Opinion ID: 1880720
Heading Depth: 2
Heading Rank: 4

Heading: Jo Ellen & GRE's Counterclaim

Text: The trial court wholly denied Jo Ellen and GRE's counterclaim. On appeal, Jo Ellen and GRE argue that the court erred in doing so. They first argue that the relationship between Poole and Jo Ellen was a confidential and special relationship and that his formation of Tax Smart while contemporaneously owning shares of Gold Rush constituted a breach of his fiduciary duty as a shareholder of Gold Rush. They next argue that Poole tortiously interfered with Gold Rush's contracts and its business. Finally, they argue that Poole fraudulently concealed from Jo Ellen the existence of Tax Smart. A claim alleging breach of fiduciary duty sounds in tort, Brooks v. Hill, 717 So.2d 759, 764 (Ala.1998), and [a] necessary element to be proven in an action alleging breach of duty is damages. Williams v. Citizens Nat'l Bank of Shawmut, 570 So.2d 635, 638 (Ala.1990). Also, an essential element of a claim of tortious interference is damages. Parsons v. Aaron, 849 So.2d 932, 946 (Ala.2002). Finally, damages is a prerequisite element to finding a defendant liable for fraudulent concealment. Ex parte Liberty Nat'l Life Ins. Co., 797 So.2d 457, 465 (Ala.2001). As Poole notes, Jo Ellen and GRE have failed to demonstrate any injury that is attributable to the creation and/or operation of Tax Smart. Jo Ellen and GRE argue that Poole caused business to be diverted from Gold Rush to Tax Smart, yet their citation to several pages in the record fails to substantiate this or to show any other circumstances occasioning damages. Rather, the citations indicate the following: that Poole solicited existing [Gold Rush] clients for Tax Smart; that Tax Smart competed for business with Gold Rush; that Wade had negotiated a contract between Gold Rush and Redstone Federal Credit Union, and at some point after this contract was negotiated, he left Gold Rush; that Jo Ellen trusted her father in 1993 and 1994; that Redstone Federal Credit Union declined to renew its contract with Gold Rush in July 2003 because of Poole's lawsuit; and that some 35% of Gold Rush's business is received from credit unions. This evidence does not establish that Poole, through Tax Smart, did any more than attempt to entice customers away from Gold Rush. In short, Jo Ellen and GRE point to no evidence indicating that Poole in any way succeeded in securing Gold Rush clients or that Redstone Federal Credit Union chose not to renew its contract with Gold Rush because it desired to have Tax Smart provide its services. Finally, Jo Ellen and GRE assert that Tax Smart made profits of over $45,000. The materials in the record evidencing Tax Smart's profits indicate, however, that for tax years 1998 to 2002, the total profits hardly surpassed $4,500. Moreover, those materials in no way indicate that any business was diverted from Gold Rush to Tax Smart. Assuming, for the sake of argument, that Poole owed a fiduciary duty, a duty not to interfere, and/or a duty to disclose a material fact to Jo Ellen and GRE, their counterclaim alleging breach of those duties must fail for want of proof of damages. We therefore affirm the judgment of the trial court as to Jo Ellen and GRE's counterclaim. In conclusion, in case no. 1031504, we affirm the judgment of the trial court in the following respects: Jo Ellen and GRE are liable for the excessive rents and salaries paid by Gold Rush to Jo Ellen between February 11, 2000, and December 18, 2001, the date of the dissolution of Gold Rush. They are liable for dividends (if any) that should have been declared and paid to Poole between February 11, 2000, and December 18, 2001. They are liable for excess compensation paid to Wade between February 11, 2000, and December 18, 2001. They are liable for funds used to pay Jo Ellen's personal credit-card bills between February 11, 2000, and December 18, 2001. They are liable for Gold Rush's payment to Jo Ellen for capital improvements made to the building on April 5, 2001. They are liable for dissolving Gold Rush and appropriating the business opportunities to GRE. Finally, we affirm the judgment of the trial court in all material respects in its denial of Jo Ellen and GRE's counterclaim. We reverse the judgment of the trial court to the extent it entered judgment for Poole as to any conduct occurring before February 11, 2000, because as to any conduct occurring before that date his action is barred by the two-year statute of limitations. In order for the trial court to determine the proper amounts of damages to be awarded Poole, we remand the case.