SUPREME COURT OF ALABAMA CASE SUMMARIES March 14, 2008 Jenks v. Harris, No. 1050687 [Arbitration / Appellate Procedure: A direct appeal is the proper procedure by which to seek review of a trial court s order granting or denying a motion to compel arbitration, and failure to appeal such an order within 42 days bars any later attempt to challenge it once arbitration has been completed.] (Smith, J., 5-0). The Jenkses contracted with Richard Dukes Homes, LLC to construct their home. That contract contained an enforceable arbitration provision. Dukes Homes subcontracted with Madison Residential Developers, Inc. to complete construction of the Jenkses house. Mark Harris was an employee of Madison Residential who met with and interacted with the Jenkses during the construction. Dukes/Madison never completed the construction, and the Jenkses ultimately sued all the relevant parties (including Mr. Harris) in circuit court. Harris answered the complaint, but the Dukes entities moved to compel the Jenkses to arbitrate their claims pursuant to the arbitration provision in their contract. The trial court granted the Dukes motion and compelled arbitration. The arbitrator ruled in favor of the Jenkses and against Dukes and Harris in the amount of $60,000 each. Harris petitioned the trial court to set aside and vacate the arbitration award. The trial court vacated the award against Harris, and the Jenkses appealed to the Alabama Supreme Court. Harris argued that he could not be bound by the arbitration award because he was not a signatory to the contract containing the arbitration clause. The Court, however, agreed with the Jenkses that Harris should have appealed from the trial court s order granting the motion to compel arbitration of the claims against him. Harris s failure to appeal that order waived any argument that the arbitration provision did not apply to him. The Court further explained that [a] direct appeal is the proper procedure by which to seek review of a trial court s order granting or denying a motion to compel arbitration. Thus, Harris s failure to appeal the trial court s [earlier] decision within 42 days bars his attempt to challenge it once arbitration has been completed. Accordingly, the Supreme Court reversed the trial court s order and rendered a judgment in favor of the Jenkses. Crutcher v. Williams, No. 1050893 [Final Order: Judgment that adjudicates fewer than all claims is not a final appealable order; failure to comply with Ala. R. App. Proc. 28 and provide citations for argument precludes review.] (Cobb, C.J, 4-0-1). Williams won a jury verdict in a medical malpractice claim against Hill Hospital and Dr. Crutcher. The trial court entered an order stating that the judgment was rendered in favor of Williams and against Dr. Crutcher and the
hospital. The order failed to address an indemnity cross-claim by the hospital against Dr. Crutcher. On appeal, the Supreme Court held that the order was not final because the order did not address the hospital s cross-claim and, thus, it adjudicated fewer than all the claims. Such an order is still subject to revision and is not final where the trial court has not directed the entry of a final judgment according to the requirements of Rule 54(b). Williams objected to remand arguing that the order was final, but cited no case law or evidence from the record to support her argument and, thus, violated Ala. R. App. Proc. 28. The case was remanded for the trial court to either make the order final pursuant to rule 54(b) or to adjudicate the cross-claim. J.C. Duke & Assocs. v. West, No. 1051732 [Personal Jurisdiction: A court may exercise personal jurisdiction over an officer of a corporation individually where the corporation is alleged to be the alter ego of the individual and the officer does not deny or present evidence disputing the allegation.] (Bolin, J., 5-0). J.C. Duke & Associates filed suit against Clements-West Construction and its two owners and officers, Terry Clements and Myrita West, alleging that it had overpaid them for contracted work in Mobile County. J.C. Duke asserted that the individual defendants had used the corporation as their alter ego, had failed to observe corporate formalities, and they could therefore be held personally liable. The trial court granted a motion to dismiss for lack of personal jurisdiction filed by West in which she stated that she was not a resident of Alabama, had no contacts with Alabama, had never traveled to Alabama for any purposes related to the allegations of the complaint, and that J.C. Duke could not establish personal jurisdiction over her personally based only on her status as a corporate officer. On appeal, the Alabama Supreme Court, in reversing the trial court, held that West had failed to properly support her motion to dismiss with an affidavit which would controvert the allegations of the Complaint, and West failed to deny the allegation that the corporation was her alter ego and controlled by her personally. The Alabama Supreme Court explained that although personal jurisdiction over an officer cannot be based on jurisdiction over the corporation, if the corporation is the alter ego of the individual then the corporate form may be disregarded and personal jurisdiction may be exercised over the individual. 2
COURT OF CIVIL APPEALS CASE SUMMARIES March 14, 2008 Stokes v. Cottrell, et al., No. 2060887 [Estate passed to only living blood relatives where plaintiffs failed to prove legal interest in the property.] (Moore, J., 5-0). The deceased ( Estelle ) owned six parcels of land and died without a will. Her only living relative ( Jenkins ) was appointed as the administrator of the estate. During Estelle s lifetime, she took in two infants and raised them to adulthood, Cottrell and Johnny Sr., but they were not related to Estelle by blood and were never formerly adopted. Cottrell and Johnny Sr. filed a complaint alleging that Estelle had purchased the six parcels of land for their benefit and that the property was being held in a constructive trust for them. Jenkins died intestate, without closing Estelle s estate. Jenkins granddaughter ( Stokes ) was named the administrator of Estelle s estate. Cottrell and Johnny Sr. s constructive trust action was dismissed. Stokes died without having formally closed Estelle s estate. Her son ( Frank ), although never formerly appointed as administrator, begin handling the estate and paying the taxes. Stokes and Frank had both entered into numerous third-party leases over the years. Cottrell and the son of Johnny Sr. ( Oscar ) filed a petition asking the probate court to appoint them as co-administrators of Estelle s estate, which was granted. They then entered into an agreement to sell the property to a third party. There was no indication in the record that any of the pleadings filed in the probate action related to the sale were served on the heirs of Jenkins, the only remaining blood relatives. Cottrell and Oscar, with others, filed this action to quiet title to the land alleging that they had color of title because they were Estelle s children (and next of kin), were the heirs at law, and had title based on adverse possession. Frank then petitioned the probate court to vacate its order appointing Cottrell and Oscar as co-administrators. A bench trial was held, and title to three parcels was quieted in Cottrell and Oscar, while three parcels were quieted in the heirs of Jenkins. Frank appealed, arguing that all six parcels should have been quieted in the heirs of Jenkins. The evidence established that Jenkins was Estelle s only living heir at the time of Estelle s death, and accordingly, the property passed to her and, upon her death, to her heirs. The Court of Civil Appeals concluded that Frank, as a tenant in common with any other of Jenkins heirs at law, had a legal interest in the property. The plaintiffs failed to establish any legal title to the property because they had no deed and could not have acquired possession through intestate succession. Neither could they establish a claim of adverse possession. Finally, the Court held that the rule of repose did not prevent the trial court from quieting title in the heirs of Jenkins. Frank s right to have title quieted in Jenkins heirs arose out of the fact that plaintiffs hailed them 3
into court to defend their title. The rule of repose does not allow a plaintiff without title to obtain property from a defendant with title. Francis Powell Enterprises, Inc. v. Andrews, No. 2060610 [Workers Compensation: Action reversed and remanded where the trial court failed to make a finding responsive to defendant s properly pleaded and litigated defense of failure to provide proper notice of injury to the employer.] (Thomas, J., 4-0). In a workers compensation action brought by Charles Andrews against his former employer, Francis Powell Enterprises, Inc. ( Francis ), the trial court granted Andrews permanent-total-disability benefits and attorney s fees, and ordered Francis to pay all medical treatment reasonably and necessarily related to Andrews injury. On appeal, Francis argued, among other things, that the trial court s judgment failed to address Francis affirmative defenses of whether Andrews gave proper notice of injury and whether Andrews failed to disclose a preexisting injury, in violation of Ala. Code 25-5-88 of the Alabama s Workers Compensation Act ( the Act ). Section 25-5-88 requires that the trial court decide the controversy and make the necessary findings of fact and conclusions of law relating to the properly pleaded and litigated issues. In reversing and remanding the trial court s judgment, the Court of Civil Appeals determined that the judgment did not contain a finding addressing the properly pleaded and litigated issue of whether Andrews provided notice of his injury to Francis nor did the judgment make a finding concerning Francis affirmative defense that Andrews failed to disclose a preexisting condition to Francis in violation of 25-5-51 of the Act. BFI Waste Services, LLC v. Pullum, No. 2061009. [Workers Compensation Act: (1) Because the exclusivity provisions of the Workers Compensation Act provide that all rights and remedies available to affected parties are found within the Act, a court-ordered $1,000 per day penalty for future late payments, not authorized by the Act, is inappropriate; and (2) A judgment awarding a 15% penalty for late payment of benefits must be supported by a finding of fact that the employer has failed to timely pay compensation without good cause.] (Moore, J., 5-0). Post-verdict, a trial court ordered BFI Waste Services, LLC to commence weekly payments of workers compensation benefits to Michael Pullum. Shortly thereafter, Pullum filed a motion for modification of the judgment, alleging that the employer had failed to make payments as ordered. BFI denied that it had missed any payments. After a hearing where no evidence was taken, the court entered a judgment against BFI, subjecting BFI to a 15% penalty on all arrearage, as well as setting an additional $1,000 per day penalty for any future late payments. BFI timely appealed. Regarding the $1,000 per day future late payment penalty, the 4
Court of Civil Appeals found that the Workers Compensation Act contains exclusivity provisions determining all rights and remedies available to affected parties and that courts accordingly have no authority to fashion additional remedies. The Court thus concluded that the $1,000 per day penalty was in error because the Act did not provide for such a penalty. Regarding the 15% penalty on all arrearage, the Court held that a finding of fact that the employer has failed to pay compensation without good cause was necessary to permit this penalty. Pullum presented no evidence in support of his motion to modify, and the trial court held no evidentiary hearing; therefore, the record did not contain sufficient evidence to sustain the 15% penalty. Consequently, the Court reversed and remanded the cause with instructions to vacate the award. NOTE: The information contained in this document is provided for informational purposes only and is not intended to provide legal advice to any person or entity and should not be used as a substitute for the advice of a qualified lawyer. When using this document, be aware that the information may be out of date and/or may not apply or be appropriate to your particular set of circumstances or your judicial jurisdiction. As legal advice must be tailored to the specific circumstances of each case and the law is constantly changing, you should not rely solely on the information set forth in this document. Anyone with a legal question or legal problem should always consult with and seek the advice of a qualified lawyer. Balch & Bingham LLP does not make any representations, warranties, claims, promises or guarantees about the completeness, accuracy or adequacy of the information in this document. The information in this document does not necessarily represent the opinion of Balch & Bingham LLP, any of its lawyers, or any clients of the firm. 5