Armstrong Business Services, Inc. v. AmSouth Bank

• Decision Date: 31 August 2001
• Citation: 817 So.2d 665
• Parties: ARMSTRONG BUSINESS SERVICES, INC. v. AmSOUTH BANK and Leonard "Bo" Marks.
• Court: Alabama Supreme Court

817 So.2d 665

ARMSTRONG BUSINESS SERVICES, INC. v. AmSOUTH BANK and Leonard "Bo" Marks.

1992302.

Supreme Court of Alabama.

August 31, 2001.

Rehearing Denied October 19, 2001.

George W. Finkbohner III and Royce A. Ray III of Finkbohner, Lawler & Ray, L.L.C., Mobile, for appellant.

Larry B. Childs and Randall D. Quarles of Walston, Wells, Anderson & Bains, L.L.P., Birmingham; and Matthew C. Mc-Donald of Miller, Hamilton, Snider & Odom, L.L.C., Mobile, for appellees.

HARWOOD, Justice.

On March 1, 1999, Armstrong Business Services, Inc. ("ABS"), and its owner, Norris Armstrong, sued AmSouth Bank and Leonard "Bo" Marks, an AmSouth employee, alleging tort and contract claims arising out of failed negotiations between AmSouth and ABS concerning a $5.2-million loan request. The complaint contained the following counts: (count one) breach of contract; (count two) misrepresentation; (count three) fraudulent nondisclosure; (count four) deceit; (count five) intentional interference with business relations; (count six) negligence; (count seven) wantonness; and (count eight) negligent or wanton hiring, retention, and supervision of employees. AmSouth and Marks filed answers on April 30, 1999, generally denying the allegations of wrongdoing alleged in the counts and interposing various defenses.

On May 2, 2000, after extensive discovery by the parties, AmSouth and Marks filed a joint motion for a summary judgment as to the individual claims of Armstrong, arguing that he lacked standing, and a joint motion for a summary judgment as to the claims asserted by ABS. Both motions were supported by a memorandum of law, attached evidentiary materials, and a list of supporting cases. On June 19, 2000, ABS filed a motion and a brief in opposition to AmSouth and Marks's motions for summary judgment, conceding that Marks and AmSouth were entitled to a summary judgment as to count two, claiming misrepresentation; count four, claiming deceit; and count five, claiming intentional interference with business relations. ABS and Armstrong also conceded that Armstrong lacked standing to assert ABS's claims. Also on June 19, ABS filed a motion styled "Plaintiffs' Notice of Filing of Evidentiary Materials in Opposition to Defendants' Motions for Summary Judgment." Attached to this motion were numerous items.¹

On June 22, 2000, the trial court held a hearing and heard arguments on Marks and AmSouth's motions. On June 29, 2000, ABS filed a supplemental notice of evidentiary materials offered in opposition to the defendants' motion for summary judgment, to which notice several more items were attached.² Also on June 29, ABS filed a "letter brief" in response to the trial court's questions asked at the hearing. In response, Marks and Am-South filed a "letter brief" on July 3. On July 11, Marks and AmSouth moved to strike the affidavits of Morrison, Conwell, and Hasty, on the ground that under Rule 56(c)(2) they were untimely as not having been filed at least two days before the hearing.

On August 8, 2000, the trial court entered an order granting AmSouth and Marks's motions for summary judgment. In pertinent part, the order stated:

"This action is based on a `loan commitment letter' and is before the Court on Defendants' motions for summary judgment. Count one claims breach of contract by the Defendant Bank. The Court finds that the contract, if indeed there is a contract, runs afoul of the requirement of the Statute of Frauds that the consideration for loan commitments be expressed in writing. `If the consideration be not expressed in the writing, the agreement does not bind.' Rains v. Patton, 191 Ala. 349, [351], 62 So.2d 600 (1914).

"Count three claims breach of a duty of the Bank to disclose the facts that the Bank took the positions that the alleged agreement did not constitute an absolute commitment to loan, that it did not intend to honor the alleged commitment and that the Bank officer in question was without authority to make the alleged commitment. There is no fiduciary relationship between the parties and the Court finds that the circumstances of this case give rise to no such duty to disclose.

"Counts six and seven allege negligent and wanton breach of duties claimed to be assumed by the Bank in connection with the alleged commitment. The Court finds that no duty devolved on the Bank outside the confines of the alleged agreement. See Cahaba Seafood[, Inc.] v. Central Bank of the South, 567 So.2d 1304 (Ala.1990).

"Finally, it is claimed [in count eight] that the damages complained of were occasioned by the Bank's negligent supervision of its officer. This claim is not supported by the evidence submitted.

"The other claims having been conceded by Plaintiffs, and there being no genuine issue as to any material fact, judgment is entered for Defendants, the parties to bear their own costs.

"Done at Mobile, this 8th day of August 2000."

(R. 3815-16.)

On August 22, 2000, ABS and Armstrong filed a motion to alter, amend, or vacate the summary judgment. The trial court, on August 29, 2000, entered what it called a "supplemental summary-judgment order"; we understand that August 22 order to be an order amending the summary judgment entered on August 8, 2000. By that amendment, the trial judge (1) made it clear that the summary judgment was not based on a conclusion that as to their various theories of recovery Armstrong and ABS had failed to present substantial evidence on the element of damage and (2) acknowledged that AmSouth, in the summary-judgment proceedings, had stipulated that the plaintiffs had substantial evidence on the element of damage, but that AmSouth had made that stipulation without prejudice to its right, should there be a trial or future motions, to argue that the plaintiffs had incurred no damage. The amendment also stated that the court had denied the July 11 motion by Am-South and Marks to strike the affidavits of Morrison, Conwell, and Hasty, and that "those affidavits are part of the record which was before the Court [when it considered] the merits of the Defendants' summary-judgment motions."

On September 11, 2000, ABS appealed from the summary judgment. ABS argues that the trial court erred in entering the summary judgment as to its claims alleging (1) breach of contract (count one); (2) fraudulent nondisclosure or suppression (count three); (3) negligent or wanton refusal to lend money (counts six and seven); and (4) negligent and wanton supervision (count eight). Armstrong did not appeal.

The Facts

ABS owns and operates several H & R Block franchises, which provide tax-return-preparation services to the public. ABS acquired its franchises in 1989; they are located in Mobile, Baldwin, Washington, and Clark Counties, all in South Alabama. In late 1997, ABS became aware that other H & R Block franchises were to become available for purchase in Northwest Florida and in Escambia and Monroe Counties in Alabama. These franchises were operated collectively under the corporate name "Thriftax." The Thriftax franchises had been owned and operated by David B. Clayton, who had died in 1977. Clayton's will provided that they be held in trust for 20 years and then be sold through a bidding process. The Thriftax franchises were attractive to ABS for purchase because their proximity to the franchises ABS already owned would allow for a less costly accommodation with ABS's management and marketing plans. ABS, represented by Armstrong, subsequently entered into negotiations with the Clayton Estate trustees, and it acquired option rights to purchase the franchises by matching the highest bids on them from other prospective purchasers. Those prospective purchasers included H & R Block, which was seeking to reacquire its franchises. After obtaining the options, ABS sought financing for the purchase of the Thriftax franchises, from a number of banks and investors other than AmSouth; in each case, ABS was unwilling or unable to agree to the prospective lender's terms.

In early September 1997, ABS, acting through Armstrong, contacted AmSouth, hoping to negotiate a loan for the purpose of purchasing the Thriftax franchises. ABS had a banking relationship with Am-South, having maintained certain corporate accounts with AmSouth, dating back to 1980; ABS had similar relationships with several other banks. Armstrong testified that his first contact with AmSouth regarding purchasing the Thriftax franchises was with AmSouth employees Mike Cadden and Bo Marks, at ABS's offices, on October 22, 1997. Marks was a loan officer (termed a "relationship manager" by AmSouth), and Cadden was a loan officer who had worked on earlier transactions with ABS. Armstrong testified that he told Marks he needed a loan of approximately $5 million and that he wanted terms by which ABS would repay the loan over a 15-year period, paying only interest for the first 2 years, and after that paying principal and interest, using the newly acquired franchises as collateral.

After the October 22, 1997, meeting, Armstrong dealt only with Marks, usually in a personal meeting at the local AmSouth branch, but also by telephone. At their next meeting, the date of which is not specified in the record, Marks questioned Armstrong about whether the franchise rights were assignable in the event ABS defaulted and AmSouth assumed possession of the franchises under the terms of the proposed loan. Marks then asked Armstrong to obtain a letter from H & R Block stating that it would consent to the assignment of the franchise rights. Armstrong indicated that he was unwilling to seek such a letter because he was currently bidding against H & R Block for the Thriftax franchises and he did not wish to reveal his position to H & R Block. Armstrong testified on deposition that he understood that the assignability of the Thriftax franchises was critical to the question whether he would receive financing from AmSouth. Armstrong never attempted to obtain H & R Block's consent to an...