Wally's, Inc. v. Intergraph Corp.

• Decision Date: 04 December 1998
• Citation: 727 So.2d 34
• Parties: WALLY'S, INC., an Alabama Corporation, d/b/a Ramada Inn at Huntsville-Madison Airport; and Wallace Coile v. INTERGRAPH CORPORATION.
• Court: Alabama Supreme Court

727 So.2d 34

WALLY'S, INC., an Alabama Corporation, d/b/a Ramada Inn at Huntsville-Madison Airport; and Wallace Coile v. INTERGRAPH CORPORATION.

1970752.

Supreme Court of Alabama.

December 4, 1998.

Rehearing Denied January 8, 1999.

Gary V. Conchin and Maureen K. Cooper of Morris, Cloud & Conchin, P.C., Huntsville, for appellants. J.R. Brooks and Gregory S. Martin of Lanier Ford Shaver & Payne, P.C., Huntsville; and David V. Lucas, Huntsville, for appellee.

ALMON, Justice.

Wally's, Inc., d/b/a Ramada Inn at Huntsville-Madison Airport, filed an action against Intergraph Corporation, alleging breach of contract, fraud, misrepresentation, suppression, and deceit. The complaint was amended to include as a plaintiff Wallace Coile, the president of Wally's, and to add as defendants Executive Park Hotels, Ltd. ("E.P.H."), M.C. Matsos, and Herman E. Thomason. Matsos and Thomason are the co-owners of E.P.H. The court entered a summary judgment for Intergraph on the fraud, misrepresentation, suppression, and deceit claims and made that judgment final pursuant to Rule 54(b), Ala.R.Civ.P. Wally's, Inc., and Wallace Coile appealed.

Motion to Dismiss the Appeal

Intergraph has moved to dismiss the appeal, contending that Wally's is a bankrupt debtor and lacks standing to appeal. Intergraph asserts that because Wally's is bankrupt, its appointed trustee in bankruptcy is the real party in interest for this appeal. Accordingly, Intergraph asserts that this appeal should be dismissed based on the failure of the trustee of the bankruptcy estate to file a timely appellant's brief as required by Rule 31(a), Ala. R.App. P.

Intergraph cites authorities for the proposition that, upon the appointment of a trustee in bankruptcy, the debtor's property, including choses in action, becomes the property of the bankruptcy estate, and the proposition that decisions as to the administration of the estate's property rest solely in the discretion of the trustee. 5 Collier on Bankruptcy, ¶¶ 541.04, 541.08 (Matthew Bender, 15th ed., rev.1996) (citing 11 U.S.C. § 541(a)(1)); 3 Collier on Bankruptcy, ¶ 323.03[1] (15th ed., rev.1997) (citing Bauer v. Commerce Union Bank, 859 F.2d 438, 441 (6th Cir.1988)); Harris v. St. Louis Univ., 114 B.R. 647 (Bankr.E.D.Mo.1990). Intergraph argues that the trustee is expressly authorized to sue, to be sued, and to continue or discontinue the prosecution of any pending civil actions. 3 Collier on Bankruptcy ¶ 323.03; Miller v. Shallowford Community Hosp., Inc., 767 F.2d 1556, 1559 (11th Cir.1985); Jones v. Harrell, 858 F.2d 667, 669 (11th Cir.1988).

Intergraph's argument is not well taken. When it filed its notice of appeal, Wally's was involved in a Chapter 11 bankruptcy proceeding. In a Chapter 11 proceeding, the debtor in possession has the same rights, powers, and duties as the trustee of the bankruptcy estate. 11 U.S.C. § 1107(a) (1993). Accordingly, on January 26, 1998, the notice of appeal was properly filed by Wally's, the debtor in possession. On February 25, 1998, the Chapter 11 bankruptcy case was converted to a Chapter 7 proceeding and the debtor in possession was replaced by the Chapter 7 trustee. However, the motion to dismiss the appeal was not filed until after the Chapter 7 bankruptcy case had been closed and the trustee had been discharged. Therefore, under 11 U.S.C. § 554(c), the action on appeal was abandoned to the debtor, and thus Wally's and Coile are the proper parties to pursue this appeal. Intergraph's motion to dismiss the appeal is denied.

Merits

The complaint filed by Wally's, as amended, alleged that Intergraph Corporation, through its agents Tom Burridge and Herman Thomason, committed fraud, misrepresentation, suppression, and deceit in securing the execution of a contract by which Intergraph agreed to rent rooms from Wally's ("the contract").¹ See §§ 6-5-100 to 6-5-104, Ala.Code 1975. This appeal presents two issues: (1) Whether the plaintiffs presented substantial evidence indicating that Thomason was an agent for Intergraph, acting within the line and scope of his employment, while he was negotiating the contract between Intergraph and Wally's, and (2) whether the plaintiffs presented substantial evidence indicating that Intergraph committed fraud, misrepresentation, suppression, or deceit.

Specifically, Wally's alleged that Intergraph fraudulently, without Wally's knowledge, began doing business with another hotel, in violation of the exclusive agreement with Wally's to rent rooms in the Ramada Inn. It further alleged that Intergraph defrauded Wally's by willfully failing to disclose in its dealings with Wally's that it had added to the contract an "Exhibit A" that Wally's says was added to provide Intergraph a means to get out of its contractual obligation. Wally's alleged that Intergraph knew that Wally's had subleased² the Ramada Inn contingent upon its obtaining the exclusive one-year contract with Intergraph. Wally's alleged that Intergraph, through Tom Burridge and Herman Thomason, who Wally's says were Intergraph's agents, committed fraud by unilaterally adding the phrase "See Exhibit A"³ to the signed contract, without any discussion or agreement regarding Exhibit A. Accordingly, Wally's alleged that when Intergraph entered into the exclusive one-year contract Intergraph had no intention of honoring it. Wally's also alleged that Burridge and Thomason conspired to defraud it by allowing Wally's to rely upon the exclusive contract when it decided to sublease the Ramada Inn.

Thomason is an engineer who began working for Intergraph in the mid-1980's. He retired from Intergraph in 1995 and performed consulting work for Intergraph until February 1997. Thomason is the general partner for E.P.H., which had built the Ramada Inn hotel in Madison. Thomason was involved with the hotel's operations until Wally's subleased the hotel on December 8, 1995. Thomason negotiated on behalf of E.P.H. for the sublease of the Ramada Inn to Wally's. Coile, as president of Wally's, negotiated only with Thomason regarding the sublease of the Ramada Inn. While Thomason was negotiating the sublease of the Ramada Inn, he was also attempting to renew a contract on behalf of the Ramada Inn to rent rooms to Intergraph. Thomas Burridge, the executive director of business development for Intergraph, negotiated on behalf of Intergraph to renew the contract with the Ramada Inn.

After Wally's subleased the Ramada Inn, Wally's wanted the renewal of the contract between Intergraph and Ramada Inn signed, in order to receive the advance on the contract, to enable Wally's to pay E.P.H. for the sublease (see note 2). Thomason and Coile testified by deposition that Thomason negotiated and drafted the contract with Intergraph on behalf of the Ramada Inn. However, Coile also testified that he thought Thomason was working for Intergraph during the negotiation of the contract. Thomason gave the contract to Coile, and after Coile signed it Thomason took it to Burridge, who signed it and added "See Exhibit A." Thomason testified that when he asked Burridge about the addition of Exhibit A, Burridge explained that Exhibit A would settle any future contingencies. Neither Thomason or Burridge disclosed to Coile the addition of Exhibit A.

After pressure from Intergraph's upper management to provide more than one hotel choice, Burridge entered into a contract on March 28, 1996, to rent a minimum of 250 room-nights per month from a Howard Johnson's hotel. Intergraph notified Wally's that it would rent only 250 room-nights per month from the Ramada Inn, rather than 500 room-nights. Wally's refused to agree to the reduction. As a result, Intergraph, relying upon Exhibit A, which...