Opinion ID: 1803658
Heading Depth: 2
Heading Rank: 2

Heading: The Voluntary-Payment Defense

Text: The U-Haul defendants' primary defense to Johnson's claim and to his asserted right to sue on behalf of a class is based upon the voluntary-payment doctrine. This Court has long recognized the defense of voluntary payment: It has been the law in Alabama for over 150 years that where one party, with full knowledge of all the facts, voluntarily pays money to satisfy the colorable legal demand of another, no action will lie to recover such a voluntary payment, in the absence of fraud, duress, or extortion. Mt. Airy Ins. Co. v. Doe Law Firm, 668 So.2d 534, 537 (Ala.1995). A breach-of-contract claim is precluded by proof that the party asserting the claim voluntarily paid what he or she is seeking to recover. Id. Nevertheless, [i]t is well settled that money voluntarily paid under a mistake of fact may be recovered, even where the party paying had means of ascertaining the real facts. However, it is equally well settled that money voluntarily paid with full knowledge of the facts but by reason of mistake of law cannot be recovered. Sherrill v. Frank Morris Pontiac-Buick-GMC, Inc., 366 So.2d 251, 257 (Ala.1978) (Torbert, C.J., concurring specially) (citations omitted). As previously noted, the trial court did not address in its class-certification order arguments concerning the voluntary-payment defense that the U-Haul defendants asserted after the class-certification hearing. The U-Haul defendants argue that the customers' claims are barred by the voluntary-payment doctrine because each customer knew the exact amount he or she was paying in taxes, which amount was stated on the contract, but each paid the stated tax anyway. The U-Haul defendants also argue that determining whether the voluntary-payment doctrine bars the claim of any given customer will require an individualized inquiry to determine whether the customer paid the tax voluntarily or under a mistake of fact. Finally, the U-Haul defendants argue that the trial court exceeded its discretion in failing to address this argument in its class-certification order. Johnson argues that under the facts of this case, the voluntary-payment doctrine does not prevent class certification of the breach-of-contract claim. Under the contract with each customer, the U-Haul defendants were entitled to pass on to that customer only those taxes actually due on the rental transaction, even though the amount was entered on a line entitled sales tax. When the U-Haul defendants knowingly overcharged customers and U-Haul International knowingly retained the overpayments, Johnson maintains, the customers were charged more than they contractually agreed to pay, and the U-Haul defendants thereby breached the contracts it had entered into with those customers. This Court has previously reversed class-certification orders based upon the voluntary-payment doctrine. See, e.g., Stone v. Mellon Mortgage Co., 771 So.2d 451 (Ala.2000); and Smart Prof'l Photocopy Corp. v. Childers-Sims, 850 So.2d 1245 (Ala.2002). In Stone, the plaintiffs paid a fee to have loan-payoff information provided to their lawyer by facsimile transmission, information they could have received by mail without cost. The fax fee was clearly disclosed on the payoff statement sent to the lawyer by the loan company. We concluded that the Stones paid the fax fee with full knowledge of all the facts and that there was no fraud, duress, or extortion that negated the voluntary nature of their payment of the extra charge. 771 So.2d at 456. In Smart, Smart Photocopy had entered into contracts with health-care businesses under which Smart Photocopy responded on behalf of the businesses to requests for copies of medical records, and it billed the costs of those copies to the persons making the requests. Smart Photocopy charged those persons requesting copies more than the reasonable amounts allowed by Alabama statutory law. We reversed the class-certification order because individual inquiries were necessary for each claimant to prove that his or her attorney mistakenly paid the copying costs and did not voluntarily agree to pay more than the statutory amount allowed. We agree with the U-Haul defendants that the trial court exceeded its discretion in failing to address the voluntary-payment doctrine in its class-certification order. We therefore vacate the order certifying the class and remand the case to allow the trial court to conduct such further proceedings as may be necessary to consider the effect on the issue of class certification of the U-Haul defendants' assertion of the voluntary-payment defense. On remand, the trial court may consider whether the U-Haul defendants are entitled to assert the defense by reason of having a colorable claim to the disputed amounts, [2] and/or whether, considering the various statutes discussed herein, the conduct of the U-Haul defendants violates public policy as established by the Legislature so that a public-policy exception to the voluntary-payment doctrine applies in this case. [3] Should the trial court conclude that the defense of voluntary payment is indeed available, the trial court must then consider, in addition to all other relevant considerations, the U-Haul defendants' objections to class certification based upon typicality and adequacy of representation by reason of Johnson's two separate transactions in determining whether to certify a class.