Case Title: Werner Beiersdoerfer v. Hilb, Rogal & Hamilton Company et al.

Citation: 

Docket Number: 1090564

State: alabama

Court: Alabama Supreme Court

Date: 2010-12-17T00:00:00Z

Document:
REL: 12/17/2010
Notice: This opinion is subject to formal revision before publication in the advance
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0649), of any typographical or other errors, in order that corrections may be made before
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2010-2011
____________________
1090564
____________________
Werner Beiersdoerfer
v.
Hilb, Rogal & Hamilton Company et al.
Appeal from Jefferson Circuit Court
(CV-01-1091)
SMITH, Justice.
Werner Beiersdoerfer appeals from a judgment of the trial
court holding that Hilb, Rogal and Hamilton Company ("HRH");
Hilb, Rogal and Hamilton of Alabama, Inc.; and BDF-Meadows,
Inc. (hereinafter collectively referred to as "the HRH
corporations"), are entitled to a "setoff" against the
$900,000 Beiersdoerfer was awarded as compensatory damages for
1090564
2
his claims against the HRH corporations.  We reverse and
remand.
Facts and Procedural History
This is the fourth time this case has been before this
Court.  See Beiersdoerfer v. Hilb, Rogal & Hamilton Co., 953
So. 2d 1196 (Ala. 2006) ("Beiersdoerfer I"); Hilb, Rogal &
Hamilton Co. v. Beiersdoerfer, 989 So. 2d 1045 (Ala. 2007)
("Beiersdoerfer II"); and Hilb, Rogal & Hamilton Co. v.
Beiersdoerfer, 33 So. 3d 557 (Ala. 2009) ("Beiersdoerfer
III").  The underlying facts are stated in Beiersdoerfer I,
953 So. 2d at 1199-1204, and are not repeated here.  The
procedural history was summarized in Beiersdoerfer III:
"In Beiersdoerfer I, this Court affirmed the
trial court's judgment in part, reversed it in part,
and remanded the cause for additional proceedings.
953 So. 2d at 1210.  On remand, the trial court held
that it did not have jurisdiction to review the HRH
corporations' motion for a remittitur of the $1.25
million verdict in favor of Beiersdoerfer, and the
HRH corporations appealed.  Beiersdoerfer II, 989
So. 2d at 1052-54.  In Beiersdoerfer II, we held
that '[t]he trial court had jurisdiction to consider
the HRH corporations' motion for a remittitur upon
our remand of the case in Beiersdoerfer I.'  989 So.
2d at 1058.  We reversed the trial court's order
denying the motion for a remittitur and remanded the
cause for the trial court to determine 'whether the
damages awarded for mental anguish were excessive,
and whether the HRH corporations are due a setoff
for a percentage of the commissions earned by
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3
Beiersdoerfer pursuant to the contract the jury
found to be in existence and enforceable.'  989 So.
2d at 1058.
"On remand from Beiersdoerfer II, the trial
court ordered a remittitur of the compensatory
damages awarded to Beiersdoerfer from $1.25 million
to $900,000.  The trial court also held that the HRH
corporations were entitled to a setoff of 60% of the
$63,000 that Beiersdoerfer apparently had earned in
commissions under the contract he had with the HRH
corporations."
Beiersdoerfer III, 33 So. 3d at 558.
In Beiersdoerfer III, we held that the trial court's
order did not comply with Rule 59(f), Ala. R. Civ. P., because
it directed a remittitur of damages but did not give
Beiersdoerfer an opportunity to choose a new trial in lieu of
accepting the remittitur.  33 So. 3d at 558-60.  Therefore, we
reversed the trial court's order and remanded the cause to the
trial court.  33 So. 3d at 560.
On remand, the trial court entered a new order; the new
order incorporated the substance of the earlier order that had
been the subject of this Court's reversal in Beiersdoerfer
III.  Specifically, the trial court (1) ordered a remittitur
of Beiersdoerfer's compensatory-damages award from $1.25
million to $900,000 and (2)  ordered that, in the event
Beiersdoerfer accepted the remittitur, the HRH corporations
1090564
4
were entitled to a "setoff" against the compensatory-damages
award. 
 
In 
compliance 
with 
this 
Court's 
mandate 
in
Beiersdoerfer III, the trial court's order gave Beiersdoerfer
the opportunity to choose a new trial in lieu of accepting the
remittitur.  
On January 15, 2010, Beiersdoerfer accepted the trial
court's remittitur of his compensatory-damages award from
$1.25 million to $900,000.  Beiersdoerfer appealed to this
Court, however, that portion of the trial court's judgment
holding that the HRH corporations are entitled to a "setoff"
against his compensatory-damages award.
Discussion
As detailed in Beiersdoerfer I, Beiersdoerfer alleged
that the HRH corporations agreed that Beiersdoerfer would
leave his employment with HRH and become an independent broker
who would service the accounts assigned to him.  See 953 So.
2d at 1201.  Under the terms of that agreement, Beiersdoerfer
was to receive 40% of the commissions from those accounts, and
HRH was to receive 60%.  Id.  Before the HRH corporations
filed 
the 
underlying 
action, 
Beiersdoerfer 
opened 
an
investment account and began depositing into that account
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5
commission checks he received for servicing the accounts
assigned to him.  The investment account accumulated
approximately $63,000 plus interest.
During its deliberations, the jury asked the trial court
whether the jury could "suggest or award the $63,000 to [the
HRH corporations] that Beiersdoerfer has in the [investment
account] outside of any other award be it plaintiff or
defense."  The trial court answered the question in the
following manner:
"I can't answer it specifically because--other than
to say this: I don't know of any way that you can
just award this money that you're asking the
question about to [the HRH corporations].  You
remember you have these verdict forms that I
discussed with you.  One is, in effect, a verdict in
favor of [the HRH corporations] and sets a certain
amount.  And the other is basically a verdict form
in favor of Mr. Beiersdoerfer.  And the third is a
verdict form in favor of neither in which case you
make an award to neither.
"Now, if you award in either of the first two;
that is, to [the HRH corporations] or to Mr.
Beiersdoerfer, obviously, those are general verdict
forms.  And you can award such amount as you, in
your discretion, determine to be the correct amount.
As I said, in your discretion.  If you find as to
the third verdict form, that is, the verdict in
favor of neither party in which neither party is
awarded anything against the other, I don't think
that you can address--then award [the investment]
account funds.  I don't think you'll address that at
all in your verdict forms.
1090564
The HRH corporations had sued Beiersdoerfer, alleging
1
breach of contract, breach of fiduciary duty, and tortious
interference 
with 
business 
relations. 
 
Beiersdoerfer
counterclaimed, 
alleging 
breach 
of 
contract,
misrepresentation, suppression, defamation, conspiracy, and
invasion of privacy.  Only Beiersdoerfer's breach-of-contract
and fraud claims went to the jury; the remaining claims and
counterclaims were resolved in motions for a judgment as a
matter of law.
6
"You just have to consider in your deliberations
in arriving at an amount, in the event that you find
in favor of either of these parties, such amount as
you, in your discretion, deem appropriate based upon
the evidence as you've heard it.  I don't know if
that helps you any or not, but that's the only
answer I can give you.
"....
"THE COURT: All right.  [Counsel for the HRH
corporations], do you want [to] put anything on the
record in response to my instructions to the jury?
"[COUNSEL FOR THE HRH CORPORATIONS]: No, Your
Honor."
The jury continued its deliberations and returned a
general 
verdict 
against 
the 
HRH 
corporations 
on
Beiersdoerfer's 
breach-of-contract 
and 
fraud 
counterclaims 
and
awarded compensatory damages in the amount of $250,000 for
breach of contract and $1,000,000 for fraud.1
After this Court reversed the judgment and remanded the
action in Beiersdoerfer I, 
1090564
Beiersdoerfer's brief is the only brief before us in this
2
appeal; the HRH corporations did not file a brief.
7
"the HRH corporations filed a motion requesting a
ruling on their 2002 motion for a remittitur and
also filed a new motion for a remittitur based on
the same grounds as the 2002 motion, i.e., that the
damages award for mental anguish was excessive and
that they were entitled to a setoff for a percentage
of the sales commissions that had been paid to
Beiersdoerfer pursuant to the contract that was the
basis of this action."
Beiersdoerfer II, 989 So. 2d at 1052 (emphasis added).  After
this Court's decision in Beiersdoerfer III, the trial court,
as noted above, ordered that, in the event Beiersdoerfer
accepted the remittitur of his compensatory-damages award from
$1.25 million to $900,000 the HRH corporations were entitled
to a "setoff" of 60% of the $63,000 in the investment account
($37,800) plus 60% of the interest that had accrued on that
account.
Beiersdoerfer contends that the trial court erred in
ordering the "setoff."   We agree.  The trial court's order of
2
a "setoff" is due to be reversed because it represents a
purported adjudication of a claim never filed by the HRH
corporations until their postjudgment motion.  Indeed, any
interest the HRH corporations claimed to the money in the
investment account arose from the same "transaction or
1090564
Although the trial court labeled the HRH corporations'
3
claim to the moneys in the investment account a "setoff," the
fact that the HRH corporations' claim arose from the same
transaction 
or 
occurrence 
forming 
the 
basis 
of 
Beiersdoerfer's
claim means that the HRH corporations' claim to the money in
the investment account was not a true setoff.  See United
States v. Finch, 239 F.R.D. 661, 663 (S.D. Ala. 2006) ("'At
common law, a setoff, as distinguished from a recoupment or
counterclaim, 
arose 
from 
different 
transactions, 
or
occurrences, between the same parties.  It was often asserted
to reduce or extinguish the creditor's claim against the
debtor.'  In re Concept Clubs, Inc., 154 B.R. 581, 586 (D.
Utah 1993) (citing Lawrence P. King, 4 Collier on Bankruptcy
¶ 553.03, at 553-14 (15th ed. 1993)).  According to Black's,
a setoff is a type of counterclaim that 'aris[es] out of a
transaction extrinsic of plaintiff's cause of action.'
Black's Law Dictionary at 1230 (5th ed. 1979) (emphasis
added).  'The right of setoff ... allows entities that owe
each other money to apply their mutual debts against each
other, thereby avoiding "the absurdity of making A pay B when
B owes A."'  Citizens Bank of Maryland v. Strumpf, 516 U.S.
16, 18, 116 S. Ct. 286, 133 L. Ed. 2d 258 (1995) (internal
quotation omitted).").
8
occurrence" that was the basis of Beiersdoerfer's claim to the
money in the investment account; thus, the HRH corporations'
claim to the money in the investment account was a compulsory
counterclaim.   See Rule 13(a), Ala. R. Civ. P.; Little
3
Narrows, LLC v. Scott, 1 So. 3d 973, 979 (Ala. 2008).  Because
the HRH corporations waited until their postjudgment motion to
assert that they were entitled to 60% of the $63,000 in the
investment account, the HRH corporations waived their right to
assert the claim.  See Scott, 1 So. 3d at 979 ("Rule 13(a)[,
1090564
9
Ala. R. Civ. P.,] requires a person against whom a claim has
been asserted to state as a counterclaim any potential claims
he or she has against 'any opposing party' if those claims
arise out of the same transaction or occurrence that is the
subject matter of the original claim.  The failure to do so
results in the waiver of those potential claims.").  The trial
court therefore erred in holding that the HRH corporations
were entitled to a portion of the money in the investment
account.
Conclusion
Insofar as it held that the HRH corporations were
entitled to a portion of the money in the investment account,
the trial court's judgment is reversed.  The remaining aspects
of the trial court's judgment are not challenged in this
appeal; therefore those portions of the judgment are not
affected by our decision.  The cause is remanded for further
proceedings consistent with this opinion.
REVERSED AND REMANDED. 
Cobb, C.J., and Lyons, Woodall, Stuart, Bolin, Parker,
and Shaw, JJ., concur.