Recent Civil Decisions, ALAJ Journal, Fall 2008, David H. Marsh and Tom Powell.

RECENT CIVIL DECISIONS

By David Marsh and Tom Powell

You may have wondered how often the justices who sit on the Supreme Court of Alabama speak to each other about the path of the law. The most open and obvious method by which they communicate among themselves is through their writings, including concurring opinions and dissenting opinions. In this issue, we examine three recent decisions – released on three successive Fridays in May – in which Chief Justice Sue Bell Cobb dissented in whole or in part. Those dissents provide some serious food for thought.

Edwards v. Kia Motors of America, Inc., Ms. 1061167, 2008 Ala. LEXIS 88 (Ala. May 16, 2008) – In 2002, Edwards bought a struggling Kia dealership in Huntsville, with the understanding that Kia Motors of America ("KMA") later would award a Kia dealership franchise in Opelika to Edwards and find a buyer for the Huntsville dealership. The business relationship between Edwards and KMA soured during the next two years, due to disputes over inventory shipments, payments for warranty services and dealer incentives. The Huntsville dealership continued to lose money, and Edwards received no indication that KMA was going to award the Opelika dealership to Edwards. In 2004, Edwards found a potential buyer for the Huntsville dealership. The agreement between Edwards and KMA required Edwards to secure KMA's approval before transferring the dealership to any buyer. When Edwards asked KMA for its approval of the sale, KMA asked Edwards to sign a "mutual release agreement."

The mutual release agreement stated, in part, that Edwards and KMA agreed to "'release, acquit and forever discharge one another of and from all claims which have arisen or may ever arise, demands and causes of action arising from, related to, or in any manner connected with the sale and service of Kia Products, including, without limitation, the Dealer Agreement, and from any and all claims for damages, related to or in any manner connected with the Dealer Agreement or the parties' business relationship.'"

Because he was afraid KMA would not approve the sale unless he signed the agreement, Edwards did sign the agreement and the sale of the dealership was completed in December 2004.

Edwards sued KMA in federal court in July 2005, alleging violations of the Alabama Motor Vehicle Franchise Act, Ala. Code § 8-20-1, et seq. KMA moved for a summary judgment, arguing that Edwards's claims were barred by the provisions of the mutual release agreement. The district court granted the summary judgment and Edwards appealed to the Eleventh Circuit, which then certified the following question to the Supreme Court of Alabama: "[W]hether the Franchise Act permits an automobile dealer to bring a claim under the Act, despite the fact that both parties already executed a mutual release agreement in which the dealer relinquished all existing legal claims against the manufacturer in exchange for a valid consideration."

Justice See's majority opinion, in which Justices Lyons, Woodall, Stuart, Smith, Bolin, Parker and Murdock concurred, answered the certified question with a "no." In reaching that result, the majority said:

"The sole issue before us is whether the language of § 8-20-11, Ala. Code 1975, and the remedial purpose of the Franchise Act permit automobile dealers to bring claims under the Franchise Act against automobile manufacturers after they have executed a mutual release of, among other claims, those then existing claims. Section 8-20-11 reads as follows:

"'Notwithstanding the terms, provisions, or conditions of any dealer agreement or franchise or the terms or provisions of any waiver, and notwithstanding any other legal remedies available, any person who is injured in his business or property by a violation of this chapter by the commission of any unfair and deceptive trade practices, or because he refuses to accede to a proposal for an arrangement which, if consummated, would be in violation of this chapter, may bring a civil action in a court of competent jurisdiction in this state to enjoin further violations, to recover the damages sustained by him together with the costs of the suit, including a reasonable attorney's fee.'

"Edwards argues that § 8-20-11 is a remedial statute that must be interpreted broadly and that the release agreement Edwards and KMA signed thus falls within the statutory meaning of "any waiver." Edwards further argues that a broad interpretation of the phrase "any waiver" creates an exception for both prospective releases – those dealing with issues that have not arisen at the time the release is executed – and retrospective releases -- those dealing with issues known or accrued at the time the release is executed. Therefore, Edwards argues, it should be able to bring its claims notwithstanding the mutual release agreement it entered into with KMA.

"KMA argues in response that retrospective releases are favored under general Alabama law and under the Franchise Act in particular. KMA further asserts that § 8-20-11, Ala. Code 1975, does not encompass retrospective releases of existing claims and alleges that a construction of the Franchise Act that allows parties to bring an action under the Act despite having executed a mutual retrospective release would foster an absurd result.

"[ . . . ]

"[ . . . ] We first look to the language of the statute. Although the Franchise Act [ . . . ] defines 13 terms, neither 'waiver' nor 'release' appears in that definitional section. [ . . . ]

"[ . . . ] The Franchise Act proscribes certain practices, such as persuading dealers to absolve the manufacturer from liability arising from the unfair trade practices enumerated in the Franchise Act. However, there is no indication of a legislative intent to prohibit the parties to an automobile-dealership franchise agreement from reaching a good-faith settlement of existing claims after those claims arise and entering into a binding settlement agreement.

"Section 8-20-11, Ala. Code 1975, authorizes the dealer or the manufacturer to bring a civil action notwithstanding the terms of the dealership agreements, franchise agreements, or waivers, and notwithstanding the availability of other legal remedies. However, there is no indication that § 8-20-11 does or was intended to prohibit the settlement of known claims as an alternative to taking them to trial and ultimately to judgment. If the legislature had wished to include the settlement and release of known claims in the language of § 8-20-11, Ala. Code 1975, it knew how to do so. The legislature lists prospective releases and waivers in describing specific unfair trade practices under the Franchise Act [ . . . ] The legislature did not similarly include a retrospective release as an unfair trade practice or include such a release in its list of ineffective provisions in § 8-20-11. Had the legislature meant to require the litigation of every disagreement between a manufacturer and a dealer, it could have said so.

"[ . . . ]

"[ . . . ] We decline to ignore the legislative intent expressed in the Franchise Act as a whole in favor of an isolated interpretation of the phrase 'any waiver' that is required to produce the result the dissent would have us reach."

Ms. 1061167 at pp. 4-14.

Chief Justice Cobb's dissenting opinion in Edwards responded as follows:

"I dissent. The term 'judicial activism' is susceptible to many meanings; it has been referred to as a "notoriously slippery term." Frank H. Easterbrook, Do Liberals and Conservatives Differ in Judicial Activism? 73 U. Colo. L. Rev. 1401 (2002). However, as this Court discusses the term in the context of the review of substantive law or statutes, see, e.g., Alabama Power Co. v. Citizens of Alabama, 740 So. 2d 371 (Ala. 1999), it implies a willingness on the part of the Court to invade, improperly, the province of the legislature by refusing to apply the plain meaning of the statute before us in favor of substituting language and meaning that are not otherwise present. Thus, the Court becomes a sort of 'super legislature' that imposes its particular agenda on the citizens of our State without the benefit of the usual legislative process. Certainly this is a bad thing. Not only does the Court disregard its obligations under the state and federal constitutions, but it also demonstrates an abandonment of principles that are absolutely critical to an effective system of justice. 'Our system relies for its validity on the confidence of society; without a belief by the people that the system is just and impartial, the concept of the rule of law cannot survive.' People ex rel. Clancy v. Superior Court of Riverside County, 39 Cal. 3d 740, 746, 705 P. 2d 347, 351, 218 Cal. Rptr. 24, 28 (1985).

"When judicial activism is understood as the willingness of this Court to improperly substitute itself for the legislature, this case presents a picture of judicial activism that is worth a thousand words. Section 8-20-11, Ala. Code 1975, states:

"'Notwithstanding the terms, provisions, or conditions of any dealer agreement or franchise or the terms or provisions of any waiver, and notwithstanding any other legal remedies available, any person who is injured in his business or property by a violation of this chapter by the commission of any unfair and deceptive trade practices, or because he refuses to accede to a proposal for an arrangement which, if consummated, would be in violation of this chapter, may bring a civil action in a court of competent jurisdiction in this state to enjoin further violations, to recover the damages sustained by him together with the costs of the suit, including a reasonable attorney's fee.'

"(Emphasis added.) In addition to this very plain language, this Court has also discussed the legislature's purpose in enacting the Franchise Act as 'to give balance to the inequality of bargaining power between individual dealers and their manufacturers.' Tittle v. Steel City Oldsmobile GMC Truck, Inc., 544 So. 2d 883, 887 (Ala. 1989)(emphasis added). That is, automobile dealers in this State are to receive some protection from the inequality of bargaining power that exists in their transactions with automobile manufacturers by having their claims of violations under the Franchise Act preserved for judicial adjudication, regardless of contractual releases or waivers the dealers may be compelled to sign in order to do business.

"That purpose is directly applicable to this case, a situation in which an automobile dealer has been pressured into signing a release in order to effectively transact business with a much more powerful automobile manufacturer. Here, as a result of the manufacturer's unfulfilled promises, Edwards had the choice of executing the release or suffering financial ruin, essentially a choice 'between a rock and a hard place.' In spite of the facts presented here, and in spite of the plain language of § 8-20-11 and this Court's previous statements of law concerning the legislature's intent as stated in § 8-20-2, the majority opinion embarks on a semantic voyage to ascertain the legislature's 'intent' by attempting to parse a meaningful distinction between concepts of 'release' and 'waiver,' a distinction the parties have conceded does not exist. See Edwards v. Kia Motors of America, Inc., 486 F.3d 1229, 1233 (11th. Cir. 2007) ('[D]uring oral argument, both parties conceded that the terms "waiver" and "release" can be synonymous.'). The result of the majority's analysis is a conclusion that the emphasized language quoted above from § 8-20-11 does not mean what it says it means. Because I cannot, on any reasonable reading of the above statutory language – particularly in light of the legislative purpose in enacting the Franchise Act – conclude that it means other than what it says, I must conclude that the release agreement does not bar Edwards's action. In short, the majority opinion rewrites § 8-20-11 to say that certain releases and waivers do in fact operate to prevent a dealer from bringing a claim under the Franchise Act in the courts of our State. Not only does the opinion 'relegislate' § 8-20-11, but it also obviates the legislature's intent as expressed in § 8-20-2 and Tittle, supra, so as to remove the protections in the Franchise Act from the inequality in bargaining power that exists between dealers and manufacturers.

"In the past, this Court operated under a duty to adhere to legal precedent without regard to the outcome of the case, and it consistently concluded that the plain language of a statute required that this Court apply the language as stated. The rule has generally been stated as follows:

"'"When [a] statutory pronouncement is clear and not susceptible to a different interpretation, it is the paramount judicial duty of a court to abide by that clear pronouncement."'

"Macon v. Huntsville Utils., 613 So. 2d 318, 320 (Ala. 1992) (quoting Parker v. Hilliard, 567 So. 2d 1343, 1346 (Ala. 1990)). [ . . . ] I believe that the majority opinion flies in the face of this precedent and the many other cases that have espoused the principle that this Court's paramount duty is to interpret the plain language of the law to mean what it says.

"With respect to the contention that giving effect to the plain language of § 8-20-11 means that no preexisting claim can ever be settled, it is more accurate to say that giving effect to the plain language of the statute means that a manufacturer may not by weight of its greater bargaining position in compelling a franchise agreement force a dealer to give up its right to adjudicate its claims of violations of the Franchise Act. Claims may still be settled by adjudication and settlement, and claims may be forestalled by honest business practices that do not give rise to violations of the Franchise Act. The statute says what it says. Had the legislature intended to except the release of known claims from the operation of § 8-20-11, it could have done so. The plain language of the statute permits litigation alleging an unfair trade practice notwithstanding prior agreements. This language may not be convenient for an entity that is stronger economically and that seeks to force a weaker one into compliance with its terms by allowing a release of known claims in the context of contract negotiations, but I submit that disregarding the language and intent of the Franchise Act is the antithesis of the 'strict construction' to which judicial 'conservatives' give lip service. Rather, rewriting § 8-20-11 and discarding the intent of the legislature represents judicial activism, which this Court should never endorse. Because I believe that a consistent application of this Court's principles of statutory construction is a critical component of American justice and of this Court's credibility as an agent of that justice, I must dissent."

Ms. 1061167 at pp. 16-23.

Holiday Isle, LLC v. Adkins, Ms. 1070202, 2008 Ala. LEXIS 101 (Ala. May 23, 2008) – This case arose out of transactions associated with a new condominium complex at Dauphin Island called Holiday Isle. J&R Investments agreed to purchase Unit 105 and Beth and David Adkins agreed to purchase Unit 104. These purchasers then entered into preconstruction purchase and escrow agreements with Holiday Isle, LLC, for the two units, which were to be completed within two years of April 11, 2005. Those purchase agreements provided that the earnest-money deposit could be satisfied by letters of credit issued to Holiday Isle in lieu of cash, an option the purchasers elected. The agreements further provided that, if the purchaser defaulted, Holiday Isle or its escrow agent could draw on the existing letter of credit and have the cash proceeds delivered to Holiday Isle as liquidated damages.

A certificate of occupancy was issued for the condominiums on March 28, 2007. On April 2, 2007, the purchasers conducted a pre-closing inspection of the two units. Within the following week the purchases informed Holiday Isle that they would not close because the condominiums were not completed by April 1, 2007, as required by the purchase agreements. The purchasers also requested that their letters of credit be returned to them. Holiday Isle insisted that it had met its obligations and set a closing date of April 30, 2007. On April 27, 2007, Beth Adkins and J&R Investments sought a temporary restraining order ("TRO") in circuit court, to prevent Holiday Isle from drawing on the letters of credit. They also sought a declaratory judgment, a rescission of the purchase agreements, and an injunction to prevent Holiday Isle from drawing on the letters of credit.

After a hearing, the circuit court referred the case to arbitration on July 30, 2007. On October 11, 2007, Holiday Isle objected to the TRO and argued that the circuit court no longer had jurisdiction to enter an injunction because the case had been referred to arbitration. On October 30, the circuit court appointed an arbitrator to resolve all disputes between the parties and issued a preliminary injunction to prevent Holiday Isle from negotiating the letters of credit. Holiday Isle appealed the issuance of the injunction to the Supreme Court of Alabama.

Justice Lyons's majority opinion, in which Justices See, Woodall, Stuart, Smith, Bolin and Parker concurred (Justice Murdock concurred in the result), reversed and remanded with instructions to dissolve the injunction. The majority found that the circuit court did have jurisdiction to enter the preliminary injunction, because the Commercial Rules of the American Arbitration Association and the express terms of the purchase agreements authorized the circuit court "to order equitable relief to preserve the status quo."

But it was the majority's adoption and application in this case of a new standard of review that drew Chief Justice Cobb's attention. The majority opinion stated:

"We have often stated: 'The decision to grant or to deny a preliminary injunction is within the trial court's sound discretion. In reviewing an order granting a preliminary injunction, the Court determines whether the trial court exceeded that discretion.' SouthTrust Bank of Alabama, N.A. v. Webb-Stiles Co., 931 So. 2d 706, 709 (Ala. 2005).

"[ . . . ]

"To the extent that the trial court's issuance of a preliminary injunction is grounded only in questions of law based on undisputed facts, our longstanding rule that we review an injunction solely to determine whether the trial court exceeded its discretion should not apply. We find the rule applied by the United State Supreme Court in similar situations to be persuasive: 'We review the District Court's legal rulings de novo and its ultimate decision to issue the preliminary injunction for abuse of discretion.' Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 428, 126 S. Ct. 1211, 163 L. Ed. 2d 1017 (2006); see also Justice Murdock's special writing while sitting as a judge on the Court of Civil Appeals in City of Dothan v. Eighty-Four West, Inc., 871 So. 2d 54, 60 (Ala. Civ. App. 2003) (Murdock, J., concurring specially on application for rehearing) (cited with approval in McGlathery v. Richardson, 944 So. 2d 968, 970 (Ala. Civ. App. 2006)). To the extent they conflict with our holding today, previous expressions such as the one found in TFT, Inc. v. Warning Systems, Inc., 751 So. 2d 1238, 1241-42 (Ala. 1999) ('The applicable standard of review [of injunctive relief] depends on whether the trial court entered a preliminary injunction or a permanent injunction. A preliminary injunction is reviewed under an abuse-of-discretion standard, whereas a permanent injunction is reviewed de novo.') are hereby overruled."

Ms. 1070202 at pp. 5-7.

By way of a footnote, the majority opinion said: "Chief Justice Cobb's challenge in her dissent to the fairness of the majority's sua sponte clarification of the standard of review proceeds on the false premise that adherence to the former standard would yield a different result." Ms. 1070202 at p. 7 n. 1.

Chief Justice Cobb's dissenting opinion in Holiday Isle stated:

"I respectfully dissent. Although I agree with the majority that we should entertain reviewing a trial court's preliminary injunction under a de novo rather than excess-of-discretion standard, the circumstances in this case do not warrant such a change. Fundamental fairness is denied the parties in this case by not allowing them to brief and argue their respective positions with an understanding of the appropriate standard of appellate review. The parties did not know that this Court would conclude that the facts presented here would be deemed undisputed and that the preliminary injunction would be subjected to a de novo review. Indeed, the parties are likely to be as surprised as I am that the majority, with little discussion and no fanfare, finds the facts to be undisputed. Logic dictates that if the facts were undisputed, Holiday Isle would have, instead of filing a motion to compel arbitration and dismiss or stay the proceedings, filed a motion for a summary judgment, which in the absence of a genuine issue of material fact, would have presented the query whether Holiday Isle was entitled to a judgment as a matter of law. The trial court would not have ordered this case to arbitration or enjoined the negotiation of the letters of credit had it not concluded that the facts are in dispute, particularly with respect to the underlying issue – whether the condominium units were completed within two years of April 1, 2005, in accordance with the terms of the purchase agreements.

"The parties have not presented this Court with any definitive findings or conclusions about the record, and significant material differences exist about the facts to dissuade me from applying a de novo review to the preliminary injunction."

Ms. 1070202 at pp. 20-21.

In a footnote, Chief Justice Cobb pointed out:

"In this case, the parties could not reasonably have anticipated that this Court would change the standard of review for a preliminary injunction; they have had no opportunity to frame their arguments in light of the new standard. Similarly, the change in the standard of review implemented by the Court in the majority opinion cannot be applied fairly to the parties in this case, even if the Court chooses to apply that change prospectively."

Ms. 1070202 at p. 20 n. 5.

Panayiotu v. Johnson, Ms. 1061829, 2008 Ala. LEXIS 105 (Ala. May 30, 2008) – Dr. Panayiotu performed a heart-catheterization procedure on Mae Sullivan. During the course of the procedure, Sullivan's coronary artery ruptured and she died two days later, after undergoing surgery. Sullivan's administratrix, Jamie Sullivan Johnson, sued Panayiotu and others for Sullivan's wrongful death, alleging medical malpractice.

Panayiotu moved for a summary judgment on the basis that Johnson could not offer expert testimony to show that he had breached the standard of care. Panayiotu argued that Johnson's only expert witness, Dr. Schapira, was certified by the American Board of Internal Medicine ("ABIM") in only internal medicine and cardiovascular disease, and that Schapira was not "similarly situated" to Panayiotu, who was certified by the ABIM in internal medicine, cardiovascular disease and interventional cardiology. Panayiotu further argued that, because he was practicing interventional cardiology at the time he performed the procedure upon Sullivan, Schapira was not "similarly situated" with respect to the procedure at issue and, therefore, not competent to testify with respect to the applicable standard of care.

Johnson responded that the pertinent "similarly situated" statute, Ala. Code § 6-5-548(c), required only that her expert witness be certified in the same "specialty" as the defendant in order to be considered similarly situated and that Panayiotu and Schapira both were, in fact, certified in the same "specialty," internal medicine. Johnson further argued that cardiovascular disease was a "subspecialty" of internal medicine and that interventional cardiology was, at best, yet another "subspecialty" of internal medicine or, more properly viewed as a subspecialty of cardiovascular disease and, thus, simply a "sub-subspecialty" of internal medicine.

The trial court denied Panayiotu's motion for summary judgment and he was allowed to appeal that ruling by permission to the Supreme Court of Alabama.

Justice Stuart's majority opinion, in which Justices See, Lyons, Woodall, Smith, Bolin and Parker concurred, reversed and remanded with instructions for the trial court to enter a summary judgment for Panayiotu. (Justice Murdock dissented without filing a written opinion.) On the issue of the meaning of "specialty" in § 6-5-548, the majority opinion found and held as follows:

"The legislature has defined a similarly situated health-care provider as a health-care provider that is 'certified by an appropriate American board in the same specialty"' as the defendant health-care provider. § 6-5-548(c)(3) (emphasis added). Dr. Panayiotu argues that a 'specialty' for the purposes of § 6-5-548(c) is any specialized area of medicine in which a medical board offers certification and that, because ABIM offers certification in interventional cardiology, that area is therefore a 'specialty' for purposes of § 6-5-548. Johnson, however, argues that an area of medicine is a 'specialty' only if it is specifically designated by a medical board as a 'specialty'; hence, she argues, because ABIM officially designates interventional cardiology as a 'subspecialty,' it is not a 'specialty' for § 6-5-548 purposes.

"We agree with Dr. Panayiotu that a specialty is any specialized area of medicine in which an American medical board offers certification. There is no indication in the AMLA that the legislature intended to define the term "specialty" based upon the taxonomic scheme used by ABIM, ABMS, or any other professional medical board. That any appropriate American medical board offers certification in an area of medicine is itself evidence that that area of medicine is a specialty.

"The interpretation of the term 'specialty' advocated by Johnson, if adopted, would be problematic in its application because it fails to recognize that some areas of medicine may technically be deemed 'subspecialties' by some boards, but recognized as specialties by others. For example, in Chapman v. Smith, 893 So. 2d 293 (Ala. 2004), this Court recognized that the defendant anesthesiologist was certified in the specialty field of pain management by the American Academy of Pain Management ('AAPM'), a non-ABMS board. ABMS does not recognize pain management as a 'specialty' under its taxonomic scheme; however, the relevant ABMS board, the American Board of Anesthesiology, does recognize 'pain medicine' as a 'subspecialty.' Thus, applying the argument advanced by Johnson, whether a board-certified anesthesiologist practicing in the pain-management/pain-medicine field was a specialist in that field would hinge on whether the anesthesiologist's certificate was issued by AAPM, in which case he would be recognized by our courts as a specialist, or by the American Board of Anesthesiology, in which case he would not be recognized as a specialist – even though both boards apparently agree that the field is a unique area of medicine and recognize it as such. The only difference is that the field is deemed a 'subspecialty' in the ABMS hierarchy. Whether an area of medicine is a 'specialty' for purposes of § 6-5-548 should not change depending on which board has certified the particular health-care provider in that specialty.

"Moreover, if we were to adopt Johnson's argument relying on the taxonomic designations used by ABIM and ABMS, it would pave the way for a gastroenterologist, an endocrinologist, or a nephrologist, all of whom practice in an area recognized as a 'subspecialty' by ABIM, to testify as a similarly situated health-care provider against a cardiologist merely because they were all certified by ABIM in the 'specialty' of internal medicine – regardless of the fact that their expertise is in the digestive system, the endocrine system, and the kidneys, respectively, and that they might have had minimal experience with medical issues related to the heart. This is precisely the situation § 6-5-548 was enacted to prevent. Thus, we now explicitly hold that if an appropriate American medical board recognizes an area of medicine as a distinct field and certifies health-care providers in that field, that area is a specialty for purposes of § 6-5-548.

Ms. 1061829 at pp. 12-15.

Chief Justice Cobb concurred in part and dissented in part. Her opinion in Panayiotu stated:

"The majority opinion presents a new rationale for defining the term 'specialty' as applied to similarly situated health-care providers under Ala. Code 1975, § 6-5-548. Although I do not disagree with this rationale and I concur in its adoption, I do not believe that it is appropriate to apply it to this case. In this case, and under the state of the law at the time the trial court found that Dr. Panayiotu and Dr. Schapira were similarly situated health-care providers, the trial court was correct. The record shows that, in the context of the medical procedure in question, Dr. Schapira had experience similar to or greater than Dr. Panayiotu. Under these circumstances, I believe that it would be more just to apply the new construction of § 6-5-548 as adopted by the majority prospectively, rather than retroactively. See, e.g., Ex parte F.P., 857 So. 2d 125 (Ala. 2003); City of Daphne v. City of Spanish Fort, 853 So. 2d 933 (Ala. 2003); and Ex parte Bonner, 676 So. 2d 925 (Ala. 1995)(cases supporting the general rule that statutes should be construed prospectively and not retrospectively in the absence of a particular indication of legislative intent to apply statute retrospectively)."

Ms. 1061829 at pp. 25-26.