CONFERENCE AMERICA v. TELECOM. CO-OP

• Citation: 885 So.2d 772
• Parties: CONFERENCE AMERICA, INC. v. TELECOMMUNICATIONS COOPERATIVE NETWORK, INC., et al.
• Decision Date: 21 November 2003
• Court: Supreme Court of Alabama

885 So.2d 772

CONFERENCE AMERICA, INC. v. TELECOMMUNICATIONS COOPERATIVE NETWORK, INC., et al.

1021047.

Supreme Court of Alabama.

November 21, 2003.

As Modified on Denial of Rehearing January 30, 2004.

Thomas S. Lawson, Jr., and Richard H. Allen of Capell & Howard, P.C., Montgomery; and Richard A. Ball, Jr., of Ball, Ball, Matthews & Novak, P.A., Montgomery, for appellant.

C. Lee Reeves and Anthony R. Smith of Sirote & Permutt, P.C., Birmingham; and Marvin H. Campbell, Montgomery, for appellees.

HOUSTON, Justice.

Conference America, Inc., appeals from the Montgomery Circuit Court's judgment on a jury verdict in favor of Telecommunications Cooperative Network ("New TCN") and one of its employees, Chris Lipscomb. This case involves, among other issues: 1) whether a contract, not for unique personal services, that is silent on the issue of assignability can be assigned, and 2) whether a juror's misrepresentations during voir dire were significantly material so as to warrant a new trial. We hold that the contract in this case was assignable, and we affirm the trial court's judgment relating to that issue and to Conference America's equitable claims. However, we hold that Conference America is entitled to a new trial on the remaining issues based on the misconduct of one of the jury members.

I. Relevant Facts

Conference America is an Alabama corporation that provides conference-call services. In 1995, Conference America was selected by Telecommunications Cooperative Network of New York, Inc. ("Old TCN"), a not-for-profit membership cooperative that assisted nonprofit entities in using telecommunications services, to provide conference-call services to members of Old TCN.¹

In 1997, Conference America and Old TCN entered into an agreement ("the 1997 agreement") pursuant to which Conference America would pay Old TCN a 24% commission on the services Conference America provided to members of Old TCN. The term of the 1997 agreement extended from January 27, 1997, through December 31, 2000. The 1997 agreement was silent as to whether the agreement was assignable.

By early 1998, Old TCN was having financial difficulties and was close to filing a petition for involuntary bankruptcy. Around that time, David Altshuler, who had served as vice chairman on the board of directors of Old TCN through July 1997, formed a for-profit corporation named Telecommunications Management, Inc. ("TMI"). Pursuant to a management agreement between Old TCN and TMI, Altshuler, as president of TMI, took over the management of Old TCN. In July 1998, TMI changed its name to Telecommunications Cooperative Network, Inc. ("New TCN"). In September 1998, the assets of Old TCN—including its name, its goodwill, and the 1997 agreement—were transferred or assigned to New TCN and Old TCN was subsequently dissolved. New TCN is a for-profit corporation, run by Altshuler as its sole officer and director.² Conference America claims to have had no knowledge of the transfer of assets of Old TCN to New TCN, of the dissolution of Old TCN, or of the creation of New TCN.

After New TCN acquired the assets of Old TCN, Conference America continued to provide services and to remit commissions to New TCN pursuant to its 1997 agreement with Old TCN. In December 1998, Conference America executed another agreement ("the 1998 agreement") virtually identical to the 1997 agreement that, among other things, extended the term of the 1997 agreement through September 30, 2002.³ The 1998 agreement referred to "TCN"; it did not distinguish between "Old" TCN and "New" TCN. According to Conference America, New TCN held itself out as being the same company as the dissolved Old TCN.

Subsequently, the relationship between Conference America and New TCN became strained; the reasons for the strain, which are disputed by the parties, are not relevant here. Conference America sued New TCN, Altshuler, Chris Lipscomb,⁴ and others, seeking, among other things, 1) damages for fraud, breach of contract, repudiation of contract, and moneys paid by mistake under a void assignment of the 1997 agreement, and 2) declaratory and injunctive relief. New TCN and Lipscomb each filed a counterclaim. Following the trial, however, the only claims that went to the jury were Conference America's breach-of-contract and fraud claims, New TCN's counterclaim alleging breach of contract and repudiation of contract, and Lipscomb's counterclaim alleging breach of contract. Relevant to our discussion is the fact that the trial court granted New TCN's motion for a judgment as a matter of law as to Conference America's claim that it was entitled to moneys paid to New TCN by mistake because, it argued, the 1997 agreement was unassignable.

The jury returned a verdict for New TCN and Lipscomb on Conference America's breach-of-contract and fraud claims and on their counterclaims. The jury awarded damages on the counterclaims in the amounts of $1,007,499.97, and $1,000 to New TCN and Lipscomb, respectively. The trial court entered a judgment on this verdict.

Following the verdict, Conference America discovered that a juror had given erroneous answers in his questionnaire and on voir dire examination. It confirmed this fact through investigation and memorialized its discovery and initial investigation in a letter to the Court dated November 8, 2002, enclosing its investigative material.

On November 22, 2002, Conference America filed motions for a judgment as a matter of law, a new trial, and to alter, amend, or vacate the judgment, asserting, among other things, juror misconduct and the alleged unassignability of the 1997 agreement. Following two hearings (including an evidentiary hearing on the juror-misconduct issue), the trial court denied Conference America's postjudgment motions. This appeal followed.

II. Analysis

Conference America raises three issues on appeal. First, it contends that the 1997 agreement was not assignable to New TCN. Second, Conference America contends that it was entitled to a new trial based upon juror misconduct. Third, Conference America contends it was entitled to 1) a judgment as a matter of law as to New TCN's counterclaims or, in the alternative, 2) a new trial based on the claim that the jury's verdict was against the great weight of the evidence.

A. Assignability of the 1997 Agreement

At trial, the jury awarded New TCN $1,007,499.97 on its counterclaim against Conference America alleging that Conference America had breached the 1997 agreement. Conference America contends that New TCN's right to recover under the 1997 agreement hinges on whether that agreement was assignable without Conference America's knowledge or consent; we hold that it was so assignable.

As stated above, the 1997 agreement is silent as to its assignability. In Sisco v. Empiregas, Inc. of Belle Mina, 286 Ala. 72, 76, 237 So.2d 463, 466 (1970), this Court noted "the general proposition that personal service contracts are not assignable." In Sisco, we noted that personal service contracts involve "a relationship of personal confidence between the parties." 286 Ala. at 76, 237 So.2d at 466. Such a relationship is one in which a party would have "a substantial interest in having that [particular] person perform or control the acts promised." Restatement (Second) of Contracts § 318(2)(1979). This case, however, does not involve such a personal relationship; rather, this case involves the performance of an agreement by the unidentified agents, servants, or employees of an impersonal corporation to provide teleconferencing services to customers of another impersonal corporation; contracts for such works are not personal and may be assigned.⁵

Based on the above, we hold that the trial court's rulings based on the assignability of the 1997 agreement were correct.

B. Juror Misconduct

The trial court refused to grant Conference America a new trial based upon alleged juror misconduct. Our standard of review on this issue is whether the trial court exceeded its discretion in refusing to grant a new trial. Acceptance Ins. Co. v. Brown, 832 So.2d 1, 12 (Ala.2001)("The denial of a motion for a new trial is within the sound discretion of the trial court.").

The jury foreman, H.C., a Montgomery pastor who was not a member of the original jury pool, failed to respond to numerous questions posed during voir dire examination. The trial court asked if any member of the venire had been employed by a business entity referred to as "Call Points," which provided teleconferencing services. The name, Call Points, was repeated four times. H.C. did not respond, although he had in fact been employed by Call Points. The trial court explained the nature of a teleconferencing company and asked whether any member of the venire had ever been employed by a teleconferencing company. Some members of the venire responded to the question; however, H.C., who had in fact been employed by a teleconferencing company, did not respond. The trial court also asked if any member of the venire had been involved in a contract dispute. H.C. did not respond. In fact, H.C. had had three judgments rendered against him in three collection actions and he was involved in an ongoing paternity and child-support case. He had been held in contempt twice in the paternity action. The juror questionnaire asked if the prospective juror had ever been arrested for or convicted of a crime. H.C. responded that he had not; in fact, H.C. had been arrested, convicted, and jailed on a bad-check charge.

"Not every failure of a prospective juror to respond correctly to a voir dire question will entitle the losing party to a new trial." McKowan v. Bentley, 773 So.2d 990, 996 (Ala.1999). However, where "improper responses or lack of responses by prospective jurors on voir dire result[] in probable prejudice" to the losing party, a new trial is warranted. Freeman v. Hall, 286 Ala. 161, 166, 238 So.2d 330, 335 (1970).

In Freeman, we noted:

"Although the factors upon which

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