PER CURIAM.
Southern Homes, AL, Inc. ("Southern Homes"), appeals from a preliminary injunction entered by the Madison Circuit Court in favor of Bermuda Lakes, LLC ("Bermuda"), preventing Southern Homes from proceeding "in any way with [Southern Homes'] action styled Southern Homes, A.L., Inc. v. Bermuda Lakes, LLC, Case No. 08-4797, which is now pending in Division H-12 of the Civil District Court for the Parish of Orleans in the State of Louisiana (the `Louisiana action'), or in any other proceeding that arises from the controversy that is the subject of this action or involves or relates to [Bermuda] or any of its related or affiliated entities." We reverse and remand.
On September 5, 2007, Southern Homes, an Alabama corporation with its principal place of business in Slidell, Louisiana, entered into a contract to purchase approximately 87.62 acres of land in Madison County, Alabama, from Fanning School Communities, LLC ("Fanning"), and Briar Patch, LLC ("Briar Patch"). Before the sale the land was to be subdivided into approximately 269 residential lots. Under the contract. Southern Homes was to purchase the property in four separate "take downs." Southern Homes was required to purchase a specific number of lots for each take down. The sellers were required to satisfy certain conditions concerning the preparation of the lots before each take down. Pursuant to the contract, Southern Homes provided the sellers with a $300,000 irrevocable standby letter of credit, which the sellers could draw on if Southern Homes failed to close on any take down because of a default by Southern Homes. The letter of credit was issued by Whitney National Bank located in New Orleans, Louisiana. The letter of credit provided that all drafts drawn pursuant to it must be presented to the bank's International Banking Department in New Orleans.
Later, the contract to purchase the land was amended to change the name of the sellers to Bermuda, a limited liability company formed by the principals of Fanning and Briar Patch after the consummation of the original contract to purchase. The amendment was effective January 3, 2008.
On May 2, 2008, Southern Homes gave written notice to Bermuda that it was terminating the contract to purchase because, Southern Homes said, Bermuda had failed
On the same day Southern Homes gave written notice to Bermuda that it was terminating the contract to purchase, Southern Homes also filed a declaratory-judgment action against Bermuda in the Civil District Court for the Parish of Orleans in the State of Louisiana ("the Louisiana action"). That action sought a judgment declaring that Southern Homes had lawfully terminated the purchase contract and that it was entitled to a return of the letter of credit.
In a letter dated June 18, 2008, Bermuda advised Southern Homes that it had completed all the take-down conditions and that it was prepared to immediately close on the first take down. The letter also stated that, under the terms of the contract, the time for Bermuda's performance had been extended 90 days as the result of Bermuda's inability to obtain necessary governmental approvals related to a wetlands issue. Southern Homes did not close on the property.
On September 15, 2008, Bermuda filed the present action in the Madison Circuit Court ("the Alabama action"), suing Southern Homes and its principals, Adrian Kornman and Chris Kornman, on theories of fraud and breach of contract. On October 24, 2008, Bermuda moved for a preliminary injunction, seeking to enjoin Southern Homes from prosecuting the Louisiana action and from engaging in any other proceedings in Louisiana that might arise from the controversy that is the subject of the Alabama action. Bermuda alleged that without the injunction, it would be "subjected to duplicative litigation, the possibility of inconsistent results, and unnecessary hardship and costs." Bermuda further alleged that the case belongs in Alabama because the case involves a contract between two Alabama corporations for the sale of land located in Alabama.
On October 30, 2008, Southern Homes moved for a preliminary injunction in the Louisiana action, seeking to enjoin Bermuda from prosecuting the Alabama action. On the same day, the Louisiana court set Southern Homes' motion for a preliminary injunction for a hearing on November 13, 2008. On November 4, 2008, the Madison Circuit Court set Bermuda's motion for a preliminary injunction for a hearing on November 10, 2008. On November 5, 2008, Southern Homes moved the Louisiana court to set an expedited hearing of its request for a preliminary injunction. On the same day, the Louisiana court set Southern Homes' motion for a preliminary injunction for a hearing on November 7, 2008. At 9:48 a.m. on November 6, 2008, Bermuda filed a "verified emergency motion for preliminary injunction and other equitable relief," asking the Madison Circuit Court to conduct an immediate hearing on Bermuda's motion for a preliminary injunction. Shortly thereafter, the Madison Circuit Court conducted a hearing on Bermuda's motion for a preliminary injunction in which Southern Homes' counsel participated by telephone and Bermuda's counsel participated in person. At 11:45 a.m. on November 6, 2008, "[a]fter considering the arguments and authorities of counsel and acting pursuant to its general authority to do equity," the Madison Circuit Court issued a preliminary injunction enjoining Southern Homes "from proceeding in any way with [the Louisiana action], or in any other proceeding that arises from the controversy that is the subject of this action or involves or relates to [Bermuda] or any of its related or affiliated entities." The Madison Circuit Court further held:
On November 20, 2008, Southern Homes filed its appeal from the preliminary injunction entered by the circuit court.
In Holiday Isle, LLC v. Adkins, 12 So.3d 1173 (Ala.2008), this Court set forth the standard for reviewing an order issuing a preliminary injunction:
12 So.3d at 1175-76.
Southern Homes argues, among other things, that it received insufficient notice under Rule 65(a)(1), Ala. R. Civ. P., of the hearing on Bermuda's motion for a preliminary injunction, in violation of Southern Homes' due-process rights. We agree.
Rule 65(a)(1), Ala. R. Civ. P., provides that "[n]o preliminary injunction shall be issued without notice to the adverse party." Rule 65(a)(1) does not specify how much notice must be given to the adverse party before a preliminary injunction can be issued. However, as the United States Supreme Court has held in interpreting the federal equivalent of Rule 65(a),
In Granny Goose Foods, the adverse party was given notice by telephone on the same day it was served with all the documents and the hearing was held, and the adverse party's counsel was present in the courtroom and argued on behalf of the adverse party at that hearing. The United States Supreme Court recognized that Rule 65(b), Fed.R.Civ.P., like Rule 65(b), Ala. R. Civ. P., authorizes a trial court to issue a 10-day temporary restraining order ("TRO") without notice to the adverse party. The Court compared the lack of any requirement of notice in Rule 65(b) for a TRO with the explicit notice requirement for issuing a preliminary injunction under Rule 65(a), Fed.R.Civ.P. The Court held that the "informal, same-day notice" that was provided to the adverse party in
In the present case, it is undisputed that Southern Homes had less than two hours' notice of the hearing on Bermuda's motion for a preliminary injunction and that Southern Homes' counsel participated in the hearing only by telephone. Southern Homes was not able to submit written arguments in opposition to the motion or to submit evidence to support its arguments. Also, under the circumstances, Southern Homes could not call any witnesses.
Bermuda's primary response to Southern Homes' argument concerning inadequate notice is that "Southern Homes is responsible for any alleged due process deficiencies" because, Bermuda says, "[Southern Homes'] own attempts to expedite its own hearing in Louisiana . . . led to the shorter notice it received of the November 6 hearing in Alabama." Bermuda's brief, at 34, 36. However, what was happening in the Louisiana action does not alleviate the notice requirements of Rule 65(a)(1), Ala. R. Civ. P., in the Alabama action. In the present case, before a preliminary injunction with its unlimited duration could be issued, Southern Homes had to be given notice of a hearing in which it was given a fair opportunity to oppose the motion for the preliminary injunction and to prepare for such opposition. Southern Homes simply was not given such notice. Therefore, under these circumstances, we conclude that Southern Homes did not have a fair opportunity to oppose the motion for a preliminary injunction, and, thus, the circuit court exceeded its discretion in issuing the preliminary injunction.
Based on the foregoing, we reverse the Madison Circuit Court's judgment and remand this case for proceedings consistent with this opinion.
REVERSED AND REMANDED.
COBB, C.J., and LYONS, WOODALL, STUART, SMITH, BOLIN, PARKER, MURDOCK, and SHAW, JJ., concur.