Tender Care Veterinary Hosp., Inc. v. First Tuskegee Bank

Decision Date26 November 2014
Docket Number1131078.
Citation168 So.3d 33
CourtAlabama Supreme Court

J. Doyle Fuller and Susan G. Copeland of Fuller & Copeland, Montgomery, for appellant.

Chad W. Bryan of Capell & Howard, P.C., Montgomery; and Leonard N. Math of Chambless, Math & Carr, P.C., Montgomery, for appellee.


STUART, Justice.

Tender Care Veterinary Hospital, Inc. (“TCVH”), appeals the summary judgment entered by the Montgomery Circuit Court in favor of First Tuskegee Bank on breach-of-fiduciary-duty and fraud claims asserted by TCVH stemming from a construction loan TCVH received from First Tuskegee in September 2004. We affirm.


In 2004, TCVH sought financing from First Tuskegee to construct a veterinary clinic and animal hospital in Pike Road. TCVH asserts that First Tuskegee ultimately agreed to loan TCVH the requested funds on the condition that TCVH employ PJ Construction and Services, Inc. (“PJ Construction”), as the general contractor on the project. TCVH's president, Dr. Patricia Joyce Patterson, testified in a deposition that she agreed to that condition after First Tuskegee's president, James W. Wright, assured her that PJ Construction would “do a good job.” Accordingly, on September 30, 2004, TCVH executed a loan agreement with First Tuskegee pursuant to which it borrowed $675,000.1 TCVH subsequently executed three more loan agreements with First Tuskegee, borrowing an additional $567,000, $75,000, and $9,145, respectively.

TCVH thereafter entered into a construction agreement with PJ Construction, and, pursuant to that agreement, PJ Construction began work at TCVH's site in Pike Road. Under the terms of that construction agreement, the maximum price of the project was to be $300,000 and work was to be completed within 180 days, or approximately some time in April 2005.2 However, almost immediately after work began, TCVH became concerned about the quality and timeliness of PJ Construction's performance. Dr. Patterson stated in her deposition that by January 2005 she was concerned that PJ Construction would not complete the project on time. By April 2005, the relationship between TCVH and PJ Construction was essentially broken; TCVH was unhappy with the work PJ Construction had performed to date and was unwilling to authorize First Tuskegee to disburse to PJ Construction the full amounts it was requesting for the work it had completed. It appears that PJ Construction performed no significant work at TCVH's site after April 2005, and it ceased virtually all activities related to TCVH by approximately May 11, 2005, before completely abandoning the project some time in late July 2005.3

TCVH subsequently received approval from First Tuskegee to act as its own general contractor, and it thereafter supervised construction and managed subcontractors until the veterinary clinic and animal hospital opened in August 2006. However, the business was not profitable and, in September 2007, TCVH filed a petition for bankruptcy protection. In January 2008, First Tuskegee sued TCVH's owners, Dr. Patterson and Dr. Howard King, seeking to recover on personal guaranty agreements they had made as part of the loans issued to TCVH, and in July 2008 First Tuskegee obtained a $1,623,285 judgment against them. TCVH was also engaged in multiple other lawsuits related to the construction of its facility and its business operations during this time.

On April 7, 2009, TCVH initiated the instant action when it moved the Montgomery Circuit Court to enter an injunction enjoining First Tuskegee from selling the TCVH property at a foreclosure sale later that day. Upon TCVH's agreeing to deposit one month's interest on the loans—$11,063—with the court, the trial court enjoined the foreclosure sale for 30 days to allow TCVH additional time to pay the amounts it owed First Tuskegee. However, after that 30–day period had expired and TCVH still had not made full payment of the loans to First Tuskegee, the trial court allowed the foreclosure sale to be conducted and eventually disbursed to First Tuskegee the funds being held by the court.

Nothing further happened in the case until approximately two years later, when TCVH moved the trial court to schedule a status conference. At that status conference, the trial court granted TCVH's request for leave to amend its complaint, and, on December 9, 2011, TCVH filed an amended complaint asserting breach-of-fiduciary-duty and fraud claims against First Tuskegee. The gravamen of those claims was that TCVH had been injured by First Tuskegee's requirement that it use PJ Construction as the general contractor on the project because PJ Construction was not licensed as a general contractor in Alabama and because the quality of its performance was below the quality one would expect from a properly licensed general contractor. The trial court then reinstated the case to its active docket, and, following a period of discovery, First Tuskegee moved the trial court to enter a summary judgment in its favor, arguing, among other things, that TCVH's claims were time-barred. Specifically, First Tuskegee noted that both of TCVH's claims were subject to a two-year statute of limitations and that Dr. Patterson had stated in her deposition that she first learned that PJ Construction was not licensed as a general contractor in approximately July 2005, after she took steps to collect on PJ Construction's surety bond once it formally left the TCVH site, but TCVH did not initiate an action against First Tuskegee until almost four years later in April 2009. First Tuskegee also moved for a summary judgment on a counterclaim it had asserted against TCVH seeking to recover the deficiency balance still owed after the foreclosure of TCVH's property.

TCVH opposed First Tuskegee's summary-judgment motion and submitted a new affidavit from Dr. Patterson in which she now asserted that she actually had not discovered that PJ Construction was not licensed as a general contractor until November 2008. Thus, TCVH argued, its claims were in fact timely. First Tuskegee promptly moved to strike Dr. Patterson's affidavit on the ground that it was untimely because it was filed only the day before the summary-judgment hearing and on the basis of the sham-affidavit doctrine. See Rule 56(c)(2), Ala. R. Civ. P. (stating that “any statement or affidavit in opposition [to a summary-judgment motion] shall be served at least two (2) days prior to the hearing”), and Panayiotou v. Johnson, 995 So.2d 871, 879 (Ala.2008) ([T]he so-called ‘sham affidavit doctrine’ ... prevents an individual from contradicting prior sworn testimony to avoid the entry of a summary judgment....”).

On April 17, 2014, the trial court granted both First Tuskegee's motion to strike Dr. Patterson's affidavit and its motion seeking a summary judgment, stating in relevant part:

“For the reasons set forth in its January 10, 2014, motion for summary judgment, it is ordered, adjudged, and decreed that summary judgment be entered in favor of First Tuskegee Bank on all claims asserted by [TCVH]. Without limiting the basis for its decision, the court specifically notes that all claims asserted against First Tuskegee Bank are conclusively barred by the statute of limitations. The undisputed evidence of record reflects that the corporate representative for [TCVH] admitted in deposition that actual discovery of the facts giving rise to the claims in this case was made more than two years before suit was filed in April 2009. In addition, the court finds that the undisputed evidence of record further reflects sufficient facts that reasonably should have provoked inquiry into PJ Construction's licensure status (which was publicly available) more than two years before suit was filed. Summary judgment likewise is due to be entered in favor of First Tuskegee Bank on its February 26, 2014, supplemental motion for summary judgment on counterclaim. The counterclaim asserts that [TCVH] is in default of its various promissory notes to First Tuskegee Bank, and the court has been presented with no evidence that would contradict the materials submitted by First Tuskegee Bank in support thereof. Accordingly, it is ordered, adjudged, and decreed that a total judgment in the amount of $1,239,919.76, plus court costs, is hereby entered in favor of First Tuskegee Bank and against [TCVH]. Execution may issue in accordance with the provisions of law.
“With all issues having been resolved by the court, this order shall be deemed a final disposition of this action in its entirety.
“The Court finds that any contradictory statements in the affidavit of Patricia Joyce Patterson are simply improper [and] cannot be used to create an issue of fact in light of her unambiguous deposition testimony. First Tuskegee Bank's motion to strike is therefore due to be granted to that extent.”

On May 13, 2014, the trial court denied TCVH's motion to alter, amend, or vacate the order entering the summary judgment in favor of First Tuskegee, and, on June 24, 2014, TCVH filed this appeal.


We review a summary judgment pursuant to the following standard:

This Court's review of a summary judgment is de novo. Williams v. State Farm Mut. Auto. Ins. Co., 886 So.2d 72, 74 (Ala.2003). We apply the same standard of review as the trial court applied. Specifically, we must determine whether the movant has made a prima facie showing that no genuine issue of material fact exists and that the movant is entitled to a judgment as a matter of law. Rule 56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of Alabama v. Hodurski, 899 So.2d 949, 952–53 (Ala.2004). In making such a determination, we must review the evidence in the light most favorable to the nonmovant. Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986). Once the movant makes a prima facie showing that there is no genuine issue of material fact, the burden then shifts to the nonmovant to produce ‘substantial evidence’ as to the existence of a genuine issue of

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