Case Title: Raymond L. Shaffer v. Regions Financial Corporation

Citation: 

Docket Number: 1061223

State: alabama

Court: Alabama Supreme Court

Date: 2009-08-28T00:00:00Z

Document:
Rel 08/28/2009
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2009
____________________
1061223
____________________
Raymond L. Shaffer
v.
Regions Financial Corporation
Appeal from Jefferson Circuit Court 
(CV-05-1240)
PER CURIAM.
Raymond L. Shaffer appeals from a summary judgment in
favor of Regions Financial Corporation ("Regions").  We affirm
in part, reverse in part, and remand.
Procedural History
On March 2, 2005, Shaffer sued Regions, alleging breach
of 
contract, 
fraudulent 
suppression, 
and 
fraudulent
1061223
Generally, a change-of-control agreement allows an
1
employee of a company to receive certain compensation if a
change in the control of the company causes the employee's
employment to be terminated and certain conditions are
satisfied.
2
misrepresentation and seeking specific performance of a
contract arising out of Shaffer's employment with Regions.
All the claims concerned a change-of-control agreement1
Shaffer alleges he entered into with Regions.  On April 7,
2005, Regions answered Shaffer's complaint.  On November 14,
2006, Shaffer moved for a partial summary judgment on his
breach-of-contract claim, and on January 8, 2007, Regions
moved for a summary judgment on all claims.  On May 4, 2007,
the trial court, without stating the specific basis for its
holding, entered a summary judgment in favor of Regions on all
the claims.  Shaffer appealed.
Facts
The evidence, viewed in the light most favorable to
Shaffer, the nonmovant, Wilma Corp. v. Fleming Foods of
Alabama, Inc., 613 So. 2d 359 (Ala. 1993), suggests the
following facts. 
John Dick, Regions' chief information officer and an
executive vice president, worked with Shaffer at General
1061223
3
Motors Acceptance Corporation ("GMAC") until August 2001, when
Dick left GMAC to work for Regions.  In early 2002, after
being contacted by Dick, Shaffer applied for a position with
Regions.  Dick and Shaffer had several discussions about the
position at Regions.  According to Shaffer, part of those
discussions concerned Shaffer's receiving a change-of-control
agreement as part of a job offer from Regions.  Regions
decided to hire Shaffer and sent him a letter dated March 14,
2002, which set forth the terms of Regions' job offer to
Shaffer.  The letter stated, in pertinent part:
"Please allow me to reiterate the elements of our
job offer to you.  They are as follows:
"Title: Director of Technology Management
        Senior Vice President
"Reports To: John Dick
             Chief Information Officer
             Executive Vice President
"Salary: $5,846.16 bi-weekly
         ($152,000.00 annually)
"Plus:
Inclusion into the Management Incentive
Plan (35% target), and the Long Term
Incentive Plan (target of 5,000 options),
effective calendar year 2002.
-
Included with the MIP incentive plan
throughout 
employment 
is 
Regions'
Change of Control agreement.
1061223
4
"Start Date: April 8, 2002
"Benefits:
Regions 
Financial 
Corporation
employee benefits as outlined in
our Benefits Brochure. Plus, in
exception to standard Regions
Vacation Policy as described in
the benefits summary, two (2)
additional weeks, for a total of
three (3) weeks of paid vacation
in 
2002. 
Thereafter, 
running
concurrent with your title, a
total of three (3) weeks paid
vacation each year."
(Emphasis added.)  Shortly after receiving this letter,
Shaffer began working for Regions.  
Shaffer testified that he did not rely on the specific
terms of the change-of-control agreement when he accepted the
job with Regions and that he did not know what the specific
terms of the agreement were.  Shaffer further testified that
he did not discuss the specific terms of the change-of-control
agreement with anyone before he started working for Regions.
Shaffer stated that he does not know whether he would have
taken the job with Regions if the change-of-control agreement
was not part of the job offer.  Shaffer testified that Dick
used the change-of-control agreement as a selling point
whenever they talked about the job, telling him that, "because
1061223
5
[Regions] was a regional bank, [a change-of-control agreement]
was a good item to have."
Shaffer testified that "a couple of weeks" after he began
working for Regions, he received a change-of-control agreement
through the interoffice mail.  He testified that he signed the
agreement 
and 
returned it to Regions' human-resources
department and that he did not keep a copy of the agreement.
Regions has been unable to find the agreement Shaffer says he
signed and returned.  Shaffer never saw a copy of the change-
of-control agreement that was signed by a representative of
Regions.  
Rebecca 
Crenshaw, 
Regions' 
professional 
recruiting
manager, testified that she had no doubt that Shaffer had a
change-of-control agreement with Regions.  According to
Crenshaw, Shaffer was designated to be in tier three of the
management-incentive plan, and a change-of-control agreement
was an automatic component of the compensation of any employee
who was designated to be in tier three. 
A designated representative of Regions testified that
Regions used two standard forms of the change-of-control
agreement.  The two forms were identical, except that one
1061223
6
contained a "walk-away" provision that was offered to the very
top executives at Regions.  The representative testified that
Shaffer was not at such a level in Regions' organizational
structure that he would have been offered the change-of-
control-agreement form containing the "walk-away" provision.
As evidence of the terms of the change-of-control
agreement that Shaffer says he entered into with Regions,
Shaffer presented to the trial court a change-of-control
agreement signed by Srinivas Surapaneni, who was part of the
technology-management department and who reported directly to
Shaffer.  Surapaneni's change-of-control agreement states, in
pertinent part:
"3. 
 
Termination 
of 
Employment. 
If 
the
Employee's employment with the Company and with its
Affiliates shall be terminated within twenty-four
(24) months following a Change of Control, the
Employee 
shall 
be 
entitled 
to 
the 
following
compensation and benefits:
"(a) If the Employee's employment with the
Company and with its Affiliates shall be terminated
(I) by the Company for Cause or Disability, (ii) by
reason of the Employee's death, or (iii) by the
Employee other than for Good Reason, the Company
shall pay to the Employee the Employee's Accrued
Compensation.  The Employee's entitlement to any
other compensation or benefits shall be determined
in accordance with the Company's employee benefit
plans and other applicable programs and practices
then in effect.
1061223
7
"(b) If the Employee's employment with the
Company and with its Affiliates shall be terminated
for any reason other than as specified in Section
3(a) above, the Company shall pay to the Employee
the aggregate of the Employee's Accrued Compensation
plus an amount equal to two times the sum of the
Employee's Base Amount and Bonus Amount as severance
pay and in lieu of any further compensation for
periods subsequent to the Termination Date."
The agreement defines "Good Reason" as follows:
"(I) the occurrence, after a Change of Control
of any of the following events or conditions:
"(A) a change in the Employee's status, title,
position or responsibilities (including reporting
responsibilities) 
which, 
in 
the 
Employee's
reasonable judgment, represents a materially adverse
change 
from 
his 
status, 
title, 
position 
or
responsibilities as in effect immediately prior
thereto; the assignment to the Employee of any
duties or responsibilities which, in the Employee's
reasonable judgment, are materially inconsistent
with his status, title, position, responsibilities;
or any removal of the Employee from or failure to
reappoint or reelect him to any such offices or
positions, except in connection with the termination
of employment of the Employee for Disability, Cause,
as a result of the Employee's death or by the
Employee other than for Good Reason."
The agreement further states:
"7.  Fees and Expenses.  The Company agrees to
pay as incurred, to the full extent permitted by
law, all legal fees and expenses which the Employee
may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company,
the 
Employee 
or 
others 
of 
the 
validity 
or
enforceability of, or liability under, any provision
of 
this 
Agreement 
or 
any 
guarantee 
thereof
1061223
8
(including as a result of any contest by the
Employee about the amount of any payment pursuant to
this Agreement)."
In January 2004, a merger between Regions and Union
Planters Bank was announced.  The merger was consummated on
July 1, 2004.
In late April 2004 or early May 2004, change-of-control
agreements were discussed in a staff meeting for some of
Regions' employees.  The human-resources department informed
everyone at the meeting that the department was willing to
provide them with a document summarizing the important aspects
of the change-of-control agreement.  After the staff meeting,
Shaffer obtained a copy of the summary document from Angie
Parker, Regions' group human-resources manager.  The summary
document stated, among other things, that "[t]he consummation
of the pending merger between Regions and Union Planters will
constitute a 'Change of Control' within the meaning of your
Change of Control Agreement with Regions." 
After the merger was announced, Dick formed various
committees to analyze how to integrate the Regions and Union
Planters technology departments.  The committees included
people from both Regions and Union Planters, and Shaffer was
1061223
9
on two of the committees, one of which was the committee that
developed the plan for the new planning and integration
department.  This committee did not recommend that Shaffer be
in charge of the new department.  Shaffer agreed with the
committee's recommendations concerning how to structure the
new department.  Shaffer testified that the committee's
recommendations "made sense for that organization."  Shaffer
further testified that as an officer of the company he had a
responsibility to build the organization in the best way for
Regions and that is what he did.
Regions conducted interviews to decide what positions
certain people would be placed in after the merger was
completed.  Shaffer interviewed with Dave Aldridge, who was
the chief technology officer at Union Planters.  After this
interview process, Shaffer was offered the position of
director 
of 
IT 
(information 
technology) 
planning 
and
integration.  Shaffer's compensation and benefits remained
unchanged, and he remained a senior vice president.  Dick
testified that the function of Shaffer's job changed after the
merger.  According to Dick, Shaffer "assumed a more strategic
role in the group" and "[f]ocused on more strategic issues."
1061223
"Text 
services" 
include the day-to-day 
maintenance 
of 
the
2
operating system, capacity planning, and troubleshooting
around the infrastructure.
10
Shaffer testified that his job responsibilities changed after
the merger.  Dick and Parker testified that Shaffer lost some
of his "day-to-day operating activities" after the merger,
such as "text services."   According to Dick, after the
2
merger, a systems-integration function was added to the
responsibilities of Shaffer's group so that Shaffer could
focus on IT planning strategy, architecture standards, and
systems integration.
In his role as the director of technology management at
Regions, Shaffer had about 35 employees under his supervision.
Dick testified that after the merger Shaffer had approximately
five to nine people under his supervision.  According to Dick,
this reduction in staff size was directly linked to Shaffer's
change in responsibilities after the merger.
Before the merger, Shaffer reported directly to Dick.
After the merger, Dick remained in the position of chief
information officer.  According to Dick, Regions wanted to
retain Aldridge as part of the post-merger technology
organization, so it offered him a position immediately under
1061223
11
Dick's and immediately above Shaffer's within the new
organizational hierarchy.  In the spring of 2004, Dick
informed Shaffer that after the merger he would be reporting
to Aldridge.  However, Aldridge ultimately decided not to work
for Regions.  Dick informed Shaffer of Aldridge's decision.
Shaffer testified that he reported to Aldridge for a short
period immediately following the merger until he was "moved
back underneath [Dick]" when Aldridge left.  According to
Parker, Aldridge's position was not "internally eliminated"
when he left and there was no way for Shaffer to know whether
Aldridge's position would be filled at a later time.  Shaffer
testified that he had a conversation with Dick concerning
Aldridge's position, and, Shaffer says, Dick indicated that
the position would not be eliminated and that he did not know
whether it would be filled. 
In Shaffer's view, in his new position as director of IT
planning and integration he played "a critical role" for
Regions.  However, Shaffer testified that for him this
position was only an "all right" opportunity.
After the merger was announced but before it was
completed, Shaffer was informed by one of his vendors that the
1061223
12
position of director of information technology was open at
Compass Bank ("Compass").  Based on this information, Shaffer
contacted Charles Reid, the incumbent in that position.
Compass interviewed Shaffer on July 28, 2004, and, in a letter
dated September 3, 2004, offered Shaffer the position.  The
offer stated, among other things, that Shaffer would be an
executive vice president, that he would receive an annual
salary of $190,000, that he could participate in an incentive
plan that would allow him to earn an annual bonus of up to 50
percent of his annual salary, and that he would be guaranteed
a minimum bonus of $95,000 for 2004.  Shaffer testified that
the job with Compass was better than his job with Regions.
On September 10, 2004, Shaffer sent a letter announcing
that he would resign from Regions on September 25, 2004.  On
September 13-14, 2004, Shaffer and Parker exchanged e-mail
messages 
about 
the 
change-of-control 
agreement 
Shaffer 
alleged
he had executed.  Parker assumed that Shaffer, because of his
management position, had a change-of-control agreement, and
Parker's understanding was that all employees at the level of
management in the company at which Shaffer was had the same
change-of-control agreement.  During the course of the e-mail
1061223
13
exchange, Parker reviewed a change-of-control agreement of
another employee who was at the same management level as
Shaffer to determine whether she thought Shaffer was entitled
to compensation under a change-of-control agreement he might
have executed.  Parker concluded that Shaffer was not entitled
to any payment under the terms of the change-of-control
agreement because, she thought, he had not been adversely
impacted by the merger.  Parker informed Shaffer of her
conclusion, but she advised him to refer to his own agreement.
Shaffer responded that he "had all of the following, a change
in title, change in reporting relationship, not just once but
twice, and a large reduction in responsibilities with removal
of all distributed computing responsibilities, reduction in
staff from 35+ to 5," and that these changes "reduced [his]
standing within the Technology group, effectively moving [him]
lower into the overall standings of more important areas,
which will impact [his] future earning through lower bonus
compensation."
Regions denied Shaffer's request for compensation under
the change-of-control agreement apparently based primarily on
Regions' belief that the merger did not result in a materially
1061223
14
adverse change in Shaffer's employment.  In a letter to
Regions' human-resources director dated October 30, 2004,
Shaffer appealed Regions' decision to deny him compensation
under the change-of-control agreement.  The letter stated that
Shaffer believed that his title had been "reduced," that he
had "dropped one rung" in Regions' organizational hierarchy,
that "there was an adverse change in [his] actual job
responsibilities," that there was a "dramatic reduction of
[his] staff," that he was "stripped of substantive job
responsibilities," 
that 
the 
operational 
and 
project
responsibilities he enjoyed had been taken away, and that his
"job responsibilities were carved off and [his] group was
outside of the decision-making loop."  Regions denied
Shaffer's appeal, and he sued Regions.
Standard of Review
In Pittman v. United Toll Systems, LLC, 882 So. 2d 842
(Ala. 2003), this Court set forth the standard of review
applicable to a summary judgment: 
"This Court's review of a summary judgment is de
novo.
"'In reviewing the disposition of a
motion for summary judgment, "we utilize
the same standard as the trial court in
1061223
15
determining whether the evidence before
[it] made out a genuine issue of material
fact," Bussey v. John Deere Co., 531 So. 2d
860, 862 (Ala. 1988), and whether the
movant was "entitled to a judgment as a
matter of law." Wright v. Wright, 654 So.
2d 542 (Ala. 1995); Rule 56(c), Ala. R.
Civ. P. When the movant makes a prima facie
showing that there is no genuine issue of
material fact, the burden shifts to the
nonmovant to present substantial evidence
creating such an issue. Bass v. SouthTrust
Bank of Baldwin County, 538 So. 2d 794,
797-98 
(Ala. 
1989). 
Evidence 
is
"substantial" if it is of "such weight and
quality that fair-minded persons in the
exercise 
of 
impartial 
judgment 
can
reasonably infer the existence of the fact
sought to be proved." Wright, 654 So. 2d at
543 
(quoting 
West 
v. 
Founders 
Life
Assurance Co. of Florida, 547 So. 2d 870,
871 (Ala. 1989)). Our review is further
subject to the caveat that this Court must
review the record in a light most favorable
to the nonmovant and must resolve all
reasonable doubts against the movant. Wilma
Corp. v. Fleming Foods of Alabama, Inc.,
613 So. 2d 359 (Ala. 1993) [overruled on
other grounds, Bruce v. Cole, 854 So. 2d 47
(Ala. 2003)]; Hanners v. Balfour Guthrie,
Inc., 564 So. 2d 412, 413 (Ala. 1990).'"
882 So. 2d at 844 (quoting Hobson v. American Cast Iron Pipe
Co., 690 So. 2d 341, 344 (Ala. 1997)).
Discussion
On appeal, Shaffer's only contention is that the trial
court erred in entering a summary judgment in favor of Regions
1061223
16
on his breach-of-contract claim.  Shaffer explicitly "[does]
not raise the propriety of the entry of [a] summary judgment
on the fraud and suppression claim[s]." Shaffer's reply brief,
at 29 n.8.  Therefore, the summary judgment on those claims is
affirmed.
In its summary-judgment motion, Regions argued that it
did not owe Shaffer any compensation under a change-of-control
agreement because, it says, there was no valid change-of-
control agreement between Regions and Shaffer or, if there
was, Regions did not breach the agreement.  Specifically,
Regions alleged (1) that Shaffer had failed to present
substantial evidence of mutual assent to the essential terms
of the change-of-control agreement he says he signed; (2) that
the 
change-of-control 
agreement 
was 
not 
supported 
by
consideration; (3) that, if the agreement existed, the
evidence demonstrated that Regions had not breached the
agreement because, Regions argues, Shaffer did not suffer a
materially adverse change in his employment; and (4) that
Shaffer breached his fiduciary duty to Regions and this breach
precluded him from recovery under the agreement.
1061223
17
First, Shaffer contends that he presented substantial
evidence that a valid change-of-control agreement existed
between him and Regions and substantial evidence of the
essential terms of the agreement.  Regions argues that Shaffer
did not present substantial evidence of the existence of the
agreement or its terms because Shaffer has not produced a copy
of a change-of-control agreement signed by him and Regions has
no record that he signed a change-of-control agreement.
"The elements of a breach-of-contract claim under Alabama
law are (1) a valid contract binding the parties; (2) the
plaintiffs' 
performance 
under 
the 
contract; 
(3) 
the
defendant's nonperformance; and (4) resulting damages."
Reynolds Metals Co. v. Hill, 825 So. 2d 100, 105 (Ala. 2002).
The elements of a valid contract include: "'an offer and an
acceptance, 
consideration, and mutual 
assent to terms
essential to the formation of a contract.'" Ex parte Grant,
711 So. 2d 464, 465 (Ala. 1997) (quoting Strength v. Alabama
Dep't of Fin., Div. of Risk Mgmt., 622 So. 2d 1283, 1289 (Ala.
1993)).  Under the Alabama Rules of Evidence, "when an issue
is raised (a) whether the asserted writing ever existed, or
... (c) whether other evidence of contents correctly reflects
1061223
18
the contents, the issue is for the trier of fact to determine
as in the case of other issues of fact." Rule 1008, Ala. R.
Evid.
In the present case, when the evidence is reviewed, as it
must be, in a light most favorable to Shaffer, as the
nonmovant, there is a genuine issue of material fact as to
whether a change-of-control agreement between Shaffer and
Regions existed.  It is undisputed that an element of Regions'
written job offer to Shaffer included "Regions' Change of
Control agreement."  Shaffer testified that he received the
change-of-control agreement from Regions soon after he began
working for Regions, that he signed it, and that he returned
it 
to 
Regions' 
human-resources 
department. 
 
Regions'
professional recruiting manager testified that Shaffer would
definitely have had a change-of-control agreement because, she
said, the agreement was an automatic component of the
compensation of  any employee in tier three of the management-
incentive plan.  Because this evidence creates a genuine issue
of material fact as to whether a change-of-control agreement
existed, a summary judgment in favor of Regions on the basis
that such an agreement did not exist is not proper.
1061223
19
Also, if a change-of-control agreement existed, a genuine
issue of material fact exists as to its terms.  Regions'
designated representative testified that Regions used two
standard forms of change-of-control agreement that were almost
identical.  The only difference was that one form contained a
provision 
offered 
only 
to 
executives 
above 
Shaffer's
management level.  Shaffer presented to the trial court a
complete 
change-of-control 
agreement 
signed 
by 
Surapaneni, 
who
was directly below Shaffer's management level.  The trier of
fact could decide that, if a change-of-control agreement
existed between Shaffer and Regions, Surapaneni's change-of-
control agreement correctly reflects the contents of Shaffer's
agreement.  Therefore, a summary judgment in favor of Regions
based on a failure to present substantial evidence of the
essential terms of the change-of-control agreement was not
proper.
Next, 
Shaffer 
alleges 
that 
his 
change-of-control
agreement was supported by consideration.  "[I]n order to
constitute consideration for a promise, there must have been
an act, a forbearance, a detriment, or a destruction of a
legal right, or a return promise, bargained for and given in
1061223
20
exchange for the promise." Kelsoe v. International Wood
Prods., Inc., 588 So. 2d 877, 878 (Ala. 1991).  In the context
of an employment agreement, what constitutes consideration has
been accurately explained by the United States District Court
for the District of South Carolina, as follows:
"In a unilateral employment agreement, the employer
makes an offer or promise to hire in return for
specified benefits and wages and the employee
accepts the offer by performing the act on which the
promise is impliedly or expressly based; the
employee's act or forbearance in reliance on the
employer's promise furnishes consideration to the
employer, while the benefits conferred under the
terms of the promise constitute consideration for
the employee."
Toth v. Square D Co., 712 F. Supp. 1231, 1235 (D.S.C. 1989)
(citing Small v. Springs Indus., Inc., 292 S.C. 481, 484, 357
S.E.2d 452, 454 (1987)).
In the present case, Shaffer presented substantial
evidence 
indicating 
that 
"Regions' 
Change 
of 
Control
agreement" was part of the written job offer he was presented
with and accepted when he began working for Regions.  Shaffer
presented substantial evidence indicating that he had acted in
reliance on the promises set forth in that written job offer
when he left his job at GMAC to work for Regions.  The trier
of fact could decide that these actions by Shaffer furnished
1061223
21
the consideration to Regions for the entire employment
agreement, 
including 
the 
change-of-control 
agreement.
Therefore, a summary judgment in favor of Regions based on a
failure to present substantial evidence of consideration for
the change-of-control agreement is not proper.
Next, if a valid change-of-control agreement existed,
Shaffer alleges that he presented substantial evidence
indicating that Regions breached the agreement when it refused
to pay severance compensation and legal expenses as set forth
in the agreement.  It is undisputed that Regions' merger with
Union Planters constituted a "change of control" under the
agreement and that Shaffer terminated his employment within 24
months following the change of control.  Accepting that the
trier of fact can decide that a valid change-of-control
agreement existed between Regions and Shaffer, the issue
presented for our review is whether Shaffer presented
substantial evidence creating a genuine issue of material fact
as to whether he terminated his employment with Regions for
"good reason."  Under the agreement, if he terminated his
employment for good reason, Regions would be obligated to pay
Shaffer the aggregate of his accrued compensation plus
1061223
22
severance pay and legal expenses.  Specifically, Shaffer
alleges that, in accordance with the terms of the change-of-
control 
agreement, 
he 
presented 
substantial 
evidence
indicating that he terminated his employment for "good reason"
because, he says, he presented substantial evidence indicating
that, in his "reasonable judgment," he suffered a "materially
adverse" 
change 
to 
his 
status, 
title, 
position, 
or
responsibilities after the change of control. 
Ordinarily, "[t]he question of reasonableness is one of
fact to be resolved by the trier of fact." Gunter v. Beasley,
414 So. 2d 41, 44 (Ala. 1982) (holding that the reasonableness
of the amount of an expense allowance granted to a former
lieutenant governor was a question for the trier of fact).
See Mutual Assurance, Inc. v. Schulte, 970 So. 2d 292, 296
(Ala. 2007) (holding that the reasonableness of a liability
insurer's reliance on a validly enacted statute that capped
damages for medical malpractice but that was later ruled
unconstitutional was "a question that is better left to the
trier of fact" in the insureds' action alleging negligent
failure to settle); United States Fidelity & Guar. Co. v.
Baldwin County Home Builders Ass'n, 770 So. 2d 72, 75 (Ala.
1061223
23
2000) (holding that if conflicting inferences can be drawn
from the evidence, the question of the reasonableness of an
insured's delay in giving notice to the insurer of a claim is
to be submitted to the trier of fact); Shriners Hosps. for
Crippled Children v. Robbins, 450 So. 2d 798, 802 (Ala. 1984)
(holding that the reasonableness of the trustees' delay in
turning over trust assets to the trust beneficiary was a
question of fact to be resolved by the trier of fact); Parker
v. King, 402 So. 2d 877, 879 (Ala. 1981) (citing approvingly
the general rule followed by the federal courts that
disapproves of summary judgments in negligence cases because
of the necessity that the trier of fact pass upon the
reasonableness of the conduct at issue); White v. Drivas, 954
So. 2d 1119, 1124 (Ala. Civ. App. 2006) (holding that the
reasonableness of a mobile-home owner's refusal to return
personal property unless the owner of the personal property
paid for expenses incurred is a question for the trier of the
fact); and Jimoco, Inc. v. Smith, 777 So. 2d 716, 718 (Ala.
Civ. App. 2000) (holding that, under the workers' compensation
act, the determination of the reasonableness of an employer's
request for an examination by the employer's physician, and
1061223
24
thus of the reasonableness of any refusal of the employee to
submit to an examination, is a question for the trier of
fact).
When the evidence is viewed, as it must be, in a light
most favorable to Shaffer, he presented substantial evidence
creating a genuine issue of material fact as to whether his
responsibilities changed after the merger.  Dick testified
that the function of Shaffer's position changed after the
merger.  Shaffer testified that his job responsibilities
changed after the merger.  Dick and Parker testified that
Shaffer lost some of his "day-to-day operating activities"
after the merger.  According to Dick, certain functions were
added to the responsibilities of Shaffer's group after the
merger.  Dick testified that the size of Shaffer's staff was
reduced after the merger and that this reduction was directly
linked to Shaffer's change in responsibilities.  Before the
merger, Shaffer reported directly to Dick, but for a period
after the merger, Shaffer reported to Aldridge, who in turn
reported to Dick.  According to Parker, Aldridge's position
was not "internally eliminated" when he left and there was no
way for Shaffer to know whether Aldridge's position would be
1061223
25
filled at a later time.  Shaffer testified that Dick indicated
that the position would not be eliminated and that he did not
know whether it would be filled.  Therefore, a summary
judgment in favor of Regions based on its allegation that
Shaffer failed to present substantial evidence indicating that
his "status, title, position, or responsibilities" changed
after the merger is not proper.
Shaffer also presented substantial evidence indicating
that a genuine issue of material fact exists as to whether, in
Shaffer's "reasonable judgment," the changes were materially
adverse.  Shaffer submitted substantial evidence indicating
that the following changes, in his judgment, were materially
adverse: His job title was less prestigious, he occupied a
lower position in Regions' organizational hierarchy, his staff
was reduced in size, he was stripped of substantive job
responsibilities, certain responsibilities that he enjoyed
were taken away, his job responsibilities were lessened, and
his group was placed outside the decision-making loop.  If the
trier of fact concludes that these changes did in fact occur,
then it could find that an ordinary employee in Shaffer's
position would judge these changes to be "materially adverse."
1061223
26
We conclude that the reasonableness of Shaffer's judgment is
a question of fact for the trier of fact to decide.
Therefore, a summary judgment in favor of Regions is not
proper based on its allegation that it did not breach the
change-of-control agreement.
Finally, Shaffer alleges that a summary judgment in favor
of Regions is not proper based on its allegation that he
breached his fiduciary duty to Regions.  Regions argues that
the summary judgment was proper because "[p]ursuant to the
'faithless servant' doctrine, breach of fiduciary duty is an
affirmative defense to a claim by a corporate officer of
breach of contract." Regions' brief, at 53.  Specifically,
Regions alleges that Shaffer breached his duty to Regions by
serving on a committee that recommended some of the changes he
now argues were materially adverse to his employment and by
not informing Dick that he thought the recommended changes
were materially adverse to his employment when the committee
recommended them.
"The proponent of an affirmative defense 'bears the
burden of proving the essential elements of his affirmative
defenses.'" Ex parte Ramsay, 829 So. 2d 146, 152 (Ala. 2002)
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27
(quoting Ex parte Blue Cross & Blue Shield of Alabama, 773 So.
2d 475, 478 (Ala. 2000)).
In Edwards v. Allied Home Mortgage Capital Corp., 962 So.
2d 194 (Ala. 2007), this Court explained the faithless-servant
doctrine:
"The faithless-servant doctrine precludes an
employee from receiving compensation for conduct
that is disloyal to the employer or in violation of
the employee's employment contract. The Restatement
(Second) of the Law of Agency § 469 (1958) describes
the doctrine:
"'An agent is entitled to no compensation
for conduct which is disobedient or which
is a breach of his duty of loyalty; if such
conduct constitutes a wilful and deliberate
breach of his contract of service, he is
not entitled to compensation even for
properly performed services for which no
compensation is apportioned.'
"(Emphasis supplied.)
"This longstanding doctrine remains effective
today. It was first recognized in McGar v. Adams, 65
Ala. 106 (1880). In that case, an agent had been
employed to find a purchaser for property belonging
to his principal. The agent, who was to receive a
commission upon the sale of that property, located
a purchaser to whom the principal transferred the
property. 
Before 
that 
transaction 
closed 
and
unbeknownst to the principal, however, the purchaser
asked the agent -- a banker -- for a loan to fund
the purchase. In lieu of making that loan, the agent
and purchaser entered into an agreement pursuant to
which the agent could buy a one-half interest in the
property. The purchaser conveyed that one-half
1061223
28
interest to the agent and split the sales commission
the principal had paid the agent. After learning of
the agent's actions, the principal sued the agent to
recover the commission. Considering these facts, the
McGar Court stated:
"'An agent who, for a reward, is
employed in the transaction of business,
will 
justly 
forfeit 
all 
right 
to
compensation if he is guilty of bad faith
to the principal....'
"65 Ala. at 109.
"The 
'bad 
faith' 
principle 
in 
McGar 
was
reaffirmed in Dudley v. Colonial Lumber Co., 223
Ala. 533, 137 So. 429 (1931):
"'It is unquestionably the law that it
is the duty of an agent to act in matters
touching the agency, with due regard to the
interest of the principal. In accepting the
agency he impliedly undertakes to give his
principal his best care and judgment, and
to use the powers conferred upon him for
the 
sole 
benefit 
of 
his 
principal
consistent 
with 
the 
purposes 
of 
the
agency....
"'And "an agent who, for a reward, is
employed in the transaction of business,
will 
justly 
forfeit 
all 
right 
to
compensation, if he is guilty of bad faith
to the principal." ...'
"223 Ala. at 536, 137 So. at 431."
962 So. 2d at 209-10.
In the present case, there remain genuine issues of
material fact regarding whether Shaffer was disloyal to
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29
Regions.  Regions did not present any evidence indicating that
Shaffer's actions while serving on the committee were unknown
to Regions or that Shaffer attempted to mislead Regions with
any of his actions.  Apparently based on Shaffer's approval of
the recommendations made by the committees he served on,
Regions makes a bare allegation that Shaffer "used his
position in Regions to engineer a situation that he now claims
entitles him to a payment from Regions of nearly half a
million dollars." Regions' brief, at 56-57.  However, Shaffer
testified that the committee's recommendations "made sense for
that 
organization" 
and 
that 
his 
approval 
of 
the
recommendations was a fulfillment of his responsibility to
build the organization in the best way for Regions.  Regions
did not present any evidence indicating how Shaffer allegedly
manipulated the committee to make recommendations that
allegedly benefited him and were unfaithful to Regions.
Furthermore, Regions failed to present evidence indicating
that Shaffer was dishonest in any of his dealings with Regions
concerning the committee recommendations or that the committee
recommendations he approved were not in the best interests of
Regions.  Therefore, a summary judgment in favor of Regions is
1061223
30
not proper based on its allegation that Shaffer breached his
fiduciary duty to Regions.
Conclusion
Based on the foregoing, we reverse the summary judgment
in favor of Regions as to Shaffer's breach-of-contract claim,
and we affirm the summary judgment in favor of Regions as to
all other claims.  We remand this case for proceedings
consistent with this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Cobb, C.J., and Woodall, Bolin, Parker, and Shaw, JJ.,
concur.