Dupree v. PeoplesSouth Bank

308 So.3d 484

Brad DUPREE

v.PEOPLESSOUTH BANK

1180095

Supreme Court of Alabama.

May 8, 2020

Gregory A. Brockwell of Brockwell Smith LLC, Birmingham, for appellant.

Peter A. McInish, Dothan, for appellee.

MITCHELL, Justice.

Brad Dupree sued PeoplesSouth Bank ("PeoplesSouth"), alleging that PeoplesSouth wrongfully gave the proceeds of a $100,000 certificate of deposit to his father, not him. The Houston Circuit Court entered a judgment for PeoplesSouth following a bench trial. Brad now appeals, arguing that he should have won on his breach-of-contract claim and been awarded damages in the amount of $100,000. We affirm the judgment in favor of PeoplesSouth.

Facts and Procedural History

Jimmy Dupree is the father of Brad Dupree. On June 29, 1993, Jimmy deposited $100,000 with Peoples Community Bank, now known as PeoplesSouth, and, in return, received a nonnegotiable certificate of deposit issued in the names of "Brad Dupree and Jimmy Dupree" ("the CD"). Handwritten edits on the CD later reversed the order of the names to "Jimmy Dupree and Brad Dupree" and also replaced Brad's taxpayer ID number with Jimmy's taxpayer ID number. A handwritten note, dated December 16, 1993, on the back of the CD stated "changed order of names to report interest under Jimmy's SS#." No evidence was offered as to who made the handwritten changes, and they were not initialed by either Jimmy or Brad.

Brad was a minor at the time the CD was issued and did not contribute any money to the purchase of the CD. He testified that he did not recall ever seeing or signing the CD. All interest derived from the CD was paid to Jimmy, and he, not Brad, reported that interest as income on his tax returns. After the CD was issued, it was immediately pledged to PeoplesSouth by Jimmy as collateral, along with five other $100,000 certificates of deposit, for a business loan. PeoplesSouth maintained possession of the CD from its issuance until Jimmy withdrew the funds.

A. The 2010 Action

In November 2010, before filing this case against PeoplesSouth, Brad, his mother, and his stepbrother sued Jimmy in the Houston Circuit Court, alleging that Jimmy had wrongfully converted certain personal property, including the CD ("the 2010 action"). Both sides filed competing motions for a summary judgment. Rather than ruling on the motions for a summary judgment, however, it appears that the trial court ordered the parties to mediate.

On November 20, 2012, while the 2010 action was pending, Jimmy went to PeoplesSouth and cashed in the CD without notifying Brad. PeoplesSouth issued a cashier's check payable to the order of "Jimmy Dupree or Brad Dupree" for the amount of the CD less amounts set off by PeoplesSouth related to Jimmy's business loan. Jimmy cashed the check and then spent the funds. Brad learned during mediation of the 2010 action that Jimmy had cashed in the CD and was advised by the mediator to sue PeoplesSouth.

An order from the 2010 action, dated November 21, 2014, disposed of that case. That order stated: "The property issues in this case were resolved by mediation. Motion for summary judgment granted." It is not clear, however, which party's summary-judgment motion was granted.

B. The PeoplesSouth Litigation

On December 1, 2014, nine days after the order was entered in the 2010 action, Brad sued PeoplesSouth, asserting claims for breach of the Uniform Commercial Code, breach of contract, money had and received, negligence, and wantonness and seeking restitution. PeoplesSouth answered the complaint and added Jimmy as a third-party defendant. All parties filed motions for a summary judgment, which were all denied. The case then proceeded to a bench trial.

At trial, Brad testified that the CD was a gift to him from Jimmy. Brad's mother and stepbrother also testified that Jimmy told them that he added Brad's name to the CD to provide for Brad in the event something happened to Jimmy or Brad's mother. Jimmy testified, however, that the only purpose of adding Brad's name to the CD was to provide additional protection for the investment under Federal Deposit Insurance Corporation ("FDIC") regulations.

After hearing all the evidence, the trial court entered a judgment in favor of PeoplesSouth and Jimmy, holding that Brad's claims were barred by the doctrine of res judicata based on the order entered in the 2010 action. The trial court also held, as an alternative basis for its judgment in favor of PeoplesSouth, that there was no breach of contract because Jimmy never made an inter vivos gift of the CD to Brad.

Brad does not appeal the judgment in favor of Jimmy. Brad appeals only the judgment in favor of PeoplesSouth on his breach-of-contract claim.

Standard of Review

We review final judgments where ore tenus evidence has been taken by a court in a bench trial, not a jury trial, based on the following rule, referred to as the ore tenus rule:

" ‘[W]hen a trial court hears ore tenus testimony, its findings on disputed facts are presumed correct and its judgment based on those findings will not be reversed unless the judgment is palpably erroneous or manifestly unjust.’ Philpot v. State, 843 So. 2d 122, 125 (Ala. 2002). ‘ "The presumption of correctness, however, is rebuttable and may be overcome where there is insufficient evidence presented to the trial court to sustain its judgment." ’ Waltman v. Rowell, 913 So. 2d 1083, 1086 (Ala. 2005) (quoting Dennis v. Dobbs, 474 So. 2d 77, 79 (Ala. 1985) ). ‘Additionally, the ore tenus rule does not extend to cloak with a presumption of correctness a trial judge's conclusions of law or the incorrect application of law to the facts.’ Id."

Fadalla v. Fadalla, 929 So. 2d 429, 433 (Ala. 2005). See also Hall v. Mazzone, 486 So. 2d 408, 410 (Ala. 1986) ("The ore tenus rule is grounded upon the principle that when the trial court hears oral testimony it has an opportunity to evaluate the demeanor and credibility of witnesses."). Although we must presume that the trial court's findings of fact here, which are based on ore tenus evidence, are correct, to the extent we are reviewing the trial court's conclusions of law or its application of the law to the facts, our review is de novo. Fadalla, 929 So. 2d at 433.

In reviewing the trial court's judgment, we are not limited to the reasoning that the trial court applied but can affirm its judgment for any legal, valid reason. Brannan v. Smith, 784 So. 2d 293, 297 (Ala. 2000). Further, "a correct decision will not be disturbed even if the court gives the wrong reasons." Boykin v. Magnolia Bay, Inc., 570 So. 2d 639, 642 (Ala. 1990).

Analysis

We affirm the judgment in favor of PeoplesSouth, but do so on different grounds than those upon which the trial court principally relied in entering it. The trial court entered a judgment for PeoplesSouth based on the doctrine of res judicata, while also providing several alternative bases for its judgment if the doctrine of res judicata proved to be inapplicable. Having reviewed the law and the record in this case, we cannot agree that the doctrine of res judicata barred Brad's claims against PeoplesSouth. Nevertheless, as discussed below, PeoplesSouth was entitled to prevail on Brad's breach-of-contract claim because there was sufficient evidence from which the trial court could conclude that Brad is unable to prove any damages.

A. Res Judicata

PeoplesSouth asserted the doctrine of res judicata as an affirmative defense and had the burden of proving all four elements of that defense. See Stewart v. Brinley, 902 So. 2d 1, 11 (Ala. 2004) ; see also Batchelor-Robjohns v. United States, 788 F.3d 1280, 1285 (11th Cir. 2015) ("The party asserting res judicata bears the burden of showing that the later-filed [claim] is barred."). "The essential elements of res judicata are (1) a prior judgment on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the parties, and (4) with the same cause of action presented in both actions." Equity Res. Mgmt., Inc. v. Vinson, 723 So. 2d 634, 636 (Ala. 1998).

Brad argues that the first element of res judicata was not met because no prior judgment on the merits was presented to the trial court. We agree. " ‘A judgment is on the merits when it amounts to a decision as to the respective rights and liability of the parties ....’ " Mars Hill Baptist Church of Anniston, Alabama, Inc. v. Mars Hill Missionary Baptist Church, 761 So. 2d 975, 978 (Ala. 1999) (quoting 50 C.J.S. Judgment § 728 (1997)). PeoplesSouth submitted two documents as evidence of a prior judgment on the merits. The first document was a copy of the initial complaint in the 2010 action in which Brad alleged that Jimmy had wrongfully converted the CD. The second document was an order entered in the 2010 action after competing summary-judgment motions were filed in that action; the motions themselves, however, were not provided to the trial court. Despite that omission, PeoplesSouth argues that the order from the 2010 action had a preclusive effect and served to bar Brad's claim in this case.

PeoplesSouth's res judicata argument is unavailing. The order from the 2010 action merely states: "The property issues in this case were resolved by mediation. Motion for summary judgment granted." The order did not indicate the party or parties for whom summary judgment was entered. Nor did the order declare the respective rights and liabilities of the parties or state upon what basis the judgment was entered. The rights and liabilities of each party following the 2010 action are not clear from the evidence submitted to the trial court; therefore, PeoplesSouth does not satisfy the first element necessary to establish the defense of res judicata. Accordingly, its res judicata defense fails.

B. Breach-of-Contract Claim

We now consider the merits of Brad's breach-of-contract claim against PeoplesSouth. " ‘The elements of a breach-of-contract claim under Alabama law are (1) a valid contract binding the parties; (2) the plaintiffs’ performance...