Title: Prasad Vankineni v. Santa Rosa Beach Development Corporation II and Renasant Bank

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: 09/02/2010
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, 2010
_________________________
1080908
_________________________
Prasad Vankineni 
v.
Santa Rosa Beach Development Corporation II
and Renasant Bank
Appeal from Madison Circuit Court
(CV-08-900500)
WOODALL, Justice.
On June 3, 2008, Prasad Vankineni sued Santa Rosa Beach
Development Corporation II ("Santa Rosa") in the Madison
Circuit Court.  On March 17, 2009, the trial court dismissed
the case  based upon an outbound forum-selection clause in a
1080908
The 
rescission 
claim 
was 
based 
upon 
Vankineni's
1
allegation that Santa Rosa had misled him "regarding the
2
contract between Vankineni and Santa Rosa.  Vankineni timely
appealed to this Court.  We reverse and remand.
Santa Rosa is the developer of a condominium community in
Santa Rosa County, Florida. On January 5, 2005, Vankineni
entered into a written contract to purchase a condominium unit
in that community from Santa Rosa.  The purchase contract
provided, in pertinent part: "This 
contract shall be
construed, applied, and enforced in accordance with the laws
of the State of Florida.  Any action to enforce a provision of
this agreement shall be in the appropriate court located in
Santa Rosa County, Florida."  (Emphasis added.)  
Vankineni's complaint contained three counts.  The first
count alleged that Santa Rosa had violated the Alabama
Securities Act, § 8-6-1 et seq., Ala. Code 1975 ("the Act").
For the alleged violations of the Act, Vankineni sought to
recover the consideration he had paid to Santa Rosa, plus
interest, attorney fees, and court costs.  The second count
sought the rescission of the purchase contract, thereby
requiring Santa Rosa to return the consideration paid by
Vankineni.  Similarly, the third count sought a declaratory
1
1080908
nature of the interest in the unit he was contracting to
purchase, as well as the date on which said interest would be
delivered."  It was not based upon any alleged contractual
right of rescission.
Vankineni named Renasant Bank as a necessary party to his
2
request 
for 
a 
declaratory 
judgment. 
Renasant 
Bank's
involvement 
in 
financing 
Vankineni's 
purchase 
of 
the
condominium unit is not relevant to any issue presented by
this appeal, and it has not filed a brief.  
3
judgment "[f]inding the contract is invalid and unenforceable"
and "[r]equiring Santa Rosa ... to return to ... Vankineni all
consideration flowing to [it] by virtue of the [purchase]
contract."  
2
On December 12, 2008, Santa Rosa filed a motion to
dismiss Vankineni's complaint, based, in pertinent part, upon
the outbound forum-selection clause in the purchase contract.
Santa Rosa argued that the "case [was] due to be dismissed for
improper venue because the parties agreed that any dispute
arising out of the contract [would] be brought in the
appropriate court located in Santa Rosa County, Florida."  In
response, Vankineni argued, in relevant part, that the forum-
selection clause did not apply because, according to him, he
had not brought "an action to enforce" the purchase contract.
The trial court granted Santa Rosa's motion, and Vankineni
appealed. 
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4
We must determine whether the trial court exceeded its
discretion in enforcing the forum-selection clause.  "[T]he
review of a trial court's ruling on the question of enforcing
a forum-selection clause is for an abuse of discretion." Ex
parte D.M. White Constr. Co., 806 So. 2d 370, 372 (Ala. 2001).
The 
trial 
court 
stated 
in 
its 
order 
dismissing
Vankineni's action that it was enforcing the outbound forum-
selection clause because it had concluded that Vankineni had
"not met his burden of showing that enforcement of the clause
would be unfair, unreasonable or seriously inconvenient."  It
is true that this Court has "adopt[ed] the majority rule that
a forum selection clause should be enforced so long as
enforcing it is neither unfair nor unreasonable under the
circumstances."  Professional Ins. Corp. v. Sutherland, 700
So. 2d 347, 351 (Ala. 1997).  However, the dispositive issue
in this case is not whether the enforcement of the outbound
forum-selection clause would be unfair, unreasonable, or
seriously inconvenient; instead, the dispositive issue is
whether Vankineni's action falls within the scope of the
clause.
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5
The outbound forum-selection clause in the purchase
contract applies to "[a]ny action to enforce a provision" of
the contract. (Emphasis added.) This contractual language is
"plain and free from ambiguity"; therefore, "there is no room
for construction, and it is the duty of the court to enforce
it as written."  Kinnon v. Universal Underwriters Ins. Co.,
418 So. 2d 887, 888 (Ala. 1982); see also Ex parte Cintas
Corp., 958 So. 2d 330, 333 (Ala. 2006).  "'A court may not
make a new contract for the parties or rewrite their contract
under the guise of construing it.'" Turner v. West Ridge
Apartments, Inc., 893 So. 2d 332, 335 (Ala. 2004) (quoting Ex
parte Dan Tucker Auto Sales, Inc., 718 So. 2d 33, 35-36 (Ala.
1998)).
The word "enforce" means "[t]o give force or effect to
[or] to compel obedience to."  Black's Law Dictionary 569 (8th
ed. 2004).  Thus, the enforcement of a contract is the
opposite of the rescission of a contract, because "[t]he
effect of rescission is to extinguish the contract."  Clark v.
Wilson, 380 So. 2d 810, 812 (Ala. 1980).
Vankineni argues that his action does not fall within the
scope of the outbound forum-selection clause, because, he
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6
says, he "does not seek enforcement of the contract, or any
provision thereof."  Vankineni's brief, at 33.  We agree.
Vankineni's claim under the Act seeks the "return [of] the
consideration paid by him" and does not seek compensatory
damages for any alleged breach of the contract. His other
counts seek the rescission of the contract and a declaratory
judgment "[f]inding that the contract is invalid and
unenforceable." (Emphasis added.) None of these claims
involves the enforcement of any provision of the purchase
contract.
Santa Rosa argues "that the forum-selection clause
encompasses all of [Vankineni's] claims."  Santa Rosa's brief,
at 12.  However, it does not explain how Vankineni may be
considered to be seeking to enforce any provision of the
purchase contract.  Instead, Santa Rosa argues that "[t]he
purchase agreement and its interpretation [are] central to
each of the actions raised by [Vankineni and that] each of
[his] claims flows from the existence of the contract."  Santa
Rosa's brief, at 13.  However, in order to accept Santa Rosa's
arguments, we would have to rewrite the forum-selection
clause, under the guise of construing it, to extend its scope
1080908
7
to actions arising under or relating to the purchase contract
or the relationships created by it, and this we may not do. 
For these reasons, we reverse the judgment of the trial
court and remand the case for further proceedings consistent
with this opinion.
REVERSED AND REMANDED. 
Lyons, Stuart, Smith, Bolin, Parker, Murdock, and Shaw,
JJ., concur.
Cobb, C.J., dissents.       
  
1080908
Homes of Legend, Inc. v. McCollough, 776 So. 2d 741, 746
3
(Ala. 2000) ("Under general Alabama rules of contract
interpretation, the intent of the contracting parties is
discerned from the whole of the contract. Where there is no
indication that the terms of the contract are used in a
special or technical sense, they will be given their ordinary,
plain, and natural meaning. If the court determines that the
terms are unambiguous (susceptible of only one reasonable
meaning), then the court will presume that the parties
intended what they stated and will enforce the contract as
written." (citations omitted)).
8
COBB, Chief Justice (dissenting).
I respectfully dissent.  In my view, this is a close
case.  However, looking at the allegations of the complaint,
as well as the claims asserted therein, I am not convinced
that the trial court erred in determining that this is an
action to enforce a provision or provisions of the purchase
contract and that, therefore, the outbound forum-selection
clause applied.
Generally speaking, when examining a contract, this Court
looks to the substance of the document as a whole, giving the
terms in the contract their ordinary, plain, and natural
meaning unless a more narrow, technical definition is
indicated.   In addition, complaints and other pleadings are
3
not viewed critically but are generally viewed through a wider
lens, looking to the substance in order to do substantial
1080908
9
justice.  See  Rule 8(f), Ala. R. Civ. P.  Thus, in
determining whether Prasad Vankineni's action is one "to
enforce a provision" of the purchase contract within the
intended meaning of the outbound forum-selection clause in the
contract, a trial court should consider all the provisions of
the contract, and then compare those provisions to the
substance of the allegations, the causes of action, and the
requests for relief in the complaint.
1080908
Factual averments stating that the condominium unit was
4
not completed by the contracted-for date are incorporated by
reference in the portion of Vankineni's complaint setting
forth a claim for rescission.  In full, the claim for
rescission states:
"21. Dr. Vankineni adopts and incorporates by
reference the averments of the preceding paragraphs,
as if fully set forth herein.
"22. Dr. Vankineni was mis[led] by Santa Rosa ...
regarding the nature of the interest in the Unit he
was contracting to purchase, as well as the date on
which said interest would be delivered.
"23. Santa Rosa has failed and refused to deliver
the Unit, or any interest therein, to Dr. Vankineni
for over three (3) years, yet it has had and
continues to have the benefit of Dr. Vankineni's
cash deposit during that time. Within the fifteen
(15) days preceding the date of the filing of this
Complaint, [Debra] Ciano[, who acted as a broker in
the transaction,] has advised Dr. Vankineni of
further delays in the completion of the Unit.
"24. Upon information and belief, if and when the
Unit is completed, its value will be far less than
the purchase price set forth in the Contract. Had
the Unit been completed and delivered as required by
the Contract, Dr. Vankineni could have sold his
interest therein at a profit or at a substantially
higher price than the Unit will bring if and when
completed. Worse still, even when the Unit is
completed, the Development as a whole will remain
substantially incomplete which, upon information and
belief, will substantially limit the prospects for
renting the Unit to third-parties. Forcing Dr.
Vankineni to consummate the transaction contemplated
by the Contract would require him to purchase the
Unit at a greatly inflated price, and would
10
Venkineni seeks to rescind the contract.   The purchase
4
1080908
inequitably force him to bear the burden of Santa
Rosa's delay in completing the Unit.
"25. Dr. Vankineni's hands are clean and he is
prepared to do equity.
"26. On the basis of the foregoing, Dr. Vankineni
hereby rescinds the Contract and is prepared to
restore to Santa Rosa ... any and all interest in
the Unit to which he is entitled, as well as any and
all other consideration flowing to him pursuant to
the Contract.
"WHEREFORE, Dr. Vankineni prays the Court will enter
an Order rescinding the Contract and requiring Santa
Rosa and/or Fictitious Defendants A-C to restore to
Dr. Vankineni all consideration flowing to them
under the Contract, along with the costs of this
action and any other relief at law or equity to
which Dr. Vankineni may be entitled."
11
contract itself sets forth conditions under which the buyer
may rescind the contract.  For example, the purchase contract
is "voidable by buyer within fifteen days after the date of
receipt from the developer of any amendment which materially
alters or modifies the offering in a manner that is adverse to
the buyer."  The estimated completion date in the purchase
contract for the condominium unit was October 15, 2006, but
this date was "subject to amendment by Seller should Seller's
progress or plans be altered by conditions unforeseen by or
outside the control of Seller, and any such amendment shall
not require formal or specific notice by Seller to Buyer."
1080908
As the majority points out, Vankineni alleges, among
5
other factual allegations, that he was "misled" as to the date
the unit would be finished. ___ So. 3d at ___ n.1.  However,
the only allegedly "misleading" statement as to the date of
completion referenced in the complaint is the completion date
stated in the purchase contract.  See Rule 9(b), Ala. R. Civ.
P. ("In all averments of fraud or mistake, the circumstances
constituting 
fraud 
or 
mistake 
shall 
be 
stated 
with
particularity.").  In addition, I recognize, as the majority
points out in note 1 of this Court's opinion, that Vankineni,
a medical doctor, also alleges that he is entitled to
rescission because he was orally "misled" regarding the nature
of his interest in the unit; he says he believed that he was
entering into a contract for an "ownership" interest in the
condominium unit, but, since signing the written contract, he
has discovered that the purchase contract conveys only a
"leasehold" interest.  In my view, these averments do not
negate the fact that, with his claim for rescission, Vankineni
seeks relief available "at law" as well as in equity.
12
One of the foundational allegations of the complaint is that
the condominium has not been "completed by the date set forth
in the contract, to-wit: October 15, 2006," and that
Vankineni has therefore been deprived of the use and enjoyment
of the unit since that time.  The complaint asserts that Santa
Rosa has continually delayed (i.e., amended) the contracted-
for date of completion, and this is one basis of Vankineni's
claim for rescission.5
Vankineni's claim for rescission is not specifically
described as a "contractual" claim for rescission.  Neither,
however, does Vankineni state that he seeks rescission only as
1080908
13
an equitable remedy; rather, the claim is one for "any" relief
"at law or in equity" that would be available to Vankineni
should he prove the averments of his claim for rescission.
Therefore, I read the complaint as seeking the remedy of
rescission under an equitable theory (per the rather weak
averments of having been "misled") or under any theory that
would entitle Vankineni to relief "at law."  The allegations
of the complaint, if proven, would be sufficient to support a
claim for rescission under the terms of the contract.  Thus,
although Vankineni may be seeking noncontractual relief, he is
also, at least in the alternative, seeking the remedy of
rescission under "any" legal theory available -- including
enforcement of Vankineni's legal rights under the express
provisions of the purchase contract.
Further, in an express invocation of his contractual
rights, in conjunction with his request for a declaratory
judgment, Vankineni seeks not only a judgment as to the
enforceablity of the contract, but also "the Court's judgment
as to the validity, legitimacy and enforceability of the
Contract, and as to his rights and obligations, as well as
those of the interested parties, with respect to the
1080908
14
Contract." (Emphasis added.)  When that count is fairly
construed, it appears that Vankineni seeks a declaration of
his contractual rights, including those available to him in
the event that the purchase contract is rescinded or declared
unenforceable.  Moreover, in conjunction with his request for
a declaratory judgment, Vankineni seeks an order "[a]warding
Dr. Vankineni such other and further relief, at law or equity,
to which he may be entitled."  In the context of the
allegations of the complaint, which include an allegation that
the contract was not fulfilled by the date contemplated in the
purchase contract, this, too, could reasonably be considered
a request for any relief due Vankineni at law pursuant to the
contract.
In addition, other relief requested in the complaint is
available under the rights and obligations stated in the
purchase contract as being available in the event of an action
such as this one. Paragraph 16(a) of the purchase contract
states: "If Buyer properly terminates the contract pursuant to
its terms ... all deposits shall be returned to the Buyer with
interest."   The contract also states, in paragraph 38(f): "In
the event of any litigation or arbitration concerning this
1080908
15
transaction, the prevailing party shall be entitled to recover
its reasonable costs and attorney's fees, inclusive of Court
costs 
and 
attorney's 
fees 
incurred 
in 
any 
appellate
proceeding."  In paragraph 34(b) of the complaint, in
conjunction with his request for a declaratory judgment "as to
[the] rights and obligations" of the parties "with respect to
the contract," Vankineni seeks an order "[r]equiring Santa
Rosa ... to return to Dr. Vankineni all consideration flowing
to [it] by virtue of the Contract including, without
limitation, the cash deposit paid by Dr. Vankineni in January
of 2005." Similarly, in conjunction with the claim for
rescission, Vankineni states: "WHEREFORE, Dr. Vankineni prays
the Court will enter an order rescinding the Contract and
requiring Santa Rosa ... to restore to Dr. Vankineni all
consideration flowing to [it] under the Contract, along with
the costs of this action and any other relief at law or equity
to which Dr. Vankineni may be entitled." 
Finally, I note that a reversal should be based on
arguments supported in law.  See Rule 28, Ala. R. App. P.
Vankineni's arguments for reversal are not compelling.  As
acknowledged on page 11 of Vankineni's brief, the contract
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16
states that it "shall be construed, applied, and enforced in
accordance with the laws of the State of Florida."  However,
all Vankineni's arguments seek to apply Alabama rules of
contract construction to the forum-selection clause, with no
acknowledgment of Florida law.
In short, I am not convinced that Vankineni's claim for
rescission or his request for a declaratory judgment can be
resolved without resort to, and enforcement of, contractual
provisions -- not only those governing the date for completion
and delivery of the condominium unit, but also those governing
the right to rescind the contract, and the remedies specified
in the purchase contract in the event of rescission by
Vankineni on the ground that Santa Rosa failed to perform its
contractual 
obligations. 
Therefore, 
I 
view 
Vankineni's
complaint as falling within the confines of the outbound
forum-selection clause.  
I am not convinced that the trial court erred in
determining that this is an action to enforce one or more
provisions of the purchase contract, or that the trial court
erred in enforcing the outbound forum-selection clause.
Accordingly, I respectfully dissent.