Rel: February 9, 2024
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA OCTOBER TERM, 2023-2024 ____________________
SC-2022-0863 ____________________
David Roberson and Anna Roberson
v.
Drummond Company, Inc.
Appeal from Jefferson Circuit Court (CV-19-901210)
PARKER, Chief Justice.
David Roberson and Anna Roberson appeal from an order entered
by the Jefferson Circuit Court dismissing their claim for indemnification
from Drummond Company, Inc. ("Drummond"), for damages stemming SC-2022-0863
from David's federal conviction for bribery. Because we conclude that the
damages the Robersons seek are not available through indemnification,
we affirm the order dismissing their indemnification claim.
I. Facts
David was a vice president of Drummond. In 2013, the
Environmental Protection Agency proposed placing polluted property in
Jefferson County on its "National Priorities List" for cleanup. The
cleanup costs were estimated at over $100 million. To avoid responsibility
for the cleanup costs, Drummond hired Balch & Bingham, LLP ("Balch"),
to conduct a public-relations campaign to prevent the property from being
placed on the National Priorities List. As part of that campaign, Balch
employed the Oliver Robinson Foundation, which was controlled by then-
Representative Oliver Robinson, to convince Birmingham residents not
to have their property tested for toxins. After making payments to the
foundation, Balch submitted invoices to Drummond for reimbursement.
After receiving Balch's invoices, Drummond's general counsel
asked David to approve payment of the invoices. David asked Joel
Gilbert, a lobbyist employed by Balch, if he had asked Balch's ethics
lawyers whether the plan was ethical and legal. Gilbert represented to
2 SC-2022-0863
David that Balch's ethics lawyers had reviewed the plan and determined
that it was legal. David then approved payment of Balch's invoices.
Thereafter, because he approved the payments to Balch, David was
convicted of bribery in violation of federal law and was sentenced to 30
months in prison.
After his conviction, David was allowed to remain free on bond
pending his appeal. Drummond retained David as an employee on
administrative leave and continued paying him his salary and benefits.
A little over six and a half months later, Drummond terminated David's
employment.
The Robersons sued Drummond and Balch. In their third amended
complaint, which is the operative complaint, the Robersons asserted six
claims against Drummond. In Count 1, the Robersons asserted a claim
for indemnification. In summary, the Robersons alleged that Drummond,
through its general counsel, had directed David to make the payments
that the jury in the criminal proceedings later found to be bribes; that
David had not known the payments were bribes and had acted in good
faith on Gilbert's misrepresentation that Balch's in-house ethics lawyers
had determined that the plan was legal; that he had incurred damages
3 SC-2022-0863
as a result of making the payments; and that Drummond had a duty to
indemnify him for those damages, but had failed to do so.
In Count 12, the Robersons asserted a claim of promissory fraud
based on Drummond's alleged promise to the Robersons that "they had
nothing to worry about" and that Drummond would keep David on paid
administrative leave until his appeal of his conviction was complete and
would pay his full salary, bonuses, and benefits.
Drummond moved to dismiss the Robersons' claims against it in the
third amended complaint. After a hearing, the circuit court dismissed the
indemnification claim, ruling:
"Indemnification generally comes into play in a contractual arrangement between the Parties. [The Robersons] assert[] in the [third amended] Complaint that … Drummond had and 'has a duty to indemnify [David] for all losses and damages that he has suffered and will suffer as a direct result of performing the duties assigned to him by Drummond via its General Counsel.' … The Court acknowledges that Compensatory Damages are awarded to a Plaintiff, who has proven his claim(s), to fairly and reasonably compensate him for the harm caused by another's wrongdoing. The Court is unaware of an automatic duty to Indemnify one for all losses or damages currently suffered and anticipated to [be] suffer[ed] in the future as a result of performing assigned 'duties,' without an agreement between the Parties establishing such a duty. [The Robersons] have neither produced nor alleged the existence of a contract or agreement between the [Robersons] and … Drummond to
4 SC-2022-0863
establish such a duty. … [The Robersons] do not allege any contract or agreement between [them] and … Drummond that places a 'duty' on … Drummond to compensate [the Robersons] for all losses or damages suffered now and anticipated to [be] suffer[ed] in the future. A duty to indemnify, such as alleged by the [Robersons], is not automatic. The Court FINDS that [the Robersons] cannot prove any relief consistent with the allegations set forth in the [third amended] Complaint to support the Count of Indemnification."
(Capitalization in original; emphasis omitted.) The circuit court denied
Drummond's motion as to the Robersons' other claims against
Drummond.
The Robersons then filed a written motion to reconsider. First, the
Robersons argued that the circuit court had overlooked a principal's
common-law duty to indemnify an agent for damages resulting from
actions the agent takes at the principal's direction, if the agent acted in
good faith. In the alternative, the Robersons argued that, even though a
contract is not required to show a duty to indemnify, Drummond had in
fact agreed to indemnify the Robersons by paying for David's legal fees
and by paying his full salary and benefits. The Robersons attached to
their motion a copy of the minutes of a special meeting of Drummond's
5 SC-2022-0863
board of directors ("the board"). Those minutes reflect that the board
agreed to the following:
"1. David Roberson will continue on leave pending final outcome of the proceedings[;]
"2. David Roberson will continue to receive pay and benefits; and,
"3. [Drummond] will continue to indemnify David Roberson for legal fees for his defense."
Thereafter, the circuit court entered an order denying an oral
motion to reconsider that the Robersons' had made at a status conference,
but it did not address the Robersons' written motion to reconsider.
Accordingly, the Robersons moved to reconsider the circuit court's order
denying their oral motion to reconsider. The Robersons reasserted the
arguments made in their original written motion to reconsider. The
Robersons also attached the minutes of the board's special meeting to
that motion.
The circuit court then entered another order denying the Robersons'
motions to reconsider. In that order, the circuit court ruled:
"[T]he proffered excerpt of the transcript of a July 23, 2018, Meeting of … Drummond's [board of directors] did not constitute a contract between … [David] and … Drummond, but instead is relevant to [the Robersons' promissory-fraud
6 SC-2022-0863
claim] …. The Court FINDS that the facts set forth in [the Robersons' indemnification claim] were not sufficient to prove the existence of a contract between … [David] and … Drummond requiring him to perform certain acts … which he did not know to be unlawful, thus triggering indemnification for all damages incurred by … [David] in performing the alleged requested acts. The Court FINDS that the [Robersons] are not prejudiced by the Dismissal of [the Robersons' indemnification claim] in light of the factually more specific allegation in [the Robersons' promissory-fraud claim]. The Court FINDS that the facts set forth in [the Robersons' promissory-fraud claim] incorporate[] the facts supporting the [Robersons' claim for indemnification] along with indemnification for damages sustained by [the Robersons], if proven."
(Capitalization in original; emphasis omitted.) The circuit court certified
that order as final under Rule 54(b), Ala. R. Civ. P. The Robersons
appeal. 1
II. Jurisdiction
As a threshold matter, we must address whether the circuit court
properly certified its order dismissing the Robersons' indemnity claim as
1On December 5, 2023, this Court ordered the parties to submit
supplemental briefing to address the following issue: "Whether the damages the Robersons seek in their indemnification claim against Drummond that are unrelated to liabilities of the Robersons to third parties fall within the definition of the term 'indemnification' as that term is currently defined by Alabama law?" Accordingly, the Robersons' appeal was submitted both on the original briefs and the supplemental briefs filed in response to this Court's order. 7 SC-2022-0863
final under Rule 54(b). In its order denying the Robersons' motions to
reconsider, the circuit court found that the facts set forth in Count 12,
the Robersons' promissory-fraud claim, incorporated the facts alleged in
the Robersons' indemnification claim. As the Robersons note in their brief
to this Court, if that finding was correct, then the circuit court's
certification of finality would be questionable: if the facts underlying both
claims are the same, then there would be a possibility that the two claims
might involve the same issues.
Rule 54(b) provides, in relevant part:
"When more than one claim for relief is presented in an action, … the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment."
This Court has held that a trial court exceeds its discretion in
finding that there is no just reason for delay if the issues in the
adjudicated claim and those in the pending claim are " ' " 'so closely
intertwined that separate adjudication would pose an unreasonable risk
of inconsistent results.' " ' " Lighting Fair, Inc. v. Rosenberg, 63 So. 3d
1256, 1263 (Ala. 2010) (citations omitted). This Court has adopted the
8 SC-2022-0863
following five factors to consider when determining whether there is a
just reason for delay in reviewing an order certified under Rule 54(b):
" ' "(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the [trial] court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in a set-off against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like." ' "
Id. at 1264 (citations, emphasis, and footnotes omitted).
Here, the relationship between the indemnification claim and the
promissory-fraud claim is remote. As the Robersons note, the
indemnification claim and the promissory-fraud claim are based on
entirely different legal theories. The indemnification claim is based on an
employer's alleged common-law and contractual duties to indemnify; the
promissory-fraud claim is based on an allegedly fraudulent promise to
pay David's salary and benefits.
Further, the issues in the two claims are not intertwined because
each claim is based on different facts. The indemnification claim is based
on David's employment relationship with Drummond before his
9 SC-2022-0863
conviction and the directions he allegedly received from its general
counsel; the promissory-fraud claim is based on Drummond's alleged
representation to David after he was convicted that the Robersons "had
nothing to worry about."
Finally, the damages sought in each claim are different. In the
indemnification claim, the Robersons sought damages resulting from his
prosecution and indictment; in the promissory-fraud claim, the
Robersons sought damages for emotional distress and damages resulting
from lost employment opportunities that Anna had declined based on the
alleged representation, the "fire sale" of their house and its contents, and
the lost benefits and salary that Drummond allegedly promised to pay
David.
For these reasons, it does not appear that the indemnification claim
and the promissory-fraud claim are significantly related. And because
the indemnification claim and the promissory-fraud claim are not
significantly related, the other factors are less relevant. Because the two
claims involve different legal theories, issues, and damages, the
possibility that later action in the circuit court could moot the issues in
the adjudicated indemnification claim is minimal. For the same reason,
10 SC-2022-0863
there is little risk that this Court will be required to address the issues
presented here again in reviewing the circuit court's ruling on the
promissory-fraud claim. Further, there are no other claims or
counterclaims that could result in a setoff in the damages awarded.
Accordingly, it does not appear that the issues in the indemnification
claim and the promissory-fraud claim are so closely intertwined that
separate adjudication will pose an unreasonable risk of inconsistent
results.
Finally, there are several miscellaneous factors that weigh in favor
of immediate consideration of the order dismissing the indemnification
claim. For instance, were we to wait until after trial of the promissory-
fraud claim to determine whether the circuit court properly dismissed the
indemnification claim, only to conclude at that point that the circuit court
had erred in dismissing the indemnification claim, the circuit court would
have to hold another trial on that claim. Thus, factors such as delay,
expense, shortening the time of trial, and judicial economy weigh in favor
of immediate review of the order dismissing the indemnification claim.
Accordingly, certification of the order dismissing the indemnification
claim was proper here.
11 SC-2022-0863
III. Standard of Review
Rule 12(b)(6), Ala. R. Civ. P., provides for dismissal of claims for
failure to state a claim upon which relief can be granted. "The
appropriate standard of review under Rule 12(b)(6) is whether, when the
allegations of the complaint are viewed most strongly in the pleader's
favor, it appears that the pleader could prove any set of circumstances
that would entitle her to relief." Nance ex rel. Nance v. Matthews, 622
So. 2d 297, 299 (Ala. 1993). "In making this determination, this Court
does not consider whether the plaintiff will ultimately prevail, but only
whether she may possibly prevail." Id. Further, "a Rule 12(b)(6) dismissal
is proper only when it appears beyond doubt that the plaintiff can prove
no set of facts in support of the claim that would entitle the plaintiff to
relief." Id.
IV. Analysis
The Robersons contend that the circuit court erred in holding that
they had failed to state a claim for indemnification because they did not
allege that Drummond had a contractual duty to indemnify David.
Specifically, the Robersons challenge the circuit court's following ruling:
12 SC-2022-0863
"Indemnification generally comes into play in a contractual arrangement between the Parties. [The Robersons] assert[] in the [third amended] Complaint that … Drummond had and 'has a duty to indemnify [David] for all losses and damages that he has suffered and will suffer as a direct result of performing the duties assigned to him by Drummond via its General Counsel.' … The Court acknowledges that Compensatory Damages are awarded to a Plaintiff, who has proven his claim(s), to fairly and reasonably compensate him for the harm caused by another's wrongdoing. The Court is unaware of an automatic duty to Indemnify one for all losses or damages currently suffered and anticipated to [be] suffer[ed] in the future as a result of performing assigned 'duties,' without an agreement between the Parties establishing such a duty. [The Robersons] have neither produced nor alleged the existence of a contract or agreement between the [Robersons] and … Drummond to establish such a duty. … [The Robersons] do not allege any contract or agreement between [them] and … Drummond that places a 'duty' on … Drummond to compensate [the Robersons] for all losses or damages suffered now and anticipated to [be] suffer[ed] in the future. A duty to indemnify, such as alleged by the [Robersons], is not automatic. The Court FINDS that [the Robersons] cannot prove any relief consistent with the allegations set forth in the [third amended] Complaint to support the Count of Indemnification."
(Capitalization in original; emphasis omitted.) They also challenge the
following ruling in the circuit court's order denying their motions to
reconsider:
"[T]he facts set forth in [the Robersons' indemnification claim] were not sufficient to prove the existence of a contract between [David] and … Drummond requiring him to perform
13 SC-2022-0863
certain acts … which he did not know to be unlawful, thus triggering indemnification for all damages incurred by … [David] in performing the alleged requested acts."
In challenging those rulings, the Robersons argue that (1) Alabama
common law imposes a duty on a principal to indemnify an agent; (2) they
alleged that Drummond had a contractual duty to indemnify David both
by undertaking to pay David his salary and benefits and by agreeing to
reimburse his legal fees and by adopting a resolution to do so in its board
minutes; and (3) they alleged facts supporting court-ordered
indemnification under the Alabama Business and Nonprofit Entity Code
("the ABANEC"), § 10A-1-1.01 et seq., Ala. Code 1975.
Before we address those arguments, it is helpful to review what
indemnification is. This Court has defined "indemnity" as "the obligation
or duty resting on one person[] to make good any loss or damage another
has incurred[] while acting at his request or for his benefit." Vandiver &
Co. v. Pollak, 107 Ala. 547, 553, 19 So. 180, 182 (1895). See also 42 C.J.S.
Indemnity § 1 (2017) ("Generally, 'indemnity' is defined as an obligation
of one party to pay or satisfy the loss or damage incurred by another
party."). Indemnity "permit[s] a defendant forced to pay damages to a
plaintiff to recoup those damages from a third party on the basis of some
14 SC-2022-0863
independent legal theory." 2 Michael L. Roberts, Alabama Tort Law §
36.05 (7th ed. 2021) (emphasis added). Generally, "[i]ndemnity springs
from contract[,] express or implied." Vandiver, 107 Ala. at 553, 19 So. at
182.
"Whether the indemnitor … [is] liable over to the indemnitee for damages assessed against the indemnitee may be ascertained by an action on the indemnitee contract, but this action cannot be maintained until the existence of liability of the indemnitee is determined by some procedure known to law, and the amount thereof becomes ascertainable."
Jenelle Mims Marsh, Alabama Law of Damages § 17:10 (6th ed. 2012)
(emphasis added).
This Court has further noted that " '[t]he basis for indemnity is
restitution, and the concept that one person is unjustly enriched at the
expense of another when the other discharges liability that it should be
his responsibility to pay.' " Amerada Hess Corp. v. Owens-Corning
Fiberglass Corp., 627 So. 2d 367, 370 (Ala. 1993) (quoting Restatement
(Second) of Torts § 886B, cmt. c. (Am. L. Inst. 1977)). "An indemnity
provision generally does not apply to claims between the parties to the
agreement, but obligates the indemnitor to protect the indemnitee
15 SC-2022-0863
against claims brought by third parties." 42 C.J.S. Indemnity § 1
(footnotes omitted; emphasis added).
Accordingly, a duty to indemnify includes a duty to pay another
party's out-of-pocket expenses, especially when those out-of-pocket
expenses are imposed through a judicial determination of liability to a
third party. This principle highlights a fundamental problem that
permeates all of the Robersons' arguments. The losses they seek to
recover were not indemnifiable because they were not judicially imposed
liabilities to a third party or out-of-pocket expenses that David incurred
in processing the invoices. David lost his salary and benefits, not because
his wages had been garnished to satisfy an obligation to a third party,
but because Drummond dismissed him. Similarly, David's mental
anguish, worry, and distress were not expenses for which he was found
liable because of his conduct. Whatever claims the Robersons may have
against Drummond for failure to pay his salary and benefits and for the
mental anguish, worry, and distress he suffered, those claims are not
indemnification claims.
The only indemnifiable expense that David incurred was his legal
fees that he incurred in the federal criminal proceedings. But it is
16 SC-2022-0863
undisputed that Drummond fully indemnified David for those expenses.
The Robersons even conceded in their third amended complaint that
"[Drummond] has paid [David's] legal fees in the United States District
Court and in the Eleventh Circuit Court of Appeals to date."
With this clarification in mind, we now proceed to consider the
Robersons' particular arguments.
A. Common-Law Indemnification
In challenging the circuit court's rulings, the Robersons first
contend that the circuit court disregarded the common-law duty to
indemnify. The common-law duty to indemnify is well established in
Alabama law. As early as 1855, this Court held:
"Every man who employs another to do an act which the employer appears to have a right to authorize him to do, undertakes to indemnify him for all such acts as the agent does not know to be unlawful, and as would be lawful if the employer had the authority he pretends to have."
Moore v. Appleton, 26 Ala. 633, 637 (Ala. 1855) (emphasis added). "In all
such cases, a promise of indemnity is implied, upon the plain dictates of
reason and natural justice." Id. at 638. In Moore, 26 Ala. at 637, this
Court cited § 339 of Joseph Story's treatise on agency, which contains the
following discussion of the common-law duty to indemnify:
17 SC-2022-0863
"[I]t may be stated, as a general principle of law, that an agent, who commits a trespass, or other wrong to the property of a third person, by the direction of his principal, if at the time he has no knowledge or suspicion, that it is such a trespass or wrong, but acts bona fide, will be entitled to a reimbursement and contribution from his principal for all the damages which he sustains thereby. For, although the general doctrine of the common law is, that there can be no reimbursement or contribution among wrongdoers, whether they are principals, or are agents; yet that doctrine is to be received with the qualification, that the parties know, at the time, that it is a wrong. And in all these cases, there is no difference whether there be a promise of indemnity, or not; for the law will not enforce a contract of indemnity against a known and meditated wrong; and, on the other hand, where the agent acts innocently, and without notice of the wrong, the law will imply a promise on the part of the principal to indemnify him."
Joseph Story, Commentaries on the Law of Agency § 339 (6th ed. 1863)
(footnotes omitted). See also Vandiver, 107 Ala. at 554, 19 So. at 182
(quoting the same passage from Story's Commentaries).
More recently, this Court has held that,
" '[a]s a general rule, where an agent is employed or directed by another to do an act in his behalf, the law implies a promise of indemnity by the principal for damages resulting to the agent proximately from the execution of the agency, and of reimbursement for necessary expenses advanced or incurred by the agent in order to consummate that which he is directed to do. Under this rule the principal should reimburse the agent for, or exonerate him from, authorized payments on behalf of the principal ….' "
18 SC-2022-0863
Lauderdale v. Peace Baptist Church of Birmingham, 246 Ala. 178, 182,
19 So. 2d 538, 542 (1944) (citations omitted).
The Robersons are correct that the circuit court overlooked the
common-law duty to indemnify in its order. Nevertheless, there are
multiple problems with the Robersons' common-law-indemnification
argument. First, as explained above, even if Drummond had a common-
law duty to indemnify David, that duty did not include a duty to continue
paying David his salary and benefits or to protect him from mental
anguish, worry, or distress, because those losses were not "damages" that
David sustained as a result of his conduct.
Further, in each of the cases the Robersons cite in which this Court
held that there was a common-law duty to indemnify, the agent was only
civilly liable for actions done at the principal's direction. See Moore, 26
Ala. at 639 (holding that agent was entitled to indemnification for
damages he incurred by wrongfully dispossessing occupant of land on
behalf of principal); Vandiver, 107 Ala. at 560, 19 So. at 185 (holding that
creditor was entitled to contribution from other creditors for damages
resulting from wrongful sale of attached property); Lauderdale, 246 Ala.
at 183, 19 So. 2d at 542 (holding that pastor's estate was entitled to
19 SC-2022-0863
indemnification for debt pastor personally incurred in purchasing a
building for a church); Parker v. Mauldin, 353 So. 2d 1375 (Ala. 1977)
(holding that agent was entitled to indemnification for damages resulting
from wrongful repossession of cotton picker); Creel v. Crim, 812 So. 1259
(Ala. Civ. App. 2001) (holding that lumberman was entitled to
indemnification for damages arising from wrongfully cutting trees on
property at neighbor's direction). The Robersons point to no authority
finding a common-law duty to indemnify an agent from a criminal
indictment, prosecution, conviction, or criminal penalty. Accordingly, to
the extent that the Robersons seek indemnification for the criminal
penalties David incurred, they fail to demonstrate that the common-law
duty to indemnify includes the type of indemnification that they seek.
For these reasons, the Robersons fail to demonstrate that they
sufficiently pleaded a claim for common-law indemnification.
B. Contractual Indemnification
Next, the Robersons contend that their indemnification claim
stated a claim arising from the breach of a contract to indemnify.
Specifically, they take issue with the circuit court's statements in its
initial order dismissing the indemnification claim that the Robersons
20 SC-2022-0863
"have neither produced nor alleged the existence of a contract or
agreement between the [Robersons] and … Drummond to establish [a
duty to indemnify]" and that they did "not allege any contract or
agreement between [them] and … Drummond that places a 'duty' on …
Drummond to compensate [the Robersons] for all losses or damages
suffered now and anticipated to [be] suffer[ed] in the future." (Emphasis
in original.)
The Robersons contend that they sufficiently alleged the existence
of a contract calling for indemnification in two ways. First, they contend
that Drummond entered into an implied contract to indemnify David by
continuing to pay his salary and benefits and by paying his legal fees. In
the alternative, they contend that Drummond entered into a contract to
indemnify David when its board adopted a resolution to continue paying
David his salary and benefits and to indemnify him for legal fees.
1. Implied Contract to Indemnify
The Robersons admit that, in their indemnification claim, they did
not specifically allege that Drummond's duty to indemnify David arose
from a contract or an agreement. Nevertheless, they contend that they
pleaded the existence of a contract according to its legal effect. In support,
21 SC-2022-0863
they cite a case in which this Court stated that a " 'plaintiff, at his
election, may set [a contract] forth verbatim in the complaint, attach a
copy as an exhibit, or plead it according to its effect.' " Berry v. Druid City
Hosp. Bd., 333 So. 2d 796, 801 (Ala. 1976) (citation omitted). The
Robersons note that they pleaded that Drummond "undertook to perform
its duty of indemnity" by paying David's legal fees and salary.
As explained above, the basic flaw in the Robersons' argument is
that the duties they allege Drummond undertook, other than payment of
David's legal fees, were not "indemnification." The Robersons fail to
recognize that, to state a claim for recovery of David's lost salary and
benefits, they should have pleaded a simple breach-of-contract claim. The
obligation that they allege Drummond undertook was not a promise to
indemnify David; it was simply a promise not to fire him. But the
Robersons did not assert a breach-of-contract claim. "It is not the duty of
the courts to create a claim which the plaintiff has not spelled out in the
pleadings." McCullough v. Alabama By-Prods. Corp., 343 So. 2d 508, 510
(Ala. 1977) (citing Case v. State Farm Mut. Auto. Ins. Co., 294 F.2d 676
(5th Cir. 1961)).
2. Board Minutes
22 SC-2022-0863
Before we consider if the board minutes that the Robersons
attached to their motions to reconsider were a contract for
indemnification, we must first determine whether the minutes were
properly before the circuit court. In their brief to this Court, the
Robersons recognize that a trial court is not ordinarily required to
consider documents submitted with a motion to reconsider. Nevertheless,
they contend that we can consider the board minutes on appeal because
the circuit court actually considered the minutes in denying their motions
to reconsider, without any objection from Drummond. The Robersons
note that we have previously reviewed an issue that was raised for the
first time in a motion to reconsider because the trial court had amended
its order to address the issue. Maxwell v. Dawkins, 974 So. 2d 282, 286
(Ala. 2006). The Robersons' argument turns on the following portion of
the circuit court's order denying their motions to reconsider:
"In Denying the [Robersons'] Leave to file a Fourth Amended Complaint[ 2] while addressing [the Robersons'] proposed claim for Indemnification by Drummond based on an alleged Breach of Contract, the Court acknowledges that … the Court Determined that the proffered excerpt of the transcript of a July 23, 2018, Meeting of [Drummond's]
2The Robersons do not challenge the denial of their motion for leave
to file a fourth amended complaint. 23 SC-2022-0863
Executive Committee did not constitute a contract between [David] and [Drummond], but instead is relevant to [the Robersons'] [promissory-fraud claim]."
(Capitalization in original; emphasis omitted.)
Although a copy of the Robersons' motion for leave to file a fourth
amended complaint is not in the record, it appears that the Robersons
attached the board minutes to that motion in support of its proposed
additional claim for indemnification based on a breach of a contract to
indemnify. In denying that motion, the circuit court ruled on the
Robersons' argument that the board minutes constituted a contract for
indemnification, and the circuit court incorporated that previous ruling
in denying the Robersons' motions to reconsider. Thus, the Robersons are
correct that the circuit court considered the board minutes in ruling on
the motions to reconsider. Accordingly, they are properly before us.
According to the minutes, Drummond's board agreed to the
following:
"1. David Roberson will continue on leave pending final outcome of the proceedings[;]
"2. David Roberson will continue to receive pay and benefits; and,
24 SC-2022-0863
"3. [Drummond] will continue to indemnify David Roberson for legal fees for his defense."
The Robersons are correct that the board did agree to "indemnify"
David, but, as Drummond points out, the board used the word
"indemnify" only with regard to David's legal fees for his defense, and, as
discussed above, there is no dispute that Drummond fully indemnified
David for his legal fees.
Nevertheless, the Robersons argue that Drummond's resolution to
pay David's salary and benefits is parallel to its resolution to indemnify
David for his legal fees. Thus, they contend that both Drummond's
obligation to pay David's salary and benefits and its obligation to
indemnify David for his legal fees continued to the end of his appeal. But
even if the Robersons are correct that Drummond's obligations under the
minutes continued for the same amount of time, that fact is insufficient
to establish that both obligations involved "indemnification."
As explained above, David's loss of his salary and benefits was not
a liability or expense that he incurred to a third party because he
processed the invoices. Thus, regardless of whether the Robersons cast
Drummond's decision to fire David as a breach of a corporate bylaw, a
25 SC-2022-0863
breach of a corporate resolution, or a breach of an implied contract, they
cannot make it the basis of an indemnification claim.
The Robersons also contend that the board minutes indicate that
Drummond's bylaws required Drummond to indemnify David by paying
his salary and benefits pending resolution of his appeal. They point to the
minutes' statement that "[t]he Board discussed Company Bylaws
including certain determinations involving indemnification." Relying on
that statement, the Robersons contend that "the resolution shows that
Drummond has bylaws concerning indemnification and that it acted
pursuant to those bylaws when it placed [David] on paid leave." The
Robersons' argument is based on speculation regarding what
Drummond's bylaws actually required. They did not attach a copy of the
bylaws to their written motion to reconsider or otherwise include it in the
record, and they completely failed to allege in their third amended
complaint that the bylaws required Drummond to continue paying
David's salary and benefits. All they included in the record was the
minutes, which indicate only that the board discussed the bylaws'
indemnification provisions. That statement does not support the
inference that everything the board resolved to do was based on the
26 SC-2022-0863
bylaws' requirements. The fact that the board decided to continue paying
David's salary and benefits after discussing Drummond's bylaws
regarding indemnification does not mean that Drummond's bylaws
required Drummond to "indemnify" David by paying his salary.
C. Court-Ordered Indemnification
Finally, the Robersons contend that their indemnification claim
states a claim for court-ordered indemnification under the ABANEC.
But, as Drummond points out in its brief to this Court, the Robersons did
not assert its argument under the ABANEC in its response to
Drummond's motion to dismiss, in the hearing on Drummond's motion to
dismiss, in their written motion to reconsider the circuit court's order
dismissing the indemnification claim, or in their motion to reconsider the
circuit court's order denying the Robersons' oral motion to reconsider the
dismissal of the indemnification claim. Rather, they assert it for the first
time on appeal. It is well settled that this Court will not reverse a trial
court's judgment on an issue not presented to the trial court. Ex parte
Knox, 201 So. 3d 1213, 1216 (Ala. 2015). Accordingly, the Robersons
failed to preserve their ABANEC argument for appellate review.
27 SC-2022-0863
In their reply brief, the Robersons contend that they preserved their
claim for court-ordered indemnification simply by alleging facts that they
say were sufficient to invoke the theory. They rely on this Court's
statement that, " ' "if under a provable set of facts, upon any cognizable
theory of law, a complaint states a claim upon which relief could be
granted, the complaint should not be dismissed." ' " Roberson v. Balch &
Bingham, LLP, 358 So. 3d 1118, 1126 (Ala. 2022) (citations omitted). But
the Robersons conflate the requirements for sufficiently pleading a claim
with the requirements for preserving for appeal a basis for reversing an
order dismissing a claim. To preserve a basis for reversing an order
dismissing a claim, a plaintiff must bring that basis to the trial court's
attention either in response to the motion to dismiss or in a postjudgment
motion. Allowing a plaintiff to assert a basis for reversal for the first time
on appeal so long as it satisfied the requirements for sufficient pleading
would violate basic principles of appellate procedure. Knox, supra.
V. Conclusion
For these reasons, we affirm the order dismissing the Robersons'
indemnification claim.
AFFIRMED.
28 SC-2022-0863
Mendheim and Stewart, JJ., and Baschab* and Welch,* Special Justices, concur.
Lyons,* Special Justice, concurs in part and dissents in part as to the rationale and dissents from the judgment, with opinion, joined by Main,* Special Justice.
Shaw, Wise, Bryan, Sellers, Mitchell, and Cook, JJ., recuse themselves.
____________________ *Retired Associate Justice Champ Lyons, Jr., Retired Associate Justice James Allen Main, Retired Judge Pamela Willis Baschab, and Retired Judge Samuel Henry Welch were appointed to serve as Special Justices in regard to this appeal. 29 SC-2022-0863
LYONS, Special Justice (concurring in part and dissenting in part as to
the rationale and dissenting from the judgment).
This case presents a remarkable assortment of shifting theories and
rationales. The trial court dismissed the indemnification claim asserted
by David Roberson and Anna Roberson on a ground not asserted in the
motion to dismiss filed by Drummond Company, Inc. ("Drummond"). The
Robersons, on appeal, assert statutory relief not raised below.
Drummond, on appeal, raises grounds not argued in the trial court but fails
to defend the ground actually relied upon by the trial court. The main
opinion affirms on a theory never raised below or on appeal by
Drummond asserts for the first time on appeal that the effect of
David Roberson's conviction in federal court precludes him from
pursuing a civil action in state court seeking a result inconsistent with
the facts found in the federal criminal proceeding. In their reply brief,
the Robersons argue persuasively that Drummond is asserting for the
first time on appeal an issue that constitutes a waived affirmative
defense. In fact, the Robersons contend that in the trial court
Drummond relied on authority that is inconsistent with its position on 30 SC-2022-0863
appeal. The Robersons cite authority that prevents affirmance on a
waived affirmative defense. However, in this proceeding, the
obligations inherent in serving an answer, such as, among other things,
assertion of any available affirmative defenses, did not come into play
because the trial court dismissed the indemnification claim asserted in
the Robersons' third amended complaint, thereby eliminating the
necessity for Drummond to raise affirmative defenses to that claim in
an answer. For this reason, it would be inappropriate to affirm the trial
court's dismissal order on this ground.
The main opinion addresses the ground for dismissal relied upon by
the trial court and agrees with the Robersons that the trial court erred
in overlooking common-law indemnity. I concur in that determination.
The main opinion then limits common-law indemnity to claims by the
indemnitee against the indemnitor for losses sustained as a result of
claims against the indemnitee by third parties, thus serving up an
additional basis for affirmance by stating that the Robersons point to
no authority finding a common-law duty to indemnify an agent from a
criminal indictment, conviction, or criminal penalty. On this theory, a
defense of estoppel, had it been asserted, would have been a defense to 31 SC-2022-0863
the indemnification claim asserted in the third amended complaint. Of
course, neither of these contentions were asserted by Drummond in the
trial court or on appeal. With respect to contractual indemnity, the
main opinion again points to the unavailability of indemnity when the
losses are not triggered by liability to a third party.
The Court requested supplemental briefing on a potential basis
for affirmance, namely, that common-law indemnity is limited to claims
by the indemnitee against the indemnitor for losses sustained as a result
of claims against the indemnitee by third parties. The additional
briefing was ordered due to the potential for the denial of due process
recognized in Liberty National Life Insurance Co. v. University of
Alabama Health Services Foundation, P.C., 881 So. 2d 1013, 1020 (Ala.
2003), wherein this Court affirmed the trial court's judgment on a
ground raised by the Court for the first time on appeal. The issue
whether indemnity is restricted to restitution for losses that the
alleged indemnitee, who was an employee of the alleged indemnitor,
was required to pay to a third party was not raised by the Robersons,
Drummond, or the trial court, either below or on appeal.
In their supplemental brief, the Robersons point to the procedural 32 SC-2022-0863
defect of Drummond's failure to attack the nature of recoverable
damages by proper motion below and also assert substantive grounds
for rejecting a restricted view of recoverable damages for indemnity
based on caselaw and an Alabama statute. Sorting through the details
of the procedural requirements of a challenge to damages by a
defendant and the substantive issue of the recoverability of specific
categories of damages under the facts before us, as well as applying the
precedents applicable to these issues cited in the supplemental briefs,
smack of functions that should initially be left to the trial court, with
one exception -- the determination whether, in considering those issues,
the Robersons should be permitted to rely on certain provisions of the
Alabama Business and Nonprofit Entities Code ("the ABANEC"), Ala.
Code 1975, § 10A-1-1.01 et seq.
With respect to the appropriate procedural posture for a challenge
to damages, the Robersons cite Jefferies v. Bush, 608 So. 2d 361 (1992).
In that case, a defendant challenged the recoverability of a certain
category of damages at the trial level by moving to strike a request for
mental-anguish damages asserted in the complaint. After noting that
such a procedure was no longer appropriate after the promulgation of 33 SC-2022-0863
the Alabama Rules of Civil Procedure, this Court observed that "the
proper vehicle for challenging a claim for mental anguish damages
would be a motion for partial summary judgment." Id. at 363. This Court
then reviewed the trial court's determination preventing the plaintiffs
from recovering mental-anguish damages by applying the standard
applicable to a partial summary judgment. Of course, here, no motion
of any kind challenging the categories of damages sought was served by
Drummond below, so this Court cannot review any ruling on such a
motion simply by applying the proper standard, as was done in Jefferies.
I am unable to conclude that the round of letter briefs on the issue
of the categories of recoverable damages for indemnity is an adequate
substitute for proceedings below on a motion for a partial summary
judgment. I therefore dissent from the main opinion's affirmance of the
trial court's order insofar as the affirmance is premised on the
unavailability of the damages sought by the Robersons under a claim
for common-law indemnity.
Turning to the ABANEC claim, the Robersons assert it for the first
time on appeal, citing the opinion this Court released in an earlier
appeal in this case, Roberson v. Balch & Bingham, LLP, 358 So. 3d 34 SC-2022-0863
1118 (Ala. 2022), as authority to do so, notwithstanding their failure
to assert it in their third amended complaint. The Robersons' reliance
on this Court's opinion in the previous appeal in this case is misplaced.
The operative complaint in Roberson explicitly charged common-law
fraud. The issue of the sufficiency of the allegations of the fraud claim
was thus addressed on appeal based on a record established in the trial
court, not on an allegation made for the first time on appeal.
As for the ABANEC claim, as Drummond contends in its
principal brief to this Court, the Robersons
"did not present this argument to the trial court. '[An] appellate court] cannot consider arguments advanced for the purpose of reversing the judgment of a trial court when those arguments were never presented to the trial court for consideration or were raised for the first time on appeal.' ... Therefore, we do not address that argument further."
G.A. West & Co. v. McGhee, 58 So. 3d 167, 177 (Ala. Civ. App. 2010)
(quoting State Farm Mut. Auto. Ins. Co. v. Motley, 909 So. 2d 806, 821
(Ala. 2005)). See also Marks v. Tenbrunsel, 910 So. 2d 1255, 1263 (Ala.
2005) (" 'This Court cannot consider arguments raised for the first time
on appeal; rather, our review is restricted to the evidence and
arguments considered by the trial court.' " (citation omitted)).
35 SC-2022-0863
The Robersons cannot circumvent this settled rule by arguing
that the trial court should have sua sponte analyzed Count 1 of the
third amended complaint as a statutory claim for court-ordered
indemnity. See McCullough v. Alabama By-Prods. Corp., 343 So. 2d
508, 510 (Ala. 1977) (citing Case v. State Farm Mut. Auto. Ins. Co., 294
F.2d 676 (5th Cir. 1961)) ("It is not the duty of the courts to create a claim
which the plaintiff has not spelled out in the pleadings."). And, the
Robersons' ABANEC claim is not a new argument of existing issues
related to common-law claims that were set forth in their third amended
complaint. I therefore concur in this aspect of the main opinion.
In my opinion, however, the trial court's order should be reversed
and the case remanded for full development below of the issue
regarding the categories of recoverable damages under common-law
indemnity and any other issues stemming from service by Drummond of
an answer asserting applicable affirmative defenses.
Main, Special Justice, concurs.