Title: Shoals Extrusion, LLC v. Beal

State: alabama

Issuer: Alabama Supreme Court

Document:

REL: April 19, 2019
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
OCTOBER TERM, 2018-2019
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1170673
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Shoals Extrusion, LLC
v.
Lonnie Beal
Appeal from Lauderdale Circuit Court
(CV-15-900394)
MITCHELL, Justice.
Lonnie Beal sued his former employer, Shoals Extrusion,
LLC, an aluminum-extrusion business in Florence, after his
employment there was terminated in November 2015.  Beal
alleged that Shoals Extrusion breached the terms of his
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employment agreement by refusing to give him severance
compensation and benefits to which he claims he was entitled. 
The Lauderdale Circuit Court entered a summary judgment in
favor of Beal and awarded him $80,800.  This appeal followed. 
We reverse the summary judgment and remand the cause for
further proceedings.
Facts and Procedural History
In late 2014, Beal was working at an extrusion business
in Florence when his supervisor, Wilbur Craven, asked him if
he would be interested in becoming the plant manager for
Shoals Extrusion, a new business Craven and other individuals
were starting.1  Beal responded in the affirmative, and, in
early 2015, he began formal discussions with Craven and Wade
Gilchrist, another owner of Shoals Extrusion, about the new
business and what the terms of his employment would be.  After
an agreement was reached in principle, Beal requested that
1The United States Court of International Trade has
described extrusion as a process by which raw material in the
form of "billets" is pushed "through a precision die that
produces a raw shape usually called a 'blank' that is then
further machined, finished, or coated as required for its
future manufacturing or consumer use."  Aluminum Extrusions
Fair Trade Committee v. United States, 968 F. Supp. 2d 1244,
1247 n. 6 (Ct. Int'l Trade 2014).
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Shoals Extrusion prepare a written employment agreement
memorializing the agreed-upon terms.  
On March 27, 2015, Beal and Craven executed a five-year
employment agreement that obligated Shoals Extrusion to pay
Beal a $20,000 signing bonus and a first-year salary of
$70,000.  Shoals Extrusion also agreed to pay Beal's health-
insurance premiums.  In return, Beal agreed that "[t]he work
week shall be [a] 40 plus hour work week and the days and the
time shall be as set by [Shoals Extrusion]." The agreement
further provided that, if Shoals Extrusion terminated Beal's
employment during the five-year term of the agreement, it
would pay Beal his "wages and benefits for the term of [one]
year."  For his part, Beal agreed that, if he chose to leave
Shoals Extrusion before the five-year term of the agreement
expired, he would pay back the $20,000 signing bonus within 30
days of leaving the employ.  
On April 1, 2015, Beal began working for Shoals
Extrusion.  In July 2015, Shoals Extrusion opened its facility
and started production with one shift beginning at 7:00 a.m.
and continuing for approximately 8 to 10 hours, depending on
the volume of orders.  In August 2015, Shoals Extrusion began
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operating a second shift.  According to Craven, the employees
voted to move the start time of the first shift up to 6:00
a.m. so the second shift did not have to work as late.  Beal,
however, refused to change his schedule and continued to
arrive at the facility at 7:00 a.m. or later.
Craven and Gilchrist spoke with Beal on multiple
occasions about Beal working additional hours to increase
production at the facility.  Craven and Gilchrist stated,
however, that Beal repeatedly indicated that he was not
willing to work more hours than he was working unless he
received an ownership interest in Shoals Extrusion.  They
stated that Beal further told them that he would, in fact,
reduce the hours he was working unless he received the
ownership interest he was seeking.  Craven stated that he
eventually learned that Beal was also telling certain
individuals in the industry that Shoals Extrusion was having
financial problems.  Shoals Extrusion subsequently decided to
terminate Beal's employment.
On November 23, 2015, Craven and Gilchrist met with Beal
and terminated his employment with Shoals Extrusion.  During
the meeting, they asked Beal to execute a "severance and
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general release agreement" that would, by its terms, obligate
Shoals Extrusion to pay Beal's salary through December 31,
2015, in return for Beal's releasing any claims he might have
against Shoals Extrusion.  Beal declined to sign the proposed
severance agreement.  Shoals Extrusion thereafter made no
further payments to Beal, despite his demand that it owed him
one year's salary plus benefits under the terms of the
severance-pay provision in his employment agreement.
On December 18, 2015, Beal sued Shoals Extrusion,
asserting 
a breach-of-contract 
claim 
based 
on 
Shoals
Extrusion's failure to pay him severance benefits following
the termination of his employment.  On February 17, 2016, Beal
moved for a summary judgment on his claim.  Shoals Extrusion
filed a response opposing the motion, and the trial court
conducted a hearing to consider the parties' arguments. 
On April 7, 2016, the trial court granted Beal's summary-
judgment 
motion, 
reasoning 
that 
Shoals 
Extrusion 
was
effectively arguing that it had terminated Beal's employment
for cause despite the absence of a provision in the employment
agreement authorizing termination for cause.  The trial court
noted Shoals Extrusion's defense that Beal had breached the
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implied duty of good faith by threatening to reduce his
working hours unless he was given an ownership interest in the
company, but the trial court found there was no evidence
indicating that Beal had actually followed through on that
threat.  Although the trial court granted Beal's summary-
judgment motion and held that Shoals Extrusion had breached
the severance-pay provision in the employment agreement, the
court did not assess damages, and no final judgment was
entered at that time.
On July 20, 2016, Beal amended his complaint to add
Gilchrist as a defendant and to assert additional claims.  The
parties subsequently engaged in discovery related to those
claims.  On January 5, 2018, the trial court dismissed all 
the claims Beal had added in his amended complaint, leaving
the amount of damages to be assessed on Beal's breach-of-
contract claim against Shoals Extrusion as the only remaining
issue before the court.  On March 23, 2018, the trial court
entered a final judgment reaffirming its April 7, 2016, order
in which it held Shoals Extrusion liable for breaching the
severance-pay provision in Beal's employment agreement and
assessing damages in the amount of $80,800 –– $70,000 for one
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year of salary and $10,800 for one year of health-insurance
premiums.  Shoals Extrusion thereafter filed a timely notice
of appeal to this Court.
Standard of Review
Shoals Extrusion seeks the reversal of the summary
judgment awarding Beal $80,800 on his breach-of-contract
claim.  We review a summary judgment under the following
standard:  
"This Court's review of a summary judgment is de
novo.  Williams v. State Farm Mut. Auto. Ins. Co.,
886 So. 2d 72, 74 (Ala. 2003).  We apply the same
standard of review as the trial court applied.
Specifically, we must determine whether the movant
has made a prima facie showing that no genuine issue
of material fact exists and that the movant is
entitled to a judgment as a matter of law. Rule
56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of
Alabama v. Hodurski, 899 So. 2d 949, 952-53 (Ala.
2004).  In making such a determination, we must
review the evidence in the light most favorable to
the nonmovant.  Wilson v. Brown, 496 So. 2d 756, 758
(Ala. 1986).  Once the movant makes a prima facie
showing that there is no genuine issue of material
fact, the burden then shifts to the nonmovant to
produce 'substantial evidence' as to the existence
of a genuine issue of material fact.  Bass v.
SouthTrust Bank of Baldwin County, 538 So. 2d 794,
797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12."
Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39
(Ala. 2004).
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Discussion
"In order to recover on a breach-of-contract claim, a
party must establish: (1) the existence of a valid contract
binding the parties; (2) the plaintiff's performance under the
contract; (3) the defendant's nonperformance; and (4)
damages."  Capmark Bank v. RGR, LLC, 81 So. 3d 1258, 1267
(Ala. 2011).  In the trial court, Beal made a prima facie
showing that those elements were established by 
submitting the
following: 
 
the 
employment agreement 
containing 
the 
severance-
pay 
provision; 
Shoals 
Extrusion's admission that 
it 
terminated
Beal's employment on November 23, 2015; and Beal's affidavit
describing the execution of the employment agreement, the
start and termination of his employment, the wages and
benefits he was receiving at the time of termination, and
Shoals Extrusion's failure to pay him any moneys subsequent to
that termination.  This evidence was sufficient to shift the
burden to Shoals Extrusion to show by substantial evidence
that there is a genuine issue of material fact on at least one
of the required elements.
Shoals Extrusion argues to this Court, as it did to the
trial court, that there is a genuine issue of material fact
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about whether Beal performed his obligations under the
employment agreement.  Shoals Extrusion asserts that Beal did
not perform his duties under the employment agreement and, for
that reason, he cannot seek to enforce that agreement.  See
Nationwide Mut. Ins. Co. v. Clay, 525 So. 2d 1339, 1343 (Ala.
1987) ("Under general principles of contract law, a
substantial breach by one party excuses further performance by
the other."); Smith v. Clark, 341 So. 2d 720, 721 (Ala. 1977)
("[T]his Court should not enforce an agreement where the party
seeking to enforce the agreement has failed to perform his
part of the bargain.").  
Beal contends that Shoals Extrusion had no right under
the terms of the employment agreement to terminate his
employment for cause.  As support, Beal relies on Southern
Medical Health System, Inc. v. Vaughn, 669 So. 2d 98, 100-01
(Ala. 1995), in which this Court rejected an employer's
argument that it could terminate a contract employee's
employment for cause despite there being no "provisions
authorizing termination for 'cause'" in the employment
agreement.  But Shoals Extrusion does not argue that it had a
right to terminate Beal for cause.  Instead, it argues that
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Beal breached the employment agreement, thereby excusing
Shoals Extrusion from its obligations under that agreement. 
Shoals Extrusion supported its argument in the trial
court by submitting affidavits from Craven and Gilchrist in
which one or both of them swore:  (1) that Beal refused to
arrive for work as directed at 6:00 a.m.; (2) that Beal stated
that he would not work the additional hours Shoals Extrusion
requested him to work unless he received an ownership interest
in the business; (3) that Beal threatened to begin working
reduced hours; and (4) that Beal began telling other
individuals in the industry that Shoals Extrusion was having
financial problems.  Shoals Extrusion argued that, by these
acts, Beal breached both the express terms of the employment
agreement and the implied duty of good faith and fair dealing
inherent in any contract.  See generally American Cast Iron
Pipe Co. v. Williams, 591 So. 2d 854, 857 (Ala. 1991)
(explaining that all contracts, including the employment
contract at issue in that appeal, "impose an obligation to act
in good faith and to deal fairly").
Craven's 
and 
Gilchrist's 
affidavits 
constitute
substantial evidence that Beal breached the express terms of
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the employment agreement –– which required Beal to work a "40
plus hour work week [with] the days and the time ... set by
[Shoals Extrusion]" –– by refusing to begin work as directed
at 6:00 a.m., and by refusing to work the additional hours he
was requested to work.  This evidence created a genuine issue
of material fact regarding Beal's performance under the
contract, thereby making a summary judgment on the breach-of-
contract claim inappropriate.  Whether Beal breached the
employment agreement and whether that breach was material to
the contract are ultimately questions for the 
fact-finder that
cannot be resolved at the summary-judgment stage.  See Karl-
Storz Endoscopy-America, Inc. v. Integrated Med. Sys., Inc.,
808 So. 2d 999, 1013 (Ala. 2001) ("Whether a breach is
material is ordinarily a question for the trier of fact.").
Conclusion
Beal sued his former employer Shoals Extrusion after his
employment was terminated in November 2015, only eight months
into the five-year term contemplated by the employment
agreement he had executed.  Beal alleged that, under the
severance-pay provision in his employment agreement, he was
entitled to one year's salary and benefits if his employment
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was terminated within that five-year term.  The trial court
agreed, entering a summary judgment against Shoals Extrusion
and awarding Beal damages of $80,800.  There is, however, a
genuine issue of material fact about whether Beal first
breached the terms of the employment agreement and whether
such breach excused further performance by Shoals Extrusion
under that agreement.  Accordingly, the summary judgment is
reversed and the cause is remanded for further proceedings
consistent with this opinion.
REVERSED AND REMANDED.
Parker, C.J., and Shaw, Bryan, and Mendheim, JJ., concur.
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