JOHN E. OTT, United States Magistrate Judge.
The court, sitting pursuant to its diversity jurisdiction under 28 U.S.C. § 1332(a), has before it the motion of the defendants, D & D Oil Company, Inc., Superior Transport, Inc., The Pantry, Inc., and Larry Martin (hereinafter referred to collectively as "Defendants"), for summary judgment on the claims of the plaintiff, Moore Oil Company, Inc. (hereinafter "Plaintiff"), filed pursuant to FED.R.CIV.P. 56(c) on April 10, 2009. (Doc. 45).
Plaintiff is a family-owned wholesale distributor of petroleum products in Jefferson County, Alabama. (Restated and Amended Complaint (doc. 2) ¶ 1; Moore 2006 Dep. 15-16; Moore 2008 Dep. 11).
In the mid-1990's, Plaintiff entered a contract whereby it supplied petroleum products to William P. Pilato (hereinafter "Pilato") at Pilato's gasoline service station on Finley Avenue in Birmingham. (Moore 2006 Dep. 25-27; Moore 2008 Dep. 41). Under the terms of that agreement, Pilato was to pay Plaintiff for its gasoline deliveries within ten days of receiving each load. (Moore 2008 Dep. 42). However, Pilato soon became delinquent in his account by failing to pay for Plaintiff's deliveries. (Moore 2006 Dep. 27-33). It is not clear by what amount Pilato fell behind on the account, but the delinquency was apparently not cured until he sold the station to a third party. (Id. at 27, Moore 2008 Dep. 189-190).
After selling the Finley Avenue station, Pilato acquired two other gasoline service
Pilato soon fell behind on both accounts.
(Moore 2006 Dep. 29-31). When it placed his credit on hold, Plaintiff stopped supplying Pilato's stations with gasoline. (Id. at 53-54). Although this occurred more than ten times, according to Moore, Pilato was never without a supply because "we did our best to keep gasoline to him even though we knew this thing was—that it had to be managed carefully." (Id. at 54). To have his credit released, Pilato did not need to become current on his account with Plaintiff. (Id.) Instead, he paid cash on delivery for new loads, or got "caught up [on] some of the past due" on his account. (Id.)
Plaintiff eventually, on a date unspecified in the record, purchased the Chevron station from Pilato to settle his debt for that station. (Id. at 37). Pilato's debt to Plaintiff on the Citgo station was satisfied when he sold it to an unknown third party on a date also unspecified in the record. (Id. at 44).
Although Moore testified that "we always got our money out of [Pilato]" by purchasing his service stations from him, the record is inconsistent on this point. (Moore 2008 Dep. 192). Moore explained that Pilato "got his account paid [when Plaintiff bought a station from Pilato], but I wound up having to buy in some cases and pay more than the property was worth to get it cleaned up." (Moore 2006 Dep. 45). Moore testified further that Plaintiff "took a loss" at each of the stations it purchased from Pilato. (Id. at 46).
According to Moore, working with Pilato also cost Plaintiff a great deal of time and effort in managing Pilato's delinquent accounts. Moore testified that
(Moore 2006 Dep. 41-42). Moore later explained that this third mortgage on the Galleria Chevron served as an open line of credit to Pilato, the value of which "would vary for whatever [Pilato] would owe on his account" to Plaintiff. (Id. at 48-51). Regardless of the amount, however, Pilato never "improved his position" or became more current in his payments to Plaintiff. (Id.) Ultimately, however, Moore explained that Plaintiff continued working with Pilato because he was
(Id. at 46, 50).
Moore was the only person at Moore Oil Company who could decide to stop doing business with Pilato, but he never exercised that authority or even discussed the possibility of termination with Pilato. (Id. at 55-56). To the contrary, Plaintiff extended Pilato a personal loan on at least one occasion:
(Moore 2008 Dep. 184-86).
After he sold his Homewood stations, Pilato acquired a fourth service station, located on State Highway 150 in Hoover, Alabama (hereinafter "the Galleria Chevron" or "the station"). (Id.) In December 1997, Plaintiff and Pilato entered a contract whereby Plaintiff became the exclusive motor fuel supplier at the Galleria Chevron, and owner of a third mortgage and security interest in that property. (Restated and Amended Complaint) (doc. 2
(Moore 2006 Dep. 38-39).
Pilato's debt to Plaintiff apparently fluctuated throughout the period relevant to this action. In May 2002, Pilato and Plaintiff signed a Renewal Promissory Note that explained
(Moore Aff., Ex. E ((Renewal Promissory Note), at 1)). By November 2003, Pilato owed Plaintiff approximately $41,000, but by November 2004 that amount had increased to approximately $226,000 by November 2004. (Moore Aff. dated November 17, 2004 (doc. 45, ex. 14)). Plaintiff attempted to rehabilitate its relationship with Pilato by renegotiating the terms of the contract to "some terms that [Pilato] could live with," and that same year, those terms were extended to June 1, 2012. (Id.; Moore Aff., Ex. F (Second Amended to Motor Fuel Supply Contract); (Moore 2006 Dep. 74, 97)). Meanwhile, Pilato's credit was repeatedly placed on hold and then released, while his debt to Plaintiff continued to increase. (Moore 2006 Dep. 40-41).
Despite Plaintiff's efforts to continue working with Pilato, the record indicates that, by 2004, Pilato had determined to stop working with Plaintiff and to pay off his debt to Moore Oil by selling the Galleria Chevron. (Pilato Dep. 36-40). He first contacted D & D Oil Company (hereinafter "D & D"), a supplier of unbranded petroleum products and a competitor of Plaintiff, through its real estate agent during the summer of 2004. (Id. 36-37). After various attempts to negotiate a sale, Pilato rejected D & D's offer to buy the station for $1.7 million because the price would not cover his entire debt to Plaintiff. (Pilato Dep. 39-41).
By the fall 2004, as it became apparent that D & D would not purchase the Galleria Chevron, Pilato and D & D began to discuss re-branding the station into a "Cowboys" station that sold unbranded gasoline supplied by D & D. (Id. at 43, 45). Meanwhile, Pilato contacted other suppliers, while continuing to receive gasoline deliveries from Plaintiff, until October 9, 2004, when Plaintiff notified Pilato that it was again placing his credit on hold due to the increasing delinquency on his account. (Id. at 20, 53-57). At some point during the month of October, Pilato, apparently for the first time since he began working with Plaintiff, stopped making payments to Plaintiff altogether. (See Moore 2008 Dep. 49("When [Pilato's] debt skyrocketed is when he got someone else to sell him gasoline. He just quit paying me entirely.")).
On November 8, 2004, the day before Plaintiff was to purchase the Galleria Chevron via foreclosure sale, Pilato filed for Chapter 11 bankruptcy protection. (Doc. 45, Ex. 1 (Moore Aff. dated November 11, 2004)); (Doc. 45, Ex. 11 (Voluntary Petition for Bankruptcy dated November 8, 2004)). On December 3, 2004, the bankruptcy court granted Plaintiffs Motion to Dismiss the petition. (Doc. 45, Ex. 12 (Order of Dismissal)).
On December 13, 2004, Plaintiff sent a letter to D & D, McCullough Oil Company, McPherson Oil Company, Veteran's Oil Company, and Williams Oil Company, informing each company that Pilato was contractually bound to Moore Oil Company as his exclusive gasoline supplier, and asking each company to stop supplying gasoline to Pilato at the Galleria Chevron. (December 13, 2004 Letter from Ronald Moore, Sr., to McCullough Oil Company, Inc., McPherson Oil Company, Veteran's Oil Company, Higginbotham Oil Company, and D & D Oil Company (Doc. 45, Ex. 15); Moore 2006 Dep. 109; Moore 2008 Dep. 70, 128).
D & D stopped supplying gasoline to Pilato in December 2004. (Shadday Dep. (Doc. 45, Ex. 16) 118-119). The record does not indicate whether this was due to the letter itself or to the fact that Pilato
In January 2005, Plaintiff took possession of the Galleria Chevron and, at the time of this action, continued to own and operate it through a commission marketing agreement with a third party operator. (Moore 2008 Dep. 193). On February 25, 2005, D & D sold its assets to The Pantry, Inc., and D & D Oil Company was dissolved.
Plaintiff filed its Complaint in the Jefferson Country Circuit Court on November 23, 2005. In it, Plaintiff alleged that D & D intentionally interfered with Plaintiff's exclusive supply contract with Pilato.
Premised on the court's diversity jurisdiction, Defendants removed the action to this court on August 13, 2007. (Doc. 1). The same day, Plaintiff filed its "Restated and Amended Complaint," asserting the following claims against Defendants: (1) intentional interference with a contract; (2) intentional interference with a business relationship; (3) improper notice of the dissolution of D & D Oil Company and its transfer of assets to The Pantry, Inc., Jarrett Shadday and Larry Martin; (4) suppression of material facts relating to the dissolution of D & D and its transfer of assets; and (5) fraudulent transfer of assets. (Doc. 2). Also on August 13, 2007, Defendants filed their Answer to Plaintiffs Restated and Amended Complaint.
On August 14, 2007, Jarrett Shadday filed a Motion to Dismiss Plaintiff's claims as to him for lack of personal jurisdiction
Under FED.R.CIV.P. 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Chapman v. AI Transport, 229 F.3d 1012, 1023 (11th Cir.2000). The party asking for summary judgment always bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the pleadings or filings which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323, 106 S.Ct. at 2553. Once the moving party has met its burden, Rule 56(c) requires the nonmoving party to go beyond the pleadings and, by its own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553.
The substantive law will identify which facts are material and which are irrelevant. Chapman, 229 F.3d at 1023; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). All reasonable doubts about the facts and all justifiable inferences are resolved in favor of the nonmovant. Chapman, 229 F.3d at 1023; Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; Chapman, 229 F.3d at 1023. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249, 106 S.Ct. at 2511.
The method used by the party moving for summary judgment to discharge its initial burden depends on whether that party bears the burden of proof on the issue at trial. See Fitzpatrick, 2 F.3d at 1115-17, citing United States v. Four Parcels of Real Property, 941 F.2d 1428 (11th Cir.1991) (en banc). If the moving party bears the burden of proof at trial, then it can meet its burden on summary judgment only by presenting positive evidence that demonstrates the absence of a genuine issue of material fact; i.e., facts that would entitle it to a directed verdict if not controverted at trial. Fitzpatrick, 2 F.3d at 1115. Once the moving party makes such a showing, the burden shifts to the nonmoving party to produce significant, probative evidence demonstrating a genuine issue for trial.
If the moving party does not bear the burden of proof at trial, it can satisfy its
The second method by which the moving party who does not bear the burden of proof at trial can satisfy its initial burden on summary judgment is to affirmatively show the absence of any evidence in the record in support of a judgment for the nonmoving party on the issue in question. This method requires more than a simple statement that the nonmoving party cannot meet its burden at trial but does not require evidence negating the nonmovant's claim; it simply requires the movant to point out to the court that there is an absence of evidence to support the nonmoving party's case. Fitzpatrick, 2 F.3d at 1115-16. If the movant meets its initial burden by using this second method, the nonmoving party may either point to evidence in the court record, overlooked or ignored by the movant, sufficient to withstand a directed verdict, or the nonmoving party may come forward with additional evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency. However, when responding, the nonmovant can no longer rest on mere allegations, but must set forth evidence of specific facts. Lewis v. Casey, 518 U.S. 343, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996), citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 2137, 119 L.Ed.2d 351 (1992).
In its Second Amended Complaint, Plaintiff asserts six counts against Defendants: intentional interference with a contract (Count I), intentional interference with a business relationship (Count II), improper notice (Count III), suppression of material facts (Count IV), fraudulent transfer by Larry Martin and Jarrett Shadday (Count V), and fraudulent transfer by The Pantry, Inc. (Count VI). (Doc. 25). Because Counts I and II are the primary bases for this action, upon which Counts III through VI assert derivative claims thereof, the court will address those counts first.
To establish a prima facie case of intentional interference with a contract, Plaintiff must demonstrate the following: (1) a protectable business relationship or contract; (2) of which the defendant knew; (3) to which the defendant was a "stranger," i.e., a third-party; (4) the defendant's intentional interference with the contract or business relationship; and (5) resulting damage to the plaintiff. White Sands, 32 So.3d at 12-13,14-15.
Here, the court finds sufficient evidence that D & D had actual knowledge of the contract. Pilato testified that he told D & D's real estate agent he was still under contract with Plaintiff when he contacted him about selling the Galleria Chevron. (Pilato Dep. 39). Pilato also informed David Shiflett
(Id. at 64). Pilato also testified that, "[a] guy came out to look at my building to see how much striping was going to be. [] So they were doing some stuff to the pumps to image them." (Id. at 50). While the record does not indicate whether this "guy" was sent by D & D or hired by Pilato, Pilato's testimony creates at least a
To counter this evidence, Defendants offer several points that, according to them, demonstrate that D & D did not know there was a valid contract between Pilato and Plaintiff, including:
(Doc. 45 at 11-13). These points are supported by the record, and are not disputed by Plaintiff. (Doc. 48 at 5-11). Nevertheless, in light of the evidence addressed supra that suggests D & D did know there was a contract between Pilato and Plaintiff, the court is satisfied that Plaintiff has carried its burden as to this element.
However, assuming that D & D knew about the contract, the court addresses Defendants' next argument that Plaintiffs claim fails because it has not demonstrated that D & D intentionally interfered with the contract. Alabama courts have routinely relied on the Restatement (Second) of Torts as authority for analyzing intentional interference claims. See, e.g., KW Plastics v. U.S. Can Co., 131 F.Supp.2d 1265, 1268 (M.D.Ala.2001) ("In defining the scope of this cause of action, Alabama courts have relied on the Restatement (Second) of Torts"), citing Ex parte ADOT, 764 So.2d 1263, 1270 (Ala.2000); Barber v. Business Prods. Center, Inc., 677 So.2d 223, 228 (1996); Gross, 494 So.2d at 598 (Torbert, J., concurring and dissenting in part) (discussing the Restatement at length, and explaining generally that "[t]he expansive new tort [combining intentional interference with contractual relations and intentional interference with business relations into a single cause of action] adopted by the majority reflects the view advanced in the Restatement (Second) of Torts § 766- § 774A (1979)"); White Sands, 32 So.3d at 12-14 (discussing justification as defined by § 767 of the Restatement); JJ's Heating & Air Conditioning, Inc. v. Gobble-Fite Lumber Co., 572 So.2d 1243, 1245 (Ala.1990) (same); Creel v. Davis, 544 So.2d 145, 149 (Ala.1989); Tom's Foods, Inc. v. Carn, 896 So.2d 443, 457-458 (Ala. 2004) (applying doctrine of competitor's privilege as defined by § 768 of the Restatement to intentional interference claim).
Section 767, comment d, of the Restatement offers the following insight on the element of "intent":
§ 8(A) of the Restatement addresses "intent" in relevant part:
As stated, the Restatement characterizes a court's consideration of "intent" as a "balancing process," in which the defendant's desire to interfere may, by itself, satisfy this element of an intentional interference claim. By contrast, where the defendant interferes without specifically desiring that result, it is less certain—but still possible—to satisfy this element of the claim.
After parsing through the record in detail, the court finds no evidence that D & D desired, either primarily or casually, to interfere with the contract between Plaintiff and Pilato. Hence, Plaintiff must demonstrate that D & D either knew its conduct was substantially certain to interfere with the contract or that such interference was a necessary consequence of its conduct.
Plaintiff attempts to carry this burden by arguing—without any citations to the record—that D & D "intended to sell gasoline products to the Galleria Chevron. [Its] clear desire was to be the supplier of the large volume being dispensed from the Station." (Pl's Response (Doc. 48) 18). If this were true, however, Plaintiff does not explain why the record consistently points to Pilato, not D & D, as the initiator of contact between the two parties, as Pilato testified:
(Id. at 35-51).
Despite this testimony by Pilato, Plaintiff urges the court to take a different view of D & D's conduct. It argues—again, without any citations to the record—that
(Pl's Response (Doc. 48) 18).
The court has found nothing in the record to corroborate this argument. Plaintiff attempts to compensate for this by asserting that, because D & D knew about the contract, the court should infer that it intended to interfere with the same. However, Plaintiff offers no authority—and the court is aware of none—that stands for the proposition that a court should infer intent in similar circumstances when the record lacks any direct evidence thereof. The fact that D & D knew about the contract does not, by itself, lead to the conclusion that it also knew its conduct was substantially certain to interfere with the contract.
The record actually suggests that D & D did not know that selling gasoline to Pilato at the end of October 2004 was substantially certain to interfere with Plaintiffs contract at the Galleria Chevron. It is undisputed that D & D did not begin supplying the station until after Pilato had begun to buy gasoline from Veteran's Oil.
(Pilato Dep. 55-57). Plaintiff does not explain why D & D was so intent on disrupting its (Plaintiffs) relationship with Pilato, but made no similar efforts to prevent him from working with any of the other distributors he contacted.
In sum, the record does not support Plaintiffs view that D & D deliberately "stole" Pilato's business out from under it. It does demonstrate that Pilato was looking for a way out of his contract with Plaintiff, even to the point that he was willing to relinquish his ownership of the Galleria Chevron, and if he could not sell the station, he was willing to work with any other supplier to pay off his obligations to Plaintiff. (Id. at 37-41, 56-57).
At most, the record suggests that D & D was negligent in failing to ascertain whether the contract was still in effect when it began supplying the Galleria Chevron. However, evidence of conduct that is merely negligent cannot, by itself, support a finding of intentional interference. See Louisville & Nashville Railroad Co. v. Arrow Transportation Co., 170 F.Supp. 597, 600 (N.D.Ala.1959) (citing to Sparks v. McCreary, 156 Ala. 382, 47 So. 332 (1908); Tennessee Coal & Iron Co. v. Kelly, 163 Ala. 348, 50 So. 1008 (1909); United States Fidelity & Guaranty Co. v. Millonas, 206 Ala. 147, 89 So. 732 (1921); Pickens v. Hal J. Copeland Groc. Co., 219 Ala. 697, 123 So. 223 (1929); Hill Grocery Co. v. Carroll, 223 Ala. 376, 136 So. 789 (1931); Louisiana Oil Corp. v. Green, 230 Ala. 470, 161 So. 479 (1935); Evans v. Swaim, 245 Ala. 641, 18 So.2d 400 (1944); McCluskey v. Steele, 18 Ala.App. 31, 88 So. 367 (1920)) (concluding that "[i]n every Alabama case dealing with [intentional interference claims] there was some element other than mere negligence. No case permits a recovery for the mere negligent interference with another's contract").
Having found that no genuine issue of material fact remains as to Plaintiff's intentional interference claims, and that Defendants are entitled to judgment as a matter of law as to these claims, the court need not further address Plaintiff's derivative claims of improper notice (Count III), suppression of material facts (Count IV), and fraudulent transfer of assets (Counts V & VI). The court concludes that Defendants' motion for summary judgment is due to be granted. Accordingly, Defendants' motion to exclude the testimony of
Defendants cite to three cases for their argument that Plaintiff must show actual knowledge by D & D. A close reading of these cases, however, reveals that none of them expressly requires actual knowledge to avoid summary judgment. In Ex parte Awtrey Realty Co., 827 So.2d 104, 108-09 (Ala.2001), the court lists the elements of an intentional interference claim, without clearly stating whether the defendant's "knowledge" of the contract was— or must be—actual or constructive. Similarly, in Gilbert v. Congress Life Ins. Co., 646 So.2d 592, 594 (Ala. 1994), and Starr v. Wilson, 11 So.3d 846, 856 (Ala.Civ.App.2008), the courts fail to clearly address whether a plaintiff must show actual or constructive knowledge to support an intentional interference claim.
Although these cases, on their faces, do not specify whether actual or constructive knowledge satisfies this element of the claim, the court concludes that a defendant must have actual knowledge of a contract before a plaintiff can demonstrate intentional interference therewith. Cf. Awtrey, 827 So.2d at 108-09 (affirming summary judgment for the defendant because "no evidence [was] adduced indicating that [the defendant] had any knowledge of [the plaintiff's] right of first refusal"); Gilbert, 646 So.2d at 594 (affirming summary judgment for the defendant because the plaintiff "produced no evidence that [the defendant] ever knew of any alleged contractual relationship").