FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT JULY 21, 2008 THOMAS K. KAH

N CLERK [ DO NO T P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 08- 11029 N on -A rgum entC al endar

________________________ D . C . D ocketN o. 06 -017 01 -C V -H C L I V E S A M U E L S & A S S O C I A T E S , I N C ., P la in tif f - A p p e lle e , v ersu s B O X C A R F O O D S , U S A , I N C ., D e f e n d a n t, R E T A I L G R O U P S E , I N C ., J E R O M E D . H O F F M A N , D e f e n d a n ts - A p p e lla n ts .

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e rn D i s tr i c to f A l ab a ma

_________________________ ( Ju l y 21, 2008)2

B efo re H U L L , M A R C U S an d W IL S O N , C i rcu i tJu d g es. P E R C U R I A M: I n th is b r e a c h o f

c o n tr a c t a c tio n , d e f

e n d a n ts R e ta il G r o u p , S E , I n c . ( “R e ta il G roup ”) and Jer om e H offm an (“ H offm an”) (c ol l ec t i vel y, “ D ef endant s” ) app ea l f r om the di s tr i c tc our t ’ s e ntry of s um m a ry j udgm e nti n f a vorof pl a i nt i f f C l i ve S am u el s & A sso ci at es, In c. (“ C S A ”). A ft er rev i ew , w e affi rm i n p artan d rev erse in p a r t. I . B AC KG RO UN D I n S e p te m b e r2 0 0 5 , H o f f m a n , th e C E O , C F O , p r e s id e n t, a n d s o le s ha r e hol de rof

R e t a i l G r oup, appr oa c he d C S A , a n e ngi ne e r i ng f i r m , a boutde s i gn se rvi ce s f

or se vera l re t ai l st ores t o b e kno w n as “ B ox ca r” st ores . H offm an r e que s t e d tha tC S A de s i gn, a m ong othe rthi ngs , a r e f r i ge r a t i on s y s t e m f

orthe B ox ca r s t ores ’ food st orage ar ea s thatw ou l d h ol d foo d p rodu ct s on car t s l ocat ed behi nd an ai r c urt ai n sys t em . T he ai r c urt ai n sys t em w ou l d repl ac e the do ors ty p ic a lly u s e d in f

o o d r e f r ig e r a tio n u n its , e lim in a tin g th e n e e d f o rc u s to m e r s to op en do ors t o acc es s produ ct s. H offm an bel i eved thatthe sy st em w ou l d reduce l a borc os t s a nd i nt e gr a t e the pr oc e s s of ha ndl i ng pr oduc t s by a l l ow i ng pa l l e t s of p e r is h a b le f

o o d to b e p la c e d in p o s itio n f o rs e le c tio n w ith o u t th e n e e d to m a n u a lly rest o ck trad i t i o n al refri g erat i o n u n i t s.It is undisput ed that B ox car Foods USA Inc. is a non-e x istent entity . Boxcar F oods 1 USA Inc. wa s orig inally

named a s a def

endant in this action but was dismissed by the district court a fter theparties agree d that it did not ex ist. CS A discovered B ox car Foods USA Inc.’s non-existence in discover y , and the district cour

t ga ve CSA leaveto amend its complaint to add the cor rec t entity —alleg ed by

defendant Hoff

man to be an entity

called B ox car

Foods, Inc.—but CSA declined to amend its complaint. Thus, the only remaining de fenda

nts are H offman a

nd Retail Group. 3 O n O c t obe r9, 2005, C S A s ubm i tt e d a de s i gn pr opos a l tha ti nc orpor a t e d the a i rc ur t a i n r e f

r i ge r a t i on s y s t e m . O n O c t obe r12, 2005, H of f m a n s e nta l e tt e r , on R e t a i l G r oup l e tt e rhe a d, a c c e pt i ng C S A ’ s pr opos a l . T he pa r t i e s a gr e e tha tthe O c to b e r9 d e s ig n p r o p o s a l a n d O c to b e r1 2 le tte rc o n s titu te th e c o n tr a c t a t is s u e . H o f f m a n ’s O c to b e r1 2 le tte rs ta te d , in p e r tin e n t p a r t: R ef er ence your prop osal for B ox ca r F oo ds U S A Inc. da te d O ct ob er 9 th , 2 0 0 5 , w e h e r e b y a c c e p t. R et ai l G roup S . E . Inc. and B ox ca r F oo d s U S A In c. here by gu ar ant ee p aym en tw i th i n n i n ety (9 0 ) d ays. A s a gr e e d upon, y ou w i l l de l i ve rt he pr ot oty pe e ngi ne e r i ng a nd s p eci fi cat i ons w i thi n e i ghtw e e ks of t oda y . A nd w e w i l l not i f y y ou a c c or di ngl y w ha tw i l l be the f i r s tl oc a t i on. L e tt e rf r om H of f m a n t o C S A of

O c t . 12, 2005. 1 A l though the or i gi na l c ontr a c tc a l l e d f ora n a i rc ur t a i n s y s t e m , a ts om e poi nt b e tw e e n O c to b e ra n d D e c e m b e r2 0 0 5 , C S A r e c o m m e n d e d c h a n g in g th e d e s ig n to i ncl ud e doo rs i nst ea d o f the ai r c urt ai n sys t em . In D ec em ber 200 5, H offm an pers on al l y app roved C S A ’ s r ec om m ended chang e t o a m ore c on vent i on al r e f r i ge r a t i on s y s t e m , a l though H of f m a n t e s t i f

i e d he “ w a s f

or c e d t o go a l ong w i th”Hoffma n contends that the drawing s wereall the same. 2 4 the c ha nge be c a us e “ w e w e r e s o f a ri nt o i tw i th a num be rof s t or e s a nd f

i ght i ng a d ea d li n e.” D ep o siti o n o f J er o m e H o ff m an , at 9 9 . A cc o rd in g to H o ff m an , C S A ’s c ha nge f r om the a i rc ur t a i n s y s t e m t o a m or e c onve nt i ona l s y s t e m “ w a s n’ tthe o r ig in a l c o n tr a c t, a n d [ C S A ] k n e w it.” I d . I n a ny e ve nt , C S A ul t i m a t e l y pr ovi de d s i x s e t s of dr a w i ngs f

ors i x di f f e r e nt B o x car st o res, an d each seti m p l em en t ed co n v en t i o n al refri g erat i o n syst em s. 2 D ef endant s use d C S A ’ s dra w i ng s i n sub m i ss i on s t o g ov ernm entpl anni ng offi ce s i n B i rm i ng ham , C ul l m an, and T usca l oo sa , A l abam a; S al i sbury a nd G re envi l l e, N orth C ar ol i na; and C on w ay , S ou th C ar ol i na. B eg i n n i n g i n Jan u ary 2 0 0 6 an d en d i n g i n Ju l y 2 0 0 6 , C S A su b m i tt ed tw en tye ig h t in v o ic e s to H o f

f m a n , to ta lin g $ 5 4 9 ,2 0 3 .2 0 . D e f e n d a n ts n e v e rp a id a s in g le in v o ic e . H o f

f m a n a d m itte d th a t D e f

e n d a n ts h a d n e ith e rc a s h n o ra lin e o f c r e d it a va i l a bl e t o pa y C S A ’ s i nvoi c e s . I ns t e a d, a c c or di ng t o H of f m a n, C S A unde r s t ood thati tw ou l d n otbe pai d u nt i l a B ox ca r s t ore w as sol d and l ea se d b ac k. H ow ever , H o f f m a n ’s O c to b e r1 2 , 2 0 0 5 , a c c e p ta n c e le tte ru n a m b ig u o u s ly s ta te s th a t “R e ta il G r o u p S .E . I n c . a n d B o x c a rF o o d s U S A I n c . h e r e b y g u a r a n te e p a y m e n t w ith in ni ne ty ( 90) da y s . ” L e tt e rf r om H of f m a n t o C S A of

O c t . 12, 2005.Fe deral jurisdiction ex ists pursuant to 28 U.S.C . § 1332 (diversity jurisdiction). 3 We reviewthe district court’s grant of summar y judgment to CS A de novo a nd resolve 4 all rea sonable doubts about the f acts in favor of the non- movants (Hoff man and Retail Group). Se eVa n V oo rhis v . H ill sb orough Co unty B d. of County Comm’ rs , 5 12 F .3 d 1 29 6, 12 99 (1 1th Cir. 2008). Summary

judgment is appropriateif thereis no genuine issue as to any material fac t and the movingparty

is entitled to a judgment as a matter of law. Seeid. The district cour

t applied Alabama law, a

nd the par ties agreethat Alabama

law g overns 5 this disput e. Ac cording ly , we a pply Alabama law. 5 I n A ugus t2006, C S A f

i l e d thi s l a w s ui t , a l l e gi ng br e a c h of c ontr a c t a nd

3 as ki ng thatR et ai l G roup ’ s c orpo ra t e f orm be di sr egar ded so as t o h ol d H offm an pe r s ona l l y l i abl e f

ori t s br e a c h. C S A m ove d f ors um m a ry j udgm e nt , w hi c h the di stri ctcourtgrant ed. T he di stri ctcourtent er ed fi nal j ud gm entagai nstH offm an and R et ai l G roup , j oi nt l y a nd se vera l l y, i n the am ou ntof $5 49 , 20 3. 20 . H offm an a n d R e ta il G r o u p ap p e a l. 4 I I . DI S CUS S I ON A. Co n t r a c t t e r ms D e f e nda nt s f i r s ta r gue tha tthe di s tr i c tc our te rr e d i n de t e r m i ni ng tha tthe cont ra ctw as un am bi gu ou s. U nd erA l abam a l aw , “ [a ] m bi gu i ty i n a cont ra ct pr e c l ude s the tr i a l c our tf r om e nt e r i ng a s um m a ry j udgm e nt . ” W hi t e t a i l D e v. Co rp . v . N i c k e l s o n , 6 8 9 So . 2 d 8 6 5 , 8 6 7 ( A l a . Ci v . A p p . 1 9 9 6 ) . “ I f th e t e r ms 5 w i thi n a c ontr a c ta r e pl a i n a nd una m bi guous , the c ons truc t i on of the c ontr a c ta nd i t s l egal ef

fe ctbecom e quest i on s of l aw for the courtand, w hen app ropri at e, m ayIn the district court, De fenda nts argued that there were e ight ambiguities in the contract 6 that rendered summar

y judgment inappropriate . On appe al, Def endants raise (and so w e addre ss) only

threepurported a

mbiguities. See United States v. Curtis, 380 F.3d 1308, 1310 (11th Cir. 2004) (notingthe “long -standingrule in this circuit” that issues not raised in initial briefs on a

ppeal a re w aived) ; see also United States v. Gupta, 463 F.3d 1182, 1195 ( 11th Cir. 20 06 ) ( statingthat if

a pa rt y fails to p ro videargumentson themerits o f a

n is su eand

make s o nly passingref

erence to the issue in its brief s, the argument is waived), c ert. denied, 127 S. Ct. 2446 (2007). 6 b e d e c id e d b y a s u m m a ry ju d g m e n t.” M c D o n a ld v . U .S . D ie C a s tin g & D e v . C o ., 5 8 5 S o . 2 d 8 5 3 , 8 5 5 (A l a. 1 9 9 1 ). If a co n tracti s am b i g u o u s, a co u rtsh o u l d fi rst e m p lo y e s tab lis h e d ru le s o f c o n tr a c t c o n s tru c tio n to try to r e s o lv e th e a m b ig u itie s . A l f a L i f e I ns . C orp. v. J ohns on, 822 S o. 2d 400, 405 ( A l a . 2001) . “ H ow e ve r , i f the t e r m s w i thi n the c ontr a c ta r e [ s t i l l ] a m bi guous i n a ny r e s pe c t , the de t e r m i na t i on of the true m ea ni ng of the cont ra cti s aqu es t i on of fa ctt o b e r es ol ved b y aj ury. ” M cD on al d, 58 5 S o. 2d at85 5; se e J oh nson , 82 2 S o. 2d at40 5 (“ W here fa ctual is s u e s a r is e , th e r e s o lu tio n o f th e a m b ig u ity b e c o m e s a ta s k f o rth e ju ry .” ) . D ef endant s a rgue thatsum m ary j ud gm entw as i napp ropri at e bec ause the cont ra ct co n t ai n s atl eastth ree am b i g u i t i es th atsh o u l d h av e b een reso l v ed b y a j u ry. 6 F i r s t , the c ontr a c ti s nota m bi guous a s t o w he the ri ti s f orthe de s i gn of

one

“ s t or e ” a s oppos e d t o m ul t i pl e “ s t or e s . ” T he c ontr a c ts pe c i f i c a l l y pr ovi de s tha tthe

“ F ee . . . for the fi rs tprot otype s t ore, as det ai l ed abov e, shal l be $9 5, 00 0, ” a nd that the “ F ee . . . for the nextfi ve st ores , as det ai l ed abov e, shal l be $3 40 , 00 0. ” P r opos a l of

O c t . 9, 2005, a t8. A s D e f e nda nt s a c know l e dge , the “ m a j orpor t i on ofAdditionally , the one- sentenc e re ferenceto a sing le “store ” is an obvious ty pographic al 7 e rror in a bo ilerp latec on c lus ion

sentenc e , p articula

rly g iven th at th esamesentenc einc lude s a ref erence to CSA looking f

orwa rd to workingwith “Fairway,” an entity that apparently

has nothing to do with this case or these pa rties. The ne x t-to-last sentenc e of CSA’s proposal states in full: “We look forward to workingwith Fair way [si c] in developingthe eng ineering pla ns for this store.” Proposal of Oc t. 9, 2005, at 9. 7 the cont ra ct ” a dd re ss es w ork t o b e per form ed on m ul t i pl e s t ores , and even H o f f m a n ’s a c c e p ta n c e le tte rin d ic a te s th a t th e c o n tr a c t c o n c e rn s m u ltip le s to r e s . B r . o f Ap p e l l a n t s a t1 1 ; L e tt e rf r o m Ho f f m a n t o C S A o f

Oc t . 1 2 , 2 0 0 5 ( “ An d we w ill n o tif y y o u a c c o r d in g ly w h a t w ill b e th e f ir s t lo c a tio n .” ) ( e m p h a s is a d d e d ) . A cco rd i n g l y, th e co n tract ’ s i so l at ed referen ce t o a si n g l e “ st o re” i n i t s n ex t -t o -l ast s e n te n c e d o e s n o t r e n d e rth e c o n tr a c t a m b ig u o u s , a s th e o n ly r e a s o n ab le in te rp r e ta tio n o f

th e c o n tr a c t is th a t it p e r ta in s to w o r k to b e p e r f o r m e d o n m u ltip le st ores . S ee S t at e v. L ori l l ar d T ob ac co C o. , __ S o. 2d __ , 20 08 A l a. L E X IS 62 , at * 1 4 ( A la . M a r . 2 8 , 2 0 0 8 ) ( n o tin g th a t o n e ru le o f c o n tr a c t c o n s tru c tio n is th a t a c our ts houl d c ons true a c ontr a c ta s a w hol e a nd tha tde t a c he d w or ds s t a ndi ng a l one a r e notc ontr ol l i ng) ; s e e a l s o R us s e l l v. G a rr e tt , 93 S o. 711, 713 ( A l a . 1922) (s am e) . 7 S e c ond, the c ontr a c ti s nota m bi guous on a c c ountof the f a c ttha t“ the r e i s no i nd i ca t i on as t o w hi ch st ores w er e i ncl ud ed w i thi n the sc op e of the cont ra ct . ” B r. o f A p p e lla n ts a t 9 . A lth o u g h D e f e n d a n ts d o n o t f

u lly e x p la in th is a s s e r tio n , th e ir c la im s e e m s to b e th a t b e c a u s e th e c o n tr a c t in d ic a te s th a t C S A w ill b ill R e ta il8

G r o u p a t a lo w e rr a te a f te rth e f ir s t s ix s to r e s a r e c o m p le te d , C S A w ill b e a b le to

“ cherry -pi ck” w hi ch st ores i tw i l l pl ac e i n the fi rs tgrou p o f s i x st ores and w hi ch s t or e s i tw i l l pl a c e i n s ubs e que ntgr oups , s o a s t o m a xi m i z e i t s pr of i t s . I d. a t11. T he prob l em w i th thi s a rgum enti s thatthe cont ra ctun am bi gu ou sl y s t at es thatC S A w i l l prov i de desi gn se rvi ce s t o R et ai l G roup : (1) f or on e prot otype s t ore; ( 2 ) f o rf iv e a d d itio n a l s to r e s ; a n d ( 3 ) f o ra r e f r ig e r a tio n m a n u f

a c tu r in g f

a c ility in G re envi l l e, S ou th C ar ol i na. B ey on d that , the cont ra cton l y “ ant i ci pat e[ s] ” that further s t ores coul d b e des i gn ed by C S A for are du ce d costand t hati dent i ca l st ores coul d b e provi ded ata f urther r educed fee . P ropo sa l of O ct . 9, 20 05 , at8. In ot her w o r d s , th e c o n tr a c t d o e s n o t im p o s e a d d itio n a l o b lig a tio n s o n C S A b e y o n d its w or k on the f

i r s ts i x s t or e s a nd the G r e e nvi l l e f a c i l i ty . ( I nde e d, i ti s not e w or thy th a t C S A a c tu a lly p r o v id e d D e f e n d a n ts w ith e x a c tly s ix s e ts o f d r a w in g s f

o rs ix B ox ca r s t ores . ) T hu s, the cont ra cti s notam bi gu ou s a s are sul tof i t s purpo rt ed fa i l ure t o i nd i ca t e w hi ch st ores w er e i ncl ud ed w i thi n i t s s cope. H o w e v e r , w e a g r e e w ith D e f e n d a n ts th a t th e c o n tr a c t is a m b ig u o u s a s to w he the ri ti nc l ude s di r e c ttr a ve l e xpe ns e s . T he c ontr a c tl i s t s va r i ous de s i gn a nd othe rs e r vi c e s tha ta r e c ove r e d by the pr opos e d f e e s f orthe s t or e s . S e e P r opos a l of O c t . 9, 2005, a t8 ( S e c t i on V I I I : “ C om pe ns a t i on” ) ( not i ng tha tthe “ F e e f orthe M ech an i cal , E l ectri cal , P l u m b i n g an d R efri g erat i o n E n g i n eeri n g D esi g n S erv i ces”9

i s t o b e $95 , 00 0 for the fi rs tst ore a nd $3 40 , 00 0 for the nextfi ve st ores ). H ow ever , the cont ra ctexpres sl y e xcl ud es di re cttra vel expenses fr om tho se prop osed fe es , as fo l l o w s: VI I . E XC L US I ON S 1. T hi s pr opos a l doe s noti nc l ude a ny w or k i nvol ve d w i th the p resen ce o f asb est o s o r asb est o s co n t ai n i n g m at eri al s. 2 . A l l d i recttrav el ex p en ses. 3 . A ll m e e tin g s a b o v e a n d b e y o n d th o s e d e s ig n a te d in th is p r o p o s a l. 4 . S i t e safety an d secu ri ty co n d i t i o n s. 5. B ui l di ng s truc tur a l s y s t e m s a nd de s i gn. 6 . M o d i fi cat i o n s t o ex i st i n g fi re sp ri n k l er syst em s. I d . a t 7 . D e s pi t e thi s e xpr e s s e xc l us i on of di r e c ttr a ve l e xpe ns e s , C S A a r gue s — a nd th e d is tr ic t c o u r t f

o u n d

— th a t th e c o n tr a c t u n a m b ig u o u s ly in c lu d e s tr a v e l e x p e n s e s . A c c o r d in g to C S A a n d th e d is tr ic t c o u r t, th e ite m s lis te d a s “E x c lu s io n s ” c a n o n ly be r e a s onabl y i nt e rpr e t e d a s i t e m s tha tw i l l be bi l l e d s e pa r a t e l y by C S A , a bove a nd b e y o n d th e p r o p o s e d f

e e s lis te d in th e c o n tr a c t. W h ile C S A ’s a n d th e d is tr ic t c o u r t’s in te rp r e ta tio n is o n e r e a s o n ab le c ons truc t i on of

the c ontr a c t , i ti s notthe onl y r e a s ona bl e c ons truc t i on of the cont ra ct . Inst ea d— gi ven t hat“ di re cttra vel expenses ” a re l i st ed un der

“ E xcl usi on s”

— the cont ra ctca n al so re as on abl y be r ea d so as t o excl ud e di re ct tra vel expenses com pl et el y, w hi ch re nd er s the cont ra ctam bi gu ou s a s t o d i re ct10

tra vel expenses . S ee M cC ol l ou gh v. R egi on s B ank, 95 5 S o. 2d 40 5, 41 1 (A l a. 2006) ( s t a t i ng tha ta c ontr a c tt e r m i s a m bi guous i f i ti s r e a s ona bl y s us c e pt i bl e of m ore than o ne i nt erpret at i on ). T hi s i s part i cul ar l y s o i n l i gh tof the fa ctthattra vel e x p e n s e s a r e n o t lis te d in a la te rp o r tio n o f th e c o n tr a c t th a t d is c u s s e s c e r ta in

“ i t e m s a nd s e r vi c e s [ tha t ] s ha l l be de e m e d r e i m bur s abl e e xpe ns e s . ” P r opos a l of O c t. 9 , 2 0 0 5 , a t 8 ( e m p h a s is a d d e d ) . A lth o u g h th is lis t o f “ite m s a n d s e r v ic e s [ th a t] shal l be deem ed re i m bu rs abl e e xp ense s” i s notnece ss ar i l y r ef l ec t i ve of every re i m bu rs abl e e xp ense betw ee n the part i es , i ti s c ert ai nl y not abl e thatdi re cttra vel ex p en ses are n o tl i st ed th ereu n d er, an d th ei r ab sen ce su p p o rt s D efen d an t s’ co n t en t i o n th atth e co n tracti s am b i g u o u s as t o d i recttrav el ex p en ses. F o r th ese r e a s ons , the di s tr i c tc our te rr e d i n gr a nt i ng C S A s um m a ry j udgm e ntf orthe appr oxi m a t e l y $10, 000 tha ti tc ha r ge d D e f e nda nt s i n di r e c ttr a ve l e xpe ns e s , a nd a j u ry m u streso l v e th e q u est i o n o f w h eth er th e co n tracti n cl u d es th o se ex p en ses. B . B re ach D e f e n d a n t s n e x ta r g u e th a tth e d i s tr i c tc o u r te rr e d i n d e t e r mi n i n g th a tCSA wa s e n t i t l e d t o s u mm a ry j u d g me n to n th e u n d e r l y i n g b r e a c h o f c o n tr a c tc l a i m. To e s tab lis h its b r e a c h o f

c o n tr a c t c la im , C S A m u s t p r o v e f o u re le m e n ts : ( 1 ) a v a lid c ontr a c tbe tw e e n the pa r t i e s ; ( 2) C S A ’ s ow n pe r f or m a nc e unde rthe c ontr a c t ; ( 3) D e f e nda nt s ’ nonpe r f

or m a nc e unde rthe c ontr a c t ; a nd ( 4) da m a ge s . S e e H oope rv.11

C o lu m b u s R e g ’l H e a lth c a r e S y s ., I n c ., 9 5 6 S o . 2 d 1 1 3 5 , 1 1 3 9 ( A la . 2 0 0 6 ) . O n l y th e s e c o n d e l e me n ti s i n d i s p u t e h e r e . A c c o r d i n g t o D e f e n d a n t s , CSA c a n n o t s a tis f

y th e s e c o n d e le m e n t b e c a u s e C S A n e v e rp r o v id e d th e a irc u r ta in re fr i gera t i on sy st em ori gi nal l y i n the cont ra ct . W hi l e D ef endant s a ckno w l edge that th ey ag reed t o u t i l i ze a co n v en t i o n al refri g erat i o n syst em d u e t o t i m e co n strai n t s, the y a r gue tha tthe i ra gr e e m e ntt o us e a c onve nt i ona l r e f r i ge r a t i on s y s t e m di d not c ons t i tut e a n aba ndonm e ntof the i re xpe c t a t i ons f

ora n a i rc ur t a i n s y s t e m . I ns t e a d, D e f e n d a n t s c o n t e n d th a tth e y s t i l l w e r e e n t i t l e d t o r e c e i v e a n a i rc u r t a i n s y s t e m, e v e n a f t e rth e y a g r e e d t o a l l o w CSA t o p r o v i d e a mo r e c o n v e n t i o n a l s y s t e m. T hi s a rgum entfa i l s bec ause D ef endant s’ un di sput ed agree m entt o u se a m o r e c o n v e n tio n a l r e f

r ig e r a tio n s y s te m m o d if ie d th e c o n tr a c t b e tw e e n th e p a r tie s .

“ [ P ] a r t i e s a r e f

r e e t o m odi f

y a gr e e m e nt s , a nd i f

the t e r m s of

a s ubs e que nt a gr e e m e ntc ontr a di c tthe e a r l i e ra gr e e m e nt , the t e r m s of the l a t e ra gr e e m e nt p r e v a il.” C a v a lie rM f

g ., I n c . v . C la r k e , 8 6 2 S o . 2 d 6 3 4 , 6 4 1 ( A la . 2 0 0 3 ) . H e r e , it i s und i sput ed thatas of D ec em ber 200 5, H offm an agree d t o h ave C S A proceed w ith B o x c a rs to r e d e s ig n s th a t in c lu d e d c o n v e n tio n a l r e f r ig e r a tio n s y s te m s . I t is f ur the rundi s put e d tha tD e f e nda nt s us e d C S A ’ s de s i gns — w hi c h i nc l ude d door s on r e f r i ge r a t e d s pa c e s , r a the rtha n a i rc ur t a i ns — i n s ubm i s s i ons t o s i x gove rnm e nt pl anni ng offi ce s. A cc ordi ng l y, i ti s c l ea r thatthe part i es m utual l y a gree d t o m od i fyDe fendantsse e m to arguein p a ssingthat th ec ontra c t w a s unil aterally modif ie d b y CSA 8 (a s opp os e d tomodif

ie d b y mut ual agre e ment) , a

nd tha t unilateral mo dif

ic atio n isimp e rmiss ibl e under A labama la

w. Def endants a re c orre ct that a pa

rty “ca nnot unilaterally

alter theterms of a contract af

ter the c ontrac t has been made”and that “[b]oth parties must mutually assent to a modification.” Ex parte Amoc o Fa brics &Fiber s Co., 729 So. 2d 336, 340 (Ala. 1998). Ho wever, thec ontra c t herewa s n ot u nil aterally

modif ie d. Ho ff man undispute dly

agre e d w ith CSA to have CSA procee d with designs that included conventional refrigeration systems instead of air curtain systems, even if hedid so reluctantly . Def endants also argue in passingthat the contract was rendered ambiguous by the parties’ alteration of the contract to allow CSA to include conventional food refrigeration systems. Ho wever, thi s c ontenti on is w ith out merit be c a

us ethepa rtie s mo dif

ie d th ec ontra c t, thereby relievingCSA of any

duties to provide designs that included air curtain re frig eration s ys t e m s . T h em o di f

i c at i o ndi d

n o tc re at eamb i gu i ty. In any event, the A labama Supreme Court rec ently stated: “‘Par

ties to a written contract 9 may by mutual consent without other consideration orally alter, modify

or re scind the contract.’” Cavalier Mf

g ., 862 So. 2d at 640-41 (empha sis added) ( quoting Watson v. McGe e, 348 So. 2d 461, 464 (Ala. 1977) ). 12 th e c o n tr a c t to in c lu d e a m o r e c o n v e n tio n a l r e f r ig e r a tio n s y s te m in s te a d o f a n a ir c ur t a i n s y s t e m , a nd tha tthi s c ha nge s upe r s e de d the e a r l i e ra gr e e m e ntbe tw e e n the p art i es. 8 D e f e nda nt s f ur the rc ont e nd tha ta ny m odi f i c a t i on of

the c ontr a c tha d t o be supp ort ed by new consi dera t i on , and t hathere , there w as no addi t i on al c o n s id e r a tio n g iv e n f

o rth e p u rp o r te d m o d if

ic a tio n . H o w e v e r , D e f

e n d a n ts f a ile d to ra i se thi s “ consi dera t i on ” i ss ue before the di stri ctcourt , and t hu s they have w ai ved the a r gum e nt . S e e A c c e s s N ow , I nc . v. S w . A i r l i ne s C o. , 385 F . 3d 1324, 1331 (11t h C i r. 20 04 ) ( no t i ng thatthi s C ou rthas r epea t edl y hel d thatan i ss ue no tra i se d i n the di stri ctcourtand rai se d for the fi rs tt i m e on app ea l i s w ai ved). 9 A c c o r d in g ly , th e d is tr ic t c o u r t c o rr e c tly d e te rm in e d th a t C S A w a s e n title d to13

s u mma ry j u d g me n to n i t s b r e a c h o f c o n tr a c tc l a i m. C . H offm an ’s p er son al l i ab i l i ty F in ally, th e d istrict co u rt d id n o t errin co n clu d in g th at R etail G ro u p ’s c o rp o r a te v e il s h o u ld b e p ie r c e d s o a s to m a k e H o f f m a n p e r s o n a lly liab le . I n or de rt o pi e r c e R e t a i l G r oup’ s c orpor a t e ve i l , C S A m us te s t abl i s h tha t : ( 1) H o ffm an h ad co m p l et e co n tro l o f R et ai l G ro u p ’ s fi n an ces, p o l i cy, an d b u si n ess prac t i ce s s o thatatthe t i m e of the cont ra ct , R et ai l G roup had n o w i l l or exi st ence o f its o w n ; (2 ) H o ff

m an m isu se d h is co n tro l o f R etail G ro u p ; an d (3 ) H o ff m an ’s m i s us e of

c ontr ol pr oxi m a t e l y c a us e d C S A ’ s l os s . S e e M e s s i c k v. M or i ng, 514 S o. 2 d 8 9 2 , 8 9 4 - 9 5 ( A la . 1 9 8 7 ) . A s to th e f ir s t e le m e n t, “[ t]h e m e r e f a c t th a t a p a r ty ow ns am a

j or i ty ora l l of

the c orpor a t i on’ s s t oc k doe s not , of i t s e l f , de s tr oy the c orpor a t e i de nt i ty , buti ti s a f a c t ort o be c ons i de r e d i n de t e r m i ni ng the c ontr ol of the corporat i on . ” I d. at89 5. A s t o the se cond el em ent , “ fr aud o r the vi ol at i on of a st atut ory or other posi t i ve l egal du ty i s m i suse of cont rol , [but ] w hen i ti s nec es sa ry t o pr e ve nti nj us t i c e ori ne qui t abl e c i r c um s t a nc e s , m i s us e of c ontr ol w i l l be p r e s u m e d .” I d . H er e, al l three el em ent s a re pres ent . A s t o the fi rs tel em ent , H offm an ow ned a ll th e s to c k o f

R e ta il G r o u p a n d w a s its C E O , C F O , a n d p r e s id e n t. W h ile H o f f m a n ’s s ta tu s a s R e ta il G r o u p ’s s o le s h a r e h o ld e rd o e s n o t b y its e lf e s tab lis h h is14

“ c om pl e t e c ontr ol a nd dom i na t i on” ove rR e t a i l G r oup, i ti s a f a c t ort o be c ons i de r e d. I d. a t894. M or e ove r , w he n a s ke d i f the r e w e r e a ny othe rdi r e c t or s of R e ta il G r o u p b e y o n d h im s e lf , H o f f m a n f ir s t te s tif ie d th a t h e d id n o t k n o w . D e pos i t i on of

J e r om e H of

f m a n, a t17. A l though H of f m a n e ve ntua l l y na m e d A a r on A rr ad o n d o as an o th erd irec to r, w h en H o ff m an w as as k ed ab o u t A rr ad o n d o ’s resp o n si b i l i t i es, h e t est i fi ed o n l y th atA rrad o n d o w as a “ research an al yst ” w h o se dut i e s w e r e l i m i t e d t o s tudy i ng the r e t a i l m a r ke tf ors upe r m a r ke t s a nd he l pi ng

“ de ve l op the B oxc a rc onc e pt . ” I d. a t17- 18, 32- 33. H of f m a n m e nt i one d no tra di t i on al offi ce r r es po nsi bi l i t i es for A rr adon do , further e st abl i shi ng thatH offm an e xe r c i s e d s ol e a nd c om pl e t e c ontr ol ove rR e t a i l G r oup. A s t o the se cond and t hi rd el em ent s, the un di sput ed evi dence es t abl i shes that H offm an m i suse d h i s c on trol of R et ai l G roup t o o bt ai n servi ce s f rom C S A and t hat h is m is u s e c a u s e d C S A ’s lo s s . H o f f m a n ’s a c c e p ta n c e le tte r , w r itte n o n R e ta il G r oup l e tt e rhe a d, e xpr e s s l y “ gua r a nt e e [ d] ” pa y m e ntt o C S A f r om R e t a i l G r oup a nd the non- e xi s t e ntB oxc a rF oods U S A I nc . , s e e L e tt e rf r om H of f m a n t o C S A of O ct . 12 , 20 05 , and C S A re l i ed on thatgu ar ant ee and p er form ed un der the cont ra ct as l at er m o d i fi ed . D esp i t e h i s w ri tt en g u aran t ee t o p ay C S A w i th i n n i n ety d ays, ho w ever , H offm an adm i tt ed thathe never i nt ended t o p ay C S A un t i l the B ox ca r s t or e s w e r e bui l t , s ol d, a nd l e a s e d ba c k. I nde e d, H of f m a n a dm i tt e d tha tne i the rhe15

norR e t a i l G r oup ( nor , f ortha tm a tt e r , B oxc a rF oods U S A I nc . ) ha d c a s h ora l i ne o f c r e d it a v a ilab le f

r o m a b a n k o ra n y o th e rs o u r c e th a t w o u ld h a v e e n ab le d h im to p a y C S A e v e n if

h e h a d c h o s e n to d o s o . M or e ove r , the f

a c ttha tH of

f m a n c ontr a c t e d on be ha l f of a non- e xi s t e nt e nt i ty ( B oxc a rF oods U S A I nc . ) i n a ddi t i on t o R e t a i l G r oup i s f ur the re vi de nc e of H offm an’ s s ub t er fuge. A nd gi ven t hatR et ai l G roup ’ s s t ock h as no val ue and t hat R e ta il G r o u p h a s n o in s u r a n c e w ith w h ic h to s a tis f y a ju d g m e n t a g a in s t it, H of f m a n’ s m i s us e of

c ontr ol c oul d e ve n be pr e s um e d he r e i n or de rt o pr e ve nt in ju s tic e . S e e C o h e n v . W illia m s , 3 1 8 S o . 2 d 2 7 9 , 2 8 1 ( A la . 1 9 7 5 ) . A c c o r d in g ly , w e c a n n o t s a y th a t th e d is tr ic t c o u r t e rr e d in p ie r c in g R e ta il G roup ’ s c orpo ra t e vei l t o h ol d H offm an pers on al l y l i abl e. I I I . CONCL US I ON F or the foregoi ng re as on s, w e a ff i rm the di stri ctcourt ’ s gra ntof sum m ary j udgm e nti n f

a vorof C S A a nd a ga i ns tD e f

e nda nt s H of

f m a n a nd R e t a i l G r oup e x c e p t a s to th e ap p r o x im a te ly $ 1 0 ,0 0 0 in d ir e c t tr a v e l e x p e n s e s . W ith r e g a r d to th e tr a v e l e x p e n s e s , w e r e m a n d f o rf u r th e rp r o c e e d in g s c o n s is te n t w ith th is opi ni on. AF F I RME D I N P AR T , RE V E RS E D I N P AR T , AN D R E MAND E D.