Title: Spencer v. S. Boyd, Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: 09/28/2012
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, 2012
_________________________
1110319
_________________________
Ex parte Shirley Spencer and Christy Gee
PETITION FOR WRIT OF MANDAMUS
(In re:  Shirley Spencer and Christy Gee
v.
S. Boyd, Inc., et al.)
(Greene Circuit Court, CV-08-900042)
PARKER, Justice.
Shirley Spencer and Christy Gee petition this Court for
a writ of mandamus directing the Greene Circuit Court to
1110319
vacate its judgment granting the motion of K & K Excavating,
LLC ("K & K"), to enforce a forum-selection clause and
transferring the petitioners' action against K & K to the
Tuscaloosa Circuit Court.
Facts and Procedural History
On February 27, 2007, Spencer contracted with K & K for
the installation of a septic system at the petitioners' house
in Eutaw.  The petitioners separately contracted with S. Boyd,
Inc. ("Boyd"), to conduct the excavation work necessary to
install the septic system.  It is undisputed that the work of
installing the septic system was performed under a written
agreement between Spencer and K & K ("the contract").  The
contract included a forum-selection clause, which states that
"[v]enue and jurisdiction shall strictly and only be in the
courts of Tuscaloosa County, Alabama."
Following the installation of the septic system, the
petitioners allege, they "began experiencing problems and
noticing defects, incomplete work, inadequate work and other
problems with their septic system and land."  As a result, on
July 30, 2008, the petitioners sued K & K and Boyd, along with
several fictitiously named defendants, in the Greene Circuit
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Court, alleging breach of contract; breach of express
warranty; 
breach 
of 
implied 
warranty 
of 
fitness, 
habitability,
and merchantability; and negligence, under numerous theories.
The petitioners filed an amended complaint on December 30,
2008, adding Richard Stephen Boyd, the owner of Boyd, as a
defendant (Boyd and Richard Stephen Boyd are hereinafter
referred to collectively as "the Boyd defendants").
On October 17, 2008, K & K answered the petitioners'
complaint, 
asserting 
improper 
venue 
as 
a 
defense.
Specifically, K & K argued that the forum-selection clause in
the contract was applicable to the petitioners' claims.  On
the same day, K & K also initiated the discovery process by
submitting its first set of interrogatories and request for
the production of documents, including a request for the
production of "[a]ny and all contracts and warranties [the
petitioners] claim[ed] were breached by any defendant."
Extensive 
discovery 
ensued, 
including 
depositions 
taken 
by 
all
parties and a motion to compel the petitioners to respond to
K & K's interrogatories and request for the production of
documents.  During the discovery process, K & K also
subpoenaed nonparties.
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On July 22, 2009, the Boyd defendants answered the
petitioners' amended complaint; the Boyd defendants made no
argument concerning forum.
On November 4, 2010 -- more than two years after K & K
had filed its answer to the petitioners' complaint, in which
K & K invoked the forum-selection clause -- K & K filed its
motion entitled "motion to transfer venue or, in the
alternative, motion to enforce forum selection clause" ("the
transfer motion").
On January 27, 2011, following numerous pretrial
conferences, the Greene Circuit Court set the case for a trial
scheduled for April 4, 2011.
On February 15, 2011, the petitioners filed a response to
the transfer motion arguing that K & K had waived its right to
invoke the forum-selection clause as a result of K & K's
failure to timely file the transfer motion.  The petitioners
also argued that they would be prejudiced if their case was
transferred out of the Greene Circuit Court because the case
had already been set for trial and a transfer of the case
would result in an unnecessary delay.  The transfer motion was
set for a hearing on March 23, 2011.  On March 14, 2011, the
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parties filed a motion to continue the March 23, 2011, hearing
on the transfer motion to allow the parties to attempt to
mediate the case; this motion was also presented before the
Greene Circuit Court on the day of the hearing.  The parties
also filed a motion to continue the April 4, 2011, trial.  The
trial court granted both motions on March 29, 2011.
When mediation of the case proved unsuccessful, the
Greene Circuit Court ordered another pretrial conference 
to 
be
held on August 25, 2011.  On August 23, 2011, K & K filed a
reply brief in support of the transfer motion; the petitioners
responded.  At the August 25, 2011, pretrial conference, the
Greene Circuit Court heard oral argument on the transfer
motion.  On August 31, 2011, the Boyd defendants filed a
motion to join the transfer motion.  On October 30, 2011, the
Greene Circuit Court entered an order granting the transfer
motion as to K & K and severing the petitioners' claims
against K & K from those asserted against the Boyd defendants;
the Greene Circuit Court denied the transfer motion as to the
Boyd defendants.
On November 17, 2011, Mr. Boyd filed a "suggestion of
bankruptcy" in the Greene Circuit Court, which stated:
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1110319
"COMES NOW the Defendant, Richard Stephen Boyd
('Boyd'), and suggests the filing of a Petition for
Relief pursuant to Chapter 13 in the United States
Bankruptcy Court for the Northern District of
Alabama. The Chapter 13 Petition was filed on or
about September 9, 2011 .... Boyd further suggests
that this action has been stayed by operation of
Title 11 U.S.C. § 362."
On November 29, 2011, the Boyd defendants filed a motion
to alter, amend, or vacate the Greene Circuit Court's October
30, 2011, order, seeking to have the claims against them
transferred to the Tuscaloosa Circuit Court as well.  Before
the Greene Circuit Court ruled on the Boyd defendants' motion
to alter, amend, or vacate, the petitioners petitioned this
Court for a writ of mandamus directing the Greene Circuit
Court to vacate its judgment granting the transfer motion on
December 12, 2011; the petitioners have not requested that the
proceedings in the Greene Circuit Court be stayed.1
As a result of Mr. Boyd's filing a petition for
bankruptcy, the petitioners filed a motion to dismiss Mr. Boyd
as a defendant, without prejudice, which the Greene Circuit
Court granted on January 26, 2012.  The petitioners also state
The filing of a petition for the writ of mandamus does
1
not divest the trial court of jurisdiction or stay the case.
State v. Webber, 892 So. 2d 869, 871 (Ala. 2004).
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1110319
in their reply brief that they "withdraw their [p]etition as
to their claims against Mr. Boyd individually."2
Standard of Review
"'A writ of mandamus is a
"'"drastic 
and 
extraordinary
writ, that will issue only where
there is: (1) a clear legal right
in the petitioner to the order
sought; (2) an imperative duty
upon the respondent to perform,
accompanied by a refusal to do
so; (3) the lack of another
adequate remedy; and (4) properly
invoked 
jurisdiction 
of 
the
court."'
"Ex parte Wood, 852 So. 2d 705, 708 (Ala. 2002)
(quoting Ex parte United Serv. Stations, Inc., 628
So. 2d 501, 503 (Ala. 1993))."
Boyd filed a motion to strike the order attached to the
2
petitioners' reply brief, arguing that the order dismissing
Mr. Boyd from the case was not part of the record.  Boyd has
not cited any relevant authority to support its argument. 
Instead, Boyd relies upon authorities indicating that this
Court cannot consider matters outside the record when
considering a direct appeal.  This case is distinguishable in
that what is before us is a petition for a writ of mandamus;
no record has been certified as final by the trial court.
We note that Boyd also filed a motion to strike one of
the attachments to the petition, a document entitled "Alabama
Unified Judicial System, Fiscal Year 2010 Annual Report &
Statistics," on the basis that the report had not been
submitted to the Greene Circuit Court for its consideration.
We will not consider the report in our consideration of the
petition.
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Ex parte Fuller, 955 So. 2d 414, 415 (Ala. 2006).
Discussion
Initially, Boyd argues that this Court lacks jurisdiction
over the petition based on the automatic stay entered pursuant
to 11 U.S.C. § 362 at the time Mr. Boyd filed his suggestion
of bankruptcy on November 17, 2011.  We disagree.  The
automatic stay entered in the Greene Circuit Court as a result
of Mr. Boyd's filing his suggestion of bankruptcy applied only
to litigation against Mr. Boyd, not against his solvent
codefendants.  In Bradberry v. Carrier Corp., 86 So. 3d 973
(Ala. 2011), this Court, dealing with a similar situation,
stated:
"The plaintiffs argue that the trial court's
order setting the defendants' motions for a summary
judgment for a hearing and requiring the plaintiffs
to submit substantive responses to those motions
violated 
the 
automatic-stay 
provision 
of 
the
Bankruptcy Code. This argument is premised on the
plaintiffs' general contention 
that Leslie Controls'
filing 
for 
bankruptcy 
completely 
stayed 
all
litigation in which Leslie Controls was involved,
including 
litigation 
involving 
solvent 
codefendants.
"... Section 362 of the Bankruptcy Code
provides, in part:
"'§ 362. Automatic Stay
"'(a) Except as provided in subsection (b)
of this section, a petition filed under
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section 301, 302, or 303 of this title, or
an application filed under section 5(a)(3)
of the Securities Investor Protection Act
of 1970, operates as a stay, applicable to
all entities, of --
"'(1) 
the 
commencement 
or
continuation, 
including 
the
issuance 
or 
employment 
of
process, 
of 
a 
judicial,
administrative, or other action
or proceeding against the debtor
that was or could have been
commenced before the commencement
of the case under this title, or
to recover a claim against the
debtor that arose before the
commencement of the case under
this title....'
"11 U.S.C. § 362. Section 362 specifically states
that the filing of a bankruptcy petition operates as
a stay of the continuation of a judicial action
against a debtor. Section 362 makes no references to
a stay of judicial actions against the debtor's
solvent codefendants.
"Beyond the plain language of § 362, courts have
consistently held that the automatic-stay provision
of § 362 does not act to stay proceedings against a
debtor's solvent codefendants. In Snow v. Baldwin,
491 So. 2d 900 (Ala. 1986), L.C. Baldwin sold the
Bidgood Stationery Corporation to Lamar Snow and
George Reasonover. Subsequently, Baldwin and his
wife sued Snow and Reasonover seeking damages for
default on a promissory note executed as part of the
sale of the corporation. Reasonover filed a petition
in bankruptcy during the pendency of the action, and
the action was stayed as to him. The Baldwins
informed the trial court that they wished to sever
Reasonover from the action and to proceed against
only Snow. Although the trial court never entered a
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1110319
formal 
order 
severing 
Reasonover, 
the 
action
proceeded to trial solely against Snow. Citing
Fortier v. Dona Anna Plaza Partners, 747 F.2d 1324
(10th Cir. 1984), this Court concluded that the
automatic-stay provision of § 362 does not affect a
party's 
right 
to 
proceed 
against 
solvent
codefendants. Snow, 491 So. 2d at 902 n. 2."
Bradberry, 86 So. 3d at 981-82 (footnote omitted).
It is well established that the automatic stay entered
pursuant to § 362 pertained only to litigation against Mr.
Boyd, not his solvent codefendants.  Therefore, the
petitioners' filing of their petition with this Court was a
nullity as to Mr. Boyd, but nothing divested this Court of
jurisdiction over the petition as to the solvent parties, K &
K and Boyd.  Further, Mr. Boyd has since been dismissed as a
party in the case below, and the petitioners have withdrawn
their petition as to their claims against Mr. Boyd.  Clearly,
we have jurisdiction over the petition insofar as it concerns
K & K and Boyd, Mr. Boyd's solvent codefendants.
We now turn to the merits of the petition.  The
petitioners do not challenge the validity of the forum-
selection clause.  Instead, the petitioners argue only that K
& K waived its right to enforce the forum-selection clause "by
defending the lawsuit in Greene County for two years, through
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multiple pretrial conferences and completion of party
discovery."  We agree.
It is a well established principle of Alabama law that
"[p]arties are free to contract as they will, provided they
contract within the law."  Perkins v. Skates, 220 Ala. 216,
218, 124 So. 514, 515 (1929).  Forum-selection clauses are not
against public policy in Alabama, and parties are free to
contractually agree to a specified forum in which all
litigation is to be litigated.  See Brown v. Alabama Chem.
Co., 207 Ala. 215, 216, 92 So. 260, 260-61 (1922)(recognizing
the validity of forum-selection clauses).  However, a party
may waive its right to enforce a contractual right in certain
circumstances.  Concerning waiver in the context of a forum-
selection clause, this Court stated in Ex parte Textron, Inc.,
67 So. 3d 61, 66 (Ala. 2011):
"Our research 
has 
not 
disclosed, 
and 
the 
parties
have not cited, an Alabama case dealing with waiver
in the context of a forum-selection clause.
Regarding the waiver of rights under a contract
generally, this Court has stated:
"'The question of waiver, the voluntary
surrender of a known right, is in the main
a 
question 
of 
intention, 
and 
the
authorities hold that, to be effectual, it
must be manifested in some unequivocal
manner; if not express, then by such
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1110319
language or conduct as to evince clearly
the intention to surrender. Bennecke v.
Insurance Co., 105 U.S. 355, 26 L. Ed. 990
[(1881)]; Balfour v. Parkinson (C.C.) 84
Fed. 855, 861 [(1898)]. Quoting Sanborn,
J., in Rice v. Fidelity & Deposit Co., 103
Fed. 427, 435, 43 C.C.A. 270, 278 [(1900)]:
"'"To constitute a waiver,
there must be an intention to
relinquish the right, or there
must be words or acts calculated
to induce the other contracting
party to 
believe, 
and 
which
deceive him into the belief, that
the holder of the right has
abandoned it."
"'"A waiver will not be implied from
slight 
circumstances, 
but 
must 
be 
evidenced
by an unequivocal and decisive act, clearly
proved." 29 Am. & Eng. Law, p. 1105.'
"Isom v. Johnson, 205 Ala. 157, 159–60, 87 So. 543,
545 (1920)."
Thus, in Textron, we made it clear that a party may waive its
right to enforce a forum-selection clause, as it may with
other contract provisions, by evincing an intention to do so.
We note that no rigid rule exists for determining what
constitutes a waiver of the right to enforce a forum-selection
clause; the determination whether there has been a waiver
must, instead, be based on the particular facts of each case.
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Under the facts of this case, K & K's substantial
invocation of the litigation process in Greene County clearly
evinced its intention to abandon its right to enforce the
forum-selection clause in favor of the judicial process.  Cf.
Crews v. National Boat Owners Ass'n Marine Ins. Agency, Inc.,
46 So. 3d 933, 939 (Ala. 2010)(holding that "'a party may
waive its right to arbitrate a dispute if it substantially
invokes the litigation process'" (quoting Companion Life Ins.
Co. v. Whitesell, 670 So. 2d 897, 899 (Ala. 1995))); In re ADM
Investor 
Servs., 
Inc., 
304 
S.W.3d 
371, 
374 
(Tex.
2010)(analogizing a party's waiver of its rights under
arbitration 
agreement 
by 
the 
party's 
substantial 
invocation 
of
the litigation process to a party's waiver of its rights under
a forum-selection clause); Vimar Seguros y Reaseguros, 
S.A. v.
M/V Sky Reefer, 515 U.S. 528, 548 n.7 (1995) (recognizing that
"[t]he only ground on which one might 
distinguish 
[arbitration
and forum-selection] clauses is that another federal statute,
the Federal Arbitration Act, makes arbitration clauses
enforceable, whereas no analogous federal statute exists for
forum selection clauses"); and Scherk v. Alberto-Culver Co.,
417 U.S. 506, 519 (1974)("An agreement to arbitrate before a
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specified tribunal is, in effect, a specialized kind of
forum-selection clause that posits not only the situs of suit
but also the procedure to be used in resolving the dispute").
The petitioners sued K & K, among others, alleging breach
of contract and breach of express warranty, as well as other
claims.  In its answer to the petitioners' complaint, K & K
argued that the Greene Circuit Court was an improper forum
based on the forum-selection clause in the contract.  We can
confidently conclude that, at the time K & K filed its answer,
K & K knew that the petitioners were suing it under the
contract based on K & K's reliance upon the contract in its
answer.   However, K & K did not file the transfer motion at
3
that time.  Instead, K & K substantially invoked the
litigation process for 25 months after filing its answer by
filing responsive pleadings, engaging in extensive discovery
K & K argues that its delay in filing the transfer motion
3
was the result of allegedly necessary discovery to determine
if the petitioners were, in fact, relying upon the contract as
the basis of their claims against K & K.  This argument is
disingenuous, because K & K relied upon the contract in
answering the petitioners' complaint.  Further, nothing kept
K & K from filing the transfer motion at the outset of the
case based on the forum-selection clause in the contract.  If
the petitioners were not relying upon the contract (although
K & K does not suggest any other contract that could have
formed the basis of the petitioners' action), that fact would
have been determined at that time by the Greene Circuit Court.
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and pretrial conferences, and attempting to resolve the case
through mediation.  It was not until trial was inevitable that
K & K invoked the forum-selection clause by filing the
transfer motion.  By this time, both the parties and the
Greene Circuit Court had invested substantial time and
resources in the action.  K & K's actions indicated its
intention to abandon its contractual right to try the case in
the Tuscaloosa Circuit Court.4
Conclusion
Under the circumstances presented, we conclude that K &
K waived its contractual right to enforce the forum-selection
clause based on K & K's intention to abandon said right,
evidenced by its substantial invocation of the litigation
The 
parties 
spend 
considerable 
time 
arguing 
that 
Ex 
parte
4
Soprema, Inc., 949 So. 2d 907 (Ala. 2006), supports their
respective positions.  Soprema is distinguishable from this
case, however, because in that case the party seeking to
enforce the forum-selection clause filed a motion to dismiss
based on improper venue early in the litigation process, and
the trial court denied the motion because it determined that
further discovery needed to be completed to determine if the
forum-selection clause applied to the particular claims
raised.  Here, it is undisputed that the forum-selection
clause applies to the petitioners' claims, and K & K waited to
file the transfer motion until 29 months after the petitioners
filed their complaint.
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process.  Therefore, we grant the petition and direct the
trial court to vacate its order granting the transfer motion.
PETITION GRANTED; WRIT ISSUED.
Malone, C.J., and Woodall, Stuart, Bolin, Murdock, Shaw,
Main, and Wise, JJ., concur.
16