Polk v. Polk

• Decision Date: 11 February 2011
• Docket Number: 2090591.
• Citation: 70 So.3d 363
• Parties: Dusty POLK and Lezanne (Polk) Proctorv.Leslie POLK and Polk Plumbing, LLC.
• Court: Alabama Court of Civil Appeals

70 So.3d 363

Dusty POLK and Lezanne (Polk) Proctor

v.Leslie POLK and Polk Plumbing, LLC.

2090591.

Court of Civil Appeals of Alabama.

Oct. 22, 2010.Opinion on Return to Remand Feb. 11, 2011.

H. Chase Dearman of Dearman Law Firm, P.C., Mobile, for appellants.A. Riley Powell IV of The Powell Law Firm, P.C., Gulf Shores, for appellees.

MOORE, Judge.

Dusty Polk and Lezanne Proctor sued Leslie Polk and Polk Plumbing, LLC (“the LLC”), asserting, among others, claims of breach of fiduciary duty. Leslie and the LLC counterclaimed against Dusty and Lezanne, asserting, among others, claims of conversion. The case was tried before a jury; only Dusty's and Lezanne's breach-of-fiduciary-duty claims against Leslie and the LLC's conversion claim against Dusty were submitted to the jury.¹ The jury found in favor of Dusty and Lezanne on their claims against Leslie and awarded each of them $1 in compensatory damages; the jury found in favor of Dusty on the LLC's counterclaim. The trial court entered a judgment on the jury's verdict.

Dusty and Lezanne moved for a new trial, asserting, among other things, that the jury's award of compensatory damages to them was inadequate based upon the evidence presented at the trial. The trial court denied that motion without stating its reasons for doing so. Dusty and Lezanne appealed.

The trial court erred in denying Dusty and Lezanne's motion for a new trial without providing a written statement of the reasons for its denial. We, therefore, remand this case for the trial court to enter an order in compliance with Hammond v. City of Gadsden, 493 So.2d 1374 (Ala.1986), stating its reasons for denying the motion for a new trial. See Southern Pine Elec. Coop. v. Burch, 878 So.2d 1120 (Ala.2003) (remanding case to the trial court for the entry of a Hammond order); and Love v. Johnson, 775 So.2d 127 (Ala.2000) (accord). The trial court is instructed to file a return to this court within 28 days of the release of this opinion, after which Dusty and Lezanne will have 14 days to file a supplemental brief if they choose to do so. Leslie will then have seven days to respond, and Dusty and Lezanne may file a reply brief within seven days of Leslie's response.

REMANDED WITH INSTRUCTIONS.

PITTMAN, BRYAN, and THOMAS, JJ., concur.THOMPSON, P.J., concurs in the result, without writing.

On Return to Remand

MOORE, Judge.

Dusty Polk and Lezanne (Polk) Proctor appeal from a judgment, entered on a jury's verdict, awarding each of them $1 in compensatory damages on their claim of breach of fiduciary duty asserted against Leslie Polk; Dusty Polk also appeals from the judgment entered on the jury's verdict on a counterclaim of conversion asserted by Polk Plumbing, LLC (“the LLC”), against Dusty Polk. We affirm in part and reverse in part.

Procedural History

In December 2004, Dusty, Lezanne, and Leslie, along with Yurii Polk, formed the LLC, pursuant to the Alabama Limited Liability Company Act (“the Act”), Ala.Code 1975, § 10–12–1 et seq., by filing the appropriate documents in the Baldwin Probate Court. As the sole members of the LLC, Leslie and his children, Yurii, Dusty, and Lezanne, executed a detailed “Operating Agreement” governing the LLC's business affairs. According to the Operating Agreement, all the members would act as the “initial managers” of the LLC, charged with the responsibility of handling the day-to-day affairs of the LLC. The Operating Agreement also contained specific provisions governing the transfer of a member's interest in the LLC and the dissolution and “winding up” of the LLC. It was undisputed that, as originally organized, the members held the following ownership percentages in the LLC: Leslie—50%; Yurii—20%; Dusty—20%; and Lezanne—10%.

It appears that the family members worked successfully together for a period with Leslie, Dusty, and Yurii performing commercial plumbing work and Lezanne, an accountant, maintaining the financial records and serving as the office manager. In September 2005, the members held a special business meeting. At that meeting, Yurii indicated that he wished to return to “service work,” or residential work; because Leslie and Dusty had no interest in service work, the LLC did not engage in that type of plumbing work. Minutes from that special business meeting indicated that Yurii's “shares [in the LLC] will be signed over to the president, Leslie Polk. See Amendment 1 to the Operating Agreement for the new distribution of ownership.” All members of the LLC signed those minutes.¹ A document entitled “Amendment 1” was affixed to the Operating Agreement; that document indicated that Leslie Polk held 70% ownership of the LLC, while Dusty continued to hold 20% and Lezanne continued to hold 10%. Lezanne made the necessary notations on the books of the LLC to record the transfer of 200 shares in the LLC from Yurii to Leslie. The trial court admitted into evidence a copy of the minutes of the special business meeting, a copy of the LLC's Operating Agreement, as amended, and a copy of the certificate representing the additional 200 shares issued to Leslie.

In April 2007, Leslie became dissatisfied with Dusty and Lezanne. He purported to “fire” them from the LLC, and, shortly thereafter, he prevented them from accessing the LLC's books and records and the LLC's offices. After their alleged dismissal in April 2007, it was undisputed that Dusty and Lezanne had no control or input into the operation of the LLC. After dismissing Dusty and Lezanne from the day-to-day operations of the LLC, Leslie continued to operate the business. Dusty began operating as “Absolute Plumbing,” a prior business that he had never formally dissolved or closed.² Lezanne accepted employment with an accounting firm.

On July 2, 2007, Dusty and Lezanne sued Leslie and the LLC. In their complaint, they alleged that Dusty held a 20% interest in the LLC, that Lezanne held a 10% interest in the LLC, that Leslie held a 50% interest in the LLC, and that Leslie held Yurii's 20% interest in trust for distribution among the LLC's other members and potential future members. Dusty and Lezanne asserted claims of breach of fiduciary duty, willful and wanton conduct, intentional interference with business relations, conversion, and the tort of outrage; they also sought a preliminary injunction. Leslie and the LLC answered the complaint asserting counterclaims of conversion of funds belonging to the LLC and breach of the LLC's Operating Agreement; they also sought an injunction and an accounting. Dusty and Lezanne later amended their complaint to seek partition of certain property they alleged they co-owned with Leslie.

After much procedural wrangling, some of which will be discussed later, the trial court submitted to the jury only Dusty and Lezanne's breach-of-fiduciary-duty claim against Leslie and the LLC's conversion claim against Dusty. On September 11, 2009, the trial court entered a judgment on the jury's verdict, stating in pertinent part:

“9/10/09—Trial continues. Came the jury of twelve good and lawful people upon their oaths states as follows: (Dusty Polk's Claim for Breach of Fiduciary Duty) ‘We, the jury, find in favor of the Plaintiff, Dusty Polk, and against Leslie Polk and assess Dusty Polk's damages as follows: $1.00 Compensatory ...’; (Lezanne Proctor's Claim for Breach of Fiduciary Duty) ‘We, the jury, find in favor of the Plaintiff, Lezanne Proctor, and against Leslie Polk and assess Lezanne Polk's damages as follows: $1.00 Compensatory ...’; (Polk Plumbing LLC's Counterclaim for Conversion) ‘We, the jury, find in favor of the Counter Defendant Dusty Polk and against the Counter Plaintiff Polk Plumbing LLC ...’;

“Therefore, the Court enters judgment in favor of Dusty Polk and against Leslie Polk in the sum of $1.00. The Court enters judgment in favor of Lezanne Proctor and against Leslie Polk in the sum of $1.00. The Court enters judgment in favor of Dusty Polk and against Polk Plumbing LLC on its counterclaim.

“The Court determines from the evidence that all outstanding liabilities of [the LLC] have been paid. The Court hereby orders the immediate dissolution of [the LLC]. The Court directs the parties to take all necessary steps to formally dissolve [the LLC] within thirty (30) days from the date of this order. The Court orders Chase Dearman to immediately ... disburse from his trust account the balance of the funds belonging to [the LLC] deposited there as follows: a sum equal to 70% of said amount to Leslie Polk; an amount equal to 20% of said sum to Dusty Polk; and a sum equal to 10% of said amount to Lezanne Proctor.”

The trial court, which had served as the trier of fact on the partition claim, concluded that all necessary parties had not been before the court. The trial court ordered Dusty and Lezanne to add all necessary parties in order to proceed with the partition claim.

On September 17, 2009, Leslie and the LLC moved the trial court to order Dusty and Lezanne to disburse funds from their lawyer's trust account to the members of the LLC according to their ownership interests or for a finding of contempt. The following day, September 18, 2009, the trial court ordered Dusty and Lezanne to post a supersedeas bond or to immediately comply with the September 11, 2009, judgment. Dusty and Lezanne followed that order with a motion to reconsider the September, 18, 2009, order or to stay execution of the September 11, 2009, judgment. On October 11, 2009, Dusty and Lezanne filed a postjudgment motion, pursuant to Rule 59, Ala. R. Civ. P., seeking a new trial. They alleged, among other grounds, that the damages awarded to them by the jury were inadequate. The trial court denied that motion on October 19, 2009.

Dusty and Lezanne filed their notice of appeal on November 3, 2009. That appeal was dismissed on the motion of the appellants because it had been taken from a nonfinal judgment. See Polk v. Polk (No. 2090174, March 9, 2010) ––– So.3d –––– (Ala.Civ.App.2010) (table)....