Case Title: Whaley, et al. v. Dept. of Alabama Veterans of Foreign Wars of the United States

Citation: 

Docket Number: SC-2022-0850, SC-2023-0465

State: alabama

Court: Alabama Supreme Court

Date: 2023-08-18T00:00:00Z

Document:
Rel: August 18, 2023 
 
 
 
 
 
 
 
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) 229-0650), 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, 2023 
 
_________________________ 
 
SC-2022-0850 
_________________________ 
 
Travis E. Whaley and Randall C. Lovvorn 
 
v. 
 
Department of Alabama Veterans of Foreign Wars of the United 
States 
 
 
Appeal from Montgomery Circuit Court 
(CV-18-900411) 
 
SELLERS, Justice. 
 
This appeal relates to "electronic-bingo" operations conducted by 
the Department of Alabama Veterans of Foreign Wars of the United 
SC-2022-0850 
2 
 
States ("the VFW") at some of its Alabama posts. Travis E. Whaley and 
Randall C. Lovvorn contracted with the VFW to superintend and promote 
its electronic-bingo operations. Whaley and Lovvorn were in prominent 
positions with the VFW both before and during the events of this case. 
Between 1997 and 2013, Whaley served the VFW as adjutant, 
commander, and quartermaster at different times. For his part, Lovvorn 
served as the VFW's accountant.  After meeting at a local VFW post, 
Lovvorn and Whaley apparently began a friendship in the 1990s, which 
subsequently merged into a business relationship and leadership of the 
VFW's electronic-bingo operations. 
 
Following a failed attempt by Whaley to establish electronic-bingo 
at a single VFW post, the VFW contracted with G2 Operations, Inc. 
("G2"), to conduct its electronic-bingo operations.1 Apparently, there were 
two agreements between the VFW and G2 at that time -- a statewide 
contract and a contract for a single VFW post. Under the statewide 
contract, the VFW was to retain 2% of gross revenue, and, under the local 
contract, it was to receive 2% of the net income.  
 
1Although G2 was initially a defendant in the case, it was 
subsequently dismissed and is no longer a party. 
SC-2022-0850 
3 
 
 
Between 2007 and 2009, the VFW expanded its electronic-bingo 
operations, offering electronic bingo at additional posts and entering into 
a new contract with G2. Under the new contract, G2 agreed to conduct 
electronic-bingo operations at VFW posts throughout Alabama, and the 
VFW would receive 10% of the gross revenue. All the proceeds from 
electronic bingo were deposited into a VFW bank account, known as the 
Jasper account. During the years the VFW and G2 operated under the 
various contracts, $36,562,465.07 was deposited into the Jasper account; 
only proceeds from electronic bingo were deposited into that account. 
Under its contracts with G2, the VFW was entitled to receive 
$3,161,649.98 of that amount. 
During that period, the VFW also entered into contracts with 
Whaley and Lovvorn, assigning them specific roles in its electronic-bingo 
operations. In 2008, Whaley entered a five-year office-manager contract 
with the VFW. In the same year, Lovvorn was retained by the VFW to 
"promote, market and consult the [VFW] on the operation of the VFW's 
Electronic Charity Bingo Operations." Those contracts underlie the 
VFW's breach-of-contract claims against Whaley and Lovvorn, which are 
discussed later in this opinion. However, in 2009 the VFW's electronic-
SC-2022-0850 
4 
 
bingo operations began winding down in compliance with our holding in 
Barber v. Cornerstone Community Outreach, Inc., 42 So. 3d 65, 86 (Ala. 
2009), recognizing the illegality of electronic bingo. 
Several years later, after being notified of a tax penalty from the 
IRS, the VFW discovered a shortfall of $1,782,368.88 from what it should 
have received under its contracts with G2. The VFW filed a complaint in 
the Montgomery Circuit Court, asserting claims against G2 as well as 
additional claims against other parties, which were eventually whittled 
down throughout litigation until only claims against Whaley and 
Lovvorn remained. At trial, Whaley and Lovvorn moved for a judgment 
as a matter of law. The trial court denied that motion, and, after a trial, 
the jury reached a verdict against Whaley and Lovvorn on VFW's claims 
of breach of contract, fraudulent suppression, and conversion, awarding 
$1,782,368.88 in compensatory damages and $2,000,000 in punitive 
damages. The trial court entered a judgment on that verdict, and Whaley 
and Lovvorn filed a renewed motion for judgment as a matter of law or, 
alternatively, for a new trial or remittitur. That motion was denied as 
well, and this appeal followed. Because the VFW's claims rely upon its 
SC-2022-0850 
5 
 
own involvement in illegal transactions, we reverse the trial court's 
judgment and render a judgment in favor of Whaley and Lovvorn. 
Analysis 
 
"'Electronic bingo is illegal in Alabama.'" Dream, Inc. v. Samuels, 
[Ms. SC-2022-0808, June 23, 2023] ___ So. 3d ___, ___ (Ala. 2023) (quoting 
State v. Epic Tech, LLC, [Ms. 1200798, Sept. 30, 2022] ___ So. 3d ___, 
(Ala. 2022)). We have stated that "'[a] person cannot maintain a cause of 
action if, in order to establish it, he must rely in whole or part on an 
illegal or immoral act or transaction to which he is a party.'" Oden v. 
Pepsi Cola Bottling Co. of Decatur, Inc., 621 So. 2d 953, 954-55 (Ala. 
1993) (quoting Hinkle v. Railway Express Agency, 242 Ala. 374, 378, 6 
So. 2d 417, 421 (1942)). That rule derives "'from a desire to see that those 
who transgress the moral or criminal code shall not receive aid from the 
judicial branch of government.'" Oden, 621 So. 2d at 955 (quoting Bonnier 
v. Chicago, Burlington & Quincy R.R., 351 Ill. App. 34, 51, 113 N.E. 2d 
615, 622 (1923)). Indeed, "illegality is such a 'fundamental' defect 'that 
we may raise the issue ex mero motu.'" Dream, Inc., ___ So. 3d at ___ 
(quoting Rape v. Poarch Band of Creek Indians, 250 So. 3d 547, 563 (Ala. 
2017)). Accordingly, the VFW's arguments that Whaley and Lovvorn 
SC-2022-0850 
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waived or failed to preserve the illegality issue are unavailing. Instead, 
because the VFW's breach-of-contract, fraudulent-suppression, and 
conversion claims necessarily rely upon its involvement in illegal 
electronic bingo, the trial court's judgment is due to be reversed.  
I. 
The Breach-of-Contract Claims 
The VFW asserted breach-of-contract claims against Whaley and 
Lovvorn based upon two distinct contracts. In its claim against Whaley, 
the VFW alleged that, "[o]n or about May 17, 2009, the [VFW] entered 
into a written contract with the Defendant Whaley for a five-year term of 
employment as Office Manager of the [VFW]."  The breach-of-contract 
claim against Lovvorn alleges that, "[o]n or about May 14, 2009, the 
[VFW] entered into a written contract with Defendant Lovvorn in which 
said Defendant agreed and promised to promote, market and consult 
with the [VFW] on the operation of the [VFW's] Charity Bingo 
operations."  When "'"a party requires the aid of an illegal transaction to 
support his case, he cannot recover."'" Lucky Jacks Ent. Ctr., LLC v. 
Jopat Bldg. Corp., 32 So. 3d 565, 569 n.3 (Ala. 2009) (citations omitted). 
Accordingly, if its contracts with Whaley and Lovvorn are illegal, then 
the VFW cannot recover for any breach of those contracts.  
SC-2022-0850 
7 
 
The office-manager contract with Whaley provided that 
"[h]is additional responsibility will be to keep up with 
the current and future involvement of the VFW in the 21st 
Century Electronic Bingo Operations. He will be required to 
work with the Vendor to insure that we are always in 
compliance with all rules and regulations as well as ma[k]e 
necessary decisions based on past and future requirements to 
continue to receive the Charity income for the VFW. He will 
be required to report to the Council on a regular bas[is] to 
keep all members of the Council abreast of the operations in 
progress or planned."  
 
Despite the word "additional," the contract sets forth only the duties 
listed above. Similarly, the only duties outlined in Lovvorn's contract are 
"to promote, market and consult the [VFW] on the operation of the VFW's 
Electronic Charity Bingo Operations." On their face, both contracts seek 
to use Whaley's and Lovvorn's labor, knowledge, and expertise to further 
the VFW's illegal electronic-bingo operations. As noted above, when "'"a 
party requires the aid of an illegal transaction to support his case, he 
cannot recover."'" Lucky Jacks, 32 So. 3d at 569 n.3 (citations omitted). 
Thus, the VFW is entitled to no relief based on the breach of these facially 
illegal contracts. 
 
The VFW argues that a case decided by the United States District 
Court for the Northern District of Alabama, Papa Air LLC v. Cal-Mid 
Properties, LP, No. 2:19-CV-01713-RDP, Mar. 15, 2022 (N.D. Ala. 2022) 
SC-2022-0850 
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(not published in Federal Supplement), demonstrates that the contracts 
in question are not void ab initio. Papa Air is not binding on this Court, 
nor is it apposite to the case at bar. In Papa Air, the federal district court 
found that a lease relating to premises used to conduct an illegal video-
sweepstakes operation was not void ab initio for two reasons. First, the 
lease in Papa Air permitted the lessee to use the premises for any 
commercially reasonable operation, so long as it obtained the written 
approval of the lessor, and prevented the lessor from unreasonably 
withholding its approval. As a result, the lease expressly allowed for the 
premises to be used for alternative, legal purposes. Second, the lease 
provided that if a provision was discovered to be unenforceable the rest 
of the lease would remain in effect. Essentially, the court found that that 
clause functioned as a severance clause regarding unenforceable 
provisions. 
 
The contracts between the VFW and Whaley and Lovvorn are easily 
distinguished from the lease in Papa Air. The duties relating to electronic 
bingo contained in Whaley's and Lovvorn's contracts are fundamental to 
both contracts. There is no provision in either contract relating to 
alternative, legal job duties; rather, both contracts exclusively involve 
SC-2022-0850 
9 
 
illegal electronic-bingo operations and contain no severance or savings 
clause regarding unenforceable provisions. In short, there is no clause 
providing for the severance of any provisions relating to the illegal 
electronic-bingo operations. Indeed, even if the contracts contained such 
a clause, a severance of those unenforceable provisions would make the 
contracts ambiguous because the only job responsibilities referenced 
within the contracts were solely related to the illegal electronic-bingo 
operations. Accordingly, Papa Air is inapposite.  
 
The VFW also argues that our 2009 holding that electronic bingo is 
illegal was not "clearly foreshadowed" and should thus be treated as 
nonretroactive. See Lucky Jacks, 32 So. 3d at 570; see also Barber v. 
Cornerstone, 42 So. 3d at 86. Our decision in Lucky Jacks is instructive. 
In Lucky Jacks we held that "the resolution of a question of first 
impression as to the meaning of a statute … does not excuse the parties 
from compliance with the statute so as to render void contracts 
enforceable." 32 So. 3d at 569. Applying that principle to our earlier 
decision in Barber v. Jefferson County Racing Ass'n, 960 So. 2d 599 (Ala. 
2006), we reasoned that, in deciding that video sweepstakes were 
unlawful under § 13A-12-27, Ala. Code 1975, we had not "establish[ed] a 
SC-2022-0850 
10 
 
new principle of law, justifying nonretroactivity." Lucky Jacks, 32 So. 3d 
at 570.  
That reasoning compels the same conclusion with respect to our 
holding on the illegality of electronic bingo. The decision in Barber v. 
Cornerstone did not establish a new principle of law -- it merely 
recognized that "the term 'bingo' as used in Amendment No. 674 [(now § 
43-2.00, Ala. Const. 2022)] was intended to reference the game commonly 
or traditionally known as bingo." 42 So. 3d at 86. The holding of Barber 
that "bingo" means "bingo" was clearly foreshadowed. Assigning words 
their common meaning and interpreting them within the context of 
confirmed legal precedent is far from establishing a new principle of law. 
Accordingly, there is no basis for treating our holding in Barber v. 
Cornerstone as nonretroactive.  
II. 
The Fraudulent-Suppression Claims 
To establish its fraudulent-suppression claims, the VFW needed to 
prove that it had suffered actual damage as a proximate result of 
Whaley's and Lovvorn's conduct. State Farm Fire & Cas. Co. v. Owen, 
729 So. 2d 834, 837 (Ala. 1998). The VFW alleged that it had been injured 
by "failing to receive funds due it under the Charity Bingo operation." 
SC-2022-0850 
11 
 
However, the VFW's right to receive those funds was premised on its 
contracts with G2, which entitled it to a portion of proceeds derived from 
illegal electronic bingo. As noted, "[a] person cannot maintain a cause of 
action if, in order to establish it, he must rely in whole or in part on an 
illegal or immoral act or transaction to which he is a party." Hinkle, 242 
Ala. at 378, 6 So. 2d at 421; see also Dream, Inc., ___ So. 3d at ___ (holding 
that "Alabama courts will not enforce claims, whether in contract or in 
tort, which require the aid of an illegal agreement"). Simply put, the VFW 
cannot demonstrate damage without relying on its right to the proceeds 
of an illegal activity. As a result, it cannot maintain this cause of action. 
III. The Conversion Claims 
In a count titled "Conversion of Bingo Funds," the VFW alleged that 
"the Defendants converted proceeds due the [VFW] from the Charity 
Bingo operation." The VFW cannot maintain its conversion claims for the 
same reason it cannot maintain its fraudulent-suppression claims -- it is 
impossible to describe its right to the funds or the damage that it 
sustained except by reference to its own illegal acts. Accordingly, the 
VFW can receive no relief on its conversion claims.  
Conclusion  
SC-2022-0850 
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To carry on its illegal electronic-bingo operations, the VFW entered 
into numerous related, unenforceable contracts. Those contracts entitled 
the VFW to a portion of funds generated from its illegal activity, which 
were deposited into an account containing only the proceeds of the illegal 
electronic-bingo operations. The VFW's frustration at losing such a large 
sum is understandable, and, as an organization aimed at the support of 
veterans, the VFW is highly sympathetic. But Alabama law is and was 
clear even before the contracts among these parties were executed that 
we cannot provide the relief of returning illegally gotten gains to the doer 
of the original misdeed.  
 
REVERSED AND JUDGMENT RENDERED. 
 
Parker, C.J., and Wise, Stewart, and Cook, JJ., concur.