Tradewinds v. Brown Bros. Constr., L.L.C.

• Citation: 999 So.2d 875
• Decision Date: 13 June 2008
• Docket Number: 1060305.
• Parties: TRADEWINDS ENVIRONMENTAL RESTORATION, INC. v. BROWN BROTHERS CONSTRUCTION, L.L.C., et al.
• Court: Supreme Court of Alabama

999 So.2d 875

TRADEWINDS ENVIRONMENTAL RESTORATION, INC. v. BROWN BROTHERS CONSTRUCTION, L.L.C., et al.

1060305.

Supreme Court of Alabama.

June 13, 2008.

Charles A. Burkhart, Ed R. Haden, and Matthew F. Carroll of Balch & Bingham, LLP, Birmingham, for appellant.

Michael C. Niemeyer of Hand Arendall, L.L.C., Fairhope; and J. Craig Campbell and Windy C. Bitzer of Hand Arendall, L.L.C., Mobile, for appellee Brown Brothers Construction, L.L.C.

Jonathon R. Law and David F. Daniell of Daniell, Upton, Perry & Morris, P.C., Daphne, for appellee Windward Pointe Condominium Association, Inc.

David K. McWhorter, Gadsden, for appellee Shoalwater Condominium Association, Inc.

SEE, Justice.

TradeWinds Environmental Restoration, Inc. ("TradeWinds"), brought this action against Brown Brothers Construction, L.L.C. ("BBC"), the Shoalwater Condominium Association, Inc. ("Shoalwater"), and the Windward Pointe Condominium Association, Inc. ("Windward"), in connection with structural-drying work performed by TradeWinds at the Shoalwater condominiums and the Windward Pointe condominiums following Hurricane Ivan. BBC, Shoalwater, and Windward moved the Baldwin Circuit Court for a summary judgment, asserting that TradeWinds' claims were barred by § 10-2B-15.02, Ala. Code 1975 (Alabama's "door-closing" statute), because TradeWinds is a foreign corporation that had not qualified to do business in this State. The trial court entered a summary judgment in favor of BBC, Shoalwater, and Windward. TradeWinds appeals, arguing that § 10-2B-15.02, Ala. Code 1975, does not preclude TradeWinds from bringing its claims and that, if Alabama's door-closing statute applies, BBC, Shoalwater, and Windward are equitably estopped from asserting the statute as a defense because the parties received benefits under a contract for which they did not pay. We affirm.

Facts and Procedural History

TradeWinds is a New York-based company that performs post-disaster response, environmental remediation, and restoration services. Following the landfall of Hurricane Ivan in September 2004, BBC, an Alabama-based general contractor, entered into a contract with TradeWinds under which TradeWinds would perform structural-drying services and restoration at a number of condominiums along the Gulf Coast, including Shoalwater condominiums and Windward Pointe condominiums ("the contract"). TradeWinds asserts that it completed the work contemplated by the contract but that BBC refused to pay TradeWinds the amount TradeWinds says is due under the contract. TradeWinds recorded verified statements of lien in the office of the judge of probate of Baldwin County against the Windward and Shoalwater properties, seeking $210,024.75 and $188,814.25, respectively, for money owed under the contract. TradeWinds also filed this action in the Baldwin Circuit Court alleging a breach-of-contract claim against BBC, asserting unjust-enrichment claims against Shoalwater and Windward, and seeking to foreclose on its liens on the Shoalwater and Windward properties.

BBC, Shoalwater, and Windward moved the trial court for a summary judgment, asserting that TradeWinds' claims were barred by § 10-2B-15.02, Ala.Code 1975,¹ because TradeWinds is a foreign corporation that had not qualified to do business in Alabama. TradeWinds argued that the contract involved interstate commerce and, therefore, that the contract is protected from § 10-2B-15.02 by the Commerce Clause of the Constitution of the United States, U.S. Const., Art. 1, § 8, cl. 3. The trial court agreed with BBC, Shoalwater, and Windward that it was undisputed that TradeWinds had failed to obtain a certificate of authority from the secretary of state in order to transact business in Alabama and that BBC, Shoalwater, and Windward were entitled to a judgment as a matter of law. It then entered a summary judgment in favor of BBC, Shoalwater, and Windward. TradeWinds moved the trial court to alter, amend, or vacate its judgment, but the trial court denied that motion. TradeWinds appeals.

Issues

TradeWinds presents two issues for appeal. First, TradeWinds argues that the trial court erred when it entered a summary judgment in favor of BBC, Shoalwater, and Windward on the basis of the door-closing statute, because, TradeWinds argues, the contract involved interstate commerce and therefore the door-closing statute is not applicable. Second, TradeWinds asserts that, even if the door-closing statute does apply, equitable estoppel bars its application because BBC, Shoalwater, and Windward received benefits under the contract for which they did not pay.

Analysis

A. Standard of Review

"On appeal, this Court reviews a summary judgment de novo." DiBiasi v. Joe Wheeler Elec. Membership Corp., 988 So.2d 454, 459 (Ala.2008) (citing Ex parte Essary, 992 So.2d 5, 8 (Ala.2007)). "`"Our review [of a summary judgment] is subject to the caveat that we must review the record in the light most favorable to the nonmovant and must resolve all reasonable doubts against the movant."'" Ex parte CSX Transp., Inc., 938 So.2d 959, 962 (Ala.2006) (quoting Payton v. Monsanto Co., 801 So.2d 829, 833 (Ala.2001), quoting in turn Ex parte Alfa Mut. Gen. Ins. Co., 742 So.2d 182, 184 (Ala.1999)); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990). "The facts in this case are undisputed; therefore, we will review the trial court's application of the law to those facts to determine whether the plaintiffs were entitled to a judgment as a matter of law." Carpenter v. Davis, 688 So.2d 256, 258 (Ala.1997). "The trial court's ruling on a question of law carries no presumption of correctness, and this Court reviews de novo the trial court's conclusion as to the appropriate legal standard to be applied." McCutchen Co. v. Media Gen., Inc., 988 So.2d 998, 1001 (Ala. 2008).

B. TradeWinds' Door-Closing Argument

The trial court entered a summary judgment in favor of BBC, Shoalwater, and Windward because it found, as a matter of law, that TradeWinds' action is "barred by the [door-closing] statute, in that[] [TradeWinds] was required to obtain a Certificate of Authority from the secretary of State to transact business in Alabama and failed to do so." (Trial court's summary-judgment order.)

To determine whether the trial court properly entered a summary judgment in favor of BBC, Shoalwater, and Windward on the basis that TradeWinds' claims are barred, we must address § 10-2B-15.02, Ala.Code 1975, Alabama's door-closing statute. Section 10-2B-15.02 (a) provides:

"(a) A foreign corporation transacting business in this state without a certificate of authority or without complying with Chapter 14A of Title 40 may not maintain a proceeding in this state without a certificate of authority. All contracts or agreements made or entered into in this state by foreign corporations prior to obtaining a certificate of authority to transact business in this state shall be held void at the action of the foreign corporation or by any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he who seeks equity must do equity."

"This section of the Code is part of a statutory scheme that requires foreign corporations to receive a certificate of authority to do business in this State before transacting business here." Green Tree Acceptance, Inc. v. Blalock, 525 So.2d 1366, 1370 (Ala.1988). "Failure to secure such a certificate means that the foreign corporation cannot enforce a contract entered into in this State." 525 So.2d at 1370. "A foreign corporation that has not been authorized to do business in Alabama is not barred from enforcing its contracts in the courts of this state, however, `unless the business conducted here by [the] nonqualified corporation[] is considered "intrastate" in nature.'" Building Maintenance Pers., Inc. v. International Shipbuilding, Inc., 621 So.2d 1303, 1304 (Ala. 1993) (quoting Wise v. Grumman Credit Corp., 603 So.2d 952, 953 (Ala.1992)). This is because "businesses engaged in interstate commerce are protected by the commerce clause in the United States Constitution, U.S. Const., Art. 1, § 8, cl. 3, and are therefore immune from the effects of the `door closing' statutes." Stewart Mach. & Eng'g Co. v. Checkers Drive In Rests. of N. America, Inc., 575 So.2d 1072, 1074 (Ala.1991). Because TradeWinds concedes that it was not qualified to do business in Alabama at the time the contract was entered into, or, for that matter, at the time of performance under the contract, "the focus of this case is on whether [TradeWinds] was engaged in interstate or intrastate commerce; this issue is ultimately decided on a case-by-case basis." Stewart Mach. & Eng'g, 575 So.2d at 1074. "[I]n determining whether a corporation is doing business in Alabama within the meaning of § [10-2B-15.02], courts are flexible and decide each case on its own facts." Green Tree Acceptance, 525 So.2d at 1370.

In Eli Lilly & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276, 81 S.Ct. 1316, 6 L.Ed.2d 288 (1961), the Supreme Court of the United States addressed when a state may require a foreign corporation to obtain a certificate of authority to do business in the state. The Supreme Court stated:

"Lilly is free to send salesmen into New Jersey to promote this interstate trade without interference from regulations imposed by the State. On the other hand, it is equally well settled that if Lilly is engaged in intrastate as well as interstate aspects of the New Jersey drug business, the State can require it to get a certificate of authority to do business. In such a situation, Lilly could not escape state regulation merely because it is also engaged in interstate commerce. We must then look to the record to determine whether Lilly is engaged in intrastate commerce in New Jersey."

366 U.S. at 279, 81 S.Ct. 1316 (footnote omitted). Alabama caselaw also holds that § 10-2B-15.02, Ala.Code 1975, is...