We are committed to sharing decisions and providing legal updates that may be beneficial to you and your teams. Included below are summaries of cases recently released by Alabama Appellate Courts. Please reach out to any member of our
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Alabama Appellate Opinions Released
May 24, 2019
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Court Affirms Decision Denying Defendants’ Motion to Transfer
Ex parte Tyson Chicken, Inc., and Craig
In November 2017, Lisa Burke Huffstutler collided into a tractor-trailer that was operated by Charles Gregory Craig, who was working for his employer, Tyson Chicken, Inc. (“Tyson”), at the time of the accident. Huffstutler was injured due to the accident and was taken to Cullman Regional Medical Center for treatment. She sued both Craig and Tyson in the Marshall Circuit Court and asserted claims of negligence and wantonness against Craig. She also asserted claims of negligent and wanton supervision or training and negligent and wanton hiring, retention, or entrustment against Tyson. Tyson and Craig filed a joint motion to transfer the case from Marshall County to Cullman County under the doctrine of forum non conveniens. After the motion was denied by the circuit court, Tyson and Craig filed a petition for a writ of mandamus with the Alabama Supreme Court.
On appeal, Tyson and Craig argued that Marshall County was an inconvenient forum and that the transfer was required “based on the interest of justice.” Yet, neither Tyson, Craig, nor Huffstutler disputed that both Marshall County and Cullman County are appropriate venues for the underlying action. The Court emphasized that a motion for change of venue should not be granted under the convenience-of-parties prong “unless the new forum is shown to be ‘significantly more convenient’ than the forum in which the action was filed,” which the defendant carries the burden to prove. It also emphasized that in addition to proving the underlying action’s strong connection to the county which transfer is sought, the defendant must prove a “weak” connection to the county in which the action is pending.
Tyson and Craig failed to present evidence and affidavits demonstrating that Cullman County was a “significantly more convenient” forum than Marshall County. Further, Tyson and Craig failed to prove that Marshall County’s connection to the underlying action was “weak.” Although Huffstutler was injured in Cullman County and was provided emergency medical care in Cullman County, this was not enough to warrant granting Tyson and Craig’s motion to transfer. In reaching this conclusion, the Court noted that all of the parties either live in or operate in Marshall County, meaning that the underlying action’s connection to Marshall County was also strong. Thus, the Court affirmed the circuit court’s decision.
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Court Finds Contractor Was Not Covered Under CGL Insurance Policy
Nationwide Mutual Fire Insurance Company v. The David Group, Inc.
The construction company The David Group, Inc. (“TDG”) purchased a commercial general liability (“CGL”) insurance policy from Nationwide Mutual Fire Insurance Company (“Nationwide”) in January 2004. The CGL insurance policy provided that its coverage applied to “bodily injury” or “property damage” only if “[t]he ‘bodily injury’ or ‘property damage’ is caused by an occurrence.’” Under the CGL insurance policy, an “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.”
While TDG’s CGL insurance policy with Nationwide was in effect, Saurin and
Valerie Shah purchased a newly built home from TDG. When the Shahs began experiencing problems with the home after moving in, they filed a Complaint in the Jefferson County Court. The Shahs asserted claims of rescission, breach of contract, breach of express and implied warranties, negligence and wantonness, negligent supervision and training, misrepresentation and fraud, suppression, and “gross negligence” and “incompetence.” Nationwide, however, determined that it was under no duty to defend or indemnify TDG because the damages alleged by the Shahs in their Complaint did not constitute an “occurrence.”
After TDG initiated an action against Nationwide for declaratory judgment concerning its duty to defend and indemnify, the Shahs’ action against TDG proceeded to arbitration and TDG’s action against Nationwide was stayed. Once the arbitrator issued an award in favor of the Shahs, Nationwide filed a motion for summary judgment on TDG’s claims arguing that TDG’s alleged faulty workmanship in constructing the Shahs home did not constitute an “occurrence.” The circuit court denied Nationwide’s motion for summary judgment and entered a partial summary judgment in favor of TDG on the issue of coverage. After the circuit court’s decision, both parties filed various motions related to damages, which were granted in favor of TDG. Nationwide appealed.
On appeal, the Alabama Supreme Court noted how it has repeatedly held that “faulty workmanship itself is not an occurrence” under a CGL policy. Nevertheless, it recognized that faulty work may lead to an “occurrence,” “if it subjects personal property or other parts of the [damaged] structure to ‘continuous or repeated exposure’ to some other ‘general harmful condition’ . . . and, as a result of that exposure, personal property or other parts of the structure are damaged.” The Court also emphasized that whether a CGL policy applies as a result of faulty workmanship depends on the “nature of the [resulting] damage.”
During arbitration, it was found that the Shahs’ experts “failed to prove specifically any defects in the home other than some minor damage.” Further, the Shahs did not allege any additional damage to their house or personal property resulting from TDG’s alleged faulty workmanship. Therefore, because the record was devoid of any evidence that the Shahs suffered damages as a result of an “occurrence” caused by faulty workmanship, the Court reversed the circuit court’s decision.
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Court Affirms Decision Denying Motion to Compel Arbitration
Greenway Health, LLC, and Greenway EHS, Inc. v. Southeast Alabama Rural Health Associates
Sunrise Technology Consultants, LLC, and Lee Investment Consultants, LLC v. Southeast Alabama Rural Health Associates
In March 2008, SARHA (“Southeast Alabama Rural Health Associates”) entered into a license agreement, which contained an arbitration agreement, with Greenway Health, LLC, and Greenway EHS, Inc. (“the Greenway defendants”), for the use of the Greenway defendants’ proprietary software for the management of its patients’ medical records. SARHA also entered into a service agreement, which did not contain an arbitration agreement, with Sunrise Technology Consultants, LLC (“the Sunrise defendants”) for the installation and maintenance of computer servers and hardware to operate this proprietary software. SARHA also entered into a business associate agreement (“the BAA”) with the Greenway defendants which did not contain an arbitration agreement and provided that it superseded the license agreement.
Between May 2016 and August 2016, SARHA was unable to access its patients’ medical records due to a failure in the primary and secondary hard-drive disks in its computer servers. SARHA alleged that neither the Greenway defendants nor the Sunrise defendants were able to restore the medical information and did not have a viable backup of the database. SARHA filed a Complaint against the Greenway and Sunrise defendants in the Pike Circuit Court alleging fraudulent misrepresentation, fraudulent suppression, negligence, wantonness, and breach of contract.
The Greenway defendants moved to compel arbitration. The Sunrise defendants joined the motion to compel arbitration, arguing that the claims brought against the Greenway and Sunrise defendants were intertwined. SARHA opposed the motion by arguing the claims against the Greenway defendants arose from the BAA, which does not contain an arbitration agreement and superseded the license agreement. The Pike Circuit Court denied the Greenway defendants’ motion and the defendants appealed.
Ultimately, the Alabama Supreme Court upheld the decision of the circuit court based on the language of the BAA which expressly covered the subject of maintaining and protecting the protected health information of SARHA’s patients and provided that the BAA superseded the license agreement. Also, because the Greenway defendants failed to establish the existence of a contract containing an arbitration agreement and the service agreement did not contain an arbitration agreement, the denial of the Sunrise defendants’ motion was also upheld.
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Decision to Enforce Forum-Selection Clause Affirmed
Castleberry and Castleberry v. Angie’s List
In 2014, Jessie and Rickey Castleberry, both father and son, entered into a membership agreement with Angie’s List. The membership agreement contained a forum selection clause which provided that the Castleberrys consented to the “exclusive jurisdiction” of the state or federal courts located in Marion County, Indiana, and that the agreement would be governed by Indiana law.
The Castleberrys alleged that they used the services of Angie’s List to locate a contractor, Dream Baths of Alabama, LLC (“Dream Baths”), that they could hire for the renovation of a bathroom in Jessie Castleberry’s home. However, the Castleberrys alleged that Dream Baths was not properly licensed and poorly performed the work. The Castleberrys filed suit in the Montgomery Circuit Court against Dream Baths, asserting claims related to the renovation, and against Angie’s List alleging that it misrepresented Dream Bath’s qualifications. The Castleberry’s Complaint against Angie’s List alleged breach of contract, breach of a duty of good faith and fair dealing, fraud, unjust enrichment, and deceptive trade practices.
Angie’s List filed a motion to dismiss the Castleberrys' Complaint based on the forum selection clause contained in the membership agreement. The circuit court granted the motion to dismiss after determining that the clause was valid and enforceable. The Castleberrys appealed.
On appeal, the Castleberrys argued that the clear language of the membership agreement provided that Angie’s List members agreed to litigate in Indiana only those claims brought against a member by Angie’s List and not claims asserted against Angie’s List by its members. The Alabama Supreme Court disagreed. The Castleberrys argued further that the clause should not be enforced because of Angie’s List alleged overweening bargaining power and trying their claims in Marion County, Indiana, would be seriously inconvenient. However, the Castleberrys failed to demonstrate that their lack of business acumen weighed against enforcing the forum-selection clause. The Castleberrys also failed to convince the Court that litigating their claims in Indiana would be “so gravely difficult and inconvenient” that they would “effectively be deprived of [their] day in court.” Thus, the Alabama Supreme Court affirmed the circuit court’s decision.
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Alabama Court of Civil Appeals
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