Hanuman, LLC v. Summit Hotel OP, LP
Filing
32
REVISED MEMORANDUM OPINION as more fully set out in order. Signed by Magistrate Judge Herman N Johnson, Jr on 10/02/17. (SPT )
FILED
2017 Oct-02 AM 09:27
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
HANUMAN, LLC,
Plaintiff
vs.
SUMMIT HOTEL OP, LP,
Defendant
)
)
)
)
)
)
)
)
)
Case No. 2:13-cv-02234-HNJ
REVISED MEMORANDUM OPINION
In this diversity action, the defendant proceeds before the court on a Motion for
Summary Judgment. (Doc. 19). Plaintiff filed a response (Docs. 21 & 22), and
defendant filed a reply (Doc. 23). The parties consented to the jurisdiction of the
undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). (Doc. 17).
After careful consideration, the court GRANTS the Motion for Summary Judgment.
SUMMARY JUDGMENT STANDARD
Pursuant to the Federal Rules of Civil Procedure, “[t]he court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. Rule 56(a).
Defendants, as the party seeking summary judgment, bear the initial responsibility of
informing the district court of the basis for its motion, and identifying those portions of
Page 1 of 18
the pleadings, depositions, answers to interrogatories, and admissions on file, together
with the affidavits, if any, which it believes demonstrates the absence of a genuine issue
of material fact. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991) (quoting
Celotex Corp. v. Catrett, 477 U.S.317, 323 (1986)). The bu r d e n t hen shifts to the
non-moving party to demonstrate why summary judgment would not be proper. Celotex,
477 U.S. at 323. The non-moving party must affirmatively set forth specific facts
showing a genuine issue for trial and may not rest upon the mere allegations or denials
in the pleadings. Fed. R. Civ. P. 56(e).
At the summary-judgment stage, the court may not weigh the evidence nor
determine the truth of the proceedings; rather, the court shall determine only whether
a genuine issue exists for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In
doing so, the court must view the evidence in the light most favorable to the
non-moving party and draw all reasonable inferences in favor of that party. Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
FACTUAL FINDINGS
Hanuman owned a Hilton Garden Inn in Birmingham, Alabama. (Doc. 20-1,
Hanuman Depo. (Vol. I), at 9).1 On October 20, 2011, Summit offered to purchase the
1
“Hanuman Depo.” refers to the deposition of Hanuman’s 30(b)(6) representative, Chiman
Patel. In cites to a deposition, the page numbers refer to the CM/ECF pagination of the document
rather than the page number of the deposition. All cites to exhibits refer to the CM/ECF page number
of the court document containing the exhibit.
Page 2 of 18
Hilton Garden Inn from Hanuman for $8,000,000. (Doc. 20-1 at 38-42 (Letter of
Intent)).
On November 21, 2011, the parties signed a Purchase Agreement
memorializing Summit’s contract to purchase the Hilton Garden Inn for $8,625,000.00.
(Doc. 20-1 at 44-72 (Purchase Agreement)).
The Purchase Agreement provided for an adjustment to the purchase price based
upon implementation of Hilton Worldwide’s Product Improvement Plan (PIP) to update
the property:
Seller shall be responsible for ordering the Property Improvement Plan
(“PIP”) from Hilton Worldwide (“Hilton”) and paying the initial PIP fee.
The parties shall mutually agree upon the cost of the PIP scope prior to the
expiration of the Due Diligence Period and the Purchase Price shall be
reduced by the amount that the PIP scope exceeds $1,000,000. Either
Purchaser or Seller shall be entitled to terminate this Agreement during the
Due Diligence Period if Seller or Purchaser cannot secure a guaranteed,
binding contract from a Hilton approved design and build contractor
approved solely by Purchaser to perform the PIP work for an amount not
to exceed $1,000,000. If the scope of the PIP work exceeds $1,000,000
and this Agreement is not otherwise terminated, the Purchase Price shall
be reduced at Closing by the amount the PIP scope exceeds $1,000,000.
Upon final completion of all required new ownership PIP items, should the
Purchaser’s costs specifically associated with new ownership PIP items be
less than $1,000,000 the Purchaser warrants that it will reimburse the Seller
for the difference in amount in which those total costs are less than
$1,000,000.
(Doc. 20-1 at 46)2 On November 29, 2011, Hilton issued a PIP describing work needed
to update the property. (Doc. 20-1 at 74-80 (November 2011 PIP)). On December 27,
2
Hanuman and Summit executed three amendments to the Purchase Agreement; each
amendment extended the “Inspection Period” as defined in the Purchase Agreement. (DX 2, Hanuman
Depo. (Vol. 2), at Exs. 11, 12 & 13).
Page 3 of 18
2011, Hilton issued a revised PIP representing the “Final PIP” for renovations to the
property. (Doc. 20-1 at 82-88).
On February 24, 2012, Hanuman and Summit executed a “Side Letter to Purchase
Agreement.” The Side Letter Agreement set forth further terms revising the provisions
in the afore-cited Paragraph 2.A. of the Purchase Agreement. (Doc. 20-2 at 49-51). The
Side Letter Agreement set a “Capped Amount” on the “PIP Work” of $1,000,000 and
provided:
The Seller and Purchaser hereby agree that, in accordance with Section 2.A.
of the Agreement, the scope of the PIP Work is equal to, but does not
exceed, Capped Amount. Upon final completion of the PIP Work, should
Purchaser’s actual costs associated with the PIP Work be less than the
Capped Amount, Purchaser agrees to reimburse Seller for the difference
between the Capped Amount less payment made to Seller for approved
Special PIP Items and Purchaser’s actual costs associated with the PIP
work.
(Id. at 49 (“PIP Work Agreement”)).
An additional term of the Side Letter Agreement provided that Hanuman would
complete and pay for certain items of the PIP Work. (Id. at 50 (“Special PIP Items”)).
Pursuant to this term, Hanuman enjoyed the right to submit, within 60 days of closing,
its invoices for completing the Special PIP Items and obtain reimbursement from
Summit for those expenditures. (Id.). Hanuman did not submit invoices to Summit for
the Special PIP expenditures. (Doc. 20-2, Hanuman Depo. (Vol. 2), at 12).
Page 4 of 18
Another term of the Side Letter Agreement provided:
Other PIP Items. Seller’s principal, Chiman Patel, in his individual
capacity, shall advise, consult and develop pricing on behalf of Purchaser
for the Other PIP Items and submit those prices, and installation, including
where needed, employment of contractor and/or subcontractors, to
Purchaser for the purchase and installation of the Other PIP Items (with
all pricing and purchasing subject to final approval by Purchaser and all
purchases being made by Purchaser), in order to reduce the total cost of
the PIP Work below the Capped Amount.
(Doc. 20-2 at 50). Based upon Patel’s recommendation, Summit switched from the
company it intended to rely upon to supply furniture, fixtures, operating supplies, and
equipment (A1 Fusion Designs) for the Other PIP items and instead contracted with
Carver & Associates for those services. (Doc. 20-3, Trowbridge Depo., at 12).
On August 28, 2012, Chris Eng, Summit’s Vice President and General Counsel,
sent an email to Chiman Patel, the sole member of Hanuman, stating:
As for the rest of the “Other PIP Items” (items that are not Special PIP
items), Summit has engaged Carter [sic] & Associates as the purchasing
company for the Other PIP items and we’ve engaged a contractor to
complete the work, which is scheduled to begin November 1st. We will
take care of the “Other PIP Items” per the terms of our Agreement. You
need not be involved in this aspect of the work and we would ask that you
refrain from contacting anyone related to the work.
(Doc. 20-3 at 69). Mr. Patel acceded to Eng’s request. Doc. 20-2, Hanuman Depo. (Vol.
2), at 33-34).
Summit retained Monolith Hospitality, LLC (Monolith) as its general contractor
for the renovations. (Doc. 20-3, Trowbridge Depo., at 32-38). Summit did not consult
Page 5 of 18
with Chiman Patel prior to contracting with Monolith. (Doc. 20-3, Trowbridge Depo.,
at 12-13; Doc. 20-2, Hanuman Depo. (Vol. 2), at 33). However, Summit based its
selection of Monolith as general contractor on a prior positive experience with Monolith
on an almost identical renovation. Hilton required the PIP renovations to conform to
its “Project Grow - Scenario 2” standards. (Doc. 20-3, Trowbridge Depo., at 18).
Monolith successfully completed the first Scenario 2 renovation in the country for
Summit at the Hilton Garden Inn in Gwinnett, Georgia. (Doc. 20-3, Trowbridge Depo.,
at 11).
Summit incurred $1,573,469.02 in costs to complete the PIP renovations to the
Hilton Garden Inn. (Doc. 20-3, Trowbridge Depo., at 17, 21-23, 25-28; Doc. 20-4 at 34).
Chiman Patel relied upon his extensive experience owning hotels, discussions with
other individuals (Alpesh Patel, Robert Staron and Humphreys & Associates), and a
compiled spreadsheet, to contend that the cost of Summit’s renovations should not have
exceeded $600,000. (Doc. 20-1, Hanuman Depo. (Vol. I), at 23, 90-92; Doc. 20-2,
Hanuman Depo. (Vol. II), at 23-24; Doc. 21, Chiman Patel Aff.). Chiman Patel sent the
PIP for the subject property to Alpesh Patel, the President and Chief Executive Officer
of a hotel management company,3 and asked him to give an opinion on the renovation
cost. (Doc. 20-5, Alpesh Patel Depo., at 13). Alpesh Patel testified that the cost
3
Doc. 20-5, Alpesh Patel Depo, at 6.
Page 6 of 18
calculations in the spreadsheet emanated from a three-hour meeting with Chiman Patel,
Robert Staron and other contractors (Humphreys & Associates). (Id. at 17, 29-31).
After completion of the hotel renovations, Hanuman requested an accounting of
the renovation costs. On November 19, 2013, Summit provided Hanuman with
contracts, invoices, and other materials reflecting the costs associated with the
renovations. (Doc. 20-3 at 56-61; Doc. 20-5 at 66-71; Doc. 21 at 20-25). When
Hanuman expressed its dissatisfaction with the details of the information, Summit’s
Larry Trowbridge reviewed the invoices and associated specific costs with line items in
the PIP, and then subsequently created a spreadsheet detailing the $1,573,460.02 in PIP
costs. (See Doc. 20-3, Trowbridge Depo., at 21-23, 25-28; 63-70; Doc. 20-4 at 3-4, 31-36;
Doc. 20-5 at 40-47).
As these events occurred, Hanuman sued Summit for breach of contract and for
an accounting, averring that Summit should have remitted $381,156.68, to Hanuman
based upon the Side Agreement because the PIP costs should not have exceeded the
$1,000,000 Capped Amount.4
4
Hanuman calculates this sum based upon its contractors’ estimate that Summit could have
completed the PIP renovations for $192,361.28, along with the amount for furniture, fixtures, and
equipment, $426,481.32, for a total estimated PIP cost of $618,843.36.
Page 7 of 18
DISCUSSION
Summit Deserves Summary Judgment on the Breach of Contract Claim
In its summary judgement motion, Summit argues there is no genuine issue of
material fact on Hanuman’s breach-of-contract claim, and it therewith deserves judgment
as a matter law because it did not breach its agreements with Hanuman. The Court
agrees.
In this diversity action, the Court applies the law of Alabama to the parties’ claims
and defenses. Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). A plaintiff sustains a breachof-contract claim by proving the following elements: “‘(1) that the agreement existed;
(2) that the defendant breached the agreement; and (3) that the plaintiff was damaged as
a result of the breach.’” Crestview Memorial Funeral Home, Inc. v. Gilmer, 79 S.o3d 585, 592
(Ala. 2011) (quoting Sokol v. Bruno’s, Inc., 527 So.2d 1245, 1247–48 (Ala.1988)). The
parties do not dispute the formation of a contract, and of course there exists a genuine
disagreement as to whether Hanuman incurred any damages from an alleged breach.
Therefore, the analysis turns on whether there exists a genuine issue of material fact
regarding Summit’s alleged breached of its pertinent obligations in the agreements at
issue.5
5
The parties contest whether Hanuman breached its obligations as an aspect of a breach-ofcontract claim. Indeed, some cases list this issue as an element for breach-of-contract claims. See,, e.g.,
Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009) (listing the elements of a breach-of-contract
claim as “(1) a valid contract binding the parties; (2) the plaintiffs’ performance under the contract; (3)
the defendant’s nonperformance; and (4) resulting damages”). However, this element does not apply
in this case.
Page 8 of 18
“‘Breach’ consists of the failure without legal excuse to perform any promise
forming the whole or part of the contract.” McGinney v. Jackson, 575 So.2d 1070, 1071
(Ala. 1991) (citation omitted). As an initial matter, Summit did not breach its obligation
under paragraph 2 of the Side Agreement to reimburse Hanuman for any difference
between the $1,000,000 Capped Amount, less payments made to Hanuman for Special
PIP items, and the costs associated with PIP work. As contemplated in that provision,
Summit’s obligation arose only if its PIP costs summed less than the Capped Amount,
a condition precedent which did not occur because it calculated its PIP expenditures at
$1,573,460.02. See Gamble v. Corley, Moncus & Ward, P.C., 723 So.2d 627, 631 (Ala. 1988)
(“A condition precedent is a fact (other than the lapse of time) that, unless excused, must
exist or occur before a duty of immediate performance of a promise arises. . . . Whether
a provision in a contract is a condition precedent depends, not upon formal words, but
upon the intent of the parties, to be deduced from the instrument as a whole.”) (citing
Hanuman’s alleged nonperformance consists of failing to remit invoices to Summit for the costs
it incurred in completing the Special PIP items. This failure to perform under the contract constitutes
an immaterial and insubstantial breach that would not excuse Summit’s performance. See Edwards v.
Allied Home Mortg. Capital Corp., 962 So.2d 194, 207 (Ala. 2007) (“If the defaulting party materially
breaches its duties, the injured party may repudiate the agreement and not perform prospectively. . . .
[Furthermore], [w]hen the parties have exchanged promises of performances, . . . the injured party is
not excused from performing his remaining duties if he continues the agreement with knowledge of the
default by the breaching party.”) (emphasis added) (citations omitted); Nationwide Mut. Ins. Co. v. Clay,
525 So.2d 1339, 1343 (Ala. 1987) (“Under general principles of contract law, a substantial breach by one
party excuses further performance by the other.”) (emphasis added); Birmingham News Co. v. Fitzgerald,
133 So. 31, 32 (Ala. 1931) (“Every breach of a contract is, of course, inconsistent with the contract; but
every breach by one party does not authorize the other to renounce it in toto”) (citation omitted).
Therefore, the plaintiff may sustain its breach-of-contract claim even if it failed to submit
invoices to Summit. Indeed, this nonperformance inured to Summit’s benefit, not Hanuman’s.
Page 9 of 18
Fidelity & Casualty Co. of New York v. DeLoach, 195 So.2d 789 (1967)). Furthermore, there
exists no evidence Summit improperly designated non-PIP costs as PIP costs under the
Side Agreement, and therefore, there exists no evidence Summit breached the contract
by undertaking such action. See Doc. 20-3, Trowbridge Depo. at 21-23, 25-28; 63-70;
Doc. 20-4 at 3-4.
Hanuman charges Summit with breaching a purported obligation to “call[] upon
(Chiman Patel) to advise, consult, and develop pricing on behalf of Summit and submit
those prices and installation . . . to Summit in order to reduce the total cost of the PIP
work to [sic] below the $1 million Capped Amount.” However, the pertinent language
in the Side Agreement did not obligate Summit to perform such an undertaking:
Other PIP Items. Seller’s principal, Chiman Patel, in his individual
capacity, shall advise, consult and develop pricing on behalf of Purchaser
for the Other PIP Items and submit those prices, and installation, including
where needed, employment of contractor and/or subcontractors, to
Purchaser for the purchase and installation of the Other PIP Items (with
all pricing and purchasing subject to final approval by Purchaser and all
purchases being made by Purchaser), in order to reduce the total cost of
the PIP Work below the Capped Amount.
This provision did not obligate Summit to facilitate Patel’s consultancy. At best, it
obligated Summit to consider, and either accept or reject, Patel’s consult as to
contractors, suppliers, and vendors. Thus, if any obligation arose from the quoted terms,
the performance fell upon Patel to advise, consult, and develop recommendations, and
for Summit to consider, and accept or reject, the recommendations. Indeed, Summit
Page 10 of 18
acknowledged such consult when it accepted Patel’s recommendation to secure Carver
& Associates for provision of furniture, fixtures, and equipment. The evidence does not
evince any failure by Summit to engage its obligations in this regard.
To be sure, Hanuman quotes an email purportedly indicating Summit CEO Chris
Eng’s directive to Chiman Patel to cease involvement with the PIP renovations and
withhold contacting anyone conducting the renovations:
As for the rest of the “Other PIP Items” (items that are not Special PIP
items), Summit has engaged Carter [sic] & Associates as the purchasing
company for the Other PIP items and we’ve engaged a contractor to
complete the work, which is scheduled to begin November 1st. We will
take care of the “Other PIP Items” per the terms of our Agreement. You
need not be involved in this aspect of the work and we would ask that you
refrain from contacting anyone related to the work.
The email directing Patel not to contact contractors - who ostensibly were already
engaged in conducting PIP renovations – did not prevent Patel from fulfilling its
obligation as to the pertinent aspect of the Side Agreement. Eng’s invitation that Patel
“need not” be involved should not translate into a directive that Patel “should not” be
involved. Patel could have still advised and consulted with Summit as to prices,
installation, and putative employment of contractors, yet Eng’s email clearly provides
that Patel should steer clear of communicating with Summit’s contractors in doing so,
a request which is clearly not prohibited by the agreements. Finally on this point, Eng’s
statement that Summit “will take care of the “Other PIP items’ per the terms of [the]
Agreement” referred to Summit’s responsibility to cover other PIP costs because the
Page 11 of 18
prior paragraph in the email requested the invoices for the Special PIP items Hanuman
completed.
The final breach-of-contract theory lodged by Hanuman contends Summit
breached an implied covenant of good faith and fair dealing. As this district has
discerned, Alabama law does not sustain a cause of action on this theory:
Under Alabama law, every contract imposes an obligation of good faith in
its performance and enforcement. Ala. Code § 7–1–304 (originally enacted
as Ala. Code § 7–1–203). See also Tanner v. Church’s Fried Chicken, Inc., 582
So. 2d 449, 451–52 (Ala. 1991). However, the violation of this obligation
does not give rise to a cause of action as the statute was intended to be
directive, not remedial. Tanner, 582 So. 2d at 452 (citing Chandler v. Hunter,
340 So. 2d 818, 821 (Ala. Civ. App. 1976)). See also Government Street Lumber
Co., Inc. v. AmSouth Bank, N.A., 553 So. 2d 68, 72 (Ala. 1989) (“failure to
act in good faith in the performance or enforcement of contracts arising
out of Title 7A does not state a claim for relief that may be granted in
Alabama, since § 7–1–203 is directive rather than remedial”). Thus, in
order to prove a breach of contract on the part of the defendant, a plaintiff
must prove that the defendant expressly breached a specific term of the
contract. Tanner, 582 So. 2d at 452. Camp v. Alabama Telco Credit Union, 2013
WL 2106727, at *3 (N.D. Ala. May 13, 2013). Alabama law is clear “that
failure to act in good faith in performance or enforcement of contracts . .
. does not state a claim for relief that may be granted in Alabama.”
Government Street Lumber Co., Inc., 553 So. 2d at 72.
Wiggins v. FDIC, No.: 2:12-cv-02705-SGC, 2017 WL 588444, * 2 (N.D. Ala. Feb. 14,
2017). To be sure, the law of Alabama does not limit this stance to cases under the
Uniform Commercial Code:
This Court has clearly and specifically held that a duty of good faith in
connection with a contract is directive, not remedial, and that therefore an
action will not lie for breach of such a duty. Government Street Lumber Co.,
553 So.2d 68. The directive nature of the duty is in no way related to the
Page 12 of 18
fact that it is implied rather than expressed. Accordingly, we agree with the
trial court’s conclusion: “The good faith clause in the present Contract has
the same effect and operation as the obligation of good faith that is implied
in all contracts under common law and in sales contracts under Alabama’s
UCC.”
Tanner, 582 So.2d at 452 (emphasis added). Therefore, Hanuman may not sustain its
claim under this theory as a matter of law.
Indeed, even if Alabama law provided for such claims, the Court would still grant
summary judgment. The putative cause of action provides “‘an implied covenant that
neither party shall do anything which will have the effect of destroying or injuring the
rights of the other party to receive the fruits of the contract . . . .” Lloyd Nolan Found.,
Inc. v. City of Fairfield Healthcare Auth., 837 So.2d 253, 267 (Ala. 2002) (citation omitted).
As contemplated, Summit did not “destroy” or “injure” Hanuman’s obligation to advise
and consult. Eng’s email did not direct Patel to cease advising and consulting; rather it
advised Patel that he “need not” undertake the “Other PIP items” and asked him not to
contact the contractors conducting the renovations.
Summit did not incur more than $1.5 million in Other PIP costs in an effort to
injure Hanuman benefits under the contract. Rather, Summit reasonably contracted with
a general contractor, Monolith, who had successfully completed the same type of PIP
renovations on another property in Gwinnett, Georgia, on a prior occasion. This
evidence reveals Summit did not breach any putative covenant of good faith and fair
dealing because it chose a contractor it trusted to perform the work correctly.
Page 13 of 18
Summit Deserves Summary Judgment on the Accounting Claims
Plaintiff’s accounting claim requests a meaningful accounting on a line item basis
of all PIP and non-PIP renovation costs so that it may precisely quantify the refund
amount it purportedly deserves. A claim for equitable accounting actually encompasses
four distinct claims, all of which Alabama recognizes in some form or fashion: an
accounting for profits where the defendant is a fiduciary; an accounting where parties
engaged complex accounts; an accounting where parties held a mutual account; and an
accounting used as a means of discovery for another, putative claim. Joel Eichengrun,
Remedying the Remedy of Accounting, 60 Ind. L. J. 463, 468 (1985). The Court grants
summary judgment on all four theories of equitable accounting.
One Alabama case references the standard for three of the equitable accounting
theories:
Without reference to a discovery, or other relief peculiar to equity, that
court will not sustain a bill for accounting unless there are mutual accounts
between them; or, if not that, they are so complicated and difficult to
adjust that relief at law is not adequate; or fiduciary relations exist between
the parties.
Doss v. Williams, 32 So.2d 221, 222-23 (Ala. 1947).
As for the latter type of equitable accounting discussed by Doss, an accounting for
profits where the defendant is a fiduciary, the evidence does not establish that Summit
exercised control over any funds as a fiduciary on behalf of Hanuman, and much less
Page 14 of 18
wrongfully used such funds for its own benefit and profit. Therefore, Summit deserves
summary judgment on this theory of an equitable accounting.
As for an equitable accounting based upon complex accounts, any putative
account between the parties “is not ‘complicated’ merely because it involves a large
number of items.” Id. (internal citations omitted). “A general averment of complication
of accounts [as to render inadequate a legal remedy] is insufficient.” Kirksey Motors, Inc.
v. Gen. Acceptance Corp., 161 So.2d 475, 477 (Ala. 1964).
This form of equitable
accounting demands “facts alleged to show that the accounts are so complicated and
difficult to adjust that a law court could not easily ascertain and settle the accounts.”
Wooten v. Wooten, 117 So.2d 192, 194 (Ala. 1959). Suffice to say, Hanuman has not
sustained its summary judgment burden to demonstrate a genuine issue of material fact
on this claim. That is, Hanuman has not demonstrated the existence of any account that
is so complicated that equity compels a claim separate from the breach-of-contract claim.
Indeed, the United States Supreme Court has ruled that this type of equitable
accounting claim for complex accounts should persist only in the rarest of circumstances:
The necessary prerequisite to the right to maintain a suit for an equitable
accounting, like all other equitable remedies, is . . . the absence of an
adequate remedy at law. Consequently, in order to maintain such a suit on
a cause of action cognizable at law, as this one is, the plaintiff must be able
to show that the “accounts between the parties” are of such a “complicated
nature” that only a court of equity can satisfactorily unravel them. In view
of the powers given to District Courts by Federal Rule of Civil Procedure
53(b) to appoint masters to assist the jury in those exceptional cases where
the legal issues are too complicated for the jury adequately to handle alone,
Page 15 of 18
the burden of such a showing is considerably increased and it will indeed
be a rare case in which it can be met.
Dairy Queen, Inc. v. Wood, 369 U.S. 469, 478 (1962) (footnotes omitted). Because the law
of Alabama adopted the applicable Federal Rules of Civil Procedure verbatim, the
undersigned fails to discern a diverging conclusion.
The same conclusion derives for an equitable accounting claim based upon mutual
accounts. In any event, this claim does not arise based on the facts of this action.
“Mutuality is where each of the parties has an account against the other, as where each
party has given credit to the other on the faith of indebtedness to him; or each party has
a demand or right of action against the other. It is not mutual where it consists of items
on one side and payments merely on the other.” Doss, 32 So.2d at 222. The facts in this
case do not portray a “status of mutual accounts existing between” Summit and
Hanuman, Wooten, 117 So.2d at 194, and thus, Summit deserves summary judgment on
this theory.
Finally, several principles regarding an equitable accounting in aid of discovery
dooms Hanuman’s claim. A “discovery in aid of accounting arises only where there is
some duty to discover in equity and good conscience. No such right arises where the
matter of accounting grows out of the breach of obligation by complainant, matters
which he should have prevented, and which are ascertainable in an action at law.”
Meyrovitz v. Watford, 177 So. 887, 889 (Ala. 1937). “[C]omplainant must aver and prove
Page 16 of 18
not only the materiality of the matter of which he would have discovery, but also that it
is indispensable to establishment of his cause or defense and that he is unable otherwise
to make this proof.” Wooten, 117 So.2d at 194-95 (citation omitted). “The equity of a
bill could not be sustained on ground that it sought discovery, in absence of averments
showing confidential relations between complainant and defendant, or that facts
essential to support of complainant’s claim were peculiarly within defendant’s
knowledge.” Id. at 195 (citation and internal quotation marks omitted). Most critically,
an equitable accounting for discovery claim cannot survive a showing that “special relief
by way of discovery would be obtainable by the statutory system at law devised for that
purpose.” George Moulton, Inc. v. Langan, 233 So.2d 74, 80 (Ala. 1970) (citations omitted);
see also Clay v. River Landing Corp., 601 So.2d 919 (Ala. 1992) (the plaintiff was not entitled
to an accounting where the defendant provided all requested material regarding the
financial management of a condominium).
In this case, Hanuman clearly enjoyed access to a “statutory system at law
devised” for the purpose of obtaining the sought-after material, that is, discovery
pursuant to the Federal Rules of Civil Procedure. Therefore, Hanuman may not sustain
this form of equitable accounting claim. Indeed, the court has reviewed the documents
provided to Hanuman, including those memorializing Trowbridge’s efforts to associate
costs of the renovation work with PIP line items. The court finds the documentation
and subsequent explanations by Mr. Trowbridge suffice to accommodate Hanuman’s
Page 17 of 18
concerns. Trowbridge marked cost items on the invoices submitted by the general
contractor, Monolith, and Carver and Associates, and associated the marked items with
the appropriate PIP requirements.
Then, he used this information to create a
spreadsheet (Ex. 14) summing the associated items to derive the total amount of PIP
related costs: $1,573,469.02. The court finds no special circumstances warranting any
further accounting by Summit. Therefore, Summit also merits summary judgment on
Hanuman’s accounting claim.
CONCLUSION
Based on the foregoing, the court GRANTS the defendant’s motion for summary
judgment. The court will enter a separate order in conformity with this Memorandum
Opinion.
DONE this 2nd day of October, 2017.
HERMAN N. JOHNSON, JR.
UNITED STATES MAGISTRATE JUDGE
Page 18 of 18
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?