Court Opinion

ID: 2755784
Source: CourtListenerOpinion
Date Created: 2014-11-26 18:01:42.874339+00
Date Added: 2024-06-11T10:28:52.503708
License: Public Domain

REL:11/26/2014

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
                           OCTOBER TERM, 2014-2015
                            ____________________

                                    1131078
                             ____________________

                 Tender Care Veterinary Hospital, Inc.

                                           v.

                              First Tuskegee Bank

                 Appeal from Montgomery Circuit Court
                            (CV-09-900425)

STUART, Justice.

      Tender Care Veterinary Hospital, Inc. ("TCVH"), appeals

the summary judgment entered by the Montgomery Circuit Court

in favor of First Tuskegee Bank on breach-of-fiduciary-duty

and fraud claims asserted by TCVH stemming from a construction
1131078

loan TCVH received from First Tuskegee in September 2004.   We

affirm.

                              I.

    In 2004, TCVH sought financing from First Tuskegee to

construct a veterinary clinic and animal hospital in Pike

Road.   TCVH asserts that First Tuskegee ultimately agreed to

loan TCVH the requested funds on the condition that TCVH

employ PJ Construction and Services, Inc. ("PJ Construction"),

as the general contractor on the project.   TCVH's president,

Dr. Patricia Joyce Patterson, testified in a deposition that

she agreed to that condition after First Tuskegee's president,

James W. Wright, assured her that PJ Construction would "do a

good job."   Accordingly, on September 30, 2004, TCVH executed

a loan agreement with First Tuskegee pursuant to which it

borrowed $675,000.1    TCVH subsequently executed three more

    1
     First Tuskegee emphasizes to this Court on appeal that
the loan agreement makes no mention of PJ Construction. First
Tuskegee further argues that there is no evidence in the
record establishing that First Tuskegee required TCVH to use
PJ Construction as its general contractor in order to receive
the loan.    However, because First Tuskegee stated in its
summary-judgment motion that "[this] allegation will be taken
as true for purposes of summary judgment," we will also accept
it as true when reviewing the summary judgment subsequently
entered on that motion.
                               2
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loan agreements with First Tuskegee, borrowing an additional

$567,000, $75,000, and $9,145, respectively.

    TCVH thereafter entered into a construction agreement

with PJ Construction, and, pursuant to that agreement, PJ

Construction began work at TCVH's site in Pike Road.            Under

the terms of that construction agreement, the maximum price of

the project was to be $300,000 and work was to be completed

within 180 days, or approximately some time in April 2005.2

However, almost immediately after work began, TCVH became

concerned     about   the   quality      and     timeliness    of    PJ

Construction's performance.           Dr. Patterson stated in her

deposition that by January 2005 she was concerned that PJ

Construction would not complete the project on time. By April

2005, the relationship between TCVH and PJ Construction was

essentially    broken;   TCVH   was    unhappy   with   the   work   PJ

Construction had performed to date and was unwilling to

authorize First Tuskegee to disburse to PJ Construction the

full amounts it was requesting for the work it had completed.

It appears that PJ Construction performed no significant work

at TCVH's site after April 2005, and it ceased virtually all

    2
     Some of the initial loan proceeds were used to pay off
an existing mortgage on TCVH's property.
                                 3
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activities related to TCVH by approximately May 11, 2005,

before completely abandoning the project some time in late

July 2005.3

    TCVH subsequently received approval from First Tuskegee

to act as its own general contractor, and it thereafter

supervised construction and managed subcontractors until the

veterinary clinic and animal hospital opened in August 2006.

However, the business was not profitable and, in September

2007, TCVH filed a petition for bankruptcy protection.             In

January 2008, First Tuskegee sued TCVH's owners, Dr. Patterson

and Dr. Howard King, seeking to recover on personal guaranty

agreements they had made as part of the loans issued to TCVH,

and in July 2008 First Tuskegee obtained a $1,623,285 judgment

against   them.   TCVH   was   also   engaged   in   multiple   other

    3
     PJ Construction received a total of $111,000 for work
performed on behalf of TCVH –– $50,000 in January 2005 and
$61,000 in April 2005. In February 2006, PJ Construction sued
TCVH, alleging that TCVH owed it an additional $137,198 under
their contract; however, that lawsuit was ultimately dismissed
because PJ Construction was not a licensed general contractor.
See, e.g., Twickenham Station, Inc. v. Beddingfield, 404 So.
2d 43, 45 (Ala. 1981) (stating that it is illegal for an
unlicensed contractor to contract to perform the work of a
contractor as defined in § 34-8-1, Ala. Code 1975, and that
any such contract is void and unenforceable).
                                 4
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lawsuits related to the construction of its facility and its

business operations during this time.

       On April 7, 2009, TCVH initiated the instant action when

it moved the Montgomery Circuit Court to enter an injunction

enjoining First Tuskegee from selling the TCVH property at a

foreclosure sale later that day.            Upon TCVH's agreeing to

deposit one month's interest on the loans –– $11,063 –– with

the court, the trial court enjoined the foreclosure sale for

30 days to allow TCVH additional time to pay the amounts it

owed First Tuskegee.          However, after that 30-day period had

expired and TCVH still had not made full payment of the loans

to First Tuskegee, the trial court allowed the foreclosure

sale    to   be   conducted    and   eventually   disbursed   to   First

Tuskegee the funds being held by the court.

       Nothing further happened in the case until approximately

two years later, when TCVH moved the trial court to schedule

a status conference.          At that status conference, the trial

court granted TCVH's request for leave to amend its complaint,

and, on December 9, 2011, TCVH filed an amended complaint

asserting breach-of-fiduciary-duty and fraud claims against

First Tuskegee.       The gravamen of those claims was that TCVH

                                     5
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had been injured by First Tuskegee's requirement that it use

PJ Construction as the general contractor on the project

because   PJ   Construction    was      not   licensed   as   a   general

contractor     in   Alabama   and    because    the   quality     of    its

performance was below the quality one would expect from a

properly licensed general contractor.            The trial court then

reinstated the case to its active docket, and, following a

period of discovery, First Tuskegee moved the trial court to

enter a summary judgment in its favor, arguing, among other

things, that TCVH's claims were time-barred.             Specifically,

First Tuskegee noted that both of TCVH's claims were subject

to a two-year statute of limitations and that Dr. Patterson

had stated in her deposition that she first learned that PJ

Construction was not licensed as a general contractor in

approximately July 2005, after she took steps to collect on PJ

Construction's surety bond once it formally left the TCVH

site, but TCVH did not initiate an action against First

Tuskegee until almost four years later in April 2009.                  First

Tuskegee also moved for a summary judgment on a counterclaim

it had asserted against TCVH seeking to recover the deficiency

balance still owed after the foreclosure of TCVH's property.

                                    6
1131078

    TCVH opposed First Tuskegee's summary-judgment motion and

submitted a new affidavit from Dr. Patterson in which she now

asserted   that   she   actually       had   not   discovered   that    PJ

Construction was not licensed as a general contractor until

November 2008.      Thus, TCVH argued, its claims were in fact

timely.     First    Tuskegee   promptly       moved   to   strike     Dr.

Patterson's affidavit on the ground that it was untimely

because it was filed only the day before the summary-judgment

hearing and on the basis of the sham-affidavit doctrine.               See

Rule 56(c)(2), Ala. R. Civ. P. (stating that "any statement or

affidavit in opposition [to a summary-judgment motion] shall

be served at least two (2) days prior to the hearing"), and

Panayiotou v. Johnson, 995 So. 2d 871, 879 (Ala. 2008) ("[T]he

so-called 'sham affidavit doctrine' ... prevents an individual

from contradicting prior sworn testimony to avoid the entry of

a summary judgment ....").

    On April 17, 2014, the trial court granted both First

Tuskegee's motion to strike Dr. Patterson's affidavit and its

motion seeking a summary judgment, stating in relevant part:

         "For the reasons set forth in its January 10,
    2014, motion for summary judgment, it is ordered,
    adjudged, and decreed that summary judgment be
    entered in favor of First Tuskegee Bank on all

                                   7
1131078

    claims asserted by [TCVH].      Without limiting the
    basis for its decision, the court specifically notes
    that all claims asserted against First Tuskegee Bank
    are   conclusively   barred   by    the   statute   of
    limitations.    The undisputed evidence of record
    reflects that the corporate representative for
    [TCVH] admitted in deposition that actual discovery
    of the facts giving rise to the claims in this case
    was made more than two years before suit was filed
    in April 2009. In addition, the court finds that
    the undisputed evidence of record further reflects
    sufficient facts that reasonably should have
    provoked inquiry into PJ Construction's licensure
    status (which was publicly available) more than two
    years before suit was filed.         Summary judgment
    likewise is due to be entered in favor of First
    Tuskegee Bank on its February 26, 2014, supplemental
    motion for summary judgment on counterclaim.       The
    counterclaim asserts that [TCVH] is in default of
    its various promissory notes to First Tuskegee Bank,
    and the court has been presented with no evidence
    that would contradict the materials submitted by
    First    Tuskegee   Bank    in    support     thereof.
    Accordingly, it is ordered, adjudged, and decreed
    that   a   total   judgment    in    the   amount   of
    $1,239,919.76, plus court costs, is hereby entered
    in favor of First Tuskegee Bank and against [TCVH].
    Execution may issue in accordance with the
    provisions of law.

         "With all issues having been resolved by the
    court, this order shall be deemed a final
    disposition of this action in its entirety.

         "The Court finds that any contradictory
    statements in the affidavit of Patricia Joyce
    Patterson are simply improper [and] cannot be used
    to create an issue of fact in light of her
    unambiguous deposition testimony.   First Tuskegee
    Bank's motion to strike is therefore due to be
    granted to that extent."

                              8
1131078

On May 13, 2014, the trial court denied TCVH's motion to

alter,    amend,   or   vacate   the    order   entering   the   summary

judgment in favor of First Tuskegee, and, on June 24, 2014,

TCVH filed this appeal.

                                  II.

    We review a summary judgment pursuant to the following

standard:

         "This Court's review of a summary judgment is de
    novo. Williams v. State Farm Mut. Auto. Ins. Co.,
    886 So. 2d 72, 74 (Ala. 2003). We apply the same
    standard of review as the trial court applied.
    Specifically, we must determine whether the movant
    has made a prima facie showing that no genuine issue
    of material fact exists and that the movant is
    entitled to a judgment as a matter of law. Rule
    56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of
    Alabama v. Hodurski, 899 So. 2d 949, 952-53 (Ala.
    2004).   In making such a determination, we must
    review the evidence in the light most favorable to
    the nonmovant. Wilson v. Brown, 496 So. 2d 756, 758
    (Ala. 1986). Once the movant makes a prima facie
    showing that there is no genuine issue of material
    fact, the burden then shifts to the nonmovant to
    produce 'substantial evidence' as to the existence
    of a genuine issue of material fact.         Bass v.
    SouthTrust Bank of Baldwin County, 538 So. 2d 794,
    797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12."

Dow v. Alabama Democratic Party, 897 So. 2d 1035, 1038-39

(Ala. 2004).

                                 III.

                                   9
1131078

       TCVH argues that the summary judgment should be reversed

because, it argues, the trial court erred in holding that

TCVH's claims were time-barred.         Although TCVH acknowledges

that both of its claims are subject to a two-year statute of

limitations,    it   argues   that     the   trial   court   erred   by

concluding that the claims accrued in approximately July 2005,

when    First   Tuskegee   alleges      TCVH   discovered    that    PJ

Construction was not a licensed general contractor.            Rather,

TCVH argues that its breach-of-fiduciary-duty claim did not

accrue until First Tuskegee initiated foreclosure proceedings

in early 2009 and their relationship turned adversarial and

that its fraud claim did not accrue until November 2008, when

TCVH asserts it actually learned that PJ Construction was not

a licensed general contractor.        TCVH argues that its December

2011 amended complaint asserting those claims relates back to

its April 2009 filing and that its claims were therefore

asserted within two years of their accrual in early 2009 and

November 2008, respectively.         See Weber v. Freeman, 3 So. 3d
825, 834-35 (Ala. 2008) ("[The plaintiff's] clarified second

amended complaint was filed after the statutory period had

run; therefore, the claims against [the defendant] set forth

                                 10
1131078

in the amended complaint are time-barred unless Rule 15, Ala.

R. Civ. P., applies.      Under Rule 15(c)(2), an amendment

relates back to the original complaint when 'the claim ...

asserted in the amended pleading arose out of the conduct,

transaction, or occurrence set forth or attempted to be set

forth in the original pleading ....'").

      We first consider the timeliness of TCVH's breach-of-

fiduciary-duty claim.    In support of its argument that the

limitations period on this claim did not begin to run until

its   fiduciary   relationship    with   First   Tuskegee   turned

adversarial in early 2009, TCVH cites Tonsmeire v. AmSouth

Bank, 659 So. 2d 601, 604 (Ala. 1995), for the proposition

that "'[t]he [limitations period] for [an action based on]

breach of fiduciary duty begins to run once the fiduciary

relationship is terminated and possession of trust property by

the trustee becomes adverse'"         (quoting with approval the

order of the trial court).   However, TCVH fails to recognize

that both Tonsmeire and Benners v. First National Bank, 247
Ala. 74, 22 So. 2d 435 (1945), upon which Tonsmeire relied,

concerned the alleged breach of fiduciary duties owed by a

trustee to the beneficiary of the trust administered by the

                                 11
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trustee.4    In the instant case, there is no "trustee" or

"trust property," and it is a different class of fiduciary

duties that are alleged to have been breached.             In cases

alleging a breach-of-fiduciary-duty claim not involving a

trust, this Court has not considered the date the parties

terminated their fiduciary relationship when considering the

application of the two-year statute of limitations; rather, it

has focused on when the aggrieved party was damaged.           See,

e.g., System Dynamics Int'l, Inc., 683 So. 2d 419, 421 (Ala.

1996) ("[I]n situations where the act itself is not a legal

injury, not a completed wrong, and the plaintiff's injury

comes only as a result of what the defendant has done, the

cause of action accrues and the limitations period begins to

run   when   damage   is   sustained.").   However,   as    further

explained by the United States District Court for the Middle

District of Alabama in Davis v. Dorsey, 495 F. Supp. 2d 1162,

1171 (M.D. Ala. 2007), even though a breach-of-fiduciary-duty

claim will accrue when damage is sustained, the two-year

statute of limitations can still be tolled based on the

      4
      This tolling of the limitations period for claims against
trustees has now been codified in § 19-3B-1005, Ala. Code
1975.
                                 12
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aggrieved party's ignorance.     Thus, like its fraud claim, the

timeliness   of   TCVH's   breach-of-fiduciary-duty   claim   will

ultimately hinge on when TCVH was damaged and TCVH's knowledge

of the relevant facts.

    Dr. Patterson gave unequivocal testimony regarding both

of those points in her deposition.    With regard to the damage

sustained by TCVH, Dr. Patterson testified that by June 2005

it was clear that PJ Construction's work product was not what

one would expect from a licensed general contractor because,

she stated, PJ Construction was committing obvious violations

of building codes and was not completing its work in a

workmanlike manner.    When asked by First Tuskegee's attorney

specifically whether TCVH had, at that point in time, been

damaged by the actions of PJ Construction, she readily agreed

that it had:

    "Q. Did you feel, as of June 2005, that these
        delays that failed to meet your expectations
        for [PJ Construction] had caused harm to
        [TCVH]?

    "A. Yes.

    "Q. That harm being financial?

    "A. Yes.

    "Q. And physical?

                                13
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     "A. Yes."

When asked to clarify when TCVH learned that PJ Construction

was not a licensed general contractor, Dr. Patterson also made

it   clear   that   she   had   become   aware   of   that   fact   in

approximately July 2005:

     "Q. Did you ever attempt to do any investigation as
         to whether [PJ Construction] was a licensed
         general contractor with the state licensing
         board?

     "A. After their departure, I made an effort to find
         out about their guarantee –– bond surety so
         that we would be able to file to get enough
         funds to complete it.     And at that time, I
         found out that they were not licensed general
         contractors.    I went to every agency in
         Montgomery County, and no one had ever –– they
         weren't recorded as a general contractor's
         license anywhere in the state of Alabama.

     "Q. And when did that take place?

     "A. After their departure, when I was trying to get
         the surety bond to make sure it was in force.
         After I spoke with Ms. Sutton,[5] she gave me a
         copy of the surety bond.    And I called that
         company, and then I went about getting the
         information to have a meeting with Mr. Wright.

     "Q. And this would have been at some point shortly
         after July 2006?

     "A. Yes.

     5
     Vanessa Sutton is a branch manager employed by First
Tuskegee.
                                  14
1131078

    "Q. I'm sorry.       2005.

    "A. 2005.       Yes."

Thus,     Dr.   Patterson,   TCVH's   corporate   representative,

acknowledged that, by approximately July 2005, TCVH was aware

1) that the misrepresentation First Tuskegee allegedly made ––

that PJ Construction was a licensed general contractor that

would do a good job –– was false and 2) that TCVH had been

injured as a result of that misrepresentation. The breach-of-

fiduciary-duty and fraud claims subsequently asserted in the

April 2009 action were accordingly untimely because they were

not asserted for more than two years after they accrued in

approximately July 2005.

    We further note, with regard to TCVH's argument that, via

her affidavit contradicting her deposition testimony, Dr.

Patterson created a genuine issue of material fact regarding

when TCVH learned that PJ Construction lacked a general

contractor's license, that this argument is not properly

before us.      The trial court struck Dr. Patterson's affidavit

pursuant to the sham-affidavit doctrine (although it did not

specifically invoke that doctrine by name), and it also

appears to be undisputed that the affidavit was untimely. See

                                 15
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Van Voorst v. Federal Express Corp., 16 So. 3d 86, 90-92 (Ala.

2008) (noting that there were "multiple valid grounds" for the

trial court to strike an affidavit that contradicted a party's

previous sworn testimony and that was also untimely filed).

Nevertheless, TCVH continues to cite the affidavit, although

it has not offered any argument as to whether the trial court

erred   by   striking     the   affidavit.      In   Gonzalez    v.    Blue

Cross/Blue Shield of Alabama, 689 So. 2d 812, 819 (Ala. 1997),

abrogated    on   other    grounds,     as   recognized   by    Ex    parte

Prudential Ins. Co. of America, 785 So. 2d 348, 350 (Ala.

2000), this Court considered a similar situation and stated:

    "The [appellants'] brief merely cites the affidavit
    as if it had been admitted as evidence, but the
    [appellants] completely fail to argue why excluding
    the affidavit was error and they cite no authority
    to support their position. 'When an appellant fails
    to properly argue an issue, that issue is waived and
    will not be considered on appeal.' Sullivan v. Alfa
    Mut. Ins. Co., 656 So. 2d 1233 (Ala. Civ. App.
    1995), citing Boshell v. Keith, 418 So. 2d 89 (Ala.
    1982)."

See also Chambers v. Advanced Processing Sys., 853 So. 2d 984,

990 (Ala. Civ. App. 2002) ("Given the plaintiffs' failure to

demonstrate that the trial court erred in ordering Chambers's

affidavit stricken, we may not consider the assertions set

forth in that affidavit in our review of this appeal.").

                                   16
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Thus, there is no real dispute regarding the date            TCVH

learned   that   PJ   Construction   was   not   licensed,   and,

accordingly, both TCVH's breach-of-fiduciary-duty claim and

its fraud claim are untimely.6

                              IV.

    TCVH asserted breach-of-fiduciary-duty and fraud claims

against First Tuskegee stemming from a construction loan First

Tuskegee made to TCVH in September 2004.         The gravamen of

those claims was that TCVH was injured by First Tuskegee's

alleged insistence that TCVH use PJ Construction as the

general contractor on the project although PJ Construction was

not licensed as a general contractor in Alabama, that PJ

Construction's work product was below what one would expect

from a properly licensed general contractor, and that using PJ

Construction resulted in delays, cost overruns, and, TCVH

argues, the ultimate failure of its business.           However,

because TCVH's claims accrued in approximately July 2005 and

TCVH did not formally assert them until after it initiated

    6
     Having held that TCVH's claims are untimely, it is
unnecessary for us to consider the other arguments put forth
by First Tuskegee urging us to affirm the summary judgment on
other grounds, such as whether First Tuskegee in fact owed any
fiduciary duties to TCVH.
                               17
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this action in April 2009, those claims are barred by the two-

year statute of limitations that governs them.   Accordingly,

the summary judgment entered by the trial court in favor of

First Tuskegee is hereby affirmed.

    AFFIRMED.

    Moore, C.J., and Parker, Shaw, and Wise, JJ., concur.

                             18