Justia Business Law Opinion Summaries

This appeal was the latest "in a decade-long dispute" between Joseph Dzwonkowski, Sr. (Joe Sr.) and two of his sons, Robert and Joseph Jr. (Joe Jr.) regarding the ownership and control of Sonitrol of Mobile, Inc., a closely-held corporation that provided commercial-security services in the greater Mobile area. Ten years prior, Joe Jr. sold his shares in the company to his father in order to settle some of his personal debts. Possession of the stock certificates was the central issue in the case. Joe Sr. fired his sons and offered to purchase their shares, but Joe Jr. demanded his former shares back from his father. Joe Sr. then filed suit for a declaratory judgment to determine who rightfully owned the stock and to uphold his decision to fire his sons. The trial court ruled against Joe Sr. In 2004, the Supreme Court dismissed Joe Sr.'s appeal of that judgment, holding that an appeal was premature because the damages to be awarded to Sonitrol had not yet been set. Those damages were eventually set in 2011, awarding Sonitrol $764,359 and Joe Jr. $1. Joe Sr. appealed. On appeal, Joe Sr. argued whether the trial court should have immediately entered an order declaring him owner of the disputed shares of Sonitrol stock. The Supreme Court found that the trial court did not act contrary to the appellate court's mandate on remand. Accordingly the trial court's judgment was affirmed.

Defendant Mitzi Lawson appealed a judgment in favor of Plaintiffs Harris Culinary Enterprises, LLC (HCE), John C. Harris III (Clinton), and John C. Harris, Jr. (John), (collectively "the Harrises"), on their fraud claims related to their purchase of a restaurant franchise. Mitzi was married to codefendant, Sims Lawson. Following his marriage to Mitzi, Sims formed SYM, Inc. for the purpose of operating a "Fox's Pizza Den" restaurant franchise in Killen. Sims purchased a building in which to operate the franchise; that building was titled solely in Mitzi's name. At some time before the events giving rise to their claims on appeal, John and Clinton formed HCE for the purpose of operating pizza-restaurant franchises. In March 2007, the Harrises entered into negotiations with Sims to purchase the Killen franchise. According to the Harrises, in an apparent attempt to secure a higher purchase price, Sims purportedly generated false financial reports evidencing higher gross sales and profits for the Killen franchise than were actually realized. The Harrises ultimately purchased the Killen franchise. As a condition of the sales agreement, the Harrises entered into a one-year lease agreement to continue operation of the Killen franchise in its then current location. The Harrisses initiated the underlying lawsuit alleging that as a result of the allegedly falsified financial reports, they were induced to purchase both the franchise and enter into the lease agreement. Mitzi moved to dismiss the claims against her, arguing that she made no actual representation to the Harrises. Plaintiffs won at trial, and Mitzi appealed. Upon review, the Supreme Court found that there was no evidence presented at trial from which the court could have reasonably determined that Mitzi made any misrepresentation to the Harrises. Accordingly, the Court reversed the trial court's judgment against her.

Smith's Sports Cycles, Inc. appealed the outcome of a nonjury trial that held in favor of American Suzuki Motor Corporation. Smith's claimed that Suzuki wrongfully terminated the parties' franchise agreement. The trial court conducted a 12-day bench trial. After hearing the evidence, the trial court entered a judgment in favor of Suzuki on Smith's breach-of-contract claim, concluding that there was not substantial evidence that Suzuki had breached any provision of the franchise agreement. The trial court also entered a judgment in favor of Suzuki on Smith's claim that Suzuki had violated the Franchise Act. Upon review, the Supreme Court concluded that "the judgment of the trial court terminating the parties' franchise relationship is due to be affirmed."

Defendants Lafarge North America, Inc. and Wayne Looney appealed a jury verdict in favor of Plaintinff Lawrence Nord. Plaintiff's claims arose from a personal injury he sustained at Lafarge's cement packhouse. Various forms of bagged cement are loaded onto flatbed trucks owned and operated by companies other than Lafarge, by Lafarge employees using forklifts. The drivers of the flatbed trucks drive their trucks into the loading zone of the packhouse. Plaintiff, a driver for Southern Tank, was injured in the loading zone of the packhouse when Lafarge employee Looney ran over Plaintiff's foot with a forklift, breaking several bones. In their postjudgment motion, Defendants argued that Plaintiff failed to produce sufficient evidence to support the jury's findings on his wantonness claim; that Plaintiff's negligence claim was barred because he had been contributorily negligent; that if the jury verdict stood, Defendants were "entitled to a setoff in the amount of the damages claimed by [Nord] which [had] already been recovered by ... Nord ..."; that the trial court had erred by instructing the jury on wantonness, punitive damages, and premises liability; and that the verdict form submitted to the jury was improper. Upon review of the trial record, the Supreme Court found that the record was insufficient to support the jury's verdict in favor of Plaintiff. The Court reversed the trial court's judgment and remanded the case to the trial court for judgment in favor of Defendants.

Getloaded Corporation, TransCore, and Roper Industries, Inc. (collectively, Getloaded), and American Timber & Steel Company, Inc. (ATSC), petitioned the Supreme Court for writs of mandamus to direct the Montgomery Circuit Court to dismiss them as defendants based on a lack of personal jurisdiction in actions filed by Plaintiffs Bishop Ivey, Carolyn Kelley, Joan Foye Wynn, Sonie Taylor, Annette Fenn, Kendra Bouier, and Jenny Simmons. The plaintiffs were representatives of the estates of passengers riding in an Alabama Department of Corrections van who died as a result of an October 2008 accident. A truck carrying lumber purchased by ATSC from Getloaded tried to pass another vehicle on the highway. The van hit the passing truck and caught fire, engulfing the van in flames killing all inside. The plaintiffs' respective complaints asserted claims against the purchasers of the lumber, the truck drivers and their trucking companies, and others who were otherwise involved in the loading and delivery of the lumber. ATSC filed an answer to the complaints in which, among other things, it pleaded lack of personal jurisdiction. In April 2009, the claims against ATSC were voluntarily dismissed without prejudice. The plaintiffs then reached a settlement with one of the trucking companies and its driver. The circuit court found that the remaining Defendants had the sufficient "minimum contacts" with the state to justify the exercise of personal jurisdiction. Upon review, the Supreme Court found Defendants did not have sufficient contact with the state in order for the circuit court to exercise personal jurisdiction over them. The Supreme Court reversed the court's decision and remanded the case to dismiss Defendants from this action.

American Suzuki Motor Corporation petitioned the Supreme Court for a writ of mandamus to direct the circuit court to grant its motion to dismiss the claims filed against it by John Burns and Jill S. Hearn. Plaintiffs sued Defendants American Suzuki, several local dealerships and the dealerships' owner, alleging breach of contract based on Suzuki vehicle warranties, diminution in value of their vehicles, fraudulent misrepresentations, and unjust enrichment. Plaintiffs purported to bring the action on behalf of themselves and all members of a class composed of individuals who had purchased Suzuki vehicles from Defendants and had active warranties or service contracts on those vehicles. According to the complaint, new Suzuki vehicles carried a manufacturer's warranty, and that Defendants also sold purchasers of Suzuki vehicles extended warranties and maintenance agreements. In early March 2009, "the defendants closed dealerships … and [that] there are no other Suzuki dealerships closer than Nashville, Tennessee, Murfreesboro, Tennessee, or Birmingham, Alabama, to perform service work on the warranted vehicles." As a result of the dealerships being closed, Plaintiffs alleged they were "constructively barred from obtaining warranty work on their vehicles." The complaint did not allege that Plaintiffs needed or sought service under the warranties on their vehicles or that any of the Defendants refused to honor the warranties on vehicles. American Suzuki filed a motion to dismiss alleging that Plaintiffs' claims should be dismissed for failing to state a claim upon which relief can be granted. Upon review, the Supreme Court reversed the trial court's denial of American Suzuki's motion to dismiss, and remanded the case to the trial court to enter an order granting American Suzuki's motion.

Defendants Kohlberg Kravis Roberts & Company, L.P. (KKR), KKR Associates, KKR Partners II, and Crimson Associates, L.P., as well as several individuals, petitioned the Supreme Court for the writ of mandamus to direct a circuit court to vacate its order that denied their motion to dismiss Plaintiffs' complaint because it lacked personal jurisdiction. The plaintiffs in this action were 46 individuals, partnerships, corporations, foundations, trusts and retirement and pension funds located throughout the country that invested in certain promissory notes issued as part of a leveraged recapitalization of Bruno's Inc., a supermarket-grocery business with its headquarters in Alabama. Plaintiffs contended that despite a negative due-diligence report from its forensic accountant, KKR decided to proceed with its acquisition of Bruno's. In order to achieve the recapitalization, Plaintiffs alleged that Defendants made material, fraudulent misrepresentations to the Plaintiffs' investment money manger that induced them into purchasing the notes. Based on the torts allegedly committed by the individual defendants, the Supreme Court concluded that the circuit court did not err in denying Defendants' motion to dismiss based on lack of personal jurisdiction. The Court denied Defendants' application for the writ of mandamus, and remanded the case for further proceedings.

Branson Machinery, LLC appealed a circuit court's decision that set aside a default judgment granted in its favor against Hilltop Tractor, LLC and Jeffrey Williams. According to Branson, Hilltop owed it money for equipment it had purchased. Because it had not received payment, Branson filed a breach-of-contract action against Hilltop and Mr. Williams. The Blount Circuit Court entered a default judgment in favor of Branson. Following the entry of the default judgment, Branson's counsel engaged Hilltop and Mr. Williams (acting without counsel) in settlement negotiations. The parties negotiated a "workout" agreement, and at some point, Hilltop became unable to meet the payment terms. Branson filed garnishment paperwork with the trial court seeking to enforce the original default judgment. Hilltop and Mr. Williams hired counsel and successfully moved the court to set aside the default judgment. Upon review, the Supreme Court found that the trial court exceeded its discretion in granting Hilltop and Mr. Williams' motion to set aside the default judgment. The Court reversed the trial court's decision and remanded the case to reinstate the original default judgment.

Tellabs Operations, Inc. appealed an administrative agency's decision in its taxpayer's refund action from the circuit court. Tellabs unsuccessfully petitioned for a refund of allegedly overpaid sales taxes to the City of Bessemer. The case was originally filed in Montgomery Circuit Court. Bessemer filed a motion to dismiss, or in the alternative, to change venue to Jefferson Circuit Court. Without holding a hearing on the motion, the circuit court transferred the appeal to Jefferson Circuit Court. In its motion for reconsideration, Tellabs argued the Montgomery Court erred in transferring the appeal. The court responded that it had lost jurisdiction, and Tellabs' only remedy was to petition the Supreme Court. Upon review of the circuit court records, the Supreme Court concluded that the Montgomery Circuit Court erred in transferring the appeal to the Jefferson Court. The Supreme Court vacated the transfer order and remanded the case for further proceedings in Montgomery Circuit Court.

Black Warrior Minerals, Inc. sued Empire Coal Sales, Inc. and John Fay, Jr. Black Warrior sought money allegedly owed pursuant to a coal-purchase agreement between Black Warrior and Empire and a personal guaranty executed by Mr. Fay. A trial court entered summary judgment in favor of Black Warrior, awarding it damages plus attorney fees and costs. The trial court held a bench trial on the breach-of-guaranty claim against Mr. Fay, entering judgment in favor of Mr. Fay. Black Warrior appealed the latter, arguing that the trial court erred in finding the language of the guaranty was ambiguous and applied only to amounts in excess of $1.2 million owed by Empire to Black Warrior. Upon review of the language of the guaranty and the applicable legal authority, the Supreme Court concluded the trial court erred in its interpretation of the guaranty's terms. The Court reversed the lower court's judgment and remanded the case for further proceedings.