Files et al v. Church of God et al

Filing 150

MEMORANDUM OPINION. Signed by Judge Robert B Propst on 4/3/13. (ASL)

FILED
2013 Apr-03 AM 10:21
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
BILLY E. FILES and LINDA L. FILES,
Plaintiffs,
v.
CHURCH OF GOD, et al.,
Defendants.

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) Case No: 4:11-CV-01171-RBP
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MEMORANDUM OPINION
This cause comes before the court on the defendants Southern New England Region for
the Church of God, Inc. (“SNE”) and Jonathan Ramsey’s Motion for Summary Judgment (Doc.
121), the defendant Church of God’s Motion for Summary Judgment (Doc. 126), and the
plaintiffs Billy and Linda Files’ Motion for Summary Judgment (Doc. 123). All motions were
filed on September 26, 2012. These motions addressed the plaintiffs’ Third Amended Complaint
(Doc. 117). The parties have briefed, responded and replied to the various motions for summary
judgments.
Facts1
In 2005, the Files, a couple living in Alabama, loaned $100,000, unsecured, to defendant
Celestial Praise at a 10.5% interest rate. The investment was made through the efforts of Wayne
Pitts, Matthew Pitts, and Wayne Pitts Real Estate, (“the Pitts defendants”) a Florida company
known for assisting churches seeking financing. A promissory note (the “Note”) was executed on

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As required when considering a summary judgment motion, the court considers the facts in the light most
favorable to the non-movant. Hardy v. Regions Mortg., Inc., 449 F. 3d 1357, 1359 (11th Cir. 2006).

1

March 19, 2005 by Celestial Praise, by its pastor, defendant Lawrence A. Walden, and Celestial
Praise’s Board of Trustees, including defendants Paul Campbell, Kevin Boyce, Sonia Dinnall
a/k/a S. Dinell, A. Brown, and H. Smith.2 (Doc. 117, Exh. A). A guaranty (“the Guaranty”) was
sent to the Files along with the Note. (Doc. 117, Exh. B). The Guaranty purports to place
repayment responsibility on the Regional Administrative Bishop, defendant Jonathan Ramsey,
and defendant Southern New England Region (SNE). (Doc. 117, Exh. B). It lists “Wayne Pitts
Real Estate & Finance” as the lender of a $2 million loan and is signed by the Board Members of
the Regional Executive Committee and Ramsey. Id. Walden and the Pitts defendants arranged an
additional $600,000 of loans after the Guaranty was executed of which SNE and Ramsey had no
knowledge. The Files loan went into default in late 2007.
After default, Wayne Pitts sent a copy of the Note to SNE, asking it to agree to an
amendment of the Note. SNE refused to sign the amendment. (Doc. 121, Exh. E). Walden,
Celestial Praise, and the Files executed an amendment without SNE’s consent. Celestial Praise
again defaulted on the loan in 2008, after the amendment. The Church of God Foundation, Inc.
(the “Foundation”) provided Celestial Praise with two loans in 2008 for the purpose of paying
construction liens. These loans were secured by mortgages on Celestial Praise’s properties. SNE
guaranteed these loans, which have gone into default as well. Though a payment demand has
been made upon SNE, the loans have not been made current. Celestial Praise ceased paying at all
on the Files’ loan in 2011.
This case originated with a complaint filed on April 4, 2011 (Doc. 1). The clerk filed an

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There is at least an ambiguity as to whether the “trustees” executed the note only as trustees or as
individuals also.

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entry of default against defendant Lawrence A. Walden on September 27, 2011 (Doc. 44).3 With
court permission, the plaintiffs filed the Second Amended Complaint on November 8, 2011
(Doc. 73). A stipulated final judgment against defendant Celestial Praise Church of God, Inc.
(Celestial) was entered in favor of the plaintiffs on November 21, 2011 (Doc. 81). A default
judgment was entered against defendants Matthew Pitts, R. Wayne Pitts, and Wayne Pitts Real
Estate and Finance, Inc. (Pitts defendants) in favor of the plaintiffs on November 29, 2011 (Doc.
86). The plaintiffs again amended their complaint, with court consent, on August 15, 2012 (Doc.
117, Third Amended Complaint).
In the Third Amended Complaint, the Files claim “the Primary Obligors,” including
Celestial Praise, Celestial Praise’s said Board of Trustee members individually, and Walden,
breached the Note and were unjustly enriched in the process. They also claim that SNE and
Ramsey, individually, breached the Guaranty. The complaint contends that the defendant
International Church of God, through its alleged alter-ego and instrumentality Celestial Praise,
breached the Note and was unjustly enriched. Additionally, the complaint alleges that the Pitts
defendants knowingly made material misrepresentations regarding Celestial Praise’s ability to
repay the loan which the Files reasonably relied upon in making their loan. The Files also
contend the Pitts defendants established a confidential, fiduciary relationship with them which
they subsequently breached.
Summary Judgment Legal Standard
Under Federal Rule of Civil Procedure 56(c), summary judgment is proper “if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
3

Other defendants were named in this entry of default but were successful in having it set aside as to them.

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judgment as a matter of law.” Fed. R. Civ. P. 56(a). The party seeking summary judgment
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“always bears the initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The
movant can meet this burden by presenting evidence showing there is no dispute of material fact,
or by showing that the nonmoving party has failed to present evidence in support of some
element of its case on which it bears the ultimate burden of proof. Id. at 322-23. There is no
requirement, however, “that the moving party support its motion with affidavits or other similar
materials negating the opponent’s claim.” Id. at 323.
Once the moving party has met its burden, Rule 56 “requires the nonmoving party to go
beyond the pleadings and by her 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.”
Id. at 324. The nonmoving party need not present evidence in a form necessary for admission at
trial; however, she may not merely rest on her pleadings. Id. “[T]he plain language of Rule 56
mandates the entry of summary judgment, after adequate time for discovery and upon motion,
against a party who fails to make a showing sufficient to establish the existence of an element
essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id. at
322. After the plaintiff has properly responded to a proper motion for summary judgment, the
court must grant the motion if there is no genuine issue of material fact, and the moving party is

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Even though Rule 56 was amended in 2010, “[t]he standard for granting summary judgment remains
unchanged.” Fed. R. Civ. P. 56, Advisory Committee’s Note (2010 Amendments).

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entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c). The substantive law will
identify which facts are material and which are irrelevant. Anderson, 477 U.S. at 248. A dispute
is genuine “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id.
At this stage, “the judge’s function is not himself to weigh the evidence and determine the
truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. His
guide is the same standard necessary to direct a verdict: “whether the evidence presents a
sufficient disagreement to require submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Id. at 251-52; see also Bill Johnson’s Rests., Inc. v.
N.L.R.B., 461 U.S. 731, 745 n.11 (1983). The nonmoving party, however, “must do more than
show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). If the evidence is merely colorable,
or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249;
accord Spence v. Zimmerman, 873 F.2d 256 (11th Cir. 1989). Further, the court must “view the
evidence presented through the prism of the substantive evidentiary burden,” so there must be
sufficient evidence on which the jury could reasonably find for the plaintiff. Anderson, 477 U.S.
at 254. Even so, credibility determinations, the weighing of evidence, and the drawing of
inferences from the facts are the province of the jury, and therefore the evidence of the
nonmovant is to be believed and all justifiable inferences are to be drawn in her favor. Id. at 255.
But the non-movant need not be given the benefit of every inference, but only of every
reasonable inference. See Brown v. City of Clewiston, 848 F.2d 1534, 1540 n.12 (11th Cir. 1988).
Analysis
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A. Church of God
The Third Amended Complaint presents three claims against the Church of God: breach
of contract (the Note), unjust enrichment, and a claim for attorneys’ fees and expenses. Both
Church of God and the plaintiffs have filed motions for summary judgment on this count.
1. Breach of Contract
The breach of contract claim rests upon an “alter ego and instrumentality” theory. The
Files claim that the Church of God “exercised complete control and domination over Celestial
Praise’s property ownership, finances, policies, and governance such that Celestial Praise has no
separate mind, will, or existence of its own.” (Doc. 117, ¶ 94). The Files allege Church of God
similarly controls SNE and directed Celestial Praise, through SNE, to stop paying the Files’ loan.
(Id. at ¶ 95). It is undisputed that Church of God is not a signatory to the Note. Therefore, the
only means by which Church of God is liable for breaching the Note is if a reasonable jury could
find that Celestial Praise was a mere instrumentality of Church of God, thus “piercing the
corporate veil.”
Under Alabama law,5 “where one corporation controls and dominates another corporation
to the extent that the second corporation becomes the mere instrumentality of the first, the
dominant corporation becomes liable for those debts or torts of the subservient corporation
attributable to that abuse of control.” Duff v. Southern Ry. Co., 496 So. 2d 760, 762 (Ala. 1986).
The standard for imposing liability is three part: “

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Plaintiffs and Church of God agree that Alabama case law provides no direction on choice of law for
piercing corporate veils. If the court were to follow the internal affairs doctrine, choosing the law of the state of
incorporation, Massachusetts law would govern. However, both parties agree that Alabama and Massachusetts laws
on piercing the corporate veil are so similar that the choice would not be outcome determinative. (Doc. 128, fn. 14;
Doc 137, fn. 2). This court will cite to Alabama law.

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1) The dominant party must have complete control and domination of the subservient
corporation's finances, policy and business practices so that at the time of the
attacked transaction the subservient corporation had no separate mind, will, or
existence of its own;
2) The control must have been misused by the dominant party. Although fraud or the
violation of a statutory or other positive legal duty is misuse of control, when it is
necessary to prevent injustice or inequitable circumstances, misuse of control will be
presumed;
3) The misuse of this control must proximately cause the harm or unjust loss
complained of.
Heisz v. Galt Industries, Inc., 93 So. 3d 918, 930 (quoting Messick v. Moring, 514 So. 2d 892,
894 (Ala. 1987)).
The question of whether the parent has complete control is “primarily a question of fact
and of degree.” Duff, 496 So. 2d at 763. Alabama recognizes certain factors which should be
considered:
(a) The parent corporation owns all or most of the capital stock of the subsidiary.
(b) The parent and subsidiary corporations have common directors or officers.
(c) The parent corporation finances the subsidiary.
(d) The parent corporation subscribes to all the capital stock of the subsidiary or
otherwise causes its incorporation.
(e) The subsidiary has grossly inadequate capital.
(f) The parent corporation pays the salaries and other expenses or losses of the
subsidiary.
(g) The subsidiary has substantially no business except with the parent corporation
or no assets except those conveyed to it by the parent corporation.
(h) In the papers of the parent corporation or in the statements of its officers, the
subsidiary is described as a department or division of the parent corporation, or its
business or financial responsibility is referred to as the parent corporation's own.
(i) The parent corporation uses the property of the subsidiary as its own.
(j) The directors or executives of the subsidiary do not act independently in the
interest of the subsidiary but take their orders from the parent corporation in the
latter's interest.
(k) The formal legal requirements of the subsidiary are not observed.
Id (emphasis added). None of these factors are dispositive, and the list is not exclusive. Id.
Though the application of these business factors to a religious institution is somewhat strained,
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these factors will be considered with respect to the factual circumstances at hand.
The main evidence in purported support of the Files’ argument for piercing the corporate
veil is the “Minutes” of the International General Assembly of the Church of God, which serve as
bylaws and operating procedures for churches affiliated with the Church of God. The Files have
quoted sections of the Minutes as evidence that “Church of God has the right to exercise
complete dominion and control over Celestial Praise.” (Doc. 137, p. 5). Pertinent to this case, the
Minutes provide rules to govern the ownership of real and personal property of local churches.
The Minutes state that articles of incorporation, charters, and bylaws “of local Churches of God
shall . . . contain provisions that incorporated local churches shall be subject to the Church of
God General Assembly Minutes in all pertinent matters, including conformity with Church of
God deed and property requirements.” (Doc. 137, p. 5, quoting Supplement to the 2004 Minutes
S1(IV)(D)). These deed and property requirements involve an express or implied trust in favor of
the Church of God:
Title to all real and personal property now owned or hereafter acquired by the Church
of God (Cleveland, Tennessee, U.S.A._ at any structural level shall be held by and/or
conveyed and transferred to its duly elected or appointed trustees and their successors
in office in trust for the use and benefit of the Church of God. (Cleveland, Tennessee,
U.S.A.).
Supplement to the 2004 Minutes S45(III)(2) (emphasis added).
Should any member or members, in whole or in part, decide to withdraw from the
Church of God (Cleveland, Tennessee, U.S.A.), or to take action contrary to the
polity of the Church of God (Cleveland, Tennessee, U.S.A.), it is understood that the
ownership of all property, both real and personal, remains with the Church of God
(Cleveland, Tennessee, U.S.A.).
Id. at S45(IV) (Emphasis added).6 The Minutes state that when a local church incorporates, it
6

Note that it “remains” with Church of God.

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“merely creates a legal entity to hold in trust the properties, both real and personal, of the Church
of God (Cleveland, Tennessee, U.S.A.).” Id. at S47. Section S49 of the Supplement to the 2004
Minutes addresses church property directly:
All property, real and personal, held by or for a particular church, state office,
department or agency, whether legal title is lodged in a corporation, a trustee or
trustees, or an unincorporated association, is held in trust nevertheless for the use and
benefit of the Church of God (Cleveland, Tennessee, U.S.A.).
The centralized governmental structure of the Church of God (Cleveland, Tennessee,
U.S.A.) does not provide for local church ownership of properties outside the trust
relationship for the sole and exclusive use and benefit of the Church of God
(Cleveland, Tennessee, U.S.A.). All deed conveyances, or other actions purporting
to effect ownership or control of real or personal property, which are inconsistant
with the requirements as set forth in these International General Assembly Minutes
are deemed invalid and ineffective to alter the essential trust relationship for the
benefit of the Church of God (Cleveland, Tennessee, U.S.A.).
Where there does not exist an express trust covering, real or personal properties
utilized by local churches, then an implied trust in favor of the Church of God
(Cleveland, Tennessee, U.S.A.) exists by virtue of the Church of God polity as
expressed in these Minutes.
Id. at S49. This section of text was quoted by the Church of God (Cleveland, Tennessee, U.S.A.)
in its verified complaint in a case filed against Anthony R. Scott and the City of Holyoke, Mass.
in December 2009. Spanish Church of God of Holyoke, Mass., Inc. v. Scott, et al., Case 3:09-cv30224, Doc. 1, ¶ 24. While defendant Church of God has attempted to rely upon Hilani v. Greek
Orthodox Archdiocese of America, 863 F.Supp.2d 711 (W.D. Tenn. 2012) to distance Church of
God from such control, the court notes that Hilani turned on personal jurisdiction, did not reach
the merits of the issue, and is not controlling precedent.
In interpreting these sections of the Minutes, a reasonable jury could determine that these
“papers of the parent corporation . . .” makeCelestial Praise and SNE “as department(s) or

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division(s) of the parent corporation.” Duff, 496 So. 2d at 763. The significant amount and
strength of the language regarding the local ownership and express trust of real property speaks
to a level of control. The Files have alleged, and Church of God has admitted, that Celestial
Praise’s attorneys fees were paid by Church of God. A reasonable jury could interpret this as the
parent corporation paying “other expenses or losses of the subsidiary.” Id. The court finds a
genuine fact question as to whether Church of God controls Celestial Praise and SNE to such a
level as to pierce the corporate veil.
Even if control exists, Church of God argues that summary judgment should still be
granted because the alleged control has not resulted in misuse or fraud which proximately
harmed the Files. However, the Files present deposition evidence that Celestial Praise borrowed
$285,000.00 from the Church of God Foundation, Inc. in August 2008, which required a first
mortgage on the sanctuary and property. It is undisputed that none of these loan proceeds were
paid to the Files. (Doc. 125, Ex. C, 36:16-24; 49:15-50:8). There is also evidence that the Church
of God, through the Administrative Bishop for the area, directed Celestial Praise to cease
payments to its individual lenders, including the Files, in April or May 2011. (Doc. 125, Ex. D,
137:14-25). This evidence provides enough factual dispute regarding potential fraud or misuse to
create a genuine issue of material fact on which a reasonable jury could differ.
Because genuine issues of material fact exist, the court will deny the Church of God’s
Motion for Summary Judgement as to the breach of contract claim, Count I. For the same
reasons, the court will also deny the Plaintiffs’ Motion for Summary Judgment as to Count I

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against Church of God.7
2. Unjust Enrichment
The complaint also alleges that Church of God “by and through its alter ego and
instrumentality Celestial Praise, has directly benefitted and has been unjustly enriched through
the receipt of loan funds.” (Doc. 117, ¶ 103). In pleading a claim for unjust enrichment, a
plaintiff must first show that enrichment has occurred. See Matador Holdings, Inc. v. HoPo
Realty Investments, L.L.C., 77 So. 3d 139, 145-146 (Ala. 2011). This involves a showing “that
(1) the defendant knowingly accepted and retained a benefit, (2) provided by another, (3) who
has a reasonable expectation of compensation.” Id. at 145 (quoting Portofino Seaport Vill., LLC
v. Welch, 4 So. 3d 1095, 1098 (Ala. 2008)). The plaintiff then must show enrichment of the
defendant was unjust by showing “(1) the donor of the benefit . . . acted under a mistake of fact
or in misreliance on a right or duty, or (2) the recipient of the benefit . . . engaged in some
unconscionable conduct, such as fraud, coercion, or abuse of a confidential relationship.” Id. at
146 (quoting Jordan v. Mitchell, 705 So. 2d 453, 458 (Ala. Civ. App. 1997)).
The Minutes and their significant referral to the trust relationship regarding property held
by Celestial Praise, as a local church, create a genuine issue of material fact as to whether
defendant Church of God has knowingly accepted property, via the trust relationship, that was
originally purchased partly using the Files’ loan. It is possible for a reasonable jury to find that
Church of God unjustly received this benefit by directing Celestial Praise to cease paying

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Not only does Church of God have a present and continuing ownership of a beneficial interest in the
property of Celestial Praise, it stood to gain in the value of this interest if the loan proceeds had been properly used.
Further, there is a reasonable inference that better facilities of Celestial Praise would have increased its membership
and the periodic cash payments which it was due to pay to Church of God. The Church of God’s interest goes
beyond ecclesiastical as determined in Hilani, (supra).

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individual lenders, including the Files. It might also be possible for a reasonable jury to find there
to be no evidence that the Files’ loan was used to purchase the property at all. Several genuine
issues of material fact on which a reasonable jury could differ exist within this particular count.
Therefore, the court will deny Church of God’s Motion for Summary Judgment on Count II
Unjust Enrichment. For the same reasons as stated above, the court will also deny the plaintiffs’
Motion for Summary Judgment as against Church of God for Count II.8
3. Attorneys’ Fees and Expenses
Because the question of liability for the breach of contract and unjust enrichment issues
still exists, the court will presently deny both Church of God’s Motion for Summary Judgment
and plaintiffs’ Motion for Summary Judgment on the issue of attorneys’ fees and expenses.
B. SNE and Jonathan Ramsey
The Files allege that SNE and Ramsey, in his individual capacity, are liable for the debt
of Celestial Praise pursuant to the terms of the Guaranty, and that, by refusing to pay the debt,
have breached the Guaranty contract. These allegations make up Counts II - Breach of Contract and IV - Attorney’s Fees. SNE and Ramsey, represented by the same counsel, filed a Motion for
Summary Judgment on these claims. The plaintiffs have also filed a Motion for Summary
Judgment against SNE and Ramsey.
1. Counts II and IV against Ramsey as an Individual
Alabama law regarding contracts dictates that the terms within the ‘four corners’ of the
contract control the parties. See Hartford Fire Ins. Co. v. Shapiro, 117 So. 2d 348, 352 (Ala.
1960). Parol evidence is only admissible if the contract is ambiguous. Marriot Intern., Inc. v.
8

Also see immediately prior footnote.

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deCelle, 772 So. 2d 760, 761 (Ala. 1998) (citing Cummings v. Hill, 518 So. 2d 1246, 1247 (Ala.
1987)). “In determining whether a contract is ambiguous as to the capacity in which a party
signed it, [Alabama law] looks to the consistency between the body of the contract and the
signature block.” Id. While the body of the Guaranty does mention the Administrative Bishop, it
is in reference to notification to trigger SNE to make the account current after default.
Additionally, the body of the contract always refers to “the Administrative Bishop” as an office
rather than a specific individual occupying the office at a specific time. This treatment is
consistent with the signature block, which provides a space for the signature of “Administrative
Bishop.” The Guaranty is consistent in its treatment of the Administrative Bishop as a
representative of SNE and never mentions Jonathan Ramsey as an individual. See Professional
Business Systems, Inc. v. Kaufman, 507 So. 2d 421 (Ala. 1987) (officer of corporation held not
individually liable because the body of contract and signature block were consistent in treating
him as a representative officer of the corporation).
Because the Guaranty is not ambiguous as to the capacity in which Ramsey signed it, the
court finds the terms of the contract control. As a matter of law, Jonathan Ramsey is not
individually liable for any alleged breach of the Guaranty contract, or resulting attorneys’ fees.
Ramsey’s Motion for Summary Judgment regarding Count II and IV as against Jonathan Ramsey
is due to be GRANTED. The plaintiffs’ Motion for Summary Judgment against Ramsey will
therefore be denied. Jonathan Ramsey will be DISMISSED as a defendant.
2. Counts II and IV against SNE
The argument between SNE and the Files rests on the interpretation of the Guaranty. The
Files complaint alleges that there was a “scrivener’s error” listing Wayne Pitts as “Lender” on the
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Guaranty contract and that the Guaranty is, at the very least, ambiguous as to the identity of the
Lender. SNE argues that the language on the Guaranty accurately reflects its understanding of the
situation of Wayne Pitts functioning as a broker-lender. The court must decide whether the
Guaranty is ambiguous.
Alabama law applies general contract interpretation rules to the “interpretation or
construction of a guaranty contract.” Gov’t St. Lumber Co., Inc. v. AmSouth Bank, N.A., 553 So.
2d 68, 75 (Ala. 1989). A guaranty is binding on the guarantor “only to the extent and in the
manner stated in the contract of guaranty.” Id (quoting Pate v. Merchants Nat’l Bank, 428 So. 2d
37, 39 (Ala. 1983)). “The intention of the parties controls in construing a written contract, and
the intention of the parties is to be derived from the contract itself, where the language is plain
and unambiguous.” Loerch v. National Bank of Commerce of Birmingham, 624 So. 2d 552, 553
(Ala. 1993). However, if a writing
through mutual mistake . . . or mistake of one of the parties, and fraud or deception
on the part of the other, or mistake of the scrivener who drew the contract for the
parties, contains substantially more or less than the parties intended or the intention
of the parties is not expressed ‘due to inapt language’ it will be reformed to express
the true intention of the parties.
Pullum v. Pullum, 58 So. 3d 752, 756 (Ala. 2010).
In the instant case, both parties agree that the plain language of the Guaranty contract
does not represent the true intention of the parties. The Guaranty provides Wayne Pitts’ name and
contact information for the “Lender.” However, there is at least a reasonable inference that the
parties knew that the Pitts were only brokers. Even SNE argues that the Pitts were brokers for a
bank. SNE claims that the plain language indicates its understanding at the time the contract was
signed that Wayne Pitts was acting as a broker for a bank and would arrange for a single $2
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million loan. SNE contends that it would not have guaranteed the subsequent numerous
individual loans which totaled $2.6 million. Though reformation for a unilateral mistake is not
typically allowed, it is permissible “when there is fraud or inequitable conduct on the part of the
other party to the contract.” Pullam, 58 So. 3d at 756-757.
The Files argue that the listing of Wayne Pitts as the Lender is a “scrivener’s error,” an
error by the party who drafted the document. Alabama law treats scrivener’s errors like mutual
mistake in which the documents do not represent the true intent of the parties. Sherman v.
Woerner Magnolia Farms, Inc., 565 So. 2d 601, 601 (Ala. 1990). Both parties are seeking a form
of reformation and, thus, have the burden to prove, by clear and convincing evidence, “ . . . first,
that the writing does not truly express the intention of the parties - that on which their minds had
agreed; and, second, what it was the parties intended the writing should express. . . . If the proof
is uncertain in any material respect, it will be held insufficient.” Id. While it is clear that the
Guaranty is ambiguous and does not express the parties’ intentions, there is a genuine factual
issue as to what the parties actually intended. SNE’s Motion for Summary Judgment on Count II
- breach of the Guaranty contract - and Count IV - the accompanying claim for attorneys’ fees will presently be denied. For the same reasons, the Plaintiffs’ Motion for Summary Judgment as
against SNE will be denied.
C. Individual Board Defendants Campbell, Boyce, Dinnall, Brown, and Smith
Plaintiffs have alleged that the individual members of the Board of Trustees who signed
the Notes along with Celestial Praise are individually liable, thus becoming liable for the breach
of note and associated attorneys fees and costs. These allegations comprise Counts I, III, and IV.
These individuals, including Paul Campbell, Kevin Boyce, Sonia Dinnall, A. Brown, and H.
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Smith, have not answered the Third Amended Complaint or responded to the plaintiffs’ Motion
for Summary Judgment. The individual Board members did file a response (doc. 78) to the
Second Amended Complaint, and default has not been entered against them. Without a response
to the plaintiffs’ Motion, the court can only consider the facts as set out by the plaintiffs, though
it draws inferences in favor of the non-moving party. The plaintiffs bear the initial burden of
demonstrating the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477
U.S. at 323.
1. Count I: Breach of the Note
In a breach of contract case, the plaintiff has the burden of establishing “(1) a valid
contract binding the parties; (2) the plaintiffs' performance under the contract; (3) the defendant's
nonperformance; and (4) resulting damages.” Reynolds Metals Co. v. Hill, 825 So. 2d 100, 105
(Ala. 2002). The plaintiffs assert that the Board individuals signed in the capacity of individual
“Primary Obligors,” thus creating a valid contract between them and each Board individual. “In
determining whether a contract is ambiguous as to the capacity in which a party signed it,
[Alabama law] looks to the consistency between the body of the contract and the signature
block.” Marriot Intern, 772 So. 2d at 761. The plaintiffs have presented the Note, attached to
their Third Amended Complaint (doc. 117), which names “the undersigned Celestial Praise
Church of God and P. Campbell, K. Boyce, S. Dinell, A. Brown, H. Smith (collectively the
“Promisor”) each as principal, jointly and severally.” (Exh. A, Doc. 117). The Note appears to
have been signed by all of the Board individual defendants on a single signature line with the
designation of “Trustees” under the line. (Id.) The court finds an inconsistency between the way
the individuals are named in the body of the contract (as individuals without reference to their
16

roles as Trustees) and the way they are named in the signature block (referenced as Trustees who
sign on one line as a group) to create an ambiguity. Thus, there is a genuine issue of material fact.
The plaintiffs’ motion will be denied as to Count I against Campbell, Boyce, Dinnall, Brown, and
Smith.
2. Count III: Unjust Enrichment
In pleading a claim for unjust enrichment, a plaintiff must first show enrichment has
occurred. See Matador Holdings, Inc. v. HoPo Realty Investments, L.L.C., 77 So. 3d 139, 145146 (Ala. 2011). This involves a showing “that (1) the defendant knowingly accepted and
retained a benefit, (2) provided by another, (3) who has a reasonable expectation of
compensation.” Id. at 145 (quoting Portofino Seaport Vill., LLC v. Welch, 4 So. 3d 1095, 1098
(Ala. 2008)). The plaintiff then must show enrichment of the defendant was unjust by showing
“(1) the donor of the benefit . . . acted under a mistake of fact or in misreliance on a right or duty,
or (2) the recipient of the benefit . . . engaged in some unconscionable conduct, such as fraud,
coercion, or abuse of a confidential relationship.” Id. at 146 (quoting Jordan v. Mitchell, 705 So.
2d 453, 458 (Ala. Civ. App. 1997)).
The plaintiffs have not established as a matter of law a claim of unjust enrichment against
the individual Board defendants sufficient to gain a grant of summary judgment. Neither their
Third Amended Complaint nor the Motion for Summary Judgment provides sufficient evidence
to show the individual Board defendants accepted and retained a personal benefit. The plaintiffs’
motion will be denied as to Count III against Campbell, Boyce, Dinnall, Brown, and Smith.
3. Count IV: Attorneys’ Fees and Costs
Because the plaintiffs’ motion will be denied as to Counts I and III against the individual
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Board defendants, the court will also deny the plaintiffs’ motion for summary judgment on Count
IV, which alleges liability for attorneys fees. There exists a genuine issue of material fact as to
the defendants’ liability for such fees and costs, and the plaintiffs are not entitled to judgment as
a matter of law.
A separate order will be issued consistent with this memorandum.
This the 3rd day of April, 2013.

ROBERT B. PROPST
SENIOR UNITED STATES DISTRICT JUDGE

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