Justia Business Law Opinion SummariesArticles Posted in Supreme Court of Alabama
Ex parte Valley National Bank.
Valley National Bank ("VNB") petitioned the Alabama Supreme Court for a writ of mandamus to direct directing the trial court to dismiss a declaratory-judgment action filed against VNB by Jesse Blount, Wilson Blount, and William Blount. William owned a 33% interest in Alabama Utility Services, LLC ("AUS"). William also served as the president of WWJ Corporation, Inc. ("WWJ"), and WWJ managed AUS. Wilson and Jesse, William's sons, owned all the stock of WWJ. In May 2013, William transferred his 33% interest in AUS to WWJ, and WWJ then owned all the interest in AUS. In July 2015, VNB obtained a $905,599.90 judgment against William in an action separate from the underlying action. On August 31, 2015, Asset Management Professionals, LLC, purchased from WWJ all the assets of AUS for $1,600,000. On July 17, 2018, the Blounts filed a declaratory judgment action seeking a judgment declaring "that a) William's transfer of his interest in AUS to WWJ was not fraudulent as to [VNB], b) William was not the alter ego of AUS or WWJ, c) the sale of AUS did not result in a constructive trust in favor of [VNB], and d) the [Blounts] did not engage in a civil conspiracy." VNB filed an action under the Alabama Uniform Fraudulent Transfer Act against the Blounts and others in which it asserted that William had fraudulently transferred assets and sought to pierce the corporate veil of WWJ. After review of the trial court records and documents submitted by the parties, the Alabama Supreme Court determined VNB did not demonstrate a clear legal right to have claims against them dismissed. The court denied the mandamus petition insofar as it sought dismissal of the alter-ego claim and the constructive-trust claim. View "Ex parte Valley National Bank." on Justia Law
Ex parte Chris W. Hayslip.
Luther Pate IV and New Pate, LLC, filed suit against Chris Hayslip, among others, seeking indemnity and to set aside a particular transfer of funds as fraudulent. Hayslip filed a motion to dismiss Pate and New Pate's action. The circuit court entered an order granting Hayslip's motion as to Pate and New Pate's indemnity claim and denying the motion as to the fraudulent-transfer claim. Hayslip petitioned the Alabama Supreme Court for a writ of mandamus to direct the circuit court to vacate that portion of its order denying Hayslip's motion to dismiss Pate and New Pate's fraudulent-transfer claim and to enter an order granting the entirety of Hayslip's motion to dismiss. In 2005, Hayslip and Harlan Homebuilders, Inc., formed The Townes of North River Development Company, LLC ("Townes Development Company"), to develop a residential subdivision. Christopher Dobbs and Teresa Dobbs owned Harlan Homebuilders. At some point, a dispute arose as to the ownership of Townes Development Company. In June 2007, Hayslip and Harlan Homebuilders mediated the dispute and agreed to a settlement in which Hayslip and Harlan Homebuilders would sign a new operating agreement for Townes Development Company indicating that Hayslip owned 70% of Townes Development Company and that Harlan Homebuilders owned the remaining 30%. As part of the settlement agreement, the parties further agreed that the Dobbses would purchase Hayslip's 70% interest in Townes Development Company. However, the Dobbses subsequently claimed that they had been fraudulently induced into entering into the settlement agreement and determined to sue Hayslip and Townes Development Company alleging fraud and other business torts. The Alabama Supreme Court concluded Hayslip demonstrated the circuit court should have granted his motion to dismiss Pate and New Pate's fraudulent-transfer claim. Hayslip's petition for mandamus relief was granted. View "Ex parte Chris W. Hayslip." on Justia Law
Ali v. Williamson
This case challenged a circuit court default judgment against Muhammad Wasim Sadiq Ali and others in favor of Mike Williamson after a case ordered to private arbitration was remanded to the trial court. Williamson, Patrick Watson, Ali, and others formed RPM, a regional supplier of rental cranes based in Birmingham, in 2008. Williamson was employed as RPM's general manager. Ali was the primary investor and majority owner of RPM, and Ali and Watson allegedly represented to Williamson at the time RPM was formed that Williamson would own a 12% share of the company. In 2012, Watson and Ali told Williamson that, in order to accrue his 12% equity interest in RPM at the end of his five-year employment term, he needed to pay $1,000,000, and that, if Williamson could not pay, his employment would be terminated unless he signed an employment agreement. Williamson signed an employment agreement with RPM which contained an arbitration clause. The employment agreement also contained a noncompetition clause that prohibited Williamson, for two years following the termination of his employment with RPM, from competing with RPM and from being employed by any business that is in competition with RPM. In 2013, a dispute between Williamson and RPM arose concerning Williamson's insurance coverage with respect to RPM vehicles. RPM terminated Williamson's employment "for cause," citing his failure to obtain an appropriate certificate of insurance. In 2014, Williamson filed a complaint against RPM Cranes, LLC ("RPM"), asserting claims of breach of contract, unjust enrichment, conversion, unreasonable restraint of trade, and misrepresentation arising from his alleged ownership of, his employment with, and the termination of that employment with RPM. Ali contended the default judgment was void because the trial court lacked personal jurisdiction over him. After review, the Alabama Supreme Court agreed, and reversed and remanded. View "Ali v. Williamson" on Justia Law
Posted in: Business Law, Civil Procedure, Contracts, Labor & Employment Law, Supreme Court of Alabama
Ex parte Ultratec Special Effects, Inc.
Ultratec Special Effects, Inc. ("Ultratec"), filed two petitions for mandamus relief from the Alabama Supreme Court, to get the trial court to vacate its October 25, 2018 order denying Ultratec's motion for a summary judgment on claims asserted against it by David Cothran, as the administrator of the estate of his sister, Aimee Cothran, and by Donald Ray Sanderson, as the administrator of the estate of his wife, Virginia Marie Sanderson (collectively, "the Estates"), based on, among others, Ultratec's claim that it was immune from suit based on the exclusivity provisions of the Alabama Workers' Compensation Act. Aimee Cothran and Virginia Sanderson were working at an Ultratec HSV plant when they were killed by an explosion. They separately sued Ultratec, alleging, among other causes of action, negligence and strict liability. Ultratec’s answer asserted the exclusivity provisions of the Act. Specifically, Ultratec argued that it was immune because it and Ultratec HSV were a single employer group for purposes of the Act; because Aimee and Virginia were jointly employed by both Ultratec and Ultratec HSV; and because Ultratec HSV operated as a division of Ultratec. The Estates filed a response in opposition to the motion for a summary judgment, arguing that a parent corporation is not entitled to the immunity provided by the exclusivity provisions of the Act in a tort action for the injury or death of an employee of the corporation's subsidiary; that questions of fact existed as to whether Ultratec and Ultratec HSV were separate entities; and that the joint-employer doctrine is inapplicable as a matter of law. Following a hearing, the trial court entered an order denying Ultratec's motion for a summary judgment, holding that Ultratec was protected by the exclusivity provisions of the Act. Given the “abundance of disputed facts,” the Alabama Supreme Court could not say Ultratec demonstrated a clear legal right to mandamus relief on the issue of whether Ultratec and Ultratec HSV were separate entities, or that the Alabama Legislature intended to extend immunity to parent corporations for employees killed on the job. Ultratec’s applications for relief were granted in part, denied in part, but the petitions were ultimately denied. View "Ex parte Ultratec Special Effects, Inc." on Justia Law
LNM1, LLC, and Mohamed Alsahqani v. TP Properties, LLC
Since November 2012, LNM1, LLC, operated a gasoline station and convenience store in Greensboro, Alabama under a lease agreement with the owner of the property, TP Properties, LLC. In August 2017, TP Properties sued LNM1 and its owner Mohamed Alsahqani seeking to terminate the lease because LNM1 had not maintained all the required insurance coverages. The trial court entered a summary judgment in favor of TP Properties, holding that LNM1's failure to maintain the insurance required by the lease agreement constituted a material breach of that agreement, thus entitling TP Properties to terminate the lease. Finding no reversible error in that judgment, the Alabama Supreme Court affirmed the trial court. View "LNM1, LLC, and Mohamed Alsahqani v. TP Properties, LLC" on Justia Law
Patel v. Shah
Dahyalal Patel filed an action seeking to enforce his ownership rights as a shareholder in Subway No. 43092, Inc. ("the corporation"), against shareholder Ashish Shah ("Shah"), Shah's father, Ramesh Shah ("Ramesh"); and the corporation (collectively,"the Shah defendants"). In 2007, Shah, the owner of eight Subway restaurants in and around Madison County, Alabama, prepared to open a ninth Subway restaurant in Huntsville ("the restaurant"). In July 2008, Shah formed the corporation for the purposes of owning and operating the restaurant. Shah owned 90 percent of the stock of the corporation and Ramesh owned 10 percent. In 2008, Patel met with Shah about Shah's plan to open the restaurant. At some point, Patel and Shah orally agreed that Patel would purchase a 25 percent ownership interest in the corporation. Because Shah estimated that start-up costs for the restaurant would be $240,000, Patel agreed to purchase a 25 percent interest in the corporation for $60,000, payable in monthly installments. After the restaurant opened in December 2008, Shah began making periodic distributions of profits to Patel. Patel eventually paid back the $60,000, and agreed to pay an additional $12,000 for an additional five percent interest. In September 2012, Patel sued the Shah defendants, alleging that Shah had misrepresented the start-up costs for the restaurant in calculating the price of Patel's 25 percent interest. Patel alleged that the actual start-up costs were $140,000 rather than $240,000, as Shah had represented. Accordingly, Patel alleged that he either overpaid for his interest or acquired more than a 50 percent interest in the corporation. Patel further alleged that the distributions of profits he received were not proportional to his interest, even assuming that his interest was 30 percent. In addition, he claimed that Shah had withheld Patel's share of franchise-sales commissions that the corporation received from its franchisor. The Shah defendants raised a number of defenses, among them, statute of frauds and statute of limitations. The trial court granted the Shaw defendants' motion for summary judgment, effectively dismissing Patel's claims. After review, the Alabama Supreme Court affirmed summary judgment in favor of the Shah defendants on Patel's tort claims, other than conversion, and on Patel's conversion claim insofar as Patel alleged conversion of profits, commissions, and his ownership interest in the corporation. The Court reversed the summary judgment on Patel's breach-of-contract and unjust-enrichment claims and on his conversion claim insofar as Patel alleged the conversion of corporate property. This case was remanded for further proceedings. View "Patel v. Shah" on Justia Law
Zieman v. Zieman Speegle, LLC
Jerome Speegle and Anthony Hoffman, two members of Zieman Speegle, LLC, a law firm based in Mobile, petitioned for approval of dissolution of the firm. Thomas Zieman, Jr., previously a member of the law firm, appeared in the action, asserting a counterclaim against the law firm and a third-party complaint against Speegle and Hoffman. Without holding a hearing, the trial court entered a summary judgment on Zieman's counterclaim and third-party complaint in favor of the law firm, Speegle, and Hoffman. The trial court also identified the equity-holding members of the law firm and provided for the distribution of the assets of the law firm. Because the Alabama Supreme Court held the trial court should have held a hearing, it reversed the trial court's judgment and remanded the case for further proceedings. View "Zieman v. Zieman Speegle, LLC" on Justia Law
Sirote & Permutt, P.C. v. Caldwell
C. Randall Caldwell, Jr. worked for George Woerner, who owned several businesses headquartered in Foley. In 2009, Caldwell was promoted to president of Woerner Landscape, Inc., one of those businesses. Caldwell stated that, at that time, he was a licensed attorney in good standing in Alabama even though he was not engaged in private practice. During his employment with Woerner, the BP oil spill occurred in the Gulf of Mexico. Caldwell contacted an attorney with Cunningham Bounds, LLC, a law firm in Mobile, regarding the possibility of referring Woerner's businesses to Cunningham Bounds for Cunningham Bounds to handle their claims arising out of the spill. In April 2011, the Woerner companies retained Cunningham Bounds; Cunningham Bounds executed representation agreements with each of the Woerner companies. Those agreements provided that Cunningham Bounds would be paid a contingency fee for the work. In 2014, the Woerner companies retained Sirote & Permutt, P.C. to assist Cunningham Bounds in the BP oil-spill litigation. Additionally, each of the Woerner companies sent Caldwell a letter in which they stated that Caldwell had previously assisted with a BP oil-spill claim asserted on behalf of that Woerner company; that the claim had been principally handled by Cunningham Bounds; and that at the time Caldwell provided assistance he was working as in-house counsel for one or more of the Woerner companies. Each letter went on to assert that the claim would have to be reworked "based on newly announced guidelines from appellate courts hearing BP's objections to some of the previously filed claims"; that the owners and management of the Woerner companies felt that it would be in their best interest to retain a firm with experienced tax and business attorneys to assist in the claims; that the Woerner companies wished to continue their representation by Cunningham Bounds; that they were terminating the attorney-client relationship between Caldwell and the Woerner companies; and that they were retaining Sirote to assist Cunningham Bounds in reworking the claims asserted by the Woerner companies. After receiving this letter, Caldwell contacted one of the attorneys at Cunningham Bounds and told him that it was his position that he was entitled to the referral fees discussed in the representation agreements because, he said, he had referred the Woerner companies' claims to Cunningham Bounds. Summary judgment was ultimately entered in favor of Caldwell; the Alabama Supreme Court determined the trial court erred in finding Caldwell was owed a referral fee. Judgment was reversed and the matter remanded for further proceedings. View "Sirote & Permutt, P.C. v. Caldwell" on Justia Law
Ex parte Valley National Bank.
Valley National Bank ("VNB") petitioned the Alabama Supreme Court for a writ of mandamus to direct the Montgomery Circuit Court to dismiss a declaratory-judgment action filed against VNB by Jesse Blount, Wilson Blount, and William Blount. William owned a 33% interest in Alabama Utility Services, LLC ("AUS"). William also served as the president of WWJ Corporation, Inc. ("WWJ"), and WWJ managed AUS. Wilson and Jesse, William's sons, owned all the stock of WWJ. In May 2013, William transferred his 33% interest in AUS to WWJ, and WWJ then owned all of the interest in AUS. In July 2015, VNB obtained a $905,599.90 judgment against William in an action separate from the underlying action. On August 31, 2015, Asset Management Professionals, LLC, purchased from WWJ all the assets of AUS for $1,600,000. On July 17, 2018, the Blounts filed a declaratory-judgment action seeking a judgment declaring "that (a) William's transfer of his interest in AUS to WWJ was not fraudulent as to [VNB], (b) William was not the alter ego of AUS or WWJ, (c) the sale of AUS did not result in a constructive trust in favor of [VNB], and (d) the [Blounts] did not engage in a civil conspiracy." VNB responded by filing a motion to dismiss pursuant to Rule 12(b)(1) and (b)(6), Ala. R. Civ. P., asserting the lack of subject-matter jurisdiction and the lack of a justiciable controversy. The parties were referred to mediation, which was unsuccessful. The Supreme Court determined that with regard to the Blounts' complaint, insofar as it sought a judgment declaring that William's transfer of his interest in AUS to WWJ was not fraudulent as to VNB and that the Blounts did not engage in a civil conspiracy, a declaratory-judgment action was inappropriate as a means of resolving those issues. Therefore, VNB had demonstrated a clear legal right to have its motion to dismiss granted as to those claims. With regard to the alter-ego claim and the constructive-trust claim, VNB did not demonstrate "a clear legal right" to have those claims dismissed. The Court therefore granted in part, and denied in part, the petition for mandamus relief. View "Ex parte Valley National Bank." on Justia Law
Health Care Authority for Baptist Health v. Central Alabama Radiation Oncology, LLC
The Health Care Authority for Baptist Health, an affiliate of UAB Health Systems ("the Authority"), and Simeon Penton (collectively, "Baptist Health") appealed a circuit court judgment compelling Baptist Health to disclose certain documents to Central Alabama Radiation Oncology, LLC ("CARO"), under the auspices of the Alabama Open Records Act. CARO was a Montgomery-area radiation-oncology practice; CARO provided radiation and oncology services at the Montgomery Cancer Center ("MCC"), a facility owned and operated by the Authority. The Authority and CARO executed a noncompetition agreement in May 2012. In 2017, the Authority submitted a letter of intent to file a certificate-of-need ("CON") application with the State Health Planning and Development Agency ("SHPDA"). The letter of intent indicated that the Authority sought to offer radiation-oncology services at the Prattville location of MCC. CARO alleged it then attempted to persuade the Authority to use CARO physicians for radiation-oncology services at the Prattville location of MCC but that the Authority rebuffed CARO's overtures. In February 2018, the Authority filed its CON. Then in March 2018, the Authority notified CARO of the termination of the noncompetition agreement. A dispute arose and ended up in court. Counsel for the Authority sent CARO a letter requesting that CARO dismiss its action because, the Authority asserted, CARO's review of Board minutes confirmed that the Authority had not breached the noncompetition agreement by recruiting or employing radiation oncologists to work at the Prattville location of MCC. CARO asserted that redactions in the minutes included information relating to arrangements with medical oncologists, the Medicare 340B program, and the Authority's other proposed projects in the Prattville area. Counsel for the Authority contended that the remainder of the Board minutes and other documents CARO requested were "confidential and privileged and/or not subject to production under [the ORA]." The circuit court ultimately ordered unredacted minutes to be produced. The Alabama Supreme Court determined that although the Authority allowed CARO's counsel to review the unredacted Board minutes, it steadfastly refused to provide a copy of those unredacted minutes to CARO. Thus, the Authority plainly did not sufficiently comply with the ORA with respect to the Board minutes, and the circuit court did not exceed the scope of the ORA in ordering the records disclosed. View "Health Care Authority for Baptist Health v. Central Alabama Radiation Oncology, LLC" on Justia Law