Crown Castle USA, Inc. v. Howell Engineering and Surveying, Inc., No. 2040076 (AL 8/19/2004)

• Decision Date: 19 August 2004
• Docket Number: No. 2040076.,No. 2031147.,2040076.,2031147.
• Parties: Crown Castle USA, Inc. v. Howell Engineering and Surveying, Inc. Crown Castle USA, Inc. v. Howell Engineering and Surveying, Inc., and Gloria Brown
• Court: Alabama Supreme Court

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Crown Castle USA, Inc. v. Howell Engineering and Surveying, Inc.

Crown Castle USA, Inc. v. Howell Engineering and Surveying, Inc., and Gloria Brown

No. 2040076.

No. 2031147.

Court of Civil Appeals of Alabama.

Decided August 19, 2004.

Appeals from Jefferson Circuit Court (CV-02-3190)

CRAWLEY, Presiding Judge.

Crown Castle USA, Inc. ("Crown"), leases space on cellular-telephone towers to cellular-telecommunications providers. In conducting its business, Crown uses the services of several types of professionals including land surveyors and civil or structural engineers. In the years before approximately mid- to late 2002, Crown contracted with local vendors for the surveying and engineering services it required. Howell Engineering and Surveying, Inc. ("HES"), was one of Crown's approved vendors. Before November 2001, HES and Crown operated under a professional-services agreement ("the former agreement"). In November 2001, HES and Crown entered into a new agreement, entitled the "A & E Agreement," to govern their business relationship, which was explicitly defined in the A & E Agreement as an independent-contractor relationship. The A & E Agreement included provisions governing such things as the procedures for invoicing, the requirement that the contractor have certain insurance, the grounds for termination of the agreement, and confidentiality. The A & E Agreement also specifically stated that the agreement was not exclusive and that Crown could award projects to other contractors. In addition, the A & E Agreement contained the following provision in Paragraph 15E, which we will refer to as the "no-solicitation/no-hire provision":

"Contractor and Crown mutually agree not to solicit nor hire individuals actively employed by the other party's respective organization during and for a period of one (1) year following termination of this Agreement, without the prior written consent of the other party, which consent will not be unreasonably withheld."

In October 2001, before the execution of the A & E Agreement between Crown and HES, Gloria Brown, HES's only civil structural engineer, sought to become an approved vendor for Crown. Brown had decided to start her own business; however, she continued to work for HES. In February 2002, Brown began working on projects assigned to her by Crown. The employee handbook provided to Brown and other employees by HES contained the following provision:

"MOONLIGHTING

"Moonlighting is strongly discouraged and must be approved in advance by the President. No moonlighting will be permitted if it is a conflict of interest with our company. Failure to have other employment authorized in advance is grounds for immediate dismissal."

Sometime around March 15, 2002, Larry Howell, the president of HES, learned that Brown was doing projects for Crown independently. Immediately after he discovered that Brown was working for Crown, Larry Howell terminated Brown's employment with HES. He testified that he had "laid [Brown] off" and that he had explained to her that the business from Crown was slowing down and that he could not afford to continue employing her.

HES sued Crown, alleging that Crown had breached the A & E Agreement and the former agreement between the parties and that Crown had intentionally interfered with HES's business relations. HES also sued Brown, alleging that Brown had intentionally interfered with HES's business relations and that Brown had converted certain items of property owned by HES. The intentional-interference-with-business-relations claims against both Brown and Crown were disposed of by the entry of summary judgments in favor of Brown and Crown. The remaining claims proceeded to a jury trial, at which the breach-of-contract claim based on the former agreement between Crown and HES was voluntarily withdrawn by HES. After Crown's and Brown's respective pre-verdict motions for a judgment as a matter of law ("JML") at the close of HES's evidence and at the close of all the evidence were denied by the trial court, the remaining breach-of-contract claim based on Crown's alleged breach of the A & E Agreement and the conversion claim against Brown were submitted to the jury. The jury returned a verdict in favor of HES and against both Brown and Crown, awarding HES $618,634 in damages on its breach-of-contract claim against Crown and $7,300 in compensatory damages and $73,000 in punitive damages on its conversion claim against Brown. Crown and Brown each filed postjudgment motions; Crown's postjudgment motion was denied, but the trial court granted Brown's postjudgment motion in part, remitting the punitive-damages award to $50,000. Both Crown and Brown appealed to the Alabama Supreme Court. Brown's appeal was later dismissed by agreement of the parties.

Later, HES filed a garnishment action against Crown and Brown to recover from Crown a portion of the $57,300 judgment against Brown. The trial court determined that Crown owed Brown $24,600, which amount was subject to garnishment by HES. Crown appealed that judgment to this court (case no. 2031147).¹ Crown's appeal of the judgment entered on the jury's verdict was then transferred to this court, pursuant to Ala. Code 1975, § 12-2-7(6), assigned case no. 2040076, and the two appeals were consolidated.

The Appeal of the Judgment on the Breach-of-Contract Claim in Case No. 2040076

Crown argues that the trial court erred in failing to grant its motions for a JML.

"This Court reviews a denial of a motion for a JML by the same standard the trial court used in initially denying the motion. Palm Harbor Homes, Inc. v. Crawford, 689 So. 2d 3 (Ala. 1997). Furthermore, we must determine `whether the party who bears the burden of proof had produced substantial evidence creating a factual dispute requiring resolution by the jury.' Bell v. T.R. Miller Mill Co., Inc., 768 So. 2d 953, 956 (Ala. 2000), citing Carter v. Henderson, 598 So. 2d 1350 (Ala. 1992). We view the evidence in a light most favorable to the nonmoving party and entertain any reasonable inferences the jury may have been able to draw. Bell, 768 So. 2d at 956. Notwithstanding, we accord the trial court's ruling on a question of law no presumption of correctness. Id."

LaFarge Bldg. Materials, Inc. v. Stribling, 880 So. 2d 415, 418-19 (Ala. 2003).

One of several grounds argued by Crown in its motions for a JML and again on appeal as a basis for reversal is that the no-solicitation/no-hire provision of the A & E Agreement is void as a matter of law. Although the A & E Agreement specified that Pennsylvania law would govern the agreement and although choice-of-law provisions are honored in Alabama, Crown correctly points out that Pennsylvania law governing noncompetition agreements cannot be applied if application of that law would contravene Alabama's policy regarding noncompetition agreements. Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 506-07 (Ala. 1991). In Brown, our supreme court was faced with determining whether to apply the law of North Carolina, which the parties had chosen to govern their agreement, or the law of Alabama. Brown, 582 So. 2d at 507. The noncompetition provisions in the parties' agreement were enforceable under North Carolina law, but they violated Ala. Code 1975, § 8-1-1. Id. As the Brown court explained:

"The partnership agreement specifies that the parties agree that North Carolina law will govern the construction and validity of the agreement. Alabama follows the principle of 'lex loci contractus,' which states that a contract is governed by the laws of the state where it is made except where the parties have legally contracted with reference to the laws of another jurisdiction. Macey v. Crum, 249 Ala. 249, 30 So. 2d 666 (1947); J.R. Watkins Co. v. Hill, 214 Ala. 507, 108 So. 244 (1926). Alabama law has long recognized the right of parties to an agreement to choose a particular state's laws to govern an agreement. Craig v. Bemis Co., 517 F.2d 677 (5th Cir. 1975). Thus, North Carolina law would seem to govern the present agreement, because CB & H and Brown have apparently chosen the laws of North Carolina to govern it. However, this principle is qualified by the principles set out in Blalock v. Perfect Subscription Co., 458 F. Supp. 123 (S.D. Ala. 1978), and the cases following it.

"In Blalock, although the parties to an agreement, which contained a covenant not to compete, chose Pennsylvania law (which enforces covenants not to compete) to govern the agreement, the United States District Court for the Southern District of Alabama held that where the parties' choice of law would be contrary to the fundamental public policies of the forum state, Alabama, the parties' choice of law could not be given effect and that the laws of the forum must control the agreement. That case involved a contract between an Alabama resident and a Pennsylvania corporation. The Blalock court referred to the Restatement Second of Conflict of Laws, §§ 187 and 188 for guidance. Section 187 provides, in part:

"`(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.

"`(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either

"`(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

"`(b) application of the law of the above chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state...