Title: Vicki Edwards v. Allied Home Mortgage Capital Corporation

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:01/12/2007 EDWARDS V. ALLIED HOMES
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)
242-4621), 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
 OCTOBER TERM, 2006-2007
_________________________
1050343
_________________________
Vicki Edwards
v.
Allied Home Mortgage Capital Corporation
Appeal from Jefferson Circuit Court
(CV-03-5644)
NABERS, Chief Justice.
Vicki Edwards appeals from judgments for Allied Home
Mortgage Capital Corporation on its claims against Edwards and
on her  counterclaims against Allied.  All those claims arose
from Edwards's employment with Allied between 1997 and 2003.
1050343
Loans were funded either by Allied or by lenders it
1
approved.  During the period pertinent to these disputes, most
loans that closed with assistance from Allied's branch in
Huntsville were funded by lenders other than Allied. 
2
For the reasons discussed below, we affirm in part and reverse
in part. 
Facts and Procedural History
Allied, which is based in Houston, Texas, is a mortgage-
brokerage company engaged in procuring, facilitating, and
funding home-mortgage loans.  In 1997 Allied employed Edwards
as the manager of its branch office in Huntsville.  As branch
manager, Edwards's principal duties were the marketing of
Allied's services in the Huntsville area, the operation of the
branch, the procurement of customers, the generation of loan
applications, the prequalification of borrowers, and other
support services to borrowers and lenders related to the
closing of loans secured by home mortgages.   
1
Edwards's employment was terminable at will either by her
or by Allied.  The terms of Edwards's employment and her
responsibilities as branch manager were detailed in a branch
operating/employment agreement executed on October 3, 1997
("the agreement").  The agreement specified that Edwards was
solely responsible for the profitability of the branch.
1050343
If Edwards retained a third party (e.g., an appraiser or
2
credit-report agency) to perform any closing services, the
closing attorney would deduct from the loan proceeds and remit
to the branch the amount Edwards owed that third party.  In
the ordinary course of business, Allied, not Edwards, was
responsible to remit payment to the third-party vendors. 
3
Accordingly, Edwards had the responsibility for paying for
utilities, 
rent, 
payroll, 
equipment, 
furniture, 
office
supplies, federal employment taxes, and all other operating
expenses related to the branch (collectively hereinafter "the
branch-operating expenses").
Revenues for the services Allied provided were generated
upon the closing of loans that originated through the
Huntsville branch.  The lender who funded the loan designated
the closing attorney.  That attorney was authorized to remit
part of the loan proceeds to Allied as compensation for the
loan origination or other services the Huntsville branch
office provided for a closing.   Following a closing
originated through the Huntsville branch office, the closing
attorney would send the branch a check payable to Allied for
the sum of all fees owed for Allied's services (including
amounts owed to any third-party vendor).  
2
The agreement specified the responsibilities of Edwards
and Allied for handling, accounting, and distributing revenues
1050343
4
generated from loans closed through the branch.  Paragraph 2.8
of the agreement stated:
"2.8 All monies received by [Edwards] for
[Allied] or to be held for others shall be made
payable to [Allied] and received in trust by
[Edwards] for [Allied] and delivered immediately to
[Allied].  [Edwards] shall open no bank accounts in
[Allied's] name."
Along with the closing checks payable to Allied, Edwards also
sent Allied's corporate office copies of the settlement
statements that detailed the disbursement of funds at closings
and income-distribution reports she prepared to facilitate the
accounting of revenues between Allied and the Huntsville
branch office.  
After Edwards sent the closing checks to Allied, the
corporate office was authorized to remove two types of charges
from those revenues.  First, pursuant to Allied's policies and
procedures, Allied’s corporate office paid all branch-
operating expenses.  This obligation was reflected in
paragraph 2.3 of the agreement, which stated Allied was to
"promptly pay all bills for [the branch-operating expenses]
previously approved by [Edwards] up to the total cash
available to the Branch ... subject to the billings for such
being promptly submitted to [Allied]."  Second, Allied was
1050343
Allied did not maintain separate accounts for Edwards's
3
Huntsville branch office or for any of its other branches.
Beginning in 1999, Allied accounted for branch revenues,
payments of branch-operating expenses, and deductions of
corporate fees in Moneylink, an on-line software program. 
5
authorized in paragraph 3.2 of the agreement to deduct and pay
itself .30% of the amount of each loan closed by the
Huntsville branch office ("the corporate fee").  The corporate
fee was Allied's compensation for its support of the
Huntsville branch office.     
After Allied paid the branch-operating expenses and
deducted its corporate fee, the remaining funds were retained
in an account for the benefit of the Huntsville branch office
("the branch account").  Allied did not pay Edwards a salary
or guarantee her form of compensation.  Edwards could,
however, request draws from her branch account for any
purpose.  When Edwards withdrew funds from the branch account,
Allied sent her a check and generated a W-2 statement for
federal income tax purposes.  Moneys remaining in the branch
account after Allied made the authorized deductions were
profits or commissions to Edwards for her services.3
Edwards 
testified 
at 
trial 
that 
she 
maintained
independent personal records in the Huntsville branch office
1050343
6
that reflected what she considered to be the proper balance in
the branch account.   During the early years of the agreement,
the Huntsville branch office and Allied's corporate office had
a minimal number of accounting issues concerning the
administration of the branch.  According to Edwards, however,
she noticed accounting discrepancies beginning around 1999,
and Allied began failing to pay (or to pay timely) the branch-
operating expenses, failing to properly debit payroll taxes
and other charges, failing to pay draws from the branch
account upon Edwards's request, and failing to properly
calculate the corporate fee on transactions.  Around that
time, Edwards testified, she made dozens of oral inquiries and
complaints to Allied's officials and members of its staff
about Allied's handling of the branch account.  Also, Edwards
testified that Allied, which was then experiencing a period of
high growth and high employee turnover, was not responsive to
her complaints about Allied's failure to perform certain of
its duties under  the agreement.  Edwards did not send Allied
any written documents (correspondence, e-mail messages,
facsimiles, etc.) reflecting her complaints concerning the
corporate office's administration of the agreement. 
1050343
7
Beginning in 1998, Edwards began retaining checks that
were payable to Allied.  Between February 1998 and August
1999, Edwards deposited into one of her personal accounts
checks totaling $346 payable to Allied.   In December 2000
Edwards opened an account at SouthTrust Bank in the name of
"Vicki W. Edwards D/B/A  Allied Mortgage Capital Corporation"
("the d/b/a account").  Between December 2000 and August 2003,
Edwards received, endorsed, and deposited into the d/b/a
account checks payable to Allied totaling approximately
$381,000.  Between the late 1990s and 2002, Edwards  deposited
checks payable to Allied  totaling approximately $44,000 into
other bank accounts controlled by Edwards or her husband.  The
total face value of checks payable to Allied that Edwards
deposited into her personal accounts between 1998 and August
2003 was approximately $425,309.  Most of those funds were
generated from checks issued to Allied on closed loans
originated by the Huntsville branch office. Edwards did not
advise Allied or obtain its consent before depositing those
checks into her personal accounts.  According to Edwards, she
retained and deposited those checks out of her frustration in
1050343
8
dealing with Allied on accounting questions related to the
branch account. 
  
 Morever, on those closed loans that Edwards did not
disclose to Allied and for which she retained checks payable
to Allied, Edwards did not (1) calculate and send Allied its
corporate fee or (2) send Allied the settlement statements or
income-distribution reports Edwards furnished on the closings
she did report to the corporate office.  During the same
period in which Edwards did not report certain closings, on
many other loans originated through the Huntsville branch
office she did send Allied checks and closing documents.  Both
parties used the accounting practices contemplated by the
agreement on those loan closings Edwards reported to Allied.
Further, after Edwards opened the d/b/a account in 2000,
she began directly paying many branch-operating expenses
through the d/b/a account without submitting those expenses to
Allied for payment by the corporate office.  According to the
trial testimony of Edwards’s accountant, Edwards directly paid
approximately $155,000 of such expenses through the d/b/a
account.  During the same period in which Edwards did not
report all closings, she submitted, and Allied continued to
1050343
9
pay, 
certain 
branch-operating 
expenses 
in 
the 
manner
contemplated by the agreement.  
Allied performed an audit of the Huntsville branch office
in 2002.  At that time, Allied did not discover, and Edwards
did not disclose, that she had retained checks payable to
Allied and had not reported all loan closings.  Further,
Allied was unaware at that time that Edwards had directly paid
branch-operating expenses from the d/b/a/ account in violation
of the procedures in the agreement.  Edwards testified that
at the time of the 2002 audit she considered the agreement
still effective.
By 2003, Allied began to question the capability of
Edwards’s branch to interface with its corporate computer
network.  Further, an Allied auditor reported to the corporate
office that, during an August 11, 2003, visit to the branch,
the auditor was not treated in a businesslike manner.
Immediately after that visit, Allied terminated its agreement
with Edwards and closed the Huntsville branch office effective
August 13, 2003.  
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In pertinent part, paragraph 4.1 of the agreement stated:
4
"All files, records, documents, drawings,... proprietary
information, and similar items relating to the business of
[Allied], whether prepared by [Edwards] or otherwise coming
into [Edwards's] possession, shall remain the exclusive
property of [Allied] and shall not be copied or removed from
the premises of [Allied] under any circumstances whatsoever
without the prior written consent of [Allied]." 
10
Allied owned all the records at the Huntsville branch
office 
that 
related 
its 
mortgage-loan 
business.  
 
In
4
connection with terminating the agreement, representatives of
Allied appeared at the Huntsville branch office on August 13,
2003, without advance notice to Edwards, stated their
intention to secure all files related to Allied's business,
and removed 45 boxes of documents from the premises.  Upon
inspecting those records, Allied discovered a notice from
SouthTrust concerning the d/b/a account.    
After learning that Edwards had opened the d/b/a account
without its permission and had not reported certain loan
closings,  Allied sued Edwards on September 3, 2003, seeking
damages for violation of the agreement.  On Allied’s motion,
the trial court entered a temporary restraining order
directing Edwards to deliver to Allied any closing checks
payable to Allied that were then in Edwards’s possession ("the
checks on hand").  Edwards  complied with that order and
1050343
11
delivered to Allied a total of approximately $141,000 of
checks on hand, generated from closings that occurred between
May 2003 and August 2003.
On October 9, 2003, the trial court entered a preliminary
injunction ordering an accounting of all loans closed by the
branch, directing Edwards to return to Allied any personal
property in her possession that was owned by Allied that
Allied did not take on August 13, and freezing certain of
Edwards’s assets pending the accounting.  After Allied
deposited the checks on hand and deducted its corporate fee
and other charges from the branch account, the balance in that
account in June 2004 was $125,300 ("the branch-account closing
balance"). 
Allied asserted multiple claims in its action against
Edwards.  In its breach-of-contract claim, Allied alleged that
Edwards (a) violated paragraph 2.8 of the agreement when she
did not deliver closing checks payable to Allied and opened
bank accounts in both her and Allied’s names, and (b) used
Allied’s name in violation of paragraph 2.16.  Additionally,
Allied claimed that Edwards fraudulently suppressed the
existence of loan closings and checks payable to Allied;
converted those checks by endorsing and depositing them into
1050343
Allied also asserted claims against Edwards alleging
5
negligence, wantonness, money had and received, and unjust
enrichment.  Those claims were dismissed before the jury was
charged at trial.   
On August 13, 2003, Edwards was renting the branch office
6
space from a third party under an oral, month-to-month lease.
12
her personal accounts; and breached a fiduciary duty owed to
Allied to report loan closings and forward related checks and
documents to Allied.     
5
Edwards filed several counterclaims.  In her breach-of-
contract counterclaim, Edwards alleged that Allied failed to
perform its obligations under the agreement by not paying (or
by paying late) the branch-operating expenses; failing to pay
Edwards commissions that she had earned; improperly diverting,
or incorrectly accounting for, moneys in the branch account;
and not paying the branch-account closing balance to Edwards.
Additionally, Edwards claimed that, on August 13, 2003, Allied
(a) trespassed when its representatives refused to leave the
Huntsville branch office when requested,  and (b) converted
6
items of personal property (i.e., her personal financial
records and family memorabilia) that were in the boxes of
records that Allied removed from the Huntsville branch office
that day.
1050343
Paragraph 2.13 of the agreement stated that "[Edwards]
7
shall indemnify and hold [Allied]... harmless from and against
any and all claims, losses, damages, fines, penalties, causes
of action, suits, and liability of every kind, including all
expenses of litigation, court costs and attorney fees arising
on account of ... (2) any violation of this Agreement ...."
The agreement did not state that Edwards could recover her
attorney fees or other litigation costs if Allied breached its
obligations thereunder.
13
On November 11, 2004, Allied moved for partial summary
judgment on its conversion, breach-of-fiduciary-duty, and
fraudulent-suppression claims against Edwards.  The trial
court partially granted that motion with respect to liability
on Allied's conversion and fraudulent-suppression claims, but
withheld ruling on damages for those tort claims. 
The case proceeded to a trial before a jury on September
12, 2006.  At trial, Allied's evidentiary presentation
centered on proof of the agreement, an explanation of the
branch-accounting procedures contemplated by the agreement,
Edwards’s retention of checks payable to Allied, the face
amounts of those checks, and proof of the attorney fees and
other litigation expenses Allied had incurred.   Edwards
7
offered testimony about the following topics, among others, at
trial: the accounting discrepancies she orally reported to
Allied; Allied's failure over the term of the agreement to pay
1050343
As discussed below, the evidence presented by Edwards at
8
trial on her counterclaim related to Allied's alleged
underpayment of the principal sum of $215,000 and its
retention of the branch-account closing balance (i.e.,
$125,300). 
14
her 
approximately 
$215,000 
(excluding 
interest) 
on
transactions she had reported to Allied and that were
processed using the accounting procedures contemplated by the
agreement; Edwards’s direct payment of approximately $155,000
in branch-operating expenses through the d/b/a account without
requesting that Allied pay those expenses; Allied’s retention
of the branch-account closing balance (i.e., $125,300) when
the agreement was terminated; and the events of August 13,
2003, when Allied's representatives removed boxes, which
purportedly included Edwards’s personal property, from the
Huntsville branch office.  
After more than nine days of trial, the trial court
entered a judgment as a matter of law ("JML") in favor of
Allied on its breach-of-contract and breach-of-fiduciary-duty
claims against Edwards.  The trial court also entered a JML
for Allied on Edwards's breach-of-contract counterclaim.8
Following those rulings, the only questions remaining for the
jury were (a) the amount of compensatory damages to be awarded
1050343
Allied's proof of damage on its breach-of-contract claim
9
was limited to attorney fees and litigation expenses.
15
to Allied on its claims against Edwards of conversion,
fraudulent suppression, breach of fiduciary duty, and breach
of contract, and (b) the determination of liability and
damages, if Allied was found liable,  on Edwards's conversion
and trespass claims against Allied that arose from the events
of August 13, 2003. 
On September 25, 2005, the jury awarded damages of
$513,972 to Allied on its conversion, fraudulent-suppression,
and breach-of-fiduciary-duty claims.  On Allied’s breach-of-
contract claim, the jury awarded an additional $308,369 as
compensatory damages for the litigation expenses  it had
incurred.   The jury returned a verdict in favor of Allied on
9
Edwards's conversion and trespass claims.  On October 31,
2005, the trial court denied Edwards's motion to alter, amend,
or vacate the judgment that it had entered in favor of Allied
in accordance with the jury verdict.  Thereafter, Edwards
timely filed this appeal; she contests multiple rulings by the
trial court on liability and damages issues, seeks reversal of
the judgment entered for Allied, and requests a new trial of
all claims and counterclaims that were adjudicated below.  
1050343
16
Issues Presented for Review 
The following four questions are raised on appeal: (1) Did
the trial court err in its rulings related to the jury's award
of $513,972 as compensatory damages on Allied’s tort claims?
(2) Was the JML for Allied on its breach-of-contract and
breach-of-fiduciary-duty claims proper? (3) Was the JML for
Allied on Edwards's breach-of-contract counterclaim proper?
and (4) Did the trial court commit reversible error when it
(a) allowed Allied to cross-examine Edwards concerning (and
subsequently introduce into evidence) her amended federal
income tax returns, and (b) sustained Allied’s objection to,
and 
allegedly 
chastised 
Edwards’s 
counsel 
concerning,
Edwards's  argument about Allied's failure to call one of its
executives as a witness?  
  
1.  Compensatory Damages for Allied's Tort Claims
The jury awarded $513,972 as compensatory damages on
Allied’s 
conversion, 
breach-of-fiduciary-duty, 
and 
fraudulent-
suppression claims.  That award consists of $425,309 in actual
compensatory damages (i.e., the face value of the checks
payable to Allied that Edwards retained and deposited into her
personal accounts) and approximately $89,000 in prejudgment
interest.  Before closing argument, the trial court ruled that
1050343
The trial court told Edwards's counsel that, if he
10
argued that Allied's interests in the checks retained by
Edwards was less than their face value or that Edwards had
paid branch-operating expenses from the funds she converted,
it would give a correcting instruction and affirmatively
charge the jury that Allied was entitled to the face amount of
the checks.
17
Edwards's counsel was prohibited from arguing to the jury (a)
that Allied's damages related to the checks retained by
Edwards and deposited into her accounts were less than the
face value of those instruments or (b), alternatively, if
Allied's interest in those checks was the face value of the
checks, that the amount of damages should be mitigated by (i)
$155,000 (the amount of branch-operating expenses Edwards paid
directly from the d/b/a account) and (ii) the branch-account
closing balance ($125,300) retained by Allied.
  We apply a de
10
novo standard in reviewing the conclusions of law on which the
trial court based those rulings.  BT Sec. Corp. v. W.R. Huff
Asset Mgmt. Co., 891 So. 2d 310, 312 (Ala. 2004).   
Paragraph 2.8 of the  agreement provided: "All monies
received by [Edwards] for [Allied] or to be held for others
shall be made payable to [Allied] and received in trust by
[Edwards] for [Allied] and delivered immediately to [Allied]."
Edwards does not dispute that, during the term of the
1050343
Edwards did not attempt to appeal the trial court's
11
finding of liability on Allied's claims of conversion and
fraudulent suppression, and that finding is not an issue on
appeal.
18
agreement, she deposited into her personal accounts checks
totaling $425,309 that were payable to Allied.  Further, it is
undisputed that Edwards did not disclose to Allied the
existence of those checks and the related loan closings that
generated those funds.  Based largely on those facts, the
trial court found Edwards liable on Allied's conversion and
fraudulent-suppression claims when Allied moved for a partial
summary judgment.
  Edwards's challenge concerning the
11
judgment entered on Allied's tort claims is limited to the
amount of compensatory damages. 
Edwards argues that the jury's award on the tort claims
(i.e., the principal sum of $425,309) exceeded Allied's actual
loss.  Under the agreement, Allied retained a corporate fee of
0.30% of the amount of each closed loan that originated
through the branch.  Edwards's accountant testified at trial
that, if Edwards had sent Allied the $425,309 in checks she
had retained and deposited into her personal accounts, the
corporate fee earned by Allied on the related closings would
have totaled $64,467. Jeannie Seach, Allied's  representative
1050343
The  damages flowing from Edwards's conversion of checks
12
were common to all of Allied's tort claims.  The trial court
19
at trial, testified that Allied would have retained between
$67,000-$80,000 in additional corporate fees if Edwards had
forwarded all closing checks to Allied.  Accordingly,  Edwards
argues that Allied's actual economic loss on the checks
Edwards retained could not have been $425,309, but was
$64,467.
Allied contends that the trial court did not err when it
prohibited Edwards from arguing to the jury that Allied's
interest in the checks retained by Edwards was less than the
aggregate face value of the checks or that the $425,309
damages amount should be mitigated.  According to Allied,
Edwards had no interest in the converted checks under the
agreement, and she forfeited any right to argue mitigation by
concealing loan closings and retaining checks associated with
those closings that were payable to Allied.   
Counsel for Allied waived its claim for punitive damages
in his opening statement.  Further, the only damages that
Allied proved at trial concerning its tort claims were
Edwards's retention of checks payable to Allied totaling
$425,309.
 
12
1050343
instructed the jury that Allied did not claim any damages for
fraudulent suppression and breach of fiduciary duty over those
claimed for conversion.
20
Both parties reference § 7-3-420, Ala. Code 1975, in
support of their respective arguments.  That section, which
addresses the conversion of checks and other negotiable
instruments, states:
"(a) 
An 
instrument 
is 
converted 
under
circumstances which would constitute the conversion
under personal property law. ...
"(b)  In an action under subsection (a), the
measure of liability is presumed to be the amount
payable on the instrument, but recovery may not
exceed the amount of the plaintiff's interest in the
instrument." 
(Emphasis supplied.)  The Official Comment to § 7-3-420(b)
states: 
  "The 'but' clause in subsection (b) addresses the
problem of conversion actions in multiple payee
checks. Section 3-110(d) states that an instrument
cannot be enforced unless all payees join in the
action.  But an action for conversion might be
brought by a payee having no interest or a limited
interest in the proceeds of the check.  This clause
prevents such a plaintiff from receiving a windfall.
An example is a check payable to a building
contractor and a supplier of building material.  The
check is not payable to the payees alternatively. ...
The check is delivered to the contractor by the owner
of the building.  Suppose the contractor forges
supplier's signature as an indorsement of the check
and receives the entire proceeds of the check.  The
supplier should not, without qualification, be
1050343
21
entitled to recover the entire amount of the check
from the bank that converted the check.  Depending
upon 
the 
contract 
between 
the 
contractor 
and
supplier, the amount of the check may be due entirely
to the  contractor  ..., entirely to the supplier
..., or part may be due one and the rest to the other
...."
(Emphasis supplied.)
Edwards argues that the qualifying clause in § 7-3-420(b)
limits Allied's compensatory damages for the conversion of the
checks to the amount of the corporate fee Allied would have
earned had Edwards forwarded those instruments to Allied.
Allied does not contest that the face value of the checks
retained by Edwards exceeds the aggregate corporate fee it
would have earned from the related closings.  On the other
hand, Allied argues that the Official Comment to § 7-3-420(b)
restricts the qualifying language in subsection (b) to
circumstances involving multiple-payee checks.  Because the
checks 
converted 
by 
Edwards 
were 
payable 
to 
Allied
exclusively, Allied argues, the "measure of liability" and
Allied's interest in those checks is their face value.
Further, Allied asserts that Edwards's right to compensation
or to receive credit for expenses she paid from the checks she
converted are contract, not tort, considerations that are not
germane to the interpretation of § 7-3-420(b).   
1050343
22
Allied's arguments on the compensatory-damages issue are
not well-founded.  The trial court should not have prohibited
Edwards from arguing to the jury that Allied's interest in the
converted checks was less than their face value.  This Court
is bound by rules of statutory construction "to interpret the
language of [a statute] to mean exactly what it says and to
give effect to the apparent intent of the legislature."  IMED
Corp. v. Systems Eng'g, Assocs. Corp., 602 So. 2d 344, 349
(Ala. 1992).  The first clause in  § 7-3-420(b) states that
the measure of liability is presumed to be the amount payable
on the instrument.  Although the statute creates that
presumption, the plain language in the clause that immediately
follows the first clause indicates that the measure of
liability is not equal to the face amount if the "recovery ...
exceed[s] the amount of the plaintiff's interest in the
instrument."  The Official Comment to § 7-3-420(b) states that
the purpose of that qualifying clause is to "prevent ... a
plaintiff [with no interest or little interest in the proceeds
of the check] from receiving a windfall."  That Comment
concludes that the amount of recovery for conversion of a
check could  be "depend[ent] upon [a] contract" between the
parties. 
1050343
Black's Law Dictionary 1224 (8th ed. 2004) defines a
13
"rebuttable presumption" as "[a]n inference drawn from certain
facts that establish a prima facie case, which may be overcome
by the introduction of contrary evidence."
23
Section 7-3-420(b), Ala. Code 1975, creates a rebuttable
presumption that the amount of compensatory damages for
conversion of a negotiable instrument is the face value of the
instrument.
  Here, Allied presumptively established that
13
Edwards's liability for her conversion of checks payable to
Allied was $425,309 (i.e., the face value of the converted
checks). Edwards rebutted that presumption, however, when she
presented testimony that, considering the rights of the
parties in the agreement, Allied's "interest" in those checks
was $64,467--the aggregate corporate fee Allied would have
earned had Edwards delivered the closing checks she had
retained to Allied.  Compensatory damages are intended to
reimburse a claimant only for the loss suffered by reason of
its injury.  Torsch v. McLeod,  665 So. 2d 934, 940 (Ala.
1995). The jury's award of $425,309 (excluding prejudgment
interest) in compensatory damages on Allied's tort claims when
it incurred an actual loss ranging from $64,467 (according to
the testimony of Edwards's accountant) to  $80,000 (according
to the testimony of Allied's representative) was a windfall to
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In view of our holding, we need not consider Edwards's
14
alternative argument that she should have been allowed to
argue to the jury that the damages of $425,309 should be
mitigated by the sum of branch-operating expenses she paid
directly and by the branch-account closing balance.
24
Allied that is unsupported by the evidence of economic loss or
the law.   
In summary, the trial court erred when it prohibited
Edwards's counsel from arguing to the jury that Allied's
interest in the converted checks was less than the face amount
of those checks.  Because of that ruling, the jury's award of
$513,972 ($425,309 plus prejudgment interest) was in error.
We reverse the judgment on Allied's tort claims insofar as it
awarded $513,972 in damages and order a new trial on the issue
of compensatory damages for those claims.
  
14
 2.  Allied's Breach-of-Contract and Fiduciary-Duty Claims
The trial court entered a JML for Allied on its claims of
breach of contract and breach of fiduciary duty.  Edwards
requests a new trial on both of those claims. This Court
reviews de novo the grant or denial of a motion for a JML,
determining whether there was substantial evidence, when
viewed in the light most favorable to the nonmoving party, to
produce a factual conflict warranting jury consideration.
1050343
It was undisputed that Allied had an interest in the
15
vast preponderance of checks that Edwards converted. Edwards
contended that Allied did not own several checks that totaled
$346.  The jury disagreed and included those checks in the
amount it awarded as compensatory damages on the tort claims.
25
Alfa Life Ins. Corp. v. Jackson, 906 So. 2d 143, 149 (Ala.
2005) (citing Ex parte Helms, 873 So. 2d 1139, 1143-44 (Ala.
2003)).  "[S]ubstantial evidence is evidence 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."  West v. Founders Life Assurance
Co. of Florida, 547 So. 2d 870, 871 (Ala. 1989).  
The evidence supporting the JML for Allied on its breach-
of-contract and breach-of-fiduciary-duty claims is largely
uncontested.
  Edwards was obligated under paragraph 2.8 of
15
the agreement to send the corporate office all checks payable
to Allied that were generated from closings and to hold all
such moneys "in trust" for Allied.  Her retention of checks,
failure to report loan closings, direct payment of branch-
operating expenses, and opening of a bank account in Allied's
name were clear violations of the agreement. 
Edwards’s defense to Allied's breach-of-contract and
breach-of-fiduciary-duty claims was that Allied breached
1050343
Edwards primarily claims that Allied breached by making
16
accounting errors in managing the branch account.  
26
first, and it therefore could not afterwards enforce the
agreement against Edwards.
  See Gray v. Reynolds, 553 So. 2d
16
79, 82 (Ala. 1989) (a court should not enforce a contract when
the party seeking enforcement failed to perform his part of
the agreement). Stated differently, Edwards argues that
Allied’s 
breach 
excused 
her 
own 
nonperformance. 
 
See
Nationwide Mut. Life Ins. Co. v. Clay, 525 So. 2d 1339, 1343
(Ala. 1987)("a substantial breach by one party [to a contract]
excuses further performance by the other").   
The trial court rejected Edwards’s defense.  Even assuming
that Allied breached the agreement beginning in the late
1990s, the trial court concluded that, at that time, Edwards
must  have either (a) repudiated the agreement and sued for
Allied's breach, or (b) continued the agreement but waived any
claim against Allied for its purported breach.  Edwards did
not repudiate the agreement when Allied purportedly breached.
Ruling that Edwards had waived her right to sue Allied for its
breach by not repudiating the agreement, the trial court
determined that Edwards had no defense to Allied’s claims
alleging breach of contract and breach of fiduciary duty.
1050343
Edwards does not contest the jury’s calculation of those
17
damages, but instead contends that a new trial should be
awarded on Allied’s underlying contract theory.   
27
Absent that defense, the trial court entered a JML  on
Allied’s breach-of-contract claim and submitted the related
question of compensatory damages to the jury.  As damages for
Allied’s breach-of-contract claim, the jury awarded $308,369
for litigation expenses incurred by Allied.
  
17
The Restatement (Second) of Contracts discusses two
separate questions that arise if one party breaches its
obligations under a contract in which the parties have
promised to exchange performances.  The first is whether the
injured party is excused from performing his duties following
the breach. If the defaulting party materially breaches its
duties, the injured party may repudiate the agreement and not
perform prospectively. See Restatement (Second) of Contracts,
Ch. 10, intro. n. (1981) (the injured party is justified in
not performing his own obligations if the other party
materially fails to perform); Smith v. Clark, 341 So. 2d 720,
721 (Ala. 1977) (court did not enforce boundary-line agreement
against the plaintiff where the defendant failed to honor his
part of that agreement to move a structure off the disputed
1050343
28
area).  In lieu of repudiation following a material breach by
the other party, the injured party may elect to continue the
contract and retain its economic benefits.  See Restatement
§ 246, cmt. c, illus. 3.  
The second question is whether the injured party may claim
damages for the breach.  Contrary to the trial court's ruling,
the injured party is not required to repudiate the contract in
order to preserve its right to sue the other for breach of the
contract.  See Restatement, Ch. 10, intro. n. (parties
ordinarily 
desire 
and 
bargain 
for 
performance 
by 
the
defaulting party rather than a lawsuit).  After a breach the
injured party may elect to continue the agreement and claim
damages from the defaulting party for his nonperformance. See
Restatement § 246, cmt. b  (injured party's acceptance of
defective performance from the defaulting party does not
preclude recovery of damages for the breach).  When the
parties have exchanged promises of performances, however, the
injured party is not excused from performing his remaining
duties if he continues the agreement with knowledge of the
default by the breaching party.  "'A plaintiff cannot
simultaneously claim the benefits of a contract and repudiate
its burdens and conditions.'"  Southern Energy Homes, Inc. v.
1050343
If parties promise to exchange performances, the
18
determination as to which party first committed a material
29
Gregor, 777 So. 2d 79, 82 (Ala. 2000) (quoting Southern Energy
Homes, Inc. v. Ard, 772 So. 2d 1131, 1134 (Ala. 2000)).  As
stated in § 246 of the Restatement,  "an obligor’s acceptance
or his retention for an unreasonable time of the obligor’s
performance, with knowledge or reason to know of the
[obligee’s failure to perform], operates as a promise to
perform in spite of that non-occurrence ...." 
 Edwards continued the agreement and received its
financial benefits for approximately four years after she
learned of Allied's purported nonperformance.  Having made
that election, Edwards was not excused from performing her own
obligations under the agreement. See Restatement  § 246.  The
evidence is undisputed that, following Allied's purported
breach, Edwards did not send all closing checks to Allied,
failed to hold Allied's funds "in trust," opened a bank
account in Allied's name, and directly paid branch-operating
expenses from her d/b/a account.  Edwards's argument that
Allied "breached first" did not excuse her nonperformance
where, as here, she accepted the benefits of the agreement
with knowledge of Allied's alleged breach.
  Accordingly, the
18
1050343
breach is critical in deciding whether, upon the defaulting
party's failure to cure its breach, the other party is excused
from performing his remaining obligations.  See Restatement
§ 237, cmt. b. 
30
trial court did not err when it entered a JML in favor of
Allied on its breach-of-contract and breach-of-fiduciary-duty
claims. Further, the judgment awarding Allied $308,369 in
compensatory damages on its breach-of-contract claim is
affirmed.     
3.  Edwards’s Breach-of-Contract Counterclaim 
Edwards presented testimony concerning two categories of
revenues she alleged Allied owed her.  First, Edwards's
accountant testified that, over the life of the agreement,
Allied underpaid Edwards approximately $215,000 (excluding
interest) on transactions that were reported, processed, and
accounting 
entries 
made 
using 
Allied’s 
administrative
procedures for the agreement ("the accounting errors").
Edwards's accountant calculated this $215,000 by comparing
settlement statements and other records related to loan
closings that Edwards reported with records of payments she
received from Allied.      
Second, Edwards also proffered evidence indicating that
Allied retained the branch-account closing balance (i.e.,
1050343
There was approximately $17,000 in the branch account
19
when Allied terminated the agreement.  After Allied deposited
the $141,000, it apparently removed its corporate fee or
debited other sums from the branch account. 
Even though the trial court incorrectly ruled that
20
Edwards waived her breach-of-contract claim by not repudiating
the agreement, we could affirm the judgment for Allied on that
claim for any valid ground. See Bannan v. Smith, 784 So. 2d
293, 297 (Ala. 2001).     
31
$125,300).  Immediately after Allied sued Edwards, the trial
court issued a temporary restraining order directing Edwards
to deliver  to Allied all the checks on hand. Edwards complied
with 
that 
directive 
and 
surrendered 
checks 
totaling
approximately $141,000.  After Allied deposited those checks
and made entries in the branch account, the closing balance in
that account was $125,300.
   
19
Allied argues that we should affirm the trial court’s
judgment 
against 
Edwards 
on 
her 
breach-of-contract
counterclaim for two reasons.  First, Allied contends, Edwards
failed to present substantial evidence indicating that she did
not waive Allied's purported breach.
  Waiver is the
20
intentional relinquishment of a known right.  O'Neal v.
O'Neal, 284 Ala. 661, 663, 227 So.2d 430, 431 (1969).
"[I]ntentional 
relinquishment 
must 
be 
shown 
in 
an
unequivocable manner."  Putnam Constr. & Realty Co. v. Byrd,
1050343
32
632 So. 2d 961, 965 (Ala. 1992).  A party's intent to waive a
right may be found from conduct that is inconsistent with the
assertion of that right.  General Motors Acceptance Co. v.
Givens, 324 So. 2d 277, 279 (Ala. Civ. App. 1975).
   
Allied argues that Edwards waived her breach-of-contract
counterclaim by accepting the benefits of the agreement after
she learned of Allied's purported breach.  Allied notes that,
as late as 2002, Edwards acknowledged that the agreement was
still effective.  Allied also proved that Edwards did not
possess any documents (whether in paper or electronic form)
concerning 
her 
complaints 
about 
Allied's 
alleged
nonperformance under the agreement.  Based on these facts,
Allied posits that a reasonable juror could only find from
Edwards's conduct that she waived her breach-of-contract
counterclaim against Allied.
 
Whether a party has intentionally waived a known right is
normally a jury question. See Putnam Construction, 632 So. 2d
at  965.  Although Allied presented considerable evidence on
its waiver defense, we view the evidence in the light most
favorable to Edwards when reviewing the JML entered against
her.  Edwards testified that, during the term of the
agreement, she orally complained on dozens of occasions to
1050343
33
different representatives of Allied about its mismanagement of
the branch account.  According to Edwards, those complaints
concerned delays in paying (or failure to pay) branch-
operating expenses, erroneous accounting entries, failure to
remit commissions, and  failure to furnish a written
accounting after she made multiple requests. Although Allied
proved the absence of documentary evidence concerning these
oral complaints, it did not present any witness to rebut
Edwards's testimony that she had indeed made them.     
Under these facts, Edwards presented substantial evidence
to rebut Allied's defense that she had waived Allied's breach
of the agreement.  Because a jury question existed as to
whether Edwards intentionally relinquished her breach-of-
contract counterclaim,  Allied was not entitled to a JML on
the basis of its waiver defense.
In the alternative, Allied argues that the faithless-
servant doctrine should bar Edwards's claim for additional
compensation from Allied under the agreement.  After Edwards
rested her case, the trial court invoked that doctrine and
ruled that Edwards had forfeited any right to recover the
$141,000 in checks on hand that funded the branch-account
1050343
34
closing balance.  We apply a de novo standard in reviewing
that conclusion of law.  BT Sec. Corp., 891 So. 2d at 312. 
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
1050343
35
pursuant to which the agent could buy a one-half interest in
the property.  The purchaser conveyed that one-half 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.'..." 
1050343
Another case in which the doctrine was thoroughly
21
considered is Bessman v. Bessman, 214 Kan. 510, 520 P.2d 1210
(1974).  The employee in Bessman received a weekly salary to
manage a hotel-renovation project. The employee kept payments
from contractors who were working on the project and failed to
report those transactions to his employer. The employee
defended his retention of the undisclosed payments "as a form
of self-help, justified by the employer's slow pay of his
salary."  214 Kan. at 513, 520 P.2d at 1213.  The Bessman
Court applied the faithless-servant doctrine and held that the
employee was not entitled to his salary during the 48-week
"period of his unfaithlessness."  214 Kan. at 513, 520 P.2d.
at 1220.
36
223 Ala. at 536, 137 So. at 431.
    
21
As noted above, the trial court applied the faithless-
servant doctrine when it ruled that Edwards could not claim
the $141,000 in checks on hand she delivered to Allied after
the agreement was terminated.  Allied argues that Edwards's
conduct in concealing many loan closings and retaining closing
checks is the "bad faith toward the principal" on which the
doctrine is based.  Because of that deceitful conduct, Allied
argues, Edwards should forfeit all rights to the $141,000 of
checks on hand or any other compensation from Allied.
The facts support the application of the faithless-servant
doctrine in this case.  In the late 1990s, Edwards began
depositing checks payable to Allied into her personal
accounts.  Even though Allied had an interest in those funds,
1050343
In Dudley v. Colonial Lumber Co., supra, this Court
22
rejected the agent's argument that because of the principal's
errors in filling orders the agent was justified in keeping
certain sales commissions that were otherwise payable to the
principal.  The Dudley Court stated that it was the agent's
duty to advise the principal of its errors. 223 Ala. at 536,
137 So. at 431.
37
Edwards did not calculate, deduct from the funds, and send
Allied its corporate fee from the associated loan closings
that generated those checks.  Further, she did not disclose
numerous loan closings that she helped close through the
Huntsville branch office and did not forward to Allied records
of those transactions.  Edwards defends her conduct on the
basis that that Allied did not perform its obligations under
the agreement.  Edwards's self-help accounting practices were
unjustified, however, because she had a duty as an employee to
disclose 
loan 
closings, 
the 
checks, 
and 
the 
related
transactions to Allied.  Moreover, even if Allied's management
of the branch account was deficient, Edwards was not justified
in concealing those transactions. The inefficient conduct of
business by an employer does not excuse an employee's breach
of its duties of loyalty and fidelity to his employer.
   
22
Despite the soundness of the faithless-servant doctrine
and the substantial evidence of Edwards's unfaithful conduct,
1050343
38
that doctrine does not preclude all of Edwards's claims for
compensation in this case.  Allied agreed to pay commissions
to Edwards if she was terminated "for any reason."  Paragraph
3.4 of the agreement states:    
  "3.4 Upon termination of employment, for any
reason, Employee shall be paid, less any repayable
advances or other monies owed to Employer, for all
loans actively solicited, originated, and processed
by 
Employee 
which 
are 
approved 
prior 
to 
the
Employee's termination date if and only if actually
funded within thirty (30) days of termination.  With
regard to such loans at time of termination, Employee
will be paid a commission of one-half (0.50%) percent
of the loan amount only if the loan is actually
funded within thirty (30) days.  Said payment to
Employee [is] to be paid only after any funds that
may be owed by Employee to Employer are paid by
Employee to Employer or at Employer's option, after
the deduction by Employer of any such amounts still
due the Employer by Employee.  Employer may deduct
such amounts from any payment due to Employee which
payments shall be made as soon as Employer can
reasonably reconcile the accounts of Employer and
Employee." 
(Emphasis supplied.)
 Only in limited circumstances will this Court not
enforce an agreement willingly entered into by contracting
parties.  This Court discusssed this principle in Ex parte
Thicklin, 824 So. 2d 723, 732 (Ala. 2002):
"This Court has limited authority to deal with
the enforceability of contract terms. It can nullify
or reform a contract on the basis of fraud; it can
also nullify or reform a contract to eliminate any
1050343
39
unconscionable provisions or terms that violate
public policy.  As previously noted, a contract
provision that violates public policy can be subsumed
under the theory of substantive unconscionability.
... However, § 43 of the Constitution of Alabama of
1901 mandates the separation of judicial power from
legislative power and condemns the usurpation of the
power of one branch of government by the other. The
authority to declare public policy is reserved to the
Legislature, subject to limits imposed by the
Constitution. ..." 
(Footnote omitted.)
The agreement here, which was bargained for at arm's
length between persons who were experienced in the mortgage-
loan business, is not unconscionable.  Allied certainly was
free not to insert language in its agreement that allowed the
payment of commissions to Edwards even in the event of her
faithless service.  Instead, Allied agreed to pay Edwards
commissions upon her being terminated "for any reason" (which
includes faithless service), and we are duty bound to enforce
the plain meaning of paragraph 3.4.
Because Allied agreed to pay Edwards commissions if she
was terminated for any reason, and in light of our discussion
above on Allied's waiver defense, we reverse the JML entered
against Edwards on her breach-of-contract counterclaim  and
order that a new trial be held on her breach-of-contract
counterclaim.  Subject to the jury's resolution of Allied's
1050343
The trial's court's rulings on Edwards's counterclaim
23
precluded 
full 
development 
of 
her 
breach-of-contract
theories.  Paragraph 3.4 states that Edwards was to receive a
.50% commission on certain loans funded within 30 days of her
termination.  It is not clear from the record how that or
other provisions in 3.4 apply to the categories of moneys in
dispute. Provided Edwards can prove that, pursuant to
paragraph 3.4, the parties intended she would be paid the
branch-account closing balance of $125,300 and the approximate
$215,000 in purported accounting errors upon her termination,
she may claim those moneys as damages on retrial. 
  
40
waiver defense and its other defenses, on retrial Edwards may
assert any claims for commissions that are covered under
paragraph 3.4 of the agreement.
   
23
4.  Other Alleged Errors by Trial Court
The jury returned a verdict for Allied on Edwards's claims
of conversion and trespass that arose from the events that
occurred on August 13, 2003.  On that date, Allied's
representatives 
entered 
the 
Huntsville 
branch 
office,
retrieved Allied's business records, and allegedly converted
items of personal property owned by Edwards.  Edwards argues
that the trial court committed two errors that warrant a new
trial on these claims.
a.  Evidentiary Rulings on Amended Tax Returns
The commissions Allied paid Edwards from the branch
account constituted income to her for federal income tax
1050343
41
purposes.  Also, branch-operating expenses were deductible as
ordinary business expenses on Edwards's tax returns.  Edwards
did not, however, initially report income or claim expense
deductions on her tax returns with respect to the transactions
she did not disclose to Allied.  After Allied sued in 2003,
Edwards amended her tax returns for the prior years to
recognize those transactions. 
For impeachment purposes, the trial court allowed Allied
to cross-examine Edwards concerning the timing and filing of
her amended returns.  Those returns were also admitted into
evidence.  Edwards objected to those evidentiary rulings on
the basis that they allowed Allied to impugn Edwards's
credibility in violation of Rule 608(b), Ala. R. Evid. Rule
608(b) provides:
"Specific instances of the conduct of a witness, for
the purpose of attacking or supporting the witness's
credibility, other than conviction of crime as
provided in Rule 609, may not be inquired into on
cross-examination of the witness nor proved by
extrinsic evidence."
 
Edwards argues that Rule 608(b) proscribes cross-examination
concerning "'specific acts of misconduct by [a witness] which
have no relevancy except as tending to show that [the witness]
is a person of bad character as a whole or with respect to
1050343
42
truth and veracity.'" J.B. Hunt Transport, Inc. v. Credeur,
681 So. 2d 1355, 1361 (Ala. 1996) (quoting C. Gamble,
McElroy's Alabama Evidence, § 140(10)(4th ed. 1991)).  Edwards
contends that the inquiry into her amended tax returns was
error because, she argues, those returns were immaterial to
the issues in the case.  Allied argues that the impeachment of
Edwards concerning her amended returns and tax-reporting
practices was valid after she testified that Allied's
nonperformance of its obligations under the agreement had
prevented Edwards from "making a living." 
A trial court has "wide discretion in matters of cross-
examination."  Hyche v. Medical Ctr. East, Inc., 711 So. 2d
1017, 1019 (Ala. Civ. App. 1997).  Rulings on those matters
"will not be reversed absent a showing of gross abuse of that
discretion that caused substantial injury to the objecting
party."  711 So. 2d at 1019.  Furthermore, a judgment will not
be reversed for the "improper admission or rejection of
evidence ... unless in the opinion of the court to which the
appeal is taken ... after an examination of the entire cause,
it [appears] that the error complained of has probably
injuriously affected substantial rights of the parties."  Rule
45, Ala. R. App. P.  Without deciding whether the trial court
1050343
43
exceeded its discretion in allowing cross-examination based on
the amended tax returns, Edwards has not demonstrated the
requisite substantial injury required for a reversal of the
trial court's judgment based on  Rule 45.      
  b.  Closing Argument About Witness not Called by Allied
  
Without advance notice to Edwards, representatives of
Allied came to the Huntsville branch office on August 13, 2003
--the date the agreement was terminated--to retrieve Allied's
records. Cheryl Camp, an employee of the Huntsville branch
office, testified that Jim Hodge, Allied's president, who was
based 
in 
Houston, 
Texas, 
threatened 
in 
a 
telephone
conversation held on that day "to tie her up in litigation for
life" if she did not cooperate with Allied's representatives.
During closing argument, Edwards's counsel attempted to argue
to the jury the significance of Allied's failure to call Hodge
as a witness.  Allied objected to that argument on the grounds
that Edwards could have deposed Hodge before trial and that he
was "equally accessible" to either party.  The trial court
sustained that objection, prohibited Edwards's argument, and
stated the following to Edwards's counsel in the presence of
the jury: 
1050343
44
"The Court:  You can subpoena [Mr. Hodge] or take his
deposition, Mr. Ogle.  That is improper argument and
the Court hereby instructs you not to make that
argument, and the jury will ignore it."   
  
Edwards moved for a mistrial following that exchange.  The
trial court denied that motion.  On appeal, Edwards argues
that the trial court erred when it prohibited her argument
about Hodge's failure to testify.  Further, Edwards argues
that the trial court's "castigation" of her counsel in the
presence of the jury caused her such substantial injury that
a new trial is warranted on her tort claims.        
The standard of review is whether the trial court exceeded
its discretion in prohibiting part of Edwards's closing
argument and denying her related motion for a mistrial.  Super
Valu Stores, Inc. v. Peterson, 506 So. 2d 317, 325 (Ala.
1987).  A court exceeds its discretion when its ruling is
based on an erroneous conclusion of law or when it has acted
arbitrarily without employing conscientious judgment, has
exceeded the bounds of reason in view of all circumstances, or
has so far ignored recognized principles of law or practice as
to 
cause 
substantial 
injustice. 
Hall 
v. 
Larry 
Latham
Auctioneers, Inc., 607 So. 2d 154, 155 (Ala. 1992); Dowdy v.
Gilbert Eng'g Co., 372 So. 2d 11, 13, (Ala. 1979).  
1050343
45
A party may not comment on the failure of his opponent to
call a witness if that witness is "equally accessible" to both
parties.  Donaldson v. Buck, 333 So. 2d 786, 787 (Ala. 1976).
The fact that either party can subpoena a potential witness
does not automatically make that witness equally accessible.
333 So. 2d at 788. When the testimony of the witness would
favor one party over the other, the witness  is not "equally
accessible." 
 
See, 
e.g., 
Harrison 
v. 
Woodley 
Square
Apartments, Ltd., 421 So. 2d 101, 103 (Ala. 1982)(testimony of
friend of plaintiff's likely would favor plaintiff); Drs.
Lane, Bryant, Eubanks & Dulaney v. Otts, 412 So. 2d 254 (Ala.
1982)(potential witness who was a physician was not equally
accessible when his testimony likely would favor the defendant
physicians).  
Here, 
Hodge--Allied's 
president--was 
not 
equally
accessible to Edwards.  Notwithstanding, Allied argues that
the trial court did not commit error when it precluded
Edwards's argument unless the "noncalled person had knowledge
of a material matter and is hostile to or biased against the
party offering the comment."  C. Gamble, McElroy's Alabama
Evidence § 191.04(b)(5th ed. 1995).  
1050343
We also disagree with Edwards's contention that the
24
manner in which the trial court prohibited Edwards's closing
argument regarding Hodge's failure to testify brought her
counsel 
"into 
contempt 
before 
the 
jury," 
caused 
her
prejudicial injury, and warrants reversal. Gwin v. State, 425
So. 2d 500, 507 (1982) (a trial judge should not express any
opinion, use language, or engage in other conduct that brings
an attorney into contempt). When the trial court prohibited
that argument, the above-noted exchange ensued in which
counsel debated the propriety of that ruling in the presence
of the jury.  That exchange would not have occurred had
Edwards's counsel approached the bench and requested a sidebar
conference.  Even if the trial court erred when it limited
closing argument, which it did not, Edwards's counsel invited
any error that arose from the exchange before the jury. See,
e.g., Phillips v. Anesthesia Servs., P.C., 565 So. 2d 127, 129
46
According to Edwards's testimony, she had numerous
telephone conversations with, and left multiple messages for,
Hodge about administrative problems related to the agreement
that she had experienced during its term.  However, the
breach-of-contract claims were not in dispute at the time of
Edwards's closing argument, and the scope of that argument was
limited to rebuttal comments concerning her claims of trespass
and conversion, which were then pending.  Although Hodge was
not equally accessible to Edwards, she has not demonstrated
that Hodge had knowledge of matters that were material to
those tort claims.  Absent that showing, Edwards's closing
argument 
regarding 
Hodge's 
failure 
to 
testify 
was
unwarranted.24
1050343
(Ala. 1990) (a party may not avail himself of an error into
which he led the trial court).  The manner in which the trial
court limited Edwards's closing argument cannot be said to be
reversible error.  
47
In summary, the trial court did not cause substantial
injury to Edwards in its evidentiary rulings related to her
amended tax returns.  Additionally, the trial court did not
commit error when it prohibited Edwards's counsel from
referring in closing argument to Hodge's failure to testify or
when it discussed that ruling with Edwards's counsel before
the jury.  Accordingly, the judgment for Allied on Edwards's
tort claims is affirmed. 
Conclusion 
We affirm the judgment in favor of Allied to the extent
that it found Edwards liable on Allied's claims of breach of
contract and breach of fiduciary duty.  We also affirm that
portion of the judgment for Allied that awarded it $308,369 as
compensatory damages on its breach-of-contract claim.
We reverse the judgment in favor of Allied insofar as it
awarded $513,972 in damages on its claims against Edwards
alleging conversion, fraudulent suppression, and breach of
fiduciary duty; we remand the case for the trial court to
1050343
48
conduct a new trial to reconsider the amount of compensatory
damages recoverable by Allied on those tort claims.  
We affirm the judgment entered against Edwards on her
claims alleging trespass and conversion.  We reverse the trial
court's judgment on Edwards's counterclaim alleging breach of
contract and remand the case for the trial court to conduct a
new trial on that counterclaim. 
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED WITH
INSTRUCTIONS.
See, Harwood, Stuart, and Bolin, JJ., concur.