Green v. Bradley Const., Inc.

• Decision Date: 06 May 1983
• Parties: Thomas G. GREEN, III v. BRADLEY CONSTRUCTION, INC., et al. 81-705.
• Court: Alabama Supreme Court

Page 1226

431 So.2d 1226

Thomas G. GREEN, III v. BRADLEY CONSTRUCTION, INC., et al.

81-705.

Supreme Court of Alabama.

May 6, 1983.

John D. Cates, Jr., Montgomery, for appellant.

W.H. Brittain, II of Ball, Ball, Duke & Matthews, Montgomery, for appellees.

FAULKNER, Justice.

Plaintiff, Thomas G. Green, III, appeals from the Montgomery Circuit Court's finding in favor of defendants, Bradley Construction, Inc., Alfred E. Mann, Jr., Anita B. Green, and William E. Bradley (hereinafter all defendants referred to as Bradley) on two points of defense raised by defendants in their motion to dismiss, namely:

1. "The Plaintiff at the time the suit was filed was not a stockholder with Bradley Construction Company and was not a real party in interest in the action."

2. "The Plaintiff was barred by the theories of Res Judicata and Collateral Estoppel."

Green filed his complaint on October 1, 1981, alleging that Bradley engaged in fraudulent conduct which resulted in Green's suffering a loss of his share of certain equities and income of the corporation. In his complaint, Green states that as a result of the previous divorce proceeding between himself and defendant Anita B. Green, the court awarded his entire stock in Bradley Construction, Inc., to Anita B. Green on April 10, 1981. However, Green contends that he was a stockholder of record at the time the fraudulent conversions took place.

Bradley answered the complaint with a motion to dismiss. In support of the motion Bradley provided the lower court with an affidavit from defendant Anita B. Green, testimony of William Edward Bradley and Rudolph Ohme, Jr., taken during the previous divorce proceeding, and the depositions of William Edward Bradley and Thomas G. Green, III, taken as discovery in the prior divorce proceedings. The lower court granted defendants' motion to dismiss, stating:

"After consideration of the arguments presented by counsel in their briefs addressing the issues presented in the Defendant's Motion to Dismiss presented with affirmative defenses, it is the opinion of this Court that based on defendant's second and third affirmative defenses the Motion to Dismiss should be GRANTED."

This court notes that the lower court looked beyond the pleadings to rule on Bradley's motion to dismiss and therefore the motion should have been converted into a motion for summary judgment as provided in Rule 12(c), Alabama Rules of Civil Procedure. See Thorne v. Odum, 349 So.2d 1126 (Ala.1977) (motion to dismiss treated as motion for summary judgment by the appellate court even though it was not specifically designated as such by the trial court). Thus, once matters outside the pleadings are considered, the requirements of ARCP Rule 56 become operable and the "... moving party's burden changes and he is obliged to demonstrate that there exists no genuine issue as to any material fact and that he is entitled to a judgment as a matter of law." C. Wright and A. Miller, Federal Practice and Procedure: Civil § 1366 (1969). Therefore, we must determine whether the defendants met that burden, which is appropriately shifted to the defendant-movant for summary judgment because the plaintiff cannot amend as a matter of right after a summary judgment has been rendered against him. Papastefan v. B & L Const. Co., Inc. of Mobile, 356 So.2d 158 (Ala.1978). In determining whether any genuine issue of fact exists, we must view the record before us in the light most favorable to the party opposing the motion for summary judgment.

There are two major issues on appeal: (1) whether the trial court erred upon its finding that the plaintiff lacked standing to prosecute his claim on the basis that he was not a stockholder at the time of filing his suit; (2) whether collateral estoppel and res judicata apply in this case.

We will address the standing issue first. Green alleges that the defendants' conversion of his funds was, in effect, conversion of his personal assets. Green contends that his status to maintain suit is not on the basis of its being a derivative action, but instead, on the basis of the establishment of a constructive trust for funds which should have accrued to him but were fraudulently converted by individuals to their personal use. Green relies on the fact that Bradley Construction, Inc. elected to be a subchapter S corporation in August 1974. According to Green, the net income of the corporation for any year during the subchapter S period accrued to him not as a dividend of the corporation, but as distributable income which belonged to him.

Bradley points out, however, that Green has, contrary to his argument, filed his suit under Rule 23.1, Alabama Rules of Civil Procedure, which states:

"DERIVATIVE ACTION BY SHAREHOLDERS

"In a derivative action brought by one or more shareholders or members to enforce a right of a corporation or of an unincorporated association, the corporation or association having failed to enforce a right which may properly be asserted by it, the complaint shall be verified and...