Phillips v. Knight

• Decision Date: 02 March 1990
• Citation: Phillips v. Knight, 559 So.2d 564 (Ala. 1990)
• Parties: Wayne PHILLIPS v. Jimmy H. KNIGHT. 88-1527.
• Court: Alabama Supreme Court

Page 564

559 So.2d 564

Wayne PHILLIPS v. Jimmy H. KNIGHT.

88-1527.

Supreme Court of Alabama.

March 2, 1990.

Douglas L. McWhorter and Jesse P. Evans III of Najjar, Denaburg, Meyerson, Zarzuar, Max, Wright & Schwartz, Birmingham, for appellant.

Henry C. Wiley, Jr. of Laird and Wiley, Jasper, for appellee.

HORNSBY, Chief Justice.

This is an appeal from an order of the Circuit Court of Walker County finding that a settlement agreement existed between the parties and ordering it enforced. Knight and Phillips were the sole incorporators, officers, directors, and shareholders of Vidco, Inc., and Earthworks, Inc., with each owning 50% of the outstanding stock of both corporations.

Phillips was first to file an action; he filed his action in Jefferson County Circuit Court on July 9, 1985, alleging, among other things, that Knight had breached his fiduciary duties to the two corporations. ¹ Knight filed a complaint two days later in the Circuit Court of Walker County alleging that Phillips had breached his fiduciary duties as an officer and director of the two corporations. The circuit judge of Walker County determined that Walker County was the proper forum for the lawsuit. ² Phillips subsequently filed an answer and a counterclaim in the Walker County suit, alleging that Knight had breached his fiduciary duties to both corporations. Knight's answer to the counterclaim denied these allegations.

In June 1988, Knight's attorney filed a motion to enforce the settlement agreement he alleged had been agreed to by the parties as a result of negotiations that had taken place during the summer of 1986. In July 1988, Phillips hired a new attorney, Danny Lockhart. Lockhart responded to the motion to enforce the settlement agreement by alleging that neither Phillips nor his former attorney, Gould H.K. Blair, had ever agreed to settle the case on Phillips's behalf. This response included an affidavit by Phillips's former attorney, Blair, who stated that he had never had the authority to enter into a settlement agreement on behalf of Phillips. The trial court granted Knight's motion to enforce the settlement agreement, basing its order on the evidence submitted at the hearing on the motion. Phillips appeals from the trial court's order.

Issues

Phillips asserts that the trial court erred in three respects: 1) that it abused its discretion by finding facts not supported by the record; 2) that it failed to conduct an evidentiary hearing; and 3) that Phillips's attorney should not have been found to have had the authority to enter into the settlement agreement on behalf of his client. Because we reverse and remand this case to the trial court, we need not discuss the failure of the trial court to hold an evidentiary hearing.

Discussion

The facts necessary to our decision appear in the trial court's order, as set forth in pertinent part below:

"[T]he parties were ably represented by counsel.... The Motion was submitted to the Court for ruling upon facts as stipulated and agreed upon by the parties, ³ upon the pleadings, attachments exhibits, and affidavits attached thereto, and upon the strong arguments of both Attorneys. Upon consideration of the stipulated facts, pleadings (together with attachments, exhibits and affidavits attached thereto) and the arguments of counsel, the Court makes the following findings and it is therefore the Order, Judgment, and Decree of this Court:

"1. That on July 11, 1985 this action was commenced by the filing of a Complaint by Jimmy H. Knight in the Circuit Court of Walker County. The Complaint stated that it was 'an action commenced pursuant to Section 10-2A-195 in the Code of Alabama [1975] to dissolve Vidco, Inc. and Earthworks, Inc. and to liquidate the assets and business of said corporations.' The Complaint also contained certain other allegations regarding the conduct of the Defendant Wayne Phillips and in addition to seeking dissolution of the corporations, sought certain injunctive and other relief. Defendant filed an Answer to this Counterclaim on July 16, 1985 and on October 3, 1985 filed a Multiple Count Counterclaim.

"2. That, subsequently, during the summer months of 1986, the Attorneys of record for the parties, namely Hon. Gould H.K. Blair, Attorney for Wayne Phillips, and Hon. H.C. Wiley, Jr., Attorney for Jimmy Knight, entered into lengthy settlement negotiations with regard to the pending litigation. These negotiations continued through the summer of 1986 and culminated when the parties, through their attorneys, reached a settlement agreement which was set forth in a letter dated September 2, 1987 from Knight's attorney to Phillips's attorney. Prior to this time, numerous writings concerning this settlement had been sent from Knight's attorney to Phillips's attorney. These writings are attached to Knight's Motion to Enforce Settlement Agreement and are a part of this court file and are in evidence for the purpose of the pending motion. They are summarized in the Motion itself and this summary [is] set forth here:

"7-1-86--Letter from Counsel for Knight to counsel for Phillips concerning settlement.

"9-25-86--Written correspondence from counsel from [sic] Knight to Counsel of Phillips concerning settlement.

"10-7-86--Written correspondence to attorney of record for Phillips concerning settlement.

"2-18-87--Letter from counsel for Knight to counsel of Phillips concerning settlement.

"8-10-87--Letter from counsel for Knight to counsel of Phillips concerning continuance of litigation.

"8-25-87--Letter from counsel for Knight to counsel for Phillips concerning settlement.

"3. On September 2, 1987 Knight's attorney wrote to Phillips's attorney a letter which states, in part, 'this will confirm our recent telephone conversation where we settled the disputes between our respective clients.' This correspondence also included the following written documents whereby the settlement agreement was further reduced to writing:

"[list of 15 documents attached necessary to conclude settlement]

"4. Subsequent to September 2, 1987 additional writings were forwarded to Phillips's attorney confirming the settlement. These occurred on November 12, 1987; November 30, 1987; and November 21, 1987. The correspondence of November 12, 1987 and November 30, 1987 stated that it had been reported to the Judge presiding over the matter that the case had been settled.

"5. On June 21, 1987 Knight's attorney wrote to the Circuit Court for Walker County, James E. Wilson, and advised in writing that case had been settled.

"6. On at least one occasion, July 6, 1988, the matter was called on a Circuit Court Trial Docket. Knight's attorney appeared, (Phillips's attorney failed to appear) and informed the Court that settlement had been agreed upon. The presiding Judge made a Docket entry which read 'trying to settle. H.W. (Knight's attorney) to get Order. Default in ten days.' Thus, the Trial Court made an entry ... on the minutes of the Court confirming that the case was settled, that an Order would be forthcoming, and that Default would be entered against Phillips if the Order was not received. The Court find[s] that the reason that Phillips's attorney did not appear is due to the fact that a settlement agreement had been reached at that time which had been reduced to writing.

"7. The Court finds that ... Gould H.K. Blair, attorney for Wayne Phillips, in fact represented Wayne Phillips during the course of the settlement negotiations and had authority to bind his client in this action. The Court further finds that Hon. H.C. Wiley, Jr. was attorney of record for Plaintiff Jimmy Knight during the settlement negotiations referenced herein and had authority to bind his client in these matters.

"8. The Court finds that a Settlement Agreement was reached in relation to this case, that the Agreement was reduced to writing and is enforceable.

"9. The Court finds that a Settlement Agreement was reached in this case, an entry of the same was made on the minutes of the Court in this matter, and said settlement is due to be enforced.

"10. The Court finds further that Phillips is estopped from denying the Settlement Agreement reached in this case and that the Settlement Agreement is therefore due to be enforced.

"[The remainder of the Order lists the specific terms of the Settlement Agreement.]"

Standard of Review

At the outset, we note that the usual presumptions of correctness applied to the trial court's findings in ore tenus cases are not applicable here. Hacker v. Carlisle, 388 So.2d 947, 950 (Ala.1980). We review the evidence presented in the record before us without any presumption of correctness, due to the trial judge's having taken no oral testimony. Ingram v. Pollock, 557 So.2d 1199 (Ala.1989); Bownes v. Winston County, 481 So.2d 362, 364 (Ala.1985) ("[w]here the evidence is stipulated, and no testimony is presented orally before the trial court, this Court will review without any presumption in favor of the trial court's findings and sit in judgment on the evidence"); Ex parte British Steel Corp., 426 So.2d 409, 414 (Ala.1982); Hacker v. Carlisle, supra ("This case was tried without a jury on stipulations and briefs of the parties and primarily documentary evidence. No testimony of any witness was admitted into evidence on any material matter. In such a situation, the appellate court sits in judgment on the evidence") (emphasis original); see also Perdue v. Roberts, 294 Ala. 194, 314 So.2d 280 (1975); McCulloch v. Roberts, 292 Ala. 451, 454, 296 So.2d 163 (1974) "[t]his is in effect the negative expression of the ore tenus rule"); Sheehan v. Liberty Mutual Fire Ins. Co., 288 Ala. 137, 258 So.2d 719 (1972); Kennedy v. State Dept. of Pensions & Security, 277 Ala. 5, 166 So.2d 736 (1964); Adams v. Logan, 260 Ala. 346, 70 So.2d 786 (1954); Redwine v. Jackson, 254 Ala. 564, 569, 49 So.2d 115 (1950); 5 Am Jur 2d Appeal and Error, § 825 at 267 (1962). Thus, we must review the evidence in this case...