author: SEE, Justice.

text:
    Burt BLACKMON v. NEXITY FINANCIAL CORPORATION et al.
    1041796.
    Supreme Court of Alabama.
    Sept. 22, 2006.

      John D. Saxon and Stephen J. Austin of John D. Saxon, P.C., Birmingham; and Stephen E. Hudson of Kilpatrick Stockton, LLP, Atlanta, Georgia, for appellant.
    Lee H. Zell and Matthew F. Carroll of Balch & Bingham, LLP, Birmingham, for appellees.
   SEE, Justice.

This is a seeurities-fraud case. After Burt Blackmon purchased stock in Nexity Financial Corporation (“Nexity”), he sued Nexity and its directors and officers, alleging that they had misrepresented and failed to disclose material facts when he purchased his stock. The trial court entered a summary judgment in favor of Nexity and its directors and officers. Blackmon appeals; we affirm.

I. Facts and Procedural History

Nexity was incorporated in 1999 as a Delaware corporation. Nexity is a holding company that owns Nexity Bank; Nexity Bank operates banks in various cities in Alabama. In January 2000, Nexity Bank started its Internet banking operations, and by February 2000 Nexity Bank was operating primarily as an “Internet bank.”

By the end of 1999, Nexity had incurred a net operating loss of $5,657,287, and it decided to raise capital through a private offering of its stock. In connection with the private stock offering, Nexity issued a private-offering memorandum (“POM”), dated March 8, 2000. The POM described the stock offering, Nexity’s business, and the risks associated with the investment. Nexity supplied potential investors with copies of the POM.

At $5 per share, Nexity sought to raise between $15,000,000 and $25,000,000 through the private stock offering. The POM states that the offering would terminate no later than May 30, 2000, unless Nexity extended the deadline by written notice to the subscribers to the stock.

The POM includes Nexity’s financial statement for the period from March 12, 1999 (the incorporation date), through December 31,1999, which shows a net operating loss of $5,657,287. Nexity did not disclose in the POM its budget for the year 2000, nor did it state how close it was coming to that budget as of the issuance date of the POM. As of May 2000, Nexity’s budget showed a loss of $637,990; in actuality, Nexity had incurred a net operating loss of $2,465,385 as of May 2000.

The POM contains several positive forward-looking statements. For example, the POM stated that the “use of the Internet ... is expected to continue to grow ... [and] the number of Internet users is expected to increase from 29.2 million in July 1997 to 232 million in 2001,” and that “[Nexity] believes the number of electronic banking households will grow substantially in the next several years.” It further asserted that “[Nexity] believe[s] that only a relatively small number [of banks] have the capability to transact banking business over the Internet” and that “[t]he growth of the Internet and the speed, flexibility and convenience it offers may provide [Nexity] with a competitive advantage over traditional banks.”

The POM states that words such as “believe” and “expect” identify forward-looking statements and that such statements “are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such statements.” The POM also contains the following warning at the beginning, in boldfaced type: “An investment in [Nexity] involves a high degree of risk.” It also states in boldfaced type that the investors should “consider [Nexity’s] prospects in light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in the new and rapidly evolving market for electronic financial services such as banking.” The POM further states that Nexity will require each potential investor to represent, prior to the purchase of stock, that “he or she recognizes that this investment is highly speculative and that it could result in a total loss of his or her investment.”

The POM sets forth nine pages of “risk factors.” The POM points out that Nexity had a limited operating history, with a net operating loss for the year 1999. The POM states that Nexity has been engaged in Internet banking since only February 2000. The POM advises the investors to “consider [Nexity’s] prospects in light of the risks, expenses, and difficulties frequently encountered by companies in their early stages of development, particularly companies in the new and rapidly evolving market for electronic financial services such as banking.” The POM also warned that Nexity did not intend to pay dividends “in the foreseeable future” and that Nexity did not expect “to realize a profit during its initial years of operation.”

The POM further cautions that “demand and market acceptance for Internet banking are subject to a high level of uncertainty” and that “there can be no assurance that Internet banking will become widespread ... [or] that the usage trends currently experienced will continue to be realized for electronic banking or commerce.” The POM points out that “[b]ecause the market for Internet banking is new and evolving, it is difficult to predict the future growth rate”and that “[i]f the market does not continue to grow,” Nexity could be adversely affected. The POM warns that Nexity may not have identified or considered all of its present and future competitors. The POM states that “[m]any of [Nexity’s] competitors have substantially greater financial resources than Nexity.”

The POM also warns that Nexity may have to raise additional capital “through public or private financings,” which, it warns, may be on terms unfavorable to Nexity. Although Nexity “anticipates that [it] may seek additional capital through a public offering of its common stock sometime in the latter part of 2000,” the POM states, “no decision regarding such offer has been made ... [and] [t]here is no assurance that a public offer can be made on terms ... acceptable to Nexity.” Thus, the POM points out that Nexity’s stock might not be traded publicly and that if it is not the investors “will be limited in their ability to resell shares.”

On May 30, 2000, Nexity issued its first supplement to the POM (“the supplement”). The supplement advised the investors that the offering was extended to June 15, 2000, instead of May 30, 2000. The supplement also lowered the minimum offering to $10,000,000. Nexity allowed investors the opportunity to cancel their stock subscriptions up until June 5, 2000.

Blackmon received the supplement; he chose not to cancel his subscription of Nexity stock, and on May 31, 2000, he signed a subscription agreement. Black-mon purchased 150,000 shares of Nexity stock for a total purchase price of $750,000. Before Blackmon purchased the Nexity stock, he spoke with an officer of Nexity, Ken Vassey, about the prospect of Nexity’s conducting an initial public offering (“IPO”). Blackmon testified at his deposition that Vassey expressed optimism that an IPO would occur. However, Blackmon admitted that no one promised him that Nexity would conduct an IPO.

Before purchasing the Nexity stock, Blackmon also spoke with Nexity’s president, David Long, and its chief executive officer, Greg Lee, regarding the supplement. He specifically asked them why Nexity had extended the offering and lowered the amount of the minimum offering. Blackmon testified at his deposition that they told him that Nexity lowered the minimum amount to be raised from the offering to $10,000,000 in order to “break escrow” and to have access to that amount immediately rather than having to wait for $15,000,000 to be raised. Blackmon testified that they assured him that Nexity expected to receive $15,000,000 by June 15, 2000. However, he also testified that he understood from the supplement that Nexity might not raise $15,000,000.

At some point before his purchase, Blackmon inquired generally about how Nexity was doing. Blackmon testified at his deposition that Lee told him in general terms that “Nexity was doing fine and things were progressing as per their plans.” Blackmon further testified that he understood the comment to refer to Nexity’s “general strategic plan that they had within the bank” and that he did not receive any details about the strategic plan. He also testified that he believed Nexity had a budget or financial information that was not included in the POM. However, he did not ask to see Nexity’s budget, its model, or a financial statement before his purchase.

Nexity closed its offering on June 15, 2000; it raised approximately $11,000,000. Lee and Long testified that the minutes of the August 16, 2000, meeting of Nexity’s board of directors reflect that the private stock offering was closed as of June 15, 2000. The minutes also reflect that the board of directors authorized additional investors to join until September 15, 2000. However, both Lee and Long testified that Nexity did not sell any additional shares after June 15, 2000.

Blackmon claimed that Nexity offered a “side deal” to potential institutional investors during the period of the stock offering. He described the “side deal” as Nexity’s offer, made to institutional investors, i.e., banks, that had purchased Nexity stock, of an opportunity also to purchase loan participations. He explained that institutional investors would gain returns from loan participations and earn back the purchase price of their stock. Blackmon testified that Nexity did not offer a similar opportunity to individual investors. Black-mon admitted that, even if Nexity had offered individual investors the opportunity, however, he could not have participated in it.

Nexity did not conduct an IPO in late 2000, and, for that year, it incurred a net operating loss of approximately $5,400,000.

On November 20, 2002, Blackmon sued Nexity, Lee, Long, and Nexity’s directors, John J. Moran, Randy K. Dolyniuk, John W. Collins, and Denise N. Slupe (collectively “the Nexity defendants”). He alleged (1) that the Nexity defendants violated § 8 — 6—19(a)(2), Ala.Code 1975, when they sold stock to him by misstating or omitting material facts, and (2) that the individual defendants violated § 8 — 6—19(c), Ala.Code 1975, as directors and/or officers of Nexity by conducting the private stock offering in 2000, by preparing and distributing the POM and the supplement, which he says misstated or omitted material facts, and by materially aiding Nexity in its violation of § 8 — 6—19(a), Ala.Code 1975. Blackmon sought a recovery of his $750,000 investment with 6% interest, reasonable attorney fees, and other appropriate costs.

In his complaint, Blackmon alleges the following facts as to the Nexity defendants’ misrepresentations and omissions:

(1) The POM and the supplement failed to provide or to update Nexity’s financial information for the year 2000, instead including only Nexity’s 1999 Annual Report and “positive, glowing representations concerning consumer use of the Internet, Internet-based businesses in general, and Nexity Bank’s prospects as an Internet bank in particular”;

(2) The supplement failed to disclose that Nexity had lowered its minimum stock offering from $15,000,000 to $10,000,000 because it could not attract sufficient investors to reach that goal;

(3) The supplement failed to disclose that Nexity’s inability to raise a minimum of $15,000,000 would force it to seek additional capital at a lower price per share, diluting the value of existing shares; and

(4) Nexity’s officers orally assured Blackmon that Nexity would conduct an IPO later in 2000 and the POM stated that Nexity might conduct an IPO in the latter part of 2000, but the supplement failed to disclose that Nexity would not be able to conduct an IPO in the latter part of 2000, though that fact was known to the Nexity defendants when the supplement was issued.

On May 10, 2004, the trial court entered a scheduling order, setting the following deadlines: (1) May 1, 2005, as the discovery cut-off date; (2) May 15, 2005, as the deadline for filing any amendments to the pleadings; and (3) the week beginning June 13, 2005, as the trial setting for the case.

On September 21, 2004, the Nexity defendants deposed Blackmon. In April 2005, he in turn deposed Long, Vassey, and Lee. Upon indication from Blackmon that he intended to amend his complaint, the trial court, on April 29, 2005, amended its scheduling order. The amended scheduling order set May 5, 2005, as the deadline for Blackmon to file an amended complaint, and it set the case for trial during the week of August 8, 2005. On May 5, 2005, Blackmon filed his amended complaint.

In the amended complaint, Blackmon added claims of fraud, fraudulent suppression, and breach of contract against the Nexity defendants. In addition to the relief requested in the original complaint, Blackmon sought punitive damages of $1,000,000. Blackmon also added the following new factual allegations as to the Nexity defendants’ alleged misrepresentations and omissions:

(1) That the supplement failed to disclose that Nexity’s loss for May 2000 was worse than projected in Nexity’s internal budget;

(2) That the POM and the supplement failed to disclose that Nexity was offering “side deals” to potential institutional investors by offering to sell them loan partic-ipations;

(3) That the Nexity defendants had no intention of closing the offering on June 15, 2000, as the supplement provided;

(4) That a senior manager of Nexity orally represented to Blackmon that Nexity was doing well financially, that it was “on budget” and progressing according to plan for 2000, and that the likelihood of conducting, an IPO in the latter part of 2000 was strong; and

(5) That Blackmon accepted June 15, 2000, as the new deadline for the private stock offering by signing the notice attached to the supplement, and that Nexity was required to but did not notify Black-mon in writing that the offering had been extended to September 15, 2000.

The Nexity defendants moved to disallow Blackmon’s amended complaint or, in the alternative, sought leave to conduct additional discovery regarding the amended claims. Blackmon opposed that motion. On June 14, 2005, the trial court granted the Nexity defendants’ motion to disallow the amended complaint, finding that

“[Blackmon was] aware of facts justifying the amended complaint when the original complaint was filed. To allow the amendment now would require a substantial delay of the trial setting to allow additional discovery.”

The Nexity defendants then moved for a summary judgment on all the claims in the original complaint. Blackmon opposed the motion. After a hearing, on July 22, 2005, the trial court granted the motion and entered a summary judgment for all the Nexity defendants. Blackmon appeals.

II. Standard of Review

We review a summary judgment de novo, and we apply the same standard the trial court applied to determine “ ‘whether the evidence before [it] made out a genuine issue of material fact.’ ” Story v. RAJ Props., Inc., 909 So.2d 797, 801 (Ala.2005) (quoting Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988)). “When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the non-movant to present substantial evidence creating such an issue.” 909 So.2d at 801. “Substantial evidence” is evidence of “ ‘such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.’ ” 909 So.2d at 801 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989)). We must review the evidence in a light most favorable to the nonmovant and resolve all reasonable doubts against the movant. 909 So.2d at 802.

In reviewing the trial court’s grant or denial of leave to amend a pleading, we must determine whether the trial court exceeded its discretion. Boros v. Baxley, 621 So.2d 240, 245 (Ala.1993). We review a trial court’s conclusions of law de novo. BT Sec. Corp. v. W.R. Huff Asset Mgmt. Co., 891 So.2d 310, 312 (Ala.2004).

III. Analysis

Blackmon argues that the trial court erred in disallowing his timely filed amended complaint and in granting the Nexity defendants’ summary-judgment motion as to Blackmon’s claims under § 8-6-19(a), Ala.Code 1975. We first review whether the trial court erred in disallowing Blackmon’s amended complaint.

A. Amendment of Complaint

Pursuant to Rule 16(b), Ala. R. Civ. P., the trial court “may enter a scheduling order that limits the time ... to amend the pleadings.” In this ease, the trial court entered a scheduling order and an amended scheduling order setting a specific deadline for Blackmon to file his amended pleading. Blackmon argues that because he filed his amended complaint within the deadline set by the trial court in its scheduling order, the trial court did not have discretion to disallow the amendment on the basis of undue delay. That is, Blackmon argues that the trial court was required to accept his complaint as timely filed. We do not believe that this is the standard.

Blackmon correctly points out that Rule 15(a), Ala. R. Civ. P., governs this case. Rule 15(a) states, in pertinent part:

“Unless a court has ordered otherwise, a party may amend a pleading without leave of court, but subject to disallowance on the court’s own motion or a motion to strike of an adverse party, at any time more than forty-two (42) days before the first setting of the case for trial, and such amendment shall be freely allowed when justice so requires. Thereafter, a party may amend a pleading only by leave of court, and leave shall be given only upon a showing of good cause.”

Blackmon argues that the timetable in Rule 15(a) is inapplicable in this case because the trial court entered a scheduling order setting forth a different deadline for filing an amended pleading. We agree. The trial court here “ordered otherwise” by setting in its scheduling order a different deadline for filing an amended complaint. Under the trial court’s original scheduling order, the latest a party was to be allowed to file an amended pleading without the trial court’s leave was May 15, 2005 — 29 days before the first setting of the case for trial. Under the trial court’s amended scheduling order, the latest Blackmon was allowed to file an amended complaint without the trial court’s permission was May 5, 2005, and the trial date was moved from the week of June 13 to the week of August 8, 2005. Thus, first the May 15 deadline and then the May 5 deadline was substituted for the default provision in Rule 15(a).

Blackmon incorrectly assumes, however, that he could freely amend a pleading under Rule 15(a) so long as he filed the amendment within either the deadline set by Rule 15(a) or by the court. That is not the correct standard. Rule 15(a) states that the amendment shall be “freely allowed when justice so requires” and that the amendment is subject to dis-allowance on the trial court’s or opposing party’s motion.

We have held that there is an “overarching liberal policy of allowing amendments under Rule 15.” Ex parte Liberty Nat’l Life Ins. Co., 858 So.2d 950, 954 (Ala.2003). However, Rule 15 “‘is not carte blanche authority to amend ... at any time.’ ” Burkett v. American Gen. Fin., Inc., 607 So.2d 138, 141 (Ala.1992)(quoting Stallings v. Angelica Uniform Co., 388 So.2d 942, 947 (Ala.1980)). The trial court has discretion to deny an amendment for good cause. Ex parte GRE Ins. Group, 822 So.2d 388, 390 (Ala.2001); Stallings, 388 So.2d at 947. The deadline in the scheduling order does not curtail the trial court’s discretion in considering the merits of the offered amendment. See Moses.com Sec., Inc. v. Comprehensive Software Sys., Inc., 406 F.3d 1052, 1066 (8th Cir.2005)(holding that “the scheduling order merely prescribes the date by which all [motions to amend] ‘shall be filed;’ the date on the scheduling order does not confine the district court’s consideration of the merits of such motions and does not preclude it from finding that an amendment would result in prejudice”). The trial court can refuse to allow an amendment if allowing it would result in actual prejudice to the opposing party or for reasons of “undue delay.” GRE Ins. Group, 822 So.2d at 390.

Undue delay can have two different meanings in a case. First, the trial court has discretion to deny an amendment to a pleading if allowing the amendment would unduly delay the trial. Horton v. Shelby Med. Ctr., 562 So.2d 127, 130 (Ala.1989). Second, an unexplained undue delay in filing an amendment when the party has had sufficient opportunity to discover the facts necessary to file the amendment earlier is also sufficient grounds upon which to deny the amendment. Stallings, 388 So.2d at 947; see also Rector v. Better Houses, Inc., 820 So.2d 75, 78 (Ala.2001)(holding that the trial court properly struck the amended complaint when the plaintiff offered no reason to refute the trial court’s finding that the new allegations in the amended complaint were based on facts the plaintiff had known since the beginning of the action); Burkett, 607 So.2d at 141 (holding that the trial court did not exceed its discretion in striking the amended complaint where the plaintiffs had learned of the facts underlying the new allegations six months before they attempted to amend).

The trial court in this case denied the amendment on both theories of undue delay. The trial court found that Black-mon was aware of the facts justifying the amended complaint when he filed his original complaint. Blackmon does not show that when he filed his original complaint he was unaware of the factual allegations added in the amended complaint. In fact, Blackmon argues that there was no actual prejudice to the Nexity defendants by the amendment because the new factual assertions were based on Blackmon’s deposition testimony. Blackmon argues that the Nexity defendants were aware of Blackmon’s testimony for at least eight (8) months before Blackmon’s amendment, and that the Nexity defendants, therefore, could not have been surprised by the amendment. Blackmon, however, is addressing a theory on which the trial court did not rely in denying the amendment — actual prejudice to the Nexity defendants. The trial court relied instead on undue delay as a reason for denying the amendment. Blackmon’s argument in fact supports the trial court’s finding that Blackmon was aware of the new factual allegations that he stated in the amendment but that he delayed unduly in filing the amendment and offered no explanation for his tardiness.

The trial court further found that the amendment would require additional discovery and would substantially delay the trial setting. Blackmon had attempted to add three additional claims to his amended complaint. The Nexity defendants argued that they would need additional discovery with respect to these claims and had moved — as an alternate to disallowance of the amendment — for additional time for discovery. Blackmon did not show that the Nexity defendants did not need the additional discovery in order to prepare for trial. Instead, he argues that he made himself available for additional deposition, if additional discovery was necessary, and that the Nexity defendants had ample time to prepare. The point, however, is not Blackmon’s availability for discovery, but that the additional discovery might necessarily delay the setting of the ease for trial.

We decline to hold, as Blackmon urges, that a scheduling order establishes the date up until which a party may automatically amend a pleading, regardless of prejudice to the other party or undue delay. We hold instead that, although the trial court should freely allow the amendment of pleadings within the time set in the scheduling order, the trial court has discretion, in the interests of justice, to deny an amendment for reasons of prejudice or undue delay. This standard is consistent with our past interpretation of Rule 15(a), Ala. R. Civ. P. Blackmon fails to show that he did not unduly delay filing his amendment and that the amendment will not delay setting the ease for trial; therefore, we hold that the trial court did not exceed its discretion in disallowing Blackmon’s amended complaint.

B. Alleged Material Misrepresentations or Omissions in Violation of § 8-6-19(a)(2), Ala.Code 1975

Blackmon argues that the trial court erred in entering the summary judgment in favor of the Nexity defendants on his claims made under the Alabama Securities Act, § 8-6-1 et seq., Ala.Code 1975. Blackmon contends that he presented substantial evidence indicating that Nexity and its officers misrepresented and omitted several material facts in the sale of its stock. Blackmon argues that at the very least there is a factual dispute that requires a jury determination.

Blackmon argues that the Nexity defendants violated § 8 — 6—19(a)(2), Ala.Code 1975, which states:

“(a) Any person who:
“(2) Sells or offers to sell a security by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they are made, not misleading, the buyer not knowing of the untruth or omission, and who does not sustain the burden of proof that he did not know and in the exercise of reasonable care could not have known of the untruth or omission,
“is liable to the person buying the security from him who may bring an action to recover the consideration paid for the security, together with interest at six percent per year from the date of payment, court costs and reasonable attorneys’ fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he no longer owns the security. Damages are the amount that would be recoverable upon a tender less the value of the security when the buyer disposed of it and interest at six percent per year from the date of disposition.”

Thus, a claim of a violation of § 8-6-19(a)(2), Ala.Code 1975, requires (1) a sale or an offer to sell a security (2) by means of a false statement or omission (8) of material fact and (4) the ignorance of the buyer as to the untruth or omission.

The parties dispute whether the Nexity defendants made misrepresentations and omissions of “material” facts.

1. Applicable Standard of Materiality

Because there are few Alabama cases construing the Alabama Securities Act, we review federal cases construing federal securities law to aid in properly interpreting the corresponding provisions of the Alabama Securities Act. See Buffo v. State, 415 So.2d 1158, 1162 (Ala.1982) (holding that because there are few Alabama cases construing § 8-6-17, Ala.Code 1975, federal cases should be reviewed). Section 8-6-19(a)(2), Ala.Code 1975, is similar to § 12(a)(2), Securities Act of 1933, codified as 15 U.S.C. § 771(a)(2). See Banton v. Hackney, 557 So.2d 807, 826 (Ala.1989)(stating that § 8-6-19(a)(2), Ala. Code 1975, is similar to § 12(2) of the Securities Act of 1933). Thus, we look to federal cases that have interpreted “materiality” under § 12(a)(2) of the Securities Act of 1933.

The standard of “materiality” is the same for various provisions of federal securities law, including § 12(a)(2) of the Securities Act of 1933. See Rombach v. Chang, 355 F.3d 164, 178 n. 11 (2d Cir.2004)(stating that the standard for a materially misleading statement is the same under § 12(a)(2), § 10(b), and § 11). Specifically, federal courts have adopted the materiality standard of § 14 of the Securities Exchange Act of 1934 as set forth in TSC Industries, Inc. v. Northway, Inc., 426 U.S. 438, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976), in construing various provisions of federal securities law, including the provisions of the Securities Act of 1933. Goss v. Clutch Exch., Inc., 701 P.2d 33, 36 (Colo.1985)(citing various federal cases).

Under TSC Industries, Inc., a misrepresentation or omission of fact “is material if there is substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.” 426 U.S. at 449, 96 S.Ct. 2126. Moreover, “[t]here must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” 426 U.S. at 449, 96 S.Ct. 2126 (footnote omitted).

The jury generally determines materiality as a question of fact, but alleged misrepresentations may be immaterial as a matter of law if the trial court determines that no reasonable investor could have been swayed by the alleged misrepresentation or omission. In re Amdocs Ltd. Sec. Litig., 390 F.3d 542, 547 (8th Cir.2004); see also Parnes v. Gateway 2000, Inc., 122 F.3d 539, 546-48 (8th Cir.1997) (explaining situations where materiality is not necessarily a factual question for a jury when a misrepresentation or an omission is immaterial as a matter of law). Specifically,

“[ajlleged misrepresentations and omissions can be immaterial as a matter of law if they: 1) are of such common knowledge that a reasonable investor can be presumed to understand them; 2) present or conceal such insignificant data that, in the total mix of information, it simply would not matter; 3) are so vague and of such obvious hyperbole that no reasonable investor would rely upon them; or 4) are accompanied by sufficient cautionary statements.”

Amdocs Ltd., 390 F.3d at 548.

Cautionary statements must relate directly to the alleged misrepresentations or omissions to render them immaterial as a matter of law. Amdocs Ltd., 390 F.3d at 548; see also Parnes, 122 F.3d at 548 (stating that the “bespeaks caution doctrine” provides that misrepresentations or omissions are immaterial if sufficient, specific cautionary statements accompany the alleged misrepresentations and omissions). In determining materiality, we do not “attribute to investors a childlike simplicity.” Pames, 122 F.3d at 547.

2. Alleged Misrepresentations or Omissions

Blackmon argues that he came forward with substantial evidence indicating that the Nexity defendants misrepresented or omitted five material facts. After reviewing each of those five instances, we conclude that his arguments are unpersuasive.

i. Nexity Financial Performance in 2000

Blackmon argues that Lee, Nexity’s chief executive officer, personally assured him that “Nexity was doing well and it was progressing per [its] model [and] their budget [was] on plan.” He contends that this was a material misrepresentation because Nexity had a net operating loss of approximately $2,400,000 as of May 2000, exceeding its internal projected loss as of that date. Blackmon further argues that the net operating loss of $5,657,287 in 1999 was not indicative of the loss Nexity might incur in the future because he understood from one of the notes in the financial statement that over $4,000,000 of that loss was due to a onetime, nonrecurring compensation expense to Nexity’s founders.

Review of Blackmon’s deposition testimony reveals that he understood from the Nexity officers that the company was progressing according to its general strategic plan. Nexity officers apparently stated only in general terms that Nexity was doing well. The following is an excerpt from Blackmon’s deposition transcript:

“A: ... I had conversations with Ken [Vassey] about how Nexity was doing, and he assured me that Nexity was doing fíne, that all they needed was the capital to continue their growth and profitability. I want to say I had one conversation via telephone with Greg [Lee] and received general assurances from Greg that Nexity was doing well. Verbally at the meeting that I had with David [Long] and Greg on May 30th, I again got verbal updates on Nexity that Nexity was doing fine and things were progressing as per their plans. But I did not receive anything in writing.
“Q: Now, when you say Nexity was progressing as per their plans, do you mean the plans as outlined in the offering memorandum?
“A: No. As per their general strategic plan that they had within the bank is what I understood them to say.
“Q: In what respect, if any, was that different than what was said about the plans in the offering memorandum?
“A: I guess the main thing that was different is that their plan — strategic plan, their budget, their model had more financial forward-looking information in it than the prospectus did. The prospectus virtually had no forward-looking financial information with it.
“A: ... But with Mr. Lee, the question led into what was I told, I believe was your question, or the question was what was I told or what did I receive from them. And the conversation moved to what I was told. And I was told that Nexity was progressing as per their model and doing well, general comment.
“Q: Was that the extent of what you were told, that’s as specific as it got?
“A: That’s correct. Now, your other question — your other question is are you telling me that Nexity — or you asked me a question, are you telling me that Nexity had budgeted or had financial information that was not included in the prospectus, I believe that was your question. And the answer is yes, they did.
“Q: All right. And my question really was did Mr. Lee or anybody else at Nexity before you made your investment tell you that such information, in fact, existed?
“A: The only thing I was told was that Nexity was doing well and that it was progressing as per their model or their budget on plan.”

Blackmon admitted that he had not asked to review Nexity’s strategic plan or budget. Given the vague generality of the representation that Nexity was “progressing as per their model or their budget [was] on plan,” no reasonable investor would rely on it. See Hillson Partners Ltd. P’ship v. Adage, Inc., 42 F.3d 204, 213-16 (4th Cir.1994) (holding that vague “on schedule” and “on track” statements were immaterial misrepresentations); see also Glassman v. Computervision Corp., 90 F.3d 617, 631 (1st Cir.1996)(holding that federal securities law focuses on disclosure of backward-looking hard information, not on information such as internal projections and budgets and that “[t]he mere fact that intraquarterly results lagged behind internal projections does not, without more, require disclosure”).

Blackmon received the POM, which contained a number of cautionary statements, including the statements that Nexity may suffer losses during the first few years of operations, that Nexity had incurred a loss in the previous year, and that investment in Nexity was highly speculative. These cautionary statements sufficiently related to the alleged misrepresentations so as to render them immaterial. See Amdocs Ltd., 390 F.3d at 548 (stating that if cautionary statements relate to the alleged misrepresentations, such cautionary statements render the misrepresentations immaterial). Furthermore, written cautionary statements generally take precedence over contradictory oral representations and render the oral representations immaterial as a matter of law. See Carr v. CIGNA Sec., Inc., 95 F.3d 544, 547 (7th Cir.1996)(holding that if a literate adult is given a written document with warnings but is orally told something that contradicts those warnings, then that person cannot maintain an action for fraud against the issuer); see also Alfa Life Ins. Corp. v. Green, 881 So.2d 987, 992-93 (Ala.2003)(holding that a person could not reasonably rely on oral representations that contradict a written document); Ex parte Caver, 742 So.2d 168, 173 (Ala.1999)(stating that a person cannot blindly rely on an agent’s oral representations that are contrary to written disclosures); and Wamser v. J.E. Liss, Inc., 838 F.Supp. 393, 399 (E.D.Wis.1993)(holding that written information cures oral misstatements and omissions). Therefore, the alleged oral misrepresentations and omissions regarding Nexity’s financial performance in the year 2000 were immaterial as a matter of law.

ii. June 15, 2000, Closing

Blackmon argues that the Nexity defendants misrepresented the closing date of the offering as June 15, 2000, because Nexity actually allowed investors to purchase stock even after August 2000. Blackmon bases this argument on the new factual allegation in the stricken amended complaint. Because we hold that the amended complaint was properly disallowed, the trial court was correct in not addressing this argument. See Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir.1994)(holding that the trial court properly refused to consider allegations in the disallowed amended complaints). Therefore, we do not consider this argument.

iii. Minimum Offering of $15,000,000

Blackmon argues that Nexity’s officers misrepresented that it could raise the original minimum offering of $15,000,000. The trial court found that Blackmon “was aware that he could cancel or reduce his subscription and chose not to do so.” Blackmon testified at his deposition (1) that he understood, after he received the supplement, that Nexity might not raise $15,000,000 and (2) that he voluntarily purchased Nexity stock even though he knew Nexity might not raise that amount. Blackmon received the supplement, which states that the offering minimum had been lowered to $10,000,000, and Blackmon testified that he understood that change. We will not attribute a “childlike simplicity” to investors in determining whether a misrepresentation or omission is material. Pames, 122 F.3d at 547. In this case, the written notice in the supplement that the minimum offering was being lowered to $10,000,000 rendered any contrary oral misrepresentations immaterial. Carr, 95 F.3d at 547.

iv. IPO in 2000

Blackmon claims that the Nexity defendants misrepresented the likelihood that Nexity would conduct an IPO in 2000. He argues that Nexity had not hired an investment advisor or otherwise prepared to conduct an IPO when it represented that it anticipated conducting an IPO. Thus, Blackmon argues, the Nexity defendants materially misrepresented that Nexity would conduct an IPO when there was no such prospect.

Although the POM and Ken Vassey, a Nexity officer, may have indicated that Nexity expected to conduct an IPO in the latter part of 2000, the POM also contained explicit warnings that such an IPO might never occur. The POM stated that “no decision regarding such offer has been made ... [and] [t]here is no assurance that a public offer can be made on terms ... acceptable to Nexity.” Thus, Nexity pointed out that its stock might not be traded publicly and that, if it were not, the investors “will be limited in their ability to resell shares.” These cautionary statements directly relate to the alleged misrepresentation at issue. Nexity’s statements regarding the possibility of conducting an IPO in context with these cautionary statements would not have misled a reasonable investor. See P. Stolz Family P’ship L.P. v. Daum, 355 F.3d 92, 98 (2d Cir.2004)(holding that cautionary statements neutralized any misrepresentations regarding future IPOs); Halperin v. eBanker USA.com, Inc., 295 F.3d 352, 357-58 (2d Cir.2002)(holding that representations and omissions must be considered together and in context to determine whether they affect the total mix of information and mislead a reasonable investor). Therefore, any representation by Nexity and its officer, Ken Vassey, regarding the possibility of an IPO is, as a matter of law, not material.

v. Nexity’s “Side Deal” with Institutional Investors

Finally, Blackmon argues that he presented substantial evidence indicating that Nexity offered a “side deal” to potential institutional investors to entice them to purchase stock. He argues (1) that the “side deal” was not offered to individual investors and (2) that the POM and the supplement did not disclose the “side deal.” Blackmon bases this argument on the new factual allegation in the stricken amended complaint. The trial court properly did not address this argument, and we do not address it. See Kaplan, 49 F.3d at 1370 (holding that the trial court properly refused to consider allegations in the amended complaints that were disallowed).

IV. Conclusion

The trial court did not exceed its discretion in denying Blackmon’s motion to amend his complaint. Further, the trial court did not err in entering a summary judgment against Blackmon and in favor of the Nexity defendants. Therefore, we affirm the trial court’s judgment.

AFFIRMED.

NABERS, C.J., and HARWOOD, STUART, and BOLIN, JJ., concur.

      . Blackmon testified at his deposition that he received the supplement at some point and that he reviewed it before delivering his executed subscription agreement and paying for the stock. He acknowledged the receipt of the supplement on June 2, 2000, by signing a notice attached to the supplement.

      . Although Blackmon states in his brief that Nexity's 2001 annual report shows a net operating loss of $5,500,000 for the year 2000, Nexity's 2001 annual report is not included in the record. Thus, we rely on Blackmon’s deposition testimony in the record that Nexity incurred a net operating loss of approximately $5,400,000 in 2000.

      . Blackmon also sued Thomas A. Bryan, one of the original directors, but he later voluntarily dismissed his claims against this defendant.

      . The trial court’s order states, in pertinent part:
      "[Blackmon’s] claim is based on the following misrepresentations:
      "(1) [Nexity's] financial performance;
      "(2) [Nexity’s] anticipated IPO in 2000;
      "(3) extension of closing of offering until June 15, 2000;
      "(4) lowering the original minimum amount of the offering.
      "[Blackmon] alleges that he was told that Nexity was doing well and progressing per its model and the budget was on plan. [Blackmon] contends that in reality Nexity had lost $2.4 million in the year to date. However, the evidence before the Court is that Nexity had reported over $5 million in losses in the offering memorandum.
      “[Blackmon] also alleges that he was misled by an anticipated public offering. However, [Blackmon] admitted that he knew there may never be a public offering.
      "[Blackmon] makes the following contentions regarding the extension of the closing of the offering:
      “(1) The extension from May 30 to June 15 was to force investors to make a decision. However, [Blackmon] made his purchase on May 31 after the extension was made.
      "(2) Nexity would still raise the $15 million although the offering was lowered. [Blackmon] says he was told they had enough subscription agreements in hand or verbal commitments to meet the $15 million minimum. However, [Blackmon] was aware he could cancel or reduce his subscription and chose not to do so.
      "[Blackmon] also contends that Nexity offered a 'side deal’ to institutional investors. This was not a claim which was made in the original complaint and is not before the Court.
      "There were some statements made by defendants which could be characterized as ‘glowing’ with regard to Nexity’s future.... It appears to this Court that the 'glowing’ statements were within the proper limits of enthusiasm for a beginning venture.
      "The Court does not find any misrepresentations of a material fact as required by § 8-6-19(a), Alabama Code 1975.
      "Therefore, the Motion for Summary Judgment by all defendants is granted.”

      . The Private Securities Litigation Reform Act of 1995 renumbered § 12(2) of the Securities Act of 1933 as § 12(a)(2) of the Securities Act of 1933. Yung v. Lee, 432 F.3d 142, 146 n. 3 (2d Cir.2005).

      . Although this is how Blackmon summarizes the conversation with Lee in his brief to this Court, the actual language from the deposition transcript is: "The only thing I was told was that Nexity was doing well and that it was progressing as per their model or their budget on plan.”

      . Even if this argument could have been properly considered, Blackmon bases it on the minutes of the August 2000 meeting of Nexity’s board of directors. The minutes reflect that, at the time of the August meeting, the board allowed the offering to continue until September 15, 2000. We are concerned, however, only with the materiality of misrepresentations that occurred at the time of sale or offer to sell. See § 8-6-19(a)(2), Ala.Code 1975. Blackmon's argument fails to show that the Nexity defendants intended, at the time Blackmon purchased his stock, to extend the offering beyond June 15, 2000.

      . Even if this argument could have been properly considered, Blackmon testified at his deposition that he did not know if this was relevant information and that he could not have purchased loan participations even if he had known about the deal. He testified that he simply would like to have known about the "side deal.” Blackmon fails to show that the omission was material. "[T]here must be substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.” TSC Industries, 426 U.S. at 449, 96 S.Ct. 2126 (footnote omitted). In light of Blackmon’s deposition testimony, the disclosure of this “side deal” would not appear to have significantly altered the "total mix” of information available to Blackmon.

      . The Nexity defendants also argue that the applicable statute of limitations bars Black-mon’s claims. Because we affirm the trial court's judgment on substantive grounds, we need not address this argument.


source: Caselaw Access Project

author: PER CURIAM.

license: Public Domain

text:
    Werner BEIERSDOERFER v. HILB, ROGAL and HAMILTON COMPANY et al. Hilb, Rogal and Hamilton Company et al. v. Werner Beiersdoerfer.
    1012243 and 1012304.
    Supreme Court of Alabama.
    Sept. 22, 2006.

      William K. Thomas of Cabaniss, Johnston, Gardner, Dumas & O’Neal, Birmingham; and James R. Morgan, Birmingham, for appellant/eross-appellee Werner Bei-ersdoerfer.
    Michael D. Freeman, Allen M. Estes, Vincent J. Bodin, and J. Eric Getty of Balch & Bingham, LLP, Birmingham, for appellees/cross-appellants Hilb, Rogal and Hamilton Company et al.
   On Applications for Rehearing

PER CURIAM.

This Court’s opinion of January 7, 2005, is withdrawn, and the following is substituted therefor.

The defendant/counter-plaintiff Werner Beiersdoerfer appeals the grant of the motion for new trial filed by the “HRH” plaintiffs/eounter-defendants Hilb, Rogal and Hamilton Company (“HRH”); Hilb, Rogal and Hamilton of Alabama, Inc. (“HRH Alabama”); and Beiersdoerfer-Meadows, Inc. (collectively “the HRH plaintiffs”). The HRH plaintiffs cross-appeal the denial of their motions for a summary judgment and a judgment as a matter of law (“JML”). In case no. 1012304, we decline to review the denial of the motion for a summary judgment, and we dismiss the appeal in part and affirm the denial of the motion for a JML. In case no. 1012243, we reverse the order granting the motion for a new trial, and we remand the case for further proceedings consistent with this opinion.

Substantive Facts

In reviewing rulings on motions for a summary judgment or a JML, we consider all of the relevant undisputed evidence, accept the tendencies of the disputed evidence most favorable to the nonmoving party, and resolve all reasonable factual doubts in favor of the nonmoving party. Alexander, Corder, Plunk, Baker & Shelly, P.C. v. Jackson, 811 So.2d 506, 513 (Ala.2001), and Alfa Life Ins. Corp. v. Jackson, 906 So.2d 143, 146 (Ala.2005). Considered in that manner, the evidence established the following facts.

On January 1, 1998, Beiersdoerfer, the sole shareholder of Beiersdoerfer-Mead-ows, Inc. (“BMI”), an insurance agency, sold all of the stock in BMI to HRH for $700,000 and executed a written stock-purchase agreement. In addition, Beiers-doerfer agreed to work for HRH for two years and executed a written employment agreement. In both the stock-purchase agreement and the employment agreement, Beiersdoerfer agreed that he would not compete with HRH for a specified period of time. As an employee of HRH, Beiersdoerfer continued to manage the accounts of BMI and to supervise subordinates.

In June 2000, Beiersdoerfer told Richard Simmons III, regional director of HRH, that Beiersdoerfer wanted to terminate his employment with HRH. Beiers-doerfer offered to repurchase BMI from HRH. Simmons told Beiersdoerfer that Simmons would have to discuss Beiers-doerfer’s offer to purchase BMI with Mel Vaughn, the chief operating officer of HRH, because Simmons did not have authority to accept or to reject such an offer on behalf of HRH. Vaughn rejected Bei-ersdoerfer’s offer.

After Vaughn rejected Beiersdoerfer’s offer to repurchase BMI, Beiersdoerfer and Simmons began discussing the possibility of Beiersdoerfer’s continuing to manage the accounts of BMI for HRH as an independent broker instead of as an employee. Beiersdoerfer asked Simmons whether he had the authority to agree to such an arrangement without seeking approval from the home office of HRH in Richmond, Virginia. Simmons responded “that he had the authority and the decision could be made locally and no Richmond.” (At trial, however, Vaughn testified that Simmons did not have such authority.)

Thereafter, Beiersdoerfer and Simmons met in mid-November 2000 (“the mid-November meeting”). Simmons asked Bei-ersdoerfer to go over his proposal to manage the accounts of BMI as an independent broker. Beiersdoerfer stated that he proposed to resign as an employee of HRH, to manage the accounts of BMI as an independent broker, and to split the commissions generated by those accounts with HRH. Simmons suggested that HRH should receive 60% of the commissions and Beiersdoerfer should receive 40%. Beiersdoerfer agreed and stated that he would pay all of his expenses out of his share of the commissions. Beiers-doerfer further stated that the arrangement would continue until HRH received an amount equal to the $700,000 it had paid Beiersdoerfer for the stock in BMI less any profits already received by HRH from the operation of BMI (“the monetary goal”). Finally, Beiersdoerfer stated that, under his proposal, any new business referred by HRH to BMI would remain with HRH when the arrangement ended and any new business generated by Beiersdoerfer or referred by outside brokers would go with him when the arrangement ended. At the end of this discussion, Simmons said: “I understand and I agree.” Simmons then told Beiersdoer-fer that he was leaving at the end of the year to take another position, and he asked Beiersdoerfer to explain the arrangement to David Hobbs, the president of HRH Alabama. After the mid-November meeting, Beiersdoerfer made informal arrangements to sublease office space in another building where he planned to manage the BMI accounts as an independent broker; he arranged for a moving company; and he moved his office.

On November 21, 2000, Beiersdoerfer, Simmons, and Hobbs met to discuss Bei-ersdoerfer’s managing the BMI accounts for HRH as an independent broker (“the November 21 meeting”). Beiersdoerfer recited the terms he and Simmons had discussed at the mid-November meeting. Hobbs complained that two BMI agents, Kevin Tangney and Heidi Parker, who is Beiersdoerfer’s daughter, were planning to leave BMI without having signed covenants not to compete with HRH. Hobbs said that he could cause trouble for Parker and Tangney even though they had not signed a covenant not to compete. Beiers-doerfer said he would continue to manage the BMI accounts until HRH received $75,000 more than the monetary goal if Hobbs would refrain from causing trouble for Parker and Tangney. Hobbs stated: “I agree.” Hobbs then told Beiersdoerfer that, because they were going to implement the independent-broker arrangement, Beiersdoerfer should take BMI’s files to his office. Although Hobbs said that he wanted Simmons to reduce the terms of the agreement between Beiers-doerfer and HRH to writing, neither he nor Simmons indicated that the assent of HRH to the agreement was contingent on its being reduced to writing. Beiersdoer-fer testified at trial that no details of the agreement remained unresolved at the end of the November 21 meeting. Simmons admitted at trial that neither he nor Hobbs told Beiersdoerfer at the November 21 meeting that any details of their agreement remained unresolved.

The next day, Beiersdoerfer moved BMI’s files from the offices of HRH to his new office. While he was at HRH’s offices, he saw Simmons, who stated, “I was glad that we were able to reach an agreement.” On December 1, Beiersdoerfer executed a sublease on his new office.

After the mid-November meeting and the November 21 meeting, Simmons instructed the comptroller of HRH to pay Beiersdoerfer 40% of the revenue of BMI as a commission after December 31. The comptroller then prepared a budget for the next year showing Beiersdoerfer as receiving 40% of the revenue of BMI as a commission.

On November 27 and 28, 2000, Simmons and Hobbs met with Vaughn at the home office of HRH in Richmond (“the November 27 and 28 meetings”). Vaughn said that “there should be a one-year consulting agreement [with Beiersdoerfer] with a non-piracy agreement upon termination and that it should have a 30-day termination clause and that it was — should only be needed for 90- to 120 days.” Vaughn’s plan was that Wayne Bowling, an HRH employee, would become familiar with the BMI accounts during this 90- to 120-day period and the consulting agreement would then be terminated. No one told Beiers-doerfer about Vaughn’s instructions at the November 27 and 28 meetings.

When Beiersdoerfer returned to his office after the New Year’s Day holiday, he found an unsigned faxed letter from Hobbs dated December 29. The letter stated:

“The purpose of this letter is to outline the terms of our agreement:
“1. Werner Beiersdoerfer will retire from HRH effective January 1, 2000 [sic]. At that time he will become an independent broker, serving the accounts assigned to him. See attached list. We agree that the long-term objective is to orderly transfer these accounts to an HRH producer.
“2. All Fees & Commissions will be paid to HRH. HRH will then pay Mr. Beiersdoerfer 40% of the commissions and fees generated by these assigned accounts.
“3. The files on these accounts will remain with Mr. Beiersdoerfer, but will
be returned at any time to HRH at their request.
“4. HRH will not extend errors and omissions coverage to Mr. Beiersdoer-fer.
“5. Mr. Beiersdoerfer agrees that at no time in the future will he work in collusion with his daughter, Heidi Parker, to solicit these assigned accounts.
“6. If at any time in the future, either Werner Beiersdoerfer or HRH becomes dissatisfied with this arrangement, either party can cancel this agreement with 30 days notice. At that time, Mr. Beiersdoerfer agrees to never contact or solicit these assigned accounts.”

On January 2, Beiersdoerfer telephoned Simmons and left a message on his answering machine. The message stated that Hobbs’s December 29 letter was satisfactory except for the statement in paragraph 4 that HRH would not provide Beiersdoerfer with errors-and-omissions coverage and the statement in paragraph 6 that Beiersdoerfer would “never contact” clients of BMI. Simmons acknowledged that he received the message and that he conveyed the information to Hobbs. That same day, Hobbs signed a payroll authorization form listing Beiers-doerfer’s date of termination as an employee of HRH as December 31, 2000.

On January 3,' Hobbs showed Vaughn a copy of Hobbs’s December 29 letter. Vaughn became angry and asked Hobbs if he understood that the letter amended the employment and stock-purchase agreements. Vaughn instructed Hobbs to “get out” of the agreement with Beiersdoerfer. Hobbs and Fred Renneker, the chief executive officer of HRH Alabama, went to Beiersdoerfer’s office on January 8. Hobbs gave Beiersdoerfer a letter signed by Hobbs and dated January 5. In pertinent part, the letter stated:

“I have made the decision to terminate your employment as of February 9, 2001. Since we have not finalized our arrangement (earlier faxed to you), that proposed offer is retracted as well.”

After giving Beiersdoerfer this letter, Hobbs said, “Mel [Vaughn] didn’t like the agreement.” Beiersdoerfer responded that they had an agreement. Renneker then said that the agreement had not been reduced to writing and signed. Beiers-doerfer responded that oral agreements were binding in Alabama, that he intended to abide by the oral agreement they had reached, and that he expected HRH to abide by it as well.

A few days after this meeting, Beiers-doerfer’s wife received a letter from HRH informing her of her right, under COBRA, to continue her health insurance coverage under the group plan for up to 18 months after the termination of Beiersdoerfer’s employment on December 31, 2000. Later in January, HRH generated a payroll authorization form to reinstate Beiersdoer-fer’s pay and benefits as an employee through February 9, 2001.

Procedural Facts

Alleging that Beiersdoerfer had violated the covenants not to compete in the stock-purchase and employment agreements, the HRH plaintiffs sued him, alleging breach of contract, breach of fiduciary duty, and tortious interference with business relationships. Beiersdoerfer counterclaimed, alleging breach of contract, misrepresentation, suppression, defamation, defamation per se, conspiracy, and invasion of privacy.

As the factual basis of his breach-of-contract claim, Beiersdoerfer alleged that Beiersdoerfer and HRH had formed an oral contract at the mid-November and November 21 meetings and that HRH had breached that oral contract. As part of the factual basis of his misrepresentation claim, Beiersdoerfer alleged that, after September 2000 and before the mid-November meeting, Simmons had misrepresented to Beiersdoerfer “[t]hat Simmons possessed the authority to enter a contract on behalf of [HRH] regarding Beiersdoer-fer’s management of accounts” and “[t]hat the agreement regarding Beiersdoerfer’s management of accounts could be made ‘locally,’ and did not require the ‘approval of Richmond.’ ” In addition, Beiersdoerfer alleged that Simmons and Hobbs, at the November 21 meeting, had misrepresented the intent of HRH “to be bound by the terms and conditions agreed upon,” “to perform the terms and conditions for a time period sufficient to achieve the monetary goal agreed upon,” and “to reduce the terms and conditions to writing.” As the factual basis of his suppression claim, Bei-ersdoerfer alleged that, between November 2000 and January 8, 2001, Simmons and Hobbs had suppressed the fact “[t]hat Simmons did not possess the authority to enter a contract on behalf of [HRH] regarding Beiersdoerfer’s management of accounts”; the fact “[t]hat the agreement regarding Beiersdoerfer’s management of accounts could not be handled ‘locally’ the fact that such an agreement “did require the ‘approval of Richmond’ the fact “that [HRH] did not intend to honor the terms and conditions agreed upon”; the fact “that [HRH] formed an intent to repudiate the agreement reached within 90 to 180 days”; the fact “that Mel Vaughn had instructed them that the most he could live with was a one-year consulting agreement terminable on 30-day’s notice with a non-piracy clause, and that he expected that it would only be needed for 90 to 180 days”; and the fact “that [HRH] had no intention of allowing the parties to perform as agreed upon.”

The HRH plaintiffs moved for a summary judgment on Beiersdoerfer’s counterclaims. However, the trial court denied the summary-judgment motion, and the case proceeded to trial. The HRH plaintiffs, on the one hand, and Beiersdoerfer, on the other, moved for a JML at the close of all the evidence. As grounds for a JML on Beiersdoerfer’s breach-of-contract claim, the HRH plaintiffs asserted that Beiersdoerfer had not introduced substantial evidence tending to prove that the parties had mutually assented to all of the terms of the putative oral contract and substantial evidence tending to prove that the putative oral contract specified how it had modified the stock-purchase and employment agreements. As grounds for a JML on Beiersdoerfer’s misrepresentation claim, the HRH plaintiffs asserted that Beiersdoerfer had not introduced substantial evidence indicating that Simmons’s representation was false, that Beiersdoer-fer had relied upon Simmons’s representation, and that Beiersdoerfer was damaged by relying upon Simmons’s representation. As the ground for a JML on Beiersdoer-fer’s suppression claim, the HRH plaintiffs asserted that Beiersdoerfer had not introduced substantial evidence indicating that the HRH plaintiffs had suppressed any facts.

The trial court entered a JML in favor of the HRH plaintiffs on all of Beiersdoer-fer’s claims except his breach-of-contract, misrepresentation, and suppression claims. The trial court entered a JML in favor of Beiersdoerfer on all of the claims of the HRH plaintiffs except their breach-of-contract claim. The trial court then charged the jury on the HRH plaintiffs’ breach-of-contract claim and Beiersdoerfer’s breach-of-contract, misrepresentation, and suppression claims. The trial court did not instruct the jury that it could not return a verdict for Beiersdoerfer on both his breach-of-contract claim and his misrepresentation claim. The verdict form the trial court gave the jury to be used if the jury found in favor of Beiersdoerfer allowed the jury to return a verdict for Beiersdoerfer both “[f]or breach of contract” and “[f]or fraud” without requiring the jury to specify whether a verdict for Beiersdoerfer “[f]or fraud” was a verdict on the misrepresentation claim only, a verdict on the suppression claim only, or a verdict on both of those claims.

Immediately after the trial court charged the jury and before the jury retired to consider its verdict, counsel for the HRH plaintiffs, outside the presence of the jury, stated on the record:

“It seems to me that Mr. Beiersdoer-fer should — and I admit I have not researched — but he should elect between his remedies, fraud and breach of contract, since they’re based upon the same facts. And there’s the potential for the jury, if they rule his way on both of those claims, to award double damages. But I admit to you I have not researched that as of yet.”

The trial court did not give the jury any additional instructions in response to this statement. Thereafter, the jury returned a verdict in favor of Beiersdoerfer on the HRH plaintiffs’ breach-of-contract claim and in favor of Beiersdoerfer on his claims against the HRH plaintiffs. Using the verdict form provided by the trial court, the jury awarded Beiersdoerfer $250,000 “[f]or breach of contract” and $1,000,000 “[f]or fraud.” The trial court entered judgment on the jury verdict.

The HRH plaintiffs renewed their motion for a JML and moved, in the alternative, for a new trial or a remittitur. As one of the grounds of their motion for a new trial, the HRH plaintiffs asserted that the jury verdict was inconsistent because it awarded Beiersdoerfer damages for both breach of contract and fraud, claims that presupposed inconsistent facts. Although the trial court denied the HRH plaintiffs’ motion for a JML, it awarded them a new trial on the ground that the verdict returned by the jury was inconsistent. The trial court reasoned:

“Beiersdoerfer contended before the jury that a valid contract existed which was breached by HRH and he was entitled to damages as a result of this breach. At the same time Beiersdoerfer contended before the jury that the contract was invalid because Simmons fraudulently represented to [Beiersdoer-fer] that [Simmons] had the authority to enter into the contract without the approval of the home office in Richmond, Virginia, when in fact he did not have such authority and he was entitled to damages for the fraudulent misrepresentation. These theories of recovery are factually inconsistent and a general verdict allowing recovery under both theories is self-contradictory. It is well settled under Alabama law that a plaintiff may present alternative, inconsistent, and mutually exclusive claims to the jury. King v. Cooper Green Hospital, 591 So.2d 464 (Ala.1991). However, a plaintiff may recover under only one of those claims. United States Fidelity & Guaranty Company v. McKinnon, 356 So.2d 600 (Ala.1978). No instruction was given to the jury in that regard, and the jury in fact awarded damages for both breach of contract and fraud.”

The trial court acknowledged that a portion of Beiersdoerfer’s suppression claim did not presuppose the invalidity of the putative oral contract. However, the trial court reasoned:

“The verdict on the fraud claims was in the form of a general verdict and did not distinguish between the fraudulent misrepresentation and the fraudulent suppression claims. The Court therefore cannot determine from the verdict whether the jury award [for fraud] was based upon the fraud claim of misrepresentation, which would be inconsistent with the breach of contract award and would be improper, or was based upon the fraud claim of suppression, which would perhaps be permissible. Therefore, the verdict rendered herein is inconsistent, and the judgment entered pursuant to said verdict must be set aside.”

Issues

Beiersdoerfer presents the issue as whether the trial court erred in granting a new trial for the HRH plaintiffs. In cross-appealing, the HRH plaintiffs raise these issues: (1) whether the trial court erred in denying their motion for a summary judgment, and (2) whether the trial court erred in denying them motion for a JML. Because a holding that the trial court erred in denying either the motion for a summary judgment or for a JML would moot the issue whether the trial court erred in granting a new trial, we will first address the issues raised by the HRH plaintiffs.

Law and Analysis

A. The Summary-Judgment Motion

“[W]e do not review a trial court’s denial of a summary-judgment motion following a trial on the merits. See Grayson v. Hanson, 843 So.2d 146 (Ala.2002); Superskate, Inc. v. Nolen, 641 So.2d 231, 233 (Ala.1994); see also Lind v. United Parcel Service, Inc., 254 F.3d 1281,1283-84 (11th Cir.2001).”

Mitchell v. Folmar & Assocs., LLP, 854 So.2d 1115, 1116 (Ala.2003). Because this case was tried on the merits after the trial court denied the HRH plaintiffs’ summary-judgment motion, we will not review the denial of that motion. Mitchell.

B. The Motion for a JML

“When reviewing a ruling on a motion for a JML, this Court uses the same standard the trial court used initially in granting or denying a JML. Palm Harbor Homes, Inc. v. Crawford, 689 So.2d 3 (Ala.1997). Regarding questions of fact, the ultimate question is whether the nonmovant has presented sufficient evidence to allow the case or the issue to be submitted to the jury for a factual resolution. Carter v. Henderson, 598 So.2d 1350 (Ala.1992) .... A reviewing court must determine whether the party who bears the burden of proof has produced substantial evidence creating a factual dispute requiring resolution by the jury. Carter, 598 So .2d at 1353.”

Delchamps, Inc. v. Bryant, 738 So.2d 824, 830 (Ala.1999). Substantial evidence is “evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.” West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

Section 6-5-102, AIa.Code 1975, provides:

“Suppression of a material fact which the party is under an obligation to communicate constitutes fraud. The obligation to communicate may arise from the confidential relations of the parties or from the particular circumstances of the case.”

This Court has stated:

“A duty to disclose may arise from the particular circumstances of the case. See Ala.Code 1975, § 6-5-102. Those circumstances include ‘(1) the relationship of the parties; (2) the relative knowledge of the parties; (3) the value of the particular fact; (4) the plaintiffs opportunity to ascertain the fact; (5) the customs of the trade; and (6) other relevant circumstances.’ State Farm Fire & Cas. Co. v. Owen, 729 So.2d 834, 842-43 (Ala.1998).”

Bethel v. Thom, 757 So.2d 1154, 1162 (Ala.1999).

Regarding the breach-of-contract claim, the HRH plaintiffs first argue that they were entitled to a JML because, they argue, Beiersdoerfer did not introduce substantial evidence tending to prove the essential element of mutual assent. We disagree. Beiersdoerfer introduced evidence that Simmons stated, “I understand and I agree” at the conclusion of the mid-November meeting; that Hobbs stated, “I agree” at the conclusion of the November 21 meeting; and that HRH acted in conformity with the putative oral contract until Vaughn instructed Hobbs to “get out” of the agreement with Beiersdoerfer. This evidence constituted substantial evidence tending to prove mutual assent to the putative oral contract.

Second, citing Smiths Water Authority v. City of Phenix City, 436 So.2d 827 (Ala.1983), the HRH plaintiffs argue that they were entitled to a JML on Beiersdoerfer’s breach-of-contract claim because, they argue, Beiersdoerfer did not introduce substantial evidence indicating that the putative oral contract was definite in providing how it modified the written stock-purchase and employment agreements. In Smiths Water Authority, this Court held that “mere negotiations for a contract modification do not amount to a modification,” because mere negotiations do not prove mutual assent to the modification. 436 So.2d at 831. Smiths Water Authority is distinguishable from this case because Beiers-doerfer introduced substantial evidence of mutual assent to the oral contract.

Moreover, the oral contract was definite in providing how it modified the stock-purchase and employment agreements. First, the oral contract authorized Beiersdoerfer to manage the accounts of BMI as an independent broker after the termination of his employment with HRH. Second, the oral contract provided that Beiersdoerfer would receive 40% of the revenue of BMI after the termination of his employment with HRH. Third, the oral contract authorized Bei-ersdoerfer to solicit new clients for BMI and to accept referrals of clients from other brokers after the termination of his employment with HRH. Fourth, the oral contract provided that clients generated by Beiersdoerfer or referred by brokers other than HRH would remain with Bei-ersdoerfer upon termination of the oral contract. All of these provisions of the oral contract were definite modifications of the stock-purchase and employment agreements.

Any terms of those agreements not effectively modified remained in effect. Hauben v. Harmon, 605 F.2d 920, 925 n. 2 (5th Cir.1979) (“Although a contract may be modified, the general rule is that the original contract stays in force except as modified. 17 AmJur.2d Contracts § 459.”). The HRH plaintiffs cite no authority for the proposition that the oral contract could not exist without modification of still more terms of the stock-purchase and employment agreements.

Although the HRH plaintiffs, in arguing to us that they were entitled to a summary judgment, briefed to us what they regarded as deficiencies in Beiersdoerfer’s proof of several other terms the HRH plaintiffs argued to be essential to an oral contract, the HRH plaintiffs do not brief any of these other purported deficiencies in support of their argument that they were due a JML. “Issues not argued in a party’s brief are waived.” Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875 So.2d 1143,1167 (Ala.2003).

Regarding misrepresentation, the HRH plaintiffs first argue that Beiers-doerfer did not introduce substantial evidence indicating that Simmons lacked authority to agree to the putative oral contract on behalf of HRH. However, this argument has no merit because Bei-ersdoerfer introduced the testimony of Mel Vaughn to the effect that Simmons did not have such authority. Second, the HRH plaintiffs argue that Beiers-doerfer did not introduce substantial evidence indicating that Simmons and Hobbs misrepresented the intent of HRH to be bound by the putative oral contract. However, that argument has no merit. Beiersdoerfer introduced evidence indicating that Simmons responded to the contract terms proposed by Bei-ersdoerfer at the mid-November meeting by stating “I understand and I agree” and that Hobbs responded to the contract terms proposed by Beiersdoerfer at the November 21 meeting by stating “I agree.” That evidence constituted substantial evidence indicating that Simmons and Hobbs misrepresented the intent of HRH to be bound by the putative oral contract.

The HRH plaintiffs also argue that Beiersdoerfer did not introduce substantial evidence that HRH did not intend to perform the promises made by Simmons and Hobbs and that it intended to deceive Beiersdoerfer when the promises were made, two essential elements of a claim of promissory fraud. See Clanton v. Bains Oil Co., 417 So.2d 149, 151 (Ala.1982) (“In order for promises or opinions to constitute fraudulent misrepresentations, there must have been at the time the representations were made an intention not to do the act promised, and such promise or opinion must have been given with intent to deceive.”). However, because neither the verdict in favor of Beiersdoerfer nor the judgment entered on that verdict were based on Beiersdoerfer’s promissory-fraud claim, this argument is moot.

When the trial court charged the jury, it did not charge the jury regarding Beiersdoerfer’s promissory-fraud claim. Moreover, Beiersdoerfer did not object to the trial court’s failure to so charge the jury. By not objecting to the trial court’s failure to charge the jury regarding his promissory-fraud claim, Beiersdoerfer waived his promissory-fraud claim; therefore, the verdict returned by the jury could not have been based upon that claim. Regions Bank v. Plott, 897 So.2d 239, 247 (Ala.2004) (“When the [plaintiffs] expressed their approval of the jury charge, which did not include instructions on their claim of intrusion on seclusion, they waived that claim, and the general verdict returned by the jury could not have been based on it.”). Because the verdict returned by the jury could not have been based on Beiersdoerfer’s promissory-fraud claim, the judgment entered on that verdict could not have been based on Beiers-doerfer’s promissory-fraud claim. Plott, 897 So.2d at 247. Because neither the verdict returned by the jury nor the judgment entered on that verdict could have been based on Beiersdoerfer’s promissory-fraud claim, the HRH plaintiffs’ challenge to the denial of a JML with respect to Beiersdoerfer’s promissory-fraud claim is moot. 897 So.2d at 247 (“Because the claim [of intrusion on seclusion] was not included in the verdict, or in the judgment entered on that verdict, [the defendant’s] challenge to the denial of a JML as to that claim is moot.”). Therefore, we dismiss the HRH plaintiffs’ cross-appeal (case no. 1012304) insofar as it challenges the denial of a JML with respect to Beiersdoerfer’s promissory-fraud claim because that challenge is moot.

With respect to Beiersdoerfer’s misrepresentation claims, the HRH plaintiffs also argue that Beiersdoerfer did not introduce substantial evidence indicating that he relied upon the representations of Simmons and Hobbs. Reliance is an essential element of both misrepresentation of a material existing fact and of promissory fraud. With respect to Beiersdoerfer’s claim of promissory fraud, the HRH plaintiffs’ lack-of-reliance argument is also moot — neither the verdict returned by the jury nor the judgment entered on that verdict was based on Beiersdoerfer’s promissory-fraud claim. With respect to Beiersdoerfer’s claim of misrepresentation of a material existing fact, the HRH plaintiffs’ lack-of-reliance argument has no merit because Beiersdoerfer’s testimony that he subleased office space at a new location and that he relocated his office there in reb-anee on the representations of Simmons and Hobbs constitutes substantial evidence that Beiersdoerfer relied upon those representations.

Regarding Beiersdoerfer’s suppression claim, the HRH plaintiffs argue that, as a matter of law, HRH owed no duty to disclose material facts to Beiersdoerfer because Beiersdoerfer was a sophisticated businessman. However, this argument does not address other relevant factors, such as the relative knowledge of the parties, the value of the suppressed facts, and Beiersdoerfer’s opportunity to ascertain the suppressed facts. Bethel v. Thom, 757 So.2d at 1162. In determining whether those factors imposed on HRH a duty to disclose, we must consider all of the relevant undisputed evidence, accept the tendencies of the disputed evidence most favorable to Beiersdoerfer, and resolve all reasonable factual doubts in favor of Beiersdoerfer. Alfa Life Ins. Corp. v. Jackson, supra. Considered in that manner, the evidence tended to prove that HRH formed an intent not to honor its obligations under the oral contract when Vaughn stated, at the November 27 and 28 meetings, that he wanted only a consulting agreement with Beiersdoerfer that would last 90 to 120 days. The evidence further tended to prove that the suppression of this information was used by HRH in an attempt, through Hobbs’s December 29 letter, to obtain Beiersdoerfer’s assent to the addition of a provision to the oral contract that would have given HRH the right to terminate the oral contract on 30 days’ notice. This provision would have allowed HRH to gain the benefit of Beiers-doerfer’s services for 90 to 120 days while Wayne Bowling became familiar with the accounts and then to terminate its obligations under the oral contract merely by giving Beiersdoerfer notice of termination. This would have deprived Beiersdoerfer of the benefits he expected to receive when he contracted with HRH to manage the BMI accounts until the monetary goal was achieved and simultaneously would have deprived him of his breach-of-contract remedy. Regardless of Beiersdoerfer’s sophistication in the insurance-brokering business, he had no opportunity to ascertain this suppressed information; it was known only to the upper management of HRH, who suppressed it. The suppressed information was obviously valuable. Accordingly, we hold that HRH owed a duty to Beiersdoerfer to disclose its intent not to honor the oral agreement. Therefore, the trial court did not err in denying the HRH plaintiffs’ motion for a JML on Bei-ersdoerfer’s suppression claim.

C. The Motion for a New Trial

“Denying, and to a more limited extent granting, a motion for new trial is within the sound discretion of the trial court.” Carter v. Henderson, 598 So.2d 1350, 1354 (Ala.1992) (citation omitted). “[T]his Court will reverse an order granting a new trial when some legal right is denied and the record clearly shows that the trial court abused its discretion.” Hayden v. Elam, 739 So.2d 1088, 1093 (Ala.1999) (citation omitted).

Beiersdoerfer argues on appeal that the trial court’s order setting aside the verdict is “erroneous because [the HRH plaintiffs] did not request an instruction to the jury that Beiersdoerfer could recover on only one of the claims which [the HRH plaintiffs claim] to be inconsistent, and [the HRH plaintiffs] did not object to the failure of the trial court to instruct the jury to that effect.”

In Bird v. Metropolitan Life Insurance Co., 705 So.2d 363, 365 (Ala.1997), this Court, citing Rule 59, Ala. R. Civ. P., stated that preservation of error was a requisite for the granting of a new trial: “A trial judge may grant a new trial on the ground that an error of law occurred at the trial, if the issue was properly preserved. Rule 59, Ala. R. Civ. P., and § 12 — 13—1[1](a), Ala. Code 1975.”

In Scott v. Famell, 775 So.2d 789, 791 (Ala.2000), this Court explained the background to Rule 59(a):

“Rule 59(a), Ala. R. Civ. P., provides that a new trial may be granted ‘for any of the reasons for which new trials have heretofore [i.e., before the adoption of the Alabama Rules of Civil Procedure] been granted in actions at law.’ The Committee Comments on the 1973 adoption of that rule state:
“ ‘Subdivision (a) expressly provides that the grounds for a new trial under the rule shall be those which would have sufficed for a new trial or a rehearing under prior Alabama practice. Thus the rule makes no change in the grounds for a new trial, and prior Alabama decisions must be consulted to determine when a motion under this rule should be granted. In an action tried to a jury a new trial can be granted for any of the reasons listed in Code of Ala. [1940 (Re-comp.1958) ], Tit. 7, § 276, or for any of the common-law grounds not listed in that statute.’
“Section 12-13-11, Ala.Code 1975, was derived from Title 7, § 276, Ala.Code of 1940 (Recomp.1958). Thus, a new trial can be granted for the reasons listed in § 12-13-11. One of those reasons is that ‘[t]he verdict ... is not sustained by the great preponderance of the evidence.’ § 12 — 13—11(a)(6).”

Applicable here is § 12 — 13—11(a)(8), Ala. Code 1975, which provides that a new trial may be granted on the ground of “[e]rror of law occurring at the trial and properly preserved by the party making the application.”

The discussion offered by the HRH plaintiffs after the charges had been given to the jury did not rise to an objection:

“It seems to me that Mr. Beiersdoer-fer should ... elect between his remedies, fraud and breach of contract, since they’re based upon the same facts. And there’s the potential for the jury, if they rule his way on both of those claims, to award double damages. But I admit to you I have not researched that as of yet.”

See Rule 51, Ala. R. Civ. P. Nor did it address any possible inconsistency. The HRH plaintiffs failed to preserve any error regarding inconsistent claims.

Unobjected-to instructions of the trial court become the law of the case:

“ ‘Unchallenged jury instructions become the law of the case. Louisville & Nashville R.R. v. Atkins, 435 So.2d 1275 (Ala.1983).’ Clark v. Black, 630 So.2d 1012, 1017 (Ala.1993). ‘The jury is bound to follow such instructions, even if they are erroneous. Lee v. Gidley, 252 Ala. 156, 40 So.2d 80 (1949) (erroneous instructions became the law of the case, and a judgment entered on the jury’s verdict comporting with those instructions would not be reversed on appeal).’ 630 So.2d at 1017.
“Because no party objected in a timely manner, the court’s instruction, and the verdict rendered in accordance therewith, became the law of this case. For these reasons, BIC’s inconsistency of the verdict argument will not serve as grounds for reversal of the judgment entered on the jury verdict.”

BIC Corp. v. Bean, 669 So.2d 840, 844 (Ala.1995). In Bean, this Court acknowledged the inconsistency, but nonetheless affirmed the judgment because of the failure to object to the jury instructions.

Here, we hold that the trial court exceeded its discretion in ordering a new trial in the absence of a timely objection to the jury charges as given.

Conclusion

We decline to review the denial of the HRH plaintiffs’ motion for a summary judgment. Mitchell, supra. We dismiss the HRH plaintiffs’ cross-appeal as to the promissory-fraud claim as moot, and we affirm the order denying the HRH plaintiffs’ motion for a JML on the other grounds. We reverse the order granting the motion of the HRH plaintiffs for new trial, and we remand this case to the trial court for further proceedings consistent with this opinion.

1012243 — OPINION OF JANUARY 7, 2005, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; REVERSED AND REMANDED.

1012304 — OPINION OF JANUARY 7, 2005, WITHDRAWN; OPINION SUBSTITUTED; APPLICATION OVERRULED; APPEAL DISMISSED AS MOOT IN PART; AFFIRMED IN PART.

SEE, LYONS, HARWOOD, WOODALL, SMITH, BOLIN, and PARKER, JJ., concur.

NABERS, C.J., recuses himself.

      . Although the HRH plaintiffs also named as defendants in the action Parker and Tangney, alleging against them breach of fiduciary duty, the HRH plaintiffs later dismissed the claims against Parker and Tangney.


author: HARWOOD, Justice. STUART, Justice PARKER, J.,

text:
    Ex parte Donald JONES. (In re Donald Jones v. State of Alabama).
    1051533.
    Supreme Court of Alabama.
    Sept. 29, 2006.
    Donald Jones, pro se.
    Submitted on petitioner’s brief only.
   HARWOOD, Justice.

WRIT DENIED.

NABERS, C.J., and SEE, LYONS, WOODALL, SMITH, and BOLIN, JJ., concur.

STUART and PARKER, JJ., dissent.

STUART, Justice

(dissenting).

I dissent. I would issue the writ in this case and address Donald Jones’s argument that he was entitled to a hearing and a determination of whether he is eligible for a sentence reduction on his motion filed pursuant to § 13A-5-9.1, Ala.Code 1975, and Kirby v. State, 899 So.2d 968 (Ala.2004).

Section 13A-5-9.1, Ala.Code 1975, provides a mechanism for sentence-reduction consideration for “nonviolent convicted offenders” whose sentences fit within certain statutory requirements. As the Court of Criminal Appeals explained in Prestwood v. State, 915 So.2d 580, 585 (Ala.Crim.App. 2005):

“[T]he only inmates who would be eligible for reconsideration of their sentence(s), in the discretion of the circuit court, are (1) nonviolent offenders with three prior felony convictions who were subsequently convicted of a Class B felony and sentenced to life in prison pursuant to § 13A-5-9(c)(2), Ala.Code 1975, and (2) nonviolent offenders with three prior felony convictions, none of which was for a Class A felony, who were subsequently convicted of a Class A felony and sentenced to imprisonment for life without the possibility of parole pursuant to § 13A-5-9(c)(3), Ala.Code 1975.”

Therefore, to be eligible for sentence reconsideration an inmate must be (1) a “nonviolent convicted offender” and (2) his sentence must meet the above statutory requirements.

Here, Jones was convicted of first-degree rape and was sentenced to life without the possibility of parole based on a record showing at least three prior felony convictions. It is undisputed that Jones satisfies the statutory requirement of having three prior felony convictions to be eligible for sentence reconsideration; however, in my opinion, Jones does not satisfy the “nonviolent convicted offender” statutory requirement. In my opinion, Jones, as a matter of law, is a violent offender and consequently ineligible for sentence reconsideration. The legislature has defined first-degree rape as a violent offense, see § 13A-11-70, Ala.Code 1975. Jones was convicted of first-degree rape; therefore, Jones is a violent convicted offender and, as a matter of law, is ineligible for sentence reconsideration.

PARKER, J.,

concurs.