FIRST BAPTIST CHURCH, CITRONELLE v. Citronelle-Mobile Gathering, Inc.

409 So. 2d 727, 1981 Ala. LEXIS 3801
CourtSupreme Court of Alabama
DecidedSeptember 29, 1981
Docket79-922, 79-923
StatusPublished
Cited by31 cases

This text of 409 So. 2d 727 (FIRST BAPTIST CHURCH, CITRONELLE v. Citronelle-Mobile Gathering, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
FIRST BAPTIST CHURCH, CITRONELLE v. Citronelle-Mobile Gathering, Inc., 409 So. 2d 727, 1981 Ala. LEXIS 3801 (Ala. 1981).

Opinion

409 So.2d 727 (1981)

FIRST BAPTIST CHURCH OF CITRONELLE, et al.
v.
CITRONELLE-MOBILE GATHERING, INC. and
Sanders MASON, Jr., et al.
v.
Bart B. CHAMBERLAIN, Jr., et al.

Nos. 79-922, 79-923.

Supreme Court of Alabama.

September 29, 1981.
Rehearing Denied February 12, 1982.

Frank McRight and Donald J. Stewart of McRight, Sims, Rowe & Stewart, Mobile, for appellants in No. 79-922.

Larry T. Menefee of Blacksher, Menefee & Stein, Mobile, for appellants in No. 79-923.

G. Sage Lyons and J. P. Courtney, III of Lyons, Pipes & Cook, Mobile, for appellees.

*728 FAULKNER, Justice.

Plaintiffs are the representatives of a class of persons who were royalty owners of oil and gas interests in the Citronelle Oil Field in Mobile County, Alabama, in December, 1973. The defendants, Citronelle-Mobile Gathering, Inc. (Gathering) and Bart Chamberlain, Jr., Gathering's president, own and operate a system of gathering lines in the Citronelle Unit. The gathering lines permit the corporation to receive, transport and sell oil which is subject to the royalty interests of the plaintiffs. The class members were parties to an "open price division order contract" with Gathering. Under such a contract, Gathering has the right to purchase oil at the "posted price on the day thereof, for oil of the same kind and quality produced from the same field," subject only to the plaintiffs' royalty interests.

By federal regulation, oil sales to domestic purchasers were limited to a price of $5.10 per barrel from December, 1973 through May, 1974. The defendant entered into a series of oil sales contracts with a Bahamian corporation for the export sale of 1,000,000 barrels of oil from the Citronelle Field at a price of $14.00 per barrel. But the defendant paid royalties to the plaintiffs on the price of $5.10 per barrel. Plaintiffs contend that Gathering breached its contract with them by failing to pay royalties on the higher price.

In an action brought in federal court, Judge Virgil Pittman determined that the oil sales in question were not for "export" within the context of the price deregulations on oil, and therefore the sales were not exempt from the federal pricing regulations limiting the price of domestic oil sold for $5.10 a barrel. The Court ordered the excess profits, $8,000,000, to be paid into the United States Treasury as restitution.

On July 7, 1975, purported members of the class of persons holding royalty interests in the Citronelle Field brought a class action for fraud and breach of contract in a case styled Helveston, et al. v. Gathering, Chamberlain, et al. The trial court denied class action status two years and four months later, on November 9, 1977. In April of 1978, the former class representatives reached a settlement agreement with Gathering and the case was dismissed. The putative class members were never sent notice of the settlement or dismissal.

On October 24, 1978, less than six months later, the plaintiff filed the present class action suits on behalf of the putative members of the Helveston class, one against Gathering and one against Chamberlain. The action against Gathering is for breach of contract, while the action against Chamberlain is for fraud. The lower court granted Gathering's motion for a summary judgment on the grounds that the statutes of limitations bar bringing the causes of action.

The representatives of the class of owners of royalty interests in the Citronelle Field appeal the granting of the summary judgment in favor of Gathering. We reverse the decision of the trial court.

The sole issue on appeal is whether the applicable statute of limitations[1] bars filing of a separate class action after denial of class certification and dismissal in the original action. We hold that when the interests of putative class members may not be adequately protected by the class representative or by the judiciary, the statute of limitations is tolled from the date of commencement of the action until the date of denial of class certification. In the appropriate circumstances, an action may be *729 brought by a putative class member after the denial of class certification and dismissal of an action.

Rule 23 of the Alabama Rules of Civil Procedure is identical to Rule 23 of the Federal Rules of Civil Procedure. Thus, federal authorities are persuasive when interpreting the Alabama Rule, but they are not binding on this Court. Thomas v. Liberty National Life Insurance Co., 368 So.2d 254 (Ala.1979).

The Supreme Court of the United States employs a balancing approach when determining whether a statute of limitations is tolled by the filing of a class action. See United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977); American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). The Court considers the policies underlying class actions and statutes of limitations to discover if tolling the statute of limitations is consistent with those policies.

The class action developed partially in response to problems with the practice in equity regarding "spurious" class actions— class actions in which there are common questions of law or fact. See American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974). Potential members of a spurious class action could choose not to intervene in an action if a favorable determination appeared to be unlikely. The class members were not bound unless they intervened in the action. The class action under Rule 23 permits the binding of all class members if the procedures of the rule are complied with. The class action procedure serves "not only the convenience of the parties but also prompt, efficient judicial administration." (Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 185, 94 S.Ct. 2140, 2156, 40 L.Ed.2d 732 (1974)) (Douglas, J., dissenting) (quoting Z. Chaffee, Some Problems of Equity 149 (1950)). The aggregation of individual claims into one action prevents the waste of judicial resources that result necessary filing of repetitious suits, motions, and papers in individual actions. Moreover, the class action provides a framework within which to seek redress for claims that it may be unfeasible economically to bring in individual actions. See Deposit Guaranty National Bank v. Roper, 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980).

The Supreme Court of the United States has determined that tolling of a statute of limitations to permit putative class members to intervene after the denial of class certification is consistent with federal class action procedure. See United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 246, 53 L.Ed.2d 423 (1977) (putative class members may intervene on appeal to contest denial of class certification);

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409 So. 2d 727, 1981 Ala. LEXIS 3801, Counsel Stack Legal Research, https://law.counselstack.com/opinion/first-baptist-church-citronelle-v-citronelle-mobile-gathering-inc-ala-1981.