeals in Sketo indicated that the trial court had awarded the husband property worth $70,000 and had awarded the wife only $2,500 in alimony in gross. Id.
In Welch, the Court of Civil Appeals held that a trial court may consider retirement benefits accumulated during the course of a marriage to constitute marital property, and, therefore, to be subject to equitable division. 636 So. 2d at 466-67. The court indicated that an amount represented in a 401(k) plan or in an individual retirement account (IRA) could be awarded as alimony in gross or could be awarded through a survivor's annuity. 636 So. 2d at 466.
In the present case, the trial court awarded the wife non-money personal property worth $40,900. This amount included a number of household appliances, a horse, half of the parties' cows and calves, furniture, cooking utensils, dishes, linens, and the equipment used in the wife's beautician business. It may or may not have included also the value of a 1993 Ford Aerostar van. She received the money held in a personal checking account and money in a savings account, *330 along with a savings bond in her name, the total of which the trial court stated was $28,000; she received an award of $20,000 as alimony in gross; and the court ordered that her health insurance coverage be paid for by the husband for 36 months (at an estimated cost of $7,000.00), the period for which she would be eligible to receive benefits under a COBRA plan administered through the Monsanto Company. She kept her one-half remainder interest in a 45-acre tract of land in which her mother held a life estate; her interest had an estimated value of $22,500. The trial court also held the wife responsible for any outstanding indebtedness incurred in her name, which amounted to an estimated $27,000 from the purchase of a new house and a new office for her beautician business. The trial court ordered that the wife was to have no interest in the husband's retirement account at the Monsanto Company, and she was divested of any interest in the parties' house and 81-acre estate.
The trial court awarded the husband non money personal property worth $19,050. This property included a 1961 John Deere tractor, a "pull camper," half of the cows and calves, a bull, a stock trailer, farm equipment, and the personal property in his possession, such as a washer and dryer, a refrigerator, a freezer, furniture, kitchen utensils, dishes, and linens. It may or may not have also included the value of a 1992 Ford pickup truck and a 1979 Dodge pickup truck. He received the 81-acre estate, on which were located the marital home, various buildings used for farming purposes, and the wife's office that she had used for her beautician business; this estate had an estimated value of $159,600. He received the money held in his personal savings and checking accounts, which amounted to $15,440; a full interest in his savings accounts with the Monsanto Company, which totalled $61,031; and a full interest in his "fully vested" pension account with the Monsanto Company, which would pay him $1,393 per month if he retired at age 65, or would pay him $975 per month if he retired at age 55.
The judgment of a trial court based on ore tenus evidence is presumed correct and the trial court's findings based on that evidence "will not be disturbed on appeal unless they are palpably wrong, manifestly unjust, or without supporting evidence." McCoy v. McCoy, 549 So. 2d 53, 57 (Ala.1989); McCrary v. Butler, 540 So. 2d 736 (Ala.1989); Jones v. Jones, 470 So. 2d 1207 (Ala.1985); Clark v. Albertville Nursing Home, Inc., 545 So. 2d 9, 12-13 (Ala.1989).
In Grimsley v. Grimsley, 545 So. 2d 75 (Ala.Civ.App.1989), the Court of Civil Appeals, considering whether a property division was equitable, stated:
545 So. 2d at 76. (Citations omitted.) Although it is not the function of the reviewing court to substitute its judgment for that of the trial court, Lewis v. Lewis, 494 So. 2d 105 (Ala.Civ.App.1986), the reviewing court may revise the trial court's judgment. Sketo v. Sketo, 608 So. 2d at 760; Seamon v. Seamon, 587 So. 2d 333 (Ala.Civ.App.1991).
The record and the briefs submitted by the parties show that the trial court's division of the Proctors' property (including the wife's remainder interest) resulted in an award of approximately 68% of the estate to the husband and 32% of the estate to the wife. While a property division need not be equal, it must be equitable. Sketo, supra. Those percentages do not include the "vested" retirement amounts the husband will receive at some point after reaching age 55. Additionally, those percentages exclude the debt incurred by the wife for her purchase of *331 a new house and a new office for her beautician business. The wife is eligible for health insurance benefits under the COBRA health insurance plan for only 36 months, and she will lose that coverage when she turns 48 years old. She has no retirement savings, and she received no interest in the house and the 81-acre estate, which she and the husband had held jointly, which had been held for the common benefit of both the husband and the wife, and which had been paid for in part by the wife during the course of her 28 year marriage. While the husband stands to earn approximately $41,847 a year working at the Monsanto Company, the wife stands to earn approximately $19,200 working at First American Health Care, assuming she works 40 hours a week.
In Sketo, supra, the court emphasized that the wife had been a joint owner of the real property; that the property had been used for the common benefit of the parties during their marriage; and that the wife had contributed to the payment of the mortgage on the home and on two of the parties' lots. 608 So. 2d at 761. Here, the Proctors had jointly purchased the marital home and 79 acres of the estate and held joint title to all 81 acres of the estate, which they had used for their common benefit during their marriage. The length of the marriage in Sketo 7 years was significantly shorter than that of the Proctor marriage 28 years. The husband in Sketo had purchased the marital home and some adjoining lots before the marriage; the husband in this present case had owned only two acres of the estate before the marriage. Like the wife in Sketo, the wife in this case held title jointly with the husband and had helped pay for the marital home and 79 acres of the estate. Like the trial court in Sketo, the trial court in this present case awarded the husband all of the real estate, including the marital home.
We are unable to distinguish the facts in this case from those in Sketo. Accordingly, we reverse the judgment of the Court of Civil Appeals and remand the case for that court to consider these facts in light of Sketo v. Sketo, 608 So. 2d 759 (Ala.Civ.App.1992), and Welch v. Welch, 636 So. 2d 464 (Ala.Civ. App.1994).
REVERSED AND REMANDED.
HOOPER, C.J., and HOUSTON, KENNEDY, COOK, and SEE, JJ., concur. | June 27, 1997 |
b64664d4-b823-434e-9f4c-96c704f541f7 | Flagstar Enterprises, Inc. v. Davis | 709 So. 2d 1132 | 1960141 | Alabama | Alabama Supreme Court | 709 So. 2d 1132 (1997)
FLAGSTAR ENTERPRISES, INC.
v.
Maureen DAVIS.
1960141.
Supreme Court of Alabama.
September 12, 1997.
Rehearing Denied January 23, 1998.
*1133 Bert P. Taylor and Scott P. Hooker of Taylor & Smith, P.C., Birmingham, for appellant.
Gary D. Hooper and R. Stephen Griffis of Hooper & Griffis, P.C., Birmingham, for appellee.
HOUSTON, Justice.
The defendant, Flagstar Enterprises, Inc. ("Flagstar"), appeals from a judgment entered on a $250,000 general jury verdict ($100,000 in compensatory damages and $150,000 in punitive damages) for the plaintiff, Maureen Davis, in this action seeking damages under theories of negligence and wantonness and under the Alabama Extended *1134 Manufacturer's Liability Doctrine ("AEMLD"). We reverse and remand.
Davis sued after discovering human blood in a styrofoam package containing a biscuit with gravy; she had purchased the biscuit from a Hardee's restaurant, which was operated under a franchise agreement with Flagstar. The evidence, viewed in the light most favorable to Davis, as it must be in accordance with our standard for reviewing the denial of a motion for a judgment as a matter of law,[1]St. Clair Federal Savings Bank v. Rozelle, 653 So. 2d 986 (Ala.1995), was set out in Davis's brief as follows:
(Citations to the record omitted; emphasis by Davis.)
The trial court denied Flagstar's motion for a judgment as a matter of law made before submission of the case to the jury and later denied its motion for a judgment as a matter of law made after the verdict. It is those rulings that form the basis for Flagstar's appeal.[2]
With respect to the negligence claim, Flagstar contends that Davis failed to present any evidence that the Hardee's restaurant breached a duty with respect to the manner in which its employee or employees had prepared her food. Specifically, Flagstar argues:
Davis contends that she presented sufficient circumstantial evidence of each element of her negligence claim to submit that claim to a jury. Based on our review of the evidence, we conclude that it was sufficient to create a jury question with respect to the negligence claim. It is well established that there are three essential elements to a right of recovery for negligence: 1) a duty owing from the defendant to the plaintiff; 2) a breach of that duty; and 3) an injury to the plaintiff in consequence of that breach. Stokely-Van Camp, Inc. v. Ferguson, 271 Ala. 120, 122 So. 2d 356 (1959); South Coast Properties, Inc. v. Schuster, 583 So. 2d 215 (Ala.1991). It cannot be seriously disputed that the restaurant owed a duty to Davis to exercise reasonable care in the preparation and packaging of her food, i.e., that it had a duty to sell her merchantable food or food that was not unreasonably dangerous. In McCarley v. Wood Drugs, Inc., 228 Ala. 226, 227, 153 So. 446, 446 (1934), this Court stated:
A Hardee's employee would certainly take reasonable steps so as not to allow his or her own food to become contaminated with human blood, and a Hardee's customer certainly would not reasonably expect to find human blood in a biscuit with gravy, a fact conceded by Flagstar. See Cain v. Sheraton Perimeter Park South Hotel, 592 So. 2d 218 (Ala.1991), discussing the "reasonable expectation" test adopted by this Court in Ex parte Morrison's Cafeteria of Montgomery, Inc., 431 So. 2d 975 (Ala.1983). The evidence, viewed in the light most favorable to Davis, indicated that Davis purchased a biscuit with gravy from the Hardee's restaurant; that that biscuit with gravy was contaminated with human blood; that Annetta Cohill, a Hardee's employee, was primarily responsible for preparing Davis's food on the morning in question; that Cohill's supervisor had to bandage Cohill's arm on that same morning;[3] that Cohill's supervisor sent her home before her shift was over, even though the restaurant was busy with customers; and that no one outside the restaurant who came into contact with the food (Eric Cohill) or in close proximity to it (customers paying for gasoline at the store's counter) had a reasonable opportunity to bleed into the styrofoam container. A jury could reasonably infer from this evidence that Annetta Cohill failed to exercise reasonable care in packaging Davis's food, either by failing to properly bandage a cut or abrasion on her arm or by failing to observe that blood had gotten onto the styrofoam container, and that Davis suffered emotional distress as a result of eating blood-tainted food.[4] We hold, therefore, that *1141 the trial court properly denied Flagstar's motion for a judgment as a matter of law on Davis's negligence claim.[5]
As to the AEMLD claim, Flagstar concedes, as previously noted, that a consumer would not reasonably expect to find *1142 human blood in food purchased from a restaurant and, therefore, that food contaminated in such a manner would be "defective" within the meaning of the AEMLD. For a discussion of the AEMLD in the context of allegedly defective food served by a restaurant, see Cain v. Sheraton Perimeter Park South Hotel, supra. Flagstar contends, however, that Davis failed to present sufficient evidence that the biscuit with gravy left the restaurant's control in an unreasonably dangerous or defective condition. Flagstar also contends that "the evidence conclusively demonstrates that the product was substantially changed from its original condition." These two contentions appear to be based on Flagstar's belief that the evidence conclusively established that the styrofoam package containing the biscuit with gravy was contaminated by someone after it was taken from the restaurant by Eric Cohill. Suffice it to say that the evidence presents a question of fact for a jury as to whether the food could have been contaminated after it was taken from the restaurant. We hold, therefore, that the trial court properly denied Flagstar's motion for a judgment as a matter of law with respect to the AEMLD claim.
Wantonness is "[c]onduct which is carried on with a reckless or conscious disregard of the rights or safety of others." Ala. Code 1975, § 6-11-20(b)(3). Flagstar contends that Davis's evidence was not of such quality and weight that a jury of reasonable and fair-minded persons could find that evidence "clear and convincing" on Davis's claim that an employee or employees of the Hardee's restaurant had deliberately engaged in conduct that was in reckless or conscious disregard of the safety of the restaurant's customers. See Ex parte Norwood Hodges Motor Co., 680 So. 2d 245 (Ala.1996). Davis, of course, takes the contrary position, arguing primarily that she presented evidence from which a jury could reasonably infer that employees of the restaurant, and Flagstar itself, failed to fully cooperate with Davis following the incident and could infer that a "cover up" had been undertaken in an attempt to avoid liability. After carefully examining the evidence, we conclude that Davis presented insufficient evidence to submit the wantonness claim to a jury. We hasten to point out again that in reviewing the evidence we have indulged all reasonable inferences in favor of Davisconsidering the evidence exactly as Davis set it out in her brief. Although we agree with Davis that a reasonable person might conclude from the evidence that employees of Hardee's and Flagstar took evasive measures to hinder and possibly "cover up" the investigation into the incident by the health department and Davis's attorney, that evidence, standing alone, in no way indicates that on November 30, 1993, Annetta Cohill, or any other employee of Hardee's, deliberately engaged in conduct (preparing food) in reckless or conscious disregard for the safety of the restaurant's customers. The evidence of a "cover up" of what may have been negligence on the part of Annetta Cohill in packaging Davis's food cannot logically support a finding of wantonness and a consequent assessment of punitive damages. A conclusion based solely on conjecture or speculation cannot serve as a proper basis for a jury verdict. South Coast Properties, Inc. v. Schuster, supra. Therefore, we are constrained by our standard of review to hold that, with respect to the wantonness claim, the trial court erred in denying Flagstar's motions for a judgment as a matter of law. Because Flagstar challenged the sufficiency of the evidence to support the wantonness claim and because the wantonness claim constituted a "bad count" within the meaning of Aspinwall v. Gowens, 405 So. 2d 134 (Ala. 1981), we reverse the judgment and remand the case for further proceedings consistent with this opinion.[6]
REVERSED AND REMANDED.
*1143 HOOPER, C.J., and MADDOX, KENNEDY, and SEE, JJ., concur.
ALMON, SHORES, and COOK, JJ., dissent.
COOK, Justice (dissenting).
I respectfully dissent. I would hold that sufficient evidence existed to submit the wantonness claim to the jury.
I agree with the majority that evidence offered to prove that employees of Hardee's and Flagstar subsequently attempted to "cover-up" the investigation into the incident does not indicate that any employees engaged in conduct in reckless or conscious disregard for the safety of Hardee's customers. However, the conduct of Hardee's employees prior to the incident has a direct bearing on the sufficiency of the evidence with respect to the wantonness claim. On two occasions, Annetta Cohill stated under oath that she may have cut herself and that it may have been her blood in the styrofoam container in question. During cross-examination at trial, "substantial portions of the [Annetta Cohill] deposition [were] read to her and placed into the record without objection by Flagstar. Particularly, Annetta Cohill admitted in her deposition testimony and in her trial testimony, under oath, that when Davis's counsel inquired as to whether or not she had information with regard to the bloody biscuit, her first response was, `I could have cut myself,' [and] `It might have been my blood,' and that her supervisor, Hilda Bryant, sent her home early on that day." (Appellee's brief at 12.) (Citations to the record omitted; emphasis added.) These statements were made by Cohill to Davis's attorney when Cohill believed she was speaking *1144 with an attorney for Hardee's. Not only did Cohill admit during her sworn deposition testimony that she had made the statements to Davis's attorney in a telephone conversation, but she also admitted the same at trial. It was not until after Cohill realized that she was not talking to a Hardee's attorney that she stated that she did not cut her hand and that it could not have been her blood in the biscuit. If the jury believed, and apparently it did, that Cohill knew she was bleeding and that her blood may have gotten into the styrofoam container, yet continued to work and package biscuits and gravy for customers, then the jury could have found that Cohill's conduct occurred with a reckless or conscious disregard for Hardee's customers, including Davis.
Furthermore, at no time during trial did Flagstar object to the testimony of Annetta Cohill. In fact, Flagstar failed to request, in regard to Cohill's testimony, a limiting instruction specifying that the testimony could be used for impeachment purposes only. Therefore, Flagstar failed to properly preserve this argument for appeal.
I agree with the majority that the plaintiff's evidence was sufficient to support the negligence and AEMLD claims. However, based on the fact that Cohill stated under oath on two occasions that she might have cut herself and that it might have been her blood in the biscuit, I dissent from the holding that the plaintiff's evidence was insufficient on the wantonness claim. I would affirm the judgment.
ALMON and SHORES, JJ., concur.
[1] See Rule 50, Ala.R.Civ.P. Such a motion was formerly known as a motion for a directed verdict, when it was made before submission of the case to the jury, and as a motion for a judgment notwithstanding the verdict, when it was made after an unfavorable verdict.
[2] In addition to challenging the sufficiency of the evidence to support Davis's claims, Flagstar also contends that the verdict was against the weight of the evidence. In light of our holding on the sufficiency issue, we pretermit any discussion of the weight-of-the-evidence issue.
[3] There was testimony indicating that the supervisor had bandaged an old scab on Cohill's arm as a precautionary measure only, not out of any concern that it may have been bleeding. The credibility of this testimony and the weight to which it is entitled in deciding this case are matters reserved to the jury.
[4] We note that our holding in this respect is not based on the doctrine of res ipsa loquitur. In McCarley v. Wood Drugs, Inc., supra, this Court noted:
"[In] Hooper Cafe Co. v. Henderson, [223 Ala. 579, 137 So. 419 (1931)], it was noted that the case of Sheffer v. Willoughby, 163 Ill. 518, 45 N.E. 253, 34 L.R.A. 464, 54 Am.St.Rep. 483, cited approvingly in Travis v. L. & N.R.R. Co., [183 Ala. 415, 62 So. 851 (1913)], held, in effect, that proof that plaintiff ate the food, and in consequence became sick, did not make out a prima facie case of negligence, nor shift the burden to defendant, and this holding was approved, with the concluding observation, that negligence or breach of duty is not to be presumed.
"Measured by the rule of these decisions, now firmly established in this jurisdiction, the trial court correctly ruled in giving the affirmative charge in favor of the defendant.
"The evidence is not voluminous and has been duly considered by the court in consultation, and we find it was sufficient from which the jury might reasonably infer plaintiff's sickness was in some manner produced by the food served her in the purchased lunch. But this alone will not suffice for the submission of plaintiff's case to the jury. There must be some fact or circumstance from which a reasonable inference may also be drawn that defendant failed in the proper degree of care in the selection or preparation thereof.
"Of course, as insisted by counsel for plaintiff, negligence may be inferred from circumstances (Lawson v. Mobile Electric Co., 204 Ala. 318, 85 So. 257), and direct acts need not be shown, but proof must nevertheless be adduced from which a reasonable inference of negligence may be drawn. It was so adduced in Hooper Cafe v. Henderson, supra, where fish with an unpleasant odor and taste was served with the added proof that spoiled fish may be readily detected by the senses of sight, touch, and smellall of which justified the inference of negligence on the defendant's part. And in Travis v. L. & N.R.R. Co., supra, proof was offered as to the oysters served, upon which negligence might be reasonably inferred; and in Pantaze v. West, 7 Ala.App. 599, 61 So. 42, 44, cited by appellant, where plaintiff became sick from eating tainted brains, proof was adduced showing that such condition was easily detected, and that in fact the harmful effects might be removed by proper cooking. The court observed: `The inferences that might easily and reasonably be drawn from this evidence, it seems to us, are that, if the plaintiff was made sick from eating tainted brains, the defendant or his servants, for whose acts the defendant is liable, were negligent either in not using due care in properly cooking the brains or in failing to discover that they were tainted or in an unfit and dangerous condition to cook and serve to patrons for consumption; for it was established by the testimony that the taint was easily and readily detected by any one giving ordinary attention to the matter, and a want or failure to observe this duty and exercise due care in this regard would constitute that negligence for which the defendant would be held liable.'
"In the instant case there was no proof of peculiar or unpleasant odor or taste as to the food consumed, nor anything to indicate that it was in any manner improper for human consumption. Plaintiff rests her case upon proof tending to show sickness in consequence of the food consumed. But, as previously stated, this will not suffice for submission of the matter of defendant's negligence for the jury's determination."
228 Ala. at 227-28, 153 So. at 447. As previously stated, the evidence in the present case suggested that the blood was clearly visible inside the styrofoam container and that it could have been readily detected by Cohill if she had been exercising reasonable care at the time she packaged Davis's food.
Citing a number of cases from other jurisdictions, Flagstar also contends that, as a matter of law, Davis should not be allowed to recover damages based on allegations that she suffered emotional distress arising out of a fear of contracting HIV, the virus that causes AIDS (acquired immune deficiency syndrome). The record indicates that Flagstar tried its case below on the theory that Davis had failed to prove each of the elements of her claims, not on the theory, presented here for the first time, that as a matter of law she could recover no damages for emotional distress. Characterizing Davis's assertions of emotional distress as "AIDS phobia," Flagstar argues that it was entitled to a judgment as a matter of law on the ground that Davis suffered no injury as the result of eating blood-tainted food. We find it unnecessary to reach this issue because, in our view, it constitutes a new theory that was not raised in the trial court. Relying on Beavers v. County of Walker, 645 So. 2d 1365 (Ala.1994), Flagstar takes the position that it preserved the issue for appellate review by making the general argument that the evidence was insufficient to submit the negligence claim to a jury. This Court did recognize in Beavers that the rule requiring adherence to the theory relied on in the trial court does not mean that the parties are limited on appeal to the same reasons or arguments advanced in the trial court upon the matter or question in issue. 645 So. 2d at 1372. However, the rule remains that a party may not change theories on appeal in an attempt to set aside the judgment. This Court, in First National Bank of Pulaski, Tenn. v. Thomas, 453 So. 2d 1313 (Ala.1984), implicitly rejected the notion that a general motion challenging the sufficiency of the evidence is sufficient to preserve for appellate review every theory that might be relied on to support the motion. One of the issues in that case concerned whether the bank had trespassed on the plaintiffs' property. At trial, the bank took the position that it had had permission to send one of its representatives onto the plaintiffs' property; therefore, according to the bank, the evidence was insufficient to show that it had committed a trespass. On appeal, however, the bank argued that no trespass had occurred because it had a right under its mortgage to enter onto the plaintiffs' property. This Court stated:
"The assertion now, for the first time, that the Bank as mortgagee had a right to enter upon plaintiffs' premises raises a theory which we cannot consider. Dixie Highway Express, Inc. v. Southern Railway Co., 286 Ala. 646, 244 So. 2d 591 (1971). Having permission or consent to enter upon the land, on the one hand, and having the right as mortgagee to enter upon that land, are obviously inconsistent and different theories. Having permission or consent implies that plaintiffs had the right to control the Bank's entry, while having the right to enter the land as mortgagee implies a right of entry not dependent upon permission or consent of the plaintiff mortgagors. Having tried its case below on the theory of consent, the Bank cannot now pursue the new theory of entrance by right as mortgagee."
453 So. 2d at 1319.
[5] We note, as Flagstar points out, that there is no cause of action in Alabama for the negligent infliction of emotional distress. Implied in our holding in Allen v. Walker, 569 So. 2d 350 (Ala. 1990), a case involving allegations of verbal abuse and threats of physical violence, is the idea that one cannot negligently "inflict" emotional distress on another. The American Heritage Dictionary of the English Language (1969), defines "inflict" as follows: "1. To cause or carry out by physical assault or other aggressive action. 2. To impose.... 3. To afflict." Accordingly, this Court has recognized that only the intentional infliction of severe emotional distress is actionable as a separate tort. However, the present action is based on allegations that a Hardee's employee negligently packaged Davis's food and that that negligence resulted in Davis's suffering emotional distress. Damages for emotional distress may be awarded in a negligence case, even in the absence of physical injury. Taylor v. Baptist Medical Center, Inc., 400 So. 2d 369 (Ala. 1981). See, also, Reserve National Ins. Co. v. Crowell, 614 So. 2d 1005, 1011 (Ala.1993), cert. denied, 510 U.S. 824, 114 S. Ct. 84, 126 L. Ed. 2d 52 (1993), wherein this Court recognized the difference between a claim alleging negligent infliction of emotional distress and a claim not based on infliction of emotional distress, but pursuant to which damages for emotional distress may nonetheless be awarded.
[6] We note that in considering the question of the sufficiency of the evidence with respect to the negligence and wantonness claims, we have not considered as substantive evidence Annetta Cohill's testimony that she "could have" cut herself or that the blood "might have been" hers. That testimony was admissible at the trial for impeachment purposes after Cohill had denied that the blood could have been hers, and Flagstar concedes as much; however, it could be considered as substantive evidence only if the statements had been made in an appropriate proceeding at which Cohill was under oath and was subject to being penalized for perjury. See Rule 801(d)(1), Ala.R.Evid., which provides:
"Statements That Are Not Hearsay. A statement is not hearsay if
"(1) Prior Statement by Witness. The declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement, and the statement is (A) inconsistent with the declarant's testimony, and was given under oath subject to the penalty of perjury at a trial, hearing, or other proceeding, or in a deposition...."
See, also, Patrick v. Femco Southeast, Inc., 590 So. 2d 259 (Ala.1991); and C. Gamble, McElroy's Alabama Evidence, § 159.02(1) (5th ed.1996):
"A self-contradictory statement by a witness who is not a party, whether testified to by the witness during questioning or proven extrinsically by others, generally is not substantive evidence of the matter asserted. The statement customarily operates only to impeach or discredit the witness and has no other effect; in particular, such statement cannot be the basis of a finding of fact necessary to the establishment of civil or criminal liability or a defense to either.
"....
"With the advent of the Alabama Rules of Evidence, however, at least some inconsistent statements constitute substantive evidence as to the truth of the matter asserted in them. When a witness, for example, testifies at a trial or hearing and is subject to cross-examination then that witness' prior inconsistent statement is admissible as substantive evidence if it was given under oath subject to penalty of perjury at a trial, hearing, other proceeding or in a deposition. This particular rule of admissibility had been embraced by the Alabama courts before adoption of the Alabama Rules of Evidence. A statement qualifies [as substantive evidence] under [Rule 801(d)(1)(A)] only if: 1) it is inconsistent with the witness' present testimony; 2) the witness is subject to cross-examination; and 3) the statement was given in an appropriate proceeding. Appropriate proceedings include such proceedings as hearings before a grand jury, prior trials and depositions. When a prior inconsistent statement is offered for substantive proof of its contents under the present principle, the offering party is due an instruction that it is usable both as going to the credibility of the witness and as substantive proof of the matter asserted."
Davis argues that because Cohill admitted under oath in her deposition and at trial that she had made the statements to Davis's attorney in a telephone conversation over two years after the incident, Rule 801(d)(1) is satisfied and the statements should be considered as evidence that Cohill could have cut herself and that she could have gotten blood in the container. The rule is clear, however, and it requires that the statement one seeks to have admitted have been made under oath at an appropriate proceeding. Testifying under oath that she had made the statements to Davis's attorney is not the same as making the statements under oath. The rule contemplates that a statement is more reliable if it was made under oath, with the declarant subject to penalty for perjury. Stretching the rule in the way Davis suggests would tend to remove the prophylactic effect of that requirement.
In any event, we note that even if we were to consider the statements as substantive evidence, they in no way indicate that Cohill engaged in wanton conduct while preparing Davis's food. | September 12, 1997 |
4bc9ac54-12bf-4731-8e86-db5ba8963f23 | Hurst v. Tony Moore Imports, Inc. | 699 So. 2d 1249 | 1960306 | Alabama | Alabama Supreme Court | 699 So. 2d 1249 (1997)
John R. HURST
v.
TONY MOORE IMPORTS, INC., et al.
1960306.
Supreme Court of Alabama.
July 18, 1997.
*1250 Johnny V. Berry, Cullman, for appellant.
No brief filed for appellees.
HOUSTON, Justice.
The plaintiff, John R. Hurst, purchased a used GMC pickup truck from the defendant, Tony Moore Imports, Inc. ("the dealership"). Hurst signed a "Buyer's Order" that contained the following "Dispute Resolution Agreement":
After becoming dissatisfied with the vehicle, Hurst sued the dealership and several of its employees, seeking damages based on allegations of fraud and breach of implied warranties. Hurst demanded a jury trial.
The dealership moved to compel Hurst to arbitrate his claims, in accordance with the arbitration agreement he had signed, and to stay any further judicial proceedings pending the completion of the arbitration proceedings. In the same motion, the dealership moved, in the alternative, to dismiss Hurst's action. In support of that motion, Tony Moore, the dealership's president and sole shareholder, submitted the "Buyer's Order" and an affidavit that stated, in pertinent part, as follows:
The trial court granted the dealership's motion, stating:
Hurst filed a motion to alter, amend, or vacate the order, supported by, among other things, his affidavit, which stated, in pertinent part, as follows:
The trial court denied Hurst's motion, again relying on Allied-Bruce Terminix, supra. Hurst appealed. We affirm.
Under Alabama law, the specific enforcement of a predispute arbitration agreement violates both our statutory law and our public policy, unless federal law preempts them. Lopez v. Home Buyers Warranty Corp., 670 So. 2d 35 (Ala.1995). The Federal Arbitration Act preempts contrary state law and, thus, renders enforceable a predispute arbitration agreement contained in a contract that "involves" interstate commerce. Jim Burke Automotive, Inc. v. Beavers, 674 So. 2d 1260 (Ala.1995), citing Allied-Bruce Terminix, supra. In Allied-Bruce Terminix, the United States Supreme Court rejected the "contemplation of the parties" test that this Court had adopted in Ex parte Warren, 548 So. 2d 157 (Ala.1989), cert. denied, Jim Skinner Ford, Inc. v. Warren, 493 U.S. 998, 110 S. Ct. 554, 107 L. Ed. 2d 550 (1989).[2] The Supreme Court stated:
513 U.S. at 272-82, 115 S. Ct. at 839-43.
The evidence presented by affidavits in the present case indicates that the dealership is an Alabama corporation, with its sole place of business in Alabama; that Hurst is an Alabama resident and that he purchased a used motor vehicle in Alabama for his own personal use; that Hurst financed the purchase through First Alabama Bank; that Redstone Federal Credit Union held a lien on the vehicle Hurst "traded in" to the dealership; and that the indebtedness owed on that trade-in vehicle was satisfied from the proceeds of the transaction. This Court had *1253 held before Allied-Bruce Terminix that the sale in Alabama of a used motor vehicle manufactured outside Alabama to an Alabama resident who was buying it as a consumer and not for commercial purposes, was not a contract "involving commerce," as that term is used in the FAA, if the seller had its only place of business in Alabama, the vehicle was delivered to the buyer in Alabama, and all obligations arising out of the contract were to be performed in Alabama. See Ex parte Williams, 555 So. 2d 146 (Ala.1989), which relied on a similar case, Ex parte Warren, supra. In Ex parte Warren, this Court stated:
"Ex parte Costa & Head (Atrium), Ltd., 486 So. 2d 1272, 1275 (Ala.1986).
"287 F.2d at 387 (Lumbard, Chief Judge, concurring) (emphasis original). See, also, Burke County Public Schools Board of Education v. Shaver, 303 N.C. 408, 279 S.E.2d 816, 822 (1981) (applying the Metro Industrial test).
548 So. 2d at 159-60.
Ex parte Williams and Ex parte Warren were decided before the United States Supreme Court decided Allied-Bruce Terminix and while this Court was applying the "contemplation of the parties" test. However, in Allied-Bruce Terminix, the Supreme Court made it very clear that the words "involving commerce," as used in § 2 of the FAA, are much broader than the often-found words of art "in commerce" and that they cover activities within the "flow" of interstate commerce as well as activities that merely have an effect on interstate commerce. Citing United *1254 States v. American Building Maintenance Industries, 422 U.S. 271, 276, 95 S. Ct. 2150, 2154, 45 L. Ed. 2d 177 (1975), quoting Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 195, 95 S. Ct. 392, 398, 42 L. Ed. 2d 378 (1974), the Court in Allied-Bruce Terminix defined "flow" to include "the generation of goods and services for interstate markets and their transport and distribution to the consumer."[3] 513 U.S. at 268, 115 S. Ct. at 839. The Court in American Building Maintenance had held:
422 U.S. at 283-86, 95 S. Ct. at 2158-59.
Based on Allied-Bruce Terminix and American Building Maintenance,[4] we reaffirm *1255 Ex parte Williams and Ex parte Warren to the extent they stand for the proposition that, standing alone, the sale in Alabama of a used motor vehicle to an Alabama resident, where the seller has its only place of business in Alabama, the vehicle is delivered to the buyer in Alabama, and all obligations arising out of the sales contract are to be performed in Alabama, is not a transaction within the "flow" of interstate commerce.
However, the question remains as to whether Hurst's purchase of the vehicle had some effect on interstate commerce. Because the dealership did not file a brief in this Court, we could assume from the content of Moore's affidavit that the trial court may have held (and that the dealership's argument might be) that the transaction in question affected the flow of interstate commerce, at least in part, because the two financial institutions involved (First Alabama Bank and Redstone Federal Credit Union) may have shareholders or members who reside outside Alabama. Assuming, without deciding, that Moore's testimony (that he was "informed" and "believed" that First Alabama Bank and Redstone Federal Credit Union had out-of-state shareholders or members) was admissible for purposes of the dealership's motion, that testimony in no way indicates that Hurst's purchase of the vehicle from the dealership affected the flow of interstate commerce. Stated differently, a purely intrastate transaction, such as the one here, must affect in some way "the generation of goods and services for interstate markets and their transport and distribution to the consumer" (Allied-Bruce Terminix, supra, 513 U.S. at 273, 115 S.Ct. at 839), in order for it to "involve" interstate commerce within the meaning of § 2 of the FAA. However, the obvious weakness of the argument that the involvement of First Alabama Bank and Redstone Federal Credit Union brings this case within § 2 of the FAA causes us to believe that this was not the basis upon which the trial court ruled.
In Jim Burke Automotive, Inc. v. Beavers, supra, a post-Allied-Bruce Terminix case, a majority of this Court affirmed the trial court's denial of a motion to compel arbitration of a dispute arising out of the sale of a used motor vehicle. The majority wrote:
674 So. 2d at 1261. Based on our review of the record in the present case, we may logically surmise that the trial court understood the issue before it to be whether an agreement for the intrastate sale of a used motor vehicle has an effect on interstate commerce. Thus, the issue the majority would not reach in Jim Burke Automotive, Inc. v. Beavers is ripe for review in the instant case.
The United States Constitution delegates to Congress the power "[t]o regulate commerce with foreign Nations, and among the several states, and with Indian Tribes." U.S. Const., Art. I, § 8, cl. 3. From the outset of constitutional jurisprudence, many questions have been raised concerning the extent to which Congress may regulate commerce. *1256 Chief Justice John Marshall first addressed this provision of the Constitution in the seminal case of Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L. Ed. 23 (1824). In that case, the Chief Justice, noting that the Constitution allowed Congress to "regulate commerce... among the several states," gave the first interpretation of this constitutional delegation of power, stating:
22 U.S. (9 Wheat.) at 194-95 (emphasis added). Thus, the very first interpretation of Congress's power to regulate interstate commerce held that this power extends to the regulation of commerce "which concerns more states than one."
The contract in this case involved the sale of a used motor vehicle. Congress, exercising its power to regulate interstate commerce, has specifically authorized federal agencies to regulate the sale of used motor vehicles. See Code of Federal Regulations, Title 16, Commercial Practices, Chapter 1, Federal Trade Commission, Subchapter D, Trade Regulation Rules, Part 455, Used Motor Vehicle Regulation Rule. 16 C.F.R. § 455. Therefore, Congress has concluded that the sale of a used motor vehicle involves interstate commerce.
The definition of "interstate commerce" has been greatly extended beyond the original interpretation given by Chief Justice Marshall. Before 1937, the Supreme Court decisions interpreting the Commerce Clause dealt almost entirely with the Commerce Clause as a restriction on state legislation and interpreted the reach of the Commerce Clause in a narrower manner than more recent decisions. See, e.g., A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837, 79 L. Ed. 1570 (1935); United States v. E.C. Knight Co., 156 U.S. 1, 15 S. Ct. 249, 39 L. Ed. 325 (1895); Kidd v. Pearson, 128 U.S. 1, 9 S. Ct. 6, 32 L. Ed. 346 (1888); Veazie v. Moor, 55 U.S. 568, 14 How. 568, 14 L. Ed. 545 (1853). In 1937, the Court expanded the interpretation of interstate commerce in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 57 S. Ct. 615, 81 L. Ed. 893 (1937), and abandoned the previous distinction that had been made between direct and indirect effects on interstate commerce, so as to expand Congress's regulatory power. See also United States v. Wrightwood Dairy Co., 315 U.S. 110, 62 S. Ct. 523, 86 L. Ed. 726 (1942); United States v. Darby, 312 U.S. 100, 61 S. Ct. 451, 85 L. Ed. 609 (1941). The expansive interpretation of interstate commerce reached its zenith in Wickard v. Filburn, 317 U.S. 111, 63 S. Ct. 82, 87 L. Ed. 122 (1942), wherein the Supreme Court, stating that growing and harvesting wheat in one's own backyard would affect interstate commerce, gave Congress the power to regulate a minute local activity. In Wickard v. Filburn the Court held that the powers of Congress under the Commerce Clause extended to the regulation of the activities of a farmer, Filburn, who had violated the Agricultural Adjustment Act of 1938 by harvesting more wheat than was allowed under the Act. Although Filburn had grown this wheat primarily for his family's own consumption and had harvested only 12 more acres than was allowed by the Act, the Court held that this activity had a sufficient effect on interstate commerce to allow the United States to prosecute him for violating the Act. The Court, in determining that Filburn's activities involved interstate commerce, stated:
Wickard, 317 U.S. at 128, 63 S. Ct. at 91.
Since this zenith, the seemingly infinite reach of Congress' regulatory authority under the Commerce Clause has shortened somewhat. In United States v. Lopez, 514 U.S. 549, 115 S. Ct. 1624, 131 L. Ed. 2d 626 (1995), the Supreme Court noted that the possession of a firearm near a high school did not involve a commercial transaction and it held that such possession did not affect interstate commerce. The Supreme Court recognized the key dilemma posed by our system of federalismto hold that the possession of a firearm near a school affected interstate commerce would divest states of the right to regulate public and private schools and would vest that power in Congress.[5] 514 U.S. at 563-67, 115 S. Ct. at 1632-33. Unwilling to conclude that the Commerce Clause was intended to subject all state authority to federal intervention, the Supreme Court recognized that the concept of interstate commerce does have limits, at least in noncommercial situations. 514 U.S. at 567, 115 S. Ct. at 1634. However, we do not view Lopez as signaling a retreat by the Supreme Court from its expansive interpretation of "interstate commerce" in cases clearly involving commercial transactions.[6] The Court's opinions discussing the reach of the Commerce Clause seem to hold that almost any commercial transaction undertaken may "affect" interstate commerce, no matter how slightly, and therefore can be regulated by Congress. See, e.g., Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S. Ct. 1005, 83 L. Ed. 2d 1016 (1985); Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264, 101 S. Ct. 2352, 69 L. Ed. 2d 1 (1981); Perez v. United States, 402 U.S. 146, 91 S. Ct. 1357, 28 L. Ed. 2d 686 (1971); Katzenbach v. McClung, 379 U.S. 294, 85 S. Ct. 377, 13 L. Ed. 2d 290 (1964); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 85 S. Ct. 348, 13 L. Ed. 2d 258 (1964). These cases stand for the proposition that if any effect on interstate commerce can be found in a commercial transaction, then the transaction is considered to be one involving interstate commerce.
One of the most striking examples of the Supreme Court's expansive interpretation of Congress's regulatory power under the Commerce Clause in a commercial setting can be found in Russell v. United States, 471 U.S. 858, 105 S. Ct. 2455, 85 L. Ed. 2d 829 (1985), which was cited in Allied-Bruce Terminix, 513 U.S. at 272, 115 S. Ct. at 839, for the proposition that the phrase "affecting commerce" normally "signals a congressional intent to exercise its Commerce Clause powers to the full." In Russell, the defendant was convicted of unlawfully attempting to destroy by fire a two-unit apartment building in Chicago, Illinois, that the defendant owned and rented. The defendant was prosecuted under 18 U.S.C. § 844(i), which provided:
See 471 U.S. at 859, 105 S. Ct. at 2456.
In affirming the conviction, the Court stated:
471 U.S. at 860-62, 105 S. Ct. at 2456-57. (Emphasis added.)
It is apparent from an analysis of the Supreme Court's opinions discussing the favored status of arbitration agreements, see Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 115 S. Ct. 1212, 131 L. Ed. 2d 76 (1995); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S. Ct. 2332, 96 L. Ed. 2d 185 (1987), and the reach of Congress's regulatory power under the Commerce Clause, that that power extends to the regulation of the intrastate sale of a used motor vehicle. Quite obviously, if the intrastate rental of an apartment building is "an element of a much broader commercial market in rental properties," and is, therefore, subject to congressional regulation under the Commerce Clause, then the intrastate sale of a used motor vehicle would constitute an "individual activity" within a broader "class of activities" subject to federal regulation. We hold, therefore, that federal law preempts state law in this case and that the arbitration agreement contained in the "Buyer's Order" is enforceable.
We note Hurst's alternative argument that the trial court erred in dismissing his action, as opposed to staying it pending the completion of the arbitration process. Section 3 of the FAA provides:
Based on an examination of § 3 and federal precedent, we adopt the following interpretation placed on § 3 by the Fifth Circuit Court of Appeals in Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir.1992):
Like the plaintiff's claims in Alford, all of Hurst's state law claims are arbitrable; therefore, the trial court did not abuse its discretion in dismissing them.
For the foregoing reasons, the trial court's order dismissing Hurst's action and compelling him to arbitrate his dispute with the dealership is affirmed.
AFFIRMED.
HOOPER, C.J., and SEE, J., concur.
MADDOX, J., concurs specially.
COOK, J., concurs in the result.
ALMON, SHORES, KENNEDY, and BUTTS, JJ., dissent.
MADDOX, Justice (concurring specially).
I concur wholeheartedly in Justice Houston's well-reasoned opinion. It is consistent with the views I expressed in a dissenting opinion in Ex parte Warren, 548 So. 2d 157, 160 (Ala.1989).
[1] First Alabama Bank is now known as Regions Bank.
[2] This Court has used two approaches in determining whether a contract involves interstate commerce. See Henderson v. Superior Ins. Co., 628 So. 2d 365 (Ala.1993), noting this Court's use of the "slightest nexus" test in Ex parte Costa & Head (Atrium) Ltd., 486 So. 2d 1272 (Ala.1986), overruled, Ex parte Jones, 628 So. 2d 316 (Ala. 1993), and its adoption of the "contemplation of the parties" test in Ex parte Warren.
[3] Section 1 of the FAA defines "commerce" as "commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation."
[4] We note that in Katzenbach v. McClung, 379 U.S. 294, 85 S. Ct. 377, 13 L. Ed. 2d 290 (1964), the Court held that a Birmingham barbecue restaurant (Ollie's Barbecue) was involved in interstate commerce because, among other things, the establishment bought meat from a local supplier that had procured the meat from outside Alabama. In so holding, the Court stated:
"Nor are the cases holding that interstate commerce ends when goods come to rest in the State of destination apposite here. That line of cases has been applied with reference to state taxation or regulation but not in a field of federal regulation."
379 U.S. at 302, 85 S. Ct. at 383. Because American Building Maintenance involved a federal regulatory act and because it stands for the proposition that the "flow" of interstate commerce ceases once goods come to rest in the state of destination, we are hesitant to place great significance on the holding in Katzenbach, at least with respect to the issue whether Hurst's purchase of the vehicle was within the flow of interstate commerce.
[5] To emphasize the constitutional significance of the balance of power between the federal government and the states, the Supreme Court quoted James Madison:
"[T]he powers delegated by the proposed Constitution to the federal government are few and defined. Those which are to remain in the State governments are numerous and indefinite."
Lopez, 514 U.S. at 551, 115 S. Ct. at 1626 (quoting The Federalist No. 45, at 292-93) (Clinton Rossiter ed., 1961). The Supreme Court held that Congress's enumerated commerce power did not extend to the regulation of public and private schools. 514 U.S. at 565, 115 S. Ct. at 1633.
[6] The Court in Lopez noted:
"To uphold the Government's contentions here, we would have to pile inference upon inference in a manner that would bid fair to convert congressional authority under the Commerce Clause to a general police power of the sort retained by the States. Admittedly, some of our prior cases have taken long steps down that road, giving great deference to congressional action.... The broad language in these opinions has suggested the possibility of additional expansion, but we decline here to proceed any further."
514 U.S. at 567, 115 S. Ct. at 1634. (Emphasis added.) | July 18, 1997 |
c3b31bee-a12b-4e32-a1e9-46c42a8048cd | Ex Parte Price | 698 So. 2d 111 | 1961019 | Alabama | Alabama Supreme Court | 698 So. 2d 111 (1997)
Ex Parte Walter J. PRICE, Jr.
(Re Lyndell L. Robinson v. Walter J. Price, Jr.).
1961019.
Supreme Court of Alabama.
June 13, 1997.
Samuel H. Franklin and James R. Sturdivant of Lightfoot, Franklin & White, L.L.C., Birmingham, for Petitioner.
Amy A. Slayden, Huntsville; and Kenneth D. Hampton, Huntsville, for Respondent.
KENNEDY, Justice.
Walter J. Price, Jr., seeks a writ of mandamus compelling Judge Joseph Battle of the Circuit Court of Madison County to vacate his order of March 14, 1997, denying Price's request for a stay of civil proceedings against him pending the resolution of criminal investigations into his activities regarding the administration of estates. We deny the writ.
This matter arises out of the administration of the estate of Joe Thomas Robinson. Price, as the administrator of that probate estate, removed the case from the Probate Court of Madison County to the circuit court, and on January 28, 1994, filed a petition in the circuit court for a final settlement. Thereafter, Price sought numerous delays regarding that petition for final settlement; finally, on July 10, 1996, the sole heir to the estate, the respondent Lyndell L. Robinson, successfully sought to have Price removed as administrator. The heir also sued Price, alleging, among other things, that Price had converted estate assets to his own use. The heir also sued the bonding company that the heir says had issued a bond assuring Price's proper performance of his duties as administrator.
Price, an attorney in private practice, had been appointed to act as the administrator of numerous probate estates in Madison Countyhe was referred to as the "county administrator"and he has become the target of ongoing criminal investigations related to his handling of estate moneys. As to these investigations, Price contends that if discovery proceeds in Robinson's civil action he will have to elect between exercising his Fifth Amendment right not to incriminate himself, *112 and fully defending himself against the civil claims.
For the writ of mandamus to issue, the petitioner must show, among other things, "a clear legal right ... to the order sought." Ex parte Bloodsaw, 648 So. 2d 553, 554 (Ala.1994). It does not appear that a full stay of the heir's claims is needed to protect Price's Fifth Amendment rights. For example, Price does not indicate in his petition why discovery could not properly proceed as to the defendant bonding company.
In Ex parte White, 551 So. 2d 923 (Ala. 1989), we discussed the interests that must be weighed in a case like this: on the one hand a litigant's interest in asserting the Fifth Amendment privilege, and on the other, the opposing litigant's interest in preventing prejudice that might be caused by a postponement. We emphasized in White that to stay proceedings in the civil actions until the related criminal proceedings were completed was the only way the court could guarantee that the petitioner's Fifth Amendment right against incrimination would be preserved. We stated: "Weighing [the petitioner's] interest in postponing the civil actions against the prejudice that might result to [the opposing litigant] because of the delay, we are compelled to postpone them. This solution is the only method of guaranteeing [the petitioner's] Fifth Amendment privilege." Id. at 925.
We have also stated: "[I]n balancing the interests of the parties, we must favor the constitutional privilege against self-incrimination over the interest in avoiding the delay of a civil proceeding." Ex parte Coastal Training Institute, 583 So. 2d 979, 981 (Ala.1991). In sum, to the extent necessary to ensure protection of the privilege, concerns about delays must yield.
It is clear that Price's Fifth Amendment rights can be adequately protected while the case proceeds in some limited way. Certainly, it appears that discovery not requiring Price either to testify or to produce documents could continue without putting Price in a position that might call for him to incriminate himself in order to comply.
In this regard, the heir suggests that we should direct the trial court to issue a protective order that would protect Price from being deposed or that would prevent Price from being required to produce documents but that would otherwise permit the heir to proceed with discovery. However, nothing before us indicates that Price seeks anything less than a full stay or that the trial court has denied any request for a protective order.[1]
WRIT DENIED.
HOOPER, C.J., and MADDOX, SHORES, and SEE, JJ., concur.
HOUSTON and COOK, JJ., dissent.
[1] In a mandamus proceeding, we would not direct a court to take some action it has not previously refused to take. See Bloodsaw, 648 So. 2d at 554 (stating as one of the prerequisites for the issuance of the writ of mandamus that there be "an imperative duty upon the respondent [official] to perform, accompanied by a refusal to do so" (emphasis added)). | June 13, 1997 |
ffb8c524-edf8-475e-b7d0-49fc3d411595 | Ex Parte Coleman | 705 So. 2d 392 | 1960680 | Alabama | Alabama Supreme Court | 705 So. 2d 392 (1997)
Ex parte Osmund A. COLEMAN.
(In re Osmund A. COLEMAN v. Michael A. HARPER).
1960680.
Supreme Court of Alabama.
August 1, 1997.
*393 J. Garrison Thompson of Pitts, Pitts & Thompson, Selma, for petitioner.
Bobby H. Cockrell, Jr., of Cockrell & Cockrell, Tuscaloosa; and John M. Karrh, Tuscaloosa, of counsel, for respondent.
HOUSTON, Justice.
On July 14, 1994, Michael Anthony Harper was injured when he tried to reposition an outside air conditioning unit located on the house he rented from Osmund A. Coleman. Harper sued Coleman, alleging that Coleman had negligently or wantonly installed, or had negligently or wantonly had someone else install an air conditioning unit in the home Harper leased from Coleman and that Harper was injured as a result. The trial court entered a summary judgment for Coleman, holding that as a lessor Coleman was not liable for injuries caused by latent defects that were not known to him at the time he leased the home to Harper. The Court of Civil Appeals, in a three-to-one decision, with Judge Crawley dissenting and Judge Thigpen recused, reversed and remanded, writing as follows:
Harper v. Coleman, 705 So. 2d 388, 391 (Ala. Civ.App.1996). (Citations omitted.) Coleman petitioned for certiorari review, which we granted.
On a motion for summary judgment, the movant has the burden to make a prima facie showing that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ.P.; Willingham v. United Insurance Co. of America, 642 So. 2d 428 (Ala. 1994). The burden then shifts to the nonmovant to present substantial evidence creating a fact question. Ala.Code 1975, § 12-21-12. "[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989).
On June 2, 1994, Harper and his wife, Theresa Renee Harper, rented a house in Greensboro, Alabama, from Osmund A. Coleman. Mrs. Harper handled the rental negotiations, but she never discussed with anyone Coleman's responsibility for the air conditioning unit, and Coleman did not obligate himself to make repairs to the appliances and the air conditioner in the househe did not reserve the right to inspect or maintain the air conditioner, nor did he undertake, or promise, to repair the unit. There was no written lease. The Harpers moved into the house between June 4, 1994, and June 10, 1994. On July 14, 1994, one of the Harpers' daughters turned off an air conditioning unit in one of the bedrooms because, she said, it "smelled funny and wasn't keeping the room cool." Mrs. Harper later turned the unit on, but she immediately turned the unit off when it blew only hot air. When Harper came home from work that evening, Mrs. Harper told him that the plumbing in the bathroom *395 was leaking,[1] but no one told him about any problem with the air conditioning unit. When Harper went out to the utility shed to get tools to fix the latest plumbing problems, he noticed that one of the two brackets that secured the air conditioning unit to the house was loose. He was afraid that the unit might fall, so he tried to place it back on the bracket. When he touched the bracket, he suffered electrical shock and was injured. Before that day, the air conditioning unit had worked properly. Coleman had never been notified by the Harpers that the air conditioner was not working properlyhe was never given any notice of any defect with the unit. The first time Coleman knew that there was a problem with the air conditioning unit was after Harper had been injured.
Harper's experts testified that the air conditioner had been improperly installed, specifically stating that the installation of the unit violated the standards of the National Electric Code, and that this improper installation caused the wiring of the unit to malfunction, with the malfunctioning ultimately causing Harper's injury. These experts also testified that the defect would not be apparent to someone who merely approached the unit from outside, but would have been apparent to the person or persons who installed or repaired the air conditioner or the air conditioning hook-up.
Coleman's expert testified that two defects existed inside the unit and that, although the wiring in the house was not up to national code standards, if the house had been properly wired the circuit breaker would not have tripped and the hazardous condition would still have existed. He further testified that these defects were latent and would not have been known by Coleman.
In Casey v. Estes, 657 So. 2d 845, 848 (Ala. 1995), this Court reiterated the general rule, as follows:
(Citations omitted.)
Restatement (Second) of Torts, § 358 (1965), states the general rule as follows:
See Avon-Avalon, Inc. v. Collins, 643 So. 2d 570, 574 (Ala.1994); Dunson v. Friedlander Realty, 369 So. 2d 792 (Ala.1979). "Under the law, a landlord is not an insurer of the safety of the premises." Dunson v. Friedlander, at 795.
The air conditioner was installed before the Harpers and Coleman entered into *396 the lease agreement; Coleman did not inspect the air conditioning unit before leasing the premises to the Harpers, nor after he had leased the house to them; the Harpers had no discussions with Coleman about the air conditioner, either before leasing the premises or afterwards; Coleman did not reserve the right to inspect or maintain the air conditioner; the air conditioning unit had worked properly until the day of the accident; and when the Harpers learned of the problem with the unit, they did not notify ColemanColeman became aware of the problem only after Harper was injured. Furthermore, in this case, the defect was latent because it was hidden or concealed or because it could not have been discovered by a reasonable inspection. All the expert witnesses testified that the defective wiring was not visibly apparent.
Based on the foregoing, we hold that Coleman made a prima facie showing that no genuine issue of material fact existed; therefore, the burden shifted to Harper to present substantial evidence creating a genuine issue of material fact. This he failed to do.
We note that in spite of well-established law applicable to cases involving landlord liability for injuries to a tenant, the Court of Civil Appeals held that Coleman had failed to make a prima facie showing that he did not have reason to know of the defects and, thus, that there was an issue of material fact. The Court of Civil Appeals based that holding on its finding that Coleman should have known that the wiring of the air conditioner was defective because the air conditioner had been installed by someone other than a licensed electrician, i.e., someone Coleman might have supposed was not qualified to install an air conditioning unit. That is, if Coleman allowed installation by someone not qualified to install the air conditioner, then Coleman knew or had reason to know that it was likely that the unit had been improperly installed and that, as a result, there was a risk that the unit might cause injury to future tenants.
However, there was no evidence presented to indicate that the air conditioner was not installed by an electrician or by someone otherwise qualified; rather, Coleman merely testified that he could not remember whether the units in the house had been replaced by a former tenant for whom he had reduced the rent, but that he thought he probably had replaced the units, because they were so old:
The fact that Coleman did not definitively testify that the air conditioning unit had been installed by a licensed electrician does not support Harper's bare allegation that the unit was installed by a "nonelectrician"; and that bare allegation was insufficient to rebut Coleman's prima facie showing that he did not know or have reason to know of the defects in the air conditioning unit. That bare allegation did not create a genuine issue of material fact.
We also note the Court of Civil Appeals' attempts to distinguish this case from those cases holding that lessors are not liable for latent defects that are unknown to them at the time of the leasing; the Court of Civil Appeals distinguished it on the basis that in the other cases there was no allegation as to the qualifications of the installers. This is a faulty premise on which to hold a landlord liable for injuries resulting from a latent defect, and a premise that we cannot let stand.
We further note that it appears that the Court of Civil Appeals reached its conclusion in this case by basing an inference on an inference. The first inference was that the unit was replaced; the second inference was that the replacement was performed by a "nonelectrician," either a tenant or some other unqualified person. Dean Gamble has suggested that Rule 401, Ala.R.Evid., effective *397 January 1, 1996, may permit a reasonable inference to be drawn from another reasonable inference, see, C. Gamble, McElroy's Alabama Evidence, § 21.01(8) (5th ed.1996); however, in this case, the second inference the Court of Civil Appeals made cannot be reasonably drawn from the first inference. In reaching its conclusion, that court created a duty to inspect where otherwise no such duty would have existed.
In addition, although the Court of Civil Appeals stated that it declined to adopt what it called the equivalent of an implied warranty of habitability in the landlord-tenant context, stating that it agreed with this Court that the adoption of new laws is a function for the Legislature, see, Murphy v. Hendrix, 500 So. 2d 8 (Ala.1986); Osborn v. Brown, 361 So. 2d 82 (Ala.1978), by holding as it did, the Court of Civil Appeals did exactly what it professed not to do.
For the foregoing reasons, we reverse the judgment of the Court of Civil Appeals and remand the case for an order or further proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, KENNEDY, BUTTS, and SEE, JJ., concur.
ALMON and COOK, JJ., concur in the result.
[1] The Harpers had had plumbing problems with a commode in the house; Mr. Harper had tried to fix it himself, but he did not have the proper equipment. Coleman was notified of this problem and had sent a plumber out to correct the problem. | August 1, 1997 |
aaf9bde5-69aa-4ebc-8e27-3d58f831928c | Martin v. Goodies Distribution | 695 So. 2d 1175 | 1951262 | Alabama | Alabama Supreme Court | 695 So. 2d 1175 (1997)
Terrance MARTIN, By and Through his mother, Serena MARTIN
v.
GOODIES DISTRIBUTION.
1951262.
Supreme Court of Alabama.
May 30, 1997.
*1176 W. Lee Gresham III of Hardin & Hawkins, Birmingham, for appellant.
Robert P. Fann and Michael B. Odom of Fann & Rea, P.C., Birmingham, for appellee.
PER CURIAM.
Terrance Martin, by and through his mother, Serena Martin, appeals from the summary judgment entered in favor of Goodies Distribution ("Goodies") in this negligence action.
Terrance, age seven, was injured when he was struck by an automobile after purchasing ice cream from Robert King, the driver of a Goodies ice cream truck. Terrance was attempting to cross the street and return home when he was struck by an automobile driven by Sherry Hope Hudson. From a position in front of the ice cream truck, Terrance stepped out into the street in order to look both ways before crossing. He had looked to his right and was struck as he turned to look to his left. Terrance suffered multiple fractures in one leg as a result of the collision.
Terrance sued Hudson and Goodies. In an amended complaint, he alleged that Goodies was liable for his injury because he claimed his injury was caused by negligence on the part of King, who Terrance says was an agent of Goodies. The trial court entered a summary judgment for Goodies and made that summary judgment final pursuant to Rule 54(b), Ala.R.Civ.P.; Terrance appealed.
In order to enter a summary judgment, the trial court must determine that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law. Rule 56, Ala.R.Civ. P.; Bussey v. John Deere Co., 531 So. 2d 860 (Ala.1988). In order to defeat a properly supported motion for summary judgment, the nonmovant must present substantial evidence creating a genuine issue of material fact. Betts v. McDonald's Corp., 567 So. 2d 1252 (Ala.1990).
In order to determine whether the trial court properly entered the summary judgment for Goodies, we must determine (1) whether Terrance presented substantial evidence that King, the driver of the Goodies ice cream truck who sold ice cream to Terrance, was an agent of Goodies; (2) if so, whether Terrance presented sufficient evidence to impose on Goodies a duty to assist Terrance in safely crossing the street; (3) if so, whether Terrance presented substantial evidence that Goodies breached that duty; and (4) if so, then whether the evidence before the court on the summary judgment motion showed that Terrance was contributorily negligent as a matter of law.
To meet the burden of proof in a negligence action, a plaintiff must prove that the defendant owed a duty to the plaintiff, that the defendant breached that duty, and that the breach proximately caused the plaintiff to be injured. Ford Motor Co. v. Burdeshaw, 661 So. 2d 236 (Ala.1995); Martin v. Arnold, 643 So. 2d 564 (Ala.1994).
Goodies argued to the trial court, and now argues to this Court, that King, the driver of the Goodies truck who sold ice cream to Terrance and who was present when Terrance was struck by the automobile, was not its agent or employee. Goodies insists that King was, instead, an independent contractor. Goodies notes that under Alabama law, a party is ordinarily not liable for the tortious acts of his independent contractor. Joseph Land & Co. v. Gresham, 603 So. 2d 923 (Ala.1992); Boroughs v. Joiner, 337 So. 2d 340 (Ala.1976).
In response, Terrance argues that he presented substantial evidence indicating that King was an agent of Goodies, making the issue of agency at least one of triable fact for the jury to decide. He notes that under the doctrine of respondeat superior a principal is vicariously liable for the torts of its agent if the tortious acts are committed within the line and scope of the agent's employment. Hudson v. Muller, 653 So. 2d 942 (Ala.1995); Shearson Lehman Bros., Inc. v. Crisp, 646 So. 2d 613 (Ala.1994).
The test for determining whether a person is an agent or employee of another, rather than an independent contractor with that other person, is whether that other person has reserved the right of control over the means and method by which the person's work will be performed, whether or not the right of control is actually exercised. Alabama Power Co. v. Beam, 472 So. 2d 619 (Ala.1985). How the parties characterize the relationship is of no consequence; it is the facts of the relationship that control. Thus, we must determine whether Terrance presented substantial evidence indicating that Goodies had reserved control over the means and method by which King was to sell Goodies ice cream and other snacks.
The record indicates that Terrance specifically referred the trial court to evidence indicating the following facts, which he argued were indications that Goodies had reserved the right of control over King and had thereby created a principal/agent relationship with King:
(1) King drove an ice cream truck he leased from Goodies, but he was required by Goodies to return the truck to the Goodies yard at the end of each work day.
(2) Goodies provided King with specific safety and operations training and with a list of standard safety and operating procedures that it required be followed.
*1178 (3) Goodies gave King specific instructions on how he was to maintain the ice cream truck.
(4) Goodies instructed King on what to do in case of an accident with the truck.
(5) Goodies instructed King on how to park the truck before making ice cream sales.
(6) Goodies required King to assist children under eight years of age in crossing the street.
(7) Goodies required King to "control kids" purchasing ice cream from him.
(8) Goodies assigned King to a specific territory in Birmingham; he was to operate the truck in that territory and sell ice cream there. He was allowed to make sales only in that limited area of the city.
(9) The owner of Goodies personally observed and evaluated the drivers, including King, from his own vehicle while they drove the truck and made sales.
(10) Goodies took in King's receipts at the end of the work day and determined his compensation.
In addition, we note that evidence suggesting the following facts was before the trial court upon Goodies' summary judgment motion:
(1) Goodies leased ice cream trucks to its drivers, including King, for the token amount of $25 per month.
(2) Drivers could be terminated by Goodies for not taking in sufficient daily receipts. King's relationship with Goodies was terminated for that reason.
(3) After receiving safety training, potential drivers had to take and pass a written safety examination before they could begin work. King took and passed such an exam before beginning his relationship with Goodies.
(4) Any ice cream truck that is not returned by its driver to the Goodies yard by 11:00 p.m. is reported as stolen, unless the driver has called in and received permission to keep the truck until a later hour. King could not keep overnight the truck he leased from Goodies, without receiving specific permission to do so.
(5) Drivers such as King could not sell ice cream or any other snacks purchased from a supplier other than Goodies.
(6) The operating agreement Goodies required each of its drivers to sign, including King, contained a noncompetition clause prohibiting the driver from engaging in the business of selling products of the type sold by Goodies within a 50-mile radius of the Goodies office for a period of two years after leaving the relationship with Goodies.
Construing all this evidence together, we conclude that Terrance presented substantial evidence from which a factfinder could find that Goodies had reserved the right to control the means and method by which King and its other drivers sold its products, i.e., that he presented substantial evidence of a principal/agent relationship between Goodies and King. Although the trial court did not specifically state its reasons for entering the summary judgment in favor of Goodies, that court erred if it concluded that, as a matter of law, no principal/agent relationship existed between Goodies and King. The issue whether one is the agent of another is ordinarily a question of fact to be decided by the jury. John R. Cowley & Bros., Inc. v. Brown, 569 So. 2d 375 (Ala. 1990).
Terrance argued to the trial court, and now argues to this Court, that Goodies voluntarily assumed a duty to protect its customers under the age of eight from vehicular traffic. Terrance refers this Court to a Goodies document entitled "OPERATING PROCEDURES," which Goodies required its drivers to sign as indicating their agreement to follow the instructions or policies set out in the document. With regard to safety, the document included the following requests of Goodies' drivers: "Cross all kids under 8 years old;" "Teach safety to all kids;" "Be watchful for `Children Hazards'toys, running kids, street games, etc.;" "Control kids at your truck ...;" "Serve older kids first, then smaller ones who have to be crossed."
*1179 Goodies also argued to the trial court, and now argues to this Court, that even if King could be considered its agent, any actions of King that might have been attributable to it do not amount to actionable negligence because, it says, it owed no duty to Terrance to protect him from vehicular traffic. Goodies argues that an ice cream vendor has no duty to warn children of vehicular traffic or to make the zone around the truck safe for congregating children. It also argues that as simply the owner of a parked vehicle, it owed no such duty to the public. Goodies further contends that it did not assume such a duty by virtue of the operating instructions it requested its drivers to follow. Finally, Goodies argues that even if it owed Terrance a duty to protect him from vehicular traffic, it did not breach that duty and did nothing to contribute to Terrance's being struck by an automobile and injured.
Although a party may have no affirmative duty under the law to act in a particular way in relation to another, where a party voluntarily assumes such a duty, it will be charged with performing the duty with reasonable care and may be held liable for injury resulting from a breach of that duty. Parker v. Thyssen Min. Constr., Inc., 428 So. 2d 615 (Ala.1983); Herston v. Whitesell, 374 So. 2d 267 (Ala.1979). Thus, we must next determine whether, by providing its drivers with a list of operating procedures that included instructions relating to the safety of its child patrons under the age of eight, Goodies voluntarily assumed a legal duty to protect those children from traffic hazards that was not otherwise imposed by Alabama law.[1]
After reviewing the evidence in this case, and considerations of public policy, we hold that Goodies' act of including several safety precautions in the list of operating procedures it requested its drivers to follow did not amount to the voluntary assumption of a legal duty. We find of particular note the fact that there is no evidence that Goodies advertised its safety procedures for child patrons to the public a means of increasing business or that Terrance, or his mother, was actually relying on Goodies to ensure his safety when he crossed the street to purchase ice cream.[2] Given that Goodies had no duty to assist Terrance in safely crossing the street, Goodies cannot be liable for a breach of such a duty and the trial court correctly entered the summary judgment in its favor.
We affirm the judgment of the trial court.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, BUTTS, and SEE, JJ., concur.
ALMON, J., concurs in the result.
[1] The Alabama legislature has not passed a statute imposing a duty on ice cream vendors to furnish protection to children when sales are made from vehicles and adjacent to public streets. Likewise, this Court has not recognized that ice cream vendors such as Goodies have a duty to use reasonable care in protecting their child patrons. However, we do note that some other jurisdictions have recognized that the operator of an ice cream vending truck has the common law duty to exercise reasonable care to protect child patrons from the obvious hazards of a public roadway. See Ellis v. Trowen Frozen Products, Inc., 264 Cal. App. 2d 499, 70 Cal. Rptr. 487 (1968); Neal v. Shiels, Inc., 166 Conn. 3, 347 A.2d 102 (1974); Mackey v. Spradlin, 397 S.W.2d 33 (Ky.1965); Nicosia v. Good Humor Corp., 17 Mich.App. 568, 170 N.W.2d 164 (1969); Jacobs v. Draper, 274 Minn. 110, 142 N.W.2d 628 (1966); Thomas v. Goodies Ice Cream Co., 13 Ohio App.2d 67, 233 N.E.2d 876 (1968); Bishop v. Hamad, 43 A.D.2d 805, 350 N.Y.S.2d 270 (1973); Hastings v. Smith, 223 Tenn. 142, 443 S.W.2d 436 (1969); Garza v. Perez, 443 S.W.2d 855 (Tex.Civ.App.1969).
[2] The record indicates that Terrance's mother often allowed him to walk to school and to purchase ice cream without her supervision. She testified that she felt he was capable of performing such tasks safely. | May 30, 1997 |
ae7bde13-b380-4ec3-96ff-1a2f91d727ee | Smelser v. Trent | 698 So. 2d 1094 | 1951876 | Alabama | Alabama Supreme Court | 698 So. 2d 1094 (1997)
Leslie C. SMELSER, et al.
v.
Jere C. TRENT.
1951876.
Supreme Court of Alabama.
June 27, 1997.
Byrd R. Latham, Athens, for Leslie C. Smelser, Allie P. Nuszbaum, and Zelma Deverna.
*1095 Jerry R. Barksdale, Athens, for Lazetta Moore White.
Jerry L. Batts and Anne G. Sargent of Sherrill, Batts, Mathews & Blizzard, Athens, for Jere C. Trent.
SEE, Justice.
This appeal challenges an award of fees for an attorney's efforts in recovering a tract of real property for an estate. Various beneficiaries of the estate argue that the personal representative of the estate had no authority to employ the attorney to recover the real property for the estate and that the fee she agreed upon (one-third of the sales price of the property) was excessive. The trial court awarded the attorney the agreed- upon fee. We affirm.
At her death in 1986, Ruthie McCormack, a Tennessean, owned a 333-acre farm in Limestone County, Alabama. Although she had executed a deed to convey the farm to her nieces and nephews, she never delivered the deed. Immediately after McCormack's death, one of her nephews, Clint Smelser, took the undelivered deed from her purse and had it recorded in the Limestone County Probate Court.
Lazetta White was named in McCormack's will as executrix of her estate. In 1987, when she discovered Clint Smelser's attempt to take the property from the estate, White retained Jere Trent, an attorney practicing law in Athens, Alabama. Trent agreed to attempt to recover the farm for the estate. In return, White agreed to pay Trent a fee equal to one-third of the sales proceeds of the property if that property was retrieved for the estate.[1] In March 1991, Trent's efforts to set aside the deed culminated in a court order vesting title to the farm in the estate.
In December 1991, Clint Smelser attempted to sell the property to an acquaintance for approximately $160,000. Trent intervened, stopped the sale, and had the property sold at auction for approximately $470,000. The trial court placed these proceeds in an interest-bearing account for the benefit of the estate. However, several beneficiaries, including the personal representative, White, contested Trent's fee.
After an ore tenus proceeding, the trial court awarded Trent a fee equal to one-third of the proceeds. We review that award only for plain and palpable error. Ex parte Pielach, 681 So. 2d 154 (Ala.1996) (citing Federal Home Loan Mortgage Corp. v. Bates, 644 So. 2d 925 (Ala.1994)). In our review, we give a strong presumption of correctness to the trial court's findings, and we may not substitute our judgment for that of the trial court. Ex parte Kent Corp., 641 So. 2d 242 (Ala.1994).
On appeal, the beneficiaries of the estate first contend that White had no authority in 1987 to agree that the estate would pay Trent a one-third contingent fee; White did not receive her letters testamentary until 1991.[2] The fact that a personal representative does not receive letters testamentary until after he has conducted business on behalf of the estate does not affect the validity of his act, because the letters testamentary relate back to the time of the decedent's death.[3]McAleer v. Cawthon, 215 Ala. 674, *1096 675-76, 112 So. 251, 253 (1927); Nance v. Gray, 143 Ala. 234, 38 So. 916 (1905).[4] Further, a personal representative who ultimately receives letters testamentary has the power to hire attorneys to assist him in the administration of the estate. Crossley v. Davies, 253 Ala. 275, 276, 44 So. 2d 439, 440 (1950). Thus, in 1987, White had full legal authority to hire Trent.
The beneficiaries next contend that White could not employ Trent to recover the farm for the estate because the farm was not part of the estate at the time White contracted with Trent. The beneficiaries argue that the farm automatically devolved to the heirs upon McCormack's death. Although real property generally passes directly to the beneficiaries upon the decedent's death, see Cotton v. Holloway, 96 Ala. 544, 12 So. 172 (1892), it is the well-settled law of this state that a personal representative can "recover possession of his decedent's lands from any person who does not show a termination of the decedent's title or a better title in himself," Layton v. Hamilton, 214 Ala. 329, 330, 107 So. 830, 830-31 (1926) (citations omitted). Trent's efforts to recover the farm resulted in the court's holding that Clint Smelser's title was void and that valid title to the farm was vested in the estate. At the point valid title to the farm was vested in the estate, the estate was liable to Trent for the attorney fee incurred in recovering that property.[5]
Last, the beneficiaries assert that the amount of the attorney fee in this case, one-third of the sales price of the farm, was excessive. We have previously upheld a one-third contingent fee arrangement calling for a court's approval. Mills v. Neville, 443 So. 2d 935, 938 (Ala.1983). In the ore tenus proceeding, the trial court heard testimony regarding the nature and extent of Trent's work (over four years of legal representation), the amount involved (approximately $470,000), and the results obtained (recovery of the farm), and then ordered payment of the one-third fee.[6] Although the agreed-upon fee was large, our review of the record indicates that the trial court did not err in determining that the fee was neither unconscionable nor otherwise excessive.
Based on the foregoing, the judgment of the trial court is due to be affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, SHORES, HOUSTON, KENNEDY, and BUTTS, JJ., concur.
COOK, J., concurs in the result.
[1] Although the contingent fee arrangement in this case was not reduced to writing, as required by Rule 1.5(c), Alabama Rules of Professional Conduct, White confirmed it in writing. Further, White never disputed that she did, in fact, agree to the one-third contingent fee. Because the appellants do not question whether the absence of a writing invalidated the contingent fee agreement, we do not address that issue. Boshell v. Keith, 418 So. 2d 89, 92 (Ala.1982).
[2] McCormack's will had previously been probated in Tennessee. Trent assisted White in probating the will and being appointed personal representative in Alabama in 1991.
[3] An American Law Reports annotation states:
"The doctrine of relation [back] ... is a legal fiction invented to bridge the interval that must necessarily elapse between the death of the owner of property and the orderly appointment of a person to care for and distribute it to whosoever may be entitled to it.
"....
"The doctrine that whenever letters of administration or testamentary are granted, they relate back to the intestate's or testator's death is an ancient one. It is fully 500 years old....
"The doctrine has been accepted with virtual unanimity, since it was promulgated, in a long line of cases."
Annotation, Relation Back of Letters Testamentary or of Administration, 26 A.L.R. 1359, 1360 (1923) (citing Nance v. Gray, 143 Ala. 234, 38 So. 916 (1905), and Blackwell's Adm'r v. Blackwell's Distributees, 33 Ala. 57 (1858)).
[4] Alabama recently codified the centuries-old doctrine of the relation back of the authority of a personal representative of an estate. Ala.Code 1975, § 43-2-831, states in pertinent part:
"The powers of a personal representative relate back in time to give acts by the person appointed which are beneficial to the estate occurring prior to appointment the same effect as those occurring thereafter."
Section 43-2-831, which is effective for probate proceedings begun on or after January 1, 1994, does not govern the estate in this case, because it was probated in Alabama in 1991. Ala. Acts 1993, No. 93-722, §§ 25, 28.
[5] Fees payable to the attorney for an estate, when the attorney's services are for the common benefit of the interested parties, may be derived directly from the assets of the estate. Wilkinson v. McCall, 247 Ala. 225, 23 So. 2d 577, 580 (1945).
[6] See Peebles v. Miley, 439 So. 2d 137 (Ala.1983) (using the nature and length of the representation, the amount involved, the results obtained, and other factors to assess the reasonableness of attorney fees). | June 27, 1997 |
f80634d2-113b-428d-9161-9d59655ed7df | Akin v. State | 698 So. 2d 238 | 1960712 | Alabama | Alabama Supreme Court | 698 So. 2d 238 (1997)
Ex parte State of Alabama.
(Re Joseph Dewey AKIN
v.
STATE.)
1960712.
Supreme Court of Alabama.
June 13, 1997.
Jeff Sessions and Bill Pryor, Attys. Gen., and Jean A. Therkelsen, Asst. Atty. Gen., for Petitioner.
William A. Short, Jr., Bessemer, for Respondent.
David Barber, District Atty., and Roger Brown, Chief Deputy District Atty., for Amicus Curiae Jefferson County District Attorney's Office.
PER CURIAM.
WRIT DENIED. NO OPINION.
ALMON, SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
SEE, Justice (dissenting).
The issue presented by the State's petition for certiorari review is whether a defendant, who was convicted of murder by an impartial jury, should nevertheless receive a new trial because a person who did not sit on the jury had been excluded by an extra peremptory strike instead of for cause. Despite the United States Supreme Court's definitive holding in Ross v. Oklahoma, 487 U.S. 81, 108 S. Ct. 2273, 101 L. Ed. 2d 80 (1988), that a new trial is not required, the majority denies certiorari review, thus allowing the creation of an expansive right to retrial for criminal defendants convicted by fair and impartial juries. I must respectfully dissent.
A jury convicted Joseph Dewey Akin of murder. The trial court sentenced him to life in prison. Akin v. State, 698 So. 2d 228 (Ala.Crim.App.1996). The trial court had denied Akin's challenge for cause as to juror M.M. Id. at 232. The Court of Criminal Appeals determined that the trial court should have struck juror M.M. for cause, and for that reason reversed Akin's murder conviction.[1] Akin used one of his peremptory *239 strikes to excuse M.M. Akin does not dispute that his jury was impartial.
This Court has stated: "No right of an accused felon is more basic than the right to `strike' a petit jury from a panel of fairminded, impartial prospective jurors." Ex parte Beam, 512 So. 2d 723, 724 (Ala.1987). To determine whether a defendant has been afforded trial by an impartial jury through the exercise of this right, Alabama courts have traditionally employed the federal constitutional standard for ensuring a fair trial.
The Sixth Amendment to the Constitution of the United States provides in pertinent part:
(Emphasis added.) Further, the Fourteenth Amendment to the Constitution provides in pertinent part:
Our courts have long recognized that a defendant's right to an impartial jury under Alabama law is coextensive with the right to an impartial jury as guaranteed by the Sixth and Fourteenth Amendments to the federal Constitution. For example, in Long v. State, 86 Ala. 36, 42, 5 So. 443, 447 (1889), this Court relied on the United States Supreme Court's interpretation of the Sixth Amendment in Reynolds v. United States, 98 U.S. (8 Otto) 145, 25 L. Ed. 244 (1878), to determine whether a potential juror should have been disqualified for bias.[2] In Knop v. McCain, 561 So. 2d 229, 233 (Ala.1989), this Court relied on the United States Supreme Court's interpretation of the Sixth and Fourteenth Amendments in Wainwright v. Witt, 469 U.S. 412, 105 S. Ct. 844, 83 L. Ed. 2d 841 (1985),[3] to determine whether certain jurors should have been disqualified for cause. And, in Dobyne v. State, 672 So. 2d 1319, 1332 (Ala. Crim.App.1994), the Court of Criminal Appeals relied on the United States Supreme Court's interpretation of the Sixth and Fourteenth Amendments in Irvin v. Dowd, 366 U.S. 717, 723, 81 S. Ct. 1639, 1642, 6 L. Ed. 2d 751 (1961),[4] to assess potential juror bias. Thus, Alabama courts have consistently looked to the United States Supreme Court's interpretation of the right to an impartial jury to define the scope of a defendant's right to strike potential jurors.
The United States Supreme Court's decision in Ross, 487 U.S. 81, 108 S. Ct. 2273, 101 L. Ed. 2d 80, concerned a defendant who had been convicted of murder by an impartial jury, but who nevertheless challenged his conviction on the basis that he had been required to use one of his peremptory strikes to excuse a juror who should have been excused for cause.[5] After citing Wainwright *240 and Irvin for the proposition that the Sixth and Fourteenth Amendments guarantee the defendant a right to an impartial jury, 487 U.S. at 85, 108 S. Ct. at 2276, the Supreme Court stated:
Ross, 487 U.S. at 88, 108 S. Ct. at 2278 (emphasis added) (citations omitted).
Akin used a peremptory challenge to remove a biased juror from his petit jury, and he does not argue that his jury was anything less than impartial. Because his jury was impartial, "the fact that [Akin] had to use a peremptory challenge to achieve that result does not mean the Sixth Amendment was violated." Ross, 487 U.S. at 88, 108 S. Ct. at 2278.
The United States Supreme Court addressed Ross's argument that the trial court's failure to remove the juror for cause "violated his Fourteenth Amendment right to due process by arbitrarily depriving him of the full complement of nine peremptory challenges allowed under Oklahoma law." Ross, 487 U.S. at 89, 108 S. Ct. at 2278. The Supreme Court recognized that "the right to exercise peremptory challenges is `one of the most important of the rights secured to the accused.'" Id. at 89, 108 S. Ct. at 2278 (quoting Swain v. Alabama, 380 U.S. 202, 219, 85 S. Ct. 824, 835, 13 L. Ed. 2d 759 (1965)).[6] Then, the Supreme Court stated:
Ross, 487 U.S. at 89, 108 S. Ct. at 2279 (emphasis added) (citations omitted). Although Ross had to use one of his nine peremptory challenges to challenge a potential juror who should have been excused for cause, id. at 89, 108 S. Ct. at 2278, the Supreme Court held that Ross had received all the peremptory challenges provided by Oklahoma law,[7] and it refused to expand the Fourteenth Amendment to mandate the provision of more peremptory challenges. "`[T]he Constitution entitles a criminal defendant to a fair trial, not a perfect one.'" Id. at 91, 108 S. Ct. at 2280 (quoting Delaware v. Van Arsdall, 475 U.S. 673, 681, 106 S. Ct. 1431, 1436, 89 L. Ed. 2d 674 (1986)).
In this noncapital murder case, Alabama law required that Akin and the State each receive six peremptory challenges. Rule 18.4(f)(1)(ii), Ala. R.Crim. P. By granting Akin a total of 20 peremptory challenges, the *241 trial court preserved not only actual fairness, but all appearances of fairness.[8] Akin used 1 of his 14 extra challenges to strike M.M. from his petit jury.[9] Unlike Ross (whose impartial-jury contention, it should be remembered, failed), Akin received more peremptory strikes than the relevant state law requires. Thus, Akin's Fourteenth Amendment right to an impartial jury was not impaired.
Akin was convicted of murder by an impartial jury.[10] Any error by the trial court in requiring Akin to use one of his extra peremptory strikes to achieve that impartial jury was wholly harmless. See Rule 45, Ala. R.App. P. (prohibiting reversal in the absence of an error that "probably injuriously affected substantial rights of the parties").[11]
The majority ignores directly applicable United States Supreme Court precedent that was once our guidepost for assessing jury impartiality. In doing so, the majority allows the creation of an apparently limitless "right" to retrial based not on any partiality of those who sit on the jury, but on the bias of those who do not.[12]
I dissent.
HOOPER, C.J., and MADDOX, J., concur.
[1] The examination of M.M. regarding pretrial publicity included the following exchange:
"[Defense counsel]: Have you made your mind up about this case?
"Juror [M.M.]: More or less. I'm not saying it's right.
"The Court: If you were sitting out there as a defendant would you want you to judge yourself?
"Juror [M.M.]: That's exactly what I'm saying. No."
Akin v. State, 698 So. 2d at 231. The Court of Criminal Appeals held that this exchange showed that M.M. had a bias that he or she could not overcome. Id. at 232. Thus, the court held that Akin should have been allowed to strike M.M. for cause under Ala.Code 1975, § 12-16-150, which provides a "for cause" strike against a potential juror who has "a fixed opinion as to the guilt or innocence of the defendant which would bias his verdict." See 698 So. 2d at 231.
[2] In Long v. State, this Court quoted the now classic comment of Chief Justice Marshall on Aaron Burr's trial concerning the analysis of a potential juror's bias:
"[L]ight impressions, which may fairly be supposed to yield to the testimony that may be offered, which may leave the mind open to a fair consideration of that testimony, constitute no sufficient objection to a juror; but those strong and deep impressions, which will close the mind against the testimony that may be offered in opposition to them, which will combat that testimony and resist its force, do constitute a sufficient objection to him."
86 Ala. at 42, 5 So. at 447 (emphasis added) (citing Reynolds v. United States, 98 U.S. 145, 155, 25 L. Ed. 244 (1878) (quoting 1 Burr's Trial 416 (1807))). This Court also employed the "light impressions" analysis in Ex parte Beam, 512 So. 2d 723, 724 (Ala.1987).
[3] In Wainwright v. Witt, 469 U.S. at 423, 105 S. Ct. at 851, the United States Supreme Court cited Reynolds v. United States, 98 U.S. 145, 25 L. Ed. 244 (1878), which this Court had relied on in Long v. State, 86 Ala. 36, 42, 5 So. 443, 447 (1889), as providing the proper standard for ensuring an impartial jury.
[4] In Irvin v. Dowd, 366 U.S. at 722, 81 S. Ct. at 1642, the United States Supreme Court again cited Reynolds v. United States, 98 U.S. 145, 25 L. Ed. 244 (1878), as providing the standard for ensuring an impartial jury.
[5] The Court of Criminal Appeals is unclear on its application of Ross v. Oklahoma. On the one hand, in Smith v. State, 581 So. 2d 497, 504 (Ala.Crim.App.1990), rev'd on other grounds, 581 So. 2d 531 (Ala.1991), the Court of Criminal Appeals, in dicta, cited Ross for the proposition that there is "no error where the appellant had to use peremptory challenges to remove jurors he argued should have been removed for cause." On the other hand, in Hunter v. State, 585 So. 2d 220, 222 n. 1 (Ala.Crim.App.1991), the Court of Criminal Appeals stated, in dicta, that Ross was contrary to the holdings of this Court in Ex parte Beam, 512 So. 2d 723 (Ala.1987), Ex parte Rutledge, 523 So. 2d 1118 (Ala.1988), and Knop v. McCain, 561 So. 2d 229 (Ala.1989). This statement in Hunter is puzzling because Beam, 512 So. 2d at 724, employed Chief Justice Marshall's Sixth Amendment "light impressions" test; Rutledge, 523 So. 2d at 1120, relied directly on Beam; and Knop, 561 So. 2d at 233, relied on the Sixth and Fourteenth Amendment analysis contained in Wainwright v. Witt, 469 U.S. 412, 419, 105 S. Ct. 844, 849, 83 L. Ed. 2d 841, (1985). Moreover, none of these cases directly addressed the issue whether only harmless error results from the use of an extra peremptory strike to excuse a potential juror who should have been excused for cause.
[6] We note that Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986), subsequently undercut the significance of peremptory strikes established in Swain.
[7] Under Oklahoma law, a defendant had to use a peremptory strike against a juror to preserve for appellate review a "for cause" challenge of that juror. Ross, 487 U.S. at 89, 108 S. Ct. at 2278 (citing Ferrell v. State, 475 P.2d 825, 828 (Okla. Crim.App.1970)).
[8] In Ex parte Beam, 512 So. 2d 723, 724 (Ala. 1987), this Court stated that "court proceedings must not only be fair but must also appear to be fair." (Emphasis in original.)
[9] As the district attorney's cogent amicus brief points out, there is no requirement under Alabama law that a trial court "even up" the number of veniremembers on the strike list after a challenge for cause so that the State and the defense will have the same number of peremptory strikes. Thompson v. State, 611 So. 2d 476, 478 (Ala.Crim.App.1992).
[10] That the ultimate jury might have been "different" had Akin been afforded an additional peremptory strike is inapposite because the constitutional inquiry focuses not on which particular individuals serve on the jury, but on the jury's impartiality. The Supreme Court stated:
"Although we agree that the failure to remove [the juror who should have been struck for cause] may have resulted in a jury panel different from that which would otherwise have decided the case, we do not accept the argument that this possibility mandates reversal."
Ross, 487 U.S. at 87, 108 S. Ct. at 2277.
[11] Rule 45, Ala. R.App. P., provides:
"No judgment may be reversed or set aside, nor new trial granted in any civil or criminal case on the ground of misdirection of the jury, the giving or refusal of special charges or the improper admission or rejection of evidence, nor for error as to any matter of pleading or procedure, unless in the opinion of the court to which the appeal is taken or application is made, after an examination of the entire cause, it should appear that the error complained of has probably injuriously affected substantial rights of the parties."
[12] "[T]he concept of a peremptory challenge as a totally freewheeling right unconstrained by any procedural requirement is difficult to imagine." Ross, 487 U.S. at 90, 108 S. Ct. at 2279. | June 13, 1997 |
8db630ea-592b-4a7d-8fae-76f8d1d8a3a7 | Ex Parte Williams | 710 So. 2d 1350 | 1960223 | Alabama | Alabama Supreme Court | 710 So. 2d 1350 (1997)
Ex parte Jason Oric WILLIAMS.
(In re Jason Oric Williams v. State).
1960223.
Supreme Court of Alabama.
October 3, 1997.
Rehearing Denied December 19, 1997.
Paul D. Brown of Moore, Boller & Brown, Mobile; and Bernard E. Harcourt, Cambridge, Massachusetts, for petitioner.
Bill Pryor, atty. gen., and Beth Jackson Hughes, asst. atty. gen., for respondent.
BUTTS, Justice.
Jason Oric Williams was convicted of the capital murders of Gerald Paravicini, Freddie Barber, Linda Barber, and Bryan Barber, and the trial judge sentenced him to death, following the jury's recommendation of that sentence. We affirm both the convictions and his death sentence.
Although at trial Williams did not admit to the killings, he did not dispute the State's evidence that he killed Paravicini and the Barbers by shooting them with a .22 caliber *1351 rifle. Williams presented the defense of not guilty by reason of mental disease or defect; he alleged that his claimed mental defect was the consequence of his ingesting illegal drugs in the hours before the killings, coupled with a preexisting mental disorder. More specifically, Williams says his alleged mental defect is the product of a "borderline personality disorder"[1] and the ingestion of marijuana, LSD, crack cocaine, and an unidentified prescription drug, combined with alcohol, during the night and early morning hours before the killings. Williams's expert witness, psychiatrist Dr. Claude Brown, testified that, in his opinion, at the time of the killings Williams was suffering from a mental disease or defect and was not able to appreciate the wrongfulness of his acts. The State's rebuttal expert witness, psychologist Dr. Harry McClaren, testified that in his opinion Williams, at the time of the killings, had the ability to appreciate the consequences of his acts and was not suffering from a mental disease or defect. Thus, the major issue presented to the jury at trial was whether to accept Williams's defense of not guilty by reason of a mental disease or defect.
The Court of Criminal Appeals gave a lengthy and complete discussion of the facts of this case. See Williams v. State, 710 So. 2d 1276 (Ala.Crim.App.1996). Thus, a more limited rendition of the facts is presented here. Williams, age 23, was divorced from Sandra Ellzey and had been living in the home of his friends Gerald and Clair Paravicini for the two weeks prior to February 15, 1992, the day of the killings. Williams and Ellzey had agreed to discuss possibly reuniting and had planned a date for Valentine's Day, February 14, 1992. Williams smoked marijuana before he met Ellzey for the evening. After meeting, they drove to a lounge, where he drank two or three beers. When Ellzey was ready to go home, Williams told her that he wanted to stay out longer and he asked her to drop him off at the Top Gun nightclub. He was to telephone her later when he wanted her to pick him up. At the club, Williams took two or more "hits" of LSD, smoked crack cocaine, ingested two pills of an unidentified drug, and drank a large amount of liquor. He never telephoned to ask Ellzey to pick him up.
At about 6:00 a.m. the next day, February 15, 1992, Williams arrived at the Paravicini home and was let in by Jeffery Carr, the minor son of Clair Paravicini. Williams telephoned Ellzey from the Paravicini home, and they argued about the fact that he had failed to call her the night before and that he had stayed out all night. During that conversation, Williams says, he began to have hallucinations, seeing a frightening figure in the room with him and Gerald Paravicini; however, Williams did not tell Ellzey he was seeing a frightening figure. Williams located a .22 caliber rifle in the home and shot Jeffery Carr in the face and in the arm. Jeffery ran to the neighboring home for help. Williams next shot Gerald Paravicini in the chest. Gerald also ran outside, where he died shortly thereafter. During this time Williams still was on the telephone with Ellzey, and Ellzey heard some of a conversation Williams had with Clair Paravicini.
Clair Paravicini was still in bed when she heard shouting and the shots. When she reached the living room, she found the front door open. She saw her son Jeffery running toward the neighbor's home, saw Williams standing outside with the rifle and a cordless telephone, and saw her husband Gerald standing nearby. Gerald told her to call for help, and she also ran for the neighbor's home. After reaching the neighbors and asking for help, Clair returned to try to help her husband. She went back inside the home to look for a towel to use to stop her husband's bleeding, and she found Williams inside. Williams asked her to give him the keys to the Paravicinis' truck so that he could drive Gerald to a hospital.[2] Clair, unable *1352 to locate the keys, asked Williams for her purse, which he had taken. Williams struck her in the face with the rifle and then left the house. Although the conversation between Ellzey and Williams had ended, during this time Ellzey heard some of the comments of Williams and Clair Paravicini, and she heard various noises in the background as she continued to stay on the line.
Williams ran out to the street and flagged down the driver of a pickup truck; Williams told the driver, Buford Billedeaua, that he had an emergency and that he needed his truck. Billedeaua, thinking Williams looked as if he was on drugs, turned off the truck engine, removed the keys, and then ran to the nearby woods. Williams shot twice at Billedeaua as he ran to the woods, but the shots missed.
Williams then ran down the street, past several houses, to the house occupied by the Barbers. Williams shot Linda Barber in the head as she answered the door. Williams then shot Linda's husband Fred Barber in the head as he sat at a kitchen table where he had been drinking coffee. Williams shot Fred and Linda's son Bryan in the head as he lay sleeping in bed. Williams broke into the room of another son, Brad; he shot Brad in the hand as he and Brad struggled for control of the rifle. Brad escaped. Williams then located the keys to the Barbers' van and drove away in it.
The day after the killings, Williams telephoned Ellzey from a truck stop in Mississippi. Ellzey testified that Williams was crying during the conversation, and she said he told her that he did not know what had happened, that he had a van and he did not know who it belonged to, and that he had blood on his clothing. She testified that she then told him about the people who had been killed and that he then became more upset. Williams surrendered to Mississippi State Police that day. After being advised of his Miranda rights, he gave a statement.
Williams was indicted on two counts of capital murder: (1) murder during a robbery, made capital by Ala.Code 1975, § 13A-5-40(a)(2), and (2) murder of two or more persons in the same course of conduct, made capital by § 13A-5-40(a)(10). He was also indicted on two counts of attempted murder, the attempted murders of Jeffery Carr and Brad Barber. Williams pleaded not guilty and not guilty by reason of a mental disease or mental defect. The jury returned a guilty verdict on all counts and, by a vote of 10-2, recommended a sentence of death for the capital murder convictions. The trial judge imposed the recommended death sentence for the capital murder convictions and also sentenced Williams to 20 years' imprisonment for the attempted murder convictions.
Williams appealed his capital murder convictions and death sentence to the Court of Criminal Appeals, raising more than 50 issues. The Court of Criminal Appeals affirmed his convictions and sentence in a lengthy opinion, 710 So. 2d 1276. Because of Williams's death sentence, we automatically granted his petition for a writ of certiorari to review his convictions and sentence. Rule 39(c), Ala.R.App.P.
Williams has raised 51 issues for our review; all were raised on appeal to the Court of Criminal Appeals and were discussed in that court's lengthy opinion. We have thoroughly reviewed all those issues. We have also carefully reviewed the record for "plain error," in accordance with Rule 39(k), Ala. R.App.P., and we have found none. We discuss here only the single issue that Williams's counsel addressed on oral argument before this Court. As to the other issues raised by Williams, we find no error in the opinion of the Court of Criminal Appeals.
Williams contends that the Mobile County district attorney engaged in prosecutorial misconduct that violated his right to due process and a fair trial under the United States and Alabama Constitutions, and he *1353 argues that that alleged misconduct requires reversal of his convictions and sentence. The district attorney subpoenaed Ellzey, who was Williams's ex-wife and who at trial was the lead defense witness, to testify before the May 1992 grand jury. Ellzey had not been called to testify before the April 1992 grand jury that had indicted Williams on the two counts of capital murder and two counts of attempted murderthe attempted murders of Jeffery Carr and Brad Barber. The April grand jury had "no-billed" the charges against Williams for the attempted murders of Clair Paravicini and Buford Billedeaua. The district attorney brought those two no-billed attempt charges before the May grand jury; the district attorney called Ellzey to testify before the grand jury and cross-examined her. Later, the district attorney asked the May grand jury to no-bill those charges.
Williams argues that the district attorney did not call Ellzey to testify before the May grand jury to gain information regarding the attempted murders of Clair Paravicini and Billedeaua, because, Williams says, Ellzey had no knowledge of those crimes. Williams further claims that the district attorney's request for a no-billing of those attempted murder charges during the May grand jury, which charges had been already no-billed by the April grand jury, indicates that the charges were simply a pretext the district attorney used for calling Ellzey before the May grand jury in order to get sworn testimony from her. Williams refers this Court to the following statement made by the district attorney during the trial court's hearing on Williams's motion for a new trial:
In sum, Williams argues that the district attorney abused the grand jury process by using it as a post-indictment tool to continue investigating the capital murder case against him. Williams says that the district attorney used the grand jury process to obtain improper discovery regarding the theory of his defense and to obtain impeachment material for use at trial, and Williams argues that this use of the grand jury process violated well-established safeguards concerning the function of a grand jury. He notes that his trial counsel were not given a transcript of Ellzey's grand jury testimony until trial, and he claims that the district attorney caught his counsel by surprise and used Ellzey's grand jury testimony in a prejudicial manner. He asks this Court to grant him a new trial in which the State is not allowed to use Ellzey's grand jury testimony, which he calls the "fruits of the [alleged] grand jury abuse."
In response, the State first notes that Williams did not raise the issue of alleged prosecutorial abuse of the grand jury process until after his conviction, when he filed a motion for a new trial. Citing United States v. Thompson, 944 F.2d 1331 (7th Cir.1991), cert. denied, 502 U.S. 1097, 112 S. Ct. 1177, 117 L. Ed. 2d 422 (1992), and In re Grand Jury Subpoena Duces Tecum Dated January 2, 1985, 767 F.2d 26 (2d Cir.1985), the State contends that the proper way to challenge an alleged abuse of the grand jury process is by filing a motion to quash the subpoena or by filing a motion before trial to dismiss the indictment. Thus, the State says that this issue was not properly preserved by Williams for appeal and, thus, is reviewable by this Court only under the "plain error" standard.
The State argues that the district attorney's purpose for calling Ellzey to testify before the May grand jury was to further an ongoing investigation against Williams for the attempted murders of Clair Paravicini and Billedeaua. The State admits that at the hearing on Williams's motion for a new trial the district attorney at first stated that he had subpoenaed Ellzey before the May grand jury in order to get her sworn testimony (as quoted above); however, the State notes that later during the same hearing the district attorney offered further explanation as to why he called Ellzey to testify before the May grand jury:
The State notes that the district attorney had called Jeffery Carr, Clair Paravicini, Brad Barber, and Buford Billedeaua before the April grand jury to testify regarding the capital murder charges against Williams and regarding the charges relating to the attempted murders of Jeffery Carr and Brad Barber. The grand jury returned indictments on those charges. The State argues that the district attorney then decided to investigate the attempted murders of Clair Paravicini and Billedeaua and that Ellzey was called before the May grand jury because she was the only witness who could shed further light on those attempted murders who had not yet testified before a grand jury, The State says that the district attorney knew from the statement Ellzey gave to the police on the day of the killings that Ellzey had been on the telephone with Williams and had heard Williams talk to Clair Paravicini. Thus, the State contends that the reason Ellzey was subpoenaed to appear before the May grand jury was to question her regarding what she heard over the telephone in relation to the attempted murder of Clair Paravicini.
Finally, the State says that it had no reason to call her to testify in order to gain ex parte discovery or to gain impeachment information, because, on the morning of the killings, Ellzey had given the police a thorough statement that the State says is identical to her grand jury testimony. The State further contends that Williams's defense counsel knew that Ellzey had given a statement to police, because defense counsel were given a copy of the statement. Thus, the State argues that Williams could not have been surprised by the State's use of any of Ellzey's grand jury testimony, since the information was already available to the defense through her identical police statement.
In sum, the State contends that there was no error in the district attorney's subpoenaing Ellzey to the May grand jury and, thus, no "plain error."
Rule 12.3, Ala.R.Cr.P., sets out the powers and duties of an Alabama grand jury, including the power and duty to inquire into indictable offenses. However, the power of a grand jury has its limits, as noted by the Committee Comments to Rule 12.3, which quote with approval the following statement from Fields v. State, 121 Ala. 16, 17, 25 So. 726, 727 (1899): "The functions and powers of the grand jury as to the indictment so returned are ended when the presentment is made and the indictment or true bill is received by the court." (Emphasis added.) Thus, although a district attorney may continue to investigate a crime until the very time of the trial, once an indictment has been returned by a grand jury the function of that grand jury is complete as to that crime and the grand jury cannot be used as a means for further investigation. Stated otherwise, "[i]t is improper to utilize a Grand Jury for the sole or dominating purpose of preparing an already pending indictment for trial." United States v. Dardi, 330 F.2d 316, 336 (2d Cir.), cert. denied, 379 U.S. 845, 85 S. Ct. 50, 13 L. Ed. 2d 50 (1964).
Williams argues that the district attorney subpoenaed Ellzeyhis ex-wife, who was later the lead defense witnessto testify before the May grand jury for the sole or dominating purpose of preparing for the prosecution of the capital murder indictments that had been returned by the grand jury a month previously. However, the State is correct in its argument that because Williams failed to make a timely objection during trial to the district attorney's use of Ellzey's grand jury testimony we can review this issue only under the "plain error" standard. Rule 39(k), Ala.R.App.P. Plain error is error that "has or probably has adversely affected the substantial rights of the petitioner." Id. "In other words, the plain-error exception to the contemporaneous-objection rule is to be `used sparingly, solely in those circumstances in which a miscarriage of justice would otherwise *1355 result.'" United States v. Young, 470 U.S. 1, 15, 105 S. Ct. 1038, 1042, 84 L. Ed. 2d 1 (1985), quoting United States v. Frady, 456 U.S. 152, 163, n. 14, 102 S. Ct. 1584, 1592, n. 14, 71 L. Ed. 2d 816 (1982). Thus, we must determine whether the district attorney subpoenaed Ellzey before the May grand jury for the sole or dominating purpose of preparing the pending capital murder indictments for trial and, if so, whether such action constitutes "plain error."
In regard to this claim of error by Williams, the Court of Criminal Appeals held:
Williams v. State, 710 So. 2d at 1295.
After thoroughly studying Ellzey's grand jury testimony, in the context of the facts of this case, we conclude that the Court of Criminal Appeals correctly held that the district attorney did not call Ellzey before the May grand jury for the sole or dominant purpose of obtaining discovery and impeachment evidence for use during Williams's capital murder trial. When Ellzey testified before the grand jury, charges were still pending against Williams for the attempted murders of Clair Paravicini and Buford Billedeaua. A large portion of Ellzey's grand jury testimony specifically relates to the facts surrounding Williams's alleged attempted murder of Clair Paravicini. Ellzey was on the telephone with Williams when he shot Jeffery Carr and Gerald Paravicini and threatened Clair Paravicini and struck her in the face with the rifle, knocking her down.
For example, the following appears in Ellzey's grand jury testimony:
The transcript of Ellzey's testimony indicates to us, as it did to the Court of Criminal Appeals, that the district attorney called Ellzey before the May grand jury to further investigate the charge against Williams for the attempted murder of Clair Paravicini. That charge against Williams was no-billed by the April grand jury, and after Ellzey's testimony it was no-billed by the May grand jury at the request of the district attorney. The district attorney has stated that he made that request because he believed the case against Williams for the charge of the attempted murder of Clair Paravicini was weak and that he did not wish to weaken his overall case against Williams by bringing a weak charge to trial. Although Williams suggests that the district attorney's request of the May grand jury to no-bill the Clair Paravicini attempted murder charge indicates that the district attorney's statement that he called Ellzey before the grand jury to further investigate that crime is simply a pretext, we cannot make that same assumption.
It is clear to this Court that the district attorney had no need to subpoena Ellzey before a grand jury in order to obtain discovery regarding Williams or impeachment material against Ellzey; the district attorney already had available for those purposes the lengthy statement Ellzey gave to the police on the day of the killings. Having thoroughly studied and compared the transcript of Ellzey's grand jury testimony with the statement she gave to the police, we conclude that there is no significant difference between them; the two statements are nearly identical, and the grand jury testimony contained no additional information that could have benefited the district attorney's case. Both contain references to Williams's family history, his drug use, his suicide attempt in 1990, the events of the evening before the killings, what Ellzey heard over the telephone during her conversation with Williams on the morning of the killings, and what she believed his mental state to be at that time. The district attorney could have used the statement Ellzey gave to the police to gain information regarding Williams's personal history or to impeach Ellzey at trial as easily as he could have used her grand jury testimony. In fact, the district attorney did use a particular quote found only in Ellzey's police statement to impeach her at trial (see section IV of the Court of Criminal Appeals' opinion, 710 So.2d at 1297-98).
Finally, we find no merit to Williams's contention that his trial counsel did not know *1357 that Ellzey had been subpoenaed before the May grand jury and that they were surprised by the district attorney's use of her sworn testimony at trial. Ellzey is the defendant's ex-wife and was the primary defense witness, and the record indicates that Williams knew before trial that she had appeared before the grand jury. Further, a copy of Ellzey's police statement had been provided to Williams's defense counsel before trial. Thus, as explained above, Williams's counsel could not have been surprised by the content of her grand jury testimony.
We find no merit to Williams's argument that the sole or dominant purpose for the district attorney's calling Ellzey before the May grand jury was to prepare the pending capital murder indictments for trial.[3] Moreover, even if we were to hold that the actions of the district attorney were improperand we do not so holdthe prosecutor's calling Ellzey before the grand jury did not adversely effect any of Williams's substantial rights. We find no plain error.
As noted previously, this Court has reviewed the record and the briefs, has considered the oral arguments before this Court, and has examined the determinations of the Court of Criminal Appeals in relation to all of the issues raised by Williams. This Court has also thoroughly examined the record for plain error, but has found none. We have reviewed the trial court's imposition of the death sentence against Williams, in accordance with Ala.Code 1975, § 13A-5-53, and we find no impropriety. Thus, we conclude that the Court of Criminal Appeals committed no error in affirming Williams's convictions and sentence, and we affirm the judgment of the Court of Criminal Appeals.
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, HOUSTON, KENNEDY, COOK, and SEE, JJ., concur.
[1] Williams says that his parents abandoned him when he was a young child; that he was placed in the care of an aunt and the aunt's husband and that while he was in their care the aunt's husband beat him; and that he was placed in a children's home in Mississippi and while there suffered physical and sexual abuse. He says that these problems caused the personality disorder he now claims to suffer from.
[2] This discussion of the facts is based on Clair Paravicini's trial testimony and is somewhat different from Sandra Ellzey's grand jury testimony regarding what she heard over the telephone.
[3] However, like the Court of Criminal Appeals, we caution district attorneys to be certain that the purpose for the post-indictment use of a grand jury, and the facts and circumstances supporting that use, clearly appear on the record. | October 3, 1997 |
0f26c885-c107-496a-a53e-bccfbfdfd3d3 | Ex Parte Equity Nat. Life Ins. Co. | 715 So. 2d 192 | 1961160 | Alabama | Alabama Supreme Court | 715 So. 2d 192 (1997)
Ex parte EQUITY NATIONAL LIFE INSURANCE COMPANY, et al.
(Re Claudy J. COODY and Mary F. Coody v. EQUITY NATIONAL LIFE INSURANCE COMPANY, et al.).
1961160.
Supreme Court of Alabama.
December 16, 1997.
*193 Bert S. Nettles and A. David Fawal of London & Yancey, L.L.C., Birmingham; and John W. Thompson II of Thompson & Thompson, Butler, for petitioners.
Joseph C. McCorquodale III and Christopher A. Bailey of McCorquodale & McCorquodale, Jackson; and Timothy C. Hutchinson, Butler, for respondents.
MADDOX, Justice.
Equity National Life Insurance Company, Life Investors Insurance Company of America, Aegon Insurance Group, and Beth Croney, the defendants in an action pending in the Choctaw Circuit Court, petition for a writ of mandamus directing the trial court to vacate its February 27, 1997, order conditionally certifying a statewide class of plaintiffs. We hold that the conditional class certification order failed to comply with the prerequisites of Rule 23, Ala. R. Civ. P.; therefore, we grant the petition.
On December 20, 1995, Claudy J. Coody and Mary F. Coody sued in the Choctaw Circuit Court, alleging breach of contract, fraud, misrepresentation, and fraudulent suppression, related to a "Cancer Only Supplemental Policy" that Equity National Life Insurance Company had issued to them in July 1992.[1] In their original complaint, the Coodys sought certification of a statewide class of Alabama policyholders.
On October 1, 1996, after the case had been removed to a federal district court and subsequently remanded to the state court, *194 the Coodys, without providing notice to the defendants, and despite the fact that their original complaint had alleged only a statewide class, moved for conditional certification of a nationwide class. On the same day, the trial court, without notice to the defendants and without benefit of a hearing, granted the Coodys' motion. The order did not explain why certification was proper, but simply stated that "good cause" had been shown. At this point in the litigation, discovery had been limited to the issues of removal and proper joinder.
After receiving a copy of the Coodys' motion and the trial court's order granting the conditional class certification, the defendants filed a "motion to reconsider" that order; the trial court conducted a hearing on January 7, 1997, to discuss the motion. At this hearing, the defendants argued that they had been prejudiced by the trial court's certification of a nationwide class of plaintiffs without any notice or opportunity for argument. The Coodys responded with the argument that the trial court had merely followed the conditional certification procedure provided by Ex parte Voyager Guar. Ins. Co., 669 So. 2d 198 (Ala.Civ.App.1995).
On February 27, 1997, the trial court modified its October 1, 1996, order by reducing the conditional class from a nationwide class to a class of Alabama purchasers of insurance policies from the defendant insurers. However, the trial court reaffirmed the substance of its earlier conditional certification and also held that the January 7, 1997, hearing cured any prejudice the defendants might have suffered as a result of the October 1, 1996, order. Finally, the trial court explained that it was issuing only a conditional class certification order, under the authority of Ex parte Voyager Guar. Ins. Co., supra, and that, upon a final hearing of the class certification issues, the proponent of the class would have the burden of proving compliance with the requirements of Rule 23.
The defendants challenge the February 27, 1997, conditional class certification order. We limit our discussion to the propriety of that order.
It is axiomatic that mandamus is an extraordinary and drastic writ, and that certain criteria must be met for the writ to issue. A writ of mandamus will be issued only when there is (1) a clear legal right in the petitioner to the relief sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) lack of another adequate remedy; and (4) properly invoked jurisdiction of this court. Ex parte Ben-Acadia, Ltd., 566 So. 2d 486, 488 (Ala.1990). The writ of mandamus is appropriate in cases involving an improper class certification. See, e.g., Ex parte Green Tree Financial Corp., 684 So. 2d 1302 (Ala. 1996).
In support of their mandamus petition, the defendants contend that the trial court abused its discretion when it conditionally certified a statewide class of plaintiffs. They argue that discovery in this case has been limited solely to the issues of removal and proper joinder and that the Coodys have not presented any relevant evidence supporting class certification, but have relied instead on the allegations contained in the pleadings and the motion for conditional class certification. In sum, the defendants argue that the Coodys' motion for conditional class certification was not supported by any factual evidence or findings and that the trial court's conditional class certification order, therefore, undermines the prerequisites of Rule 23 and violates the defendants' right to due process. After carefully reviewing the record in this case, we agree, and we herein set out the reasons for our conclusion.
At the outset, we note that the Coodys rely on the opinion of the Court of Civil Appeals in Ex parte Voyager Guar. Ins. Co., supra, to support the trial court's actions. That case is not binding upon this Court. See Ex parte Citicorp Acceptance Co., 715 So. 2d 199 (Ala. 1997); Ex parte American Bankers Life Assurance Co. of Florida, 715 So. 2d 186 (Ala. 1997).
The United States Supreme Court, applying Rule 23 of the Federal Rules of Civil Procedure, has said that, before issuing *195 any class certification order, a trial court must be "satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 155, 102 S. Ct. 2364, 2369, 72 L. Ed. 2d 740 (1982).[2] The essence of this holding, it appears to us, is that every class certification order must, at a minimum, identify each of the four elements of Rule 23(a) and explain in detail how the proponents of the class have met their burden of proving those elements.[3]Ex parte Mercury Finance Corp. of Alabama, 715 So. 2d 196 (Ala.1997).
It is apparent that the trial court's conditional class certification order does not adequately demonstrate that the trial court conducted the rigorous analysis required by Rule 23, Ala. R. Civ. P. Although the trial court identified each of the four prerequisites of Rule 23(a) and purported to find that these prerequisites had been satisfied, identifying the prerequisites of Rule 23(a) is only the first step toward issuing a proper class certification order. The trial court did not explain in detail how the proponents of the class certification had satisfied each of the prerequisites of Rule 23. In fact, to support its February 27, 1997, certification order, the trial court stated only that it had considered the allegations of the complaint. Specifically, the trial court stated that before it had issued the original conditional class certification order, it had considered
The trial court then stated that "[u]pon reconsideration of factors stated above, and the arguments of counsel at hearing on January 7, 1997, [it was affirming] its conditional class certification."
These conclusory statements, of course, do not satisfy the trial court's obligation to explain in detail, in the class certification order itself, how the proponents of the class have proved the prerequisites of Rule 23. In addition, the trial court issued its conditional class certification order based solely on the pleadings and without benefit of an evidentiary hearing. Because due process rights of the parties are implicated by the certification process, the proponent of the class must make a "full evidentiary demonstration" of each prerequisite under Rule 23. See Falcon, 457 U.S. at 157, 102 S. Ct. at 2370. As this Court has explained, the proponent of a class must prove each of the prerequisites of Rule 23 through competent probative evidence. See, e.g., Ex parte Blue Cross & Blue Shield of Alabama, 582 So. 2d 469 (Ala. 1991).
This does not necessarily mean that a full evidentiary hearing is required in every case. See, e.g., In re American Medical Systems, Inc., 75 F.3d 1069, 1079 (6th Cir. 1996). However, we stress that the propriety of class action certification can seldom be determined on the basis of the pleadings alone. King v. Gulf Oil Co., 581 F.2d 1184, 1186 (5th Cir.1978). In most cases, the trial court must go beyond the pleadings in order to properly understand the claims, defenses, relevant facts, and applicable substantive law in order to be able to make a meaningful determination of the certification issues. Castano v. American Tobacco Co., 84 F.3d 734, 744 (5th Cir.1996); Shelton v. Pargo, Inc., 582 F.2d 1298, 1312 (4th Cir.1978). It is not enough for the trial court to "merely parrot" the "formulaic language of Rule 23(a)." Ex parte Green Tree Financial Corp., supra, 684 So. 2d at 1307 (ordering decertification of class because, among other things, the trial court had "entered an order *196 based upon little or no evidentiary underpinnings").
Requiring that a conditional class certification order be based upon evidentiary underpinnings would be desirable for a variety of reasons. For example, such a certification order would show the amount of work done by the plaintiff to substantiate the need for class certification and would assist in appellate review of cases in which there was an issue whether another action involving the same subject matter might be abated by the class action. Obviously, the trial court's February 27, 1997, conditional class certification order was not based on such an evidentiary underpinning, but was based exclusively on the allegations presented in the Coodys' complaint and, presumably, on the motion for class certification.[4]
For the reasons discussed above, we hold that the trial court abused its discretion in conditionally certifying the class. Consequently, we grant the mandamus petition and direct the trial court to withdraw its order conditionally certifying the statewide class.
WRIT GRANTED.
HOOPER, C.J., and HOUSTON and SEE, JJ., concur.
ALMON, SHORES, and COOK, JJ., concur in the result.
KENNEDY, J., dissents.
COOK, Justice (concurring in the result).
See Ex parte First National Bank of Jasper, 717 So. 2d 342 (Ala.1997), which thoroughly addresses the concerns raised by the class-action litigants in this case regarding the necessity of conditional certification to ensure that the court will not be ousted of its jurisdiction by the subsequent filing in another court of a complaint containing identical class allegations.
ALMON and SHORES, JJ., concur.
KENNEDY, Justice (dissenting).
I dissent. See my opinion concurring specially in Ex parte First National Bank of Jasper, 717 So. 2d 342 (Ala.1997).
[1] On June 1, 1995, Life Investors Insurance Company of America acquired Equity National Life Insurance Company through merger.
[2] This Court has explained that federal authorities are persuasive when interpreting Rule 23, Ala. R. Civ. P. See Adams v. Robertson, 676 So. 2d 1265, 1268 (Ala.1995), cert. dismissed as improvidently granted, 520 U.S. 83, 117 S. Ct. 1028, 137 L. Ed. 2d 203 (1997); Rowan v. First Bank of Boaz, 476 So. 2d 44, 46 (Ala.1985).
[3] Of course, the trial court must also explain how the proponents have satisfied at least one of the grounds provided in Rule 23(b).
[4] We are aware that on January 7, 1997, the trial court did conduct a hearing to prepare for its February 27, 1997, order. After reading the transcript of that hearing, we find it clear that that hearing was not an evidentiary hearing. Indeed, during the hearing, the plaintiffs' counsel acknowledged that the plaintiffs were seeking conditional certification based solely on the allegations contained in the pleadings. It is clear that the January 7, 1997, hearing did not provide any evidence in support of the motion for class certification; therefore, that hearing does not support the trial court's class certification order. We are also aware that the trial judge intended to follow his conditional certification order with a period of discovery, concluding with a class certification hearing, and that, therefore, the February 27, 1997, order does not necessarily indicate that the trial court felt that final certification was proper. However, at this point in the litigation, neither party has conducted discovery related to the issue of class certification. We have addressed this issue to emphasize that a trial court must make detailed factual findings to support any class certification order and that, in most cases, this requirement calls for at least some measure of discovery related to class certification. | December 16, 1997 |
fb1e37d8-8dee-4636-9335-4242b6635237 | Ex Parte Trawick | 698 So. 2d 162 | 1951209 | Alabama | Alabama Supreme Court | 698 So. 2d 162 (1997)
Ex parte Jack Harrison TRAWICK.
(In re Jack Harrison Trawick v. State).
1951209.
Supreme Court of Alabama.
February 28, 1997.
As Modified on Denial of Rehearing June 13, 1997.
*166 Randall S. Susskind of the Equal Justice Initiative of Alabama, Montgomery; and William K. DelGrosso, Birmingham, for Petitioner.
Bill Pryor, Atty. Gen., and Sandra J. Stewart and John Gibbs, Asst. Attys. Gen., for Respondent.
*167 BUTTS, Justice.
Jack Harrison Trawick was convicted of the capital offense of murder committed during a first-degree kidnapping and was sentenced to death. See Ala.Code 1975, § 13A-5-40(a)(1). The Court of Criminal Appeals affirmed his conviction and sentence in Trawick v. State, 698 So. 2d 151 (Ala.Cr.App.1995). This Court has granted his petition for the writ of certiorari; see Rule 39(c), Ala. R.App.P. We affirm.
The Court of Criminal Appeals stated the facts of this case in its opinion, and we will repeat only these pertinent details: Trawick abducted Stephanie Gach[*] from the parking lot of her apartment complex in Birmingham on October 9, 1992, after following her home from a local shopping mall. Trawick took Gach to an isolated area, where he beat her with a hammer, strangled her, stabbed her through the heart, and tossed her body off an embankment. Her body was found on October 10, 1992.
On October 26, 1996, while investigating reports of several attempted abductions of women, the Jefferson County Sheriff's Department interviewed Trawick as a suspect in relation to those reports. During a second interview, the police asked Trawick whether he had had any involvement with the murder of Stephanie Gach. In a third interview, conducted on October 29, 1996, Trawick indicated that he knew something about the murder and, in a fourth interview conducted on the same day, Trawick confessed to the crime; he was then arrested for it.
The grand jury indicted Trawick for the capital offense of murder committed during a first-degree kidnapping. After arraignment, he pleaded not guilty and not guilty by reason of mental disease or defect. After a trial, the jury found Trawick guilty of capital murder and by a vote of 10-2 recommended a sentence of death; the trial court sentenced him to death in accordance with this recommendation.
Although we have carefully reviewed the many issues Trawick raises in his brief, we will address only the primary issues and those issues that were not discussed in the opinion of the Court of Criminal Appeals.
Trawick first argues that the trial court committed several reversible errors during the process of jury selection. We note from the outset that Trawick did not object to these alleged errors at trial. We therefore review these issues only for plain error, i.e., error that is so obvious that the failure to notice it would seriously affect the fairness or integrity of the judicial proceedings. Ex parte Taylor, 666 So. 2d 73 (Ala. 1995). The plain error standard applies only where a particularly egregious error occurred at trial and that error has or probably has substantially prejudiced the defendant. Taylor.
Trawick first argues that the State used its peremptory challenges to discriminate against female jurors, in violation of J.E.B. v. Alabama, 511 U.S. 127, 114 S. Ct. 1419, 128 L. Ed. 2d 89 (1994), and that the trial court erred by not requiring the State to articulate its reasons for its strikes of females. He points out that the State used 11 of its 14 peremptory strikes to remove women from Trawick's jury, resulting in a petit jury that was composed of 7 men and 5 women. He also argues that the prosecutor had a history of striking veniremembers based upon race. He thus concludes that his case should be remanded for a hearing on the State's reasons for striking women.
In J.E.B. v. Alabama, the United States Supreme Court extended the principles of Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986), to apply to gender discrimination in jury selection. A party making a Batson or J.E.B. challenge bears the burden of proving a prima facie case of discrimination and, in the absence of such proof, the prosecution is not required to state its reasons for its peremptory challenges. Ex parte Branch, 526 So. 2d 609 (Ala.1987); Ex parte Bird, 594 So. 2d 676 (Ala.1991). In Branch, this Court discussed a number of relevant factors a defendant could submit in attempting to establish a prima facie case of racial discrimination; *168 those factors are likewise applicable in the case of a defendant seeking to establish gender discrimination in the jury selection process. Those factors, stated in a manner applicable to gender discrimination, are as follows: (1) evidence that the jurors in question shared only the characteristic of gender and were in all other respects as heterogenous as the community as a whole; (2) a pattern of strikes against jurors of one gender on the particular venire; (3) the past conduct of the state's attorney in using peremptory challenges to strike members of one gender; (4) the type and manner of the state's questions and statements during voir dire; (5) the type and manner of questions directed to the challenged juror, including a lack of questions; (6) disparate treatment of members of the jury venire who had the same characteristics or who answered a question in the same manner or in a similar manner; and (7) separate examination of members of the venire. Additionally, the court may consider whether the State used all or most of its strikes against members of one gender.
At trial, Trawick objected to the State's peremptory strikes, but objected solely on the basis of race, not gender. Trawick has offered no evidence that the female veniremembers shared only the characteristics of gender, that anything in the type or manner of the prosecutor's statements or questions during the extensive voir dire indicated an intent to discriminate against female jurors, that there was a lack of meaningful voir dire directed at the female jurors, or that female jurors and male jurors were treated differently. He has offered no evidence that the prosecutor had a history of using peremptory challenges in a manner that discriminated against veniremembers of either gender. Instead, Trawick has merely emphasized that the State used many of its strikes to remove women from the venire. Without more, we do not find that the number of strikes this prosecutor used to remove women from the venire is sufficient to establish a prima facie case of gender discrimination.
Trawick next argues that during voir dire, jurors W.M. and W.C. indicated they were prejudiced against Trawick and his case, and that they therefore should have been struck from the venire for cause. Trawick argues that both of these jurors had preconceived opinions based upon media accounts of the murder and that W.C. also indicated a bias against the insanity defense in general. During voir dire, Trawick moved to strike juror W.C., but did not object to juror W.M. He also failed to raise this issue as to either of the jurors before the Court of Criminal Appeals or in his certiorari petition. Trawick nevertheless argues that it was plain error for the trial court to deny his motion to strike W.C. for cause and for it not to strike juror W.M. sua sponte.
To justify a challenge for cause, there must be a proper statutory ground or some matter that imparts absolute bias or favor and leaves nothing to the discretion of the trial court. Clark v. State, 621 So. 2d 309 (Ala.Cr.App.1992). This Court has held that once a juror indicates initially that he or she is biased or prejudiced, or has deep-seated impressions about a case, the juror should be removed for cause. Knop v. McCain, 561 So. 2d 229 (Ala.1989). The test to be applied in determining whether a juror should be removed for cause is whether the juror can eliminate the influence of previous feelings and render a verdict according to the evidence and the law. Ex parte Taylor, supra. A juror need not be excused merely because he or she knows something of the case to be tried or has formed some opinions regarding the case. Kinder v. State, 515 So. 2d 55 (Ala.Cr.App.1986). Even in cases where a potential juror has expressed some preconceived opinion as to the guilt of the accused, the juror is sufficiently impartial if he or she can set aside that opinion and render a verdict based upon the evidence in the case. Kinder. In order to justify disqualification, a juror must have more than a bias or an opinion as to the guilt or innocence of the accused; the bias or opinion must be so fixed that the juror cannot lay it aside and render a verdict based on the evidence presented in court. Oryang v. State, 642 So. 2d 979 (Ala. Cr.App.1993).
Trawick bases his argument as to juror W.M. on statements W.M. made during individual voir dire, after he had indicated in *169 general voir dire that he "knew something" about Trawick's case. The statements in question are as follows:
(Emphasis added.)
Although W.M. stated that he had learned about the case from the newspaper and had formed an opinion of the case based upon what he had read, he nevertheless stated that he thought he could set aside that opinion and base his verdict upon the evidence he heard in court. W.M.'s answers, taken as a whole, do not reveal a fixed opinion that would bias the juror's verdict; rather, they indicate a willingness and ability to put aside any preconceived ideas about Trawick's highly publicized case and to base a verdict upon the evidence that would be presented in the trial. We therefore find no plain error in the trial court's failure to remove W.M. from the jury sua sponte.
Trawick also argues that juror W.C.'s ability to act as an unbiased juror was tainted by a preconceived opinion as to his guilt. This argument is based upon the following statements W.C. made during individual voir dire:
(Emphasis added.) Nothing in this colloquy indicates that W.C. was biased or believed Trawick to be guilty; on the contrary, W.C.'s statement that he had heard that Trawick "supposedly" committed the crime clearly indicated that W.C. properly regarded the charges against Trawick to be allegations, not facts.
Trawick also argues that W.C. later indicated a bias against his defense of not guilty by reason of a mental disease or defect. Because we review this argument in accordance with the plain error rule, we are *170 mindful that Trawick's failure to object at trial to this alleged error weighs against any claim of prejudice to him. Kuenzel v. State, 577 So. 2d 474 (Ala.Cr.App.1990), affirmed, 577 So. 2d 531 (Ala.), cert. denied, 502 U.S. 886, 112 S. Ct. 242, 116 L. Ed. 2d 197 (1991). During general voir dire, Trawick's counsel asked whether anyone considered a defense of not guilty by reason of insanity to be a "cop-out"; W.C. indicated that he did. During subsequent individual voir dire of W.C., the following occurred:
Trawick's counsel then asked W.C. if his indication that he thought the insanity defense is a "cop-out" was "kind of a knee-jerk reaction." The following exchange took place:
While W.C.'s answer may indicate that he felt that the insanity defense is overused and that W.C. might therefore have difficulty believing it, he did not express an absolute bias against the defense. W.C. stated that he could follow the trial court's instructions on the defense, and the trial court had the opportunity to observe W.C.'s manner of speech, demeanor, body language, tone, and appearance as he said this. Based on W.C.'s overall responses to the questions concerning the insanity defense, and in deference to the trial court's discretion in gauging the veracity of these responses, we see no plain error in the trial court's not striking W.C. for cause.
Trawick next argues that in granting one of the State's challenges for cause the trial court violated Witherspoon v. Illinois, 391 U.S. 510, 88 S. Ct. 1770, 20 L. Ed. 2d 776 (1968). Trawick correctly states that, under Witherspoon, it is unconstitutional to exclude venirepersons for cause when they express *171 general objections to the death penalty; the juror may be excluded only if his or her view on capital punishment would prevent or substantially impair the performance of his or her duties as a juror. Before deciding whether a juror is excludable under Witherspoon, the trial court must first determine whether the juror, given his or her stated objections to capital punishment, could nevertheless consider the evidence and instructions of the court and in an appropriate case return a verdict of guilty although that verdict could result in the imposition of the death penalty.
During voir dire, the trial court asked the veniremembers whether any of them, because of religious, moral, or philosophical scruples, were unalterably opposed to capital punishmentspecifically whether anyone was so opposed to it "that you know now before you hear a stitch of testimony, before you have heard anything about the legal components, that you know right know to a certainty that you would not vote for the death penalty." Juror N.P. answered in the affirmative. The trial court then conducted individual voir dire with N.P., wherein the following was said:
We conclude that N.P.'s statements regarding his feelings against the death penalty, and his statement of allegiance to his own feelings against it, were sufficient to justify granting the State's challenge for cause. Throughout repeated questioning, N.P. consistently indicated that his own feelings of conscience against the death penalty would outweigh his obligation to any oath to consider recommending it. We therefore find no plain error in the trial's court decision to exclude N.P. from the jury.
Trawick next raises a series of issues challenging the propriety of several instructions the trial court gave the jury. We note from the outset that these issues are raised for the first time in Trawick's brief to this Court; they were not preserved before the trial court. We therefore review these issues only within the confines of the plain error rule, and we again note that this rule is to be applied to correct errors solely in those circumstances in which a miscarriage of justice would otherwise result. Ex parte Taylor, 666 So. 2d 73 (Ala.1995), cert. denied, ___ U.S. ___, 116 S. Ct. 928, 133 L. Ed. 2d 856 (1996).
Trawick argues that the trial court failed to properly instruct the jurors that he was required to prove by "clear and convincing evidence" his defense of not guilty by *172 reason of mental disease or defect. Trawick contends that this failure left the jury to believe that he had to meet the higher standard of proving his mental disease or defect beyond a reasonable doubt and thus sabotaged his defense.
The record shows that the trial court gave the following jury instruction as to Trawick's defense of not guilty by reason of mental disease or defect:
We note that the instruction in the Alabama Pattern Jury Instructions: Criminal defining the defense of mental disease or defect does not contain any definition of the clear and convincing evidence standard to be applied in cases where the defendant asserts that defense. The instruction set out above is, in essence, the same as the pattern instruction as to the defense of mental disease or defect that is contained in the Alabama Pattern Jury Instructions. Taken as a whole, the instructions given by the trial court properly defined how the jury was to weigh the evidence of Trawick's alleged mental disease or defect. The trial court clearly stated that the jurors needed only to find to their "reasonable satisfaction" that such a disease or defect existed in order to find Trawick not guilty, and we find nothing in this that would have misled the jury as to the standard of proof that Trawick was required to meet in order to establish his defense.
Trawick also argues that the trial court improperly failed to instruct the jury as to what the consequences for him would be if they found him not guilty by reason of mental disease or defect. He states that the trial court should have told the jury that such a verdict would mean that he would be confined to a mental hospital, perhaps for the rest of his life. He speculates that, without this instruction, the jury "may well have believed" that a verdict of not guilty by reason of mental disease or defect, like a regular verdict of not guilty, would result in his complete freedom. He concludes that the instruction left the impression that he would be left to go free and unfettered if the jury found him not guilty by reason of mental disease or defect and thus impermissibly influenced the jury to find him guilty.
We find no error in the trial court's silence as to the consequences for Trawick if the jury returned a verdict of not guilty by reason of mental disease or defect. On the contrary, its silence was entirely proper; it was not within the jury's sphere of concern to determine what these consequences would be, and statements as to such consequences should not be thrown into a case to influence the verdict, Ivery v. State, 686 So. 2d 495 (Ala.Cr.App.1996), citing Boyle v. State, 229 Ala. 212, 154 So. 575 (Ala.1934). The trial court correctly refrained from making statements regarding those consequences.
Trawick next argues that in instructing the jury the trial court erroneously defined "reasonable doubt," as that term is *173 used in regard to the standard of proof, as "an actual substantial doubt," and that this violated Cage v. Louisiana, 498 U.S. 39, 111 S. Ct. 328, 112 L. Ed. 2d 339 (1990). In Cage, the United States Supreme Court reversed a criminal conviction because the Court concluded that the trial court's instruction impermissibly suggested a higher degree of doubt than is required for acquittal under the reasonable doubt standard established by In re Winship, 397 U.S. 358, 90 S. Ct. 1068, 25 L. Ed. 2d 368 (1970). Trawick likens the instruction given in this case to that at issue in Cage, and he concludes that his conviction likewise must be reversed.
In Cage, the trial court instructed, in pertinent part, that reasonable doubt "must be such doubt as would rise to a grave uncertainty [and that] it is an actual substantial doubt. It is a doubt that a reasonable man can entertain. What is required is not an absolute or mathematical certainty, but a moral certainty." 498 U.S. at 40, 111 S. Ct. at 329. The United States Supreme Court held that the words "substantial" and "grave," as they are commonly understood, suggest a higher degree of doubt than is required for an acquittal under the reasonable doubt standard. The Court determined that these words, when considered with the reference to "moral certainty" rather than evidentiary certainty, could have led a reasonable juror to believe that a finding of guilty could be based on a lesser degree of certainty.
The portion of the jury instruction to which Trawick now objects is as follows:
Trawick argues that this statement lowered the burden of proof because, he says, it "guid[ed] the jurors' understanding about the State's burden in terms of their own personal affairs." We do not agree; on the contrary, we find that the statement effectively highlighted the high degree of proof that was necessary to prove Trawick's guilt, by describing it in a way that made it more personal for the jurors. Moreover, in the balance of its instruction, the trial court consistently emphasized the presumption of Trawick's innocence, the burden the State had in overcoming this presumption, and the definition of "reasonable doubt" as a product of the jury's common sense and reason. We find no error in the court's definitions of the reasonable doubt standard and the State's burden of proof.
Trawick next argues that during the penalty phase of the trial the court failed to instruct the jurors as to how they were to weigh the aggravating and mitigating circumstances of Trawick's case. The trial court instructed the jury that, if it found that the mitigating circumstances outweighed the aggravating circumstances, it was required to recommend a sentence of life imprisonment without parole. However, Trawick points out that the trial court did not further instruct the jury that if the aggravating and mitigating circumstances were equally balanced, the jury was likewise required to recommend a sentence of life imprisonment. Trawick concludes that, because Alabama law requires that aggravating circumstances must outweigh mitigating circumstances in order for a jury to recommend the death sentence, the trial court's instructions misstated Alabama law and improperly created an inference that the jury was required to recommend the death penalty if it found that the circumstances were equally balanced.
Because Trawick did not raise this issue at trial, we must consider it in accordance with the plain error rule. We note that the jury instructions as to the weighing of aggravating circumstances and mitigating circumstances were materially the same as those set out in the Alabama Pattern Jury Instructions: Criminal for use in the sentencing stage of a capital murder trial in this state, and this Court has held that no reversible error will be found when the trial court follows the pattern jury instructions adopted by this Court. Kuenzel v. State, supra. The trial court correctly instructed the jury to recommend the death penalty only if it found that the aggravating circumstances outweighed the mitigating circumstances, obviously implying that in all other circumstances the jury was required to recommend a sentence *174 of life imprisonment without parole. We do not agree with Trawick that this instruction could have misguided the jury as to its responsibility and function in weighing the aggravating and mitigating circumstances; on the contrary, the instruction clearly explained that the jury could recommend the death penalty under only one circumstance. Haney v. State, 603 So. 2d 368 (Ala.Cr.App.1991), affirmed, 603 So. 2d 412 (Ala.1992), cert. denied, 507 U.S. 925, 113 S. Ct. 1297, 122 L. Ed. 2d 687 (1993). We therefore find no plain error in the instruction as given.
Trawick next argues that the trial court erred to reversal by failing to instruct that the jury, and not the trial court, was to make the ultimate decision regarding the voluntariness of Trawick's confession. After a pre-trial hearing on the voluntariness of the confession, the trial court ruled that it was admissible, and the confession then became central to the State's case against Trawick. Trawick contends that, by allowing the confession into evidence over his objection, the trial court implied to the jury that the confession was voluntary and proper. Trawick concludes that the trial court was required to instruct the jury that there was still an issue of fact as to the voluntariness of the confession, and he contends that its failure to do so was reversible error.
This Court has recognized that a trial court cannot lawfully prevent a jury from making a determination of voluntariness as affecting the weight and credibility to be given a defendant's statements. Ex parte Singleton, 465 So. 2d 443 (Ala.1985). In Singleton, the trial judge specifically told the jury that he had already determined that the defendant's statement was voluntary and therefore admissible; however, the judge also clearly instructed that it was the jury that was to ultimately determine whether the confession was voluntary. This Court ruled that these comments did not imply that the jury should accept or believe the defendant's confession merely because it had been ruled admissible.
In this case, there is even less to indicate that the trial court in any way implied to the jury that Trawick's confession was voluntary merely because it was admissible. In admitting Trawick's confession into evidence, the trial court did not tell the jury that it had previously ruled upon the voluntariness of Trawick's confession. The trial court properly instructed the jury that the court would rule only as to whether evidence could be admitted into the case and that the jury would be the sole and exclusive judge of the truth of the evidence that was admitted. The trial court specifically stated that it did not get involved in the jury's "job" as the finder of fact. We find no plain error in the trial court's instruction.
Trawick next argues that his confession to Gach's murder was elicited after he had requested an attorney and in response to improper promises made to him by the police; thus, he argues that the confession should have been suppressed at trial, relying on Edwards v. Arizona, 451 U.S. 477, 101 S. Ct. 1880, 68 L. Ed. 2d 378 (1981).
To address these issues, we must note the following sequence of events from the record: Trawick gave several interviews to the Jefferson County Sheriff's Department personnel in October 1992. The first interview was not in direct relation to Gach's murder; rather, Trawick was brought in for questioning as part of the Department's investigation of several reported attempts by an unknown man to abduct women or to lure them into his vehicle. The police did not ask Trawick about Gach's murder, and no statements from the first interview were admitted at his trial.
In a second interview, on October 26, 1992, Lt. Steven S. Green specifically asked Trawick whether he had had any involvement in Gach's abduction and murder; however, Trawick did not admit guilt at that time. During that interview, Lt. Green asked Trawick if he would take a polygraph test; Trawick replied, in part, "[I]f I'm either being charged with or, you know highly suspected of a murder, I need to get legal assistance all the same." The interview stopped, although a police officer did ask *175 Trawick if he or his mother would object to a search of his residence.
A third interview occurred on October 29, 1992, after Lt. Green received a telephone call from Trawick's mother, who told him that Trawick wanted to speak with him. Lt. Green went to the jail and asked if Trawick wanted to see him. Lt. Green again advised Trawick of his Miranda rights; Trawick then stated that he understood those rights, and he signed a waiver form. Trawick gave an oral statement; he did not indicate that he wished to speak with an attorney before giving his statement.
During the third interview, Trawick told Lt. Green that he knew about Gach's murder and that he could tell Lt. Green what he needed to know to finish his investigation of the case. Trawick indicated that he wanted to minimize the publicity about the case, for his mother's sake, but that he wanted to make sure that the case would be tried as a capital murder and that he would be sentenced to death. Trawick did not ask to speak with an attorney. Lt. Green told Trawick that he would set up a meeting between Trawick and an assistant district attorney, and the interview ended.
A fourth interview occurred later that day, when Trawick met with Lt. Green and another police officer, along with Deputy District Attorney Roger Brown. After being advised of his Miranda rights, which he again waived, Trawick gave an oral statement, which was audiotaped, confessing to the abduction and murder of Stephanie Gach. While giving the statement, Trawick reiterated that he wanted the case to be tried as a capital murder and that he wanted the death penalty. Brown told Trawick that he would have to know the circumstances of the case before he could know whether Trawick could be tried for capital murder.
Trawick argues that, after he requested an attorney during the second interview, all questioning should have stopped until he was provided one. Thus, because he was not provided with an attorney before giving the oral statements in the third and fourth interview, he argues that evidence of those statements should have been suppressed.
When a suspect expresses a desire to deal with the police only through counsel, the suspect should not be subject to further interrogation by the authorities until counsel has been made available, unless the suspect himself initiates further communication, exchanges, or conversations with the police. Edwards v. Arizona, supra. The record shows that the second interview effectively ended after Lt. Green asked Trawick if he would take a polygraph test and Trawick indicated that he would want legal counsel before he would do so. According to Trawick's own testimony in the pre-trial suppression hearing, he asked his mother the next day to tell Lt. Green that he wanted to make a statement. When Lt. Green arrived at the jail, Trawick wanted to talk to him and, after being properly read his Miranda rights, he waived those rights and gave the statement. The evidence clearly shows that Trawick himself initiated further communication with Lt. Green, after indicating in the second interview that he might want legal counsel; thus, the statements that he gave in the third and fourth interviews were not given in violation of Edwards v. Arizona.
Trawick also argues that the assistant district attorney and the police promised him that, in return for his statement, they would assure that he would be expeditiously tried for capital murder, that he would be sentenced to death, and that they would keep news media coverage of the case to a minimum out of respect for Trawick's mother. He contends that he gave his statement only after he was promised that these conditions would be met, and that his statements were thus coerced, in violation of his due process rights.
At the pre-trial suppression hearing, Lt. Green confirmed that, before giving his statement at the fourth interview, Trawick told the distract attorney and police officers that he wanted to be tried for capital murder and to receive the death penalty. Lt. Green testified that Brown responded merely by saying that he would not know whether the case could be made capital until he knew the circumstances of it. Brown also testified that he only told Trawick, in effect, that he *176 did not know whether the case was a capital case because he did not know the facts. At the pre-trial hearing on his motion to suppress the confession, Trawick himself testified that Brown and the police officers only "promised that they would listen" to his statement and that if the facts they heard in the statement fit the facts necessary for a capital case, then his case would be tried as such.
The kinds of promises that may make a defendant's statement involuntary are promises of leniency, promises to bring the defendant's cooperation to the attention of the prosecutor, and the disclosure of incriminating evidence to the accused and silence in response to the defendant's offer to talk if his statement would not be used against him. Siebert v. State, 562 So. 2d 586 (Ala.Cr.App.1989), affirmed, 562 So. 2d 600 (Ala.), cert. denied, 498 U.S. 963, 111 S. Ct. 398, 112 L. Ed. 2d 408 (1990). There is no evidence that the police or the deputy district attorney made any promises of this sort to Trawick. The deputy district attorney's mere promise to listen to Trawick's statement of the facts of the case and to then to take whatever action was appropriate under the law as applied to those facts was merely a promise that he would do his job; certainly, it was no special privilege or favor for Trawick.
The true test for determining whether extrajudicial confessions are voluntary is whether the defendant's will was overborne at the time he confessed so that the confession was not the product of a rational intellect and free will. Ex parte Weeks, 531 So. 2d 643 (Ala.1988). The evidence, including Trawick's own testimony, shows that Trawick himself initiated the contact that led to his confession, that he legitimately waived his right to an attorney before confessing, and that he did so without the inducement of special promises of the sort described in Siebert. We therefore find no merit in his argument that his confession was not voluntary.
Trawick next argues that, in sentencing him, the trial court improperly placed on him the burden of proving mitigating circumstances and erred in failing to find the existence of mitigating circumstances. He first points out that, under Ala.Code 1975, § 13A-5-45(g), a defendant has only the burden of interjecting the issue of mitigating circumstances, and the burden then shifts to the State to disprove the existence of the mitigating circumstances, by a preponderance of the evidence. He argues that the trial court improperly required him to prove the existence of mitigating circumstances, rather than requiring the State to disprove their existence.
In considering what Trawick offered as a mitigating circumstancehis contention that he had an impaired capacity to appreciate the criminality of this conduct or to conform his conduct to the requirements of lawthe trial court stated:
(Emphasis added.)
Trawick argues that this indicates that the trial court placed the burden of persuasion upon him, rather than upon the State. We disagree. The trial court did not state that Trawick had failed to persuade it of the existence of the sixth statutory mitigating circumstance (set out at § 13A-5-51); rather, it indicated that the evidence rebutted Trawick's contention regarding the mitigating circumstance and that it was therefore not persuaded to find the existence of that mitigating circumstance. Moreover, the record shows that the trial court properly instructed the jury as to the burden of proof on mitigating circumstances, and it is presumed to follow its own correct instructions. Ex parte Harrell, 470 So. 2d 1309 (Ala.), cert. denied, 474 U.S. 935, 106 S. Ct. 269, 88 L. Ed. 2d 276 (1985). We therefore find no *177 plain error in the trial court's finding as to this mitigating factor.
Trawick also claims that although the trial court did find a nonstatutory mitigating circumstance, based upon Trawick's "characterological defects," it should have found as a statutory mitigating circumstance that his capacity to appreciate the criminality of his actions was impaired. While the trial court was required by the United States Constitution to consider all the evidence Trawick presented in mitigation, Lockett v. Ohio, 438 U.S. 586, 98 S. Ct. 2954, 57 L. Ed. 2d 973 (1978), it was not required to determine that mitigating circumstances existed. Ex parte Harrell, supra. The record contains sufficient evidence, presented by the various experts who testified at the guilt and sentencing stages of the trial, from which the trial court could conclude that, while Trawick may have suffered from a mental illness, his ability to appreciate the wrongfulness of his actions was not impaired by that illness. In view of this, we find that the trial court did not abuse its discretion in failing to find the existence of the sixth mitigating circumstance.
Trawick next argues that the trial court improperly failed to instruct the jury on the lesser included offense of noncapital intentional murder. He summarily states that the evidence presented at trial could have supported a finding that he killed Stephanie Gach before he placed her in his van; thus, he concludes, the jury could have believed that no kidnapping took place and could have convicted him of the noncapital charge of intentional murder.
Trawick did not request an instruction on intentional murder, nor did he challenge the lack of such a charge before the Court of Criminal Appeals or in his certiorari petition to this Court; thus, our review of this issue is for plain error only. A capital murder defendant is entitled to a charge on a lesser included offense only where there is a reasonable theory from the evidence that would support such a charge. Anderson v. State, 507 So. 2d 580 (Ala.Cr.App.1987). Trawick confessed that he first kidnapped, then murdered, his victim; this confession was properly admitted into evidence at trial. No reasonable interpretation of the evidence contained in the record would contradict Trawick's confession and support an inference that he killed Gach before he put her into his van; thus, there is no merit in Trawick's argument on this issue.
Trawick next argues that in regard to two pre-trial hearings he was improperly denied his constitutional right to be present. He points out that in Ex parte Jackson, 674 So. 2d 1365 (Ala.1994), this Court held that state law and federal law secure the right of a defendant accused of a capital crime to be present during all stages of the trial. According to Trawick, he was excluded from two hearings wherein the parties outlined the case against him and discussed the admissibility of parts of his oral statements to the police. He therefore concludes that his conviction must be reversed and a new trial ordered, under Jackson.
In Jackson, the defendant was allowed to leave the courtroom twice during the sentencing portion of his trial, without having displayed a level of misconduct that would have constituted a forfeiture of his right to be present at the proceeding. This Court has not held, however, that a defendant has the right to be present at all pre-trial proceedings without regard to whether the defendant's absence will prejudice the defendant.
The record does not support Trawick's contention that he was denied the right to be present at a pre-trial hearing; rather, it shows merely that Trawick arrived late at one such proceeding and that, when he did arrive, the trial court fully apprised him of what had occurred in his absence. Trawick has not demonstrated how he was prejudiced by this, or how his presence at the entire proceeding might have changed the outcome of the trial. Because Trawick did not raise this issue before the trial court, the Court of Criminal Appeals, or before this Court in his certiorari petition, we review it only for plain error. We find none.
Trawick next argues that the trial court erred in admitting into evidence photographs of the victim and the crime *178 scene and autopsy slides. He argues that the admission of these pictures was unnecessary to the prosecution of the case and was meant only to inflame the jury and undermine his defense. Trawick did not raise this issue at trial or before the Court of Criminal Appeals, and he has not provided this Court with the exhibits at issue; there is therefore nothing in the record for this Court to review. We do note that the record indicates that the exhibits were properly authenticated and appear to have been introduced in order to establish evidentiary elements of the case. Photographs that show the wounds of a deceased victim are generally admissible as evidence even though the evidence is gruesome and cumulative and relates to undisputed matters. Ex parte Siebert, 555 So. 2d 780 (Ala.1989), cert. denied, 497 U.S. 1032, 110 S. Ct. 3297, 111 L. Ed. 2d 806 (1990). Moreover, it is within the trial court's discretion to determine whether such evidence should be admitted, Siebert, and we see nothing to indicate that the trial court abused its discretion in admitting the exhibits at issue.
Trawick next argues that the jury's general verdict recommending the death penalty improperly failed to specify which, if any, statutory aggravating circumstances were found. He points out that, because death is the ultimate punishment, the Eighth Amendment requires capital sentencing procedures that "minimize the risk of wholly arbitrary and capricious action." Gregg v. Georgia, 428 U.S. 153, 96 S. Ct. 2909, 49 L. Ed. 2d 859 (1976). He also points out that statutory aggravating circumstances that genuinely narrow the class of persons eligible for the death sentence are the most important safeguards against the arbitrary infliction of capital punishment. Maynard v. Cartwright, 486 U.S. 356, 108 S. Ct. 1853, 100 L. Ed. 2d 372 (1988), and that the jury's finding of the statutory aggravating circumstances must be rationally reviewable. Godfrey v. Georgia, 446 U.S. 420, 100 S. Ct. 1759, 64 L. Ed. 2d 398 (1980). He thus concludes that the jury should have been required to indicate in some fashion what criteria it relied upon in finding him eligible for the death sentence, and that its failure to do so is reversible error.
Because Trawick did not raise this issue before the trial court, the Court of Criminal Appeals, or before this Court in his petition for certiorari review, it will be reviewed only under the plain error rule. Beyond this, we note that there is no established Federal constitutional requirement or state law requirement that a jury specify the aggravating circumstances that it finds to exist. Haney v. State, supra. The jurors in this case were properly instructed on the aggravating and mitigating circumstances and on the process to be used in weighing these circumstances. We therefore find no error in the jury's failure to specify the aggravating circumstances that it apparently found to exist.
Trawick next argues that the jury impermissibly "double-counted" the kidnapping charge against Trawick as both an element of the capital offense and as an aggravating circumstance. We have previously addressed this issue in other cases and have held that the fact that a particular capital offense necessarily includes one or more aggravating circumstances as specified in Ala. Code 1975, § 13A-5-49, shall not preclude the finding and consideration of that relevant circumstance or those circumstances in determining the sentence. Ex parte Kennedy, 472 So. 2d 1106 (Ala.), cert. denied, 474 U.S. 975, 106 S. Ct. 340, 88 L. Ed. 2d 325 (1985); Smith v. State, 698 So. 2d 189 (Ala.Cr.App. 1996). Furthermore, Alabama courts have repeatedly upheld death sentences where the only aggravating circumstance supporting the death sentence overlaps with an element of the capital offense. Smith v. State, supra; Heath v. State, 455 So. 2d 898 (Ala.Cr.App. 1983), affirmed, 455 So. 2d 905 (Ala.1984), affirmed, 474 U.S. 82, 106 S. Ct. 433, 88 L. Ed. 2d 387 (1985); Jenkins v. State, 627 So. 2d 1034 (Ala.Cr.App.1992), affirmed, 627 So. 2d 1054 (Ala.1993), cert. denied, 511 U.S. 1012, 114 S. Ct. 1388, 128 L. Ed. 2d 63 (1994). We find no merit in Trawick's arguments as to this issue.
This Court has reviewed the record and the briefs, considered the arguments made *179 before the Court on oral argument, and examined the writing and rulings of the Court of Criminal Appeals in regard to all the issues raised by Trawick, not just those specifically addressed above. Moreover, in compliance with Rule 39(k), Ala.R.App.P., we have searched the record of both the guilt phase and the sentencing phase of Trawick's trial for any plain error or defect that may have adversely affected his substantive rights. We find no error, "plain" or otherwise, that requires us to reverse the Court of Criminal Appeals' judgment affirming Trawick's conviction and sentence. That judgment is therefore affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, and COOK, JJ., concur.
[*] Note from the reporter of decisions: In its opinion, the Alabama Court of Criminal Appeals spelled the victim's name "Gash." 698 So. 2d 151 (Ala.Crim.App.1995). Both the "Gach" and "Gash" spellings appear at various points in the record. | June 13, 1997 |
7efdd6a3-9f7f-4e71-92e1-9a07ef77715c | Etherton v. City of Homewood | 700 So. 2d 1374 | 1951956 | Alabama | Alabama Supreme Court | 700 So. 2d 1374 (1997)
Vhern ETHERTON and Barbara Etherton
v.
CITY OF HOMEWOOD.
1951956.
Supreme Court of Alabama.
August 15, 1997.
*1375 John Wallace Savage of Cory, Watson, Crowder & Petway, Birmingham, for appellants.
Michael G. Kendrick and Victoria J. Franklin-Sisson of Gorham & Waldrep, P.C., Birmingham, for appellee.
Ken Smith, Alabama League of Municipalities, Montgomery, for amicus curiae Alabama League of Municipalities, in support of the appellee.
COOK, Justice.
Vhern Etherton and his wife Barbara Etherton appeal from a judgment dismissing their action against the City of Homewood seeking compensation related to injuries Mr. Etherton suffered when he fell into an open service hole in the City of Homewood. We remand with directions.
On April 11, 1996, the Ethertons filed a complaint in the Jefferson County Circuit Court against several defendants, including the City of Homewood ("the City"). The complaint alleged that the defendants had "negligently maintained an open service hole" into which Mr. Etherton fell, and it alleged that Mr. Etherton suffered personal injuries in the fall. On May 21, 1996, the City moved, pursuant to Ala. R. Civ. P. 12(b)(6), to dismiss the claims against it.
On June 19, 1996, the trial court entertained oral arguments on the City's motion to dismiss, and at the conclusion of the arguments it granted the City's motion. The next day, June 20, the Ethertons filed a proposed order for the judge's signature and moved the court to make the dismissal a final judgment, pursuant to Ala. R. Civ. P. 54(b).
On July 26, the Ethertons moved the trial court to stay the action as to the other defendants, pending appellate review of the City's dismissal. On August 9, at a hearing on the motion to stay, the Ethertons learned, for the first time, that on June 26, 1996, the court had, in fact entered a final judgment pursuant to Rule 54(b). Thus, the 42-day period in which to appeal the judgmentsee Ala. R.App. P. 4(a)(1)had expired on August 7two days before the hearing. Nevertheless, on August 29, 1996, the Ethertons filed a notice of appeal.
On November 1, 1996, the Ethertons filed in this Court a "Motion to Accept as Timely Filed Plaintiffs' Notice of Appeal." In that filing and in subsequent filings addressed to the issue, they contend that "they did not receive notice of the final judgment," as required by Ala. R. Civ. P. 77(d). That rule provides in part:
(Emphasis added.) In support of their arguments to this Court, the Ethertons allege that the following events transpired:
After some time had passed, during which the Ethertons received no notice of the disposition of their Rule 54(b) motion, their counsel began to inquire into the matter at the courthouse. More specifically, the Ethertons assert that on two occasions their counsel personally visited the office of the clerk of the Jefferson County Circuit Court to inspect the case action summary sheet, and that the case action summary sheet could not be located on either occasion. The Ethertons' counsel also visited the judge's office to inspect the case file. The Ethertons state that their counsel inspected and saw that the file contained "no copy of the case action summary sheet." Moreover, the Ethertons' counsel found that the proposed Rule 54(b) order had not been signed, and, the Ethertons say, the judge's "[law] clerk was unable to provide ... any information regarding" its disposition. They point out that their notice of appeal was filed well within the 42 days following August 9, 1996, when they actually learned of the entry of the final judgment. In addition, the notice of appeal was filed within 30 days of August 7, 1996, the date on which the 42-day appeal period expired.
They argue that they "should be entitled reasonably [to] rely on information contained in the formal case action summary sheets and the Circuit Clerk's court file," and, consequently, that they took all necessary steps to preserve their right to appeal. They contend that this case is controlled by Turner v. Barnes, 687 So. 2d 197 (Ala.1997), and Sparks v. Alabama Power Co., 679 So. 2d 678 (Ala. 1996).
Sparks, like this case, involved the failure of the office of the clerk of the Jefferson County Circuit Court to mail the plaintiff notice of the entry of an order that commenced the running of the period in which to appeal. More specifically, on June 8, 1995, Mary Sparks moved for a new trial in a wrongful death action she was prosecuting against Alabama Power Company ("APCo"). 679 So. 2d at 679. "The trial court overruled the new trial motion on July 21 by an order that was entered on the case action summary sheet. No notice of the order was mailed to... counsel, and no entry was made on the computer case record system used by the Jefferson circuit clerk's office...." Id. On September 7, 1995, approximately six days after the 42-day period in which to appeal the July 21 judgment had expired, "APCo's counsel found the case action summary sheet... in the `disposed' case files in the Jefferson circuit clerk's office and learned from the notation on the case action summary sheet that Mrs. Sparks's motion for a new trial had been denied on July 21." Id. at 680.
On October 12, 1995, Mrs. Sparks filed a notice of appeal. Additionally, on October 19, 1995, she filed a motion in the trial court, requesting it to "hold that the Jefferson circuit clerk's computerized docket sheet is a legal equivalent of the formal case action summary sheet." Id. She alleged that throughout the 42-day appeal period, her counsel had "periodically checked with the circuit clerk's office regarding a possible ruling by the court on the motion for new trial, but were repeatedly informed that the court had not ruled." Id. She asked the trial court to hold that "she had a right to rely on *1377 what the clerk's office [had] told her counsel," id., and reasonably to believe that her June 8, 1995, "motion for a new trial had not been ruled on within 90 days and, thus, had been denied on the 90th day by operation of Rule 59.1, Ala. R. Civ. P." 679 So. 2d at 680. Mrs. Sparks also asked the trial court to hold that her notice of appealwhich was filed within 42 days of September 6, the 90th day after her June 8 new-trial motionwas timely. Id.
"Following a hearing, the trial court overruled Mrs. Sparks's motion," which it considered to be one "essentially seek[ing] relief in the form of an extension of time for appeal" pursuant to Rule 77(d). 679 So. 2d at 680. In doing so, it stated:
679 So. 2d at 680 (emphasis added).
This Court disagreed with that holding and concluded that the trial court did have jurisdiction to grant relief. Id. More specifically, we deemed it "reasonable, under the facts of [that] case, to allow Mrs. Sparks to rely on the information affirmatively supplied her by the Jefferson circuit clerk's officeinformation indicating that as of the 90th day there had been no ruling on her motion for new trial." 679 So. 2d at 681. We held that, because of the affirmative, erroneous actions of the circuit clerk's office, the 42-day appeal period should have been computed from September 6, 1995, the 90th day from the June 8, 1995, new trial motion.
Turner also involved the failure of the office of the Jefferson County Circuit Court clerk to mail the plaintiff a notice of the entry of orders that commenced the running of the period in which to appeal, that is, it failed to notify Geraldine Turner of the fact that judgments had been entered against her and filed in the clerk's office. 687 So. 2d at 197. Turner's "attorney learned of the judgments from the clerk's office more than 42 days after they had been filed." Id. at 198. Although the time in which to file a notice of appeal had expired before she learned of the entry of the judgments, Turner promptly moved the trial court, pursuant to Rule 77(d), to extend the time for appeal. 687 So. 2d at 198. She asserted that her "attorney [had] telephoned the clerk's office and acted diligently in an effort to `keep abreast of the status of [the] case.'" Id. The trial court granted Turner's motion. Id.
We concluded that the trial court ruled properly in extending the time in which to file an appeal. Specifically, we stated: "Clerk's offices are unequivocally directed by Rule 77(d): `Immediately upon the entry of an order or judgment the clerk shall serve a notice of the entry by mail....'" 687 So. 2d at 198 (emphasis added). We went even further and stated: "Nothing in Rule 77 indicates that this language is aspirational, or that other means of giving notice to the parties may be substituted. Adherence to this rule should alleviate the notice problems experienced in this case." 687 So. 2d at 198 (emphasis added).
This case differs from Sparks and Turner in two substantive respects. First, the trial courts in those cases considered Rule 77(d) motions, either in fact, as in Turner, or in essence, as in Sparks, seeking an extension of time in which to appeal. Second, the appeals in each of those cases involved a record, which contained the operative facts upon which the appellants based their arguments for suspending the running of the 42-day appeal period. We have no record in this case. That is so because the Ethertons sought no action from the trial court before they filed their notice of appeal. Thus, we have no trial-court action to review.
"This court is a court of appellate review and will not entertain review proceedings until after the trial court has ruled." State v. Newberry, 336 So. 2d 181, 183 (Ala. 1976). "It is a fundamental rule of appellate procedure that, regardless of [the] merits of [the] appellant's contentions, appellate courts *1378 will not review questions not decided by the trial court. McWhorter v. Clark, 342 So. 2d 903 (Ala.1977)." Bevill v. Owen, 364 So. 2d 1201 (Ala.1979). Thus, the appellate courts of this state "scrupulously avoid" assuming a fact-finding role. Hollis v. Scott, 516 So. 2d 576 (Ala.1987); Jackson v. State, 636 So. 2d 1275 (Ala.Crim.App.1994).
As a corollary, we are not permitted to consider matters "dehors the record." Cooper v. Adams, 295 Ala. 58, 61, 322 So. 2d 706, 708 (1975). This rule may be restated as follows: "(1) Argument in brief reciting matters not disclosed by the record cannot be considered on appeal. (2) The record cannot be impeached on appeal by statements in brief, by affidavits, or by other evidence not appearing in the record." Id.
This case is, therefore, not now in a reviewable posture. Not only did the Ethertons, as we have said, obtain no ruling from the trial court as to whether they were entitled to an extension of time to appeal, but the materials they have filed in this Court in support of their "Motion to Accept as Timely Filed Plaintiffs' Notice of Appeal" are materials dehors the record, and, consequently, not currently within our purview. In other words, the assertions in those materials are factual and fact-specific, thus requiring findings by the trial court. Until that court, in its fact-finding capacity, has considered the assertions in those materials, those assertions must be taken as mere allegations and are assigned no validity on appeal. However, for reasons that we expressed in Turner, or to which we referred in that case, we conclude that the procedural posture of this present case precludes appellate review at this time.
Specifically, in Turner, we noted that "[t]he Rules of Civil Procedure are to `be construed and administered to secure the just, speedy and inexpensive determination of every action.' Rule 1(c), Ala. R. Civ. P." 687 So. 2d at 198 (emphasis added). Moreover, our admonition of "[a]dherence" to Rule 77(d) was directed to the judiciary itself, specifically to the Jefferson County circuit clerk's office. 687 So. 2d at 198.
The dismissal of an appeal as untimely in a case in which the judiciary itself failed to follow the mandates of Rule 77(d) and thereby caused the untimeliness would not be "just." Indeed, it would be particularly repugnant, not only to the tenor of the rules, but also to justice, equity, and the integrity of the institution. It would be inequitable and unjust to hold a party strictly to the provisions of Rule 77(d) if the judiciary itself does not comply with them.
Therefore, we regard the fact that the Ethertons did not file a Rule 77(d) motion before filing their notice of appeal as a nonfatal defect in their procedure. Had they, on August 9, 1996, upon learning that the appeal period had expired, immediately moved the trial court to extend the time to appeal, the trial court could have considered the arguments the Ethertons make in this Court and the materials with which they attempt to support those arguments. After the trial court had considered those arguments and materials, it could have granted the Ethertons an extension of 30 days from August 7, 1996, the date the 42-day appeal period expired, in which to file an appeal. If it had done so, then the Ethertons' notice of appeal, which was filed on August 29, 1996, would have been timely. Of course, the trial court may have overruled the Ethertons' motion. Under either scenario, their arguments and supporting materials, and the trial court's findings of fact, would have been a part of the record, and, consequently, could have been reviewed by this Court in determining whether the trial court abused its discretion in extending the time to appeal or in refusing to extend it.
Therefore, we remand this cause. The trial court is directed to allow the Ethertons to present their arguments; to make findings of fact regarding the validity of their allegations; and to enter an order nunc pro tunc, August 9, 1996, granting or denying a Rule 77(d), 30-day extension from August 7, 1996.
REMANDED WITH DIRECTIONS.
HOOPER, C.J., and ALMON, SHORES, KENNEDY, BUTTS, and SEE, JJ., concur.
MADDOX and HOUSTON, JJ., concur in the result. | August 15, 1997 |
44afa621-d723-43bf-b831-9a3161baf099 | Carl Gregory Chrysler-Plymouth, Inc. v. Barnes | 700 So. 2d 1358 | 1960182 | Alabama | Alabama Supreme Court | 700 So. 2d 1358 (1997)
CARL GREGORY CHRYSLER-PLYMOUTH, INC.
v.
Clarenzo D. BARNES and Felecia Rogers.
1960182.
Supreme Court of Alabama.
June 27, 1997.
Concurring Opinion July 1, 1997.
*1359 Simeon F. Penton of Kaufman & Rothfeder, P.C., Montgomery, for appellant.
C. Morris Mullin of Hatcher, Stubbs, Land, Hollis & Rothschild, Columbus, Georgia; and W. Banks Herndon of Loftin, Herndon & Loftin, Phenix City, for appellees.
Concurring Opinion of Justice Almon, July 1, 1997.
PER CURIAM.
Clarenzo Barnes and Felecia Rogers sued Carl Gregory Chrysler-Plymouth, Inc. ("Gregory"), alleging that Gregory had fraudulently forged Barnes's signature onto an automobile extended service contract. Gregory appeals from the trial court's denial of its motion to compel arbitration of Barnes and Rogers's claim. An order denying a motion to arbitrate is an appealable order. See Ex parte Brice Building Co., 607 So. 2d 132 (Ala.1992).
In June 1995, Barnes and Rogers, an engaged couple, visited the Gregory dealership and purchased a used Hyundai automobile.[1] While selling the car, Gregory attempted also to sell Barnes and Rogers a "Used Vehicle Extended Service Agreement" ("the service agreement"), which would operate as an extended warranty on the Hyundai. Barnes and Rogers declined the offer. Barnes executed a "Retail Purchase Contract" ("the purchase contract") for the Hyundai. Barnes and Rogers then left the dealership with the Hyundai, and Gregory representatives told them that they would receive copies of the executed paperwork in the mail.
When Barnes and Rogers received the paperwork in the mail from Gregory, they discovered a fully executed service agreement for which Barnes had been charged $1,495;[2] Barnes's signature was on the agreement. Barnes and Rogers allege that Barnes's signature was a forgery and that Barnes and Rogers never agreed to purchase the service agreement. Barnes and Rogers do not dispute the authenticity of Barnes's signature on the purchase contract.
Gregory argues that this fraud claim should be submitted to arbitration. The purchase contract contained an arbitration clause stating the following:
The service agreement upon which the plaintiffs say Barnes's name was forged also contained an arbitration provision. However, Gregory does not rely on that arbitration provision in asking that this dispute be submitted to arbitration. Instead, it relies on the arbitration clause quoted above, from the purchase contract; that clause, Gregory claims, is sufficiently broad to apply to Barnes and Rogers's claim. Gregory notes that the arbitration clause in the purchase contract provides for arbitration of all disputes "concerning any of the negotiations leading to the sale of the vehicle, terms and provisions of the sale, the performance or condition of the vehicle, or any other aspects of the vehicle and its sale," and Gregory notes that it specifically mentions service agreements: "all disputes between [the buyer and the dealer] concerning the vehicle, the terms and meaning of any of the documents signed or given in connection with the sale of the vehicle, and any representations, promises or omissions made in connection with the financing, credit life insurance, disability insurance, and vehicle service contract purchased or obtained in connection with the vehicle" are subject to arbitration.
In Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753, (1995), the United States Supreme Court held that the Federal Arbitration Act governs all contracts falling within Congress's powers under the Commerce Clause. The federal policy favoring arbitration was recognized by this Court in Allied-Bruce Terminix Companies v. Dobson, 684 So. 2d 102 (Ala.1995) (on remand from the United States Supreme Court following that Court's Terminix decision). In that opinion, this Court quoted Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927, 941-42, 74 L. Ed. 2d 765 (1983):
Allied-Bruce Terminix, 684 So. 2d at 107.
The first task of this Court, when reviewing an arbitration provision, is to determine whether the parties agreed to arbitrate the dispute at hand. We find no agreement to arbitrate the dispute in this case. Although the arbitration provision Gregory relies on is broad, it is clear that it does not compel arbitration of Barnes and Rogers's claim. The dispute here does not concern the negotiations leading to the sale of the Hyundai, nor does it concern the terms and provisions of the sale, the performance or the condition of the Hyundai, or any other aspect of the vehicle or its sale. The dispute arises solely from Gregory's alleged forgery of Barnes's signature onto the service agreement. The fact that the arbitration provision mentions service contracts does not compel arbitration of this dispute, because Barnes says the only reason he has a service agreement is that his name was forged onto it this alleged forgery is the heart of the fraud alleged in this case.
The United States Supreme Court has stated that "courts should remain attuned to well-supported claims that the *1361 agreement to arbitrate resulted from the sort of fraud ... that would provide grounds `for the revocation of any contract.'" Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 627, 105 S. Ct. 3346, 3354, 87 L. Ed. 2d 444 (1985). While this is true, courts should be even more attuned to claims that the agreement from which arbitration allegedly stems was, in fact, a forged document, which would not even provide the basis from which a court could find a valid contract to be revoked; it is impossible to revoke a contract that never existed. Certainly, if the facts are as Barnes and Rogers allege, the service agreement here has never even existed as a valid contract. Although separate contractual documents may arise from a single transaction and thus be subject to an arbitration provision in a "master agreement," see Reynolds & Reynolds Co. v. King Automobiles, Inc., 689 So. 2d 1 (Ala.1996), the service agreement here cannot be subject to the purchase contract arbitration clause because its very existence is in dispute, because of the alleged forgery. We further note that, contrary to Gregory's contentions, the claims made by Barnes and Rogers are entirely dissimilar to those found by this Court to be arbitrable in Ex parte Gates, 675 So. 2d 371 (Ala.1996), none of which entailed the forgery of a document relied upon to help bring the dispute into arbitration.
A party cannot be required to arbitrate a dispute that he or she did not agree to arbitrate. Capital Investment Group, Inc. v. Woodson, 694 So. 2d 1268 (Ala.1997). For these reasons, the trial court correctly denied Gregory's motion to arbitrate Barnes and Rogers's fraud claim. Therefore, the order of the trial court denying arbitration is affirmed.
AFFIRMED.
SHORES, KENNEDY, and COOK, JJ., concur.
ALMON, J., concurs specially.
BUTTS, J., concurs in the result.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., dissent.
ALMON, Justice, concurring specially.
I concur to affirm the denial of the motion to compel arbitration filed by Carl Gregory Chrysler-Plymouth, but I do so for a reason different from that given in the main opinion. Carl Gregory is relying upon the arbitration clause in the purchase contract, not the arbitration clause in the service contract that Barnes says he did not sign. Thus, if the arbitration clause in the purchase contract is enforceable, and if it may be applied to a dispute over whether there is a "vehicle service contract purchased or obtained in connection with the vehicle," it seems to me that the motion to compel arbitration would not be defeated by an assertion that the purported signature on the service contract is a forgery.
However, I do not think the circuit court erred in declining to apply the arbitration clause in the sales contract to a dispute over whether the parties entered into a separate service contract. These are two independent contracts, if they are contracts at all. The question here is whether to specifically enforce a predispute arbitration agreement. Specific enforcement is an equitable remedy. I would hold that a court may find it inequitable for a party in a superior bargaining position to insert arbitration clauses in a series of independent contracts and to word each of those arbitration clauses to cross-reference the other contracts. By this means, if the purported arbitration clause in a purported contract is not enforceable, the party seeking to compel arbitration could nevertheless, if allowed to do so, force arbitration of a dispute over the purported contract simply by putting an arbitration clause in another contract. A court could reasonably find that such cross-referencing of arbitration clauses is an inequitable practice. I see no error in the circuit court's decision not to order the arbitration clause in one contract specifically performed so as to resolve a dispute over whether the parties had entered into another independent and separate contract.
HOOPER, Chief Justice, dissenting.
The main opinion's focus on the allegedly forged document is misplaced. The fact that *1362 Barnes's signature may have been forged on the service agreement has no impact on whether in the retail purchase contract Barnes agreed to arbitrate all claims relating to the vehicle or its sale. Barnes signed a retail purchase contract that contained an arbitration clause broad enough to encompass the fraud claim asserted by Barnes in this action. Barnes does not dispute the validity of that document. Therefore, I must respectfully dissent.
Those joining the main opinion do not believe that there is an agreement to arbitrate the dispute involving the alleged forgery of Barnes's signature on the service agreement. Gregory does not claim that arbitration should be compelled based upon the arbitration agreement in the service contract. Instead, Gregory relies on the arbitration agreement in the retail purchase contract.
It is undisputed that at the time of the sale Barnes signed a retail purchase contract that contained the following arbitration clause:
Gregory relies on this agreement as the basis for its request that the forgery claim be submitted to arbitration; and it claims that the agreement is sufficiently broad to encompass claims relating to the alleged forgery of the extended service agreement.
The arbitration agreement in the sales contract states that "all ... controversies of every kind or nature ... concerning any of the negotiations leading to the sale of the vehicle, terms and provisions of the sale, the performance or condition of the vehicle, or any other aspects of the vehicle and its sale shall be settled by binding arbitration." (Emphasis added.) Because the arbitration agreement covers "all ... controversies" relating to the sale of the used automobile, it includes controversies relating to the purchase of a service agreement, e.g., a dispute as to whether Barnes declined to purchase the service agreement offered to him at the time of the sale and whether his signature on that document was, in fact, forged. Therefore, the fraud claim asserted by Barnes and Rogers is encompassed within the arbitration clause contained within the valid purchase contract.
In support of its position that the trial court properly denied Gregory's motion to compel arbitration, the main opinion states:
700 So. 2d at 1360-61. Barnes admits signing the purchase contract and does not dispute the authenticity of his signature on that document. Therefore, the main opinion's warning that courts should be "attuned to claims that the agreement from which arbitration allegedly stems was, in fact, a forged document," 700 So. 2d at 1361, is misplaced, because the document upon which arbitration is predicated was not forged.
In addition, although the claims asserted by Barnes and Rogers are "dissimilar" from *1363 those brought in Ex parte Gates, 675 So. 2d 371 (Ala.1996), the main opinion's attempt to distinguish that case solely because it did not involve a forged document is inaccurate and misleading. In Ex parte Gates, this Court held that the defendants had not waived their right to arbitration and that the arbitration clause in a contract for the sale of a mobile home was sufficiently broad to encompass the plaintiff's claims alleging breach of warranty, fraud, negligence, wantonness, and violation of the Magnuson-Moss Warranty Act. Similarly, the arbitration clause in the purchase agreement signed by Barnes is comparable to the arbitration agreement in Ex parte Gates in that it is a broad agreement that encompasses the claims raised by the plaintiffs. Because of the broad coverage of the arbitration agreement in the purchase contract signed by Barnes, the claim based on the alleged forgery of the service contract is subject to the arbitration agreement.
I must dissent from the main opinion's conclusion that the arbitration agreement in the purchase contract was not broad enough to encompass the fraud claim asserted by Barnes and Rogers, and I conclude that the trial court erred by not requiring that that claim be submitted to binding arbitration.
HOUSTON and SEE, JJ., concur.
MADDOX, Justice, dissenting.
If the automobile dealer in this case was attempting to enforce an arbitration agreement that was forged, then certainly the claim would not be subject to arbitration. In short, how could a person be forced to arbitrate a question of the validity of an agreement to arbitrate? He or she could not be.
The main opinion attempts to frame that as the issue in this case. It is not. The document upon which arbitration is predicated is not the allegedly forged document, but a document that the buyer admits signing.
The terms of the arbitration agreement that the buyer did sign are broad enough to cover the "claims, demands, disputes or controversies" alleged by him in his lawsuit. Stated differently, in order for the buyer to prove the allegations of his complaint, he will have to present evidence of claims, demands, disputes, or controversies that arose between him and the dealer or the dealer's agent "concerning any of the negotiations leading to the sale of the vehicle, [the] terms and provisions of the sale, [or] the performance or condition of the vehicle." In fact, the buyer, in his "statement of the case" in his brief states: "The allegations contained in Appellee's Complaint arise out of the purchase of a used automobile from the Appellant." (Emphasis added.) Did the buyer admit signing an agreement to arbitrate "all claims, demands, disputes or controversies" arising out of "the negotiations leading to the sale of the vehicle, [the] terms and provisions of the sale, [or] the performance or condition of the vehicle"? Of course he did. I believe that the trial judge and the main opinion have focused on the wrong issue in this case, as the Chief Justice points out in his dissent.
[1] In their complaint, Barnes and Rogers allege that "the paperwork was done in [Barnes's] name, but [Gregory] was aware that the automobile was to belong to the Plaintiffs jointly." Only Barnes's name appears on the documents at issue in this case. Although Gregory states in its statement of facts that Barnes was the sole purchaser of the Hyundai, the parties raise no issue concerning ownership of the Hyundai. For these reasons, and for purposes of this opinion only, we will refer to Barnes and Rogers as the purchasers of the Hyundai.
[2] For $1,495, and subject to payment of a $25 deductible, the service agreement provided certain repairs for three months from purchase or 3,000 miles. | July 1, 1997 |
7c6e5018-57f8-4baf-9e37-3c2a3172f351 | Midwest Emp. Cas. v. E. Ala. Health Care | 695 So. 2d 1169 | 1960015 | Alabama | Alabama Supreme Court | 695 So. 2d 1169 (1997)
MIDWEST EMPLOYERS CASUALTY COMPANY
v.
EAST ALABAMA HEALTH CARE; and Coastal Associates, Inc.
1960015-CER.
Supreme Court of Alabama.
May 30, 1997.
Tom Burgess and Murray H. Gibson, Jr., of Burgess & Hale, L.L.C., Birmingham, for plaintiff.
Phillip E. Adams, Jr., and Robbie Alexander Hyde of Walker, Hill, Adams, Umbach, Meadows & Walton, Opelika, for East Alabama Health Care.
James E. Williams and J. Flynn Mozingo of Melton, Espy, Williams & Hayes, P.C., Montgomery, for Coastal Associates, Inc.
BUTTS, Justice.
The United States District Court for the Middle District of Alabama has certified to this Court a question of Alabama law. That court's order certifying its question contains the following relevant background information:
On August 22, 1992, while she was leaving work, Peggy Black stepped into a pothole in the parking lot at the facility operated by her employer, East Alabama Health Care, Inc. ("EAHC"). She suffered an injury to her legs and her back. She experienced immediate pain in her right ankle and foot and in her left knee and hip. She was treated by a physician in the emergency room of the employer's hospital; she was diagnosed with a sprained ankle and was released. Black notified EAHC of her injury that same day, and she later filed a workers' compensation claim with EAHC. EAHC is self-insured for workers' compensation coverage, and Coastal Associates, Inc., is its administrator for claims. EAHC also had an insurance policy from Midwest Employers Casualty Company to indemnify it when a workers' compensation claim exceeds $250,000. The Midwest policy contains several provisions requiring EAHC to give it notice of certain workers' compensation claims before the $250,000 level of benefits is reached.
Black's physical condition worsened and she was diagnosed with a herniated disc in her spine. Although the parties to this lawsuit disagree regarding many facts, they seem to agree that because EAHC believed Black's herniated disc to be inconsistent with her initial injury it disputed whether her back injury was actually related to her stepping into a pothole in the parking lot. Black's herniated disc was surgically removed in January 1993, and in July 1993 EAHC filed a declaratory judgment action against Black in a state court, seeking to determine what benefits were due her under the Alabama Workers' Compensation Act. Black later filed a complaint against Coastal, alleging that Coastal had committed the tort of outrage through its handling of her claims for medical treatment.
Black's workers' compensation claim now exceeds $250,000 and EAHC's indemnity policy with Midwest has been implicated. Midwest contends that during the administration, dispute, and litigation of Black's workers' compensation claim several of the notice provisions in its policy were triggered. EAHC did not notify Midwest of Black's August 22, 1992, injury until April 7, 1994.[2] Midwest contends that this notice was untimely under the notice provisions in its policy and that EAHC has violated the terms of that policy. Thus, Midwest contends that because of what it says was late notice of a claim, it is not liable under its insurance policy to indemnify EAHC in relation to Black's workers' compensation claim.
In its order certifying a question to this Court, the federal district court explained its view of current Alabama law on this topic:
"[*] Thus far, the Alabama Supreme Court has carved out only one exception to the no-prejudice rule: in uninsured motorist insurance cases the factfinder must consider prejudice to the insurer as well as reasons for the delay and the length thereof. State Farm Mutual Automobile Ins. Co. v. Burgess, 474 So. 2d 634 (Ala.1985)."
EAHC and Coastal contend that Midwest is an "excess" insurer rather than a primary insurer, and that as an excess insurer Midwest should not be entitled to the protection of what they term the "no prejudice rule." They argue that because, they say, an excess insurance company does not generally investigate claims, provide a defense in litigation for its insureds, or settle claims for its insureds, as does the primary insurer, an excess insurer does not have the same need for prompt notice of a claim against the insured that a primary insurer does. Thus, they ask this Court to hold that an excess insurer such as Midwest cannot deny coverage to its insured unless the notice of the insured's claim was untimely and the excess insurer can prove that its rights have been prejudiced by the lack of notice.
In response, Midwest argues that none of the opinions of this Court relating to notice provisions in insurance policies indicates that there is or should be a distinction between excess and primary insurance carriers. It says that this Court's opinions indicate that the "no prejudice rule" regarding notice of a claim by an insured to its insurer is a blanket rule applying to all liability policies, whether primary or excess.[3] Moreover, Midwest contends that even as an excess insurer it has the same need of timely notice of a claim as does a primary insurer and for all the same reasons a primary insurer requires prompt notice, as well as to determine its needed reserves, to prevent fraud or collusion between *1172 the injured and the insured, to limit exposure by encouraging settlement, to adjust premiums, and to assess policy renewals.
We must determine whether an excess insurer may deny a primary insurer's request for insurance coverage when the primary insurer did not give the excess insurer timely notice of a claim against the primary insurer but the late notice has not prejudiced the rights of the excess insurer. In other words, may an excess insurer deny coverage to a primary insurer based on untimely notice alone, or must it additionally prove prejudice to its rights by the late notice?[4] Although we have held many times that a primary insurer need not prove that it has been prejudiced by untimely notice of a claim by a policyholder in order to deny the claim based on late notice,[5] none of this Court's opinions has specifically addressed the issue of untimely notice to an excess insurer.
A recent national survey of law has found Alabama law regarding a policyholder's notice to a primary insurer to be a minority position among the 50 jurisdictions. Barry R. Ostrager and Thomas R. Newman, Handbook on Insurance Coverage Disputes, § 4.04 (8th ed.1995). In a significant majority of jurisdictions, all insurers, both primary and excess, must prove that their rights have been prejudiced in order to use untimely notice of a claim as a defense to a policyholder's request for coverage. Id.[6] Thus, Alabama law holding that a primary insurer need not demonstrate prejudice in order to use untimely notice as a bar to coveragethe "no prejudice rule"is the minority position. However, at least two of the jurisdictions maintaining the minority position hold that position with regard to primary insurers only and have adopted the majority position with regard to excess insurers, requiring an excess insurer to prove prejudice in order to deny a claim based on late notice. Hartford Acc. & Indem. Co. v. Rush-Presbyterian-St. Luke's Medical Center, 231 Ill.App.3d 143, 172 Ill.Dec. 641, 595 N.E.2d 1311, appeal denied, 146 Ill. 2d 627, 602 N.E.2d 452, 176 Ill.Dec. 798 (1992); American Home Assur. Co. v. International Ins. Co., 219 A.D.2d 143, 641 N.Y.S.2d 241, appeal granted, 652 N.Y.S.2d 501 (1996). These courts have recognized that the policy considerations that support a rule that primary insurers need not show prejudice from an untimely notice of a claim do not support the application of that rule to excess insurers. For example, the court in American Home Assur. Co. noted that settlements, as well as investigation and defense of claims, are the sole responsibility of primary insurers and that the purpose of the "no prejudice rule" is to encourage prompt notice, which allows a primary insurer to exercise early control over the claim. 219 A.D.2d at 150, 641 N.Y.S.2d at 246.
Although Midwest provides a list of what it terms "policy reasons" stating why an excess insurer also deserves prompt notice of a claim against one of its primary insurer policyholders, we note that many of these "reasons" may be used by Midwest to argue that it has suffered prejudice from EAHC's failure to comply with the notice provisions of its *1173 policy. For example, it argues that many excess insurers need prompt notice of a claim so that they may investigate and participate in the disposition of the claim. Midwest makes the following argument to this Court:
(Emphasis original.)
Although Midwest strenuously argues to this Court that it has an important interest in being involved in the investigation of claims and in settlement discussions, we note that its policy with EAHC disclaims any duty on its part to be responsible for such matters.[7] We find it clear that Midwest and other excess insurers do not have the same duties and responsibilities as primary insurers that form the basis for this Court's adherence to the "no prejudice rule" relating to untimely notice of a claim. Instead, we believe that the arguments made by Midwest in favor of applying the "no prejudice rule" to excess insurers could be better used to support an argument that it has suffered prejudice by a delay in notification of a claim. As the American Home court stated:
219 A.D.2d at 151, 641 N.Y.S.2d at 245-46. Accordingly, we conclude that Alabama's "no prejudice rule" in relation to untimely notice of a claim by an insured to its primary insurer does not also apply to excess insurers.
In conclusion, we hold that an excess insurer is required to show prejudice when it bases its denial of a claim presented by a qualified workers' compensation policyholder on an alleged failure to comply with the notice provisions of the policy.
QUESTION ANSWERED.
SHORES, HOUSTON, KENNEDY, and COOK, JJ., concur.
HOOPER, C.J., and MADDOX and SEE, JJ., dissent.
HOOPER, Chief Justice (dissenting).
The following question has been certified to this Court by the United States District Court for the Middle District of Alabama:
East Alabama Health Care, Inc. (EAHC), for the purpose of workers' compensation claims, is a self-insured entity. It employed Coastal Associates to administer such claims. EAHC did, however, maintain an insurance policy with Midwest to cover claims made against EAHC in excess of $250,000. The Midwest insurance policy explicitly provides that timely notice must be given to Midwest by EAHC in the event certain workers' compensation claims are made against EAHC. Part Seven of the policy states:
"A. Notice of Accident
Midwest claims that several of these notice provisions were violated by EAHC. On August 22, 1992, Peggy Black suffered an alleged workplace injury, but notice of this injury was not given to Midwest until April 7, 1994. Midwest claims that it is not liable under the policy, because of the late notice given by EAHC. EAHC argues that Midwest, as an excess insurer, not a primary insurer, is not entitled to the benefit of the "no-prejudice rule," and, therefore, must prove that its rights have been prejudiced by the untimely notice. However, this contention, which the majority accepts, goes against Alabama precedent and emasculates the insurance contract.
Alabama courts follow the "no-prejudice" rule. That rule means that an insurance company can deny a claim made under a policy, because of untimely notice of a claim by its insured, without having to show that the insurance company has been prejudiced by the untimely notice. Typically, courts will consider other factors, such as the length of delay and the reason for delay but will not require the insurer to show that it has been prejudiced by a delay where the insurance policy explicitly requires the insured to give notice.
Correll v. Fireman's Fund Ins. Cos., 529 So. 2d 1006, 1008-09 (Ala.1988) (citations omitted) (emphasis in original). The United States District Court for the Northern District of Alabama has also specifically addressed this issue and has applied the no-prejudice rule to an excess insurance carrier. In Pennsylvania National Mutual Casualty Ins. Co. v. Colyer-Lloyd, Inc., CV-93-AR-2627-E (N.D.Ala., Dec. 2, 1994), that court stated that "under Alabama law a showing of *1175 prejudice is not a prerequisite to a finding of late notice as a bar to coverage." It is clear that Alabama precedent applies the no-prejudice rule.
However, Alabama has done away with the no-prejudice rule in one particular area of law, uninsured motorist coverage. State Farm Mutual Automobile Ins. Co. v. Burgess, 474 So. 2d 634 (Ala.1985). This Court held in Burgess that in cases involving uninsured motorists, Alabama does require an insurance company to show that it has been prejudiced by the lack of notice in order to deny a claim based on improper notice. However, the Burgess Court strictly limited its holding to uninsured motorist claims. An exception to this general rule should not be made for excess liability insurance carriers, because there is no distinction between an excess insurer and a primary insurer in such a situation. Both types of insurers provide insurance, and both types of insurers need prompt notice of claims made against their insured in order to protect their rights. For instance, an excess insurer needs notice of claims made against its insureds in order to investigate claims, participate in the litigation process, reassess its financial reserves and the amount of premiums, and to decide whether to renew the policy. These are only samples of the reasons why an excess insurer needs timely notice of claims made against its insured.
The majority's opinion allows an insured to simply ignore notice requirements in an insurance policy. The Midwest policy clearly states that notice must be given in order for the insured to be covered under the policy. The language in the policy is not ambiguous, and, thus, it should be given effect as it is written. State Farm Mut. Auto. Ins. Co. v. Lewis, 514 So. 2d 863 (Ala.1987). Moreover, to require an insurance company to show prejudice before it can deny a claim because of lack of notice or because of improper notice, where the policy explicitly states that the insured must provide notice to the insurer, essentially disregards the terms of the contract entered into by the parties.
The opinion in this case creates a new rule that allows insureds to escape the plain language of their insurance policies. Such a rule unfairly places the burden on the insurance company to justify clear contract language by showing prejudice; there is no reason to place such a burden on the insurance company. This state's precedent is clear, the contract is clear, and there are numerous reasons for the excess insurer to require notice. It is not difficult for an insured to comply with a notice requirement. Again, words mean what they say. This is simple contract law. Therefore, I respectfully dissent.
MADDOX and SEE, JJ., concur.
[1] The federal court referred to East Alabama Health Care, Inc., as "EAMC." We will refer to that party as "EAHC."
[2] As of that date, Black's claim was still within the limits of EAHC's workers' compensation self-insurance fund.
[3] In addition, Midwest notes that although the policy EAHC purchased may be termed an excess policy, it argues that Midwest is actually a primary insurer in relation to EAHC.
[4] We make no finding as to whether EAHC timely complied with the notice provisions in its insurance contract with Midwest. That issue is not before this Court.
[5] Correll v. Fireman's Fund Ins. Companies, 529 So. 2d 1006 (Ala.1988) (life underwriter's professional liability policy with primary insurer); Big Three Motors, Inc. v. Employers Ins. Co. of Ala., 449 So. 2d 1232 (Ala.1984) (general liability automobile policy with primary insurer); Williams v. Alabama Farm Bureau Mut. Cas. Ins. Co., 416 So. 2d 744 (Ala.1982) (automobile liability policy with primary insurer); Southern Guaranty Ins. Co. v. Thomas, 334 So. 2d 879 (Ala.1976) (homeowner's liability policy with a primary insurer); Royal Indem. Co. v. Pearson, 287 Ala. 1, 246 So. 2d 652 (1971) (automobile liability policy with a primary insurer); American Fire & Cas. Co. v. Tankersley, 270 Ala. 126, 116 So. 2d 579 (1959) (service station liability insurance policy with a primary insurer). The only exception to the rule that an insurer need not demonstrate prejudice in order to deny a claim based on untimely notice that this Court has heretofore recognized is in the area of uninsured motorist insurance. State Farm Mut. Auto. Ins. Co. v. Burgess, 474 So. 2d 634 (Ala.1985).
[6] The law of at least 36 states requires all types of insurers to demonstrate that an untimely notice by its policyholder has prejudiced its rights in order to use the untimely notice as a basis to deny coverage to the policyholder.
[7] The policy states: "The insurer has no duty to investigate, handle, settle or defend any claims, suits, or proceedings against the insured." | May 30, 1997 |
be98f6ad-3e79-407f-bdb7-a88f2536d12d | BMW of North America, Inc. v. Gore | 701 So. 2d 507 | 1920324, 1920325 | Alabama | Alabama Supreme Court | 701 So. 2d 507 (1997)
BMW OF NORTH AMERICA, INC.
v.
Ira GORE, Jr.
1920324.
Supreme Court of Alabama.
May 9, 1997.
Rehearing Denied August 15, 1997.
*508 Michael C. Quillen and Samuel M. Hill of Walston, Stabler, Wells, Anderson & Bains, Birmingham, for appellants.
Andrew L. Frey and Evan M. Tager of Mayer, Brown & Platt, Washington, D.C.; for BMW of North America, Inc.
Michael A. Epstein, Steven Alan Reiss, and Beth K. Neelman of Weil, Gotshal & Manges, New York City, for Bayerische Motoren Werke, A.G.
Andrew W. Bolt II, Paula I. Cobia, and Stephen K. Wollstein of Bolt, Isom, Jackson and Bailey, Anniston; and John W. Haley and Bruce J. McKee of Hare, Wynn, Newell & Newton, Birmingham, for appellee.
C. Clay Torbert III of Capell, Howard, Knabe & Cobbs, P.A., Montgomery; for amicus curiae Alabama Development Office in support of appellants.
Hobart A. McWhorter, Jr., Linda A. Friedman, and John E. Goodman of Bradley, Arant, Rose & White, Birmingham; and Charles A. Newman and Lawrence C. Friedman of Thompson & Mitchell, St. Louis, MO; for amici curiae American Automobile Manufacturers Association, Inc., and Association of International Automobile Manufacturers, Inc.
Fourier J. Gale III of Maynard, Cooper & Gale, P.C., Birmingham; and S. Allen Baker, Jr., of Balch & Bingham, Birmingham; for amicus curiae Business Council of Alabama, in support of appellants.
PER CURIAM.
The United States Supreme Court has vacated our earlier judgment in this case and has remanded the cause for our further consideration in accordance with BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996).
The facts are set out in their entirety in BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala.1994),[1] and we note them here only briefly: Dr. Ira Gore, the purchaser of a BMW automobile, sued BMW of North America, Inc. ("BMW"), alleging, among other things, that BMW and Bayerische Motoren Werke, A.G., the foreign manufacturer of the automobile, had fraudulently failed to disclose to him that the automobile he was purchasing had been repainted after being damaged by acid rain during its shipment from Germany. At trial, BMW admitted that the car had been damaged and that *509 BMW had a nationwide policy not to advise its dealers of predelivery damage to new cars when the cost of repair did not exceed three percent (3%) of the car's suggested retail price. The jury returned a verdict for Gore, awarding him $4,000 in compensatory damages and $4 million in punitive damages. The trial court denied BMW's post-trial motion challenging the punitive damages award as excessive; however, on appeal, this Court determined that the $4 million award was excessive and ordered a reduction to $2 million.[2] The United States Supreme Court granted BMW's petition for certiorari review.
The United States Supreme Court announced, for the first time and by a 5-4 vote, that a punitive damages award, even one that is the product of a fair trial, may be so large as to violate the Due Process Clause of the Fourteenth Amendment of the United States Constitution. The Supreme Court determined that, under the Due Process Clause, a defendant has the right to fair notice not only of the conduct that may subject him to punishment, but also of the severity of the penalty that a state may impose for such conduct. BMW, 517 U.S. at ___, 116 S. Ct. at 1598. The Supreme Court recognized that a state may impose punitive damages to further its legitimate interest in punishing misconduct and deterring a repetition of that conduct. 517 U.S. at ___, 116 S. Ct. at 1595. To that end, a state has flexibility in determining the level of punitive damages the state will allow in different classes of cases. Id. The Supreme Court held that an award of punitive damages enters "the zone of arbitrariness that violates the Due Process Clause only when that award can be fairly categorized as `grossly excessive'" in relation to those legitimate interests. Id. The Supreme Court then set out the following three "guideposts" by which a reviewing court could determine whether a punitive damages award is constitutionally excessive: (1) the degree of reprehensibility of the defendant's conduct; (2) the ratio between the plaintiff's award of compensatory damages and the amount of the punitive damages; and (3) the difference between the punitive damages award and the civil or criminal sanctions that could be imposed for comparable misconduct. 517 U.S. at ___, 116 S. Ct. at 1599.
Charting its review by these guideposts, the Supreme Court found that BMW's action was not highly reprehensible and noted that BMW could have incurred only a mere $2,000 fine under Alabama consumer fraud law for its action. It also emphasized that the plaintiff, a successful medical doctor who was not "financially vulnerable," had suffered only $4,000 in purely economic damages. Id. Under these facts, the Supreme Court concluded that BMW could not have reasonably anticipated that its actions could incur a punitive damages award of $4 million or even a reduced award of $2 million; thus, the Supreme Court held, the award violated BMW's due process rights. The Supreme Court then remanded the case to this Court, for us to reassess the punitive damages award for excessiveness in view of its opinion.
We point out that, in providing three guideposts by which to review the excessiveness of a punitive damages award, the majority in BMW did not dismiss the review process already established by this Court in Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), and upheld by the United States Supreme Court in Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991). Indeed, the first two "guideposts" are already included in a Hammond-Green Oil review; the first consideration of the review is the relationship of the amount of the punitive damages award to the harm that the defendant's action has caused or is likely to cause, and the second consideration is the degree of reprehensibility of the defendant's conduct.
Moreover, in his special concurrence in BMW, Justice Breyer discussed the Green Oil factors as a means of reasonable constraint upon arbitrary and fundamentally unfair punitive damages awards. Joined by Justices O'Connor and Souter, Justice Breyer specifically stated that the factors of the *510 Hammond-Green Oil review may make up for the lack of significant statutory constraint against excessive punitive damages awards in Alabama. 517 U.S. at ___, 116 S. Ct. at 1605. It was not the Green Oil factors themselves, but this Court's application of them in this case that Justice Breyer found objectionable.
Thus, as we read the BMW opinion, the United States Supreme Court's guideposts are not intended to exclude judicial consideration of other factors that might bear on the question of excessiveness; this Court has considered other such factors for some years. We see the three guideposts as factors to be emphasized in a judicial review of a punitive damages award pursuant to Hammond, Green Oil, and Ala.Code 1975, § 6-11-23(b). In sum, the United States Supreme Court's BMW decision seems to hold that the presumption of validity Alabama extends to a jury verdict must yield to a more meaningful judicial review of that verdict when it is challenged by a tortfeasor as excessive.
Until the United States Supreme Court released its decision in BMW, it was generally assumed that a statute stating that intentional fraud would subject a tortfeasor to such punitive damages as a jury might assess in a fair trial was sufficient notice of the severity of the punishment that might be inflicted. The Supreme Court held in BMW that "[e]lementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose." 517 U.S. at ___, 116 S. Ct. at 1598. The Supreme Court cited only criminal cases in support of this proposition and acknowledged that "[t]he strict constitutional safeguards afforded to criminal defendants are not applicable to civil cases." 517 U.S. at ___ n. 22, 116 S. Ct. at 1598 n. 22. However, the Court went on to state that "the basic protection against `judgments without notice' afforded by the Due Process Clause, Shaffer v. Heitner, 433 U.S. 186, 217, 97 S. Ct. 2569, 2587, 53 L. Ed. 2d 683 (1977) (Stevens, J., concurring in judgment), is implicated by civil penalties." 517 U.S. at ___n. 22, 116 S. Ct. at 1598 n. 22 (emphasis original). The Court concluded that each of the three guideposts (the reprehensibility of BMW's conduct, the ratio of the punitive damages award to the compensatory damages award, and comparison with applicable civil and criminal sanctions) indicated to it that BMW did not receive adequate notice of the magnitude of the sanction that Alabama might impose on it for its misconduct.
The Supreme Court's decision in BMW now requires that state courts reviewing jury verdicts challenged as violating the federal Due Process Clause determine whether the tortfeasor had adequate notice that the conduct for which the jury found him liable could subject him to punishment. Due process also requires, and state courts must now determine, whether the tortfeasor had adequate notice of the severity of the penalty that might be imposed for the activity he engaged in.
Alabama, by statute, provides notice concerning the conduct that will subject one to punitive damages in this state. Ala.Code 1975, § 6-11-20, expressly sets forth and defines the acts, as well as the state of mind:
(Emphasis added.)
Alabama, by providing a judicial review of punitive damages, provides notice of the range of amounts of punitive damages a defendant may expect to pay for conduct described in § 6-11-20. This Court refined the elements of judicial review for excessiveness of jury verdicts in 1989 by adding specific Green Oil factors to the Hammond review. We have reviewed the published opinions since that time in which this Court and the Court of Civil Appeals have affirmed awards of punitive damages, excluding wrongful death cases, and the five cases now here on remand from the United States Supreme Court.[3] These opinions show that the overall application of the Hammond-Green Oil review by the Alabama judiciary has imposed a substantial restraint upon arbitrariness in punitive damages awards and also has provided notice of the amount of punitive damages a jury might impose.[4] Thus, § 6-11-20, in conjunction with the sizable body of case law supplementing it, serves as clear notice to all of the action Alabama deems sufficiently reprehensible to warrant an award of punitive damages and the level to which a defendant may be punished for such conduct. All who would conduct activities in Alabama are presumed to know its laws. Barber Pure Milk Co. v. Alabama State Milk Control Bd., 275 Ala. 489, 156 So. 2d 351 (1963).
We now consider again the Green Oil factors, as we view them now in light of the Supreme Court's decision in BMW, in order to determine the extent to which the punitive damages award in this case is excessive. The Supreme Court has instructed this Court that a $2 million civil penalty against BMW is grossly excessive in relation to the wrongful conduct the jury found BMW guilty of committing, and we begin our review with that in mind. We will first discuss the three guideposts set out by the United States Supreme Court, two of which are already factors of a Hammond-Green Oil review, and we will then discuss the remaining Green Oil factors.
According to the Supreme Court, the degree of reprehensibility of the defendant's conduct is perhaps the "most important indicium of the reasonableness of a punitive damages award." BMW, 517 U.S. at___, 116 S. Ct. at 1599. Reprehensibility of the defendant's conduct is one of the factors Alabama courts consider in the common law excessiveness review required by Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989).
539 So. 2d at 223.
Courts in Alabama consider this factor as part of a Hammond-Green Oil review, but perhaps have not heretofore given it the weight the Supreme Court in BMW says the Constitution requires in an excessiveness review of a jury verdict in a civil case. As articulated in Green Oil, this factor encompasses considerations such as "the duration of [the defendant's] conduct, the degree of the defendant's awareness of any hazard ... his conduct has caused or is likely to cause,... any concealment or `cover-up' of that hazard, and the existence and frequency of similar past conduct." Alabama statutes also require that a court consider whether the defendant has been guilty of the same or similar acts in the past and that it consider the efforts made to remedy the wrong. § 6-11-23(b). To these considerations, the Supreme Court in BMW adds two others that principally determine reprehensibility: (1) the defendant's awareness of his actions or omissions causing harm and (2) the quality and quantity of rights of others that were disregarded by the defendant.
In discussing the element of reprehensibility, the United States Supreme Court stated:
517 U.S. at___, 116 S. Ct. at 1599 (citations and footnotes omitted). Applying this guidepost to the facts in BMW, the United States Supreme Court concluded that BMW's conduct was not sufficiently reprehensible to warrant the imposition of a $2 million exemplary damages award. The Supreme Court emphasized that the damage to the well-to-do plaintiff was purely economic in nature. While the Court recognized that economic damage inflicted upon a financially vulnerable plaintiff might well support a large punitive damages award, the fact that the plaintiff in this case was affluent weighed against a finding of great reprehensibility. The Supreme Court also pointed out that BMW's behavior "evinced no indifference to or reckless disregard for the health and safety of others". 517 U.S. at ___, 116 S. Ct. at 1599. The Supreme Court held:
517 U.S. at ___, 116 S. Ct. at 1603.
After reconsidering the element of reprehensibility with the added emphasis the Supreme *513 Court in BMW has placed upon it, we agree that, while BMW's conduct was reprehensible enough to justify the imposition of punitive damages, it was not so reprehensible as to justify the imposition of a $2 million penalty.
The United States Supreme Court in BMW stated that the "most commonly cited indicium of an unreasonable or excessive punitive damages award is its ratio to the actual harm inflicted on the plaintiff," and it stated that "exemplary damages must bear a `reasonable relationship' to compensatory damages." 517 U.S. at ___, 116 S. Ct. at 1601. However, the Court expressly held that due process does not require a purely mathematical formula:
517 U.S. at___, 116 S. Ct. at 1602-03 (citations and emphasis omitted).
Applying this guidepost to the facts in BMW, the United States Supreme Court reasoned that due process does not require any exact ratio between punitive and compensatory assessments, but that a high ratio might indicate excessiveness, particularly if the conduct of the defendant was not especially reprehensible. The Court noted that the $2 million punitive damages award is 500 times the amount of actual harm suffered, as determined by the jury, and 35 times the total actual harm suffered by the 14 Alabama consumers who had purchased repainted BMWs. 517 U.S. at ___and n. 35, 116 S. Ct. at 1602 and n. 35. The Supreme Court recognized that it had upheld a $10 million punitive damages award in TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 113 S. Ct. 2711,125 L. Ed. 2d 366 (1993), where the jury had awarded only $19,000 in actual damages (a punitive damages to compensatory damages ratio of over 500 to 1), but it emphasized that the plaintiffs in that case had faced much greater potential harm and that if the defendant had succeeded in its plan the ratio would have been less than 10 to 1. 517 U.S. at___, 116 S. Ct. at 1602. The Court thus distinguished TXO by finding that "there is no suggestion that Dr. Gore or any other BMW purchaser was threatened with any additional potential harm by BMW's nondisclosure policy"; it therefore concluded that the 500 to 1 ratio "must surely `raise a suspicious judicial eyebrow.'" 517 U.S. at ___ and ___, 116 S. Ct. at 1602 and 1603, quoting TXO, 509 U.S. at 481, 113 S. Ct. at 2732 (O'Connor, J., dissenting).
Although it is difficult to determine case by case what ratio of punitive damages to compensatory damages is excessive, we reject the easy answer of adopting one ratio that would apply to all and would therefore give a wrongdoer precise notice of the penalty that his misconduct might incur. To do so would frustrate the purpose of punitive damages, which is to punish and deter a defendant's misconduct. A ratio that could be deemed reasonable in many cases might well be insufficient in cases where the defendant has reaped great profit from its conduct, or where its conduct is particularly reprehensible. Indeed, the United States Supreme Court has consistently stated, "We need not, and indeed cannot, draw a mathematical bright line between the constitutionally acceptable and constitutionally unacceptable that would fit every case." TXO, 509 U.S. at 458, 113 S. Ct. at 2720, quoting Haslip, 499 U.S. at 18, 111 S. Ct. at 1043. Likewise, we do not draw a bright line here; however, in light of the lesser degree of reprehensibility apparent in this case, as well as the other considerations of this review, we agree that the 500 to 1 ratio of punitive damages to *514 compensatory damages in this case is grossly excessive.
The Supreme Court in BMW required state courts, when reviewing punitive damages verdicts for excessiveness, to "compare[e] the punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." 517 U.S. at ___, 116 S. Ct. at 1603. State courts engaged in this endeavor should "`accord "substantial deference" to legislative judgments concerning appropriate sanctions for the conduct at issue.'" 517 U.S. at ___, 116 S. Ct. at 1603, quoting Browning-Ferris Industries of Vermont, Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 301, 109 S. Ct. 2909, 2934, 106 L. Ed. 2d 219 (1989) (O'Connor, J., concurring in part and dissenting in part). However, under the Alabama Deceptive Trade Practices Act, Ala.Code 1975, § 8-19-5, the maximum sanction for committing a fraudulent act against an Alabama consumer is a meager $2,000. Because the legislature has set the statutory penalty for deceitful conduct at such a low level, there is little basis for comparing it with any meaningful punitive damages award, particularly where the defendant is wealthy and the profit gained from the fraudulent act is substantial. In this case, the maximum statutory penalty does not even remove the profit BMW realized from the sale of the damaged automobile to Gore. Accordingly, a consideration of the statutory penalty does little to aid in a meaningful review of the excessiveness of the punitive damages award.
In a Hammond-Green Oil review, we are required to determine whether, if the wrongful conduct was profitable to the defendant, the punitive damages removed that profit and was in excess of the profit, so that the defendant recognizes a loss. Green Oil, 539 So. 2d at 223. The jury determined that Gore suffered damage because he purchased an automobile that had an actual value $4,000 less than it was represented to be. There was also evidence that as many as 14 Alabamians each had purchased an automobile from BMW with a value less than it was represented to be, because of undisclosed repainting. Although we cannot calculate the exact amount of total profit BMW realized from the 14 sales, we agree that an award of $2 million greatly exceeds the highest amount that it could possibly be.
It is clear that a punitive damages award of $2 million would not have a devastating impact upon BMW's financial position. However, where a defendant has not committed an act that would warrant a large punitive damages award, such an award should not be upheld upon judicial review merely because the defendant has the ability to pay it. In a Hammondr-Green Oil review, a consideration of the defendant's wealth must necessarily be open-ended; however, we suggest that a trial court might consider whether a punitive damages award that exceeds 10% of the defendant's net worth crosses the line from punishment to destruction, particularly where the defendant's conduct is not highly reprehensible. Thus, the fact that a punitive damages award exceeds 10% of the defendant's net worth could suggest that the award should be reduced.
As this Court recognized in its original opinion in this case, the costs associated with this trial were substantial. 646 So. 2d at 625. However, where other Green Oil factors do not support a large punitive damages award, substantial litigation costs borne by the plaintiff will not alone justify the award.
A Hammond-Green Oil review requires us to consider whether criminal sanctions have been imposed on the defendant for the conduct made the basis for an award of punitive damages and, if so, the nature and extent of those sanctions. No criminal sanctions were imposed upon BMW for its conduct, so this factor is irrelevant here.
As this Court noted in the original opinion in this case, 646 So. 2d at 625-26, several other civil actions have been filed that are based upon the same conduct by BMW. We must view this fact as weighing against the punitive damages award.
After carefully reconsidering this case, analyzing the Hammond-Green Oil factors in the light of the United States Supreme Court's opinion in BMW, and incorporating the guideposts articulated therein, we agree that the $2 million award of punitive damages against BMW was grossly excessive. For guidance in determining the amount of punitive damages that would be proper, we have looked to comparable cases of fraud in the sale of an automobile, particularly American Honda Motor Co. v. Boyd, 475 So. 2d 835 (Ala.1985), and German Auto, Inc. v. Tamburello, 565 So. 2d 238 (Ala.1990).
In Tamburello, the plaintiff bought a BMW automobile that was represented and warranted to be new and undamaged. After the purchase, the plaintiff discovered that the left rear fender of the automobile had been damaged and repainted. The plaintiff ultimately sued the BMW dealer, alleging fraud, among other claims. The jury awarded the plaintiff $2,350 in compensatory damages and $10,815 in punitive damages, and this Court affirmed a judgment based on that verdict. In Tamburello, as in the instant case, the damage to the automobile had no effect on its safety features or performance and the repairs necessitated by the damage were merely cosmetic. Moreover, the loss to the plaintiff was purely economic, and there was no evidence that the plaintiff was financially vulnerable. The ratio of punitive damages to compensatory damages was only in the range of 5:1.
In American Honda, the plaintiff purchased a foreign automobile that the dealer represented as new, but which actually had been damaged en route to the United States and had been repaired at the port of entry before it was shipped to the dealership. The plaintiff sued both the automobile dealer and the automobile distributor, American Honda Motor Company, Inc. ("American Honda"), alleging fraud, deceit, and breach of warranty. The trial court directed a verdict for the automobile dealer, and the jury subsequently returned a general verdict of $65,000 against American Honda. Because the verdict was a general one, the exact ratio of punitive damages to compensatory damages cannot be determined. We do note that, although the defendants in Tamburello and American Honda committed similar conduct, the larger judgment in American Honda was against a national automobile distributor, presumably a larger and wealthier entity than the local automobile defendant in Tamburello.
We do not imply that the 5:1 ratio in Tamburello should be the benchmark of every case, or that the wealth of a defendant like American Honda is the most critical factor for a court to consider when reviewing a punitive damages award for excessiveness. On the contrary, the reviewing court should apply all the Green Oil factors, including the three BMW "guideposts," on a case-by-case basis to determine whether a punitive damages award is excessive and, if so, to what extent it should be remitted. However, we do agree that the facts in Tamburello and American Honda make those cases particularly useful for comparison to the instant case and that a punitive damages award within the range of the awards in those cases is appropriate here.
The trial court's order denying BMW's motion for a new trial is affirmed on the condition that the plaintiff file with this Court within 21 days a remittitur of damages to the sum of $50,000; otherwise, the judgment will be reversed and this cause remanded for a new trial.
AFFIRMED CONDITIONALLY.[*]
*516 SHORES, KENNEDY, and BUTTS,[**] JJ., concur.
ALMON[***] and COOK,** JJ., concur specially.
HOOPER, C.J.,** and MADDOX and HOUSTON, JJ., concur in the result.
SEE, J.,** recuses.
ALMON, Justice (concurring specially).
Although I did not vote in BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala. 1994), I now vote to concur with the majority opinion issued today after the remand from the Supreme Court of the United States. I write specially to note that, while I agree under all the circumstances with the remittitur ordered today, it appears to me that the deterrent effect of the original award, which changed BMW's national policy in a way that benefited purchasers of its automobiles, has been unduly minimized as this case has proceeded through successive stages of review.
COOK, Justice (concurring specially).
I concur in the result and the reasoning of the main opinion. Although I do concur, and, although I did not vote in BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala.1994), I write specially now to discuss briefly the aspect of this case that I believe has created all the difficulty and confusion.
Specifically, the jury awarded Gore $4 million in punitive damages; this Court concluded that that amount was "based upon a multiplication of $4,000 (the diminution in value of the Gore vehicle) times 1,000 (approximately the number of refinished vehicles sold in the United States)." 646 So. 2d at 627 (emphasis added). However, the Court also held that "this jury could not use the number of similar acts that a defendant [had] committed in other jurisdictions as a multiplier when determining the dollar amount of [the] punitive damages award." Id. (emphasis in original). The actual number of sales of refinished vehicles in Alabama was, "at most, only 14." Id. at 623.[5] Thus, if the jury had employed the same mathematical process, using the proper multiplier, namely, 14, rather than 1000, its punitive damages award would have been but $56,000 ($4,000 x× 14).
The United States Supreme Court expressed its own concern in the following manner:
BMW of North America, Inc. v. Gore, 517 U.S. 559, ___, 116 S. Ct. 1589,1595 n. 11,134 L. Ed. 2d 809 (1996).
Obviously, the $50,000 figure we approve today is slightly less than the $56,000 the jury would have awarded had it based its calculations on the proper multiplier. For this reason, and because I also believe that the analysis of the main opinion in arriving at its figure is sound, I concur.
HOUSTON, Justice (concurring in the result).
The Due Process Clause of the Constitution of the United States provides:
One of the first cases the Supreme Court of the United States agreed to review from Alabama that raised the federal constitutional issue was Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813, 106 S. Ct. 1580, 89 L. Ed. 2d 823 (1986). After Aetna had been argued before the Supreme Court on December 4, 1985, but before that Court had issued its opinion, a plurality of this Court (with two Justices recused and three Justices dissenting as to this issue), in Alabama Farm Bureau Mutual Casualty Ins. Co. v. Griffin, 493 So. 2d 1379,1384 (Ala.1986), wrote:
On April 22, 1986, the Supreme Court vacated the $3.5 million punitive damages award in Aetna on the ground that one of the participating Justices should have recused in the case, but the Court did not reach the constitutional issues raised in that case. Instead, the Court wrote that the case presented "important [federal constitutional] issues which, in an appropriate setting, must be resolved." 475 U.S. at 828-29, 106 S. Ct. at 1589. One issue was whether lack of sufficient standards governing punitive damages awards in Alabama violates the Due Process Clause of the Fourteenth Amendment. See 475 U.S. at 828,106 S. Ct. at 1589.
In an effort to provide guidance, primarily to trial judges, this Court, on July 11, 1986, without mentioning the dicta in Aetna, adopted a new procedure requiring trial judges to indicate on the record the reasons for interfering with a jury verdict on grounds of excessiveness of the punitive damages awarded or the reasons for refusing to do so. See Hammond v. City of Gadsden, 493 So. 2d 1374, 1379 (Ala.1986); see also Harmon v. Motors Ins. Corp., 493 So. 2d 1370 (Ala.1986). On July 11, 1986, this Court also denied rehearing in Alabama Farm Bureau v. Griffin, supra, wherein a plurality of this Court had stated that this Court had not established specific standards for trial courts to apply in granting or denying new trial motions based on grounds of excessiveness; however, this Court granted a subsequent rehearing in Alabama Farm Bureau v. Griffin on October 31, 1986, and remanded the case for the trial court to enter an order consistent with Hammond v. City of Gadsden.
When Aetna was remanded by the United States Supreme Court to this Court, this Court ordered a remittitur of $3,000,000 of the $3,500,000 punitive damages award. Aetna Life Ins. Co. v. Lavoie, 505 So. 2d 1050 (Ala.1987). On remand three Justices concurred specially.[6] In 1987, the Alabama *518 Legislature enacted a number of laws affecting the amount of punitive damages, as well as the method of imposing those damages.
In Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), this Court adopted the seven factors set out in my special concurrence in Aetna, 505 So. 2d at 1060-62, as factors that "could be taken into consideration by the trial court in determining whether the jury award of punitive damages is excessive or inadequate." 539 So. 2d at 223. This Court and our trial courts were applying the Green Oil standards and the judicial procedure for reviewing punitive damages awards for excessiveness that had been previously established in Hammond, Harmon, and Green Oil, when the Supreme Court of the United States granted certiorari review to consider this Court's judgment in Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 111 S. Ct. 1032, 113 L. Ed. 2d 1 (1991). On March 4, 1991, the Supreme Court affirmed, noting that the punitive damages award was "more than 4 times the amount of compensatory damages, [was] more than 200 times the out-of-pocket expenses of respondent Haslip, ... and, of course, [was] much in excess of the fine that could be imposed for insurance fraud" in Alabama. 499 U.S. at 23, 111 S. Ct. at 1046. In Haslip, the majority stated:
499 U.S. at 23-24, 111 S. Ct. at 1046 (emphasis added).[7]
*519 In addition to vacating the judgment in this case, the Supreme Court of the United States also vacated this Court's judgments in Life Insurance Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996), Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995), Union Security Life Insurance Co. v. Crocker, 667 So. 2d 688 (Ala.1995), and American Pioneer Life Insurance Co. v. Williamson, 681 So. 2d 1040 (Ala.1995), and remanded those cases to us for further consideration in light of its decision in this case. On remand, this Court faces the twin tasks of complying with express United States Supreme Court precedent indicating that there is no precise definition of the "outer limit" of federal due process protection,[8] and, at the same time, providing practical guidance for Alabama's trial judges to review the amounts of punitive damages awards.[9] An examination of the origin of the conflict between state law and federal due process requirements reveals that these objectives can be achieved by returning to Alabama's historic common law reasonableness standard, applied strictly, through a reinvigoration of the protective factors that prompt judicial remittitur orders.
Before its decision in this case, the Supreme Court had never overturned a state court's award of punitive damages as violating federal due process requirements. The apparent reason for this is that state law reasonableness standards for determining the amount of the award had historically been stricter than the federal excessiveness standard. See Haslip, 499 U.S. at 16-18, 111 S. Ct. at 1043 ("So far as we have been able to determine, every state and federal court that has considered the question has ruled that the common-law method for assessing punitive damages does not in itself violate due process.... In view of this consistent history, we cannot say that the common-law method for assessing punitive damages is so inherently unfair as to deny due process ....") (citation omitted). As Justice Stevens noted in TXO Production Corp. v. Alliance Resources Corp., 509 U.S. 443, 113 S. Ct. 2711, 125 L. Ed. 2d 366 (1993):
509 U.S. at 458 n.24, 113 S. Ct. at 2720-21 n.24 (emphasis added). Thus, application of the stricter state law reasonableness standard has traditionally kept awards of punitive damages from exceeding the more liberal "outer limit" imposed by the federal excessiveness standard.
The state law reasonableness standard derives from the judicial mechanism of remittitur, which plays an integral role in the procedure for respecting and controlling the jury's function to punish tortfeasors. Common law judges traditionally accorded jury awards of punitive damages a rebuttable presumption of correctness. See, e.g., Leith v. Pope, 2 Black. W. 1327, 1328, 96 Eng. Rep. 777, 778 (C.P.1779) ("[I]n cases of tort the Court will not interpose on account of the largeness of damages, unless they are so flagrantly excessive *520 as to afford an internal evidence of the prejudice and partiality of the jury"). At some point, however, when the facts indicated that the presumption of correctness waned and was finally overcome, common law judges used remittitur to reduce unreasonable awards that resulted from the passion or prejudice of the jury. Numerous English cases upheld the power of common law courts to order a new trial if the judges deemed the punitive damages unreasonable. See, e.g., Gilbert v. Burtenshaw, 1 Cowper 230, 98 Eng. Rep. 1059 (K.B.1774) (Mansfield, J.) (recognizing judicial power to grant new trial when jury awards of damages are excessive).[10]
American courts adopted the same procedure. In Whipple v. Cumberland Mfg. Co., 29 F. Cas. 934, 937-38 (C.C.Me.1843), Justice Story, sitting as a Circuit Justice, acknowledged the judicial duty to set aside a jury verdict for unreasonable damages. He had previously stated the American doctrine as follows:
Blunt v. Little, 3 F. Cas. 760, 761-62 (C.C.Mass.1822) (Story, J., sitting as Circuit Justice).
In National Surety Co. v. Mabry, 139 Ala. 217, 225, 35 So. 698, 701 (1903), this Court recognized the judicial duty to reduce unreasonable awards of punitive damages, by citing with approval Lord Mansfield's opinion in Gilbert, supra, and Justice Story's opinion in Whipple, supra. See, e.g., Cook & Laurie Contracting Co. v. Bell, 177 Ala. 618, 635, 59 So. 273, 279 (1912) ("Remittiturs are favored by the courts in proper cases, for the promotion of justice and the ending of litigation") (quoting Richardson v. Birmingham Cotton Mfg. Co., 116 Ala. 381, 22 So. 478 (1897)); Airheart v. Green, 267 Ala. 689, 692-93, 104 So. 2d 687 (1958) (affirming trial court's order of remittitur of damages).
In Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989), this Court established standards for trial judges to apply in granting or denying new trial motions on the grounds of excessiveness of punitive damages and for appellate courts to use in reviewing the trial judges' actions.
We recognized in Green Oil, 539 So. 2d at 222-24, that the excessiveness review measures when the rebuttable presumption of correctness for jury awards of punitive damages wanes and is finally overcome. Accordingly, Green Oil provided both punitive factors and protective factors. The Green Oil punitive factors include: (1) removing the profit that the tortfeasor gained from his wrongful conduct; (2) providing a penalty that is sufficiently large to "sting" the tortfeasor, given his financial position; and (3) considering the reasonable costs of litigation. Id. at 223. The Green Oil protective factors include: (1) ensuring a reasonable relationship between the size of the punitive damages award and the actual or likely harm resulting from the tortfeasor's wrongful conduct; (2) allowing only truly reprehensible conduct to justify sizable punitive damages awards; (3) ensuring that the punitive damages award does not devastate the tortfeasor, given his financial position; and (4) reducing the punitive damages award by any civil or criminal penalties imposed on the tortfeasor for the same conduct. Id. at 223-24. The difference between the Supreme Court's decision in this case and its decision in Haslip, supra, then, can be explained by looking to *521 the rigor of this Court's application of the protective Green Oil factors.[11] This Court's less stringent application of these factors in this case put our state law in conflict with the Supreme Court's application of the three federal due process guideposts.[12]
To resolve the present conflict between the state law reasonableness standard and the federal law excessiveness standard, I would return to the traditional, restrictive Alabama reasonableness standard. Although the Supreme Court, and thus, this Court, cannot precisely define the "outer limit" of federal due process, 517 U.S. at___, 116 S. Ct. at 1602 ("[W]e have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula"), we can more precisely define the "inner boundary" of state law reasonableness, Hammond, 493 So. 2d at 1378 ("[T]he responsibility to adopt standards [for requiring remittitur] lies with this Court"). To the extent this definition comports with history by producing a common law reasonableness standard that is stricter than the federal law excessiveness standard, it would both avoid conflict with binding Supreme Court precedent and provide a more workable standard for Alabama courts to apply. Specifically, I would reinvigorate the following protective Green Oil factors:
Ratio of Punitive Damages to Compensatory DamagesAlthough the Supreme Court rejected any fixed ratio, it recognized that punitive damages "must bear a `reasonable relationship' to compensatory damages." 517 U.S. at ___, 116 S. Ct. at 1601-02. I agree with the majority that this Court should not adopt a specific ratio as a judicially imposed cap on punitive damages. At the same time, I recognize that of the protective Green Oil factors, the ratio of punitive damages to compensatory damages provides the most practical guideline for Alabama trial judges.[13] Both the Alabama Legislature and Congress have established treble damages as the most common punitive standard.[14] I would therefore adopt that three-to-one ratio, *522 not as any kind of rigid restraint, but to serve as a benchmark against which to measure reasonableness. Significant deviations above the three-to-one benchmark should require special justification.
Reprehensibility of the ConductThe Supreme Court stated that the degree of reprehensibility of the defendant's conduct was "[p]erhaps the most important" guidepost for assessing whether a punitive damages award is excessive. 517 U.S. at ___, 116 S. Ct. at 1599. To justify a sizable punitive damages award, the Supreme Court requires evidence of "indifference to or reckless disregard for the health and safety of others," as opposed to mere economic harm. Id. For purely economic harm to justify a substantial award, it must be coupled with intentional, "affirmative acts of misconduct, ... financially vulnerable [victims,] ... [or] prohibited conduct [engaged in] while knowing or suspecting that it was unlawful." Id.
To justify a punitive damages award of greater than three times compensatory damages, I would define the Green Oil factor of reprehensibility to require: (1) endangerment of the physical health and safety of others; or (2) economic harm resulting from an intentional misrepresentation, deceit, or concealment of a material fact, as set out in Ala.Code 1975, § 6-11-20(b)(1), coupled with either (a) conduct repeated in spite of prior punishment, or (b) a substantial number of similar misrepresentations or acts of concealment.[15]
Similar Civil and Criminal Sanctions The Supreme Court stated that in assessing the size of a punitive damages award, a court should "accord substantial deference" to statutory fines or civil or criminal sanctions for comparable misconduct. 517 U.S. at ___, 116 S. Ct. at 1603. The Supreme Court also noted that a statutory fine could be multiplied by the number of wrongful acts for comparison to the punitive damages award. 517 U.S. at ___, 116 S. Ct. at 1603.
I would define the Green Oil factor of comparable civil and criminal sanctions to require comparison of the punitive damages award to civil or criminal penalties for similar misconduct, if such penalties exist.[16] To justify an award of greater than three times compensatory damages, the comparable civil or criminal penalties must involve substantial monetary fines or imprisonment.
The vigilant and consistent application of these Green Oil factors to the specific facts of each case would, I believe, eliminate the danger that Alabama punitive damages awards will transgress the "outer limit" imposed on those awards by federal due process requirements.
If this were the majority opinion, I would remand to allow the trial judge to apply the revised standard, because the trial judge should have the first opportunity to order remittitur of an excessive award to a constitutionally permissible amount.[17] However, *523 because the majority has chosen not to do that, I will address the majority's conclusion that $50,000 in punitive damages is the maximum amount that can be awarded under the facts of this case.
I note, initially, that the $2,000,000 in punitive damages originally approved by this Court greatly exceeds the amount that would be three times the compensatory damages (3 x× $4,000 = $12,000). Because of the jury's significant deviation above the three-to-one benchmark discussed earlier, I look to the record for the special justification that, I believe, is necessary to uphold a punitive damages award in excess of three times the compensatory damages award. In this regard, I note that BMW's conduct did not endanger the physical health or safety of the plaintiff or of others. BMW's policy of selling new vehicles without disclosing that it had refinished them resulted in purely economic harm to the purchasers. Furthermore, at the time of BMW's nondisclosure in this case, the Legislature had not signaled that significant punishment was due in cases such as this one, imposing only a $2,000 civil penalty for each willful violation of the Deceptive Trade Practices Act. See Ala.Code 1975, § 8-19-11. After this action was filed, the Legislature, during its 1993 Regular Session, enacted Act No. 93-203, Ala. Acts 1993 (now codified at Ala.Code 1975, § 8-19-5), to require manufacturers to disclose those repairs costing more than the greater of $500 or 3% of the manufacturer's suggested retail price. Consequently, because the cost of refinishing the plaintiff's vehicle was less than 3% of the manufacturer's suggested retail price, the conduct for which BMW is being punished would not even be tortious if it occurred today. Although BMW's policy of nondisclosure was, in my view, reprehensible enough to justify the imposition of some punitive damages, I am persuaded now that the considerations mentioned abovethe purely economic harm caused by BMW's conduct, the lack of a substantial monetary fine or term of imprisonment for that conduct, and the current legislative policy of allowing manufacturers to make certain minor repairs without disclosuremilitate against a punitive damages award in excess of three times the compensatory damages and certainly against one 500 times the compensatory damages. However, other considerations persuade me that a $12,000 punitive damages awardi.e., an amount three times the compensatory damages awardwould not suffice in this case. Of primary significance is the evidence indicating that BMW sold at least 12 refinished vehicles in Alabama, in addition to the one that it sold to the plaintiff, and that those sales were fraudulent or wrongful under the law at that time.[18] After considering this pattern or practice of nondisclosure, as well as the reasonable costs associated with the plaintiff's prosecution of this action, I agree with the majority that $50,000 is a constitutionally permissible amount under the facts of this case.
For the reasons stated above, I concur in the result.
HOOPER, C.J., and MADDOX, J., concur.
SEE, Justice (recusing).
The United States Supreme Court's decision in BMW of North America, Inc. v. Gore, 517 U.S. 1589, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1996), has been the topic of a national debate.[19] It is not surprising that the BMW case intruded into my 1996 campaign for this office. During the campaign, I restricted my comments on this case to the published opinions of this Court and the United States *524 Supreme Court.[20] Nonetheless, because of the high profile of the BMW case, and because of its prominent role during the campaign, I believe it is in the best interests of this Court that I recuse myself from this case.
At the first conference of the Justices after I took office, I announced to the Court that I would recuse myself from BMW, and I have ever since refrained from any discussion of the facts of BMW or of the appropriate outcome in this case. I have, of course, participated fully with my fellow Justices in the discussion of Life Ins. Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996), American Pioneer Life Ins. Co. v. Williamson, 681 So. 2d 1040 (Ala.1995), Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995), and Union Security Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala.1995), which were remanded to this Court for reconsideration in light of the United States Supreme Court's opinion in BMW. The other Justices have, therefore, had the full benefit of my views and my analysis as they relate to the issue of punitive damages presented in each of those cases.
[1] Chief Justice Hooper and Justices Cook, Butts, and See were not members of this Court when that opinion was released. Justice Almon was a member of the Court at that time, but did not participate in the decision.
[2] This Court reversed the judgment as to defendant Bayerische Motoren Werke, A.G., holding that it did not have sufficient contacts with Alabama to be subject to personal jurisdiction in this state. BMW, 646 So. 2d at 622.
[3] The United States Supreme Court also remanded these four cases for reconsideration along with BMW: Life Ins. Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996); Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995); Union Security Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala.1995); and American Pioneer Life Ins. Co. v. Williamson, 681 So. 2d 1040 (Ala.1995).
[4] Out of the more than 100 published opinions dealing with punitive damages since 1989, when the Green Oil review was implemented, fewer than 10% have affirmed punitive damages awards that still exceeded $2 million after appellate review. In several of those cases where the punitive damages award affirmed exceeded $2million, the large amount of the compensatory damages awards indicated a level of misconduct that would clearly justify an unusually high punitive damages award. See Duck Head Apparel Co. v. Hoots, 659 So. 2d 897 (Ala.1995) ($4,350,000 compensatory damages and $15,000,000 punitive damages); Sears, Roebuck & Co. v. Harris, 630 So. 2d 1018 (Ala.1993), cert. denied, 511 U.S. 1128, 114 S. Ct. 2135, 128 L. Ed. 2d 865 (1994) ($850,000 compensatory damages and $2.5 million punitive damages). In approximately 50% of the published opinions, the punitive damages award affirmed was $100,000 or less, and in approximately 80% the punitive damages award affirmed was $1 million or less.
[*] Note from the reporter of decisions: The Supreme Court on September 10, 1997, entered a "certificate of judgment of affirmance," noting that "the appellee, Ira Gore, Jr., did on September 3, 1997, file in this Court an acceptance of remittitur of punitive damages to the amount of $50,000." The certificate ordered "that the judgment of the circuit court for punitive damages be reduced to the sum of $50,000 and as thus reduced, the judgment of the circuit court is hereby affirmed, with interest and costs."
[**] Chief Justice Hooper and Justices Cook, Butts, and See were not members of this Court when the original opinion in this case was released.
[***] Justice Almon was a member of this Court when the original opinion in this case was released, but he did not participate in that decision.
[5] The number of Alabama sales referred to here excluded, apparently, the one to Dr. Thomas Yates, which sale was the subject of the action in Yates v. BMW of North America, Inc., 642 So. 2d 937 (Ala.Civ.App.1993), writ quashed, 642 So. 2d 937 (Ala.1993). In that case, a jury awarded Dr. Yates $4,600 in compensatory damages, and $0 in punitive damages. 642 So. 2d at 938. See BMW of North America, Inc. v. Gore, 517 U.S. 559, ___n. 9, 116 S. Ct. 1589, 1594 n. 9, 134 L. Ed. 2d 809 (1996).
[6] Justice Maddox, with Justice Steagall joining, concurred in the result reached in Aetna on remand, and I concurred specially and set out a procedure that I considered would be a "principled approach" to the problem. 505 So. 2d at 1054-62.
[7] In Haslip the plaintiff paid premiums for hospital insurance coverage that she did not have because the insurance agent had misappropriated Haslip's premiums. After receiving a lapse notice for failure to pay the premiums, the insurance agent failed to forward the lapse notice to Haslip. Haslip discovered that she had no hospital insurance after she was hospitalized and her hospital bill was not paid by the insurance company.
On March 8, 1991, four days after Haslip was released, portions of the 1987 legislation dealing with punitive damages were declared unconstitutional by this Court. Armstrong v. Roger's Outdoor Sports, Inc., 581 So. 2d 414 (Ala.1991); other sections of the 1987 legislation dealing with punitive damages were declared unconstitutional subsequent to that, with the most significant being the $250,000 cap on punitive damages, which was declared to be unconstitutional by a divided court in Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala.1993), even though the Supreme Court of the United States in Haslip had noted the following about that statutory cap:
"The Alabama Legislature recently enacted a statute that places a $250,000 limit on punitive damages in most cases. See 1987 Ala. Acts, No. 87-185, §§ 1, 2, and 4. The legislation, however, became effective only on June 11, 1987, see § 12, after the cause of action in the present case arose and the complaint was filed."
499 U.S. at 20 n. 9, 111 S. Ct. at 1044 n.9.
Between March 4, 1991, when the opinion upholding the punitive damages award in excess of $800,000 in Haslip was released, and May 20, 1996, when an opinion vacating and reversing the $2,000,000 punitive damages award in the present case was released, the Supreme Court of Alabama had declared substantial portions of the 1987 legislation on punitive damages to be unconstitutional and had upheld punitive damages awards in non-wrongful death and nonphysical injury cases of $15,000,000, Duck Head Apparel Co. v. Hoots, 659 So. 2d 897 (Ala.1995); $12,463,624, Northwestern Mutual Life Ins. Co. v. Sheridan, 630 So. 2d 384 (Ala.1993); $6,000,000, Union Mortgage Co. v. Barlow, 595 So. 2d 1335 (Ala.1992), cert. denied, 506 U.S. 906, 113 S. Ct. 301, 121 L. Ed. 2d 224 (1992); $6,000,000, Sperau v. Ford Motor Co., 674 So. 2d 24 (Ala.1995), judgment vacated, ___ U.S. ___, 116 S. Ct. 1843, 134 L. Ed. 2d 945 (1996); $5,000,000, Life Ins. Co. of Georgia v. Johnson, 684 So. 2d 685 (Ala.1996), judgment vacated,___ U.S. ___, 117 S. Ct. 288, 136 L. Ed. 2d 207 (1996); $4,000,000, Independent Life & Accident Ins. Co. v. Harrington, 658 So. 2d 892 (Ala.1994), cert. dismissed, ___ U.S. ___, 116 S. Ct. 1587, 134 L. Ed. 2d 662 (1996); $2,500,000, Benetton S.p.A. v. Benedot, Inc., 642 So. 2d 394 (Ala.1994); $2,000,000, Union Security Life Ins. Co. v. Crocker, 667 So. 2d 688 (Ala. 1995), judgment vacated, ___ U.S. ___, 116 S. Ct. 1872, 135 L. Ed. 2d 169 (1996); $2,000,000, Crown Life Ins. Co. v. Smith, 657 So. 2d 821 (Ala.1994); $2,000,000, American Pioneer Life Insurance Co. v. Williamson, 681 So. 2d 1040 (Ala. 1995), judgment vacated, ___ U.S. ___, 116 S. Ct. 1872, 135 L. Ed. 2d 169 (1996); $1,975,000, Allstate Insurance Co. v. Hilley, 595 So. 2d 873 (Ala. 1992); $1,000,000, Liberty National Life Ins. Co. v. McAllister, 675 So. 2d 1292 (Ala.1995), cert. dismissed, ___ U.S. ___, 116 S. Ct. 688, 133 L. Ed. 2d 593 (1995); $1,000,000, Foster v. Life Ins. Co. of Georgia, 656 So. 2d 333 (Ala.1994); $1,000,000, Intercontinental Life Ins. Co. v. Lindblom, 598 So. 2d 886 (Ala.1992), cert. denied, 506 U.S. 869, 113 S. Ct. 200, 121 L. Ed. 2d 142 (1992); $1,000,000, Fuller v. Preferred Risk Life Ins. Co., 577 So. 2d 878 (Ala.1991); $1,000,000, Mannington Wood Floors, Inc. v. Port Epes Transport, Inc., 669 So. 2d 817 (Ala.1995).
[8] The Supreme Court has expressly stated that the federal excessiveness standard cannot be defined by a formula or bright line. BMW, 517 U.S. at ___, 116 S. Ct. at 1602 ("[W]e have consistently rejected the notion that the constitutional line is marked by a simple mathematical formula"); Haslip, 499 U.S. at 18, 111 S. Ct. at 1043 ("We need not, and indeed we cannot, draw a mathematical bright line between the constitutionally acceptable and the constitutionally unacceptable that would fit every case").
[9] See, e.g., Pierce O'Donnell, Justice Byron White: Leading from the Center, 72 A.B.A.J. 24, 26-27 (applauding Justice White's consistent advocacy of appellate rules that are "practical and intelligible").
[10] See also Jones v. Sparrow, 5 T.R. 257, 101 Eng. Rep. 144 (K.B.1793) (new trial granted for excessive damages); Hewlett v. Cruchley, 5 Taunt. 277, 281, 128 Eng. Rep. 696, 698 (C.P. 1813) ("[I]t is now well acknowledged in all the Courts of Westminster-hall, that whether in actions for criminal conversation, malicious prosecutions, words, or any other matter, if the damages are clearly too large, the Courts will send the inquiry to another jury.") (emphasis in original).
[11] In his opinion in this case, 517 U.S. at ___, 116 S. Ct. at 1606, Justice Breyer, speaking for three members of the five-member majority, criticized this Court's application of the Green Oil factors.
[12] I note that the three due process guideposts (i.e., reprehensibility of the wrongful conduct, ratio of punitive damages to compensatory damages, and comparable civil and criminal penalties) are similar to the three protective Green Oil factors (i.e., reprehensibility of the wrongful conduct, reasonable relationship of the size of the punitive award to the actual and probable harm, and mitigation for actual civil and criminal penalties imposed). This is because the guideposts and the protective Green Oil factors protect similar interests. The three guideposts protect the defendant's due process right to receive fair notice of the severity of potential penalties against him, 517 U.S. at ___, 116 S. Ct. at 1598, and the three Green Oil factors protect the defendant from unreasonable punitive awards imposed by an impassioned or prejudiced jury, Green Oil, 539 So. 2d at 222.
[13] The principle that punitive damages should bear a reasonable relationship to compensatory damages has roots going back to the early English statutes that provided for punitive damages equal to a multiple of actual damages. See David G. Owen, A Punitive Damages Overview: Functions, Problems and Reform, 39 Vill. L.Rev. 363, 368 & n. 23 (1994). Alabama courts have consistently upheld the reasonable relationship principle. See Mobile & Montgomery R.R. v. Ashcraft, 48 Ala. 15, 33 (1872) ("punitive damages ought ... to bear proportion to the actual damages sustained"). (Emphasis added.) Such authorities plainly suggest that a reasonable ratio between punitive damages and actual damages is a hallmark of common law reasonableness.
[14] Ala.Code 1975, § 8-19-10(a)(2) (providing for treble damages for certain violations of the Deceptive Trade Practices Act); § 37-2-18 (providing treble damages for certain harm caused by common carriers); § 10-2B-15.02 (levying a penalty "equal to treble the amount of all fees and taxes" on foreign corporations that fail to obtain a certificate of authority); 18 U.S.C. § 1964(c) (providing for treble damages for civil violations of the Racketeer Influenced and Corrupt Organizations Act); 15 U.S.C. § 15 (providing for treble damages for violations of the Sherman Act's prohibition on monopolistic practices).
I also note that the use of a multiple of compensatory damages as a penalty has ancient and biblical origins. The ancient law of Rome required restitution of four times the amount wrongfully taken. VIII The Interpreter's Bible 326 (1952). Jewish law provided: "If a man shall steal ... a sheep, and kill it, or sell it; he shall restore ... four sheep for a sheep." Exodus 22:1. Zacchaeus promised: "`[I]f I have defrauded any one of anything, I restore it fourfold,'" which was acceptable. Luke 19:1-10. The new Oxford Annotated Bible with the Apocrypha, Expanded Edition (1977), pages 1273-74. These laws provide for the return of the amount wrongfully taken plus three times the amount wrongfully taken.
[15] I would require further indicia of egregious conduct to justify a sizable punitive award when physical safety or health is not endangered. In Green Oil, 539 So. 2d at 223, this Court stated:
"The degree of reprehensibility of the defendant's conduct should be considered. The duration of this conduct, the degree of the defendant's awareness of any hazard which his conduct has caused or is likely to cause, and any concealment or `cover-up' of that hazard, and the existence and frequency of similar past conduct should all be relevant in determining this degree of reprehensibility."
[16] In Green Oil, 539 So. 2d at 223-24, this Court stated:
"If criminal sanctions have been imposed on the defendant for his conduct, this should be taken into account in mitigation of the punitive damages award.
"....
"... If there have been other civil actions against the same defendant, based on the same conduct, this should be taken into account in mitigation of the punitive damages award." (Quoting Aetna, 505 So. 2d at 1062.)
[17] In Hammond, 493 So. 2d at 1379, this Court required "trial courts to reflect in the record the reasons for interfering with a jury verdict, or refusing to do so, on grounds of excessiveness of the damages." I reiterate the necessity for trial courts to examine with specificity each of the Green Oil factors in light of the evidence at trial and to indicate in the record how the final punitive damages award was determined.
[18] The evidence actually indicated that BMW sold at least 14 vehicles in Alabama; however, in Yates v. BMW of North America, Inc., 642 So. 2d 937 (Ala.Civ.App.1993), cert. quashed, 642 So. 2d 937 (Ala.1993), the jury, under similar facts, awarded the plaintiff compensatory damages but no punitive damages. It would be inappropriate, in my opinion, to use the sale made the subject of the Yates case to enhance the punishment in the present case.
[19] See, e.g., Paul M. Barrett, Justices Reject BMW Penalty as "Excessive", Wall St. J., May 21, 1996, at A3; Tony Mauro, Court to Weigh Punitive DamagesBMW Case Tests Legal "Wild Card", USA Today, Oct. 11, 1995, at 03A; Kelley Holland, Punishing Punitive Damages, Bus. Wk., June 3, 1996, at 46; Peter Huber, Fleeing Alabama, Forbes, July 15, 1996, at 92.
[20] This Court's opinion was reported as BMW of North America, Inc. v. Gore, 646 So. 2d 619 (Ala. 1994). The United States Supreme Court's opinion which vacated this Court's judgment and remanded the case to this Court for further proceedings, was reported as BMW of North America, Inc. v. Gore, 517 U.S. 559, 116 S. Ct. 1589, 134 L. Ed. 2d 809 (1995). | May 9, 1997 |
793b6490-d6e9-43ad-b8e0-ad1867b254e0 | Hargrove v. TREE OF LIFE CHRISTIAN DAY CARE | 699 So. 2d 1242 | 1960045 | Alabama | Alabama Supreme Court | 699 So. 2d 1242 (1997)
Timothy HARGROVE, et al.
v.
TREE OF LIFE CHRISTIAN DAY CARE CENTER.
1960045.
Supreme Court of Alabama.
May 23, 1997.
Rehearing Denied July 18, 1997.
*1243 James M. Patton of Patton & Veigas, P.C., Birmingham, for appellants.
W. J. McDaniel and Christy Osborne of McDaniel, Hall & Conerly, P.C., Birmingham, for appellee.
HOUSTON, Justice.
The plaintiffs, Timothy and Carolyn Hargrove, individually and in their representative capacities as the parents and next friends of their daughter, Sharda Lee Hargrove, appeal from a summary judgment for the defendant, Tree of Life Christian Day Care Center ("the Center"),[1] in this action seeking damages for breach of contract and under various tort theories. We affirm in part, reverse in part, and remand.
The evidence, viewed most favorably toward the Hargroves, as it must be under our standard for reviewing summary judgments, Woodruff v. Leighton Avenue Office Plaza, Ltd., 622 So. 2d 304 (Ala.1993), indicates the following: The Hargroves contracted with the Center for the daily care and supervision of their one-month-old daughter, Sharda. The Center, a church-affiliated child care provider, was licensed at that time by the Alabama Department of Human Resources ("DHR") to care for children 18 months old and older. (The Center's license has since been revoked.)[2] The Center's administrator, Bernice Mahan, provided the Hargroves with a rather lengthy document entitled "Operating Policies." That document, which stated that parents and guardians were expected "to read and follow the operating procedures," set out specific rules and procedures to be followed by the Center and the parents or guardians of the children. It provided, among other things, as follows:
(Emphasis in original.)
In addition to a number of adults, the Center also employed 14-year-old J.B. and *1244 her sister, 17-year-old A. B., to assist in the care of the children.[3] J.B. and A.B. were two of five foster children in Mahan's custody. Mahan had become the girls' foster mother only a few months before the incident made the basis of this action. The Center also allowed another sister, 12-year-old V. B., to assist with the children from time to time, although she was apparently not paid. V.B. was not one of Mahan's foster children. On April 25, 1995, when the Hargroves' daughter was approximately three months old and while she was under the Center's care and supervision, the three sisters kidnapped her.
At the time of the kidnapping, there was no qualified adult teacher, other than perhaps Mahan, directly supervising the sisters. Mahan testified in her deposition that the other teacher or teachers had gone for the day and that she thought A.B. had intentionally distracted her while J.B. and V.B. slipped the Hargroves' daughter out the front door undetected. There was evidence suggesting that J.B. and A.B. had been physically abused (perhaps sexually) by certain members of their family and that A.B. had deceived DHR and Mahan into believing that she was pregnant; however, there was no evidence that could have placed Mahan or the Center on notice that the two girls had criminal propensities.
The local police and the Federal Bureau of Investigation investigated the incident and, based at least in part on false information provided by J. B., focused part of their investigation on the Hargroves. After approximately six days, Sharda Lee Hargrove was found and was reunited with her parents. The evidence suggests that the sisters had called the baby girl Jasmine instead of Sharda and that, other than indications of withdrawal and confusion, she suffered only from rashes in her mouth and on her bottom. The evidence also indicated, as one would expect, that this incident was a traumatic one and that it was very stressful on the Hargroves.
The Hargroves filed an eight-count complaint against the Center. Count one, filed in the Hargroves' individual and representative capacities, sought damages based on allegations that the Center, "through ... negligent hiring and supervisory policies, practices, and/or procedures, proximately caused or allowed plaintiffs' minor child to be kidnapped while she was in the care and custody of the [Center]"; count two, filed in the Hargroves' individual and representative capacities, sought damages based on allegations that the Center, "through ... wanton hiring and supervisory policies, practices or procedures ... proximately caused or allowed the plaintiffs' minor child to be kidnapped while she was in the care and custody of the [Center]"; count three, filed by the Hargroves individually, sought damages based on allegations of breach of contract; count four, filed in the Hargroves' representative capacities, sought damages based on allegations that "due to the special relationships and other special circumstances involved herein, that is, the foster parent-child relationship between [Mahan] and J. B., and the relationship of Sharda, an innocent child in the [Center's] charge, the [Center] had a duty to protect Sharda from the criminal acts of J.B. and third parties, which such acts include but are not necessarily limited to kidnapping, offensive trespass to the person, and theft of personal property"; count five, filed by the Hargroves individually, sought damages based on allegations that the Center's "negligent and/or wanton breach of its duty to protect Sharda from the criminal acts of J.B. and third parties as averred in [count four] amounted to an intentional infliction of emotional distress and outrageous conduct [the tort of outrage], and that the [Center] is liable to the plaintiffs for their injuries and damages as a proximate result thereof due to the special relationships involved as set out in [count four]"; count six, filed in the Hargroves' representative capacities, sought damages based on allegations that the Center had negligently or wantonly invaded their daughter's privacy; count seven, filed by the Hargroves individually, sought damages based on allegations that the Center *1245 had negligently or wantonly invaded their privacy; and count eight, filed by the Hargroves in both their representative and individual capacities, sought damages under the doctrine of respondeat superior, based on allegations that J.B. had acted within the line and scope of her duties at the Center when she participated in the kidnapping. Count eight stated, in part, as follows:
The trial court entered a summary judgment for the Center on all claims. The Hargroves appealed.
After carefully reviewing the record and the briefs, we conclude that, with the exception of count three (breach of contract) the summary judgment was proper with respect to each of the counts contained in the Hargroves' complaint. It is well settled that, absent special relationships or circumstances, no person or entity has a duty to protect another from the criminal act of a third person. A defendant cannot be held liable for the criminal act of a third party unless the defendant knew or had reason to know that the criminal act was about to occur on the defendant's premises. Young v. Huntsville Hospital, 595 So. 2d 1386 (Ala.1992); Henley v. Pizitz Realty Co., 456 So. 2d 272 (Ala.1984). This rule was applied in the day care context in N.J. v. Greater Emanuel Temple Holiness Church, 611 So. 2d 1036 (Ala.1992). In that case, N. J., a minor child acting through her mother, as next friend, sued the church, alleging that the church had failed to use due care in watching and supervising N.J. in its day care program, and that it had thereby allowed N.J. to be raped on the church's premises by a second cousin of N.J. The cousin, J. R., lived with his family on the third floor of the church building and was a frequent visitor at N. J.'s house. The trial court entered a summary judgment for the church. This Court affirmed, holding that there was insufficient evidence of negligent supervision on the church's part. This Court, reiterating its reluctance to impose liability on one person or entity for the criminal act of another, specifically rejected the plaintiff's attempt to hold the church liable under the negligent supervision claim, based on the alleged criminal act of J. R.:
611 So. 2d at 1038. Implied in the holding of that case is that there were no special circumstances or special relationships that would give rise to a duty on the church's part to take additional steps to protect N.J. This present case is materially indistinguishable from N. J.
Recently, in Copeland v. Samford University, 686 So. 2d 190 (Ala.1996), this Court held that, as a matter of law, Samford University was not liable for the murder of one of its students, Rex Copeland, by William Slagle, a former professor at Samford. The complaint in that case alleged that Samford had negligently hired and supervised Slagle and that Samford was liable under the doctrine of respondeat superior for the murder of Rex Copeland. With respect to the negligent hiring and supervision claims, this Court noted:
686 So. 2d at 196. With respect to the claim based on the doctrine of respondeat superior, this Court stated:
686 So. 2d at 195.
The undisputed evidence in the present case indicated that J.B. and A.B. were not acting in the line and scope of their duties at the Center when they kidnapped the Hargroves' daughter. The evidence suggested that A.B. was preoccupied with the notion of having her own baby, even to the point of misleading DHR and Mahan into thinking that she was pregnant. The apparent plot hatched by the sisters to provide A.B. with a baby by kidnapping the Hargroves' daughter constituted, as a matter of law, a gross deviation from the Center's business; that fact precludes the imposition of liability upon the Center under the doctrine of respondeat superior for the actions of J.B. and A.B. Furthermore, the undisputed evidence indicated that there was nothing that should have, or could have, put Mahan or the Center on notice that the sisters would or might kidnap one of the children. Based on the holdings in N.J. v. Greater Emanuel Temple Holiness Church, supra, and Copeland v. Samford University, supra, we conclude that the summary judgment was proper as to count one (negligent hiring and supervision); count two (wanton hiring and supervision); count four (negligent or wanton failure to prevent the kidnapping); count five (the tort of outrage); count six (invasion of privacySharda's claim); count seven (invasion of privacythe Hargroves' claim); and count eight (respondeat superior). All of these counts were based on allegations that the Center breached a common law duty to the Hargroves and their daughter to prevent the kidnapping or that the Center was liable under the doctrine of respondeat superior for the kidnapping.
Count three of the Hargroves' complaint stated, in part:
The Hargroves contend that there is sufficient evidence of an express contract and of a breach thereof to warrant submitting their breach-of-contract claim to a jury. The Center contends that there is no evidence of an express contract "to provide any level of care." We agree with the Hargroves.[4]
The evidence indicates that the Center expressly contracted with the Hargroves to care for their daughter on a daily basis for a sum certain per week. The evidence is sketchy with respect to the discussions Mahan had with the Hargroves when the contract was entered. However, reasonable inferences from the evidence indicate that the document entitled "Operating Policies" was provided to the Hargroves and that it was intended by the Center to become a part of the contract. That document, which incorporated the minimum standards imposed by DHR, stated that parents were expected "to read and follow the operating procedures" contained therein. Those operating procedures specifically obligated the Center 1) to release the Hargroves' daughter only to a properly authorized and identified person; 2) to employ only persons qualified (in accordance with DHR's minimum standards) to care for the Hargroves' daughter; 3) and to keep the Hargroves' daughter safe while she was under its care and supervision. The evidence indicates that unqualified and unauthorized persons (the sisters) removed the Hargroves' daughter from the Center's premises. The evidence also indicates that a qualified teacher or child care provider was not directly supervising the Hargroves' daughter at the time of her kidnapping. The basic elements of a contract are an offer and an acceptance, consideration, and mutual assent to the essential terms of the agreement. Pinyan v. Community Bank, 644 So. 2d 919 (Ala.1994). We conclude that the plaintiffs presented sufficient evidence of these basic elements to submit to a jury their claim alleging the breach of an express contract.
The summary judgment is affirmed as to counts one, two, four, five, six, seven, and eight; however, it is reversed as to count three, and the case is remanded for further proceedings consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
HOOPER, C.J., and MADDOX, ALMON, SHORES, KENNEDY, and COOK, JJ., concur.
SEE, J., concurs in the result.
BUTTS, J., concurs in part and dissents in part.
BUTTS, Justice (concurring in part and dissenting in part).
I agree with the majority's reversal of the summary judgment as to the Hargroves' breach of contract claim. However, I respectfully dissent from the majority's affirmance of the summary judgment as to the Hargroves' claims alleging negligent and/or wanton hiring and supervision, and alleging premises liability.
To avoid a summary judgment on their claim alleging negligent and/or wanton hiring and supervision, the Hargroves must present *1248 substantial evidence indicating that Tree of Life had notice or knowledge (actual or presumed) of the alleged incompetency of J.B. and A.B. Ledbetter v. United American Ins. Co., 624 So. 2d 1371 (Ala.1993). Liability depends upon its being established by affirmative proof that such incompetency was actually known by Tree of Life, or that it could have been discovered through the exercise of due diligence. Ledbetter.
The evidence shows that by a regulation the Alabama Department of Human Resources requires that day care workers in a state licensed facility be at least 19 years of age and that student aides be at least 16. Bernice Mahan, the director of Tree of Life and the person in charge of hiring and supervising its employees, was charged with knowledge of this regulation. Mahan knew or, through the exercise of due diligence, could have learned that J.B., age 14, and A.B., age 17, did not meet this minimum-age qualification for working at Tree of Life.[5] Moreover, Mahan knew or should have known that neither J.B. nor A.B. met the standards outlined in Tree of Life's written "Operating Policies" that each parent received a copy of. According to the "Operating Policies":
There is no evidence that J.B. and A.B. had any formal training or experience in caring for infants. As their foster mother of four months, Mahan was aware that J.B. and A.B. had themselves been victims of an unstable, perhaps abusive, prior home life. Acting as the director of Tree of Life, Mahan nevertheless employed the underaged and untrained girls in the day care center, allowing them to care for the Hargroves' three-month old infant.
The record shows that, when the kidnapping occurred, at approximately 4:00 p.m., J.B. and A.B. were virtually the only ones left on the premises of the day care facility. Mahan had allowed most of the adult staff to leave for the day, although there were still children to be picked up. When the Hargroves' baby was discovered to be missing, J.B. told Mahan that Mr. Hargrove had picked up the baby. Mahan did not know this statement was false, because she had not monitored the area where the children were to be picked up and had not assigned an adult worker to do so. When questioned by the police, Mahan repeated J.B.'s false statement, and Mr. Hargrove was then subjected to questioning under suspicion of having kidnapped his own child.
Based upon the foregoing, I believe that Mahan, as the agent with the responsibility of hiring workers for Tree of Life, either knew or should have known that J.B. and A.B. were unfit to be employed as child care workers at the day care center. Moreover, I believe there are questions of fact as to whether Mahan adequately supervised J.B. and A.B. and her adult staff. I would therefore reverse the summary judgment as to the Hargroves' claims alleging negligent and/or wanton hiring and supervision.
As to the issue of premises liability, I recognize that a defendant cannot be held liable for the criminal act of a third party unless (1) special circumstances or relationships impose a duty on the defendant to protect another from the criminal act of a third person; and (2) the defendant knew or had reason to know that the criminal act was about to occur on the defendant's premises. Young v. Huntsville Hospital, 595 So. 2d 1386 (Ala.1992). It is clear that special circumstances imposed a duty upon Tree of Life to protect the Hargroves' infant from being taken by unauthorized persons. In return for accepting the Hargroves' money, Tree of Life *1249 took this duty upon itself, incorporating it into its own procedures, as stated in its "Operating Policies":
The majority recognizes that Tree of Life assumed this duty, but then finds that the Hargroves offered no substantial evidence that Tree of Life, through its agent Mahan, could have expected that J.B. and A.B. would harm the plaintiff's three-month-old child. The majority relies upon N.J. v. Greater Emanuel Temple Holiness Church, 611 So. 2d 1036 (Ala.1992), wherein this Court held that a kindergarten had no liability for a minor child's raping another minor child on the kindergarten's premises. In that case, however, the victim was not formally enrolled in the kindergarten, so it was not clear that the kindergarten had undertaken a special duty to protect her. Even assuming that the kindergarten did have such a duty, there was no evidence that the kindergarten had failed to properly supervise the victim on the day she was raped. Moreover, the kindergarten averred that it did not know, or have reason to know, that the rapist, himself a minor child, had criminal propensities.
In this case, Tree of Life did undertake the care of the Hargroves' child, and I believe that, because the child was an infant and therefore unable to defend herself, this duty was even more acute. As to the foreseeability of the crime, Tree of Life, through Mahan, knew or should have known that J.B. and A.B. did not meet the minimum qualifications necessary to work in the day care, and certainly lacked the training and maturity necessary to care for a three-month old baby. By placing the Hargroves' baby in the care of juveniles, Tree of Life created a circumstance in which harm to the baby was a most foreseeable outcome. I would therefore reverse the summary judgment for Tree of Life as to the Hargroves' premises liability claim.
[1] The defendant is also referred to in the record as "Tree of Life Day Care Center and Pre-School" and "Tree of Life Christian Child Care Center."
[2] Certain church-affiliated child care programs are exempt from state licensing requirements. Ala.Code 1975, § 38-7-3.
[3] The Center contends that the sisters were not employees. Although there is evidence to support that contention, there is also evidence that the girls worked at the Center; that the Center kept up with the hours that they worked; and that the girls received money from Mahan.
[4] The Center also argues that the Hargroves have no claim for the breach of an implied agreement to exercise reasonable care. Relying on Brown v. Schultz, 457 So. 2d 388 (Ala.1984); Waters v. American Casualty Co., 261 Ala. 252, 73 So. 2d 524 (1954); and Mosley v. Jefferson County Board of Education, 677 So. 2d 776 (Ala.Civ.App.1995), the Center contends that when a contract does not in terms require reasonable care in doing the act stipulated to be done, the law imposes a duty, but does not imply a contract, to exercise due care in doing the act. Therefore, the Center argues, when negligence exists in doing that act, only an action in tort is available, because there is no express or implied contract that is breached. The Hargroves do not argue on appeal that they have a contract claim for the breach of an implied agreement. Therefore, we find it unnecessary to address this issue.
[5] Obviously, J.B. would not qualify either as a child care worker or as a student aide. While A.B.'s age alone would not preclude her from qualifying as a student aide, the record indicates that she worked as a child care worker, not as a student aide. | May 23, 1997 |
40dab1aa-cd86-468c-9075-5e6e9d3caae9 | Meininger v. State | 704 So. 2d 1034 | 1951735 | Alabama | Alabama Supreme Court | 704 So. 2d 1034 (1997)
Ex parte State of Alabama.
(In re Stephen Philip MEININGER
v.
STATE of Alabama).
1951735.
Supreme Court of Alabama.
May 23, 1997.
Bill Pryor, atty. gen., and Jim R. Ippolito, Jr., asst. atty. gen., for petitioner.
Michael D. Mastin, Albertville, for respondent.
HOUSTON, Justice.
Stephen Philip Meininger was convicted of violating Ala.Code 1975, § 32-5A-191(a)(1), because he was driving when his blood alcohol level was 0.10% or more.[1] He was sentenced to 15 days in the county jail; his sentence was suspended, and he was placed on unsupervised probation for 24 months. The Court of Criminal Appeals, relying on Curren v. State, 620 So. 2d 739 (Ala.1993), reversed Meininger's conviction, writing and holding as follows:
Meininger v. State, 704 So. 2d 1030, 1030-32 (Ala.Crim.App.1996).
We granted the State's petition for certiorari review. The State argues that the decision of the Court of Criminal Appeals (concerning the admissibility of Trooper Dodgen's testimony about Meininger's physical condition at the scene) was based on an erroneous reading of Curren. We agree; therefore, we reverse.
Alabama's implied consent statute, Ala.Code 1975, § 32-5-192, provides, in pertinent part, as follows:
(Emphasis added.) In Morgan v. City of Vestavia Hills, 628 So. 2d 1047, 1049 (Ala. Crim.App.1993), the Court of Criminal Appeals wrote:
See, also, Hays v. City of Jacksonville, 518 So. 2d 892 (Ala.Crim.App.1987), wherein the Court of Criminal Appeals correctly observed:
The record in the present case indicates that the prosecutor elected to establish the statutory predicate, see § 32-5A-194(a), for the admission of the breathalizer tests performed on Meininger.[2] Trooper Dodgen testified, in pertinent part, as follows:
Trooper Dodgen's testimony clearly established the requirements of the statutory predicate. Of particular importance here is the fact that Trooper Dodgen's testimony established that Meininger had been lawfully arrested for driving under the influence of alcohol before being directed to submit to the Intoxilizer 5000 test and that there was probable cause to believe that Meininger had been driving while under the influence of alcohol. It was incumbent upon the prosecutor to lay the necessary predicate for the admission of the results of the breathalizer test. We hold, therefore, that the trial court did not err in denying Meininger's motion to exclude Trooper Dodgen's testimony concerning his observations of Meininger's physical condition at the time of the arrest. In so holding, we note that Meininger's reliance on, and the Court of Criminal Appeals' interpretation of, Curren was misplaced. Curren does not stand for the proposition that evidence of an arresting officer's observations of a defendant's physical condition at the scene is inadmissible in a prosecution under § 32-5A-191(a)(1). In Curren, we characterized the issue as follows:
620 So. 2d at 740. As previously stated in note 2, we held in Curren that the presumptions discussed in § 32-5A-194(b) do not apply in a prosecution under § 32-5A-191(a)(1), because intoxication is not an element of the offense of driving with a blood alcohol content of 0.10% or greater (i.e., whether the defendant had consumed "such an amount of alcohol as to affect his ability to operate a vehicle in a safe manner" is not a consideration in a prosecution under § 32-5A-191(a)(1), see Ex parte Buckner, 549 So. 2d 451 (Ala.1989) (defining "under the influence of alcohol" as used in § 32-5A-191(a)(2))). Meininger was prosecuted for violating § 32-5A-191(a)(1) and the trial court instructed the jury on the elements of that offense. Trooper Dodgen's testimony concerning Meininger's physical condition at the time of the arrest was relevant to establish probable cause to arrest. Evidence of probable cause to arrest was essential to establishing one of the material elements of the State's case-in-chiefthat the results of the breathalizer tests showed Meininger's blood alcohol content to be 0.10% or greater.[3]
For the foregoing reasons, the judgment of the Court of Criminal Appeals is reversed and the case is remanded for the entry of a judgment consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, COOK, and SEE, JJ., concur.
ALMON, J., dissents.
ALMON, Justice (dissenting).
I think the Court of Criminal Appeals correctly applied the law as stated by this Court in Curren v. State, 620 So. 2d 739 (Ala.1993). I dissented in Curren, and I would vote to overrule that case if the question whether to do so was presented. I agree with the Court of Criminal Appeals that, given the law as it existed at the time of Meininger's trial, the circuit court erred in allowing Trooper Dodgen to testify as to Meininger's physical condition.
Meininger squarely presented to the circuit court his position that the Curren rule, which prevents a defendant charged under § 32-5A-191(a)(1) from presenting evidence that he was not in an impaired condition, should prevent the State from presenting evidence that he was in an impaired condition. Furthermore, he offered to stipulate that Trooper Dodgen had probable cause to arrest him, so that the inadmissible and unfairly prejudicial evidence (as the rule of Curren would have it) of his impaired condition *1040 would not be "admissible" to prove probable cause. The State's refusal to accept this stipulation is a telling indication that the State wanted to put on evidence of his physical condition to show not only that his blood alcohol content was above .10%, but also that he was driving in an impaired condition. This was unfairly prejudicial because, under Curren, Meininger was precluded from presenting any evidence that he was not in fact in an impaired condition.
After the qualification of the jury, the trial began with the following proceedings outside the presence of the jury:
The majority uses ellipses to omit what I consider significant portions of the record. The following question is quoted by the majority, but the objection and the ruling on it are not:
Again, shortly thereafter:
I would hold that this evidence was admissible as tending to prove that Meininger was in fact "under the influence" of alcohol. I would similarly hold that a defendant should be allowed to introduce evidence that his condition was not impaired. Under the Curren rule, however, I do not agree with the majority's rationale, which allows the State to introduce evidence of the defendant's impaired condition, supposedly to show that the arresting officer had probable cause to arrest the driver suspected of driving under the influence. I would hold that, so long as a defendant offers to stipulate to probable cause, as Meininger did, evidence of impaired condition is inadmissible because, according to the Curren rule, it is not relevant to the offense charged and unfairly prejudices the defendant by calling to the jury's attention extraneous matters.
In Curren v. State, 620 So. 2d 739 (Ala. 1993), the majority of this Court held that evidence that the defendant's condition was not impaired is not a defense to a charge of violating Ala.Code 1975, § 32-5A-191(a)(1), driving while "[t]here is 0.10 per cent or more by weight of alcohol in his blood." I pointed out in my dissent several reasons why I thought the majority decision was wrong. For example:
620 So. 2d at 744 (Almon, J., dissenting).
Of course, I would prefer to see Curren overruled, so that both sides can offer evidence of impairment or the lack thereof as bearing on the true question of whether the defendant was driving under the influence of alcohol, as I explained in my dissent in Curren.
I note that the majority holds that § 32-5-192, Ala.Code 1975, the implied consent law, applies to prosecutions under § 32-5A-191(a)(1), even though the implied consent law applies only to situations where a person is suspected of "driving ... while under the influence of intoxicating liquor":
§ 32-5-192(a) (emphasis added). I agree with the majority that the clear legislative intent was for this statute to apply to prosecutions under § 32-5A-191(a)(1). However, unlike the Curren majority and the majority today, I also think that the clear legislative intent was for the presumptions of § 32-5A-194(b) (and, of course, the admissibility provisions of § 32-5A-194(a)) to apply to a prosecution under § 32-5A-191(a)(1).
I also note in regard to § 32-5-192(a) the provisions regarding "lawfully arrested" and "reasonable grounds." Certainly, if a defendant contests the traffic stop or the administration of a blood alcohol test, the question either of "lawful arrest" pursuant to "probable cause" or of "reasonable grounds" would make evidence of the defendant's condition admissible. Even if the defendant does not contest these issues, the evidence might ordinarily be part of the State's case-in-chief. However, Meininger offered to stipulate to probable cause, lawful arrest, and reasonable grounds to administer the test, so that the unfairly prejudicial evidence of his condition (again, unfairly prejudicial only because of Curren) would not be admissible. I think it was error to deny Meininger's motion in limine and to overrule his objections.
It is difficult to register my vote in this case, because, if Curren remains the law, then I think the Court of Criminal Appeals correctly held that the State should not have been allowed to introduce the trooper's testimony that Meininger did not pass a field sobriety test. Because Curren precluded Meininger from meeting this prejudicial evidence with any evidence to rebut it, I dissent from the reversal of the judgment of the Court of Criminal Appeals. However, I continue to believe that Curren was wrongly decided. The strained reasoning of this case, deriving from what I consider to be incorrect reasoning in Curren, further highlights the problems arising from Curren's "per se" offense of driving while "there is 0.10 percent or more by weight of alcohol in [the driver's] blood." If Curren were overruled, as I think it should be, then I would hold that a trial court should allow an arresting officer to testify as to a driver's condition.
I understand the need for enforcement of the laws against driving under the influence of alcohol or controlled substances, and I agree that law enforcement officers should be allowed to testify as to the condition of a driver they have arrested under suspicion of violating these statutes. However, to allow an officer so to testify over pointed objections such as were made in this case allows the State, as Meininger's response to the State's petition says, to "have its cake and eat it too." To me, it is patently unfair to allow the State to introduce evidence that is irrelevant to the offense charged but will prejudice the defendant in the jury's eyes, and then to preclude the defendant from introducing any evidence that might answer or diminish the prejudicial effect of the State's evidence. I would overrule Curren v. State, but I would affirm the reversal by the Court of Criminal Appeals of Meininger's conviction, because Meininger was deprived of his fundamental right to a fair trial. I respectfully dissent.
[1] Ala.Code 1975, § 32-5A-191(a)(1), as it read at the time of Meininger's offense, stated:
"(a) A person shall not drive or be in actual physical control of any vehicle while:
"(1) There is 0.10 per cent or more by weight of alcohol in his blood...."
This statute was later amended, effective August 9, 1995, to change the percentage to 0.08%.
[2] This Court held in Curren, supra, that Ala.Code 1975, § 32-5A-194(b), was not applicable to a prosecution under § 32-5A-191(a)(1), stating:
"As noted above, our own statute, § 32-5A-191(a)(1), Ala.Code 1975, enacts a prohibition against driving, or being in actual physical control of a vehicle, with a blood alcohol content of 0.10% or greater. In order to find the defendant guilty of violating § 32-5A-191(a)(1), the jury is not required to find that the defendant was `under the influence' of alcohol; therefore, the jury need not `presume,' in accordance with § 32-5A-194, that he was under the influence from evidence admitted as to his blood alcohol content in order to convict. For that reason, the trial court did not err in refusing to instruct the jury on the rebuttable presumptions found in § 32-5A-194(b), Ala.Code 1975."
620 So. 2d at 742. However, the reasoning used by this Court in that case does not apply in this case so as to prohibit the application of § 32-5A-194(a) to prosecutions under § 32-5A-191(a)(1), even though § 32-5A-194(a) refers to "acts alleged to have been committed by any person while driving or in actual control of a vehicle while under the influence of alcohol." Section 32-5A-194(a) sets out a procedure for establishing the admissibility of chemical analyses of a "person's blood, urine, breath or other bodily substance." Although this section on its face appears to be applicable only in prosecutions for "driving under the influence," it is illogical to conclude that the Legislature did not intend for this procedure to be available in a prosecution under § 32-5A-191(a)(1), where, as we held in Curren, the sole inquiry is whether the defendant was driving or in actual physical control of a vehicle while there was 0.10 percent or more by weight of alcohol in his blood. Our holding in Curren that § 32-5A-194(b) was not applicable in a prosecution under § 32-5A-191(a)(1) was based on our conclusion that the Legislature intended § 32-5A-191(a)(1) to be an "illegal per se law." It was, thus, illogical in Curren for this Court to hold that the presumptions discussed in § 32-5A-194(b) were applicable in a prosecution under § 32-5A-191(a)(1). Notwithstanding the Legislature's use of the phrase "driving ... while under the influence of alcohol" in § 32-5A-194(a), we nonetheless believe that our conclusion with respect to the applicability of § 32-5A-194(a) in prosecutions under § 32-5A-191(a)(1) is consistent with legislative intent.
[3] We note that Meininger did not request that a limiting instruction be given to the jury, and we express no opinion as to whether a limiting instruction of some kind should be given upon request. | May 23, 1997 |
9160bcc2-9e16-4f01-a599-9cf45346b598 | Northcom, Ltd. v. James | 694 So. 2d 1329 | 1941697 | Alabama | Alabama Supreme Court | 694 So. 2d 1329 (1997)
NORTHCOM, LTD., et al.
v.
R. E. JAMES, et al.
1941697.
Supreme Court of Alabama.
May 9, 1997.
*1330 Richard W. Whittaker, Enterprise, for appellants.
Joe C. Cassady, Enterprise, for appellees.
C. Lee Reeves and Sandra L. Vinik of Sirote & Permutt, P.C., Birmingham, for amici curiae 1st Franklin Financial Services, Trans Am erica Financial Services, and Alabama Lenders Ass'n.
Laurence D. Vinson, Jr., of Bradley, Arant, Rose & White, L.L.P., Birmingham, for amici curiae Business Council of Alabama and National Federation of Independent Business.
John M. Galese, Birmingham; and Robert A. Huffaker and William H. Webster of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for amici curiae Automobile Dealers' Ass'n of Alabama, Inc., and Alabama Independent Automobile Dealers' Ass'n in support of application for rehearing.
ALMON, Justice.
The opinion released on January 10, 1997, is withdrawn and the following is substituted as the opinion of the Court.
The defendants Northcom, Ltd., Jerry Oakley, and William R. McDonald III appeal from the denial of their motion to compel arbitration. The issues are whether the arbitration clause in the contract between the parties applies to their present dispute and whether the arbitration clause is unenforceable for lack of mutuality.
Oakley and McDonald are shareholders in Northcom, Ltd., and we will refer to all three appellants collectively as "Northcom." In 1986, Creative Broadcasting Service, Inc., sold two radio stations in Enterprise, Alabama, to Northcom. R.E. James, Roberta Gwenn James, and Kathy James Pittman were the principal owners of Creative Broadcasting, the licensee of the two radio stations, WLHQ-FM and WIRB-AM, at the time of the sale. A covenant not to compete is included within the sales contract and another, in a substantially similar form, is appended to the contract as "Exhibit F." By that covenant, *1331 R.E. James, Roberta Gwenn James, and Kathy James Pittman, as stockholders of the seller, agreed not to compete with Northcom within a 100-mile radius of the stations for a period of six years, in consideration of $250,000, payable in 72 monthly installments. This consideration was in addition to the contract price for the sale of the radio stations.
In May 1994, R.E. James, Roberta Gwenn James, and Pittman (hereinafter "the plaintiffs") brought a breach of contract action, alleging that Northcom had failed to make the monthly installment payments. Northcom moved to compel arbitration, based on an arbitration agreement in the sales contract. The circuit court denied the motion to compel arbitration.
We conclude, based on Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S. Ct. 834, 130 L. Ed. 2d 753 (1995), that this contract "involv[es] commerce." First, the 100-mile territorial limitation affects the plaintiffs' ability to engage in the radio business not only in southeast Alabama, but in parts of Florida and Georgia as well. The radio stations broadcast into Florida and Georgia and receive advertising revenue from those states. The operation of these radio stations is subject to federal control in the form of FCC regulations. Therefore, the arbitration clause is subject to the Federal Arbitration Act, 9 U.S.C. § 1 et seq. ("the FAA").
The plaintiffs' first argument in support of the denial of the motion to compel arbitration is that the covenant not to compete is separate from the sales contract and therefore not subject to the arbitration clause in the sales contract. However, that argument cannot succeed, for a number of reasons. Paragraph 5 of the sales contract recites that "the price for the Purchased Assets shall be the sum of One Million One Hundred Thousand Dollars ($1,100,000) payable as follows." Paragraph 5(a) recites a $50,000 escrow deposit, paragraph 5(b) recites an $800,000 payment at the closing of the sale, and paragraph 5(c) recites: "In consideration of an Agreement Not to Compete in the form of Exhibit F attached hereto by and between Buyer and the stockholders of Seller, Buyer shall pay to the stockholders of Seller the sum of Two Hundred Fifty Thousand Dollars ($250,000)." Paragraph 9(a) of the sales contract gives a complete recitation of the covenant not to compete, although in a form different from that of the covenant as it is stated in Exhibit F. Paragraph 9(a) begins, "As an indispensable condition of this sale" (emphasis added), and then recites that "Seller covenants and agrees that neither it nor its ... principals" will for six years operate a radio station within 100 miles of the stations being sold. Finally, paragraph 37 provides that "All Appendices attached to this Agreement shall be deemed part of this Agreement."
The language of these provisions defeats the plaintiffs' argument that the sales contract and the covenant not to compete are separate contracts. The covenant not to compete is clearly part of the sales contract. Moreover, if it were not, it presumably would be rendered void by the operation of Ala. Code 1975, § 8-1-1(a), which voids covenants not to compete, other than as allowed in paragraphs (b) and (c) of that section. Section 8-1-1(b) allows the seller of a business to agree not to compete with the buyer under reasonable time and place limitations.
Because the covenant not to compete is part of the sales contract, this action alleging nonpayment of the consideration for that covenant is a "dispute arising under this agreement." The dispute over payment of the consideration for the covenant not to compete is within the scope of the arbitration provision.
The plaintiffs also argue that the covenant not to compete is invalid for lack of mutuality because, they say, the contract gives Northcom *1332 a right to an action in court while requiring them to arbitrate any claim of breach of the agreement. They quote paragraph 21 of the contract:
Note the absence of a right in the seller to bring an action for damages or for specific performance in the event of default by the buyer. Thus, on the face of the contract, Northcom may bring an action for either legal or equitable relief, at least based on a pre-closing default, while the absence in paragraph 21 of a specific provision allowing Creative Broadcasting or its stockholders to bring such an action would make any such action subject to the arbitration clause in paragraph 33.
More pertinently, because relating directly to the claim at issue here, the covenant not to compete itself gives Northcom a right to bring an action in court. Paragraph 9(a) includes the following:
(Emphasis added.) No such provision applies to the failure of Northcom to make the monthly payments that are the consideration for the covenant not to compete.
Thus, in the two most significant circumstances likely to cause Northcom to seek relief against Creative Broadcasting or its stockholderstheir failure or refusal to convey the radio stations as agreed or their breach of the agreement not to compete after having conveyed itthe contract gives Northcom a right to bring a civil action for either legal or equitable relief. No such right is given to Creative Broadcasting or its shareholders in the two most significant circumstances likely to cause them to seek relief against NorthcomNorthcom's failure or refusal to purchase the radio stations as agreed or its failure, after having bought the stations, to pay for the stockholders' refraining from competing with it.
In support of their argument that such a lack of mutuality will invalidate an arbitration agreement, the plaintiffs cite Matterhorn, Inc. v. NCR Corp., 763 F.2d 866 (7th Cir.1985). Indeed, that opinion states: "[A] challenge based on the lack of mutuality of the arbitration clause would be for the court. Hull v. Norcom, Inc., 750 F.2d 1547, 1549-50 (11th Cir.1985)."[1] 763 F.2d at 868.
In its original opinion, this Court relied largely on Hull v. Norcom, Inc., 750 F.2d 1547 (11th Cir.1985), and held that the arbitration clause here is unenforceable because of lack of mutuality. Several pertinent objections *1333 to that holding are made in the application for rehearing, the supporting brief, and the brief of the amici curiae.
The principal objection is that Hull v. Norcom, a diversity action, applied New York law, but that the Court of Appeals of New York, in Sablosky v. Edward S. Gordon Co., 73 N.Y.2d 133, 535 N.E.2d 643, 538 N.Y.S.2d 513 (1989), overruled the underlying New York cases four years after the Eleventh Circuit Court of Appeals had decided Hull v. Norcom. Because Sablosky does not cite Hull v. Norcom, we did not discover Sablosky in attempting to ascertain the continuing validity of Hull v. Norcom.
We did not purport in the original opinion to adopt New York law; rather, we cited Hull v. Norcom for the Eleventh Circuit's reasoning, which we found convincing, on the question whether an arbitration "agreement" by which only one party is bound may be specifically enforced. The dissenting Justices questioned whether the majority was confusing "mutuality of consideration" with "mutuality of remedy," but it is clear that the Eleventh Circuit and the New York courts were applying the doctrine of mutuality of obligation, which regards the question of consideration, not the doctrine of mutuality of remedy, which pertains to specific performance. Nevertheless, the disapproval by the Court of Appeals of New York of the opinions by the New York Appellate Division requires us to consider afresh the questions of mutuality of obligation and mutuality of remedy as they pertain to specific enforcement of arbitration clauses that are not mutually and coextensively binding.
Before we reembark upon that inquiry, however, we must address another objection raised in the application for rehearing. Northcom asserts that this issue was not presented to the circuit court and so should not be addressed on appeal. We have again studied the record, and it is true that there is no mention therein of the question of mutuality; the plaintiffs' only written opposition to the defendants' motions[2] to compel arbitration stated simply:
On application for rehearing, Northcom cites Jim Burke Automotive, Inc. v. Beavers, 674 So. 2d 1260 (Ala.1995), for the proposition that "failure to raise an issue in the trial court will prohibit consideration of that issue raised for the first time on appeal." In Beavers, this Court declined to reverse a circuit court's denial of a motion to compel arbitration where Jim Burke Automotive had neither alleged nor made any showing in support of its motion to compel arbitration that the contract involved interstate commerce. Northcom argues that a comparison of this case with Beavers shows that this Court is disfavoring arbitration, in violation of the prohibition of such disfavor by Doctor's Associates, Inc. v. Casarotto, 517 U.S. ___, 116 S. Ct. 1652, 134 L. Ed. 2d 902 (1996). We respectfully disagree.
Here, the lack of mutuality is apparent on the face of the contract, and, if the doctrine of mutuality of obligation or the doctrine of mutuality of remedy supports a refusal to enforce such an arbitration clause, that lack of mutuality supports an affirmance of the circuit court's denial of Northcom's motion. Thus, Beavers is distinguishable on two grounds: First, the record in Beavers contained no evidence of a critical fact, whereas the critical fact here is apparent on the record. Northcom's assertion that the question of mutuality is not preserved depends on its assertion that the plaintiffs did not argue that question in opposition to the motion to compel arbitration. We assume for purposes of discussion that the plaintiffs did not make such an argument in an untranscribed hearing on the motion, because the second ground for distinguishing Beavers makes it unimportant whether the plaintiffs made such an argument.
*1334 The second ground of distinction is that the appellant in Beavers needed the absent fact for a reversal, whereas here the appellees/plaintiffs may rely on the rule that a judgment may be affirmed if it is correct even if for reasons other than those relied upon by the lower court and the rule that an appellate court takes cognizance of the law applicable to the facts of record. See, e.g., Marvin's, Inc. v. Robertson, 608 So. 2d 391, 393 (Ala.1992) ("In reviewing the judgment of a trial court, this Court will not presume error and will affirm the trial court's judgment if it is supported by any valid legal ground"); Yarbrough v. C & S Family Credit, Inc., 595 So. 2d 880, 881 (Ala.1992) ("If there is any ground on which the trial court could have entered the judgment, we must affirm it"), and other cases collected at 2 West's Alabama Digest 2d, "Appeal & Error," Key nos. 851.1, 854(1), 854(2) (1993).
Thus, a question of law is presented, and the record adequately presents the question. There is no discrimination in these principles of review against either arbitration or the appellants, because the appellants are free to make their arguments on the relevant points of law, as they and the amici have ably done. The plaintiffs have not filed a brief in opposition to the application for rehearing. The following, therefore, expresses our conclusions after due study of the briefs and the pertinent law as we have found it.
The questions of mutuality of obligation and mutuality of remedy are analytically distinct, but in the case of arbitration contracts they come to the same result. Generally, if there is no mutuality of obligation, there is no consideration flowing in one direction and thus there is no contract. All the cases we have seen on mutuality of remedy pertain to the remedy of specific performance, and the rule most broadly stated is that if there is no mutuality of remedy, the contract cannot be specifically enforced. If a pre-dispute arbitration agreement cannot be specifically enforced, it effectively is no contract, so a lack of mutuality of remedy is tantamount to a lack of mutuality of obligation. We shall consider whether either of these theories supports the circuit court's holding.
Until the Court of Appeals of New York decided Sablosky, New York applied the rule that an arbitration agreement was enforceable only if there were mutual promises to arbitrate serving as consideration for each other.
Hull Dye & Print Works, Inc. v. Riegel Textile Corp., 37 A.D.2d 946, 946, 325 N.Y.S.2d 782, 783 (1971) (emphasis added; citations omitted).
Kaye Knitting Mills v. Prime Yarn Co., 37 A.D.2d 951, 951, 326 N.Y.S.2d 361, 363 (1971) (citation omitted).
There is no Alabama law on the question whether there must be mutuality of obligation in an arbitration agreement because the Alabama Legislature has declared that "[a]n agreement to submit a controversy to arbitration" may not be specifically enforced (and, thus, may not be enforced at all). Ala. Code 1975, § 8-1-41(3). Moreover, Section 10 of the Alabama Constitution of 1901 provides: "[N]o person shall be barred from prosecuting or defending before any tribunal in this state, by himself or counsel, any civil cause to which he is a party." Nevertheless, *1335 the United States Supreme Court in York International v. Alabama Oxygen Co., 465 U.S. 1016, 104 S. Ct. 1260, 79 L. Ed. 2d 668 (1984), vacated the judgment of this Court setting aside a stay pending arbitration and remanded the cause for further consideration in light of Southland Corp. v. Keating, 465 U.S. 1, 104 S. Ct. 852, 79 L. Ed. 2d 1 (1984); see Ex parte Alabama Oxygen Co., 433 So. 2d 1158 (Ala.1983), and 452 So. 2d 860 (Ala.1984). By those holdings, and later ones, § 8-1-41(3) has been held to be preempted by the FAA in cases of "contract[s] evidencing a transaction involving [interstate] commerce," 9 U.S.C. § 2. Since then, this Court has not been presented with a case raising a question of mutuality of obligation in arbitration agreements, until now.
There is, however, authority in Alabama for the proposition that "[a] contract, lacking in mutuality, is unenforceable." Marcrum v. Embry, 291 Ala. 400, 403, 282 So. 2d 49, 51 (1973); Hill v. Rice, 259 Ala. 587, 67 So. 2d 789 (1953); Hunt v. Hammonds, 257 Ala. 586, 60 So. 2d 355 (1952); Sherrill v. Alabama Appliance Co., 240 Ala. 46, 197 So. 1 (1940). As Chief Justice Anderson stated the principle, "It is undoubtedly the law that a unilateral contract, that is, one which is binding on one party and not the other, will not authorize an action for the breach of same by the party not bound against the one that is." Perfection Mattress & Spring Co. v. Dupree, 216 Ala. 303, 307, 113 So. 74, 77 (1927).
The New York courts previously held that an arbitration clause essentially required its own considerationthe mutual agreements of the parties to arbitrate. However, the modern rule is that, if the contract as a whole is supported by consideration, a lack of complete mutuality of obligation in some aspect is not fatal to the contract. The remainder of this Court's statement of the rule in Marcrum v. Embry demonstrates this point:
291 Ala. at 403, 282 So. 2d at 51.
In overruling the rule announced in Hull Dye & Print Works and in Kaye Knitting Mills, the New York Court of Appeals used the term "mutuality of remedy," but it is clear that the principal concept it relied on was that of mutuality of obligation[3]:
Sablosky, 73 N.Y.2d at 137, 535 N.E.2d at 646, 538 N.Y.S.2d at 516.
*1336 Upon further consideration of this question on rehearing, we hold that the arbitration clause in this contract should not be invalidated for lack of mutuality of obligation, because there is consideration for the contract as a whole flowing from each party to the other. The arbitration clause is not a separate contract that must be independently supported by consideration; it is simply one provision in a larger contract. The circuit court's denial of arbitration cannot be sustained on the doctrine of mutuality of obligation.
The doctrine of mutuality of remedy originally held that a party to a contract may not obtain specific performance of the other party's obligation under the contract if the party seeking specific performance cannot be compelled to specifically perform. This Court, in a 1931 exposition of the doctrine, relied largely on Pomeroy's Equity Jurisprudence:
General Securities Corp. v. Welton, 223 Ala. 299, 305-06, 135 So. 329, 334-35 (1931).
The Court similarly applied a limited version of the doctrine of mutuality of remedy in Pierce v. Watson, 252 Ala. 15, 39 So. 2d 220 (1949). After discussing criticisms of and limitations on the rule, the Court stated:
252 Ala. at 18, 39 So. 2d at 222.
This version of the doctrine of mutuality of remedy is essentially the one advocated by Professor Corbin:
5A Corbin on Contracts, § 1183 (1964). Corbin discusses the subject in detail in §§ 1178 through 1204. See also 11 Williston on Contracts, §§ 1433-1440 (3d ed.1968).
Having considered these authorities, we conclude that the rule of mutuality of remedy, while severely limited, is not entirely obsolete. It may still be applied to disallow specific performance where the party who seeks specific performance will thereafter have an ongoing obligation to the other party but the other party will not have an adequate remedy for securing the performance of that obligation.
How does this apply in the context of arbitration? To the extent that the question concerns specific performance, it is certainly applicable, because a motion or an action to compel arbitration seeks specific performance of an arbitration clause in a contract. Indeed, Alabama's policy against arbitration is stated in the Code article on specific performance, in a section listing contracts that cannot be specifically enforced. Title 8, Chapter 1, Article 3, § 8-1-41(3), Ala.Code 1975.
The specific question arises when one party ("A") is bound to arbitrate but the other ("B") is not. B seeks to compel arbitration of a claim made by A. After such an arbitration, another dispute may potentially arise, and B may file an action against A. If such a later dispute arises, A will not be able to take the claim to arbitration.[4] Is there such a lack of mutuality of remedy here as to justify denying B`s motion to compel arbitration of the first claim?
This question is peculiar because the remedy to be obtained by specific performance is not performance under the contract, but only access to a remedyarbitration versus adjudicationfor the alleged breach of contract. We can, however, envision a situation in which a court, addressing a motion to compel arbitration, may invoke principles of equity to deny the motion. Such a situation could arise where a consumer contract is one of adhesion, and the party in the superior bargaining position has given itself a choice of arbitration or litigation, but has reserved a right to compel the weaker party to submit to arbitration.
Indeed, such a rationale was expressed in one of the New York cases decided before Sablosky:
Miner v. Walden, 101 Misc.2d 814, 816-19, 422 N.Y.S.2d 335, 337-40 (Sup.Ct.1979). Of course, the portion of this reasoning that requires mutuality of obligation was overruled by Sablosky, but the remaining portionsstating that arbitration is "consensual in nature," that in a contract of adhesion consent may not be truly present, and that in such a situation the doctrine of unconscionability may applywe find to be persuasive on the question of mutuality of remedy. Those concepts are applicable as general principles of law, not principles specific to and disfavoring arbitration.
As well as expressing a strong policy against specific enforcement of arbitration contracts, the Alabama legislature has also adopted a strong version of the doctrine of mutuality of remedy, also found in the Code article on specific performance:
Ala.Code 1975, § 8-1-43 (emphasis added). The few cases citing this section have applied the judicially adopted limitations on and exceptions to the doctrine of mutuality of remedy. Kennedy v. Herring, 270 Ala. 73, 116 So. 2d 596 (1959); Moss v. Cogle, 267 Ala. 208, 101 So. 2d 314 (1958); Downing v. Williams, 238 Ala. 551, 191 So. 221 (1939).[5] Nevertheless, the Code section still stands in the books and in strong language expresses a policy favoring mutuality of remedy.
Therefore, we hold that, in a case involving a contract of adhesion, if it is not shown that the party in an inferior bargaining position had a meaningful choice of agreeing to arbitration or not, and if the superior party has reserved to itself the choice of arbitration or litigation, a court may deny the superior party's motion to compel arbitration based on the doctrines of mutuality of remedy and unconscionability. We express this principle specifically as to arbitration only because that is the issue presented here. The principle is equally true as to any unconscionable term of a contract of adhesion.[6] Cf. Doctor's Associates, Inc. v. Casarotto, supra. The element of unconscionability in the context of an arbitration clause is supplied by the fact that, by agreeing to arbitrate, a party waives his right to "a remedy *1339 by due process of law," Ala. Const.1901, § 13, and his "right of trial by jury," Ala. Const.1901, § 11, and U.S. Const. Amend. VII. To allow such a waiver in an adhesion contract without a showing that it was voluntarily made might well be unconscionable. Moreover, a court in this state that is asked to enforce an arbitration clause is asked to rule contrary to the prohibition in Section 10 of our Constitution "That no person shall be barred from prosecuting or defending before any tribunal in this state, by himself or counsel, any civil cause to which he is a party," Ala. Const.1901, § 10. To enter such a ruling, a state court is entitled to require a clear showing of preemption of state law under the Supremacy Clause of the United States Constitution and a clear showing that enforcement of the arbitration clause would not be unconscionable.
As shown above, the contract requires Creative Broadcasting and its stockholders to submit any disputes they have with Northcom to arbitration, but allows Northcom in the principal situations in which it might seek reliefa failure by Creative Broadcasting to convey as agreed or a breach by its stockholders of the covenant not to competeto bring an action for equitable relief or damages. However, there is no indication that this contract is a contract of adhesion. On the contrary, both the sellers and the buyers were represented by counsel and at least had the opportunity to negotiate the terms of the contract. Under these circumstances, there is not such a showing of lack of voluntary agreement to support a holding of unconscionability of the arbitration clause based on the lack of mutuality of remedy.
For the reasons stated, the denial of the motion to compel arbitration is reversed, and the cause is remanded.
OPINION OF JANUARY 10, 1997, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION GRANTED; REVERSED AND REMANDED.
SHORES, J., concurs.
HOOPER, C.J., and MADDOX, HOUSTON, and SEE, JJ., concur in the result.
HOOPER, Chief Justice (concurring in the result).
I concur in the result, but I respectfully disagree with some of the rationale of the main opinion. As I noted in my dissent to the original opinion in this case, the elements of a contract are agreement, consideration, two or more contracting parties, a legal object, and capacity. Lawler Mobile Homes, Inc. v. Tarver, 492 So. 2d 297, 303 (Ala.1986). The main opinion now concludes that while the doctrine of mutuality of remedy does not apply to this case, it may apply to a contract of adhesion. However, even in a contract of adhesion, no rule of law requires that the remedies for a breach of contract be the same for both parties. This requirement of mutuality of remedies with respect to adhesion contracts creates an entirely new animal in Alabama contract law. As I have said before, this Court should be wary of creating new species.
The main opinion cites General Securities Corp. v. Welton, 223 Ala. 299, 135 So. 329 (1931), for the proposition that this Court has previously adopted the doctrine of mutuality of remedy. In that case the plaintiff sought specific performance of a sale of corporate stock. The defendant argued that the plaintiff did not have a remedy in equityspecific performancebecause he had an adequate remedy at law. This Court stated:
223 Ala. at 301, 135 So. at 330.
At that time courts of law and courts of equity were separate courts in Alabama. Today law and equity have been combined in Alabama's Unified Judicial System. See Rule 2, Ala. R. Civ. P. The usual remedy at law was and is money damages. Equity allows for a greater variety of remedies. For example, in General Securities, the corporate stock involved was that of a private *1340 corporation. The Court stated that normally the remedy for breach of an agreement to sell stock was money damages. However, the Court added that if the stock has no recognized market value, is not purchasable in the market, or has a value that is not settled but is contingent upon the future workings of the corporation, then the equitable remedy of specific performance may be appropriate. In other words, when the remedy at law is inadequate to make the complaining party truly whole, specific performance may be necessary. Specific performance is an equitable remedy that alleviates the problem of lack of mutuality of remedy; it is not the source of the problem.
The Court in General Securities quoted Pomeroy:
223 Ala. at 306, 135 So. at 335.
Let us compare that application of the doctrine to the case at bar. Under the agreement, Northcom has the option of demanding arbitration or filing a claim in court. Creative Broadcasting is limited to arbitration for a resolution of any dispute Creative Broadcasting has with Northcom. Creative Broadcasting agreed not to compete with Northcom within a certain geographical area and for a certain time. Creative Broadcasting filed a complaint against Northcom, alleging that it had failed to make the monthly installment payments, and Northcom filed a motion to compel arbitration, which the trial court denied. There are several questions we need to ask before this Court says that the doctrine of mutuality of remedy applies.
One, is arbitration a remedy? No. Northcom in this case did not ask the trial court for specific performance of the sale agreement as to the default in payment by Northcom. The final remedy desired by either party is not arbitration. Northcom asked the trial court to enforce a choice-of-forum clause in the sale agreement. Northcom's chosen forum is an arbitration panel. That is why Creative Broadcasting suffers no injustice if there exists a lack of mutuality; the arbitration clause has to do with the choice of forum, not the final remedy.
Two, is the remedy at law inadequate? In this case that question is inapposite. It points out the problem created by the main opinion's attempt to apply the doctrine of mutuality of remedy to arbitration clauses. The question whether the remedy at law is inadequate is the fundamental question a court must answer in deciding whether to apply an equitable remedy. See General Securities, supra; see also Kennedy v. Herring, 270 Ala. 73, 116 So. 2d 596 (1958); Moss v. Cogle, 267 Ala. 208, 101 So. 2d 314 (1958); Downing v. Williams, 238 Ala. 551, 191 So. 221 (1939) (each of these cases cited in the main opinion upheld the enforcement of specific performance). Northcom seeks specific enforcement of a clause of the contract, not because the remedy at law is inadequate, but because the clause grants Northcom a choice. The question whether the remedy at law is inadequate is completely irrelevant. In fact, Northcom claims that it may in the future need relief from a court of law because an arbitrator is unable to enforce injunctive relief, a remedy that Northcom would need in the event Creative Broadcasting violated the noncompetition agreement and began operating a similar business. Northcom points out in its brief that only Creative Broadcasting agreed not to compete and that it was reasonable for Northcom to require specific enforcement of that provision. In contrast, Northcom, as the buyer, agreed only to pay money to purchase the radio station, so there was no need for Creative Broadcasting to seek injunctive relief by going to court.
Enforcing the arbitration agreement would not end the case. The parties would go before an arbitrator, who would determine an *1341 appropriate final remedy. Northcom is not seeking a final remedy in equity by requesting arbitration. An arbitrator does not have the authority to enforce a noncompetition agreement. If Northcom needed a remedy in equity, it would have remained in court, where Creative Broadcasting originally filed its complaint. Therefore, the main opinion's analysis of mutuality of remedy in the context of arbitration mixes apples and oranges. Ironically, it is Northcom that desires arbitration in this case. Northcom is the party that claims it would have an inadequate remedy through arbitration if it could not choose to go to court.
The reasoning of the main opinion actually would turn the doctrine of mutuality of remedy on its head. Instead of ensuring that parties have all the remedies they need to reach a mutually acceptable resolution of their conflict (which appears to be the philosophy underlying the doctrine of mutuality of remedy), the main opinion would cut off an equitable method of ultimately reaching that resolution. The doctrine of mutuality of remedy was meant to expand the possibilities of remedy for the parties; it was not meant to restrict them. In this case, both parties already have the ability to obtain specific enforcement of the arbitration provision. The main opinion says that, in the case of an adhesion contract, the court should take away the parties' right to this equitable remedy. That is what Alabama precedent says mutuality of remedy is all aboutmaking sure that both parties can obtain the equitable remedy, if one of them demands it.
Even if the doctrine were not an anachronism, and even if it could be logically applied to an arbitration provision, the main opinion attempts to apply it much too broadly in this case. In Pierce v. Watson, 252 Ala. 15, 39 So. 2d at 220 (1949), this Court qualified the doctrine:
252 Ala. at 17, 39 So. 2d at 221. The Pierce Court explained the doctrine:
252 Ala. at 18, 39 So. 2d at 221-22, quoting General Securities, supra, 223 Ala. at 305,135 So. at 334.
If this analysis sounds confusing, it is because the doctrine of mutuality of remedy was never meant to apply to the situation that exists in this casewhere a party to an agreement that allows a choice of forum is seeking to enforce the agreement. No one has been treated unjustly. No one has claimed that somehow an arbitrator's decision will leave them without an adequate remedy. Yet, from somewhere in the past, the main opinion calls up this doctrine, which does not apply anymore and which certainly does not apply to arbitration agreements, and uses it to say that perhaps at some time in the future there will be an adhesion contract to which it will apply.
The only explanation I can decipher for the reasoning of the main opinion is an unfounded assumption that arbitration always and inevitably results in an inadequate remedy for a party that does not want to arbitrate. The main opinion states that the doctrine of mutuality of remedy originated in equity. Equity courts originated as the ecclesiastical courts of the Church of England. Hundreds of years ago, there were many forums for the resolution of disputes within the legal tradition of EnglandKing's Court, Court of Common Pleas, Chancery Court, Lord's Court, Merchants' Court, Town Court, Manorial Court, etc. Historically, there have been many ways for people to resolve their disputes with each other. Perhaps arbitration is an example of a new and growing diversity of means for resolving disputes, means that may prove advantageous to society. I hope *1342 this Court does not think that it and the other state-certified tribunals of Alabama are the only means by which the people of this State can resolve their disputes. Such a position would deny the variety of ways in which people have solved their disputes throughout history, including the history behind our own common law system. If it were true that only circuit court judges could resolve disputes, then we would be able to say with Job's "friends": "We are the people, and wisdom shall die with us."
Based on the above, I concur in the result.
MADDOX, Justice (concurring in the result).
In view of the result reached on rehearing, I concur.
The main opinion states: "[W]e hold that, in a case involving a contract of adhesion, if it is not shown that the party in an inferior bargaining position had a meaningful choice of agreeing to arbitration or not, and if the superior party has reserved to itself the choice of arbitration or litigation, a court may deny the superior party's motion to compel arbitration based on the doctrines of mutuality of remedy and unconscionability." 694 So. 2d at 1338.
I must point out, however, that the question the main opinion was addressing when it said thiswhether a so-called contract of adhesion can be enforced so as to compel arbitrationis not presented in this case. In my opinion, the statements in the main opinion on that question are dicta. Because of this, I concur in the result only.
SEE, J., concurs.
[1] This statement is made as a contrast to the point that a claim of fraud in the inducement of the whole contract would be for the arbitrator, as held in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967). The discussion in Matterhorn of the principles of Prima Paint seems to be inconsistent with the more recent case of First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920, 131 L. Ed. 2d 985 (1995). We note also that Judge Posner, in Matterhorn, points out some of the same incongruities between §§ 3 and 4 of the FAA that we addressed in Allied-Bruce Terminix Cos. v. Dobson, 684 So. 2d 102 (Ala.1995).
[2] Northcom, Oakley, and McDonald filed separate motions to compel arbitration. We note this fact for precision, but hereinafter will return to the opinion's collective reference to the defendants as "Northcom" and to the motions as a single motion.
[3] This confusion of terminology is quite understandable, because, as we discuss more fully below, in the context of arbitration clauses, the nonmutual obligation pertains not to performance of the contract, but to the right to seek a nonjudicial remedy.
[4] The temporal order is insignificant; the same problem exists if B`s claim may arise first and there is a potential for a later claim by A as to which B might insist on arbitration.
[5] The Code (Lawyers Co-Op) annotations also show Old Republic Ins. Co. v. Lanier, 644 So. 2d 1258 (Ala.1994), as citing § 8-1-43, but this is a mistake; that opinion cites only § 8-1-41(3).
[6] For example, this Court has held that an agreement whereby an indemnitor agrees to indemnify the indemnitee against the indemnitee's own negligence may be enforced "if the contract clearly indicates an intention to indemnify against the consequences of the indemnitee's negligence, and such provision was clearly understood by the indemnitor, and there is not shown to be evidence of a disproportionate bargaining position in favor of the indemnitee." Industrial Tile, Inc. v. Stewart, 388 So. 2d 171, 175 (Ala.1980) (emphasis added). "[I]f the parties knowingly, evenhandedly, and for valid consideration, intelligently enter into an agreement whereby one party agrees to indemnify the other, including indemnity against the indemnitee's own wrongs, if expressed in clear and unequivocal language, then such agreements will be upheld." Industrial Tile, 388 So. 2d at 176 (emphasis added). | May 9, 1997 |
3cb03891-f4b5-44ba-9502-f664d9f28b83 | Dempsey v. Phelps | 700 So. 2d 1340 | 1951787 | Alabama | Alabama Supreme Court | 700 So. 2d 1340 (1997)
Dr. Thomas R. DEMPSEY
v.
James PHELPS and Cynthia Phelps, as Guardians of a Minor, James Phelps, Jr.
1951787.
Supreme Court of Alabama.
May 2, 1997.
Rehearing Denied August 15, 1997.
*1342 Norman E. Waldrop, Jr., and Ray Morgan Thompson of Armbrecht, Jackson, DeMouy, Crowe, Holmes & Reeves, Mobile, for appellant.
Robert M. Johnston and Anne Derbes Keller of Adams, Johnston & Oreck, New Orleans, LA; Patrick D. McArdle of McArdle & Fahy, New Orleans, LA; and Ellsworth P. Scales III, Mobile, for appellees.
KENNEDY, Justice.
Dr. Thomas R. Dempsey appeals from a judgment based upon a jury verdict in favor of James Phelps and his wife Cynthia Phelps, as the parents of James Phelps, Jr. The Phelpses alleged that Dr. Dempsey had failed to provide proper treatment for their son following surgery to correct a clubfoot condition. Following Dr. Dempsey's treatment, portions of the son's foot had to be amputated. The jury returned a verdict of $270,000, and the trial court entered a judgment on that verdict. This was the second trial of this case. After the first trial, this Court reversed a judgment in Dr. Dempsey's favor, see Phelps v. Dempsey, 656 So. 2d 377 (Ala.1995), because the trial court had erred in failing to admit evidence of certain tests that had been performed on the child's foot. We affirm the judgment entered following the second trial.
A jury's verdict is presumed correct and will not be disturbed unless it is plainly erroneous or manifestly unjust. Crown Life Insurance Co. v. Smith, 657 So. 2d 821 (Ala.1994). In addition, a judgment based upon a jury verdict and sustained by the denial of a postjudgment motion for a new trial will not be reversed unless it is plainly and palpably wrong. National Security Ins. Co. v. Donaldson, 664 So. 2d 871 (Ala.1995). Because the jury returned a verdict for the Phelpses, any disputed questions of fact must be resolved in their favor, and we must presume that the jury drew from the facts any reasonable inferences necessary to support its verdict. State Farm Auto. Ins. Co. v. Morris, 612 So. 2d 440, 443 (Ala.1993). In short, in reviewing a judgment based upon a jury verdict, this Court must review the record in a light most favorable to the appellee. Liberty National Life Ins. Co. v. McAllister, 675 So. 2d 1292 (Ala.1995).
The facts of this case were thoroughly set forth in our opinion on the first appeal of this case. For the reader's convenience, the following facts are recited here as excerpted from that opinion:
656 So. 2d at 377-79.
Initially, Dr. Dempsey argues that the trial court erred in allowing the Phelpses' expert witness, Dr. Frank Catinella, to testify regarding the standard of care allegedly breached in this case. He maintains that Dr. Catinella was not a "similarly situated health care provider" as required for medical liability standard-of-care testimony pursuant to Ala Code 1975, § 6-5-548, and this Court's interpretation of that statute in Medlin v. Crosby, 583 So. 2d 1290 (Ala.1991).
In Medlin, this Court established a framework under § 6-5-548 for determining whether an expert witness is qualified to testify in a medical malpractice case. Pursuant to Medlin, the trial court must answer the following questions before determining whether as to the defendant an expert witness is "similarly situated":
583 So. 2d at 1293.
As to question (1), Dempsey maintains that the standard of care alleged to be breached here is that of an orthopedic surgeon providing care for a child after clubfoot surgery. Dempsey argues that Dr. Catinella, who is a board-certified cardiovascular thoracic surgeon, was not qualified to testify as to this standard of care. However, we agree with the trial court that this case concerned "a vascular matter, not an orthopedic matter"in other words, that the Phelpses' claims regarded Dr. Dempsey's alleged failure to properly treat the child's foot during the post-surgery phase for the circulatory and vascular problems that developed after the surgery and casting of the foot. These problems are not isolated to this type of surgery, and they do not concern the orthopedic surgery performed by Dr. Dempsey; they concern the treatment of the infection after the surgery that resulted in the loss of his foot. The standard of care allegedly breached was that of a health care provider treating a patient for post-surgical vascular problems and infection, which are not specific to orthopedic surgery.
Dr. Dempsey is, without question, a specialist in orthopedic surgery. He is a board-certified orthopedic surgeon, and since 1980 he has been licensed to practice medicine in Alabama. However, he is not a specialist in treating vascular problems resulting from surgery; it was in regard to treating those problems that the alleged breach of the standard of care occurred. "[F]or purposes of determining whether a `health care provider' is a `specialist,' ... the trial court should look to whether the defendant `health care provider' is board certified in the specialty or discipline or school of practice that covers the area of the alleged breach." Medlin, supra, at 1294.
Because Dr. Dempsey was not a "specialist" in the area of the alleged breach, we must determine whether Dr. Catinella, as the Phelpses' expert witness, was a "similarly situated health care provider" under § 6-5-548(b). That section states:
Dr. Catinella is board-certified in the areas of general surgery and cardiovascular and thoracic surgery. Because of this certification, *1345 Dr. Catinella is permitted to practice vascular surgery. After his internship at Northshore University Hospital in Chicago and his residency in New York University Medical Center, Dr. Catinella completed a three-year fellowship in cardiovascular, vascular, and thoracic surgery at Rush-Presbyterian St. Luke Medical Center in Chicago. He has specialized in cardiovascular and thoracic surgery and has published medical studies in numerous journals. Dr. Catinella is consulted by other surgeons regarding the treatment of post-surgical infections relating to a loss of blood flow to the body area affected by the surgery.
Dr. Catinella was at least as qualified as Dr. Dempsey in the field of the alleged breach in this case, and we conclude that he is a "similarly situated health care provider" as that term is defined in § 6-5-548(b). In holding that Dr. Catinella could testify as to the standard of care in this case, the trial court correctly relied upon this Court's holding in Olsen v. Rich, 657 So. 2d 875 (Ala. 1995). Like the witness in Olsen, Dr. Dempsey, although he was a specialist in his own surgical practice, was not a specialist in the area of the alleged breach___the treatment of vascular injury. Therefore, the trial court did not err in allowing Dr. Catinella to testify regarding Dr. Dempsey's alleged breach of the standard of care. As this Court noted in Rodgers v. Adams, 657 So. 2d 838 (Ala.1995), the experience and training of an expert witness and that of a defendant medical provider are not required to be exactly the same:
657 So. 2d at 842.
Dr. Dempsey next maintains that the trial court erred in excluding evidence of the child's Social Security records, as well as photographs from medical articles authored by his expert witness Dr. David Hootnick. The Social Security records indicated that, shortly after the child was born, the Phelpses applied for him to be classified by the Social Security Administration as 100% disabled. The Social Security Administration evaluated the child's spina bifida condition and determined that he was 100% disabled. Dr. Dempsey maintains that the Social Security records would have helped him to cross-examine the Phelpses regarding their statements that the child was not "abnormal" before he lost a portion of his foot.
The photographs in question showed tissue injury suffered by other patients following surgery similar to that undergone by the Phelpses' child. The photographs, which were portions of Dr. Hootnick's articles, were not admitted into evidence, although the text of the articles was read into evidence by Dr. Hootnick. Dr. Hootnick meticulously testified regarding several cases of postsurgery tissue loss that were described in the articles.
Before trial, the court granted the Phelpses' motion in limine regarding the Social Security evidence. The Phelpses maintained that the evidence would prejudice the jury. Their motion stated:
The trial court excluded the photographs during the trial, stating in part that the prejudice the photographs would cause outweighed their probative value.
Whether to exclude evidence because of its potential to prejudice the jury is within the sound discretion of the trial court. See C. Gamble, McElroy's Alabama Evidence § 21.01(6) (5th ed.1996). A trial court may exclude evidence, even if it is relevant, if it would serve little or no purpose other than to arouse prejudice in the jury. Ayres v. Lakeshore Community Hospital, 689 So. 2d 39 (Ala.1997), citing C. Gamble, McElroy's *1346 Alabama Evidence § 21.01(4) (5th ed.1996). As the Phelpses note, there was no evidence regarding the factors used by the Social Security Administration in determining the child's disability. Assuming, without deciding, that the Social Security records regarding the child's spina bifida were relevant evidence, we conclude that the trial court did not abuse its discretion in prohibiting this evidence, which clearly held a strong potential for prejudice under the circumstances of this action.
We also find no abuse of discretion in the trial court's exclusion of the photographs from the jury. Dr. Hootnick was allowed to testify thoroughly concerning the cases dealt with in his articles, and he compared those cases to the surgery and postoperative vascular problems of the Phelpses' child. In these circumstances, the photographs could conceivably have been excluded as cumulative evidence. See C. Gamble, McElroy's Alabama Evidence § 10.07 (5th ed.1996). However, in light of the graphic nature of the photographs and the fact that the cases pictured in the photographs had already been described in detail by Dr. Hootnick, the trial court certainly did not abuse its wide discretion in finding the photographs to be more prejudicial than probative. See C. Gamble, McElroy's Alabama Evidence § 21.01(6) (5th ed.1996). Contrary to Dr. Dempsey's contention that the photographs of the Phelpses' child also should have been excluded, those photographs "depicted the location and severity" of the injury this child sustained; the trial court did not abuse its discretion in admitting them. Olympia Spa v. Johnson, 547 So. 2d 80, 83 (Ala.1989) ("The trial judge is vested with discretion not only in his determination as to the preliminary proofs offered to identify the photograph or to prove that the photograph is an accurate representation ..., but also in his determination of whether the picture will aid the jury or tend to confuse or prejudice it.").
Dr. Dempsey next argues that the trial court erred in submitting the issue of wantonness and punitive damages to the jury. As noted above, the jury awarded a total of $270,000 in damages to the Phelpses. The jury classified the award as $125,000 for punitive damages; $20,000 for past compensatory damages; and $125,000 for future compensatory damages. Dr. Dempsey maintains that the Phelpses submitted "only evidence... that there was a difference of opinion about the care [the child] should have received after his clubfoot surgery was performed," and that there was no evidence to demonstrate the wantonness required for an award of punitive damages. He also contends that if the award is not set aside, then the punitive damages award should be remitted.
Wantonness occurs where a person intends to injure another; it also occurs where one acts, or fails to act, with a knowledge and consciousness that his action or failure to act will likely result in injury to another. Wright v. Terry, 646 So. 2d 11 (Ala. 1994); Lynn Strickland Sales & Service, Inc. v. Aero-Lane Fabricators, Inc., 510 So. 2d 142 (Ala.1987); Sington v. Birmingham Ry., Light & Power Co., 200 Ala. 282, 76 So. 48 (1917). The Phelpses presented evidence from which a jury could have found that Dr. Dempsey failed to properly examine the child in regard to the infection after the surgery. Dr. Dempsey told Mrs. Phelps to bring the child back to his office in one month following the surgery, even though he knew that children with spina bifida are at risk for postoperative wound healing infection. Mrs. Phelps testified as to Dr. Dempsey's treatment after he cut back a small part of the top of the child's cast to inspect his foot on July 6, 1987:
After the child had visited his pediatrician, Mr. Phelps took the child back to Dr. Dempsey, on July 11. At Mr. Phelps's insistence, Dr. Dempsey removed the front of the cast and cleaned the foot and wrapped it, but he did not prescribe antibiotics until the next day. At that time the foot was, according to Mrs. Phelps, "swollen" and "the smell was horrible, undescribable" and "it was black on his foot and it was purple and dark red and it had all kinds of pus and drainage." Mrs. Phelps stated that Dr. Dempsey told her and her husband that he "didn't think it was necessary" to remove the cast. The Phelpses produced expert testimony indicating that the child should have been hospitalized on July 12 for evaluation of his vascular infection.
The evidence set out above merely a sample of the graphic testimony found in the recordcombined with the rest of the Phelpses' evidence, including the testimony of the Phelpses' experts, was such that the jury could have properly inferred that Dr. Dempsey acted wantonly in treating the child's infection. Therefore, the jury could properly award the Phelpses punitive damages. Moreover, the trial court did not err in refusing to remit the $125,000 punitive damages award. The trial court has much discretion in determining whether to grant a new trial and, in that regard, whether to require a remittitur; that discretion was not abused here. See Fields v. Parker, 361 So. 2d 356 (Ala.1978); Crown Life Insurance Co. v. Smith, 657 So. 2d 821 (Ala.1994).
Dr. Dempsey next contends that the trial court erred in submitting to the jury a charge regarding future damages, as well as a charge stating that the child's preexisting condition did not excuse negligence or wantonness on Dr. Dempsey's part. However, *1348 the Phelpses submitted expert testimony indicating that the child could later need an artificial foot or lower leg because there is now "nothing on the inner side" of his foot, and that, therefore, his entire foot might have to be amputated. The trial court did not err in charging the jury regarding future damages. In addition, the charge concerning the child's preexisting condition was a correct statement of the lawa defendant is responsible for the probable consequences of his actions, regardless of the preexisting condition of the plaintiff. See Britton v. Doehring, 286 Ala. 498, 506, 242 So. 2d 666, 673 (1970) ("`once the element of injury proximately caused by the [defendant] is introduced, it is traditional that the defendant take the plaintiff as he finds him'") (quoting Lipscomb v. Diamiani, 226 A.2d 914 (Del.Super.1967)). See also Prescott v. Martin, 331 So. 2d 240 (Ala.1976) (holding no error where trial court informed a jury that it could base an award on all damage proximately resulting from the defendant's actions, even if the plaintiff's injuries were more serious because of her preexisting condition).
Dr. Dempsey next argues that the trial court erred in striking Juror A from the jury during the trial. A was a teacher at a school affiliated with Dr. Dempsey's church, and Dr. Dempsey's daughter attends that school. During a break in the trial, Mrs. Phelps overheard a conversation in a restroom in which another juror said to A, "I am surprised that they left you on the jury." The Phelpses moved to strike A, and the trial court held a private interview with A. The trial court stated that A felt that she did not want to serve any further on the jury and that she could not give either side a fair and impartial trial. A was then questioned by the attorneys for both the Phelpses and Dr. Dempsey. A stated that some friends of Dr. Dempsey were present during the trial and that those friends were the parents of A's daughter's best friend. She stated that "she would rather not sit on this trial," but stated that she "thought" she could make a fair decision. Although during the voir dire examination the Phelpses knew of A's employment at the church school, they were unaware of Dr. Dempsey's connections with the church until he testified at trial.
The trial court has broad discretion in sustaining or denying a challenge for cause, and its ruling in that regard will not be reversed unless it was plainly erroneous. Boykin v. Keebler, 648 So. 2d 550 (Ala.1994); Roberts v. Hutchins, 613 So. 2d 348 (Ala. 1993). The trial court took proper steps in questioning A about her involvement with Dr. Dempsey's church and then allowing the attorneys for both sides to question her. We must conclude that the trial court did not abuse its discretion in granting the Phelpses' motion to strike A from the jury because of A's connections with the church school, particularly when we consider those connections along with her acquaintance with Dr. Dempsey's friends and her equivocal statements about whether she could fairly decide the case.
Dr. Dempsey next argues that the trial court abused its discretion in granting the Phelpses' motion in limine in regard to several experts Dr. Dempsey planned to call as witnesses, and in denying his motion for a continuance after the trial court granted that motion in limine.
The motion was made in response to Dr. Dempsey's supplemental response to the Phelpses' interrogatories; that response listed several new witnesses to be called and expanded the testimony of other witnesses that had been previously listed. Dr. Dempsey's attorneys stated that they had had problems obtaining medical records from the Phelpses' attorneys and had only recently received certain arteriogram films of the child. After the trial court had conducted an extensive hearing on the morning the trial began, it granted the motion in limine and denied the motion for a continuance. The trial court stated:
Our review of the record indicates that the trial court did not abuse its discretion in granting the Phelpses' motion in limine concerning these experts and in denying Dr. Dempsey's motion for a continuance.
For the foregoing reasons, the judgment of the trial court is affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX and SHORES, JJ., concur.
BUTTS, J., concurs in the result. | May 2, 1997 |
adb522dc-1b78-4d8f-9d0d-3d55a551a34c | Ala.-Tenn. Natural Gas v. So. Nat. Gas | 694 So. 2d 1344 | 1960250 | Alabama | Alabama Supreme Court | 694 So. 2d 1344 (1997)
ALABAMA-TENNESSEE NATURAL GAS COMPANY
v.
SOUTHERN NATURAL GAS COMPANY and City of Huntsville.
1960250.
Supreme Court of Alabama.
May 23, 1997.
*1345 Henry I. Frohsin and Susan S. Wagner of Berkowitz, Lefkovits, Isom & Kushner, P.C., Birmingham; and Euel A. Screws, Jr., and J. Fairley McDonald III of Copeland, Franco, Screws & Gill, P.A., Montgomery, for Appellant.
George G. Lynn and Carl S. Burkhalter of Maynard, Cooper & Gale, P.C., Birmingham, for Southern Natural Gas Company.
E. Cutter Hughes, Jr., and Carolyn Reed Douglas of Bradley, Arant, Rose & White, Huntsville, for City of Huntsville.
SHORES, Justice.
The Alabama-Tennessee Natural Gas Company ("ATNG") sued the City of Huntsville and the Southern Natural Gas Company ("SNGC"), seeking a judgment declaring void a contract for natural gas transportation entered into between Huntsville and SNGC, or seeking to enjoin performance of that contract. ATNG based its complaint on the contention that the contract was subject to Alabama's competitive bid law, § 41-16-50 et seq., which had not been complied with. The trial court entered a summary judgment for the defendants; ATNG appealed. We affirm.
ATNG had transported or sold natural gas, without competition, to the cities of Huntsville and Decatur for over 40 years. It lost its business to a competitor, SNGC, when the Huntsville City Council accepted SNGC's proposal to provide natural gas transportation service upon the expiration of Huntsville's contract with ATNG.[1] ATNG's complaint raised the following issues, which ATNG again raises on appeal:
A third issue raised by the complaint is not raised on appeal.
In May 1996, the City of Huntsville and SNGC filed motions for summary judgment. ATNG filed a cross motion for summary judgment. The trial judge heard oral argument and considered the pleadings; the documents filed in support of, and those filed in opposition to, the pleadings; and the briefs of the parties. The judge concluded that the contract between Huntsville and SNGC is exempt from the competitive bid law under the provisions of § 41-16-51(a), and it so held in its summary judgment.
The trial judge held correctly that the contract for gas transportation services was not required to be competitively bid, because service contracts of that nature fall within the exemption for contracts of regulated utilities provided for by the Alabama Legislature in § 41-16-51(a), a portion of the competitive bid law. Courts in other states have interpreted statutes similar to § 41-16-51(a) to exempt regulated utilities from competitive bid laws. See: County of Riverside v. Whitlock, 22 Cal. App. 3d 863, 99 Cal. Rptr. 710, 719 (1972); Maffit v. City of Decatur, 322 Ill. 82, 152 N.E. 602 (1926); Telcom Systems, Inc. v. Lauderdale County Board of Supervisors, 405 So. 2d 119 (Miss.1981).
*1346 ATNG contends that the Huntsville-SNGC contract does not fall within the § 41-16-51(a) exemption, because, it argues, under the "plain meaning rule" of statutory construction the statutory requirement "fixed by law, regulation, or ordinance" is not met. ATNG points out that in 1985 the Federal Energy Regulatory Commission ("FERC") adopted Order No. 436[2] and it argues that as a result of this order the FERC now approves a range of rates, rather than a single tariff rate. ATNG argues that now, under the FERC, rates are "regulated, but not fixed" and thus cannot be held to be "fixed by ... regulation," within the meaning of § 41-16-51(a). We reject this argument, because SNGC is a utility whose rates are regulated by the FERC under the authority of the Natural Gas Act, 15 U.S.C. § 717 et seq. The construction and operation of a second natural gas pipeline to Huntsville and the rates charged by the pipeline operator are strictly governed by FERC regulations. See 18 C.F.R. § 284.7(d)(5)(ii).
We agree with the trial judge that the SNGC-Huntsville contract does not violate § 41-16-57(e), which prohibits the letting of certain competitively bid contracts for periods greater than three years. We reject ATNG's argument that the three-year limit in § 41-16-57(e) applies whether or not the contract is competitively bid; that three-year limit applies only to contracts that are competitively bid. This is the only construction consistent with custom and practice. ATNG itself entered into a contract of 20 years or longer with Huntsville to support its initial construction of a pipeline system in 1949. Apparently, no municipality or gas district in Alabama has ever put its natural gas service contracts out for bidding under the competitive bid law.
As a practical matter, a three-year limit on natural gas pipeline contracts would not be sound public policy, because no company would be willing to invest the capital required to lay a pipeline (in this case $53 million) without a long-term contractual commitment. The United States Supreme Court has recognized this fact, stating: "In the natural gas industry pipelines are very expensive; and to be justified they need long-term contracts for sale of the gas that will travel them." United States v. El Paso Natural Gas Co., 376 U.S. 651, 660, 84 S. Ct. 1044, 1049, 12 L. Ed. 2d 12 (1964).
Finally, we note that the state attorney general issued an opinion stating that this contract for natural gas transportation services is exempt from the competitive bid law.[3] The attorney general's opinion stated:
While an opinion of the attorney general is not binding, it can constitute persuasive authority. Poe v. Grove Hill Memorial Hospital Bd., 441 So. 2d 861, 863 (Ala.1983).
For the reasons stated above, the judgment of the trial court is due to be affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, and KENNEDY, JJ., concur.
BUTTS, J., recuses.[*]
[1] An analysis done by the Huntsville Utilities Gas System indicated that the building of an additional pipeline from Tuscaloosa to Huntsville, by which SNGC would transport the gas to Huntsville, would lead to a savings for the System of $7.6 million through the year 2005 and a savings of $31.6 million through the year 2017.
[2] 50 Fed.Reg. 42,408 (1985).
[3] Opinion dated December 13, 1995, from Attorney General Jeff Sessions.
[*] Attorney/firm in this case is also involved in sale/merger transaction with company in which spouse is director/stockholder. | May 23, 1997 |
2629e165-2d0c-40f7-9753-171ea9c99b06 | Ex Parte State Ex Rel. Lamon | 702 So. 2d 449 | 1951838 | Alabama | Alabama Supreme Court | 702 So. 2d 449 (1997)
Ex parte STATE of Alabama ex rel. Felicia LAMON.
(In re STATE of Alabama ex rel. Felicia LAMON
v.
Daniel HAMM).
1951838.
Supreme Court of Alabama.
May 16, 1997.
J. Coleman Campbell and Lois Brasfield, asst. attys. gen., Department of Human Resources, for petitioner.
Stanley E. Munsey of Munsey & Ford, P.C., Tuscumbia, for respondent.
HOUSTON, Justice.
The opinion of February 14, 1997, is withdrawn and the following opinion is substituted therefor.
The State argues that the trial court lacked jurisdiction to enter its final order reinstating a prior order in which it purported to forgive Daniel E. Hamm ("the husband") all of the child support arrearage that had accrued. However, because of our resolution of the case as set forth below, we pretermit any discussion on the issue of jurisdiction.
*450 Suffice it to say, without an in-depth discussion of the facts or the procedural history of this case, a recitation of which would serve no benefit to the bench and bar, the dispositive issue in this case is whether the trial court erred by forgiving the child support arrearage at issue.
Hamm and Felicia C. Lamon ("the wife") were divorced on June 14, 1983. They had one minor child, who at the time of the divorce was one and one-half years old. Pursuant to an agreement incorporated in the divorce judgment, the wife was to have permanent custody of the minor child, with the husband having reasonable visitation rights, and the husband was to pay $30 a week for the support and maintenance of the child.
Although the trial court recognized that an arrearage for child support, pursuant to the divorce judgment, had accrued from September 21, 1987 (the date of the trial court's order in a criminal nonsupport case in which the husband was ordered to pay $100 per month to fulfill his child support obligation), through April 6, 1994 (the date of the filing of this petition for modification of child support and for a finding of contempt for nonpayment), and had not been paid, it nonetheless entered a judgment for the husband on January 23, 1995, purporting to forgive the husband all the support arrearage that had accrued for that period. The trial court based that decision on its finding that the husband had thought that if he complied with the trial court's order for the lesser amount entered in the criminal nonsupport case, he would have fully complied with all of the trial court's orders.
The trial court concluded that on April 6, 1994 (the date of the filing of the petition), the husband had been put on notice of his continuing obligation for child support under the divorce judgment. It therefore entered a judgment for the wife for the amount accruing from the filing of the petition on April 6, 1994, to the entry of the January 23, 1995, order, and ordered the husband to continue to pay $30 per week as child support in order to fully comply with the divorce judgment entered on June 14, 1983.
The Court of Civil Appeals affirmed by an unpublished memorandum, State ex rel. Lamon v. Hamm, 683 So. 2d 49 (Ala.Civ.App. 1996) (table), citing, among other cases, Brown v. Brown, 513 So. 2d 617 (Ala.Civ.App. 1987), and English v. English, 352 So. 2d 454 (Ala.Civ.App.1977), both of which held that in an ore tenus case where a transcript of the testimony is not before the appellate court the evidence is conclusively presumed to support the findings of the court. Although the holdings in those cases were accurate applications of the law, those cases do not control this case.
In this case, the record on appeal contains no transcript of the testimony and no Rule 10(d), Ala.R.App.P., statement, and the findings contained in the trial court's order from which this appeal is taken are not in dispute. Therefore, this Court must presume that those findings are correct. However, the State does not dispute the findings of fact contained in the trial court's order based on the ore tenus hearing in this case; it maintains that the trial court misapplied the law to the facts. See, Griggs v. Driftwood Landing, Inc., 620 So. 2d 582 (Ala.1993).
The trial court set out extensive findings of fact, which show that the husband believed that he was in full compliance with his child support orders, even though he was not in full compliance and had not been since 1987. In the judgment, the trial court awarded the wife only the amount of support that the husband had failed to pay after the filing of this action placed him on constructive notice that he was not in compliance; and it ordered him to continue paying the amount set in the original divorce judgment entered in 1983. These findings, which are conclusively presumed to be correct, show that the trial court purported to forgive the arrearage that had continued to accrue under the 1983 divorce judgment while the husband was paying a lesser amount pursuant to a 1987 order in a criminal nonsupport action, but held him responsible for all arrearage that had accrued after the present action was initiated on April 6, 1994.
It is well settled that child support payments become final judgments on the day they are due and may be collected as any other judgment is collected; and that payments *451 that mature or become due before the filing of a petition to modify are not modifiable. See State ex rel. Howard v. Howard, 671 So. 2d 83 (Ala.Civ.App.1995); Cunningham v. Cunningham, 641 So. 2d 807 (Ala.Civ. App.1994); Glenn v. Glenn, 626 So. 2d 638 (Ala.Civ.App.1993); Frasemer v. Frasemer, 578 So. 2d 1346 (Ala.Civ.App.1991); Barnes v. State ex rel. State of Virginia, 558 So. 2d 948 (Ala.Civ.App.1990); Endress v. Jones, 534 So. 2d 307 (Ala.Civ.App.1988). Furthermore, it is well settled that a trial court has no power to forgive an accrued arrearage. See, State ex rel. McDaniel v. Miller, 659 So. 2d 640 (Ala.Civ.App.1995); Hardy v. Hardy, 600 So. 2d 1013 (Ala.Civ.App.1992), cert. denied, Ex parte Hardy, 600 So. 2d 1016 (Ala.1992). Although the trial court has the discretion to give the obligated parent credit for money and gifts given to the child or for amounts expended while the child lived with the obligated parent or a third party, it may not discharge child support payments once they have matured and come due under the divorce judgment. See, Frasemer v. Frasemer, supra. The fact that the wife took no action in the years between 1987 and 1994 does not alter these firmly established rules, because the doctrine of laches generally has no application in regard to past due child support payments under a valid divorce judgment. See, Davis v. State ex rel. Sledge, 550 So. 2d 1034, 1035 (Ala.Civ.App.1989) (in which the Court of Civil Appeals held that the doctrine of laches would apply when the delay would make it difficult or impossible to do justice but noted that that principle "has no basis for application when dealing with pastdue child support payments from a valid divorce decree"); Rudder v. Rudder, 462 So. 2d 732 (Ala.Civ.App.1984). A criminal nonsupport action does not bar a party from subsequently seeking arrears that accrued before the filing of the criminal action. See, Endress v. Jones, supra. In addition, an order entered in a nonsupport proceeding that takes place outside the divorce action does not modify the prior divorce judgment as to child support. See, Sharp v. Sharp, 578 So. 2d 1320 (Ala.Civ.App.1990).
The trial court's findings show that at all times the husband was subject to a valid order that required him to pay child support and that an arrearage accrued from 1987 forward. Its order indicates that it refused to order payment of the arrearage accruing before April 6, 1994, because it found the husband's confusion over the order to be innocent; it is clear that it did not find that no arrearage existed. Clearly, the court misapplied the law to the facts. The judgment is reversed and the cause is remanded with instructions for the trial court to determine the amount of arrearage plus interest due under the divorce judgment.
APPLICATION GRANTED; OPINION OF FEBRUARY 14, 1997, WITHDRAWN; OPINION SUBSTITUTED; REVERSED AND REMANDED.
HOOPER, C.J., and ALMON, SHORES, KENNEDY, COOK, and SEE, JJ., concur. | May 16, 1997 |
9640ebfe-340c-45bc-b75d-83deadb7f849 | Barber v. State | 703 So. 2d 314 | 1952062, 1952094 | Alabama | Alabama Supreme Court | 703 So. 2d 314 (1997)
Norman BARBER, et al.
v.
STATE of Alabama, et al.
Ben JERNIGAN
v.
STATE of Alabama, et al.
1952062, 1952094.
Supreme Court of Alabama.
June 27, 1997.
Rehearing Denied August 22, 1997.
*316 John W. Parker and Herndon Inge III, Mobile, for appellants.
Jerry L. Weidler and R. Mitchell Alton III, Counsel, State of Alabama Highway Department, for State.
Carroll H. Sullivan and Jannea S. Rogers of Clark, Scott & Sullivan, P.C., Mobile, for P & H Construction Company.
Tabor R. Novak, Jr. and E. Hamilton Wilson, Jr. of Ball, Ball, Matthews & Novak, P.A., Montgomery, for appellees.
HOUSTON, Justice.
The plaintiffs, Norman Barber, Brenda Barber, Wharfhouse Restaurant and Oyster Bar, Inc., and Ben Jernigan, appeal from a summary judgment for the defendants, the Alabama Department of Transportation ("the State") and McInnis Corporation ("McInnis"), in two consolidated actions for damages brought pursuant to Article I, § 23, and Article III, § 235, of the Alabama Constitution for a taking of, injury to, or destruction of private property for public use and for damages for tortious conduct. (One action was filed by Norman Barber, Brenda Barber, and Wharfhouse Restaurant and Oyster Bar, Inc.; the other action was filed by Ben Jernigan.) We affirm in part, reverse in part, and remand.
On a motion for a summary judgment, the burden is initially on the movant to make a prima facie showing that there is no genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. In order to defeat a movant's properly supported summary judgment motion, the nonmovant must present sufficient evidence to create a factual issue for resolution by the factfinder. On review of a summary judgment, this Court reviews the record in a light most favorable to the nonmovant and resolves all reasonable doubts against the movant. Blackburn v. State Farm Auto. Ins. Co., 652 So. 2d 1140 (Ala.1994).
On February 27, 1987, Brenda Barber purchased the Wharfhouse Restaurant and Oyster Bar ("the restaurant") and the land on which it is located. This waterfront restaurant, located in Mobile County, is primarily a wooden structure, supported by piles driven deep into the sandy soil. Brenda Barber's husband, Norman Barber, contributed funds toward the purchase of the property, and he joined his wife as a plaintiff; however, the record indicates that Brenda Barber was the sole purchaser.
On August 4, 1987, Brenda Barber transferred her ownership interest in the property to Wharfhouse Restaurant and Oyster Bar, Inc. ("the corporation"), which had been formed to assume the liabilities and operation of the restaurant. In March 1992, after Brenda Barber had learned that the State was planning to build a bridge on property adjacent to the restaurant property, the corporation leased the property to Ben Jernigan. Jernigan, who was also given an option to purchase the property, was aware when he entered into the lease that the construction of a bridge nearby was a possibility, although he believed, based on erroneous information he had received from a representative of the State, that construction would not begin soon. In fact, plans for construction were underway. The State ultimately contracted *317 with McInnis to build the bridge. McInnis contracted with P & H Construction Company, Inc. ("the subcontractor"), to perform the initial pile-driving operations to form the footings for the placement of the bridge structure. The State required that the piledriving operations conform to the project's plans and specifications. Construction of the bridge, including the installation of test piles, got underway in late 1992. The pile-driving operations subjected the restaurant to extensive vibration. Other construction activities also significantly hindered Jernigan's ability to operate the restaurant. By September 1994, Jernigan was forced to close the restaurant, and it has been vacant since.
The construction of the bridge, according to the plaintiffs, caused physical damage to the restaurant, the destruction of the restaurant as a viable business, and the diminution of the value of the property as a whole. The plaintiffs' claims against the State were based in part on allegations that the State had to compensate them under § 23 and § 235 of the Alabama Constitution for the "taking" of their respective property interests, and in part on allegations that the State was liable in damages for negligence or wantonness in connection with the construction of the bridge and on allegations that the State was liable for willful injury to their property interests.[1] The plaintiffs' claims against McInnis were based on allegations of negligent, wanton, or willful injury to the property. The plaintiffs requested a jury trial on each of their claims. The dispositive issue is whether there are any factual questions that must be resolved by a jury.
Initially, we note that the summary judgment for the State was proper as to the claims of Brenda and Norman Barber. An inverse condemnation action must be brought by the owner of the property affected or by someone with a property interest; in this case, that would have been the corporation (Wharfhouse Restaurant and Oyster Bar, Inc.) or Ben Jernigan. See State v. Woodham, 288 Ala. 608, 614, 264 So. 2d 166, 171 (1972) ("The basic constitutional principle is that there must be an actual taking of property or property rights before compensation is required."); see, also, Ala.Code 1975, § 18-1A-3(6), part of the Alabama Eminent Domain Code (defining "condemnee" as "[a] person who has or claims an interest in property that is the subject of a prospective or pending condemnation action"). We also note that § 235 of the Alabama Constitution requires municipalities and other corporations "invested with the privilege of taking property for public use" to make "just compensation" for "property taken, injured, or destroyed by the construction or enlargement of its works, highways, or improvements," where there is evidence of some direct physical damage to the property. Jefferson County v. Southern Natural Gas Co., 621 So. 2d 1282 (Ala.1993). Section 235 does not apply to the State. Finnell v. Pitts, 222 Ala. 290, 132 So. 2 (1930). The summary judgment with respect to the plaintiffs' § 235 claims was, therefore, proper, and, in fact, the plaintiffs concede this in their briefs. Finally, it is well established that tort claims against the State, such as those made here (based on allegations of negligence, wantonness, and willfulness), are barred by the sovereign immunity granted under Article I, § 14, of the Alabama Constitution. See Hutchinson v. Board of Trustees of University of Alabama, 288 Ala. 20, 23, 256 So. 2d 281, 283 (1971) (noting that "[t]his Court, construing Section 14, has held almost every conceivable type of suit to be within the constitutional prohibition"). For exceptions to the sovereign immunity doctrine, including the exception made for inverse condemnation actions against the State, see Williams v. Hank's Ambulance Service, Inc., 699 So. 2d 1230 (Ala.1997).
The principal argument of the plaintiffs (the corporation and Jernigan) is that they have valid claims against the State under § 23 of the Alabama Constitution. Section 23 provides in pertinent part that *318 "private property shall not be taken for, or applied to public use, unless just compensation be first made therefor." In Foreman v. State, 676 So. 2d 303 (Ala.1995), this Court rejected the State's argument that there can be no "taking" within the meaning of § 23 unless the State actually occupies or engages in construction activities on the affected property. This Court, quoting Jefferson County v. Southern Natural Gas, supra, at 1287, stated: "[I]n inverse condemnation actions, a governmental authority need only occupy or injure the property in question." 676 So. 2d at 305. (Emphasis in Foreman.) The State contends that there is insufficient evidence in the record from which a jury could reasonably find that the construction of the bridge caused compensable damage to the plaintiffs' property interests. After reviewing the record, we must disagree.
Ben Jernigan testified by deposition as follows:
Joe Lamar, a retired employee of the Mobile District of the Corps of Engineers, who had experience in determining the effect of vibrations on soil, testified by deposition:
Although he expressed no opinion as to whether the pile-driving operations had actually damaged the restaurant, Bill Phillips, an architect, stated in his deposition that it was his opinion that the damage to the restaurant could have been caused by the kind of piledriving operations that were conducted by the State:
The record also contains two reports and an internal memorandum prepared by Clark, Geer, Latham, & Associates, Inc., an engineering firm that Jernigan hired to conduct a structural investigation of the restaurant. These documents indicate that the restaurant began to show signs of structural stress (cracks, leaks) after the construction on the bridge was commenced. One report, dated August 16, 1993, states: "Based on our new survey, the restaurant has experienced differential movements varying from 1/2" to 3/4" which appears to have primarily occurred in the south portion of the structure."
Based on the above, we conclude that sufficient evidence was presented to create factual questions for a jury as to whether the restaurant was physically damaged as a result of the construction of the bridge, and, if so, to what extent, and as to whether the bridge construction caused the restaurant to go out of business. Compensation in a condemnation proceeding, where, as here, only a part of the property is "taken" (damaged) for a public purpose, is computed by taking the difference between the fair market value of the entire parcel immediately before the "taking" (damage) and the value of the part remaining after the "taking" (damage). State v. Woodham, supra. It is the generally accepted rule that insofar as a building adds to the fair market value of the land, it must be considered in determining the amount of compensation owed. State v. Woodham. This Court has held that unless otherwise provided by statute, the loss of a business, as such, is not compensable in condemnation proceedings[3]; however, the existence of a business is a factor to be considered in determining the highest and best use of the land upon which it is conducted. State v. Woodham, 288 Ala. at 610-11, 264 So. 2d at 168; Harco Drug, Inc. v. Notsla, Inc., 382 So. 2d 1 (Ala.1980) (noting that although loss of a business is not compensable, income derived from a business on the condemned property is nonetheless a factor that may be considered in arriving at the fair market value of the land). In State v. Atkins, 439 So. 2d 128, 131 (Ala.1983), this Court noted that "[i]n determining the fair market value of a parcel taken by eminent domain, consideration should be given to any factors which a reasonably prudent buyer would consider before purchasing the property."
Based on the above, we conclude that the summary judgment was improper with respect to the plaintiffs' inverse condemnation claims against the State under § 23 of the Alabama Constitution. Sufficient evidence was presented to allow a jury to determine whether the construction of the bridge damaged the restaurant and otherwise diminished the fair market value of the property and, if so, to determine the amount of "just compensation" due for that damage. The compensation, if any, awarded by the jury should be allocated between the owner *323 (the corporation) and the lessee (Jernigan) in accordance with the "undivided fee rule," which was discussed in Harco Drug, Inc. v. Notsla, Inc., supra, 382 So.2d at 5:
The plaintiffs' claims against McInnis were based on allegations that McInnis had acted negligently or wantonly in certain aspects of its construction activities, that those activities had proximately caused damage to the property, and that McInnis had willfully damaged the property. After carefully reviewing the record, we conclude that because Brenda Barber and Norman Barber owned no interest in the property, the summary judgment was proper with respect to their tort claims against McInnis. We also conclude that there was insufficient evidence to submit the corporation and Jernigan's willfulness claims to a jury and, therefore, that the summary judgment was proper as to those claims. We further conclude that there was insufficient evidence to submit the negligence and wantonness claims to a jury, to the extent that those claims were based on damage that may have been done to the property by the pile-driving operations performed by the subcontractor. The undisputed evidence indicates that the pile-driving conformed to generally accepted pile-driving practices. Even the plaintiffs' soil expert, Joe Lamar, agreed that the pile-driving was not negligently performed:
Accordingly, the summary judgment was also proper with respect to the claims based on allegations of negligence or wantonness in connection with the pile-driving.
However, we cannot say that there was insufficient evidence of negligence or wantonness on McInnis's part with respect to other construction activities. As noted above, Jernigan testified in his affidavit *324 that McInnis had periodically cut off utility service to his restaurant (i.e., electric, water, and telephone service); that water and mud had been diverted from the construction site onto the restaurant's parking area; that McInnis's employees had repeatedly parked their vehicles in the restaurant parking area, using valuable customer parking space; that McInnis had deposited construction materials, garbage, and other debris onto the restaurant property; that McInnis had repeatedly blocked access to the restaurant during the restaurant's business hours; and that McInnis had dug up the only driveway providing access to the restaurant and had diverted customer traffic onto a newly built service road that provided only limited access from the main road, Dauphin Island Parkway. We consider this evidence sufficient to present a jury question as to whether McInnis acted with reasonable care in its construction of the bridge and, if not, whether the failure to do so proximately caused damage to the plaintiffs. Furthermore, we view Jernigan's testimony that he had repeatedly called McInnis's attention to many of these problems to be sufficient to allow a jury to consider the plaintiffs' wantonness claims.
For the foregoing reasons, the summary judgment for the State and McInnis is affirmed in part and reversed in part and the cause is remanded.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
HOOPER, C.J., and KENNEDY, COOK, and SEE, JJ., concur.
[1] We note that the plaintiffs did not sue the subcontractor. McInnis filed a third-party complaint against the subcontractor, seeking indemnification in the event it was held liable to the plaintiffs for damage caused by the pile-driving operations. The trial court also entered a summary judgment for the subcontractor.
[2] As previously noted, other evidence indicates that installation of test piles began in late 1992.
[3] Section 18-1A-32(b), provides:
"The judgment and any settlement in an inverse condemnation action awarding or allowing compensation to the plaintiff for the taking or damaging of property by a condemnor shall include the plaintiffs' litigation expenses."
Contrary to the plaintiffs' assertions, we do not view this provision as a clear legislative authorization for the direct recovery of damages for the loss of a business. | June 27, 1997 |
938740f2-e88a-4b73-ac25-bb63d1fb2d4f | Liberty Nat. Life Ins. Co. v. Parker | 703 So. 2d 307 | 1951590 | Alabama | Alabama Supreme Court | 703 So. 2d 307 (1997)
LIBERTY NATIONAL LIFE INSURANCE COMPANY
v.
Louise B. PARKER.
1951590.
Supreme Court of Alabama.
May 23, 1997.
Rehearing Denied August 29, 1997.
Philip H. Butler, Martha Ann Miller, and Charles B. Haigler III of Robison & Belser, P.A., Montgomery, for appellant.
G. William Gill of McPhillips, Shinbaum, Gill & Stoner, Montgomery, for appellee.
SEE, Justice.
This fraud case arises out of Louise Parker's purchase of a life insurance policy from Liberty National Life Insurance Company ("Liberty National"). Parker sued Liberty National, seeking damages for fraudulent misrepresentation and suppression, alleging that agent Mike Horn, and other representatives of Liberty National, represented to her that she was the owner of the policy, when, in fact, her husband was the owner. The trial court denied Liberty National's motion for a directed verdict and submitted Parker's claims to a jury. The jury returned a verdict of $20,000 compensatory damages and $100,000 punitive damages in favor of Parker. The trial court denied Liberty National's motion for a judgment notwithstanding the verdict. Because we conclude that Parker's claims were barred by the applicable statute of limitations, we reverse and enter a judgment for Liberty National. Viewed in the light most favorable to Parker, the evidence suggests that between May 1989 and June 1990, Parker purchased four life insurance policies from Liberty National. Her now exhusband, Earl Parker, from whom she was separated during the period of these purchases, was the insured. Parker purchased two whole life insurance policies (an "ALW" policy and a "unique life" policy) and two term life insurance policies. All of Parker's claims arise from the ALW policy.
The ALW policy and the unique life policy listed Earl as the owner. The two term policies listed incorrect information regarding Earl's age, height, or weight. Parker contacted Mike Horn about correcting the ownership listings and these other problems. Horn and another Liberty National representative met with Parker in June 1990 to discuss the corrections; they indicated that all the changes she requested would be made. Although the other changes were made, the ownership change in the ALW policy was never made.
*308 In September 1990, Liberty National mailed a copy of the ALW policy and the unique life policy to Parker. The cover letters for both policies listed Earl as the insured. The cover letter for the unique life policy was addressed to Parker, and stated that the policy was "your policy." The cover letter for the ALW policy, however, was addressed to Earl and stated that it was "your policy." Parker testified that she received the policies and the letters. Parker did not at that time file a fraud action.
Parker testified that in 1992 she asked Horn if she could take out a loan on the ALW policy and that Horn said that after less than three years of premium payments there was not enough accumulated loan value in the ALW policy. There was, however, a loan value in the unique life policy, and Parker eventually obtained a loan from it.
Parker testified that later in 1992, or in early 1993, she wanted to drop one of the four policies and that Horn suggested she drop the ALW policy. In May 1993 she filled out a loan application for the ALW policy. In June 1993, she received a letter denying her loan application because she was not the owner of the ALW policy.
Parker testified that she voiced her concerns to Liberty National's Birmingham office. Parker decided to cancel the policy, and Liberty National sent a check in the amount of $4,160.60, representing the full amount of the premiums Parker had paid for the ALW policy. Parker filed this action in December 1993.
Liberty National moved for a directed verdict based on its argument that the statute of limitations barred Parker's claims. The trial court denied that motion. We review the trial court's denial of the motion for directed verdict to determine whether Parker presented substantial evidence to support each element of her claim. Malcolm v. King, 686 So. 2d 231, 236 (Ala.1996).
The statute of limitations for fraud actions generally allows two years for filing a claim. Ala.Code 1975, § 6-2-38(l).[1] The two-year period does not start to run until the plaintiff has actual knowledge of facts that would have put a reasonable person on notice of the fraud. Ala.Code 1975, § 6-2-3; Hicks v. Globe Life & Acc. Ins. Co., 584 So. 2d 458, 463 (Ala.1991).[2] The question of when the party discovered or should have discovered the fraud is generally one for the jury. Kelly v. Connecticut Mutual Life Ins. Co., 628 So. 2d 454, 458 (Ala.1993) (citing Vandegrift v. Lagrone, 477 So. 2d 292, 295 (Ala. 1985)). In Kelly, we stated (applying the rule under Hicks):
628 So. 2d at 458 (emphasis added; other emphasis omitted) (quoting Hickox v. Stover, 551 So. 2d 259, 262 (Ala.1989)).[3]
Liberty National presented undisputed evidence that in September 1990 Parker actually received the cover letter regarding the changes she had requested on the ALW policy. The letter was not vague. It was *309 addressed to Earl, not to Parker, and it stated that the ALW policy was "your policy." Parker, a college-educated former teacher in her mid-50s when she received the letter, testified that she did not understand the phrase "your policy" in the letter addressed to Earl to mean that it was Earl's policy. This evidence is insufficient to rebut the inference that a reasonable person would have understood the letter to refer to Earl as the owner of the ALW policy.[4] We conclude that, as a matter of law, the September 1990 letter provided sufficient notice to start the running of the two-year limitations period. Kelly, 628 So. 2d at 458.
628 So. 2d at 459 (emphasis added) (citations omitted). Parker offered no evidence that during the two years after she received the September 1990 letter she inquired about the ownership of the policy. Parker testified only that sometime in 1992 she attempted to, but was told that she could not, obtain a loan on the ALW policy, and that in late 1992, or early 1993, after the two-year limitations period had expired in September 1992, Horn suggested that she cancel the ALW policy in order to reduce her total premium payments on all the policies. Neither of these events was an "inquiry concerning the purported fraud" that would have tolled the running of the limitations period.[5] Parker's claims are therefore time-barred.
REVERSED AND JUDGMENT RENDERED.
HOOPER, C.J., and MADDOX, ALMON, and HOUSTON, JJ., concur.
SHORES, J., recuses.
[1] Ala.Code 1975, § 6-2-38, provides:
"(l) All actions for any injury to the person or rights of another not arising from contract and not specifically enumerated in this section must be brought within two years."
(Emphasis added.)
[2] Ala.Code 1975, § 6-2-3, provides:
"In actions seeking relief on the ground of fraud where the statute has created a bar, the claim must not be considered as having accrued until the discovery by the aggrieved party of the fact constituting the fraud, after which he must have two years within which to prosecute his action."
(Emphasis added.)
[3] We note that for actions filed after March 14, 1997, Foremost Ins. Co. v. Parham, 693 So. 2d 409 (Ala.1997), overruled the justifiable reliance standard enunciated in Hickox v. Stover, 551 So. 2d 259 (Ala.1989), for fraud actions, and the discovery standard enunciated in Hicks v. Globe Life & Acc. Ins. Co., 584 So. 2d 458 (Ala.1991), for determining when the statutory limitations period began to run in a fraud action.
[4] In addition, the cover letter on the unique life policy that Parker received on the same day was addressed to her, and it stated that she owned that policy.
[5] Because we hold that Parker's claims, all of which directly arose from her claimed ownership of the ALW policy, are time-barred, we do not address Liberty National's claims: (1) that Parker failed to present substantial evidence of intentional or willful fraud; (2) that the misrepresentation, if any, was due to the innocent use of the wrong change form; (3) that the trial court erred in not charging the jury on promissory fraud; (4) that the trial court erroneously charged the jury regarding damages for mental anguish; and (5) that the trial court erroneously charged the jury regarding fraudulent concealment. | May 23, 1997 |
ef76e9fd-05e5-46e8-a02a-4012e9177370 | Williams v. Hank's Ambulance Service | 699 So. 2d 1230 | 1950683 | Alabama | Alabama Supreme Court | 699 So. 2d 1230 (1997)
Gwendolyn WILLIAMS, et al.
v.
HANK'S AMBULANCE SERVICE, INC., et al.
1950683.
Supreme Court of Alabama.
April 18, 1997.
Rehearing Denied July 18, 1997.
Bill Pryor, atty. gen.; William O. Butler and J. Richard Piel, asst. attys. gen., Medicaid Agency; Herman H. Hamilton, Jr., deputy atty. gen.; and James H. McLemore of Capell, Howard, Knabe & Cobbs, P.A., Montgomery, for appellants.
Jesse P. Evans III and Laurie Boston Sharp of Najjar Denaburg, P.C., Birmingham; and Jack G. Paden and Bill Thomason of Paden & Thomason, Bessemer, for appellees.
HOUSTON, Justice.
The defendants, Gwendolyn H. Williams, in her capacity as commissioner of the Alabama Medicaid Agency, and the State of Alabama, appeal from a partial summary judgment in favor of the plaintiffs. The plaintiffs are a class of ambulance companies and other providers of medical services to two statutorily defined groups of persons covered under the Medicare Act, 42 U.S.C. § 1395, and the Medicaid Act, 42 U.S.C. § 1396. We affirm in part, reverse in part, and remand.
The named plaintiffs in this action also filed an action in the United States District Court for the Middle District of Alabama, Northern Division, challenging the legality of the rate of reimbursement established by the commissioner for certain medical services provided to the two groups referred to above (known as "qualified Medicare beneficiaries" *1231 (or "QMBs") and "dual eligibles"), and seeking declaratory and injunctive relief. Approximately two months later, the plaintiffs filed the present class action in a state court. The state action challenged the legality of the commissioner's reimbursement plan on the same grounds alleged in the federal action and, in addition, it sought to require the commissioner to authorize retroactive payment to the plaintiffs for previous services they had provided to "QMBs" and "dual eligibles." The plaintiffs also sought to stay proceedings in the state action until the federal action had been concluded. The federal district court ruled in favor of the defendants; however, the Eleventh Circuit Court of Appeals reversed the district court's judgment, holding that the commissioner's reimbursement plan was not in accordance with federal law. For an explanation of what "QMBs" and "dual eligibles" are, and to better understand the facts and issues surrounding this dispute, see Haynes Ambulance Service, Inc. v. Alabama, 36 F.3d 1074 (11th Cir.1994), and Pennsylvania Medical Society v. Snider, 29 F.3d 886 (3d Cir.1994), which was relied on by the Haynes court. Relying on the Eleventh Circuit's decision, the plaintiffs moved in the state court for a partial summary judgment as to liability. The trial court granted their motion, stating:
After a thorough consideration of the record, the briefs, the parties' oral arguments, and the Eleventh Circuit's decision in Haynes, we find no basis upon which to reverse the trial court's judgment insofar as that judgment is based on the Eleventh Circuit's interpretation of federal law. Therefore, we affirm the following portion of the trial court's order:
However, we find persuasive the defendants' contention that the trial court *1232 lacked subject matter jurisdiction to order the commissioner to retroactively reimburse the plaintiff class for services rendered by that class since January 1, 1989.
In Gunter v. Beasley, 414 So. 2d 41, 48 (Ala.1982), this Court stated the general Alabama rule with respect to sovereign immunity:
(Emphasis in original.)
The summary judgment in the present case would no doubt require the state to pay millions of dollars to qualified members of the plaintiff class in the form of reimbursement for services rendered since January 1, 1989. Therefore, applying well-established principles of state sovereign immunity, we conclude that the judgment would "directly [affect] a ... property right of the State." Consequently, unless this action can be fairly placed in one of those categories this Court has recognized as not coming within the prohibition of § 14, then that portion of the judgment requiring the retroactive reimbursement to the plaintiffs is unconstitutional and must be set aside.
Relying primarily on State of Alabama Highway Department v. Milton Construction Co., 586 So. 2d 872 (Ala.1991); Gunter v. Beasley, supra; Curry v. Woodstock Slag Corp., 242 Ala. 379, 6 So. 2d 479 (1942); and Horn v. Dunn Brothers, Inc., 262 Ala. 404, 79 So. 2d 11 (1955), the plaintiff class "seeks for the Alabama Department of Medicaid to perform a clear ministerial or legal duty in reimbursing [the class] with monies that are due and owing for services rendered to the State which the State failed to pay under a mistaken interpretation of the law." In Milton, supra, this Court, holding that the State Highway Department was under a legal duty to pay for road construction work that the department had duly contracted for, stated:
586 So. 2d at 875.
In Gunter, supra, a former lieutenant governor sued the state treasurer, the state comptroller, and the state finance director, seeking retroactive reimbursement for expenses he had incurred during his two previous terms in office. The evidence indicated that the Legislature, by resolution, had duly authorized reimbursement for the lieutenant governor's expenses; that the Senate Ethics Committee had set the expense allowance at a fixed sum of $1,500 per month; and that the state comptroller had initially authorized several payments in that amount, but had ceased payment after receiving an advisory opinion from the attorney general ruling that the reimbursements were unconstitutional. The trial court determined that the expense allowance had been wrongfully withheld from the former lieutenant governor and entered a judgment against the defendants in the amount of $124,350. After rejecting the constitutional issues raised by the defendants, this Court affirmed, stating:
414 So. 2d at 48-49.
In Curry, supra, a taxpayer sued the Alabama revenue commissioner, seeking a judgment declaring that a sales tax was not applicable. In affirming the trial court's order overruling the commissioner's demurrer to the complaint, this Court stated:
242 Ala. at 380-81, 6 So. 2d at 480-81.
In Horn v. Dunn Brothers, Inc., supra, a taxpayer sued the Alabama revenue commissioner, seeking a judgment declaring that it was entitled to a refund of taxes under Title 51, § 913, Ala.Code of 1940. The taxpayer had previously received a favorable ruling by the trial court on its complaint challenging its liability for the taxes, and that ruling had not been appealed. The trial court found in favor of the taxpayer and ordered the commissioner to refund $5,731.92 to the taxpayer. This Court affirmed, stating:
262 Ala. at 408-10, 79 So. 2d at 15-17. (Emphasis in Roquemore original.)
To summarize, Milton involved a clear contractual obligation on the part of the State highway director to pay a sum certain for road construction, and that obligation was held to be enforceable; Gunter involved a constitutional decision by the Legislature (the governmental body specifically charged with the constitutional authority to spend the State's money, see Ala. Const.1901, § 72; Opinion of the Justices, No. 66, 244 Ala. 632, 15 So. 2d 41 (1943)), to reimburse a state official for expenses incurred during his term of office; Curry did not involve the payment of any funds from the State treasury; and Horn involved the ministerial act of refunding tax money pursuant to a statutory refund procedure established by the Legislature money that the State was clearly not entitled to and that had not been legally earmarked for public expenditure. As was noted in Horn, this Court has tried to take a case-by-case commonsense approach to interpreting § 14 and applying the State's sovereign immunity. "We have pointed out that it is the nature of the suit or the relief demanded which the courts consider in determining whether an action against a State officer is in fact a suit against the State in violation of the Constitutional prohibition." 262 Ala. at 408, 79 So. 2d at 15. The common thread running through the cases discussed above is the unfairness that would have occurred from allowing the State to arbitrarily avoid its financial obligations. There was, and is, no legitimate reason to allow State department heads to avoid their clear contractual or ministerial obligations (once those obligations are determined), even if the performance of those obligations ultimately touches the State treasury. Such avoidance of legal and moral responsibility by the State was not the intent of the framers of the Constitution. Likewise, there was, and is, no legitimate reason (or constitutional authority) for this Court to interfere in the legislative appropriation process, as long as that process passes constitutional muster.
However, the present case is different, we think, from those cases just discussed. Although we appreciate, and regret, the fact that the plaintiff class, as a whole, was denied full payment for certain services rendered since 1989, based on what has now been judicially determined by the Eleventh Circuit Court of Appeals to be a mistaken interpretation of the Medicare and Medicaid Acts by the commissioner, we nonetheless believe that the circumstances surrounding the commissioner's actions militate against any further relaxation of the prohibitive effect of § 14 in this case. It is not seriously disputed that the Medicare and Medicaid Acts are torturous reading and not easily decipherable, even by those trained in the law. The Fourth Circuit Court of Appeals in Rehabilitation Ass'n of Virginia, Inc. v. Kozlowski, *1238 42 F.3d 1444, 1450 (4th Cir.1994), cert. denied, ___ U.S. ___, 116 S. Ct. 60, 133 L. Ed. 2d 23 (1995), characterized these Acts as follows:
In addition, we find it significant that the commissioner's interpretation of the Medicare and Medicaid Acts was consistent with the interpretation placed on those acts by the Secretary of the Department of Health and Human Services, the agency of the United States Government specifically charged with overseeing and enforcing those Acts. For these reasons, we cannot easily pigeonhole this case into one of the clear contractual-obligation or ministerial-duty categories previously recognized by this Court as not coming under the prohibition of § 14. There was no apparent bad faith or other improper motivation underlying the commissioner's implementation of the Medicaid Agency's reimbursement plan, and although that plan has now been judicially determined to have been inconsistent with federal law, we are not persuaded that the pecuniary remedy sought by the plaintiff class (requiring disbursement from the State treasury), is constitutionally allowable under § 14.
Therefore, we reverse the following portion of the trial court's order:
For the foregoing reasons, the judgment is affirmed in part and reversed in part and the cause is remanded.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
HOOPER, C.J., and MADDOX, SHORES, KENNEDY, BUTTS, and SEE, JJ., concur. | April 18, 1997 |
13c525fa-bead-4019-8333-405005179b84 | Finley v. Patterson | 705 So. 2d 826 | 1951647 | Alabama | Alabama Supreme Court | 705 So. 2d 826 (1997)
Roosevelt FINLEY
v.
W. T. PATTERSON, et al.
1951647.
Supreme Court of Alabama.
June 13, 1997.
Rehearing Denied December 15, 1997.
*827 C. Michael Benson, Auburn; Timothy Davis, Alexander City; and J. Tom Radney, Alexander City, for appellant.
Micheal S. Jackson of Beers, Anderson, Jackson & Smith, P.C., Montgomery, for W. T. Patterson, as administrator.
SEE, Justice.
The issue in this case is whether, under the facts presented, Alabama law imposes an affirmative duty that subjects a homeowner to liability if she fails to warn a responding police officer that he may be in danger from a gunman who is inside the residence with the homeowner. The trial court held that, under the circumstances, the homeowner had no duty to warn the officer, and it directed a verdict for the defendant. We affirm.
Viewed in the light most favorable to the plaintiff, Roosevelt Finley, the evidence tended to show the following: In March 1991, Marquette Patterson refused the request of his grandmother, Annie Pearl Patterson, to leave her home, and then he threatened to take money from her. He loaded a shotgun, threatened to kill several family members, shot at one family member, and threatened to shoot at the police if they came.
The Camp Hill Police Department received a report of Marquette's actions and a request for assistance. Roosevelt Finley, the chief of police of Camp Hill, responded to the domestic disturbance dispatch about Marquette. The dispatcher informed Officer Finley that a gun was possibly involved. Another officer arrived on the scene and radioed that all seemed quiet, at least from the outside of the residence. Ms. Patterson's son, Marquette's uncle, who had been at the residence at the time of the disturbance, met Finley and approached the house with him.
Officer Finley had dealt with Marquette numerous times before. Ms. Patterson had always responded when Finley knocked at the door to see Marquette. Marquette had always calmed down after Finley talked to him.
This time was different. When Finley knocked on the door, no one responded. When Finley checked the door, he found it chained from the inside. When Finley called out, no one answered. Ms. Patterson's son, however, insisted that Marquette was inside.
As Finley walked off the porch, three shotgun blasts came through the window and struck him. There was an exchange of gunfire, and the police launched tear gas into the house. A small fire broke out. The shooting from inside the house stopped. The police entered. Marquette was dead from a self-inflicted gunshot wound. Ms. Patterson had died next to Marquette, in a kneeling position, possibly from smoke inhalation.
Finley sued Ms. Patterson's estate, seeking damages on theories of negligence and wantonness. The trial court directed a verdict for the estate explaining that the evidence was purely speculative as to whether Ms. Patterson could have warned Officer Finley of the danger posed by Marquette.
On appeal, Finley argues that the directed verdict was improper, contending that Ms. Patterson, as the premises owner, had a duty to warn him, as a police officer, of the danger posed by Marquette. Finley argues that Ms. Patterson's duty was created by what he considers to be a special relationship that existed or special circumstances surrounding Marquette's shooting of Finley.[1] For the directed verdict to be proper, Finley must have failed to present substantial evidence *828 of facts giving rise to a duty on the part of Ms. Patterson to protect him. See Teague v. Adams, 638 So. 2d 836, 837 (Ala. 1994); Rule 50(a), Ala.R.Civ.P.
The general rule in Alabama is that "a person has no duty to protect another from criminal acts of a third person." Moye v. A.G. Gaston Motels, Inc., 499 So. 2d 1368, 1370 (Ala.1986). There are two exceptions to this rule: (1) the "special relationship" exception; and (2) the "special circumstances" exception. Saccuzzo v. Krystal Co., 646 So. 2d 595, 596 (Ala.1994) (citing Restatement (Second) of Torts § 315 (1965)).
The "special relationship" exception is drawn from Restatement § 315, which provides:
(Emphasis added.) The relationship between Ms. Patterson (the "actor") and Marquette (the "third person") was that of grandmother and adult grandson. This familial relationship imposed no duty on the elderly Ms. Patterson to control Marquette. See, e.g., Bell & Hudson, P.C. v. Buhl Realty Co., 185 Mich.App. 714, 462 N.W.2d 851 (1990) (holding familial relationship insufficient to impose a duty on defendant to protect plaintiff from wrongful acts of defendant's family member).
The relationship between Ms. Patterson (the "actor") and Finley (the "other") was that of citizen and police officer. This relationship is insufficient to create a right in Finley, the police officer, to require Ms. Patterson, the citizen, to protect him. In Young v. Huntsville Hospital, 595 So. 2d 1386, 1388-89 (Ala.1992), we held that the relationship between a hospital and a sedated patient gave rise to a right in the sedated patient to have the hospital protect her from a sexual assault. In Thetford v. City of Clanton, 605 So. 2d 835, 838-40 (Ala.1992), we held that an innkeeper had the duty to protect a guest, a battered wife who had informed the innkeeper that she was fleeing her husband, from unauthorized access to her room by her husband. In both Young and Thetford, the plaintiffs were completely dependent upon the defendants for protection. Unlike the sedated patient or the battered and fearful wife, Finley, the chief of police, was an armed, trained law enforcement officer with years of experience in dealing with domestic disputes and violent criminals. It cannot be maintained that Officer Finley was dependent on the elderly Ms. Patterson for protection. Accordingly, the "special relationship" exception did not impose a duty on Ms. Patterson to protect Finley from the criminal acts of the third party, Marquette.[2]
The second exception to the general rule that a person has no duty to protect another from the criminal acts of a third party is the "special circumstances" exception. It arises only in the rare case when the person "know[s] or [has] reason to know that acts are occurring or [are] about to occur on the premises that pose imminent probability of harm to an invitee." Nail v. Jefferson County Truck Growers Ass'n, Inc., 542 So. 2d 1208, 1211 (Ala.1988) (quoting Cornpropst v. Sloan, 528 S.W.2d 188, 197-98 (Tenn.1975)). In the overwhelming majority of cases presenting the question, we have not found special circumstances that give rise to a duty to protect. See, e.g., Ortell v. Spencer Companies, 477 So. 2d 299 (Ala.1985) (holding that 8 incidents of assault, theft, robbery, or burglary on the premises and 80 similar incidents within a 2-block area within the prior 3 years did not constitute "special circumstances" giving rise to a duty to protect); Henley v. Pizitz Realty Co., 456 So. 2d 272 (Ala.1984) (holding that 1 battery, 6 breakings and enterings of cars, 2 robberies, and 7 thefts in a parking deck within the prior 10 years did not constitute "special circumstances" giving rise to a duty to protect).
However, Nail, supra, is that rare case in which this Court found special circumstances giving rise to a duty to protecta duty on the part of the operator of a farmers' market to take reasonable steps to protect a threatened tenant who was an invitee. The special circumstances were that the operator was aware that for several weeks hostility had grown between two tenants at the farmers' market and that the operator had received two specific warnings that an outbreak of violence was imminent. Nail, 542 So. 2d at 1212-13.[3]
Finley argues that special circumstances are established in this case by evidence that Ms. Patterson knew that Marquette had the shotgun and knew that he had made a statement about shooting the police. Thus, Finley argues, Ms. Patterson must have known that harm to Finley was imminent. For one to have a duty to warn, however, one must have a reasonable opportunity to warn. See Richard C. Tinney, Liability to PoliceOwner or Occupant, 30 A.L.R.4th 81, 97 (1984) (citing Armstrong v. Mailand, 284 N.W.2d 343 (Minn.1979)). Finley offered evidence that Ms. Patterson, although she was over 80 years of age, could see, hear, walk, and talk; and he argues that she could have felt safe in warning him from the house because Marquette had never harmed her. While there is significant evidence rebutting the inference that Ms. Patterson's prior relationship with Marquette would allow her to feel safe in warning Finley on the day of the shooting (e.g., Marquette's threat to take Ms. Patterson's money, his refusal to leave her home, his shooting at a family member, etc.), there was no evidence of the ultimately fatal situation that existed inside Ms. Patterson's home when Finley knocked on the door. Any conclusion that Ms. Patterson had, or *830 did not have, a reasonably safe opportunity to warn Finley would be mere speculation. "Evidence ... which affords nothing more than mere speculation, conjecture, or guess is insufficient to warrant the submission of a case to the jury." Sprayberry v. First Nat'l Bank, 465 So. 2d 1111, 1114 (Ala.1984). Thus, the evidence did not indicate sufficient special circumstances to impose a duty on Ms. Patterson to warn Finley.[4] The trial court properly directed a verdict against Finley.
The judgment of the trial court is affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, ALMON, and SHORES, JJ., concur.
COOK, J., concurs in the result.
HOUSTON, KENNEDY, and BUTTS, JJ., dissent.
HOUSTON, Justice (dissenting).
A directed verdict is proper only where the nonmoving party has failed to present sufficient evidence regarding some element essential to his claim or where there is no disputed issue of fact upon which reasonable persons could differ. Because a trial judge's ruling on a directed verdict motion is based on an objective standard, and, thus, is not discretionary, review of a directed verdict on appeal is de novo. In considering the record on appeal from a judgment based on a directed verdict, this Court must view all the evidence in the light most favorable to the nonmovant and must entertain such reasonable evidentiary inferences as the jury would have been free to draw. Teague v. Adams, 638 So. 2d 836 (Ala.1994).
The evidence in the present case, viewed in the light most favorable to Finley, indicates the following: On March 17, 1991, Finley, in his capacity as the chief of police and public safety director for the Town of Camp Hill, Alabama, was dispatched by radio to a domestic disturbance at the home of Annie Pearl Patterson. Although the dispatcher's message was not entirely clear, the dispatcher informed Finley that a gun was possibly involved and she told him to meet with the complainant, W. T. Patterson (one of Ms. Patterson's sons), at a local restaurant before proceeding to the scene. W. T. Patterson told Finley that his nephew, Marquette Patterson, was at W. T.'s mother's house and was threatening to take some of her money. W. T. did not tell Finley that his nephew Marquette had a shotgun and that Marquette had shot at W. T.'s brother, Theodis Patterson (Marquette's uncle).
While en route to Ms. Patterson's house, Finley received a radio message from an officer from another police jurisdiction, James Nelms, informing him that he was already at the scene, that everything appeared to be quiet, and that he would be standing by to assist upon Finley's arrival. Based upon the information that had been provided to him, Finley did not consider the call to constitute an emergency and he proceeded to Ms. Patterson's house in a nonemergency manner. This was not the first time Finley had had to deal with Marquette Patterson. Finley had responded to numerous domestic disturbances involving Marquette. In each of those instances, Finley had been able to calm Marquette down merely by talking to him. Finley had never had to use handcuffs or a gun on Marquette, and Marquette had never attempted to pull a gun on him. Finley had responded to disturbance calls involving Marquette at both Marquette's house and Ms. Patterson's house. Both Marquette and Ms. Patterson were familiar *831 with Finley's voice. Ms. Patterson and Marquette had a very close relationship; she was capable of exercising a great deal of influence over Marquette, and on occasion she had assisted Finley in controlling him.
When Finley arrived at Ms. Patterson's house, he met with W. T. Patterson and Nelms and they all approached the house. Finley's clearly marked police car was parked where it could be seen from the front and one side of the house, and Finley was wearing a police uniform. W. T. Patterson and Finley went to the front door, and Nelms proceeded to the rear of the house. Finley knocked loudly on the front door with a heavy metal flashlight and called out to see if Marquette was in the house. After getting no response from anyone inside the house, and after W. T. Patterson had been unsuccessful in opening the door with his key (the door was blocked or latched from the inside), Finley concluded that either no one was in the house or someone had locked himself in the house and that there was little more that he could do at that time. He advised his dispatcher by radio that he was completed. Finley's refusal to force his way into the house angered W. T. Patterson, who continued to insist that Finley should do more. During this conversation, W. T. Patterson never said anything about Marquette's having had and fired a gun earlier, nor did he express concern that his mother had not responded to the door. In Finley's past experiences with Ms. Patterson, she had always responded when he knocked on her door. At this point, neither Finley nor Nelms had been told anything to substantiate the dispatcher's statement that a gun had possibly been involved in the earlier disturbance, and neither officer believed that he was in any particular danger. However, as Finley was walking off the porch Marquette shot him three times with a shotgun through a window in the house. Finley, who suffered near fatal personal injuries from those gunshots, was eventually rescued by other police officers and taken to a hospital. After an exchange of gunfire between Marquette and the other officers, during which the police used tear gas in an attempt to force Marquette out of the house, the shooting from inside the house stopped. The police entered the house, which had caught fire, and discovered that Marquette had died in the house of a self-inflicted gunshot. The police also discovered that Ms. Patterson had died in the altercation. Her body was found next to Marquette's, in a kneeling position. The position of Ms. Patterson's body suggested that she had died after Finley was shot, possibly of smoke inhalation.
A subsequent investigation of the incident revealed that Marquette had come to Ms. Patterson's house earlier on the day of the shooting and that Ms. Patterson had asked him to leave. Ms. Patterson had expressed concern that his being at her house would get her into trouble. (The record indicates that Marquette had been ordered by a judge to leave the state.) Not long after being asked by Ms. Patterson to leave the house, Marquette, who was in an agitated state of mind, was heard assembling a gun and dropping bullets or shells onto the floor. Marquette had stated that he intended to kill his wife, his father (MacArthur Patterson), and his uncle Theodis, and had stated that if he had to he would "drop" the police. Ms. Patterson was in the house in a nearby "sitting room" or "den" when Marquette stated that he would "drop" the police. Ms. Patterson was close enough to hear Marquette's threats and she was aware that Marquette had a shotgun. At some point during all of this, Marquette shot out the front door at Theodis Patterson, who, along with W. T. Patterson, had attempted to intervene. Both men were standing in the yard at that time. Ms. Patterson was aware that Marquette had shot at her son and she was either aware or should have been aware that W. T. Patterson had gone to get the police. During the entire altercation, no one heard Marquette threaten Ms. Patterson, who ultimately decided to stay in the house, apparently to protect either some money (part of which was hers and part of which belonged to another person) or Marquette. Ms. Patterson appeared to be more afraid of getting into trouble with the police if Marquette was found in her house than she was of being harmed by Marquette. At the time of the incident, Ms. Patterson, although she was over 80 years of age, was generally of sound mind, and she could see, *832 hear, walk, and talk. There was a working telephone inside the house that she was capable of using. At no time did Ms. Patterson notify the police by telephone that a clearly disturbed Marquette had locked himself in her house with a shotgun, and at no time did Ms. Patterson call out to Finley or Nelms to warn that they were in danger of being shot.
Finley filed this action against Ms. Patterson's estate, alleging negligence and wantonness on Ms. Patterson's part in failing to warn him that Marquette was on the premises with a loaded shotgun and that he was in the frame of mind to use it against the police. The trial judge directed a verdict for the estate at the close of Finley's case-in-chief, explaining that, in his opinion, the evidence was purely speculative as to whether Ms. Patterson could have warned Finley of the impending danger posed by Marquette.
In Saccuzzo v. Krystal Co., 646 So. 2d 595, 596 (Ala.1994), this Court stated:
The existence of special circumstances may, however, create a duty on the part of a premises owner to take reasonable steps to protect another from the criminal acts of a third party. Those circumstances exist only when the premises owner knows or has reason to know of a probability of conduct by a third party that will endanger the plaintiff. This exception to the general rule of nonliability arises where the particular criminal conduct is foreseeable to the premises owner. Moye v. A.G. Gaston Motels, Inc., supra. This Court recognized in Moye that it is difficult to impose such a duty on a premises owner, even when previous criminal incidents are cited as evidence that the premises owner knew that future criminal activity on the premises was foreseeable. However, it is not impossible to impose such a duty. Although evidence of previous criminal incidents may be used to establish knowledge on the part of a premises owner, other evidence may also suffice, provided it indicates that the premises owner knew or had reason to know of a probability of criminal conduct by a third party that would endanger the plaintiff.
After carefully reviewing the evidence, and after indulging all reasonable inferences in favor of Finley, I conclude that Finley presented sufficient evidence to have his claims considered by the jury. The evidence indicated that Ms. Patterson was aware of two important things on the day of the shootingthat Finley had come to her house in his capacity as a police officer to investigate a reported domestic disturbance there and that a clearly disturbed and armed Marquette was hiding on the premises and threatening to kill family members and police officers. Although the evidence does not disclose that Marquette had a history of domestic violence involving the use of a gun, I nonetheless conclude that the evidence of Ms. Patterson's knowledge of Marquette's bizarre and particularly vicious behavior on the day of the shooting, coupled with the evidence of her knowledge that Finley, based on his previous experiences with Marquette, would not be suspecting Marquette to assault him with a shotgun, created a question for the jury as to whether Marquette's "ambush" of Finley was foreseeable to Ms. Patterson (i.e., whether she knew or had reason to know that Marquette, given his state of mind, would probably shoot at an unsuspecting police officer). Such "specialized knowledge" that criminal activity is a probability is sufficient, in my opinion, to create a duty on the part of a premises owner to take steps to protect a licensee or an invitee present on the premises. Moye, supra. I would order a new trial and would require that the jury be instructed that if it found that Marquette's assault on Finley was foreseeable to Ms. Patterson, then Ms. Patterson was under a duty to alert Finley of the danger.
The evidence, again viewed in the light most favorable to Finley, as it must be under our standard of review, also indicates to me that Ms. Patterson was physically and mentally able to warn Finley of the danger. The evidence indicated that Ms. Patterson was generally of sound mind and that she could walk, talk, see, and hear (how well she could do those things was a question for the jury); that she had always been very close to, and able to talk with, Marquette; that her movements within the house and her ability to speak were not restricted (there is no evidence that she was held hostage by Marquette); and that she had been alive when Finley was shot. The exact reason or reasons why Ms. Patterson took no steps to alert Finley of Marquette's presence may never be known. However, one could reasonably infer from the evidence that Ms. Patterson was capable of warning Finley of *834 the danger posed by Marquette. Whether Ms. Patterson could have warned Finley and whether she acted reasonably or unreasonably in not doing so, or whether she acted in conscious disregard of the circumstances, are all questions better reserved to the factfinder. I conclude only that the evidence was sufficient to submit to the jury the question whether Ms. Patterson had a duty to warn Finley of the danger lurking within her house, and, if so, whether she breached that duty.
There was evidence of the standing relationship between Ms. Patterson and her grandson, Marquette, from which the trier of facts could reasonably infer that Ms. Patterson could have warned Finley or Nelms, without physical danger to herself; but, in my opinion, that was a decision for the trier of the facts, not for the trial court or this appellate court. I fear that the majority's decision today will make law enforcement officers sitting ducks when they are on private property doing their legal duty, because the majority opinion holds that, as a matter of law, law enforcement officers assume the risk of physical danger inherent in police work. I cannot go that far. I am fully aware of the policy arguments that can be made against allowing law enforcement officers to recover damages from premises owners for injuries arising out of dangers that are inherent in police work. See Premises Liability "Persons," § 6.4 (2d ed. 1995). Police officers face many dangers in the line of duty, dangers that naturally and predictably arise from face-to-face encounters with criminals and desperate situations. However, I do not think that it is necessarily an inherent risk of police work that a premises owner, who is aware of a police officer's presence, will not alert that police officer to a concealed and dangerous condition (person) on the premises, if the premises owner is aware of the dangerous condition and is physically and mentally capable of providing a simple warning without physical danger to the premises owner. For a case somewhat similar to this one, see Williams v. Wiewel, 36 Ill.App.3d 478, 344 N.E.2d 34 (1976).
For the foregoing reasons, I would reverse the judgment and remand the case for further proceedings.
[1] Finley also argues, separately, that Ms. Patterson should be liable under two additional theories: (1) the traditional premises-owner liability theory; and (2) the affirmative-conduct-of-premises owner theory. Finley, a licensee under the holding of Louisville & N.R.R. v. Griswold, 241 Ala. 104, 106, 1 So. 2d 393, 395 (1941), cannot recover under the traditional premises-owner theory because the general rule that a person is not liable for the criminal acts of third parties applies to premises owners like Ms. Patterson. See Moye v. A.G. Gaston Motels, Inc., 499 So. 2d 1368 (Ala.1986) (holding that premises owner was not liable to invitee who was shot by third party where special circumstances did not exist). Likewise, Finley cannot recover under the affirmative-conduct theory because he does not allege that Ms. Patterson took any affirmative action. Cf. Orr v. Turney, 535 So. 2d 150 (Ala.1988) (holding that premises owner owed higher duty of reasonable care to visitor, instead of lower duty to licensee, where owner's affirmative conduct of running with a pan of hot grease created a risk to a visiting child).
[2] We note that it would be peculiar to impose a duty on a person to warn a police officer, like Finley, of the very dangers inherent in police work and which the officer voluntarily assumed as part of his duties. See Sprouse v. Belcher Oil Co., 577 So. 2d 443, 444 (Ala.1991) (stating that assumption of the risk requires knowledge of the danger, appreciation of the danger, and voluntary exposure to the danger). This Court has recognized "the harsh reality that crime can and does occur despite society's best efforts to prevent it." Moye v. A.G. Gaston Motels, Inc., 499 So. 2d 1368, 1372 (Ala.1986). It is the police officer's courage and sense of duty that society depends on for protection against violent criminals. The debt society owes its law enforcement officers, however, is not responsibly laid on property owners, by this Court's invention of a new tort action.
We also note that other jurisdictions have addressed this issue and have concluded that a premises owner cannot be held liable for injuries sustained by a police officer when the officer is acting in the line of duty. See, e.g., Lenthall v. Maxwell, 138 Cal. App. 3d 716, 188 Cal. Rptr. 260 (1982) (holding police officer who was shot by occupier of premises could not recover from premises owner for injuries the officer should have reasonably expected to sustain while engaged in the line of duty); Fancil v. Q.S.E. Foods, Inc., 60 Ill. 2d 552, 328 N.E.2d 538 (1975) (holding premises owner had no duty to protect when the risk the police officer was subjected to was one inherent in that occupation); Koop v. Bailey, 502 N.E.2d 116 (Ind.App.1986) (holding homeowners not liable to member of police SWAT team who was shot by the homeowners' son while the officer responded in his professional capacity); Chapman v. Craig, 431 N.W.2d 770 (Iowa 1988) (holding tavern owner not liable for injuries sustained when intoxicated patron assaulted a police officer); Hannah v. Jensen, 298 N.W.2d 52 (Minn.1980) (holding owner of bar not liable for injuries to officer caused by a scuffle with a person the owner wanted removed from the premises); Wawrzyniak v. Sherk, 170 A.D.2d 972, 566 N.Y.S.2d 138 (1991) (holding officer unable to recover for injuries caused by the arrestee's mother when she lunged toward officer who was arresting her son, because apprehension of suspects is within the scope of police duties); Kithcart v. Feldman, 89 Okla. 276, 215 P. 419 (1923) (holding officer who was shot by employee of a hotel while he was attempting to make an arrest was unable to recover for injuries from hotel owner); Cullivan v. Leston, 43 Or.App. 361, 602 P.2d 1121 (1979) (holding proprietor of a tavern was not liable to officer who sustained injuries caused by a patron while the officer was attempting to make an arrest); Carson v. Headrick, 900 S.W.2d 685 (Tenn.1995) (holding wife did not have a duty to warn a police officer, who was shot while escorting her home, that her husband had threatened to kill any police officer).
[3] We note that in Nail, 542 So. 2d at 1211, we held, applying the "scintilla rule" of evidence, that there was sufficient evidence for a jury to find an imminent probability of harm. Alabama has since abandoned the scintilla rule in favor of the significantly higher standard of "substantial evidence." See Ala.Code 1975, § 12-21-12; Brown v. Gamble, 537 So. 2d 476, 477 (Ala.1989) (stating that cases filed after June 11, 1987, are subject to the substantial evidence rule instead of the scintilla rule).
[4] The dissent relies on an Illinois case, Williams v. Wiewel, 36 Ill.App.3d 478, 344 N.E.2d 34 (1976), for its conclusion that because of Ms. Patterson's failure to warn, the issue whether her estate should be held liable for Marquette's shooting of Finley was for the jury. In Williams, 36 Ill.App.3d at 480, 344 N.E.2d at 36, however, it was not the criminals (burglars) who shot the law enforcement officer, but another person called there by the defendant to help catch the burglars, without the defendant's having warned either that person or the officer of the other's presence. It should also be noted that the Illinois Supreme Court has held that, because "[t]he danger of being ambushed by criminals lurking in poorly illuminated areas, in shadows or behind objects is a risk inherent in the occupation [of a law enforcement officer]," a premises owner cannot be held liable for dangerous conditions on the premises. Fancil v. Q.S.E. Foods, Inc., 60 Ill. 2d 552, 558, 328 N.E.2d 538, 541 (1975).
[5] I note Finley's contention that he should be classified as an invitee for purposes of determining whether Ms. Patterson was under a duty to warn him of the danger posed by Marquette. In the only Alabama case I have found dealing with this question, this Court stated:
"An officer of the law, acting in the line of duty, is not a trespasser. Neither is he an invitee to whom the [premises owner] owes a duty to keep [the] premises in a reasonably safe condition. He is deemed a licensee, free to enter on the premises as they are, caring for his own safety as for any hazards on the premises ...."
Louisville & N.R.R. v. Griswold, 241 Ala. 104, 106, 1 So. 2d 393, 395 (1941). There is a split of authority as to whether a police officer should be classified as an invitee or as a licensee. See Harper, James, & Gray, The Law of Torts, § 27.14(2) (2d ed. 1986); Premises Liability "Persons", § 6.1 (2d ed. 1995); J. Page, The Law of Premises Liability, § 5.9 (2d ed. 1988); 62 Am. Jur.2d Premises Liability §§ 422-424 (1990). Based on the record before me, I find it unnecessary to classify Finley as either a licensee or an invitee. Finley's action is based on allegations that Ms. Patterson was under a duty to warn him that a criminal act was about to be committed by a third party. The duty discussed in Saccuzzo, supra, and in a well-established line of Alabama cases dealing with a premises owner's liability for the criminal acts of a third party, is applicable in this case regardless of whether Finley is classified as an invitee or as a licensee. See, e.g., Moye v. A.G. Gaston Motels, Inc., 499 So. 2d 1368 (Ala.1986) (involving the more typical situation where the injured person is an invitee on the premises); and Prentiss v. Evergreen Presbyterian Church, 644 So. 2d 475 (Ala.1994) (recognizing the general rule that a premises owner owes a licensee not only a duty to abstain from willfully or wantonly injuring the licensee, but also a duty to avoid negligently injuring the licensee after the premises owner discovers that the licensee is in danger).
At this point I note that I also find unpersuasive Finley's contention that this case is controlled by Orr v. Turney, 535 So. 2d 150 (Ala. 1988). I view the present case as involving a dangerous condition on the premises that Ms. Patterson allegedly was aware of and negligently or wantonly failed to warn Finley of. See, e.g., King v. Breen, 560 So. 2d 186 (Ala.1990) (dangerous animal on the premises held to be a dangerous condition); Casey v. Oliver, 577 So. 2d 453 (Ala.1991) (medication left where child could easily get to it held to be a dangerous condition); Baldwin v. Gartman, 604 So. 2d 347 (Ala.1992) (slab of concrete left balanced on a dolly held to be a dangerous condition). In Orr the premises owner injured a licensee (child) when, while running with a pan of burning grease, she spilled some on the child. That conduct had nothing to do with the condition of the premises (i.e., the premises owner's affirmative conduct was the immediate cause of the injury). See Baldwin v. Gartman, supra. The present case does not involve allegations of the kind of "active" or "affirmative" conduct or negligence on the part of a premises owner that would invoke the standard discussed in Orr. | June 13, 1997 |
10c25ddd-ff6f-4a3b-b204-df5ded9734f2 | Ex Parte Judd | 694 So. 2d 1294 | 1950078 | Alabama | Alabama Supreme Court | 694 So. 2d 1294 (1997)
Ex parte Ernest Randy JUDD.
(Re Ernest Randy Judd v. State.)
1950078.
Supreme Court of Alabama.
April 25, 1997.
*1295 Herman Watson, Jr., and Charles H. Pullen, of Watson, Fees & Jimmerson, P.C., Huntsville, for petitioner.
Bill Pryor, Atty. Gen., and Margaret S. Childers, Asst. Atty. Gen., for respondent.
PER CURIAM.
This Court granted Ernest Randy Judd's petition for the writ of certiorari to consider his argument that his conviction was had in violation of his right to a public trial as guaranteed under Article I, § 6, of the Alabama Constitution of 1901 and the Sixth Amendment to the United States Constitution.
In his petition for certiorari review, Judd cited Rule 39(c)(4), Ala.R.App.P., arguing that the affirmance by the Court of Criminal Appeals conflicts with Waller v. Georgia, 467 U.S. 39, 104 S. Ct. 2210, 81 L. Ed. 2d 31 (1984). He also cited Rule 39(c)(3), arguing that the petition presents a question of first impression in regard to the closing of a trial to the public.
Article I, § 6, Ala. Const.1901, guarantees that "in all criminal prosecutions, the accused has a right to ... a speedy, public trial." The Sixth Amendment to the United States Constitution begins: "In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial...."
Judd was indicted on several counts of rape, sodomy, and sexual abuse. Ala.Code 1975, §§ 13A-6-61, 13A-6-63, and 13A-6-66. At the opening of the testimony, the court announced that "upon motion of the State of Alabama, which I have granted, the courtroom will be cleared during the testimony of the minor child." Judd's trial counsel objected to the closure of the courtroom, stating:
The court overruled Judd's objection. The jury found Judd guilty of three counts of sexual abuse in the first degree and two counts of sodomy in the first degree. The circuit court entered judgments of conviction and sentenced Judd on those five convictions. The Court of Criminal Appeals affirmed by an unpublished memorandum. Judd v. State (CR-93-2063), 683 So. 2d 60 (Ala.Cr.App. 1995) (table).
In construing the Sixth Amendment to the United States Constitution, the United States Supreme Court has recognized a "balance of interests" to be applied in determining the extent of the right to an open trial:
Waller v. Georgia, 467 U.S. 39, 45, 104 S. Ct. 2210, 2215, 81 L. Ed. 2d 31 (1984). The Waller Court stated the test for a proper courtroom closure as follows:
467 U.S. at 48, 104 S. Ct. at 2216.
Several United States Courts of Appeals have held that the closure of a criminal trial during the testimony of a minor child did not, under the particular circumstances presented, violate the defendant's right to a public trial. In United States v. Osborne, 68 F.3d *1296 94 (5th Cir.1995), the Fifth Circuit addressed Waller by setting out the four-part Waller test quoted above and then distinguishing Waller in the following manner:
68 F.3d at 98-99 (emphasis original) (footnotes omitted). See also United States v. Farmer, 32 F.3d 369 (8th Cir.1994); United States v. Galloway, 937 F.2d 542 (10th Cir. 1991), affirmed on return to remand, 963 F.2d 1388 (10th Cir.1992); United States v. Sherlock, 962 F.2d 1349 (9th Cir.1989); Douglas v. Wainwright, 714 F.2d 1532 (11th Cir.1983), vacated and remanded, 468 U.S. 1206, 104 S. Ct. 3575, 82 L. Ed. 2d 874, panel opinion reinstated, 739 F.2d 531 (11th Cir. 1984); Geise v. United States, 262 F.2d 151 (9th Cir.1958).
Thus, the Federal courts have recognized the public interest in protecting young victims of crime, particularly young victims of sexual offenses, who are required to testify against the person accused of assaulting them. This interest provides the "substantial reason" called for in Osborne and the cases cited therein for a partial closure of a trial during the testimony of the minor victim. A "partial closure" usually means that the general public is excluded but that family and friends of the defendant are allowed to remain unless a specific reason for excluding them exists and, usually, that members of the press are allowed to remain.
Even though Alabama has a different history of applying the guarantee of a public trial as it is stated in § 6 of our Constitution, the Alabama courts have held that, under certain circumstances, a trial judge has the discretion to close a courtroom. See Wright v. State, 340 So. 2d 69, 71, n. 1 (Ala.Crim.App. 1976), reversed, 340 So. 2d 74, 79 (Ala.1976); Hull v. State, 232 Ala. 281, 167 So. 553 (1936). Cf. Reynolds v. State, 41 Ala.App. 202, 203, 126 So. 2d 497, 497 (1961), which recognized the court's discretion to exclude children of tender years from the courtroom and to exclude such persons as necessary to preserve order in the court.
Until 1973, the authority of trial courts to use their discretion in excluding persons from the courtroom during prosecutions for rape and assault with intent to ravish was included in the Alabama Constitution as Article VI, § 169, which provided:
This specific provision, however, was not carried forward in Amendment 328, which repealed the Judicial Article (Article VI) and *1297 adopted a new Article VI as set out in Amendment 328; but the legislature adopted § 12-21-202, Ala.Code 1975, and the first clause of that section reads exactly as did § 169:
Even though the provisions of § 169 were not carried forward into the new Article VI, we hold that the Legislature nevertheless had the constitutional authority under its grant of power from the people to adopt § 12-21-202, and that the repeal of § 169 does not limit the power of the legislature to exclude persons from the courtroom in cases of rape or assault with intent to ravish.
We further hold that the interpretation of the Supreme Court of the United States in Waller v. Georgia is not inconsistent with the provisions of Article 1, § 6, of the Alabama Constitution of 1901, and we adopt the Waller v. Georgia test for determining when a courtroom, in cases of rape or assault with intent to ravish, can be closed without violating a defendant's constitutional right to a public trial. We hold, therefore, that a trial court has discretion under the provisions of § 12-21-202, in the proper circumstances, as here, to limit access to the courtroom if there is a showing of a substantial need to exclude some spectators. We would caution, however, that a total closure of the courtroom can be justified only in the narrowest of circumstances, as stated in Waller, supra. In most cases, a partial closure will ordinarily allow as spectators members of the press, the defendant's family, the victim's family, and similar persons whose presence is necessary to protect against secret trials or to protect other interests at stake.
Judd failed to preserve for the record the proceedings on the motion to close the courtroom, the considerations that led to the closure of the courtroom, who was cleared from the courtroom, or whether the courtroom remained closed after the victim's testimony. The burden is on the appellant to bring the record before an appellate court. Montgomery v. State, 504 So. 2d 370, 372 (Ala.Crim.App.1987). Because Judd failed to have the relevant facts and proceedings included in the record, we cannot consider whether Judd's constitutional rights were violated when the courtroom was closed in his case.
AFFIRMED.
HOOPER, C.J., and MADDOX, KENNEDY, and SEE, JJ., concur.
SHORES and HOUSTON, JJ., concur in the result.
ALMON, J., dissents.
HOUSTON, Justice (concurring in the result).
The defendant was charged with first degree rape of J.D.J., in violation of Ala.Code 1975, § 13A-6-61(a)(3), and of first degree rape by forcible compulsion, along with other sexual crimes.
The Constitution of Alabama of 1901, § 169, provided:
Before the repeal of § 169 by the ratification of Amendment No. 328 (the new Judicial Article), which replaced Article VI, §§ 139-172 (the former Judicial Article), the legislature had enacted what is now Ala.Code 1975, § 12-21-202, which provides in its first clause:
This was the law when Amendment No. 328 was ratified. Section 6.21(h) of Amendment No. 328 provides:
(Emphasis added.)
The first clause of § 12-21-202 was a provision of law in force on the effective date of Amendment No. 328. It is not inconsistent with any of the provisions of Amendment No. 328. Therefore, in my opinion, this provision continued in effect after the ratification of Amendment No. 328.
What Amendment No. 328 of the Constitution of Alabama of 1901 took away by silence, so as to prevent legislative action in the future, it expressly preserved by § 6.21(h).
The Legislature had enacted § 12-21-202 when it had express constitutional authority to do so. That was a provision of law in force on the effective date of Amendment No. 328; and it remains in force until "superseded in the manner authorized by the Constitution."
The Constitution does not permit duly enacted legislative laws to be superseded by judicial fiat; therefore, § 12-21-202 remains the law until changed by the Legislature.
Rule 9.3(b), Ala.R.Crim.P., which provides that "[a]ll proceedings shall be open to the public, unless otherwise provided by law," does not supersede the first clause of § 12-21-202, which was in effect before the promulgation of the Alabama Rules of Criminal Procedure. I know of no means whereby the first clause of § 12-21-202 has been superseded.
I feel that Justice Almon has no need to be concerned about the fate of constitutional democracy as a result of the majority's affirming Judd's convictions of sexual abuse and sodomy, after he had been indicted and tried for rape, sexual abuse, and sodomy.
I think the trial court ruled properly on this issue; therefore, I concur in the result.
ALMON, Justice (dissenting).
I am concerned about the fate of constitutional democracy if the Legislature has "authority under its grant of power from the people," 694 So. 2d at 1297, to adopt statutes that directly conflict with constitutional provisions. Is the State Legislature not bound by the State Constitution that created the Legislature? Does this supposed authority apply to all constitutional provisions, or only provisions that are currently out of favor because the values they protect (here, public trials) come into conflict with other values (here, our concern for the well-being of our children)? Is it not true that many important values often compete with othersa free press with decorum in society, freedom of religion with some people's desire to bring religion into public life, a free society with our need for a lawful and orderly society? In the Constitution of the United States and the constitutions of the various States the people have chosen a balance between these competing values. If that balance may be overridden simply by legislative act, what is left of our Constitutions?
Mr. Justice Black, in his dissent in Adamson v. California, 332 U.S. 46, 68-123, 67 S. Ct. 1672, 1684-1711, 91 L. Ed. 1903, 1917-46 (1947), eloquently articulated the value of preserving the protections of the Bill of Rights, which include the right to a public trial as guaranteed by the Sixth Amendment to the United States Constitution; that right is also guaranteed in the Alabama Constitution of 1901, by § 6, which is found within the Declaration of Rights. I reproduce only the following excerpt from Justice Black's dissent:
Adamson, 332 U.S. at 70-71 and 89, 67 S. Ct. at 1685-86 and 1695, 91 L. Ed. at 1918-19 and 1929 (Black, J., dissenting) (footnote omitted).
The United States Supreme Court held in In re Oliver, 333 U.S. 257, 68 S. Ct. 499, 92 L. Ed. 682 (1948), that the denial to Oliver of a public trial in a Michigan contempt proceeding violated his right to due process as guaranteed by the Fourteenth Amendment. "And without exception all courts have held that an accused is at the very least entitled to have his friends, relatives and counsel present, no matter with what offense he may be charged." 333 U.S. at 271-72, 68 S. Ct. at 507, 92 L. Ed. at 693 (footnote omitted). Although the Oliver Court did not say whether the Sixth Amendment right to a public trial applies to the States, in Estes v. Texas, 381 U.S. 532, 85 S. Ct. 1628, 14 L. Ed. 2d 543 (1965), the Court took that application for granted.
Until 1973, Article VI, § 169, of the Alabama Constitution of 1901, expressly gave courts discretion to exclude persons from the courtroom during prosecutions for rape and assault with intent to ravish:
In 1973, Amendment 328 repealed the Judicial Article, Article VI, and adopted a new Article VI as set out in Amendment 328. The Judicial Article adopted by Amendment 328 does not include a provision like § 169. Thus, the constitution no longer provides an express exception to the right to a public trial. See Wright v. State, 340 So. 2d 69, 71, n. 1 (Ala.Crim.App.), reversed on the issue of waiver, 340 So. 2d 74, 79 (Ala.1976).
This Court, in construing § 169, limited it to its terms and refused to extend it from prosecutions for "rape and assault with intent to ravish" to prosecutions for other similar crimes, Wade v. State, 207 Ala. 1, 92 So. 101 (1921)[2]:
207 Ala. at 2, 92 So. at 102. Wade was convicted of mayhem for castrating another man. After the Court of Appeals again affirmed the conviction, this Court again reversed on certiorari review, reaffirming its holding in strong language. Ex parte Wade, 207 Ala. 241, 92 So. 104 (1922). In Hull v. State, 232 Ala. 281, 167 So. 553 (1936), Hull was convicted of having carnal knowledge of a girl under 12 years of age. The Court applied the holding of Wade and the holding of Toullee v. State, 100 Ala. 72, 14 So. 403 (1893), that a prosecution for carnal knowledge of a girl under age 12 was not a prosecution for rape, and concluded that the exclusion of the public from Hull's trial violated his right to a public trial. Cf. Reynolds v. State, 41 Ala.App. 202, 203, 126 So. 2d 497, 497 (1961), which recognized the court's discretion to exclude children of tender years from the courtroom and to exclude persons as necessary to preserve order in the court,[3] but held that exclusion of all children under the age of 18 exceeded that discretion and violated the defendant's right to a public trial.
This Court has thus held, in the only precedents on point, that the exclusion of the public from a criminal trial could not be ordered "upon the theory ... that this constitutional provision [the § 6 guarantee of a public trial] should yield to the rules of society, decency, and propriety," Wade, 207 Ala. at 3, 92 So. at 102-03, except in prosecutions for the two offenses mentioned in § 169. The Court in Hull reversed a conviction on a charge similar to those on which Judd has been convicted. Now that § 169 has been repealed, the holdings of this Court in Wade and Hull would lead to the conclusion that in no prosecution can the public be excluded.
Section 12-21-202, Ala.Code 1975, provides:
However, the first clause of this section (before the semicolon) tracks the language of former § 169. Because § 169 has been repealed, the constitutional underpinning of § 12-21-202 is gone and that Code section cannot provide a ground for an exception to the constitutional right to a public trial. The second clause of § 12-21-202 cannot provide a basis for closing a criminal trial over the defendant's objection. Of course, a statute cannot override a constitutional provision; moreover, the second clause does not even purport to grant an exception to § 6 of the Constitution, because it allows closure of a criminal trial only "by and with the consent and agreement of the defendant."
If the Court must do what it does today (and I understand the concern for young victimized witnesses that prompts the Court's action), it should at least do it on the basis of a reasonable construction of the § 6 guarantee of a public trial, as the federal courts have done with Amendment VI to the United States Constitution. See, e.g., United *1301 States v. Osborne, 68 F.3d 94 (5th Cir. 1995); Aaron v. Capps, 507 F.2d 685 (5th Cir.), cert. denied, 423 U.S. 878, 96 S. Ct. 153, 46 L. Ed. 2d 112 (1975); and the other cases cited in the plurality opinion.
Instead, the plurality relies, at least in part, on a Code section that derives from a statute that was enacted while § 169 of the Alabama Constitution was still in force. Justice Houston relies on the savings clause of Amendment 328 and the Court's rule-making power.[4]
These approaches belittle the fact that the authority for the statute was granted in § 169 but has been taken away by Amendment 328. Perhaps the omission of a provision like § 169 from the Judicial Article that was adopted by Amendment 328 was inadvertent, but such a supposition is pure speculation and does not alter the fact that the § 6 guarantee of a public trial now exists without an exception in the Constitution that would allow the legislature to pass a statute such as § 12-21-202.
As for the plurality's conclusion that Judd did not preserve a record, I strongly disagree. The circuit judge stated on the record that he had granted the State's motion to close the courtroom, and the defendant made a clear, specific, and pertinent objection on the record. Although a plurality of this Court holds that Judd did not preserve the question for review, the plurality opinion does acknowledge that the party seeking closure of the courtroomi.e., seeking an exception to a constitutional provisionhas the burden of showing, in the case of a partial closure, a "substantial reason" for the closure and, in the case of a total closure, that the stringent standards of Waller v. Georgia, 467 U.S. 39, 104 S. Ct. 2210, 81 L. Ed. 2d 31 (1984), have been met. There is no showing in this record that the State met either of these burdens, and there is no indication that any proceedings on the State's motion were preserved for the record. Thus, to reject Judd's argument by attributing to him the supposed deficiency in the record essentially places the burden on the defendant to show that the trial should be open to the public; this is a reversal of the true burden.
Given the ruling and the objection in the record before us, I would hold that Judd has met his burden of showing error, and that it is the State that has not met its burden of showing that the closure was only partial, was limited to the testimony of the minor prosecutrix, and was supported by a substantial reason. While I might vote in a proper case to overrule Wade v. State and Hull v. State, discussed above, and adopt a construction of § 6 of the Constitution that would allow discretion to partially limit the public's access to a courtroom during sensitive testimony, such as that of a minor prosecutrix, I would not reach such a holding based on § 12-21-202, Ala.Code 1975, or the savings clause of Amendment 328, or this Court's rule-making power. I dissent, here, because the State did not make a showing for the record that would support closing the courtroom, or a showing that the closing of the courtroom was limited only to the testimony of the minor prosecutrix, or a showing that the defendant was allowed such spectators as would protect his right to a fair and public trial.
The descent from a relatively disorderly society that respects individual dignity and freedom to a relatively stable but authoritarian society may be a gradual one, but I suspect that it may be easier to continue descending than to turn around and go back up to the pinnacle of a free democratic society. Our constitutions were written by people who had fought their way to that pinnacle, and we undermine them at our peril. To hold that constitutional provisions may be contradicted by legislatures based on the general grant by the people of power to the *1302 legislature is to seriously undermine the concept of constitutional democracy.
[1] Twining v. New Jersey, 211 U.S. 78, 29 S. Ct. 14, 53 L. Ed. 97 (1908).
[2] Overruled on the question of waiver by Wright v. State, 340 So. 2d 74, 79-80 (Ala.1976).
[3] The Wade Court also mentioned these two grounds on which a court can exclude some spectators. 207 Ala. at 2-3, 92 So. at 102. Note that this does not reach the question of excluding the general public during the testimony of a minor prosecutrix, which would be disallowed by the holding in Hull.
[4] As to Justice Houston's lack of concern for my concerns about public trials, I must side with James Madison, who cautioned in 1788:
"Since the general civilization of mankind, I believe there are more instances of the abridgement of the freedom of the people, by gradual and silent encroachments of those in power, than by violent and sudden usurpations."
James Madison, Speech at Virginia Convention, June 5, 1788, in 5 Writings of James Madison 123, 126 (Gaillard Hund ed.1904) (as quoted in Shapiro, Oxford Dictionary of American Legal Quotations, p. 153 (1993)). | April 25, 1997 |
8e59d22b-bc5d-426f-88fc-7f2e4f3b8304 | Harris v. McKenzie | 703 So. 2d 309 | 1960085 | Alabama | Alabama Supreme Court | 703 So. 2d 309 (1997)
Bobby Lee HARRIS
v.
Paul Earl McKENZIE.
1960085.
Supreme Court of Alabama.
June 6, 1997.
Rehearing Denied August 22, 1997.
*310 Allan L. Armstrong of Cartwright & Armstrong, P.C., Birmingham; and Michael G. Graffeo, Birmingham, for appellant.
James R. Kramer and Brent L. Callihan of the Law Offices of James R. Kramer, Alabaster, for appellee.
ALMON, Justice.
Bobby Lee Harris appeals from a judgment voiding his election on August 27, 1996, to the office of City Council, Ward 1, of the City of Alabaster. The election contest was filed by Paul Earl McKenzie, who had received the second largest number of votes in the election. The circuit court held that Harris was not eligible to be elected because, it found, he was not a resident of the City of Alabaster and, in particular, of Ward 1. See Ala.Code 1975, §§ 11-43-1 and 11-43-63. The issue is whether the circuit court erred in finding that Harris was a resident of Sylacauga, in Talladega County, rather than of Ward 1 of the City of Alabaster, which is in Shelby County.
The dispute arises because Harris and his wife own a house in Sylacauga that undisputedly was their residence from 1979 until 1987 and that Harris continues to use for some purposes, discussed below. Harris contends, however, and he submitted evidence indicating, that he and his family moved to Alabaster in 1987, with the intention to reside there permanently.
It appears that Harris was the incumbent. His brief states that he was elected to the position in 1992. We do not find that fact in the record, but several items in the record support it. Included in Harris's Exhibit 7 is Harris's "Statement of Economic Interests" filed with the Alabama Ethics Commission in April 1995; that statement shows him to be an assistant school principal in Shelby County and an "Alabaster City Councilman." McKenzie's verified motion for a temporary restraining order includes the statement: "Bobby Lee Harris ... vacated his office of Councilmember due to the fact that he was not a resident of the City of Alabaster from April 8, 1995" (emphasis added). The April 1995 date derives from Harris's jury service in Talladega County in April 1996, as explained *311 below, together with the requirement of residence for a year in a county before being eligible for jury service there, Ala.Code 1975, § 12-16-60(a)(1). Harris could have "vacated his office" only if he was a council member in 1995 and 1996, before the August 1996 election disputed here.
The parties stipulated to the introduction of documentary evidence for both sides, which we shall discuss below. They then stipulated as to the testimony that Harris's wife would give:
Mr. Harris then testified. He testified that he registered to vote in Alabaster about 1969 and did not register to vote in Sylacauga during the time he and his family lived there. Registration to vote is a "potent consideration" for a court to take into account when determining one's domicile. Ambrose v. Vandeford, 277 Ala. 66, 70, 167 So. 2d 149, 153 (1964). See also Parr v. Shoemaker, 545 So. 2d 37 (Ala.1989), and Wilkerson v. Lee, 236 Ala. 104, 181 So. 296 (1938). "[V]oting is indicative of intention with respect to the question [of domicile] and is regarded as importantly bearing upon the place of domicile." Ex parte Weissinger, 247 Ala. 113, 117, 22 So. 2d 510, 514 (1945). Furthermore,
Weissinger, 247 Ala. at 117-18, 22 So. 2d at 514. Harris was registered to vote in Alabaster, Ward 1, at the time of the election in question, as we shall show below when we discuss his exhibits.
In 1987, Harris was appointed assistant principal at Thompson High School in Alabaster. When he and his wife moved back to Alabaster at that time, they bought a mobile home that was located on property that he did not, and still does not, own. In 1995, the Harrises replaced the mobile home they had bought in 1987 with another that they bought and placed on the same property. Harris testified that their mobile home is on Dilcy Daniel Drive, off Simmsville Road, in Ward 1 in Alabaster. He testified that he, his wife, and his three sons had lived in a mobile home at this location since buying the mobile home in 1987 and moving into it. His children attended Thompson High School in Alabaster, with the two older sons graduating from there in May 1996, as shown by copies of their diplomas entered as Harris's Exhibit 3.
Harris's attorney asked him "How is [the Sylacauga] property used by your family? What use do you make of it?" Those questions led to the following exchange:
Harris further testified that because he does not have a street address for mail at his residence in Alabaster, he receives his mail at a post office box in Siluria, Alabama. No discussion of the location of Siluria took place during the trial; from a current map of Alabama, we judicially notice that Siluria is immediately west of Alabaster in Shelby County. Harris testified that he gets very little mail at the Sylacauga address, principally just the utility bills for the house.
The only two items of evidence that might tend to support the circuit court's finding that Harris is a resident of Sylacauga are the fact that the Harrises have continued to claim a homestead exemption for taxation of the house they own there and the fact that Harris served on a jury in Talladega County in April 1996. Harris did not dispute the evidence as to either of these facts. He was asked about the homestead exemption, as follows:
Both his attorney and McKenzie's attorney asked him about the jury service. To his attorney's question as to how he responded when the Talladega County judge asked the jury venire whether everyone was a resident of Talladega County, Harris responded, "I must have said yes like everyone else." McKenzie introduced as a stipulated exhibit an excerpt from a transcript of the organization of court in Talladega County on April 8, 1996, in which the circuit court told the prospective jurors that they must be residents of Talladega County and instructed them, if they were not, to "come forward at this time." One person came forward and was excused. The transcript then continues:
When asked about this by McKenzie's attorney, Harris answered that he remembered someone else going forward to the judge and acknowledged that he did not.
One of McKenzie's exhibits was Harris's response to McKenzie's request for admissions, but the only fact it establishes that is not mentioned above is that Harris has a telephone listing at the house in Sylacauga. Harris's Exhibit 2[1] is a copy of a page from the "Greater Birmingham Residence" telephone book showing a listing for "Rev. Bobby *313 Harris" on Simmsville Road in Alabaster. Harris's Exhibit 1 is the "Voter List by Name" for "District 001" of the City of Alabaster, showing a date of Friday, August 23, 1996, including "Harris, Bobby Lee" and "Harris, Brenda McKin[cut off by the data format]."[2] Harris introduced exhibits showing his use of the Siluria post office box as his address; those exhibits included his motor vehicle registration and even the summons to jury duty in Talladega County. He introduced a portion of his and his wife's 1987 federal income tax return, showing the Sylacauga address; their 1988 tax return, showing a post office address in Alabaster; and their 1992 tax return, showing the Siluria post office box. Harris's exhibits 4 and 6 are insurance and credit applications; they show that he used the Siluria post office box. His driver's license and his pistol license also use that address. This is essentially all of the evidence, although there is some other cumulative evidence favorable to Harris.
The circuit court stated in its judgment that "the parties agree that residence for election purposes under" the relevant Code sections "means domicile," and cited Osborn v. O'Barr, 401 So. 2d 773 (Ala.1981). We agree that this is a correct proposition of law. See, e.g., Parr v. Shoemaker, 545 So. 2d 37 (Ala.1989); Rouse v. Wiley, 440 So. 2d 1023 (Ala.1983); Mitchell v. Kinney, 242 Ala. 196, 5 So. 2d 788 (1942).
"[W]hen a trial court sits in judgment on facts that are undisputed, an appellate court will determine whether the trial court misapplied the law to those undisputed facts." Craig Constr. Co. v. Hendrix, 568 So. 2d 752, 756 (Ala.1990) (citation omitted).
Ex parte Weissinger, 247 Ala. 113, 117, 22 So. 2d 510, 514 (1945).
There are only four items of evidence having any tendency at all to support a conclusion that Harris is a resident of Sylacauga: (1) the fact that he and his wife own a house there; (2) the fact that there is a telephone listing in his name at the Sylacauga address; (3) the fact that he failed to report a change of residence to the taxing authorities of Talladega County in regard to his homestead exemption; and (4) the fact that he failed to tell a Talladega County circuit judge on April 8, 1996, that he was not a resident of Talladega County.[3] The first two items are nondispositive and are clearly overcome by the overwhelming evidence of his fixed habitation in Alabaster, where he and his family live and where he works and is involved in the community. Similarly, his two failures listed as items (3) and (4) do not overcome the otherwise uncontradicted evidence that he is, and has been at all times pertinent to this action, a resident of Ward 1 in Alabaster for purposes of his eligibility for election as a city council member for that ward. All of the facts are undisputed, except perhaps Harris's intention in regard to his place of habitation, and the overwhelming weight of the evidence is that it is his intention to be a resident of Alabaster. The circuit court erred in concluding that Harris's residence for purposes of §§ 11-43-1 and 1143-63 is in Sylacauga rather than in Ward 1 of Alabaster.
REVERSED AND REMANDED.
MADDOX, SHORES, HOUSTON, KENNEDY, COOK, BUTTS, and SEE, JJ., concur.
HOOPER, C.J., dissents.
*314 HOOPER, Chief Justice (dissenting).
I must respectfully dissent. I believe the evidence supported the trial court's finding that Harris's residence was in Sylacauga rather than in Ward 1 of Alabaster. I am most persuaded by two pieces of evidence presented at the trial: (1) the fact that Harris claimed a homestead exemption for the Sylacauga residence in Talladega County, and (2) the fact that during voir dire for jury service in Talladega County, Harris did not tell the judge, when asked, that he was a resident of another county. I believe that each of these actions on Harris's part carries a certain public formality that indicates Harris intended to live in Sylacauga and considered himself to be a resident of Talladega County. Courts must be able to use and rely on objective criteria for determining a person's residence. Otherwise, courts have too great a flexibility to determine that status and the results will be unpredictable and will appear arbitrary.
In addition, I believe that the trial court was in a better position than this court to determine where Harris intended to reside. Therefore, I would affirm the trial court's judgment.
[1] All of the exhibits were admitted by stipulation.
[2] Both of these names show an address of "102 4TH PL NE" in Siluria. There was evidence that the Harris residence is at the intersection of Dilcy Daniel Drive and 4th Place N.E.
[3] We draw no conclusion as to any effect these failures may have in regard to his jury service, the taxation of his property, or otherwise. | June 6, 1997 |
2fb62a3b-fd80-4874-931a-db12ed52f09c | Mark Marvin v. Healthcare Authority for Baptist Health, an affiliate of UAB Health System, d/b/a Baptist Medical Center South, et al. | N/A | 1140581 | Alabama | Alabama Supreme Court | REL: 01/29/2016
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2015-2016
_________________________
1140581
_________________________
Mark Marvin
v.
Healthcare Authority for Baptist Health, an affiliate of UAB
Health System, d/b/a Baptist Medical Center South, et al.
Appeal from Montgomery Circuit Court
(CV-14-901877)
PER CURIAM.
AFFIRMED. NO OPINION.
Stuart, Parker, and Shaw, JJ., concur.
Bolin, J., concurs specially.
Moore, C.J., and Murdock and Wise, JJ., dissent.
Main and Bryan, JJ., recuse themselves.
1140581
BOLIN, Justice (concurring specially).
I concur in the no-opinion affirmance for the reasons
expressed in my special concurrence in Alvarado v. Estate of
Kidd, [Ms. 1140706, January 29, 2016] ___ So. 3d ___, ___
(Ala. 2016).
2
1140581
MOORE, Chief Justice (dissenting).
I respectfully dissent for the reasons expressed in my
dissents in Alvarado v. Estate of Kidd, [Ms. 1140706, January
29, 2016] ___ So. 3d ___, ___ (Ala. 2016), and Richards v.
Baptist Health, Inc., 176 So. 3d 179, 179 (Ala. 2014). I would
overrule Wood v. Wayman, 47 So. 3d 1212, 1216 (Ala. 2010),
which held that wrongful-death actions do not benefit the
estate
and,
hence,
that
the
powers
of
a
personal
representative in a wrongful-death case do not relate back in
time to give acts of the personal representative prior to that
appointment the same effect as acts occurring thereafter. See
§ 43-2-831, Ala. Code 1975.
3
1140581
MURDOCK, Justice (dissenting).
I dissent. See my special writing in Alvarado v. Estate
of Kidd, [Ms. 1140706, January 29, 2016] ___ So. 3d ___, ___
(Ala. 2016).
4
1140581
WISE, Justice (dissenting).
Ollie Mae Marvin died on November 13, 2012, while she was
a patient at Baptist Medical Center South in Montgomery. On
November 10, 2014, Ollie's son, Mark Marvin, filed a petition
to probate Ollie's will and a waiver from Ollie's other son,
Albert Foard Marvin. However, Marvin did not file a waiver
for Ollie's daughter, Marcia Ann
Dickens;
instead, he asserted
that her address was unknown.
On November 11, 2014, Marvin, individually and as the
executor of Ollie's estate, sued the defendants -- Healthcare
Authority for Baptist Health, an affiliate of UAB Health
System, d/b/a Baptist Medical Center South; Christopher Heck,
M.D.; Rajeev Nagarad, M.D.; David George, M.D.; Kimberly
Strength, N.P.; Henry F. Flemming, M.D.; Sanjiv Shah, M.D.;
and various fictitiously named defendants
--
under
the Alabama
Medical Liability Act, § 6-5-480 et seq. and § 6-5-540 et
seq., Ala. Code 1975, alleging that their negligence had
wrongfully caused Ollie's death. Various defendants filed
motions to dismiss, arguing that Marvin did not have standing
and that he was not the proper party to bring the action
because
he
had
not
been
appointed
as
the
personal
5
1140581
representative of Ollie's estate. They also asserted that,
because Marvin had not been appointed as the personal
representative before the expiration of the limitations
period, the case was barred by the two-year limitations period
set forth in § 6-5-410(d), Ala. Code 1975.
The Montgomery Circuit Court granted the defendants'
motions to dismiss, reasoning:
"Before the Court are motions to dismiss. The facts
are not in dispute. [Marvin] seeks to prosecute a
wrongful-death
case.
He
filed
for
letters
testamentary and this lawsuit just before the
statute of limitations expired. No letters were
issued until after the statute of limitations
expired.
"The Court is left to decipher the Ogle[ v. Gordon,
706 So. 2d 707 (Ala. 1997)], and [Wood v. Wayman, 47
So. 3d 1212 (Ala. 2010),] decisions which are
seemingly
contradictory.
In
Ogle,
the
Court
explicitly held that the issuance of the letters
related back to the time of the filing of the
petition in probate court. [Wood] concluded that
Ogle had nothing to do with relation back despite
all evidence to the contrary including: the express
statement of the issue, the holding, and fourteen
references to 'relation back' or a derivative
thereof. Ultimately, [Wood] decided that there was
no relation back doctrine which could save a
wrongful-death action save, perhaps, in the instance
of a negligent delay by the probate judge.
"The obvious distinction between the two cases is
that the plaintiff in Ogle filed for letters prior
to the statute running while Wayman did not.
However, the Court in [Wood] did not rely on this
6
1140581
distinction, instead casting a broader shadow: '...
The relation-back provision ... does not apply to a
wrongful death action....'
"Accordingly, this court has no choice but to follow
the most recent pronouncement and to dismiss this
action since there is no allegation of culpability
by the probate court. The bar should be forewarned
that the two-year statute of limitations in a
wrongful-death case is no more -- the time limit is
actually two years less whatever time it will take
for a probate judge to issue letters. Better hope
the judge is not on vacation, that the heirs are
easily located, etc.
"The motions to dismiss are granted and the case is
dismissed."
In Wood v. Wayman, 47 So. 3d 1212 (Ala. 2010), upon which
the trial court relied, this Court stated:
"[T]his Court stated in Ogle[ v. Gordon, 706 So. 2d
707 (Ala. 1997)]:
"'Our decision in Strickland[ v. Mobile
Towing & Wrecking Co., 293 Ala. 348, 303
So. 2d 98 (1974),] ... came long before the
Legislature's codification of § 43–2–831.
We,
therefore,
overrule
Strickland's
holding regarding the application of the
doctrine of relation back, insofar as it is
inconsistent with what we hold today, but
we note that Strickland correctly points
out that under the doctrine of relation
back one must have something to relate back
to, and we note that in the present case
the filing of the original petition is the
event to which the appointment would relate
back.'
7
1140581
"Ogle, 706 So. 2d at 710 (emphasis added). Ogle is
not specific as to what it overruled in Strickland,
saying only that 'we overrule Strickland's holding
regarding the application of relation back, insofar
as it is inconsistent with what we hold today.'
Ogle overruled Strickland because § 43–2–831, Ala.
Code 1975, which became effective after Strickland
was decided, specifically provides for relation back
under certain circumstances. As emphasized above,
however, this Court did not overrule the holding
that under the doctrine of relation back there must
be something to relate back to. It then related
Ogle's appointment back to his filing of the
petition for letters testamentary, which was the
same date on which the action was filed.
"To summarize, Ogle stated that the two-year
limitations period in § 6–5–410 is not a statute of
limitations and that it is not subject to tolling.
Ogle acknowledged that relation back is permitted
for personal representatives by virtue of §
43–2–831, but it allowed relation back in that
wrongful-death
case
solely
because
of
the
'inadvertence' of the probate court, which caused
the long delay after Ogle timely filed both his
petition and his complaint within four months of the
decedent's death. Because there must be something
to
which
the
appointment
as
a
personal
representative may relate back, the Court related
the appointment back to the filing of the petition
for such appointment. Although Ogle's appointment
was permitted to relate back to the date he filed
his petition for that appointment, nothing in Ogle
supports Wayman's argument that her appointment as
personal representative of Charles's estate relates
back to the date of the filing of the wrongful-death
action."
47 So. 3d at 1218-19 (final emphasis added). Thus, as the
trial court noted, in Ogle this Court held that an appointment
8
1140581
as a personal representative may relate back to the filing of
the petition for such appointment.
In this case, although he was appointed as the personal
representative
of
Ollie's
estate
after
the
two-year
limitations period had expired, Marvin filed the petition to
probate Ollie's will within two years after Ollie's death and
before he filed the wrongful-death action. Applying the
principles regarding relation back that are discussed in the
cases above to these facts, when the personal representative
of an estate files a petition in the probate court before
filing a wrongful-death suit, and when both are filed before
the
two-year
limitations
period
expires,
an
appointment
should
relate back to the filing of the petition in the probate
court. To the extent Wood either implicitly or explicitly
held otherwise, it should be overruled.
In this case, Marvin's appointment should relate back to
the filing of the petition to probate Ollie's will, which was
before the limitations period expired. Therefore, I would
hold that the trial court erred in dismissing the wrongful-
death action. Accordingly, I respectfully dissent.
9 | January 29, 2015 |
cdfdafb3-d176-45af-8247-27a592551ccc | Ex Parte Brooks | 695 So. 2d 184 | 1951964 | Alabama | Alabama Supreme Court | 695 So. 2d 184 (1997)
Ex parte Christopher Eugene BROOKS.
(Re Christopher Eugene Brooks v. State).
1951964.
Supreme Court of Alabama.
April 25, 1997.
*186 Virginia A. Vinson of Wilkinson & Vinson, Birmingham, for Petitioner.
Bill Pryor, Atty. Gen., and P. David Bjurberg, Asst. Atty. Gen., for Respondent.
SHORES, Justice.
Christopher Eugene Brooks was convicted of a murder made capital because the murder occurred during a rape, a robbery, and a burglary. Ala.Code 1975, § 13A-5-40(a). The trial judge accepted the jury's recommendation and sentenced the defendant to death. The Court of Criminal Appeals affirmed his conviction and sentence. Brooks v. State, 695 So. 2d 176 (Ala.Crim.App.1996). This Court granted certiorari review. On this review, Brooks raises five issues. We affirm.
The facts of the case were stated in the opinion of the Court of Criminal Appeals:
Brooks v. State, 695 So. 2d at 178-79. The record also reflects that after searching Brooks's apartment, the police recovered the keys to the victim's automobile; pawn tickets; the victim's AT & T answering machine; and receipts from purchases that had been made with the victim's Shell Oil Company credit card.
The first issue is whether the prosecutor, in violation of the defendant's constitutional right to remain silent, improperly remarked upon the defendant's failure to testify. The following exchange occurred during the rebuttal portion of the prosecutor's closing argument:
Following this statement, defense counsel again objected and asked to be heard in chambers at the conclusion of the trial court's charge to the jury. In chambers, defense counsel moved for a mistrial, arguing that the prosecutor had improperly commented upon the defendant's failure to testify. The trial court denied the motion, finding that the comment had been directed toward defense counsel's argument that there existed a reasonable hypothesis of the defendant's innocence; the court stated:
The Court of Criminal Appeals, affirming the conviction, held that the comment had not been directed toward the defendant's silence, but that the comment was a "reply in kind" to defense counsel's argument that the circumstantial nature of the State's evidence created a reasonable hypothesis suggesting *188 the defendant's innocence, and that the State had not disproved that hypothesis. We agree.
In all criminal prosecutions, the accused shall not be compelled to give evidence against himself. Alabama Constitution, Art. I, § 6.
Ala.Code 1975, § 12-21-220; see also Ex parte Wilson, 571 So. 2d 1251, 1261 (Ala. 1990); Ex parte Yarber, 375 So. 2d 1231, 1233 (Ala.1979); Whitt v. State, 370 So. 2d 736, 738-39 (Ala.1979).
Comments by a prosecutor on a defendant's failure to testify are highly prejudicial and harmful, and courts must carefully guard against a violation of a defendant's constitutional right not to testify. Whitt, supra, at 739; Ex parte Williams, 461 So. 2d 852, 853 (Ala.1984); see Ex parte Purser, 607 So. 2d 301 (Ala.1992). This Court has held that comments by a prosecutor that a jury may possibly take as a reference to the defendant's failure to testify violate Art. I, § 6, of the Alabama Constitution of 1901. Ex parte Land, 678 So. 2d 224 (Ala.), cert. denied, ___ U.S. ___, 117 S. Ct. 308, 136 L. Ed. 2d 224 (1996); Ex parte McWilliams, 640 So. 2d 1015 (Ala.1993); Ex parte Wilson, supra; Ex parte Tucker, 454 So. 2d 552 (Ala. 1984); Beecher v. State, 294 Ala. 674, 320 So. 2d 727 (1975). Additionally, the Fifth and Fourteenth Amendments of the United States Constitution may be violated if the prosecutor comments upon the accused's silence. Griffin v. California, 380 U.S. 609, 85 S. Ct. 1229, 14 L. Ed. 2d 106 (1965); Ex parte Land, supra; Ex parte Wilson, supra. Under federal law, a comment is improper if it was "`"manifestly intended or was of such a character that a jury would naturally and necessarily take it to be a comment on the failure of the accused to testify."`" United States v. Herring, 955 F.2d 703, 709 (11th Cir.), cert. denied, 506 U.S. 927, 113 S. Ct. 353, 121 L. Ed. 2d 267 (1992) (citations omitted); Marsden v. Moore, 847 F.2d 1536, 1547 (11th Cir.), cert. denied, 488 U.S. 983, 109 S. Ct. 534, 102 L. Ed. 2d 566 (1988); United States v. Betancourt, 734 F.2d 750, 758 (11th Cir.), cert. denied, 469 U.S. 1021, 105 S. Ct. 440, 83 L. Ed. 2d 365 (1984). The federal courts characterize comments as either direct or indirect, and, in either case, hold that an improper comment may not always mandate reversal.[1]
Consistent with this reasoning, Alabama law distinguishes direct comments from indirect comments and establishes that *189 a direct comment on the defendant's failure to testify mandates the reversal of the defendant's conviction, if the trial court failed to promptly cure that comment. Whitt v. State, supra; Ex parte Yarber, supra; Ex parte Williams, supra; Ex parte Wilson, supra. On the other hand, "covert," or indirect, comments are construed against the defendant, based upon the literal construction of Ala. Code 1975, § 12-21-220, which created the "virtual identification doctrine." Ex parte Yarber, 375 So. 2d at 1234. Thus, in a case in which there has been only an indirect reference to a defendant's failure to testify, in order for the comment to constitute reversible error, there must have been a virtual identification of the defendant as the person who did not become a witness. Ex parte Yarber, 375 So. 2d at 1234; Ex parte Williams, supra; Ex parte Wilson, supra; Ex parte Purser, supra. A virtual identification will not exist where the prosecutor's comments were directed toward the fact that the State's evidence was uncontradicted, or had not been denied. See Beecher v. State, 294 Ala. 674, 682, 320 So. 2d 727, 734 (1975); Ex parte Williams, supra; Ex parte Purser, supra. Yet, in such circumstances, it becomes important to know whether the defendant alone could have provided the missing evidence.[2]
A challenged comment of a prosecutor made during closing arguments must be viewed in the context of the evidence presented in the case and the entire closing arguments made to the juryboth defense counsel's and the prosecutor's. Ex parte Land, supra; Windsor v. State, 683 So. 2d 1021, 1023 (Ala.1994); Ex parte Musgrove, 638 So. 2d 1360, 1368 (Ala.1993), cert. denied, 513 U.S. 845, 115 S. Ct. 136, 130 L. Ed. 2d 78 (1994). Here, defense counsel argued that the State's evidence, because of its circumstantial nature, was insufficient to prove beyond a reasonable doubt that the defendant had committed the crimes. Defense counsel insisted that the evidence created a reasonable hypothesis of the defendant's innocence because there were unidentified fingerprints, unidentified pubic hair, and unidentified semen at the crime scene, which, defense counsel contended, suggested that another person had committed the crimes. In rebuttal, the State commented upon the fact that defense counsel had not presented any evidence in support of this contention and had failed to contradict the State's evidence. The prosecutor highlighted the overwhelming evidence implicating the defendant as the perpetrator of the crimes and, in this context, argued that defense counsel's contention was hollow.
Under the particular facts of this case, we cannot find that the prosecutor's statements were directed toward the defendant's silence. When viewed in the proper context, it is clear that they were a response to defense counsel's characterizing the circumstantial nature of the State's evidence in a way that created a reasonable hypothesis of innocence. Ex parte Musgrove, 638 So. 2d 1360 (Ala.1993); see Stephens v. State, 580 So. 2d 11 (Ala.Crim.App.1990), aff'd, 580 So. 2d 26 (Ala.), cert. denied, 502 U.S. 859, 112 S. Ct. 176, 116 L. Ed. 2d 138 (1991); Merritt v. State, 571 So. 2d 409 (Ala.Crim.App.1990); Ex parte McWilliams, 640 So. 2d 1015, 1019-20 (Ala.1993); Ex parte Wilson, 571 So. 2d at 1262. The Court of Criminal Appeals correctly approved the trial court's ruling that the prosecutor had appropriately exercised his right to "reply in kind." Ex parte Musgrove, 638 So. 2d at 1369. We conclude that, in the context of the evidence and the closing arguments of both the defense and the State, the statements at issue were not a reference to the defendant's failure to testify, but rather were a reply to the insufficiency argument made by defense counsel that the evidence suggested a reasonable hypothesis of the defendant's innocence and that the State had failed to eliminate that hypothesis. Accordingly, we find no reversible *190 error. Assuming, however, that the statements constituted an indirect reference, we conclude that the trial court's ameliorative charge to the jury and the overwhelming evidence of guilt rendered that error harmless beyond a reasonable doubt. United States v. LeQuire, supra; United States v. Delgado, supra.
The defendant next contends that the prosecutor struck jurors on the basis of race and thereby violated the principles of Batson v. Kentucky, 476 U.S. 79, 106 S. Ct. 1712, 90 L. Ed. 2d 69 (1986). The prosecutor used two peremptory strikes to remove black female jurors from the jury venire. Defense counsel objected, alleging that the strikes had been motivated by "strictly racial reasons." The trial court asked the prosecutor for race neutral reasons for the strikes; the prosecutor replied that the jurors had never been employed; that they were single; that they were young; and that he considered them less stable and not well equipped in terms of life experience to handle the nature of a capital case and the prosecutor's seeking the death penalty. The prosecutor also indicated that he had struck one white male for the same reasons.
The party alleging discriminatory use of a peremptory strike bears the burden of establishing a prima facie case of discrimination. Ex parte Branch, 526 So. 2d 609, 622 (Ala.1987). Where, as in this case, the trial court requires the opposing counsel to state race-neutral reasons for peremptory strikes, without first requiring that a prima facie case of discrimination be shown, this Court will review the reasons given and the trial court's ultimate decision on the Batson motion without any determination of whether the moving party met its burden of proving a prima facie case of discrimination. Norfolk Southern Ry. v. Gideon, 676 So. 2d 310 (Ala.1996), citing Hernandez v. New York, 500 U.S. 352, 111 S. Ct. 1859, 114 L. Ed. 2d 395 (1991). When the trial court has required a party to state reasons for the strikes, that party must articulate reasons that are clear, specific, and legitimate, that relate to the particular case, and that are nondiscriminatory. Ex parte Bird, 594 So. 2d 676, 679 (Ala.1991); Carter v. State, 603 So. 2d 1137 (Ala.Crim.App.1992); Adkins v. State, 639 So. 2d 515 (Ala.Crim. App.1993), aff'd, 639 So. 2d 522 (Ala.), cert. denied, 513 U.S. 851, 115 S. Ct. 151, 130 L. Ed. 2d 90 (1994). After race-neutral reasons have been articulated, the moving party can offer evidence showing that those reasons are really a sham or pretext. Ex parte Branch, 526 So. 2d at 625. On appeal, the trial court's ruling on the question whether the responding party offered legitimate race neutral reasons will not be overturned unless it is clearly erroneous. K.S. v. Carr, 618 So. 2d 707, 710 (Ala.1993), citing Ex parte Branch, 526 So. 2d at 622.
The defendant contends that the reasons offered by the prosecutor were not sufficiently race-neutral, relying on Ex parte Bird, supra, Carter v. State, supra, and Adkins v. State, supra. Essentially, Ex parte Bird, Carter, and Adkins respectively hold that age, employment status, and marital status are not sufficiently race-neutral reasons for a peremptory strike, if the prosecutor gives that reason as the sole basis for the strike, where that reason is unrelated to the case. The Court of Criminal Appeals, in approving the trial court's denial of the defendant's motion, found that the prosecutor had relied upon instability and lack of life experience, in addition to the three factors of age, employment status, and marital status. Thus, the court found that the prosecutor had not relied solely on those three factors. The defendant argues that the factors of instability and lack of life experience do not add anything to the other three factors; i.e., that to speak of instability and lack of life experience is another way to speak of age, employment status, and marital status. We find, however, that the stated reasons, taken together, were permissible justifications for strikes used to remove jurors who might have identified with and felt sympathy for the defendant, who was also young, single, unemployed, and ostensibly unstable, and to remove jurors without "life experience," in favor of more experienced jurors, considering the burden posed by a capital murder trial. Olsen v. Rich, 657 So. 2d 875 (Ala.1995); Jelks v. Caputo, 607 So. 2d 177 (Ala.1992); see Fisher v. State, 587 So. 2d 1027 (Ala.Crim. App.), cert. denied, 587 So. 2d 1039 (Ala.1991), *191 cert. denied, 503 U.S. 941, 112 S. Ct. 1486, 117 L. Ed. 2d 628 (1992).
Furthermore, the prosecutor's comparable treatment of the jurors of both races is evidence tending to rebut any inference of discriminatory intent. See Ex parte Branch, 526 So. 2d 609, 624 (Ala.1987). Here, the prosecutor struck two black females and one white male on the basis of age, employment status, marital status, instability, and lack of life experience. This comparable treatment among jurors of both races suggests that the strikes were race-neutral. Ex parte Branch, supra; Sanders v. State, 623 So. 2d 428 (Ala. Crim.App.1993). Accordingly, we conclude that the trial court was not clearly erroneous in determining that the jurors were struck for race-neutral reasons. Ex parte Thomas, 659 So. 2d 3, 7 (Ala.1994); K.S.v. Carr, 618 So. 2d 707 (Ala.1993).
The defendant also argues that the prosecutor struck jurors on the basis of "economic status," in violation of § 12-16-56, Ala.Code 1975, which states that economic status shall not serve as a basis for exclusion from jury service. The defendant did not raise this issue with the trial court. We conclude that it lacks merit, because the record does not indicate that the prosecutor used economic status as a basis for any of his peremptory strikes.
The defendant next contends that he was denied effective assistance of trial counsel. This issue was raised in a motion for new trial, and the trial court held a hearing on the matter. After listening to the allegations and hearing the testimony of the trial attorneys, the court found that counsel had "ably and with distinction zealously represented" the defendant during the trial. The Court of Criminal Appeals agreed, holding, 695 So. 2d at 181, that the defendant had failed to satisfy either prong of the test enunciated by the United States Supreme Court in Strickland v. Washington, 466 U.S. 668, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984), which puts the burden on the defendant to show that trial counsel's performance was deficient and that the deficient performance prejudiced the defense. Strickland, 466 U.S. at 687, 104 S. Ct. at 2064, 80 L. Ed. 2d at 694-95.
In support of his argument, the defendant argues that his trial counsel failed to properly investigate the case in preparation for trial. The defendant argues that trial counsel should have investigated the background of the defendant and the circumstances of the crime; that counsel should have hired a private investigator and DNA experts to contest the State's evidence; and that counsel should have contacted character witnesses and witnesses named in the police report, but did not. At the hearing, trial counsel testified that his trial preparation was adequate. Counsel had complete access to the prosecutor's files; counsel interviewed all essential witnesses; counsel, as a matter of trial strategy, agreed with the prosecutor that during the sentencing phase of the trial he would not present testimony that the defendant was of a good character, in exchange for the prosecutor's agreement not to present victim-impact evidence; and counsel chose not to use DNA experts to contest the semen sample, because the defendant had admitted to having had intercourse with the victim on the night of the murder, and, instead, argued that no rape had occurred. Counsel testified that the psychiatric evaluation of the defendant showed no evidence of emotional, mental, or substance abuse problems; and that the "phantom defendant" defense was not a viable alternative, given that the defendant's bloody fingerprints were found in the victim's apartment.
In Ex parte Lawley, 512 So. 2d 1370, 1372-73 (Ala.1987), we stated that "strategic decisions made after less than complete investigation [of the crime] are `reasonable precisely to the extent that reasonable professional judgments support the limitations on investigation.'" (Citations omitted.) Having reviewed counsel's performance with a strong presumption of reasonable professional assistance, Strickland, 466 U.S. at 687, 104 S. Ct. at 2064, 80 L. Ed. 2d at 694, we conclude that counsel's investigation of the case was reasonable and that the particular way he exercised his judgment did not suggest ineffective assistance of counsel.
The defendant also argues that counsel failed to properly communicate with him and failed to advise him of his options *192 with respect to testifying or not testifying. The defendant alleges that counsel did not return the defendant's telephone calls and generally failed to keep the defendant informed. Counsel, however, testified that he adequately discussed with the defendant all aspects of the case; that counsel visited the defendant at the jail where the defendant was incarcerated and had several telephone conversations with him; that the defendant indicated as early as the preliminary hearing that he did not want to testify; and that the defendant understood his alternatives and ultimately chose not to testify. Based upon the presumption of reasonableness we accord counsel's actions, we do not find this assistance to have been deficient.
The defendant also contends that trial counsel's assistance was made ineffective by the fact that counsel presented no meaningful mitigating evidence in the sentencing phase of the trial. The record, however, shows that counsel investigated all potential mitigating evidence, but that no such evidence was usable. As stated by the Court of Criminal Appeals, "there is no indication in the record that any evidence of mitigation exists." 695 So. 2d at 181. We agree with the Court of Criminal Appeals that counsel's performance cannot be deemed deficient in this respect, when there is no such evidence. Baldwin v. State, 539 So. 2d 1103 (Ala.Crim. App.1988), cert. denied, 493 U.S. 874, 110 S. Ct. 206, 107 L. Ed. 2d 159 (1989). Accordingly, the defendant's arguments of ineffective assistance of counsel fail to satisfy the test of Strickland, supra.
The defendant next argues that during its charge to the jury the trial court committed reversible error by using the phrase "abiding conviction" in reference to "reasonable doubt." The trial court stated:
The defendant reads this instruction to mean that the jurors needed an abiding conviction in order to find a reasonable doubt, which, he says, would have improperly reduced the State's burden of proof. The defendant contends that this instruction could have caused a reasonable juror to believe that the degree of proof necessary to convict was lower than that which is required by the Due Process Clause of the United States Constitution, citing Cage v. Louisiana, 498 U.S. 39, 111 S. Ct. 328, 112 L. Ed. 2d 339 (1990), in support of that contention. Defense counsel did not object to the instruction. Therefore, our review of this issue is subject to the plain error rule. See Rule 39(k) and Rule 45A, Ala.R.App.P.
In Cage, supra, the Supreme Court held that raising the degree of doubt that would require an acquittal impermissibly reduces the State's burden of proving guilt. Here, however, the complained-of charge relates to the degree of evidence necessary for a conviction. After giving the charge quoted before the preceding paragraph, the trial court continued:
These instructions clearly do not contain the same flaws condemned by the Supreme Court in Cage. Furthermore, in Victor v. Nebraska, 511 U.S. 1, 114 S. Ct. 1239, 127 L. Ed. 2d 583 (1994), the United States Supreme Court held that an instruction cast in terms of an abiding conviction as to guilt correctly states the prosecutor's burden of proof. Thus, we find no error in the trial court's charge. See Alexander v. State, 601 So. 2d 1130 (Ala.Crim.App.1992).
The defendant's final argument is that the trial court erred by allowing testimony concerning the results of DNA testing into evidence, because, he says, the State had failed to establish that the DNA laboratory in Mobile, where the testing was done, used generally accepted testing techniques and had performed its tests without error, as *193 required by the third prong of the test stated in Ex parte Perry, 586 So. 2d 242 (Ala.1991). That prong asks:
Ex parte Perry, 586 So. 2d at 250.
At the Frye hearing, Faron Brewer, a forensic serologist working with the State Department of Forensic Sciences, amply testified to the general acceptance of the RFLP method used by the Mobile DNA laboratory. He testified that it complied with the guidelines established by the Technical Working Group for DNA Analysis Method,[3] and that the National Research Council[4] had confirmed its reliability. He testified that the Mobile lab ran quality control tests simultaneously with its analysis of the DNA sample; that the quality control tests supported the reliability of the sample taken in this case; that he was present when his supervisor performed the first part of the sampling procedure; that he performed the remainder of the sampling procedure; and that the sample's condition had not affected the analysis. We agree with the Court of Criminal Appeals' conclusion that the record fully supports the State's argument that it had satisfied the third prong of the Frye test.
We have considered each of the issues raised in the defendant's brief, and, we have searched the record for plain error, whether or not it was brought to our attention or to the attention of the trial court. Rule 39(k) and Rule 45A, Ala.R.App.P. We have found no error that adversely affected Brooks's rights. Additionally, we conclude that the opinion of the Court of Criminal Appeals properly addressed the requirements of § 13A-5-53(a) and (b), Ala.Code 1975.
For the reasons stated, the judgment of the Court of Criminal Appeals is due to be affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, HOUSTON, COOK, BUTTS, and SEE, JJ., concur.
[1] See Chapman v. California, 386 U.S. 18, 22, 87 S. Ct. 824, 827, 17 L. Ed. 2d 705 (1967); Lakeside v. Oregon, 435 U.S. 333, 98 S. Ct. 1091, 55 L. Ed. 2d 319 (1978) (holding that trial court's curative instruction that jury should draw no adverse inferences from defendant's failure to testify does not violate privilege against self-incrimination); United States v. Hasting, 461 U.S. 499, 103 S. Ct. 1974, 76 L. Ed. 2d 96 (1983) (applying the harmless-beyond-a-reasonable-doubt standard); Duncan v. Stynchcombe, 704 F.2d 1213, 1215-16 (11th Cir.1983) (holding that a prosecutor's comments on the failure of the defense, as opposed to that of the defendant, to counter or explain the testimony presented or evidence introduced is not an infringement of the defendant's Fifth Amendment privilege); Marsden v. Moore, supra; United States v. Norton, 867 F.2d 1354, 1364 (11th Cir.), cert. denied, 493 U.S. 871, 110 S. Ct. 200, 107 L. Ed. 2d 154 (1989) (holding that an indirect reference, directed toward defense counsel's failure to rebut the Government's evidence, is not reversible error per se); United States v. LeQuire, 943 F.2d 1554 (11th Cir.1991) (holding that no "manifest intent" exists where another, equally plausible explanation for the remark is present, and that even if a comment is a direct comment, which would satisfy the element of "naturally and necessarily," it may, nevertheless, constitute error harmless beyond a reasonable doubt, where the overwhelming evidence of guilt and the trial court's curative instruction would have negated any influence on the jury in reaching its verdict); United States v. Delgado, 56 F.3d 1357, 1369 (11th Cir.1995), cert. denied, ___ U.S. ___, 116 S. Ct. 713, 133 L. Ed. 2d 667 (1996) (stating that "[e]ven if the prosecutor's remarks were prejudicial, the district judge gave a curative instruction which, under settled Eleventh Circuit law, would render any error harmless where the evidence of guilt was overwhelming").
[2] See Street v. State, 266 Ala. 289, 96 So. 2d 686 (1957); Ex parte Williams, supra; Padgett v. State, 45 Ala.App. 56, 223 So. 2d 597, 602, cert. denied, 284 Ala. 732, 223 So. 2d 603 (1969) (stating that where only the defendant and his co defendant could deny the inculpatory testimony, the prosecutor's remark that certain testimony was uncontradicted raised a danger that the jury would draw an improper inference from the defendant's failure to take the stand); Pittman v. State, 462 So. 2d 791, 793 (Ala.Crim.App.1984); Windsor v. State, 593 So. 2d 87 (Ala.Crim.App.1991).
[3] TWGDAM is a voluntary quality assurance group coordinated through the FBI and composed of 35 forensic scientists representing 22 state and local agencies around the country.
[4] The National Research Council is a group of scientists outside the forensic community that has issued a report attesting to the reliability of the RFLP method. | April 25, 1997 |
74fd31bb-e845-4c3e-b4eb-a93e50511a70 | American and Foreign Ins. v. Tee Jays | 699 So. 2d 1226 | 1951931 | Alabama | Alabama Supreme Court | 699 So. 2d 1226 (1997)
AMERICAN AND FOREIGN INSURANCE COMPANY
v.
TEE JAYS MANUFACTURING COMPANY, INC.; and Tee Jays Holding Corporation.
1951931.
Supreme Court of Alabama.
April 18, 1997.
Rehearing Denied July 18, 1997.
Stanley A. Cash and Walter J. Price III of Huie, Fernambucq & Stewart, Birmingham, for appellant.
Henry H. Self, Jr., of Self & Self, Florence; and Conrad C. Pitts of Pitts & Iron, Florence, for appellees.
BUTTS, Justice.
American and Foreign Insurance Company ("A & F") appeals from a partial summary judgment entered in favor of Tee Jays Manufacturing Company, Inc., and Tee Jays Holding Corporation (collectively "Tee Jays"), on Tee Jays' claim for benefits for a claimed business income loss, under an insurance policy it had bought from A & F.[1] We affirm.
In October 1993, A & F issued to Tee Jays an insurance policy entitled "Business Protection Portfolio." The policy read, in pertinent part:
(Emphasis added.)
The business income loss coverage was to compensate the insured for lost profits or loss of earnings incurred after an occurrence, and it was to be computed on a "daily value" basis; that is, according to the amount of business income that Tee Jays would have earned each working day if no loss or damage had occurred.
The policy stated that the base premium Tee Jays paid at the inception of each policy year was actually an advance premium, subject to adjustment at the end of the policy year. The amount of advance premium charged at the beginning of the year was to be based upon a "Statement of Values" submitted by Tee Jays; that statement was to list the value of Tee Jays' covered assets. The policy required Tee Jays to supplement this information by submitting a second statement within 60 days before the end of the policy period; the policy specified that Tee Jays was to submit a listing of its business income at that time. The policy stated that, if the values Tee Jays reported at the end of the year differed by more than 2% from the values it had submitted at the beginning of the year, the premium would be decreased or increased as needed to reflect the true amount of the values listed.
The policy period began on October 4, 1993, and ended on October 4, 1994. The record shows that, at the beginning of the policy year, Tee Jays submitted to A & F a statement reporting the value of its commercial property and reporting part of its business income; however, Tee Jays did not include the entire amount of its business income. Although A & F computed the advance premium of $144,127 based solely on the amounts in this statement, the policy provided that, in return for the payment of this premium, A & F agreed to provide the insurance as stated in the policy, which included business loss insurance. The policy stated, however, that the premium would be subject to adjustment based upon the information contained within the yearly report that the insured was required to make within 60 days of the anniversary of the policy.
On February 9, 1994, Tee Jays suffered a fire loss to a portion of its business. Tee Jays submitted a claim to A & F for property damage it had sustained in the fire, and A & F paid this claim up to the policy limits. Tee Jays subsequently filed a claim for benefits under the business income loss coverage, submitting a proof of loss form showing business losses of $3,922,191.63. A & F never paid that claim.
In September, within 60 days of the anniversary of the policy, Tee Jays submitted the annual report of its property values, as the policy required it to do, and, at that time, it reported all of its annual business income. Tee Jays requested that A & F increase the premium due at the end of the policy year as needed, in view of this business income that it had not reported in its entirety at the outset of the policy year.
In response, A & F refused to adjust the premium. A & F advised Tee Jays that, when it issued the policy, it had not intended to provide Tee Jays with business income loss coverage and that it thus had not charged Tee Jays an advance premium for such coverage. A & F claimed that the insurance policy it issued to Tee Jays was a computer-generated form that its agents edited to conform to each client, that the inclusion *1228 of a business income loss provision within the policy was merely a unilateral clerical mistake, and that Tee Jays' failure to pay for the coverage from the outset indicated that it had not intended to have such coverage. A & F therefore effectively denied the business income loss coverage to Tee Jays, and Tee Jays brought this action. A & F then filed a "counterclaim for reformation," alleging that the contract contained clerical errors that caused the contract incorrectly to appear to provide business income loss coverage to Tee Jays. Tee Jays moved to dismiss the counterclaim and also moved for a partial summary judgment on the issue whether A & F was required to provide the business income loss coverage.
After a hearing, the trial court determined that the insurance contract was unambiguous but that, even if it had been ambiguous, it would be construed against the insurer. The trial court went on to note that the only affidavit testimony as to the amount of Tee Jays' business loss had come from William Newby, Tee Jays' vice-president; Newby adopted the sworn proof of loss (in the amount of $3,922,191.63) that Tee Jays had submitted to A & F. However, the trial court also noted that the defendants had introduced documents from its accountants showing that, when the loss was computed according to the provisions of the insurance policy, it amounted to $1,941,302. Based on this evidence, the trial court determined that $1,941,302 was the undisputed floor for any judgment on the contract. To this amount, the trial court added 6% interest accruing since the claim had become payable, and entered a total judgment of $2,120,872. As to A & F's counterclaim for reformation of the contract, the trial court held that any mistake A & F had made could not be deemed a mere clerical error and could not form the basis of a reformation of the contract; thus, the trial court dismissed the counterclaim.
A & F first argues that the trial court erred in entering the summary judgment for Tee Jays, ordering A & F to provide the business income coverage. We begin by noting that insurance contracts are subject to the same general rules applicable to other written contracts; specifically, in case of doubt or uncertainty as to a policy's meaning, the terms of the policy are to be interpreted against the party that drafted them. Home Indemnity Co. v. Employers National Insurance Corp., 564 So. 2d 945 (Ala.1990). If the policy is clear and unambiguous in its terms, then there is no question of interpretation or construction. Home Indemnity. If the policy is unclear and ambiguous in its terms, but not void for uncertainty, then it must be interpreted and construed under well-settled rules of construction applicable to all contracts. It is the province of the court, not the jury, after duly considering the whole of the policy, to determine if it is uncertain or ambiguous in its terms. It is further the province of the court, not the jury, to construe a policy, even though ambiguous and unclear but not void for uncertainty, where its interpretation must come from the writing itself. Home Indemnity.
Here, the policy, on its face, clearly provides business loss coverage for Tee Jays, and any mistake in including this coverage in the policy must be construed against A & F. A & F emphasizes that Tee Jays did not pay a premium for this coverage at the beginning of the policy period; however, the policy itself allowed for an adjustment of the premium at the end of the policy period and specifically required Tee Jays to report its business value at that time. Tee Jays complied with the requirement that it submit its business value 60 days prior to that time, and it stood ready to pay the increase in the premium that was necessary to pay for the business income loss coverage. Under the express terms of the insurance policy it wrote, A & F was therefore bound to provide this coverage to Tee Jays.
A & F argues that the inclusion of the express business income loss coverage terms in the policy was a clerical error and that the trial court therefore erred in dismissing its counterclaim for reformation of the contract. In response to this argument, the trial court found and held as follows:
*1229 "On May 23, 1996, the defendants filed [a] `Counterclaim for reformation' alleging `clerical errors or mistakes' in connection with the providing of `Business Income' protection. On June 7, 1996, the plaintiffs filed a Motion to Dismiss under Rule 12(b)(6)[, Ala.R.Civ.P.], specifically alleging that the only grounds for reformation are provided by Code of Alabama 1975, § 8-1-2, which provides:
"Although [they] could have done so as a matter of course, the defendants did not amend [their] Counterclaim so as to comply with the requirements of this Code section, choosing instead to advance a `clerical error or mistake' argument. Even given liberal pleading construction, the defendants have failed to allege any of these valid grounds for relief. Given the fact that the burden of proof in such action is `clear and convincing,' the Court can only conclude that the defendants conclude that the legal basis by the proper standard is unmaintainable. If `clerical error or mistake' as alleged by the defendants under the undisputed facts of this case can form the basis of the reformation of a contract, then there would never be a contract or contract provision, no matter how clear, that would be safe from attack. A clerical error is where `Smyth' is substituted for `Smith' or where '221.1 acres' is typed as '22.11 acres.' A unilateral mistake will not suffice. American Liberty Insurance Co. v. Leonard, [270 Ala. 17] 115 So. 2d 470 (1959). A unilateral mistake is all that is alleged by the defendant[s], and this deficiency is acknowledged by [their] representative in produced documents. This refusal to accept the sufficiency of the Counterclaim as a matter of law is strengthened by the following excerpt from the policy itself;
"This is a contractual mandate that the `parol evidence rule' and the doctrine of `merger' apply. There are serious implications when a contracting party represents that there are no other agreements except what is stated in the policy and then, after a loss, petitions the Court to reform the contract to add or take away from such contract.
We agree with the trial court's dismissal of A & F's counterclaim and hereby adopt the quoted portion of its order as a part of our opinion. We likewise agree that the trial court properly entered the summary judgment for Tee Jays holding that A & F must provide the insurance coverage that it included in the policy issued to Tee Jays. The trial court's judgment is therefore affirmed.
AFFIRMED.
HOOPER, C.J., and MADDOX, SHORES, HOUSTON, KENNEDY, COOK, and SEE, JJ., concur.
[1] In addition to the claim for benefits, Tee Jays sought damages for an alleged bad faith failure to pay the claim. The trial court made its ruling on the coverage issue final, pursuant to Rule 54(b), Ala.R.Civ.P. | April 18, 1997 |
8aedd8ba-337d-4047-931e-bf2c1674c0c5 | Ex Parte Lumpkin | 702 So. 2d 462 | 1960443 | Alabama | Alabama Supreme Court | 702 So. 2d 462 (1997)
Ex parte Greg LUMPKIN, M.B. Hagedorn, and Ina Black Realty.
(Re Jodi Lynn GREEN, et al.
v.
Greg LUMPKIN, et al.).
1960443.
Supreme Court of Alabama.
June 13, 1997.
*463 Jack W. Torbert of Torbert & Torbert, P.A., Gadsden; and L. Graves Stiff III and Sharon A. Woodard of Starnes & Atchison, Birmingham, for petitioners.
Valerie L. Palmedo, Anniston, for respondents.
MADDOX, Justice.
The plaintiffs alleged that the defendants were guilty of fraud in connection with a lease of property in Gadsden on which the plaintiffs had intended to operate a bar.
The plaintiffs claim that, during lease negotiations, the defendants fraudulently promised that the defendants could acquire for the plaintiffs a lease on property adjacent to the leased premises; that adjacent property was needed in order for the plaintiffs to meet zoning requirements of the City of Gadsden for the operation of a bar. More specifically, the plaintiffs alleged that the failure of the defendants to acquire the adjacent property on their behalf caused the City to deny their application for a lounge retail liquor license and that they had relied upon the defendants' promise to their detriment. They asked for compensatory and punitive damages.
The trial court, based upon the pleadings and the evidence submitted in support of the defendants' motion for summary judgment, entered a summary judgment in favor of the defendants. The plaintiffs appealed. This Court, pursuant to Ala.Code 1975, 12-2-7(6), transferred the appeal to the Court of Civil Appeals. That Court, with one Judge dissenting, reversed and remanded, writing in its opinion:
Green v. Lumpkin, 702 So. 2d 459, 460-461 (Ala.Civ.App.1996). We granted the defendants' petition for certiorari review to consider the holding of the Court of Civil Appeals, especially in view of the fact that the lease contained the following clause: "Lessor has made no representations or promises with respect to said premises except as herein expressly set forth; and lessee agrees that he has examined the premises as fully as desired and is satisfied with the condition thereof as of the commencement of the term of this Lease." (C.R. 30.)
We have reviewed the record that was before the trial court and before the Court of Civil Appeals, and we conclude that the trial court properly entered the summary judgment for the defendants. Therefore, we reverse the judgment of the Court of Civil Appeals and remand the cause for an order or proceedings consistent with this opinion.
The basic facts necessary for a resolution of this case are not disputed. Jodi L. Green and Terri L. Cranford, after negotiating,[1] entered into a lease agreement on March 4, 1993, with Fred Sington, the owner of the building and lot located at 825 South 4th Street in Gadsden. That lot accommodated 14 parking spaces.
The plaintiffs applied for a license to operate a bar on the leased premises, but on April 27, 1993, the Gadsden City Council denied their application, with the following resolution:
(C.R. 90.)
During the interim between the signing of the lease and the failure of the defendants to obtain the adjacent property, which was owned by another party, the plaintiffs performed a partial renovation of the building that was located on the leased premises.
On May 12, 1994, the plaintiffs filed this action against Greg Lumpkin and M.B. Hagedorn, the real estate agents who had negotiated the lease agreement, and their employer, Ina Black Realty. Their complaint alleged that the defendants had fraudulently promised during the negotiations for the lease that the defendants would get the owner of the adjacent property[3] to lease the *465 plaintiffs that additional property, thereby allowing them to satisfy the zoning requirements of the city. They alleged that but for this promise by the defendants they would not have signed the lease agreement on March 4, 1993.
The plaintiffs claim that the defendants initially represented to them that the lot adjacent to the leased property accompanied the leased building and could be used for parking and that it was owned by Fred Sington, but that, when it came time to sign the lease, defendant Hagedorn informed them that the adjacent property did not go with the property and, further, that Fred Sington did not own the adjacent property.
The plaintiffs maintain that at the signing they informed Hagedorn that under the zoning regulations they needed more than the 14 parking spaces in order to meet the requirements of the Gadsden zoning ordinance, and that Hagedorn then told them that he could get the adjacent property owner to lease that property to them within a week.
In reversing the judgment of the Court of Civil Appeals in this case, we have applied the principle that "[i]n reviewing the disposition of a motion for summary judgment, we utilize the same standard as ... the trial court in determining whether the evidence before [it] made out a genuine issue of material fact" and whether the movant was entitled to a judgment as a matter of law. Bussey v. John Deere Co., 531 So. 2d 860, 862 (Ala.1988) (citing Chiniche v. Smith, 374 So. 2d 872 (Ala.1979)); see Rule 56(c), Ala. R. Civ. P. The movant has the burden of "showing material facts, which, if uncontested, entitle the movant to [a] judgment as a matter of law." Berner v. Caldwell, 543 So. 2d 686, 688 (Ala.1989); Woodham v. Nationwide Life Ins. Co., 349 So. 2d 1110, 1111 (Ala.1977). Once the movant has made this showing, the opposing party then has the burden of presenting evidence creating a genuine issue of material fact. Danford v. Arnold, 582 So. 2d 545, 546 (Ala.1991); Bass v. SouthTrust Bank of Baldwin County, 538 So. 2d 794, 797-98 (Ala.1989).
This action was filed after June 11, 1987; therefore, the nonmovant must meet the burden of establishing the existence of a genuine issue of material fact by presenting substantial evidence. Ala.Code 1975, § 12-21-12; Bass v. SouthTrust Bank of Baldwin County, supra. "Substantial evidence" is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989).
Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So. 2d 412, 413 (Ala.1990); Harrell v. Reynolds Metals Co., 495 So. 2d 1381, 1383 (Ala.1986); Wilson v. Brown, 496 So. 2d 756, 758 (Ala.1986).
The gravamen of the plaintiffs' claim is that the defendants are guilty of promissory fraud, specifically, that the defendants promised to acquire the adjacent property for parking, and that they did so as a condition precedent to the plaintiffs' signing the lease, and that their promise constituted actionable fraud.
To recover in a fraud action, the plaintiff must establish certain elements. This Court has written:
Army Aviation Ctr. Fed. Credit Union v. Poston, 460 So. 2d 139, 142-43 (Ala.1984). See also, Cato v. Lowder Realty Co., 630 So. 2d 378, 381 (Ala.1993). This Court has further held:
Army Aviation Ctr. Fed. Credit Union, 460 So. 2d at 143, quoting Clanton v. Bains Oil Co., 417 So. 2d 149, 151 (Ala.1982) (emphasis added). See also, Valley Properties, Inc. v. Strahan, 565 So. 2d 571, 576 (Ala.1990).
Recently, Spring Hill Lighting & Supply Co. v. Square D Co., 662 So. 2d 1141, 1149 (Ala.1995), this Court reiterated this principle, stating:
(Emphasis added.)
The defendants claim that this case is factually similar to Ballew v. Charter Realty ERA, 603 So. 2d 877 (Ala.1992), where the plaintiffs alleged that a real estate agent misrepresented to them "that there was no problem with their loan being approved by Altus [Bank] and that she was `sure that it was going through.'" 603 So. 2d at 881. We agree. In Ballew, this Court, citing Harrell v. Dodson, 398 So. 2d 272 (Ala.1981), held that a mere statement of opinion by a real estate agent "cannot be used to impose liability on the agent as if it were a statement of fact." 603 So. 2d at 882.[4]
*467 Although it could be argued that the representations made by the agents in this case were more than a mere statement of opinion, there is no evidence in the record that either Hagedorn or Lumpkin, at the time of the signing of the lease, intentionally misrepresented to the plaintiffs that they could obtain the adjacent property or that they, in fact, knew at the time of the execution of the lease agreement that the owner of the adjacent property would not lease it. On the contrary, the evidence in the record shows that Lumpkin repeatedly tried to get Ms. Glenn, the owner of the adjacent property, to lease the property to the plaintiffs.[5]
The defendants rely heavily on this Court's opinion in Callis v. Colonial Properties, Inc., 597 So. 2d 660 (Ala.1991). The Court of Civil Appeals distinguished that case from this case on the grounds 1) that the lease contract in Callis contained a clause stating that "[n]o representation, inducement, understanding or anything of any nature whatsoever made, stated or represented on Landlord's behalf, either orally or in writing (except this Lease), has induced Tenant to enter into this Lease," 597 So. 2d at 661, and 2) that "although the plaintiffs [in this present case] had signed the lease with knowledge that a separate lease was needed for the adjacent property, there was no comparable provision regarding inducement, additional statements, or promises made." Green v. Lumpkin, 702 So. 2d at 461.
The lease agreement in this case does contain a similar provision:
(C.R. 30.) In Callis, we reasoned:
597 So. 2d at 661 (emphasis added).
Even if we did not apply the parol evidence rule and the "merger doctrine" in this case (as we did not apply them in Environmental Systems, Inc. v. Rexham Corp., 624 So. 2d 1379 (Ala.1993)), the summary judgment was nonetheless appropriate here. We are aware that in Environmental Systems this Court did hold that the parol evidence rule and the merger doctrine do not *468 apply to fraud actions, but in doing so the Court distinguished that holding from the holding the Court had made in Callis, stating:
624 So. 2d at 1383-84 (first emphasis added) (footnote omitted). In Environmental Systems, this Court further explained in footnote 6:
624 So. 2d at 1384 (emphasis added). We conclude that the same legal reasoning must be applied in the present case and the same conclusion reached. The plaintiffs here alleged fraud in the inducement. If they had presented substantial evidence indicating that the defendants committed fraud in the inducement, then we would hold, as the *469 Court of Civil Appeals held, that the summary judgment was improper. We have reviewed the record in a light most favorable to the plaintiffs, as we are required to do, and we conclude that the trial court properly entered the summary judgment in favor of the defendants.
The judgment of the Court of Civil Appeals is reversed, and the cause is remanded for an order or proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOOPER, C.J., and HOUSTON, COOK, and SEE, JJ., concur.
BUTTS, J., concurs in the result.
[1] During the negotiations, the parties made numerous changes to the lease agreement before they executed it. (C.R. 25-27.)
[2] Gadsden Mayor Steve Means, in a letter dated May 27, 1993, and addressed to the plaintiffs, stated:
"The listing of the conviction first on the resolution was no indication that it was the main, primary or motivating reason for the Council action.... It would be speculative to say whether the Council would have denied the license on the sole basis of the conviction."
(C.R. 91.) (Emphasis added.)
[3] It is undisputed that the plaintiffs were told when they signed the lease that the owner of the adjacent property had not been contacted concerning a lease of the adjacent property and that the owner was not Fred Sington.
[4] In the present case, Terri Cranford testified at her deposition, in part, as follows:
"A. That's when Mr. Hagedornthat's the day we signed the lease when we was fixing you know, we was going over the lease, and I asked him, `Well, did you put this in there about the parking?' and Mr. Hagedorn was, like, parkingand he looked'Oh, Greg just told me that this morning. If I had known that, I could have had that for you about three months ago,' or something. He said something like that. And he saidMr. Hagedorn said `I'll get right on that,' and Greg said, `Yeah, don't worry, you know, we'll have that for you at the end of the week.' That was what Greg said concerning that."
(C.R. 58.) (Emphasis added.)
"Q. What did Greg say when you said `Where is it [the adjacent property] in the lease?'?
"A. He said `He's got to'that's when we found out that the parkinghe said `He's got to call Ms. Glenn,' Ms. Glenn, I think that was her name, I might be mistaken about her name, and that'syou know, I was like, well, Ms. Glenn, and he said, `Yeah, Ms. Glenn and her son own this [the adjacent property].' So that was a surprise.
"Q. That was the first time that you found out that Ms. Glenn owned the property?
"A. But he said, you know, `Don't worry,' you know, `parking is in the bag, don't worry about it, we'll have it for you by the end of the week.'"
(C.R. 40-41.)
"Q. So you understood that there was going to be a separate second lease having to do only with the parking lot, is that correct?
"A. I don't know if they were going to add it back into that or put it separate or what. All I know is they was going to have me the parking within a week. That's what they promised.
"Q. Okay. So you knew it wasn't in the lease that you signed, but you expected it to be in some other written document
"A. Right."
(C.R. 46-47.)
[5] Jodi Lynn Green testified at her deposition, in part, as follows:
"Q. You said that Ms. Glenn got so upset with Mr. Lumpkin calling her about parking that she was to the point of cussing him; is that correct?
"A. Cursing, yes, ma'am.
"Q. When was this?
"A. The whole month of March.
"Q. So, he kept calling her and tried to pester her into doing it; is that correct?
"A. To the best of my knowledge, yes.
"Q. Do you think he was really trying to get that parking for you on the adjacent lot?
"A. Oh, yes."
(C.R. 89.) | June 13, 1997 |
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