author: STUART, Justice. LYONS, Justice JOHNSTONE, Justice

text:
    JOHN DEERE CONSTRUCTION EQUIPMENT COMPANY v. Earnest ENGLAND, individually, Johnny England, individually, and Earnest England and Johnny England d/b/a England Logging.
    1020984.
    Supreme Court of Alabama.
    Oct. 24, 2003.
    Rehearing Denied Dec. 19, 2003.

      Christopher S. Rodgers, Frank E. Lank-ford, Jr., J. Patrick Strubel, and David L. Brown, Jr., of Huie, Fernambucq & Stewart, LLP, Birmingham, for appellant.
    Larry A. Golston, Jr., and Rhon E. Jones of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Montgomery, for ap-pellees.
   STUART, Justice.

John Deere Construction Equipment Company (“Deere”) appeals from a judgment entered against it by the Perry Circuit Court. We reverse the trial court’s judgment and remand.

Facts

Earnest England and Johnny England are brothers; together they operate a business known as England Logging. Deere manufactures, among other things, heavy industrial equipment. In the early 1990s, it developed and marketed a line of skidders designated as the E-series. This line included the 548-E model, the 648-E model, and the 748-E model skidder. Shortly after these skidders were placed on the market, Deere learned of various problems with the E-series skidders. Although the problems manifested themselves in various ways, it appeared that the most recurrent problem was in the hydraulic system. However, Deere was uncertain whether the source of the problem was in the design or the components of the skidders. It began reviewing the design and the components of the E-series skid-ders and began issuing to its authorized dealers service bulletins and newsletters to address the problems.

In 1993, Deere issued an update kit to its authorized dealers in an attempt to deal with the problems that had been identified in the E-series skidders. In 1995, Deere issued another update kit designed to address the overheating of the E-series skid-ders. Deere denominated this kit as a “fix-as-fail” update, rather than a “mandatory” update.

Warrior Tractor and Equipment Company is a heavy equipment dealer with six retail locations in Alabama. As an authorized Deere dealer, Warrior had entered into a dealership agreement with Deere; that agreement outlined the relationship between Deere and Warrior. Warrior is also an authorized dealer for numerous other manufacturers of heavy equipment.

In June 1995, the Englands decided to purchase a Deere skidder for use in their logging business. Tommy Moore, a sales representative with Warrior, came to the Englands’ job site to show them a used 648-E model Deere skidder Warrior had for sale. Warrior had received this skid-der as a trade-in, had performed some repairs on it, and then offered it for sale. According to Earnest England, Moore told them that the 648-E model skidder “was faster, had more endurance, [would] do anything we need done in the woods, and boost our production.” Moore left the skidder with the Englands at their job site for three days and, according to the Eng-lands, it performed as Moore had indicated it would.

The Englands decided to purchase the used Deere skidder. The cost of the skid-der was $70,000. Warrior provided a 30-day power-train warranty. Earnest England testified that he knew Warrior, not Deere, was providing this warranty, because any warranty provided by Deere on the skidder would have expired by the time the Englands purchased the skidder. He also testified that in negotiating the purchase he met only with representatives of Warrior and negotiated only with Warrior, and that during the negotiations and while the Englands owned the skidder he never contacted Deere for any reason.

Six months after they purchased the skidder, the Englands began experiencing various problems with the skidder. Each time, either the Englands or Warrior’s service department was able to fix the skid-der; however, problems with the skidder continued to plague the Englands. Finally, in October 1999, while the skidder was at Warrior’s service department for repairs, Warrior’s service manager asked the Englands if the 1995 update kit had been installed on the skidder. Apparently, it had not. Warrior installed the 1995 update kit that same day. According to Earnest England, the update kit solved the overheating problem but the other problems continued.

The Englands assert that from the time they purchased the skidder they regularly reported to Warrior’s service manager that the skidder was overheating. They claim that the service manager never mentioned that the 648-E model skidder’s hydraulic system was defective or that an update kit that would correct this problem was available.

According to Warrior’s service manager, if the Englands had complained to him that the skidder was overheating, he would have written that complaint on a work order and he would have suggested that the 1995 update kit be installed. The records maintained in Warrior’s service department indicate that the Englands first complained of overheating in October 1999. At that time, Warrior’s service manager recommended the 1995 update kit to resolve that problem.

On August 3, 2001, over six years after they purchased the skidder from Warrior, Earnest England, individually, Johnny England, individually, and Earnest England and Johnny England d/b/a England Logging sued Deere and Warrior in the Perry Circuit Court. In their complaint, they alleged that Deere (1) fraudulently represented to them that the skidder was free of defects and was suitable for its intended use; (2) fraudulently suppressed material facts regarding the hydraulic system of the skidder; (3) negligently or wantonly failed to complete warranty work, to service, to maintain, or to repair the skid-der; (4) breached implied warranties; (5) breached express warranties; and (6) failed to exercise reasonable and ordinary care in the operation of its business.

Deere and Warrior each moved for a summary judgment as to all claims asserted by the Englands. The trial court initially granted the motions as to both defendants. Subsequently, however, the trial court granted the Englands’ motion to alter, amend, or vacate the order as to count II of their complaint, which alleged that Deere and Warrior had fraudulently suppressed material information regarding the defects in the hydraulic system of the skidder.

On September 23, 2002, the Englands’ claim of fraudulent suppression against Deere went to trial. The undisputed evidence at trial indicated that the Englands had had no contact with Deere, that the Englands had never attempted to contact Deere regarding problems with the skid-der, and that Deere had no knowledge that the Englands had purchased a used 648-E model skidder. It was also undisputed that' Deere had repeatedly notified Warri- or and its other authorized dealers of problems with the hydraulic system of the 648-E model skidder and had provided the dealers an update kit to address those problems.

The Englands claimed that Warrior did not notify them of the problems with the hydraulic system of the skidder and that Warrior did not notify them of the availability of the 1995 update kit. The Eng-lands sought to impose liability upon Deere for Warrior’s alleged failures. At trial, counsel for the Englands stipulated that the Englands’ fraudulent-suppression claim against Deere was premised entirely upon their allegation that, in its dealings with the Englands, Warrior was acting as Deere’s agent.

At the close of the Englands’ case and again at the close of Deere’s case, Deere moved for a judgment as matter of law. Deere argued that the Englands had not established sufficient evidence of the existence of an agency relationship between Warrior and Deere and that, therefore, Deere could not be liable for any alleged suppression by Warrior. Deere also argued that the Englands had failed to present any evidence to support their claim for punitive damages. The trial court denied Deere’s motion and submitted the fraudulent-suppression claim to the jury.

On September 25, 2002, the jury returned a verdict against Deere, assessing compensatory damages in the amount of $289,000 (consisting of lost profits, repair costs, and damages for emotional distress) and punitive damages in the amount of $1,500,000. On October 7, 2002, the trial court reduced the punitive-damages award, pursuant to § 6-11-21, Ala.Code 1975, to $867,000, resulting in a total award of $1,156,000. The trial court entered a judgment on the verdict as reduced.

Deere filed a motion for a remittitur, a motion for a new trial, and a postverdict motion for a judgment as a matter of law. Those motions were denied by operation of law.

Deere appeals, raising the following issues:

“I. Whether the trial court erred in overruling Deere’s [postverdict] motion for judgment [as a matter of law] as Warrior Tractor and Equipment Company was not an agent of Deere as a matter of law.
“II. Whether the trial court erred in overruling Deere’s [postverdict] motion for new trial and/or judgment [as a matter of law] as Deere had no duty to disclose alleged defects as a matter of law.
“HI. Whether the trial court erred in overruling Deere’s Batson [v. Kentucky, 476 U.S. 79 (1986),] challenge asserted after voir dire and in its subsequent motion for new trial.
“IV. Whether the trial court erred in overruling Deere’s motion for judgment as a matter of law as the Englands failed to prove by clear and convincing evidence that Deere consciously engaged in oppression, fraud, wantonness or malice.
‘V. Whether the trial court erred in overruling Deere’s motion for new trial and/or judgment [as a matter of law] as the Englands failed to provide competent evidence of damages allegedly incurred.”

Because of our resolution of issue I, we need not address the remaining issues.

Discussion

As this Court recognized in City of Birmingham v. Sutherland, 834 So.2d 755 (Ala.2002):

“Our review of the grant or denial of a motion for a judgment as a matter of law is governed by the following standard:
“ ‘ “The standard of review applicable to a motion for directed verdict or judgment notwithstanding the verdict [now referred to as preverdict and postverdict motions for a judgment as a matter of law] is identical to the standard used by the trial court in granting or denying the motions initially. Thus, when reviewing the trial court’s ruling on either motion, we determine whether there was sufficient evidence to produce a conflict warranting jury consideration. And, like the trial court, we must view any evidence most favorably to the non-movant.” ’ ”

834 So.2d at 758 (quoting Glenlakes Realty Co. v. Norwood, 721 So.2d 174, 177 (Ala.1998), quoting in turn Bussey v. John Deere Co., 531 So.2d 860, 863 (Ala.1988) (bracketed language added in Glenlakes Realty)).

We must review the record to determine whether there was sufficient evidence to produce a conflict for a jury to resolve as to whether, in connection with the sale and servicing of the used 648-E model skidder, Warrior was acting as Deere’s agent. If the evidence is insufficient to create a jury question on the agency issue, Deere cannot, as a matter of law, be held liable for the acts of Warrior.

Several cases are relevant to the agency issue presented in this appeal. The first of these cases is Malmberg v. American Honda Motor Co., 644 So.2d 888 (Ala.1994). In that case, Malmberg purchased a used Honda automobile from Tri-States, Inc. Tri-States, an independently owned dealership, was an authorized dealer of Honda products. Tri-States and American Honda had entered into an “Automobile Dealer Sales and Service Agreement,” which outlined the relationship between Tri-States and American Honda. That agreement provided, in substance, that Tri-States was to sell Honda automobiles and to provide warranties on Honda products. The terms of the agreement were as follows:

“Tri-States [was required] to provide a place of business, including sales, service, and parts departments, according to American Honda’s specifications; to keep adequate working capital and net worth; to develop public interest in Honda products; and to keep accurate and current a uniform accounting system in accordance with American Honda requirements. American Honda controlled the advertising by dealers by requiring certain types and kinds of signs, and it authorized the promotion and display of Honda trademarks. American Honda imposed upon its dealers the obligation to ‘expressly provide to a customer that [an American Honda] warranty goes with’ the vehicle.”

644 So.2d at 889 (final bracketed language added in Malmberg).

In purchasing the vehicle, Malmberg had contact only with Tri-States; she never met with or talked with anyone from American Honda. However, she believed that she was dealing with “Honda” because she saw brochures, booklets, awards, and plaques relating to Honda products at the Tri-States dealership. When she experienced problems with her used Honda automobile, a dispute arose over the extent of the warranty, if any, that came with the automobile, and she sued both Tri-States and American Honda, alleging fraud. The trial court entered a summary judgment in favor of American Honda, concluding that Tri-States was not the agent of American Honda.

On appeal, this Court addressed the law of agency in some detail, including agency by actual authority and agency by apparent authority. The Malmberg Court stated:

“Agency is generally a question of fact to be determined by the trier of fact. See Oliver v. Taylor, 394 So.2d 945 (Ala.1981). When a defendant’s liability is to be based on agency, agency may not be presumed; ... the party asserting agency has the burden of presenting [sufficient] evidence of the alleged agency. Carlton v. Alabama Dairy Queen, Inc., 529 So.2d 921 (Ala.1988); Wood v. Shell Oil Co., 495 So.2d 1034 (Ala.1986). The test to be applied in determining whether there existed an agency relationship based on actual authority is whether the alleged principal exercised a right of control over the manner of the alleged agent’s performance. Control must be proven; and proof of control requires more than proof of a mere right to determine if the person claimed to be an agent is conforming to the requirements of a contract. Id.
“The plaintiff presented no evidence that American Honda retained control over the manner in which Tri-States performed in order to meet the requirements of the dealership agreement. Under the dealership agreement, American Honda reserved the right to inspect the Tri-States business operations to determine if Tri-States was conforming to the dealership agreement, but American Honda did not provide day-to-day supervision for Tri-States and did not determine how Tri-States was to comply with the terms of the agreement. Rather, the dealership agreement left TriStates in charge of determining how to conduct its business in order to comply with the requirements of the agreement.
“Nevertheless, Malmberg argues that Tri-States could be found to be the agent of American Honda either through an agency by estoppel or through an apparent agency. The test for determining whether an agency existed by ‘estoppel’ or by ‘apparent authority’ is based upon the potential principal’s holding the potential agent out to third parties as having the authority to act....
“... The doctrine of apparent authority is based upon the actions of the principal, not those of the agent; it is based upon the principal’s holding the agent out to a third party as having the authority upon which he acts, not upon what one thinks an agent’s authority might be or what the agent holds out his authority to be....
“Under the facts of this case, although there was evidence that Honda logos were displayed upon signs, literature, products, brochures, and plaques at the Tri-States place of business, that evidence was ‘not sufficient, in itself, to create an inference of agency.’ Wood v. Shell Oil Co., supra, 495 So.2d at 1039 (emphasis in original).”

Malmberg, 644 So.2d at 890-91. Because the Court found that Malmberg had presented substantial evidence tending to establish that Tri-States was the agent of American Honda with respect to the representations regarding warranties, the Court reversed the summary judgment in favor of American Honda. In other words, because Malmberg sought to impose liability on American Honda based upon TriStates’ alleged misrepresentation regarding the warranty, and because Malmberg presented substantial evidence tending to establish that Tri-States was American Honda’s agent for warranty purposes, Malmberg’s claim presented a genuine issue of material fact. However, the fact that Tri-States sold Honda’s products, maintained a sales and service department, and displayed Honda logos and literature was insufficient, alone, to create an inference of an agency relationship.

In a similar case, McLemore v. Ford Motor Co., 628 So.2d 548 (Ala.1993), the Alabama Supreme Court upheld a summary judgment in favor of a used-automobile dealer. In doing so, the Court reviewed the relationship between Bill Russell Ford, Inc., an authorized Ford dealer, and Ford Motor Company, the automobile manufacturer. The Court noted that the evidence presented in support of the summary-judgment motion tended to establish that Bill Russell Ford sold used cars of all types, not just Ford cars. Additionally, the sales and service agreement executed by Bill Russell Ford and Ford expressly provided that Bill Russell Ford was not Ford’s agent and that Bill Russell Ford exercised sole authority over the day-to-day operations at the dealership. Based on this scant evidence and the lack of evidence showing that Ford exercised any control over the dealership, the Court concluded that the dealership was not the agent of Ford. Therefore, the used-car dealer could not be held hable for Ford’s alleged misrepresentation regarding the condition of the used car.

In another case, Goodyear Tire & Rubber Co. v. Washington, 719 So.2d 774 (Ala.1998), the Alabama Supreme Court affirmed a judgment entered on a jury’s verdict holding Goodyear Tire & Rubber Company liable for faulty repairs and misrepresentations made by Tire Pro, Inc., an independently owned automobile and tire sale and service center. In Washington, the plaintiff alleged that the manager of Tire Pro told her that Goodyear “stood behind” Tire Pro’s service. When Tire Pro performed unauthorized repairs and made what she alleged to be untruthful statements, she sued both Tire Pro and Goodyear, alleging promissory fraud and willful misrepresentation.

Although the plaintiff in Washington had had no dealings with Goodyear, this Court held that a jury question on the issue of agency was presented based on evidence indicating (1) that Goodyear knowingly allowed and encouraged Tire Pro to use Goodyear signs and to sell Goodyear products; (2) that Goodyear knowingly allowed Tire Pro to represent to customers, through a logo on its invoice, that it was a “Goodyear Certified Auto Service” center; (3) that Goodyear’s dealer sales manager testified that Goodyear intended for Tire Pro’s customers to believe they were dealing with a Goodyear establishment; (4) that the tires sold to Washington’s daughter were “Goodyear Eagles”; and (5) that the repairs performed on Washington’s daughter’s car were performed by Tire Pro as a “Goodyear Certified Auto Service” center. Relying upon Malmberg, supra, the Washington Court found that a jury question was presented as to whether an agency relationship existed between Goodyear and Tire Pro.

Finally, in Wood v. Shell Oil Co., 495 So.2d 1034 (Ala.1986), a customer who was injured when he slipped and fell at Parker Shell, an independently owned gasoline service station, attempted to hold Shell Oil Company, the supplier of petroleum products to the gasoline station, liable for those injuries under a theory of vicarious liability. The trial court entered a summary judgment in favor of Shell Oil, and the customer appealed.

On appeal, this Court found the evidence of an agency relationship between Shell Oil and Parker Shell insufficient to submit the customer’s claims against Shell Oil to a jury. The Shell Oil Court stated:

“We are of the opinion that Wood has produced no evidence that Shell Oil retained any right of control over the manner in which Parker Shell performed in order to meet the requirements of the lease and dealer agreement. Although the lease and dealer agreement specify, in some detail, what Parker Shell must do in order to conform to the terms of these contracts, and gives Shell Oil a right to approve certain aspects of Parker Shell’s operation, they do not determine how Parker Shell is to achieve compliance with these terms. Of course, a contract which, on its face, directly disclaims any agency relationship or which does not by its terms create such a relationship, will not preclude the finding of agency if there is independent evidence of a retained right of [cjontrol. However, Wood has not provided any independent evidence regarding the relationship between Shell Oil and Parker Shell from which a jury could infer an agency relationship. Shell Oil’s motion for summary judgment on the issue of actual authority was properly granted.”

495 So.2d at 1037 (citations omitted).

In addition, the Shell Oil Court rejected Wood’s theory of liability based on a theory of apparent authority or agency by estoppel. Wood argued that the display of Shell Oil’s logo on the premises of Parker Shell and on the uniforms of its employees provided the then applicable scintilla of evidence necessary to support the inference that Parker Shell was the apparent agent of Shell Oil.

The Shell Oil Court stated:

“We are of the opinion that Wood has failed to prove any reliance upon the authority of Parker Shell that would make out a jury question on the issue of apparent authority or agency by estop-pel. Wood has not provided any evidence that he did business with Parker Shell because of a desire to do business with a more responsible party (i.e., Shell Oil). Wood had no Shell credit card, nor is there any other evidence that might indicate that Wood’s reliance on Parker Shell was in any way attributable to his confidence in Shell Oil. Additionally, there is no evidence, such as that in [Standard Oil Co. v.] Gentry, [241 Ala. 62, 1 So.2d 29 (1941),] that the plaintiff had relied on a continued operation of the service station by the lessor oil company following a change in operation of the station from the oil company to the lessee. Moreover, the vast majority of the courts have held that the fact that the plaintiff testifies that the lessor oil company’s distinctive logo displayed upon signs, literature, products, and employee uniforms led him or her to assume that it was operated by the oil company is not sufficient, in itself, to create an inference of agency, because it is common knowledge among the general public that such a logo is often displayed by independent dealers and that the only representation made by such displays is that the oil company’s gasoline is sold at the service station.”

495 So.2d at 1039. See also Williams v. Harold L. Martin Distrib. Co., 769 So.2d 305 (Ala.Civ.App.1999), rev’d on other grounds, 769 So.2d 313 (Ala.2000); Ison Logging, L.L.C. v. John Deere Constr. Equip. Co., N. CA99-979-C (S.D.Ala., Oct. 12, 2000) (unpublished).

Warrior and Deere entered into a dealership agreement; that agreement was submitted as an exhibit at trial. Under the agreement, Warrior agreed to sell and promote new Deere products, maintain a certain amount of net worth so as to be properly financed, and maintain a modern, suitable place of business with adequate space and facilities for sales, service, display, and storage of Deere products. Warrior agreed to provide competent management and staff who were adequately trained and agreed to send its personnel to conferences and training schools provided by Deere. Warrior also agreed to provide service equipment and to maintain an adequate stock of service parts and the appropriate tools necessary to fulfill the warranty obligations of Deere and the nonwarranty needs of Warrior’s customers who purchased Deere products.

Under the terms of the agreement, Warrior also agreed to maintain an inventory of goods in proportion to its area of responsibility. Warrior agreed that it would cooperate with Deere in Deere’s periodic reviews of Warrior’s performance to determine if Warrior was performing in accordance with the terms of the dealer agreement.

The agreement also specifically stated:

“[Warrior] is not an employee, agent or representative of [Deere] for any purpose other than giving the Company’s warranty as provided in Section 8 [Preparation of Goods, Warranty and Post Delivery Service]; [it] has no other authority to bind [Deere] by any representations, statements, agreements, or in any manner whatsoever. In performing service work as provided in Section 8, [Warrior] is an independent contractor and assumes full responsibility for such work.”

Additionally, Gene Taylor, the owner of Warrior, testified that Deere does not direct the actual day-to-day operations at Warrior.

As a matter of law, this-evidence is insufficient to create a jury question on the issue of actual agency. Although the dealer agreement gave Deere the right to conduct periodic reviews of Warrior’s performance, that agreement neither gave Deere the right to control Warrior’s day-to-day activities nor gave Deere any authority to dictate how Warrior fulfilled its requirements under the agreement. Taylor, the owner of Warrior, confirmed that Deere does not exercise any day-to-day authority over Warrior’s business operations. Thus, there was no evidence presented to support a finding of actual agency-

Neither was there evidence that presented a jury question on the issue of apparent agency or agency by estoppel. There was no testimony indicating that the Englands ever spoke with or dealt with a representative of Deere; there was no testimony that the Englands ever believed they were dealing with a representative of Deere or that they ever thought they had obtained a warranty from Deere. Both Earnest England and Johnny England understood that they were purchasing a used skidder, that it had only a 30-day power-train warranty, and that Warrior — not Deere — was providing that warranty. There is not even an allegation that the Englands or Warrior referred to Deere during the entire six-year period the Eng-lands owned the 648-E model skidder. Thus, the only evidence related to the issue of apparent agency or agency by es-toppel is the fact that at its place of business Warrior displayed Deere’s logos, signs, and literature. However, this Court has already rejected such evidence, standing alone, as creating any inference of an agency relationship. See Wood v. Shell Oil Co., supra.

Conclusion

The trial court erred in denying Deere’s postverdict motion for a judgment as a matter of law on the issue of agency. Without conflicting evidence for the jury on the issue whether an agency relationship existed between Deere and Warrior, there can be no liability on Deere’s part for Warrior’s allegedly fraudulent suppression. We reverse the judgment entered against Deere on the jury’s verdict and remand this cause for further proceedings consistent with this opinion.

REVERSED AND REMANDED.

HOUSTON, SEE, BROWN, and WOODALL, JJ., concur.

LYONS, JOHNSTONE, and HARWOOD, JJ., dissent.

LYONS, Justice

(dissenting).

I write to address certain evidence upon which the Englands rely as proof of an agency relationship between Deere and Warrior that is not expressly referenced in the main opinion.

The Englands contend that Warrior was acting with actual authority from Deere because Deere retained a right of control in connection with Deere’s policy concerning repairs to malfunctioning skidders such as the one owned by the Englands. This policy, described as “fix as fail,” called for an update kit to be installed on a skidder that malfunctioned, with Deere paying the cost of the replacement part plus shipping and the cost of labor divided equally between Warrior and the customer. This kit was available for only those customers who experienced failure of the hydraulic system. In this setting, Deere contended that it had “preauthorized” the repair. On the other hand, mandatory repair kits required the dealer to contact the customer who had purchased the faulty machine and to make the repair at Deere’s expense. However, when Warrior’s service manager was asked about what would happen if he placed an update kit on a skidder without getting approval from Deere, he responded by stating that Deere would not have to pay the claim under that circumstance and then added, “No, I have never did anything without [Deere] okaying it first, unless it was, you know, mandatory with the serial numbers wrote out to do it anyway.”

When viewed most favorably to the Englands, the evidence shows the following: that the Englands repeatedly complained to Warrior over a period of years about the skidder’s overheating, but an update kit was not installed on the skidder; that overheating constituted failure within the meaning of Deere’s fix-as-fail policy; that Warrior finally told the Englands about the availability of update kit; that when the kit was installed the problem with the skidder was solved; and that the Englands continued to use the skidder in their logging operations.

There is no question that Deere controlled the circumstances under which it would be responsible for a portion of the cost of repairs to its products. Without doubt, the policy had practical consequences on Warrior’s conduct. Obviously, Warrior, as the seller of a used piece of Deere equipment to the Englands, had to be aware of the financial consequences to it of disclosing Deere’s fix-as-fail policy before failure because, under such circumstance, the cost of any repair would not be defrayed in part by a contribution from Deere. Also, a determination that the circumstances justified implementation of the fix-as-fail policy had economic consequences on Warrior, because it would then be responsible for absorbing one-half of the labor costs for making the repair.

Merely creating the circumstance under which Warrior might act to prefer its own self-interest over that of its customer, standing alone, does not, however, constitute either the reservation of a right to control or the exercise of the right to control. Therefore, if Deere’s contention in its reply brief that “no evidence was presented that Deere provided any instruction to Warrior Tractor concerning the installation of the update kit on the Englands’ skidder or that Deere had the authority to prevent Warrior Tractor from informing the Englands of the update kit or from installing this kit” is accurate, then agency has not been established. But, as previously noted, Warrior’s service manager testified that he did not make repairs without approval from Deere except when installing a mandatory repair kit. It is undisputed that the repairs at issue in this case did not involve a mandatory repair kit. Of course, there was conflicting evidence on this issue, because Deere maintained that under the fix-as-fail policy, repairs were “preauthorized.”

In light of the service manager’s testimony, however, the jury could have reasonably concluded that the Englands were being truthful when they said that they had complained to Warrior about problems sufficient to warrant applicability of the fix-as-fail repair kit and, because the service manager never made such repairs without prior approval from Deere, Warri- or’s failure to make the kit available over a period of years resulted from the service manager’s unsuccessful efforts to obtain approval from Deere. I consider this evidence a sufficient basis upon which the jury could conclude that Deere exercised control over Warrior on those occasions over the years when the Englands’ complaints about problems with their skidder did not result in Warrior’s making known to the Englands the availability of the fix-as-fail repair kit.

HARWOOD, J., concurs.

JOHNSTONE, Justice

(dissenting).

I respectfully dissent. The record contains substantial evidence that Warrior was the agent of Deere for the purpose of fraudulent suppression.

The record contains substantial evidence that Warrior knew but did not disclose to the Englands that the inadequate size of the hydraulic system control valve was causing the malfunction of the skidder and that Deere could supply a larger valve adequate to correct the problem. The record establishes that Deere had already discovered the defect and the solution, stocked the larger valve, and imparted this information to Warrior. The record also contains substantial evidence that Warrior was the agent of Deere for the purpose of disclosing such facts about Deere products in the course of selling Deere products to customers like the Englands and servicing Deere products for customers like the Englands.

The crucial admission by Deere comes from the testimony of Ronald Brass, the Deere corporate representative at trial:

“Q. Let me ask it this way. Do you think it is the right thing to do to tell people, your customers, the truth about your skidders?
“A. We communicate to our customers through our dealers, through the independent dealers. We have no way in some cases of even notifying a customer. And in fact in this particular case my company didn’t know that the Englands owned this machine.”

(Emphasis added.) Two features of this admission are especially noteworthy. First, the admission reveals that Deere considered the customers, generically like the Englands, of the dealers, like Warri- or, to be the customers of Deere itself. Second, the admission is stated in the classic principal-agent language: “We communicate to our customers through our dealers_” (Emphasis added.) The admission as much as says that Deere communicates with its own generic customers like the Englands (even though Deere may not have known the Englands as specific customers) by and through agents of Deere like Warrior.

Next, the record contains substantial evidence, albeit disputed, that Deere controlled Warrior in its application of the larger valves to customers’ skidders on a case-by-case basis as distinguished from the mere standard-policy basis claimed by Deere. Donnie Powell, service manager for Warrior, testified in pertinent part:

“Q. And just so we’ll get clear for the jury, John Deere determines what kits are mandatory and what kits are fix as fail; is that right?
“A. Yes.
“Q. Warrior Tractor doesn’t decide which kit is mandatory or which is fix as fail?
“A. No, sir.
“Q. Donnie Powell doesn’t decide which kits are fix as fail or mandatory?
“A. No.
“Q. Now, on these mandatory kits such as product improvement programs I showed you, on those types of things, John Deere tells you to go out and fix a certain serial number range, is that right?
“A. Yes, sir.
“Q. But on the fix as fail type kit, you don’t fix those until the logger actually brings the machine in to you; is that right?
“A. Yes.
“Q. All right. I think that Mr. Gold-ston was asking you questions about if you went out and you placed a kit on a skidder that you didn’t get approved by John Deere, that they wouldn’t pay the claim?
“A. They wouldn’t have to. I’m not saying they wouldn’t.
“Q. Have you ever had a situation—
“A. No, I have never did anything without them okaying it first, unless it was, you know, mandatory with the se- Hal numbers wrote out to do it anyway.”

(Emphasis added.)

This testimony by Brass and Powell, in context, supports a reasonable inference that the failure of Warrior to disclose the need for and the availability of the larger valve to the Englands was, by the law of agency, the failure of Deere itself. Thus, I respectfully submit that the judgment of the trial court should be affirmed.

      . According to testimony presented at the trial, technical problems with new equipment lines are not uncommon. Deere often issues service bulletins and newsletters to its dealers to address design or component problems or equipment malfunctions that have been identified.

      . The 1993 update kit replaced the skidder's relief valve and nose seals and added a red indicator light to alert the operator if the skidder was overheating.

      .In addition to correcting the problem with the hydraulic system of the skidder, this 1995 update kit also upgraded the E-series skidder so that it was comparable to the later G-series skidder manufactured by Deere.

      . Earnest England testified that the Englands had previously used other manufacturers' skidders in the logging business and wanted to try a Deere skidder.

      . Immediately before trial, the Englands entered into a settlement agreement with Warrior, agreeing to dismiss their pending fraudulent-suppression claim against Warrior in exchange for $50,000. Therefore, Warrior was not a party to this action at the time of trial.

      . This amount is three times the amount awarded as compensatory damages. Section 6 — 11—21(a), Ala.Code 1975, provides, in pertinent part:
      ''[I]n all civil actions where an entitlement to punitive damages shall have been established under applicable laws, no award of punitive damages shall exceed three times the compensatory damages of the party claiming punitive damages or five hundred thousand dollars ($500,000), whichever is greater.”


source: Caselaw Access Project

author: LYONS, Justice. HOUSTON, Justice

license: Public Domain

text:
    Annie PEARSON v. Glenn BROOKS and Michael Black.
    1021494.
    Supreme Court of Alabama.
    Dec. 5, 2003.
    S. Mark Andrews of Morris, Cary, Andrews & Talmadge, LLC, Dothan, for appellant.
    Peter A. Mclnish and William W. Nichols of Lee & Mclnish Attorneys, P.C., Dothan, for appellees.
   LYONS, Justice.

Annie Pearson appeals from the trial court’s order dismissing, on the basis of a statute-of-limitations defense, her complaint against Glenn Brooks and Michael Black seeking damages for a job-related injury. We affirm.

Pearson was employed initially in the quality assurance and inspection department at Perdue Farms, Inc., a company operating a chicken-processing plant in Dothan. Subsequently, Pearson was transferred to the sanitation department; Brooks was the superintendent of the sanitation department, and Black was Pearson’s immediate supervisor. Pearson was responsible for cleaning the “kill floor,” where many of the machines used to prepare the chickens for sale and distribution were located. Pearson’s cleaning routine required her to spray the machines with a high-pressure hose to remove the chicken remains. On November 17, 1999, while Pearson was cleaning the kill floor, she slipped in the chicken remains. In an attempt to break her fall, Pearson held her hands in front of her. Pearson fell into a “neck-skinning” machine, a machine that removed the skin from the chickens’ necks. Pearson’s right index finger was amputated when it became entangled in the machine. Apparently, the guard mechanism that would have prevented the blade of the machine from cutting was not in place at the time of Pearson’s accident.

On October 17, 2001, one month before the statutory limitations period would have run on her claims, Pearson sued Perdue Farms, Inc.; Kurt Andrews, the plant manager; Brian Hughes, the plant safety director; and several of her co-employees — Mike Harp, Dave Jones, and Dennis Widgons — who were involved in the direct maintenance and supervision of the neck-skinning machine. Pearson did not name Brooks and Black, also co-employees, in the original complaint. The complaint alleged negligence and wantonness in the maintenance, repair, and upkeep of the neck-skinning machine, as well as the failure to ensure the safety of the machine. Pursuant to Rule 9(h), Ala. R. Civ. P., Pearson alleged claims against fictitiously named defendants who were either “that person, corporation or other legal entity who or which designed the machine, which is the subject matter of this lawsuit”; “that person, corporation, or other legal entity who had responsibility for maintenance or repair of the machine which is the subject matter of this lawsuit”; or “that person, corporation, or other legal entity whose negligence, wantonness, recklessness, willfulness or other wrongful conduct caused the injury to Plaintiffs [sic].”

Pearson began the discovery process with the named defendants. Pearson claims that at the August 20, 2002, deposition of Hughes she became privy to an accident investigation report related to her injury, which Hughes had prepared. Hughes stated in the report that Pearson’s accident was caused by the “lack of control and supervision by the Sanitation Hourly Supervisor[] [Black] and Sanitation Superintendent [Brooks].” On August 30, 2002, Pearson amended her complaint to substitute Brooks and Black for two of the fictitiously named parties. Brooks and Black moved to dismiss Pearson’s complaint, arguing that Pearson’s claims against them were barred by the statute of limitations. The trial court granted the motion and dismissed Brooks and Black from the action. The trial court certified its order as final pursuant to Rule 54(b), Ala. R. Civ. P. Pearson appeals.

Pearson argues that her complaint was properly amended to add Brooks and Black as defendants pursuant to Rule 9(h), which allows a plaintiff to designate opposing parties by using a fictitious name:

“When a party is ignorant of the name of an opposing party and so alleges in the party’s pleading, the opposing party may be designated by any name, and when that party’s true name is discovered, the process and all pleadings and proceedings in the action may be amended by substituting the true name.”

Further, Rule 15(c)(4), Ala. R. Civ. P., provides that “[a]n amendment of a pleading relates back to the original date of the pleading when ... relation back is permitted by principles applicable to fictitious party practice pursuant to Rule 9(h).” Pearson claims that Brooks and Black were properly named as fictitious parties because when she filed her original complaint, Pearson knew the names of the two men but she was not aware of any facts that would support a claim against them. She argues that her claims against Brooks and Black, therefore, relate back to the time of the commencement of the action, one month before the running of the applicable statutory limitations period. Brooks and Black argue that, based on her knowledge of their job titles and duties, Pearson was not ignorant of the name of an opposing party and was not excused from failing to sue Brooks and Black by their true names in the original complaint.

Based on the record before us, we conclude that Pearson could not have reasonably been ignorant of the identities of Brooks and Black. At her deposition, Pearson testified that she had known for over three or four years that Brooks was the superintendent of the sanitation department and that Brooks had personally trained her to clean the machines:

“Q. Tell me this. Tell me what you remember that Glenn [Brooks] trained you about?
“A. When he brought me in, he showed me how to — how to do the machinery, how to clean them and wash them down and everything like that....
“Q. And which machinery did he show you how to clean?
“A. I did — It was the bird wash and— Let me see. It was two bird wash. Then it was two — The other one I can’t recall. It was two more and then it was the one, the neck skinner.”

(Emphasis added.) Pearson also testified that Black was her immediate supervisor in the sanitation department and that he instructed the employees regarding the safety procedures in the plant:

“Q. I mean, you had safety meetings periodically when you were employed with Perdue [Farms]; is that correct?
“A. Yes. We have safety meetings.
“Q. And usually, those were conducted by the lead person or someone like Michael Black ...; is that correct?
“A. Correct.
“Q. And Michael Black was involved with plant safety ...; is that right?
“A. That’s correct....
“Q. Now, we were talking about these safety meetings that you would attend as an employee at Perdue [Farms]. And do you remember specifically that you went to meetings with Michael Black where he was teaching employees like yourself about certain safety in the plant?
“A. Yes.”

It is apparent from Pearson’s testimony that she knew Brooks’s and Black’s identities as well as their duties regarding plant safety and the safe operation and cleaning of the plant’s machinery. These two men were also her department supervisor and her immediate supervisor. It would be unreasonable to believe that Pearson was ignorant of Brooks’s and Black’s identities as required to proceed under the fictitious-party practice allowed by Rule 9(h).

Pearson further argues that although she may have known Brooks’s and Black’s identities at the time she filed her complaint, she did not know that Brooks and Black were the parties that she intended to sue. Pearson cites Dannelley v. Guarino, 472 So.2d 983 (Ala.1985), as authority for this argument. In Dannelley, the plaintiff was injured when he fell out of an aerial bucket lift owned by the City of Mobile. The plaintiff and his wife sued the safety director for the City and several fictitiously named defendants. Subsequently, the plaintiffs learned that two other City employees were responsible for the testing and certification of the bucket lift, and they amended their complaint to substitute these individuals for the fictitiously named defendants. The two employees argued that the plaintiffs’ claims did not relate back to the original filing date of the complaint because, they said, the plaintiffs were not ignorant of their identities. This Court held that “the record [was] devoid of any factual allegations which would indicate that the plaintiffs ... had knowledge of any facts concerning [the employees’] possible involvement in their personal injury.” 472 So.2d at 986. Specifically, this Court stated that although the plaintiffs knew the two employees’ names and their job titles, that information would not have placed the plaintiffs on notice that those two employees had anything to do with the safety of City equipment.

Pearson’s factual situation, however, is not analogous to the situation in Dannel-ley. Pearson acknowledges that she was aware of Brooks’s role in teaching employees how to properly clean the plant’s machinery and of Black’s role in instructing employees on safety procedures within the department. Therefore, Pearson knew more than Brooks’s and Black’s names and job titles; she had firsthand knowledge of their duties in the sanitation department and as to plant safety and how those duties would relate to her injury at the plant. Furthermore, Pearson’s claim that she knew that the plant manager and the plant safety manager, whom she named as defendants, were involved in her injury, but that she did not know that the supervisors in her department had any role in her safety at the plant, in face of her deposition testimony about their duties involving training and safety, strains credulity.

Pearson’s case is more analogous to Marsh v. Wenzel, 732 So.2d 985 (Ala.1998). The plaintiff in Marsh sued her surgeon, who had removed tissue from her breast but had failed to diagnose it as cancerous. After she deposed the pathologist who had also examined the tissue and had failed to diagnose the cancer, the plaintiff substituted the pathologist for one of the fictitiously named defendants. This same pathologist was listed in the plaintiffs medical records, to which she had access before she filed her lawsuit. This Court held that the plaintiffs claims were time-barred because she could not have reasonably been ignorant of the pathologist’s identity and her claims against the pathologist, therefore, did not relate back. Dannelley and Marsh both quote Columbia Engineering International, Ltd. v. Espey, 429 So.2d 955, 960 (Ala.1983), which “re-emphasize[d] ... that Rule 9(h) was not meant to excuse ignorance of the identity of a cause of action, but only ignorance of the name of the party against whom a cause of action is stated.” Moreover, in Marsh, we interpreted Dannelley as standing only for the proposition that “one’s ignorance of the existence of a relationship that could give rise to a duty is subsumed by the concept of ‘ignorance of identity.’ ” 732 So.2d at 989. Pearson’s clear description of the personal training in cleaning the machines she received from Brooks and the safety instruction she received from Black establishes that she was aware of a special relationship that existed between her and her supervisors. Furthermore, Pearson’s knowledge of Brooks’s and Black’s duties and authority counters any argument that Pearson did not know that the two owed her a duty regarding the safety and the maintenance of the neck-skinning machine.

Pearson attempts to distinguish Marsh on the basis that Marsh involved a medical-malpractice action. Pearson argues that her case is unlike a medical-malpractice action because a plaintiff in a medical-malpractice action is able obtain a complete set of medical records before the expiration of the limitations period. The definition of ignorance under Rule 9(h), however, is not stated in terms that would restrict it to medical-malpractice cases. If we limited Marsh to medical-malpractice actions, as Pearson’s interpretation suggests we should, we would contradict the holding in Columbia Engineering, a negligence action against a construction company, the manufacturer of a scaffold, and fellow employees, that “Rule 9(h) was not meant to excuse ignorance of the identity of a cause of action, but only ignorance of the name of the party against whom a cause of action is stated.” 429 So.2d at 960. Therefore, to gain the protection of Rule 9(h), Pearson must show that she was ignorant of the existence of a relationship between her and her supervisors that might give rise to a duty on their part.

Pearson compares her case to Alexander v. Scott, 529 So.2d 951 (Ala.1988), in which the plaintiff claimed that she was ignorant of the existence of a relationship between her and two executives at her employer’s company. Explaining why it was appropriate for her to substitute the executives for fictitiously named parties, the plaintiff in Alexander stated in her affidavit in opposition to the defendants’ motion for a summary judgment:

“ ‘2. At the time of my injury, I knew Mr. Gerald Cannon and Mr. Mike Scott by name. I knew that Mike Scott was an employee of Dexter Lock, but I did not know his title, his job description or any of his duties. I did not have knowledge of any facts which would give me cause to think or suspect that Mike Scott owed me a personal duty upon which liability could be predicated.
“ !3. At the time of my injury, I knew that Gerald Cannon held a high managerial position with Dexter Lock. This is all I knew of Mr. Cannon’s job or position. I did not know his job title, his job description, or any of his duties or responsibilities loith Dexter Lock other than that he had a high managerial position.’

Alexander, 529 So.2d at 953 (emphasis added). In contrast to the plaintiff in Alexander, Pearson knew more than merely Brooks’s and Black’s names. As previously noted, Pearson knew that Brooks was superintendent of the sanitation department, and she also knew that Brooks would train people in properly cleaning the machines in the plant. Pearson knew that Black was her immediate supervisor in the sanitation department and that he was responsible for certain aspects of plant safety. Therefore, Pearson cannot claim that she was ignorant of any facts that would lead her to believe that she had a cause of action against Brooks and Black, as was the case with the plaintiff in Alexander.

Pearson attempted to minimize her knowledge of Brooks’s and Black’s identities in an affidavit sworn to on November 1, 2002. In the affidavit, Pearson asserts: “As a result of the deposition of Mr. Hughes, I learned for the first time that the cause of my accident was the misconduct of Mr. Glenn Brooks and Mr. Michael Black as determined by Mr. Brian Hughes. I also learned for the first time as a result of Mr. Hughes deposition:

“(1) that, as a result of Mr. Hughes’ Accident Investigation, it was determined that Glenn Brooks and Michael Black were the individuals responsible for locking out and tagging out the machine on which I was injured;
“(2) that it was determined by Mr. Hughes that Glenn Brooks and Michael Black failed to follow sanitation standard operating procedure when they failed to lock out and tag out the machine on which I was injured, and that as a direct result, I suffered injuries;
“(3) that Glenn Brooks and Michael Black were found to have improperly supervised and trained me and my associates in sanitation on the kill floor where I was injured as to the proper method and standard operating procedures on locking out and tagging out;
“(4) that Glenn Brooks and Michael Black were disciplined and/or received citations as a result of their willful misconduct in causing my accident.”

Pearson’s affidavit does not address her inability to identify either Brooks or Black and her ignorance of the existence of a relationship that could give rise to a duty; rather, it addresses her ability to gather additional evidence to substantiate her claims against Brooks and Black. Pearson’s deposition testimony on August 20, 2002, indicated that she was quite familiar with Brooks and Black and their duties and responsibilities at Perdue Farms. The affidavit does not contradict Pearson’s knowledge of the existence of a relationship that could give rise to a duty, and, while the affidavit does not in that respect contradict her deposition, it does not avoid the consequences of the rule in Marsh where, as previously noted, we defined ignorance under Rule 9(h) as “ignorance of the existence of a relationship that could give rise to a duty.” 732 So.2d at 989.

Pearson also relies upon Roberts v. Cochran, 656 So.2d 353 (Ala.1995). Roberts, a passenger in Cochran’s car, was injured when Cochran’s car was struck from behind. During the discovery process, Roberts became aware that Cochran applied her emergency brake and not her regular brakes when she tried to stop her car. Thereafter, Roberts amended her complaint to substitute Cochran for one of the fictitiously named parties. Cochran argued that Roberts’s claim against her was untimely. This Court held that although Roberts was aware that Cochran owed her a duty to operate the vehicle so as not to wantonly or willfully injure Roberts, she was still permitted to amend her complaint under Rule 9(h) because Roberts did not know that Cochran had misapplied the brakes until after the complaint was filed. Therefore, the Court stated:

“Roberts had no information [before the deposition] that would have indicated that she had a cause of action against Cochran, and it is the public policy of the state that civil actions are not to be commenced without ‘substantial justification.’ See Ala.Code 1975, § 12-19-270 et seq. (‘The Alabama Litigation Accountability Act’), which sets forth certain penalties to be assessed against attorneys and/or parties who file civil claims that lack ‘substantial justification,’ i.e., that are ‘frivolous, groundless in fact or in law, or vexatious, or interposed for any improper purpose, including without limitation, to cause unnecessary delay or needless increase in the cost of litigation.’ ”

656 So.2d at 355.

Roberts cannot be reconciled with this Court’s earlier holding in Columbia Engineering and our later holding in Marsh involving the same issue. Columbia Engineering held that the purpose of Rule 9(h) is not to toll the statutory period of limitations to give plaintiffs more time to formulate a cause of action, but to extend the time in emergency situations where the plaintiff knows he has been injured and has a cause of action against some person or company, but cannot determine through due diligence the party’s name. 429 So.2d at 959. This Court refused to create a special exception to Rule 9(h) that would allow a plaintiff to wait until the discovery process to ascertain possible defendants, stating as follows:

“Indeed such an interpretation would amount to nothing less than the creation of a ‘discovery’ exception to the statute of limitations. Additionally, the argument in favor of such an interpretation would support a tolling of the statute until discovery of the cause of action, rather than the classical tolling until discovery of injury which is generally contemplated by our discovery statutes.”

429 So.2d at 959. The interpretation of Rule 9(h) in Roberts excuses the plaintiff from using due diligence to ascertain the identity of a defendant, contrary to the requirements of other cases construing Rule 9(h). See Crowl v. Kayo Oil Co., 848 So.2d 930, 937 (Ala.2002), quoting Fulmer v. Clark, 654 So.2d 45, 46 (Ala.1995), as follows:

“ ‘Rule 9(h) and Rule 15(c), Ala. R. Civ. P., allow a plaintiff to avoid the bar of a statute of limitations by fictitiously naming defendants for which actual parties can later be substituted. Such a substitution is allowed to relate back to the date of the original complaint if the original complaint adequately described the fictitiously named defendant and stated a claim against such a defendant. In order for the substitution to relate back, the plaintiff must have been ignorant of the true identity of the defendant and must have used due diligence in attempting to discover it. Jones v. Resorcon, Inc., 604 So.2d 370 (Ala.1992).’ ”

(Emphasis added.) Furthermore, the holding in Roberts promotes the use of fictitiously named parties in a case where the identity of the defendant is known but the plaintiff has not quite built a winning case against the defendant. That particular use of Rule 9(h) is contrary to Marsh and Columbia Engineering, and it is exactly the use advocated by Pearson in this case. Pearson knew the identities of Brooks and Black and the duties that they performed at Perdue Farms. It would extend the statute of limitations without authorization from the Legislature to allow Pearson to substitute Brooks and Black for fictitiously named parties because Pearson has now obtained evidence that Brooks and Black have been described as the parties responsible for the accident.

Pearson cannot substitute Brooks and Black after the expiration of the statutory limitations period because under Marsh and Columbia Engineering Pearson was not ignorant of their identities at the time she filed her original complaint. We hereby overrule Roberts to the extent that it conflicts with the rule established in Columbia Engineering and followed in Marsh regarding the substitution of fictitiously named parties and the doctrine of relation back. Therefore, we affirm the order of the trial court dismissing Brooks and Black from the action.

AFFIRMED.

SEE, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.

HOUSTON, J., concurs specially.

HOUSTON, Justice

(concurring specially).

When I authored Roberts v. Cochran, 656 So.2d 353 (Ala.1995), I was trying to tie the 1987 Alabama Litigation Accountability Act (Ala.Code 1975, §§ 12-19-270 to -276) to this Court’s existing Rules of Civil Procedure. If Justice Lyons, the moving force behind the Alabama Rules of Civil Procedure, deems my effort too much of a stretch, I will not disagree. I do recommend that the Standing Committee on Alabama Rules of Civil Procedure consider adopting a rule that would give an attorney or party some relief when the attorney or party, using reasonable diligence, could not discover that the attorney or party had substantial justification for filing a claim against a party or “that person, corporation, or other legal entity whose negligence, wantonness, recklessness, willfulness or other wrongful conduct caused the injury to the Plaintiffs,” until after the statutory period of limitations on that claim had run.

      . Perdue Farms, Inc., was dismissed from this case pursuant to the exclusivity-of-remedies provision in the Workers' Compensation Act. § 25-5-53, Ala.Code 1975.

      . Brooks and Black filed a motion to strike Pearson's November 1, 2002, affidavit because, they argued, it was inconsistent with her previous deposition testimony. Pearson responded to the motion by arguing that her affidavit should stand because it was similar to the affidavit given by the plaintiff in Alexander. The trial court never ruled on the motion.


author: PER CURIAM.

text:
    ALABAMA INSURANCE GUARANTY ASSOCIATION v. AIR TUSKEGEE, LTD., et al.
    1021087.
    Supreme Court of Alabama.
    Dec. 5, 2003.

      Howard K. Glick of Spain & Gillon, L.L.C., Birmingham, for appellant.
    Phillip E. Adams, Jr., of Adams, Um-bach, Davidson & White, Opelika, for ap-pellees.
   PER CURIAM.

Alabama Insurance Guaranty Association (“AIGA”) filed this action to determine the residency of Air Tuskegee, LTD.; the trial court granted Wilford Senn, Joan Senn, David R. Dobbins, and Robin Dobbins’s cross-motion for a summary judgment declaring that Air Tuskegee is a resident of the State of Alabama within the meaning of the Alabama Insurance Guaranty Association Act (Ala.Code 1975, §§ 27-42-1 through 27-42-20) (“the Guaranty Act”). AIGA appeals.

The parties stipulated to the following joint statement of undisputed facts before the trial court granted the Senns and Dob-binses’ cross-motion for a summary judgment:

“1. The AIGA is an involuntary, nonprofit unincorporated legal entity created by legislative act pursuant to §§ 27-42-1 through 27-42-20, Ala.Code [1975].
“2. The purpose of the [Guaranty] Act is to provide a mechanism for the payment of statutorily defined claims made under certain types of insurance policies issued by insurance companies licensed to transact insurance in the State of Alabama that are declared insolvent and against whom an order of liquidation has been entered.
“3. On December 6, 1995, the Troup County (Georgia) Airport Authority was the owner, maintainer and lessor of a Piper PA-28-180 aircraft.
“4. On December 6, 1995, David R. Dobbins rented the Piper aircraft from the Troup County Airport Authority.
“5. On the morning of December 6, 1995, David R. Dobbins departed the Troup County Airport in the Piper aircraft in route to Spartan-burg, South Carolina.
“6. On December 6, 1995, Wilford Senn was a passenger in the Piper aircraft that was piloted by David R. Dobbins.
“7. On December 6, 1995 and while in flight, the engine in the Piper aircraft piloted by David R. Dobbins failed, resulting in a crash landing near Athens, Georgia.
“8. As a result of the December 6, 1995 crash, David R. Dobbins and Wilford Senn sustained severe, permanent injuries to their bodies.
“9. Prior to the December 6, 1995 crash of the Piper aircraft, Air Tuskegee, Ltd., and/or Gerald Waller had been hired by the Troup County Airport Authority to perform maintenance on and/or to examine the engine of the Piper aircraft. The subject maintenance and inspection to the subject Piper aircraft took place in Alabama.
“10. At all times relevant to his performance of maintenance on and/or examination of the engine of the Piper aircraft, Gerald Waller was either an independent contractor, agent or employee of Air Tuskegee, Ltd.
“11. As a result of the December 6, 1995 crash, on or about December 4, 1996 Wilford Senn, Joan Senn, David R. Dobbins and Robin Dobbins filed a lawsuit in the Superior Court of Troup County, Georgia against Air Tuskegee, Ltd. and Gerald Waller, among others, styled Wilford Senn, et al. v. Troup County Airport Authority, et al., Civil Action No. 97-CV-997, presently pending (hereinafter ‘the Underlying Action’).
“12. In the Underlying Action, David R. Dobbins, Robin Dobbins, Wilford Senn and Joan Senn allege that Air Tuskegee, Ltd. and Gerald Waller negligently, wantonly and/or recklessly performed maintenance on the Piper aircraft that crashed on December 6, 1995 and of which David R. Dobbins piloted and in which Wilford Senn was a passenger.
“13. In the Underlying Action, David R. Dobbins and Wilford Senn seek damages from Air Tuskegee, Ltd. and Gerald Waller, among others, for the permanent injuries each of them sustained in the December 6, 1995 crash.
“14. In the Underlying Action, Robin Dobbins and Joan Senn claim damages for loss of consortium from Air Tuskegee, Ltd. and Gerald Waller, among others, due to the physical injuries sustained by their respective spouses, David R. Dobbins and Wilford Senn, in the December 6,1995 crash.
“15. At the time of the December 6, 1995 crash made the basis of the Underlying Action, Air Tuskegee, Ltd. was a corporation existing under the laws of the State of Delaware having its principal place of business in Tuskegee, [Macon County,] Alabama.
“16. At the time of the December 6, 1995 crash made the basis of the Underlying Action Gerald Waller was a citizen and resident of [Lee County, Alabama].
“17. At the time of the December 6, 1995 crash made the basis of the Underlying Action, Wilford Senn was a resident of a state other than the State of Alabama
“18. At the time of the December 6, 1995 crash made the basis of the Underlying Action, Joan Senn was a resident of a state other than the State of Alabama.
“19. At the time of the December 6, 1995 crash made the basis of the Underlying Action, David R. Dobbins was a resident of a state other than the State of Alabama.
“20. At the time of the December 6, 1995 crash made the basis of the Underlying Action, Robin Dobbins was a resident of a state other than the State of Alabama.
“21. At the time of the December 6, 1995 crash made the basis of the Underlying Action, Gerald Waller was not an executive officer, director or shareholder of Air Tuskegee, Ltd.
“22. At.the time of the December 6, 1995 crash made the basis of the Underlying Action and effective April 18, 1995 through April 18, 1996, American Eagle Insurance Company (hereinafter ‘American Eagle’) provided a General Liability Airport Policy, Policy No. AFE 0157824-01 (hereinafter ‘the Policy’) to its named insured, Air Tuskegee, Ltd.
“23. The parties stipulate that the Policy is attached hereto as Exhibit ‘A’ and that the same is a true, accurate and complete copy of the Policy referenced in paragraph 22 above. [A copy of the policy is not attached to this opinion.]
“24. The Policy designates Air Tuskegee, Ltd. as a ‘corporation.’
“25 On December 22, 1997, American Eagle was declared insolvent and placed under an order of liquidation by a court of competent jurisdiction in the State of Texas. “26. American Eagle is an ‘insolvent insurer,’ as defined by § 27-42-5(5), Ala.Code [1975].
“27. Alabama law governs the interpretation of the Policy.”

This Court reviews a summary judgment de novo. American Liberty Ins. Co. v. AmSouth Bank, 825 So.2d 786, 790 (Ala.2002).

In 1980, the Alabama Legislature adopted the Guaranty Act, which was modeled after the Post-Assessment Property and Liability Guaranty Model Act (“the Model Act”). The term “resident,” is not defined in either the Model Act or the Guaranty Act. AIGA’s liability is predicated upon the claimant’s or the insured’s being “a resident of this state at the time of the insured event.” Ala.Code 1975, § 27-42-5(4). The claimants (the Senns and the Dobbinses) were not residents of Alabama on December 6, 1995. On that date, the insured, Air Tuskegee, was a corporation incorporated in Delaware with its principal place of business in Tuskegee, Alabama. AIGA is obligated to Air Tuskegee only to the extent there exists a “covered claim” under the Guaranty Act. A “covered claim” is defined in Ala.Code 1975, § 27-42-5(4), in pertinent part, as follows:

“An unpaid claim ... which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this chapter applies issued by an insurer, if such insurer becomes an insolvent insurer after January 1, 1981 and (i) the claimant or insured is a resident of this state at the time of the insured event....”

In Alabama Insurance Guaranty Ass’n v. Colonial Freight Systems, Inc., 537 So.2d 475 (Ala.1988), this Court held that Colonial Freight, an Alabama corporation with its principal place of business in Knoxville, Tennessee, was a resident of Alabama.

“AIGA argues that a finding by an arbitration panel (submitted by AIGA and [the Tennessee Insurance Guaranty Association]) that Colonial Freight is a resident of Tennessee because of its substantial contacts precludes a finding of residency in Alabama. The language in Jackson Securities & Investment Co. v. State, 241 Ala. 288, 292, 2 So.2d 760, 764 (1941), is very clear on the issue of residence: ‘[A] corporation is a citizen, resident or inhabitant of the state under whose laws it was created.... ’ Because it was incorporated in Alabama, Colonial Freight is a resident of Alabama....”

537 So.2d at 476. Jackson Securities & Investment Co. v. State, 241 Ala. 288, 2 So.2d 760 (1941), on which this Court relied in Colonial Freight, involved a question of residency for purposes of franchise-tax assessments, not residency under the Guaranty Act.

The judgment of the trial court must be affirmed 1) if an insured can be a resident of two states for purposes of the Guaranty Act (this was not decided in Colonial Freight); 2) if Gerald Waller was an insured under American Eagle’s policy on December 6, 1995, because the parties stipulated that Waller was a resident of Alabama on that date; or 3) if this Court overrules Colonial Freight and adopts the principal-place-of-business rule adopted by the majority of the jurisdictions in the United States, which AIGA in its alternate argument requests that we do. The Senns and the Dobbinses in their brief wrote: “Alabama should therefore adopt the principal place of business rule to define corporate residence under the [Guaranty Act].”

Delaware, the state in which Air Tuskegee was incorporated, defines the residency of a corporation under its guaranty act as the state in which the corporation has its principal place of business. Del.Code Ann. tit. 18, § 4205(6)a.(2).

Colonial Freight did not address the possibility of a corporation’s having a dual residency under the Guaranty Act. Ala. Code 1975, § 27-42-12(b), provides, in pertinent part:

“Any person having a claim which may be recovered under more than one insurance guaranty association or its equivalent shall seek recovery first from the association of the place of residence of the insured ....”

(Emphasis added.)

In interpreting a Wyoming statute with substantially the same wording, the Wyoming Supreme Court, noting the singular language “place of residence” used in the Wyoming statute held that an insured could have only one residence at the time of the insured event for purposes of entitlement to recovery under the Wyoming guaranty act. Wyoming Ins. Guar. Ass’n v. Woods, 888 P.2d 192, 198 (Wyo.1994).

In Kroblin Refrigerated Xpress, Inc. v. Iowa Insurance Guaranty Ass’n, 461 N.W.2d 175 (Iowa 1990), the Iowa Supreme Court, in interpreting a guaranty statute identical to Alabama’s, held that although a corporation may have different residences for different purposes, it can have only a single residence for purposes of being entitled to recovery under Iowa’s guaranty act. The Iowa Supreme Court rejected the holding in Colonial Freight and noted that our Court had failed to discuss or address the purpose or intent of the relevant Alabama statutes. The Iowa Supreme Court adopted the principal-place-of-business test to determine corporate residency under Iowa’s guaranty act. 461 N.W.2d at 179-80. See Pennsylvania Ins. Guar. Ass’n v. Charter Abstract Corp., 790 F.Supp. 82, 87 (E.D.Pa.1992) (a corporation, like an individual, can be a resident of only one state for purposes of entitlement to recovery under Pennsylvania’s guaranty act).

We hold that a corporation can be a resident of only one state for purposes of entitlement to recovery under the Guaranty Act based upon the plain language of § 27-42-12(b) and the persuasive authority of Wyoming Insurance Guaranty, Pennsylvania Insurance Guaranty, and Kroblin Refrigerated.

We acknowledge that this Court did not discuss or address in Colonial Freight the purpose or intent of the Legislature in enacting the Guaranty Act. One definition of “resident” may not fit all definitions of “resident.” In American Employers’ Insurance Co. v. Elf Atochem North America, Inc., 157 N.J. 580, 725 A.2d 1093 (1999), the New Jersey Supreme Court thoroughly analyzed the reasons behind the enactment of the Model Act and the relation between those reasons and the residency requirements of the Model Act. 157 N.J. at 586-597, 725 A.2d at 1097-1102.

In Ex parte Krothapalli, 762 So.2d 836, 838 (Ala.2000), this Court noted: “The intent of the Legislature in adopting a statute may be gleaned from considering the language used, the reason and necessity for the statute, and the goals the Legislature sought to accomplish.” The words of the Guaranty Act indicate that the Legislature intended a corporation to be a resident of only one state for purposes of entitlement to any recovery under the Guaranty Act. Unfortunately, the Guaranty Act does not define the word “resident,” so we must look to “the reason and necessity for the statute, and the goals the Legislature sought to accomplish.” The National Conference of Insurance Guaranty Funds explained in an amicus curiae brief filed in Elf Atochem that a guaranty act is part of a “ ‘carefully crafted national approach which, when construed and administered as intended, apportions the cost of funding claims arising under an insurer insolvency in a rational, cohesive, and equitable manner throughout the United States.’ ” 157 N.J. at 597, 725 A.2d at 1102. After consideration of its guaranty act, the New Jersey Supreme Court was persuaded that Elf/Pennwalt, a corporation formed under the laws of New Jersey with its principal place of business in Pennsylvania, should not be considered a resident of New Jersey for purposes of coverage under the New Jersey guaranty act. Id.

At this time, the Colonial Freight definition of residence, i.e., the state of incorporation, creates potential and serious gaps in coverage. For example, in this case, if we retain the Colonial Freight definition, no state provides coverage for Air Tuskegee because Delaware, Air Tuskegee’s state of incorporation, defines a corporation’s residence (for purposes of its insurance guaranty association) as the state of the corporation’s principal place of business. DeLCode Ann. tit. 18, § 4205(6)(a)(2). Therefore, under the definition presently used in Alabama, neither Alabama nor Delaware provides coverage for Air Tuskegee. Yet if a corporation were incorporated in Alabama and had its principal place of business in Delaware, both states would provide coverage. This scenario destroys the unity intended by Alabama’s adoption of an AIGA, which is paramount for the multistate system contemplated by the Model Act to be effective.

This Court has stated that the Guaranty Act “only provides protection from the insolvency of insurers ‘licensed to transact insurance in this State.’ ” Alabama Ins. Guar. Ass’n v. Pierce, 551 So.2d 310, 312 (Ala.1989). Under the statutory scheme, the premiums paid by Alabama insurers generate revenue for AIGA. The principal-place-of-business rule creates a relationship between these premiums paid to the State of Alabama and the claims paid. An insurance company that conducts business in this State, by providing insurance in Alabama, pays premiums to AIGA; thus the insured, regardless of where it is incorporated, should enjoy the benefits of AIGA coverage. Retention of the place-of-incorporation rule would result in AIGA’s being unjustly enriched. For example, Air Tuskegee paid insurance premiums to American Eagle, which paid AIGA fees; however, under the rule enunciated in Colonial Freight it would not receive protection under the Guaranty Act.

For these reasons, this Court adopts the principal-place-of-business rule in accord with the definition adopted in the Model Act and by other states. This definition of a corporation’s residence is limited to the AIGA context. To the extent it contradicts this opinion, Colonial Freight is hereby overruled. Thus, the rule in Jackson is not affected. The trial court’s judgment is affirmed.

AFFIRMED.

HOUSTON, SEE, LYONS, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.

      . In 1969 the National Association of Insurance Commissioners developed the Post-Assessment Property and Liability Insurance Guaranty Model Act on which many states’ guaranty acts are based.

      . The Model Act, as now amended, defines "residence,” as it relates to an insured corporation, as the state where the principal place of business of the corporation is located.

      . The Senns and the Dobbinses contend that AIGA did not argue this issue before the trial court. They are not correct The crux of AIGA's motion for a summary judgment was that Air Tuskegee was a resident only of Delaware for purposes of the Guaranty Act. In opposition to this, the Senns and the Dobbins-es argued that Air Tuskegee could be deemed a resident of more than one state for purposes of the Guaranty Act. Certainly, this Court could affirm the judgment of the trial court on this issue. See Smith v. Equifax Servs., Inc., 537 So.2d 463, 465 (Ala.1988).

      . The Wyoming statute provides that the claimant "shall seek recovery first from the association of the insured’s place of residence.” Wyo. Stat. Ann. § 26 — 31—111 (b).