Gulledge v. Frosty Land Foods Intern., Inc.
| Decision Date | 23 April 1982 |
| Citation | 414 So.2d 60 |
| Parties | E. A. GULLEDGE and Iowa Meat Distributing Company, Inc. v. FROSTY LAND FOODS INTERNATIONAL, INC. 80-642. |
| Court | Alabama Supreme Court |
Thomas R. Christian of Turner, Wilson, Christian & Dorrough, Montgomery, for appellant.
Sterling G. Culpepper, Jr., and William P. Cobb, II, for Smith, Bowman, Thagard, Crook & Culpepper, Montgomery, for appellees.
Frosty Land Foods International, Inc. (hereinafter Frosty Land) and Lorenz Transport and Ship Lines, Inc. (Lorenz), a wholly-owned subsidiary of Frosty Land, filed suit against E. A. Gulledge and Iowa Meat Distributing Company, Inc. (Iowa), alleging that Gulledge, while an officer, employee and director of both Frosty Land and Lorenz, violated his fiduciary duty to the plaintiff corporations by engaging in a competing business to the detriment of those plaintiff corporations. The plaintiff corporations further alleged that Gulledge used their men and equipment to further his business and that he usurped corporate opportunities of the plaintiff corporations to his own use, converted Frosty Land's equipment and property and was also guilty of gross negligence, indifference, or bad faith in failing to perform his duties as the chief executive officer in a diligent manner.
The defendants denied that Gulledge, acting either through Iowa or by himself, violated any fiduciary or confidential duty to the plaintiffs. By stipulation, all parties agreed before trial that they would adjudicate the question of any monies owed by the parties to each other.
After a hearing ore tenus, the trial court entered judgment in favor of Frosty Land on all counts.
Defendants filed a motion for new trial or to alter, amend or set aside the judgment. The trial court entered an amended order correcting the amount of damages awarded but denied a new trial. Defendants appeal. We affirm.
The plaintiffs, Frosty Land and Lorenz, were corporations primarily involved in the business of processing and distributing beef, respectively.
From 1972, defendant E. A. Gulledge occupied a number of executive positions with the plaintiff corporations. He was director of sales and distribution/transportation for Frosty Land from November, 1976 through mid-April, 1977. He then became chief operating officer, president, and a corporate director of Lorenz, a subsidiary formed at that time for the sole purpose of distributing/transporting Frosty Land meat.
In May, 1977, while employed in the above capacities with Lorenz and as vice president and corporate director of Frosty Land, defendant Gulledge first approached an officer of First Alabama Bank of Montgomery with respect to formation of Iowa. The same month, Gulledge, still so employed by the plaintiffs, solicited an order for the sale of beef on his own behalf as Iowa Meat Distributing Company. The order was solicited from Clyde Porter, the meat buyer for "Bi Lo," a grocery chain of South Carolina, which was the largest principal customer of Frosty Land, purchasing approximately thirty-seven percent of Frosty Land's meat. Gulledge approached a Lorenz driver about making this haul, told the driver he was going into business for himself, asked the driver not to tell anyone about the trip, and ultimately used a Lorenz driver, tractor, and trailer to deliver his meats. Gulledge told the driver that he "could come to work for him" and asked him to make a similar delivery the following week. As Gulledge put it, he "had made a decision to leave the corporation and was looking out for [his] own self" as of May, 1977. Also in 1977, Gulledge used Lorenz's equipment to haul two loads of building supplies to the home construction site of Clyde Porter, the "Bi Lo" buyer, which trips were not authorized by plaintiffs.
In September, 1977, Gulledge approached another Lorenz driver about working for him and asked the driver to make a haul for his company to "Bi Lo." The driver made the run for Gulledge on his instructions in a Lorenz tractor and later made a trip to Atlanta using a Lorenz tractor to pick up a trailer for Gulledge.
In late September, 1977, Gulledge informed Larry Neuhoff, president of Frosty Land and chairman of the board of Lorenz, that he was leaving his employment. Plaintiff corporations allege that he never told his employer about the use of Lorenz men and equipment to make deliveries for Iowa Meat. Instead, these facts were first learned as the result of an investigation. Gulledge testified that he informed Neuhoff on that same day.
After leaving Frosty Land/Lorenz, Gulledge continued delivering meat to "Bi Lo" as Iowa Meat Distributing Company. Upon leaving, he put Jim Willis, who was employed full time as the...
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