Kelmor, LLC v. Alabama Dynamics, Inc.

20 So. 3d 783, 2009 Ala. LEXIS 66, 2009 WL 886503
CourtSupreme Court of Alabama
DecidedApril 3, 2009
Docket1050479
StatusPublished
Cited by5 cases

This text of 20 So. 3d 783 (Kelmor, LLC v. Alabama Dynamics, 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
Kelmor, LLC v. Alabama Dynamics, Inc., 20 So. 3d 783, 2009 Ala. LEXIS 66, 2009 WL 886503 (Ala. 2009).

Opinions

COBB, Chief Justice.1

Kelmor, LLC, James S. Pace, and Melvin Zimmerman, the plaintiffs in a breach-of-contract action in the Shelby Circuit Court, appeal from a summary judgment in favor of the defendants, Alabama Dy[786]*786namics, Inc., and Gene Ernest. We affirm.

I. Factual and Procedural History

Ernest owns Alabama Dynamics, Inc., an industrial manufacturing and fabrication business located in Calera. In early 2001, Ernest decided to sell the business he had started nearly 30 years earlier. He hired John Clark of an entity known as Business Resources to locate a buyer for his company. Soon thereafter Clark presented Zimmerman as a potential buyer. On February 21, 2001, Zimmerman presented Ernest with a letter of intent regarding the purchase of Alabama Dynamics. The letter of intent stated that the closing of the transaction would occur on or before April 30, 2001. The letter of intent also stated that the letter of intent would expire on April 30, 2001, if the transaction was not consummated by that date. After realizing that the transaction would not be consummated by April 30, 2001, because of problems in securing financing for the purchase, Zimmerman presented Ernest with another letter of intent on April 11, 2001. This second letter of intent provided that Ernest would discontinue any discussion with any party other than Zimmerman for the sale of the company and its assets until the closing date in the letter, May 31, 2001. On June 4, 2001, Zimmerman’s attorney wrote Ernest’s attorney asking that the closing date be extended to June 30, 2001. The following day Ernest’s attorney wrote Zimmerman’s attorney stating that Ernest had agreed to extend the closing date to June 30, 2001.

The sale of Alabama Dynamics did not close by June 30, 2001, again because of problems in securing financing. In July 2001, a “Sale of Assets Agreement” was executed between Alabama Dynamics and Ernest, as the sellers, and Zimmerman Acquisition, Inc., and Zimmerman, as the

purchasers. The agreement provided that the closing would occur on August 31, 2001. Once again, that deadline passed without the closing of the transaction.

In June 2002, Zimmerman, his business partner Pace, and Kelmor, LLC, a limited liability corporation owned by Zimmerman and Pace (hereinafter referred to collectively as “Kelmor”), entered into another asset-purchase agreement with Ernest and Alabama Dynamics (“the asset-purchase agreement”). The asset-purchase agreement contained the following pertinent provisions:

“1. SALE OF ASSETS AND PURCHASE PRICE.
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“(c) Purchase Price Adjustment: Seller and Purchaser shall jointly perform an examination of Seller[’]s balance sheet as of Date of Closing and the Purchase Price shall be adjusted to reflect any changes therein since June 30, 2002. Any increase or decrease in total assets, excluding plant and equipment, and total liabilities shall be reflected by an identical change in the total purchase price and the amount of cash due at closing. All items are to be accounted for in accordance with Generally Accepted Accounting Principles (GAAP), consistently applied.
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“2. CLOSING AND PRORATIONS.
“(a) The purchase and sale contemplated hereunder shall be closed on June_, 2002. The closing shall take place at the offices of Kracke, Thompson and Ellis in Birmingham, Alabama.
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“12. MISCELLANEOUS PROVISIONS.
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[787]*787“(f) Time is of the Essence: Time is of the essence of this Agreement.”

Although the asset-purchase agreement called for the closing of the sale to take place “on June_, 2002,” the sale was not completed by June 30, 2002. The record indicates that Kelmor was unable to obtain financing before June 30, 2002.

On July 23, 2002, Ernest and Alabama Dynamics’ attorney sent a letter to Kel-mor’s financier, which stated, in pertinent part:

“This letter will serve as confirmation that Alabama Dynamics, Inc. has sufficient and available funds to pay the closing costs of the Purchaser, Kelmor, LLC, on the l’eferenced transaction. We have been informed the closing costs will not exceed One Hundred and Sixty Thousand Dollars ($160,000.00). The contemplated payment of these closing costs by Alabama Dynamics, Inc. will result in the Sale of Assets Agreement being modified to reflect this change in terms.
“This letter is not to be constructed or considered to be a promise or agreement to pay the closing costs of the Purchaser, Kelmor LLC, unless and until each and every term and provision of the Sale of Asset[s] Agreement referenced above has been completely fulfilled. If for any reason, performance contemplated by the Sale of Assets Agreement does not occur[,] no claim can be made on any of the assets of Alabama Dynamics, Inc. for cost or fee incurred by you. Any claim for reimbursement of costs or fees due you must be made on your borrower, Kelmor, LLC.”

By August 21, 2002, the transaction still had not been closed. In a letter dated August 21, 2002, to Kelmor’s attorney, Ernest and Alabama Dynamics’ attorney wrote:

“Please consider this letter as notification to you on behalf of my clients, Alabama Dynamics, Inc. and Gene Ernest, that unless the Sale of Assets Agreement by and between Alabama Dynamics, Inc. and Gene Ernest as Sellers and Kelmor, LLC and Melvin Zimmerman and James S. Pace as Purchasers, is not closed on or before 5:00 p.m. August 23, 2002, we shall consider it null and void and of no force and effect. The Closing contemplated by the Agreement was to take place in June 2002.
“My client has been extremely patient with the innumerable delays which have occurred in closing this Agreement. Our client can no longer agree to continued delays in Closing; therefore, please accept this letter has [sic] notice that unless this matter can be closed by the date set out above, we will consider it null and void and of no force and effect.
“If the matter does not close by the date set out above we will instruct the Broker to forthwith return any earnest money being held to your clients. If you have any questions, please do not hesitate to call me.”

Kelmor did not respond to the letter, and the sale did not close on August 23, 2002.

On September 5, 2002, Zimmerman and Pace, along with a third individual, arrived at the premises of Alabama Dynamics to conduct an environmental study.2 Zimmerman and Pace contend that they had contacted Clark to arrange the visit, who in turn had told Ernest’s wife that they would be visiting the premises; Ernest, [788]*788however, alleges they arrived unannounced. Upon their arrival, Ernest informed Zimmerman and Pace that the sale would not occur and ordered them off the property.

On September 18, 2002, Kelmor sued Ernest and Alabama Dynamics, alleging breach of contract. Business Resources intervened in the action and also brought a breach-of-eontract claim against Ernest and Alabama Dynamics.

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Kelmor, LLC v. Alabama Dynamics, Inc.
20 So. 3d 783 (Supreme Court of Alabama, 2009)

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Bluebook (online)
20 So. 3d 783, 2009 Ala. LEXIS 66, 2009 WL 886503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kelmor-llc-v-alabama-dynamics-inc-ala-2009.