Title: The Lem Harris Rainwater Family Trust, et al. v. Rainwater

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:  September 30, 2022 
 
 
 
 
 
 
 
 
 
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) 229-0650), 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, 2022 
____________________ 
 
1210106 
____________________ 
 
The Lem Harris Rainwater Family Trust, Charles Edward 
Rainwater, Jean Rainwater Loggins, and the Rainwater Marital 
Trust 
 
v. 
 
Lenn Rainwater 
 
Appeal from St. Clair Circuit Court 
(CV-18-900281) 
 
 
 
PARKER, Chief Justice. 
 
This case returns to this Court as an appeal in ongoing litigation 
among four siblings regarding family trusts. Charles Edward Rainwater, 
 
 
1210106 
 
2 
 
Jean Rainwater Loggins, The Lem Harris Rainwater Family Trust, and 
the Rainwater Marital Trust appeal a final judgment of the St. Clair 
Circuit Court enforcing a settlement agreement in the litigation. They 
challenge three aspects of the judgment: its enforcement of the 
settlement agreement, its denial of a motion to dissolve a prior order 
enforcing the settlement agreement, and its denial of a motion to quash 
a garnishment.  Because the court failed to hold an evidentiary hearing 
on enforcement of the settlement agreement, because the prior 
enforcement order was improper, and because any award on which the 
garnishment could have been based is being reversed, we reverse the 
judgment as to all three aspects. 
I. Facts 
 
Lem Harris Rainwater ("Mr. Rainwater") and Jean Rainwater 
("Mrs. Rainwater") had four children: Lenn Rainwater ("Lenn," a 
daughter), Charles Edward Rainwater ("Charles"), Jean Rainwater 
Loggins ("Jean"), and Mary Rainwater Breazeale ("Mary"). In 1995, Mr. 
and Mrs. Rainwater created The Lem Harris Rainwater Family Trust 
("the Family Trust"). After Mrs. Rainwater died in 2007, the Family 
 
 
1210106 
 
3 
 
Trust was divided into two trusts -- the Rainwater Marital Trust ("the 
Marital Trust") and the Jean Rainwater Bypass Trust. Mr. Rainwater 
allegedly amended the Marital Trust to provide that, upon his death, 
Lenn would receive all rights to Victorian Village, a shopping center. All 
four children served as trustees of the Family Trust and the Marital 
Trust. 
 
Mr. Rainwater died in 2015. In 2018, Lenn sued Charles, Jean, 
Mary, and the Family Trust, seeking a declaration of Lenn's rights. After 
court-ordered mediation, the parties signed a settlement agreement. In 
it, Charles, Jean, Mary, and the Family Trust agreed to pay Lenn a cash 
amount from Family Trust assets and to convey all interest in Victorian 
Village to her. In exchange, Lenn agreed to release all her claims and to 
resign 
as 
cotrustee. 
The 
settlement 
agreement 
contained 
a 
confidentiality clause. 
 
In 2020, Charles, Jean, and Mary moved for clarification regarding 
the settlement agreement. They alleged that Lenn had breached the 
agreement by not executing a release of her claims and by not 
maintaining the confidentiality of the agreement. They argued that 
 
 
1210106 
 
4 
 
Lenn's breaches excused their performance of their duties under the 
agreement. After a hearing, the circuit court entered an order enforcing 
the settlement agreement ("the first enforcement order"). 
 
Lenn then moved to enforce the first enforcement order or to freeze 
cash assets. Lenn attached to her motion a copy of the settlement 
agreement. The court granted Lenn's motion, and Charles, Jean, and the 
Family Trust appealed, challenging the first enforcement order. 
 
While that appeal was pending, Lenn filed a process of garnishment 
issued to Regions Bank regarding an account belonging to the Marital 
Trust. Charles, Jean, Mary, the Family Trust, and the Marital Trust 
moved to quash the garnishment. After a hearing, the circuit court denied 
the motion to quash. Charles, Jean, the Family Trust, and the Marital 
Trust appealed. 
 
This Court dismissed both appeals, which had been consolidated. 
Lem Harris Rainwater Fam. Tr. v. Rainwater, [Ms. 1190951, June 30, 
2021] ___ So. 3d ___ (Ala. 2021) ("Rainwater"). We held that the first 
enforcement order was an interlocutory injunction, not a final judgment, 
and that the appeal of that order was untimely because the appeal was 
 
 
1210106 
 
5 
 
filed more than 14 days after the order was entered. We also held that 
the order denying the motion to quash the garnishment was not a final 
judgment, such that the appeal of that order was premature. 
 
Thereafter, Charles and Jean moved to dissolve the first 
enforcement order and to quash the garnishment. Lenn moved to enforce 
the settlement agreement (and to enforce the first enforcement order, 
which had itself enforced the settlement agreement). Charles and Jean 
filed a response to Lenn's motion, alleging that Lenn had materially 
breached the settlement agreement and requesting an evidentiary 
hearing on the motion. Without holding an evidentiary hearing, the 
circuit court entered a final judgment enforcing the settlement 
agreement. The judgment also denied Charles and Jean's motions to 
dissolve the first enforcement order and to quash the garnishment. 
Charles, Jean, the Family Trust, and the Marital Trust ("the 
defendants") appeal. 
II. Analysis 
 
The defendants challenge the aspects of the circuit court's judgment 
enforcing the settlement agreement, denying the motion to dissolve the 
 
 
1210106 
 
6 
 
first enforcement order, and denying the motion to quash the 
garnishment. 
A. Enforcement of the settlement agreement 
 
The defendants contend that the circuit court erred in entering the 
final judgment enforcing the settlement agreement without conducting 
an evidentiary hearing. In opposition to Lenn's final motion to enforce, 
Charles and Jean alleged that Lenn had materially breached the 
settlement agreement. Thus, the defendants contend, the court was 
required to hold an evidentiary hearing to allow Charles and Jean to 
present evidence of Lenn's material breaches of the agreement, which 
they alleged excused their performance, before the court determined 
whether Lenn was entitled to enforcement of the settlement agreement.  
This argument raises a question of law, which we review de novo. 
Richardson v. County of Mobile, 327 So. 3d 1130, 1134 (Ala. 2020). A 
settlement agreement is a contract. Billy Barnes Enters., Inc. v. 
Williams, 982 So. 2d 494, 498 (Ala. 2007); Jones v. Bullington, 401 So. 2d 
740, 741 (Ala. 1981). Normally, a breach of a contract is a basis for a 
distinct legal claim in a lawsuit. However, when a settlement agreement 
 
 
1210106 
 
7 
 
resolving underlying legal claims is entered into mid-litigation and the 
underlying action is not dismissed, the mechanism for seeking relief 
based on a breach of that agreement is a motion to enforce the agreement. 
See Kappa Sigma Fraternity v. Price-Williams, 40 So. 3d 683, 690 n.3 
(Ala. 2009) (explaining, in case involving enforcement of a settlement 
agreement within the underlying action, that "a proceeding to enforce a 
settlement is in the nature of an action on a contract"); 15B Am. Jur. 2d 
Compromise and Settlement § 41 (2021) ("[W]here the parties agree to 
settle a pending lawsuit but, before judgment is rendered on the 
agreement, one party withdraws consent, … the party seeking to uphold 
the agreement may file a motion for enforcement in the underlying 
action, rather than institute a new action on the contract of settlement."); 
Fidelity & Guar. Ins. Co. v. Star Equip. Corp., 541 F.3d 1, 5 (1st Cir. 2008) 
("Where … the settlement collapses before the original suit is dismissed, 
the party seeking to enforce the agreement may file a motion with the 
trial court.").  
Thus, the principles that apply to breach-of-contract claims also 
ordinarily apply to a motion to enforce a settlement agreement. Village 
 
 
1210106 
 
8 
 
of Kaktovik v. Watt, 689 F.2d 222, 230 (D.C. Cir. 1982) ("The 
enforceability of settlement agreements is governed by familiar 
principles of contract law."). When a party raises a defense to a breach-
of-contract claim and the defense involves an issue of fact, normally a 
trial must be held on the defense. See LNM1, LLC v. TP Props., LLC, 296 
So. 3d 792, 797 (Ala. 2019). Accordingly, when the same situation arises 
on a motion to enforce a settlement agreement, an evidentiary hearing 
must be held. That is, when a party raises a fact-based defense to 
enforcement of a settlement agreement, that defense must be resolved in 
the same way other issues of fact are resolved -- by conducting a hearing 
at which evidence is received and any witnesses are subject to cross-
examination. See Claybrook v. Claybrook, 56 So. 3d 652, 658 (Ala. Civ. 
App. 2010). In Claybrook, a husband and wife entered into a divorce 
settlement agreement. During the divorce action, the wife challenged the 
enforceability of the settlement agreement, based on contract-law 
defenses. The trial court, without conducting an evidentiary hearing, 
entered a final judgment incorporating the agreement. The Court of Civil 
Appeals held that the trial court erred by failing to hold an evidentiary 
 
 
1210106 
 
9 
 
hearing on the wife's challenges to the enforceability of the settlement 
agreement. Cf. Dunn v. Dunn, 124 So. 3d 148, 150-51 (Ala. Civ. App. 
2013) (holding that trial court erred by failing to conduct evidentiary 
hearing on party's postjudgment motion that raised contract-formation-
defense grounds for vacating judgment that had incorporated settlement 
agreement). Similarly, here Charles and Jean alleged the contract-law 
defense of material breach in opposition to Lenn's motion to enforce the 
settlement agreement. 
 
Lenn argues that Charles and Jean could not oppose her motion to 
enforce the settlement agreement because the enforceability of the 
agreement was the law of the case after this Court's decision in 
Rainwater. Lenn points out that (1) the first enforcement order ruled that 
the settlement agreement was enforceable and (2) Rainwater did not 
disturb that ruling. The only relevant issue this Court decided in 
Rainwater, however, was whether the first enforcement order was a final 
judgment or a preliminary injunction. This Court determined that it was 
a preliminary injunction, appealable only within 14 days, making the 
appeal after that deadline untimely. We never reached the merits of 
 
 
1210106 
 
10 
 
Charles and Jean's argument that Lenn's alleged breaches of the 
settlement agreement excused their performance. And a dismissal of an 
appeal has the same effect as if no appeal had been taken. Federal 
Deposit Ins. Corp. v. Equitable Life Assurance Soc'y of the United States, 
289 Ala. 192, 196, 266 So. 2d 752, 754 (1972); Florence Surgery Ctr., L.P. 
v. Eye Surgery Ctr. of Florence, LLC, 121 So. 3d 386 (Ala. Civ. App. 2013). 
Accordingly, our dismissal of the appeal placed Charles and Jean in the 
position of not having appealed the first enforcement order. Thus, our 
decision in Rainwater did not preclude any of the defendants from later 
challenging the enforceability of the settlement agreement.  
Alternatively, Lenn's argument may be understood as asserting 
that, under the law-of-the-case doctrine, after the defendants failed to 
timely appeal the appealable first enforcement order, they were 
precluded from challenging the circuit court's rulings in that order. This 
argument raises what appears to be a question of first impression for this 
Court, but the answer to it is clear. Ordinarily, a party must wait until 
final judgment to appeal an adverse ruling. North Alabama Elec. Coop. 
v. New Hope Tel. Coop., 7 So. 3d 342, 344 (Ala. 2008). However, Rule 
 
 
1210106 
 
11 
 
4(a)(1), Ala. R. App. P., recognizes several categories of orders from which 
an appeal is permitted before final judgment. One of those categories 
includes orders "granting … an injunction." Rule 4(a)(1)(A). But nothing 
in Rule 4(a)(1) requires a party to interlocutorily appeal an injunction 
order to avoid later preclusion of issues that could have been raised in 
such an appeal. In this way, Rule 4(a)(1)(A) is analogous to 28 U.S.C. § 
1292(a), which permits appeals from interlocutory orders regarding 
injunctions. Federal courts have held that that statute does not require 
a party to interlocutorily appeal to avoid preclusion: 
"Although an order denying a preliminary injunction is 
immediately appealable as an interlocutory decision under 28 
U.S.C. § 1292(a)(1), an immediate appeal nonetheless is not 
mandated by the statute. A party may forgo an interlocutory 
appeal and present the issue for appeal after final judgment. 
'Interlocutory orders therefore may be stored up and raised at 
the end of the case....'" 
 
Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 608 (7th Cir. 
1993) (citation omitted); see 16 Charles Alan Wright, Arthur R. Miller, & 
Edward H. Cooper, Federal Practice and Procedure § 3921 (3d ed. 2012) 
("[A]lthough appeal is available under § 1292(a)(1) as a matter of 
right, failure to take an available appeal does not of itself waive the right 
 
 
1210106 
 
12 
 
to secure review, on appeal from final judgment, of matters that could 
have been appealed but were not."). Similarly, the fact that Rule 
4(a)(1)(A) provides an opportunity for interlocutory appeal of certain 
injunction-related orders does not prevent a party that does not file such 
an appeal from later challenging the trial court's rulings in those orders. 
 
Lenn also argues that a party's breach of a settlement agreement is 
no defense to that party's enforcement of it. She contends that the only 
defenses to enforcement are fraud, accident, or mistake -- none of which 
was alleged here. Lenn relies on the following language in an opinion of 
the Court of Civil Appeals: 
 
"'"The law in Alabama is clear in that agreements made 
in settlement of litigation are as binding on parties thereto as 
any other contract. A settlement agreement once entered into 
cannot be repudiated by either party and will be summarily 
enforced.  
 
"'"When parties who are sui juris make a final 
settlement between themselves, such settlement is as binding 
on them in many respects as a decree of the court. However, 
such settlement may be opened for fraud, accident, or 
mistake."'" 
 
Sherman Int'l Corp. v. Summit Gen. Contractors, Inc., 848 So. 2d 263, 
264 (Ala. Civ. App. 2002) (citations omitted). It is true that fraud, 
 
 
1210106 
 
13 
 
accident, and mistake are grounds for setting aside a settlement 
agreement as defective in its formation. Barnes, 982 So. 2d at 498-99. But 
that is not what Charles and Jean sought to do. Instead, they sought to 
defend against Lenn's attempt to enforce the settlement agreement, on 
the basis that she had allegedly materially breached the agreement. 
Moreover, as explained above, a settlement agreement is simply a 
particular type of contract. Thus, a settlement agreement is "as binding 
… as any other contract." Sherman, 848 So. 2d at 264 (citations and 
quotation marks omitted); Beverly v. Chandler, 564 So. 2d 922, 923 (Ala. 
1990). Ordinarily, a contract is binding so long as each party performs its 
obligations under it. If either party materially breaches the contract, the 
other party is excused from performing. Nationwide Mut. Ins. Co. v. Clay, 
525 So. 2d 1339, 1343 (Ala. 1987). Thus, as applied to settlement 
agreements, the general rule is that "[a] party's material breach or 
failure to fulfill a substantial condition of a settlement agreement excuses 
the other party's obligation to perform its end of the bargain." 15B Am. 
Jur. 2d Compromise and Settlement § 40 (2021) (footnotes omitted). 
Therefore, Charles and Jean were not limited to alleging fraud, accident, 
 
 
1210106 
 
14 
 
or mistake, but could defend against Lenn's motion to enforce the 
settlement agreement based on allegations that Lenn materially 
breached it. 
For these reasons, we conclude that the circuit court erred in 
entering the final judgment without conducting an evidentiary hearing 
on the enforceability of the settlement agreement, including Charles and 
Jean's defense of material breach.  
The defendants also argue that the circuit court erred in entering 
the judgment because the record contained undisputed evidence that 
Lenn materially breached the settlement agreement. We do not reach 
this argument because we have concluded that the settlement-
enforcement aspect of the judgment must be reversed based on the circuit 
court's failure to conduct an evidentiary hearing. 
B. Denial of the motion to dissolve the first enforcement order 
 
The defendants also challenge the circuit court's denial of Charles 
and Jean's motion to dissolve the first enforcement order. This challenge 
is not moot, because we are reversing the settlement-enforcement aspect 
 
 
1210106 
 
15 
 
of the final judgment, and on remand the first enforcement order will 
once again be in place.  
In Rainwater, this Court held that the first enforcement order was 
a preliminary injunction, and that characterization is the law of the case 
as between these parties. See Blumberg v. Touche Ross & Co., 514 So. 2d 
922, 924 (Ala. 1987) ("Under the doctrine of the 'law of the case,' whatever 
is once established between the same parties in the same case continues 
to be the law of that case …."). In this appeal, the defendants contend 
that the first enforcement order did not comply with the requirements for 
a preliminary injunction. First, they point out that Lenn did not provide 
security for any damage they might incur in complying with the order. 
Rule 65(c), Ala. R. Civ. P., provides: 
"No restraining order or preliminary injunction shall issue 
except upon the giving of security by the applicant, in such 
sum as the court deems proper, for the payment of such costs, 
damages, and reasonable attorney fees as may be incurred or 
suffered by any party who is found to have been wrongfully 
enjoined or restrained ...." 
 
Further, the defendants argue that the first enforcement order did not 
set forth the reasons for its issuance and did not describe in detail the 
acts to be performed by the parties. Rule 65(d)(2) provides: "Every order 
 
 
1210106 
 
16 
 
granting an injunction shall set forth the reasons for its issuance; shall 
be specific in terms; [and] shall describe in reasonable detail, and not by 
reference to the complaint or other document, the act or acts sought to be 
restrained ...." 
 
When considering a challenge to an order regarding a preliminary 
injunction, we review questions of law de novo. See Holiday Isle, LLC v. 
Adkins, 12 So. 3d 1173, 1176 (Ala. 2008). In the first enforcement order, 
the circuit court stated that it was entering the order "[u]pon 
consideration of the motion [for clarification] and arguments of counsel, 
and based upon the terms and provisions of the [settlement agreement] 
as determined by this [c]ourt." The court articulated no reasons, other 
than referring to the parties' arguments, why the settlement agreement 
was due to be enforced despite allegations that Lenn had breached it. 
Thus, the order failed to comply with Rule 65(d)(2) by failing to set forth 
reasons for its issuance. See Teleprompter of Mobile, Inc. v. Bayou Cable 
TV, 428 So. 2d 17, 20 (Ala. 1983) (holding that preliminary injunction 
that merely referenced party's arguments did not comply with Rule 
65(d)(2)'s reasons-for-issuance requirement). 
 
 
1210106 
 
17 
 
 
The first enforcement order also commanded the parties to "perform 
each and every act and to execute any and all documents necessary or 
expedient to evidence and consummate the [settlement agreement]." This 
provision failed to satisfy Rule 65(d)(2) because it did not describe in 
detail the acts to be performed, without reference to another document. 
Instead, it merely incorporated the terms of the settlement agreement, 
which the rule prohibits.  
 
Because of these deficiencies in the first enforcement order, the 
circuit court erred in denying Charles and Jean's motion to dissolve it. 
See Tapscott v. Fowler, 437 So. 2d 1280, 1282 (Ala. 1983) (reversing 
injunction for failure to comply with Rule 65(d)(2)).  
C. Denial of the motion to quash the garnishment 
 
Finally, the defendants contend that, if this Court reverses the 
settlement-enforcement aspect of the final judgment, the garnishment 
must necessarily be quashed because any judgment on which the 
garnishment was based no longer exists. Under § 6-6-390, Ala. Code 
1975, "no garnishment shall issue prior to a final judgment … unless 
there is a showing that such garnishment is necessary because of 
 
 
1210106 
 
18 
 
extraordinary circumstances." Here, based on our reversal of the 
settlement-enforcement aspect of the judgment, there is no remaining 
judgment award on which the garnishment could have been based. 
Moreover, Lenn made no showing of extraordinary circumstances. Thus, 
the garnishment must be quashed. 
  
III. Conclusion 
 
Based on the foregoing, we reverse the final judgment as to its 
enforcement of the settlement agreement and its denial of the motions to 
dissolve the first enforcement order and to quash the garnishment. We 
remand the case for further proceedings. 
REVERSED AND REMANDED. 
 
Bolin, Shaw, Wise, Bryan, Sellers, Mendheim, Stewart, and 
Mitchell, JJ., concur.