source: Caselaw Access Project

author: LYONS, Justice. NABERS, Chief Justice

license: Public Domain

text:
    James C. WHITE, Sr., and WhiteGroup, a partnership v. STATE FARM FIRE & CASUALTY COMPANY.
    1040748.
    Supreme Court of Alabama.
    Aug. 4, 2006.
    Rehearing Denied Sept. 22, 2006.

      Ted Taylor, Leah 0. Taylor, and Rhonda P. Chambers of Taylor & Taylor, Birmingham, for appellant.
    Bert S. Nettles and Mark D. Hess of Haskell Slaughter Young & Rediker, LLC, Birmingham, for appellee.
   LYONS, Justice.

James C. White, Sr., and WhiteGroup, a partnership, appeal from a summary judgment entered in favor of State Farm Fire & Casualty Company. We reverse and remand.

I. Factual Background and Procedural History

WhiteGroup is a partnership that buys, sells, owns, and manages real estate; White is the managing partner. WhiteG-roup owns an office building located in downtown Birmingham that it leases to Banks, Finley, White & Company, an accounting firm (hereinafter “BFW”). White is also the managing partner of BFW. WhiteGroup insured its office building with State Farm.

WhiteGroup’s insurance policy with State Farm provided that State Farm would “pay for accidental direct physical loss to buildings at the premises described in the Declarations caused by an insured loss” to the extent the loss exceeded the $250 deductible. The applicable “Conditions” in the “Loss Payment” section of the policy provided that State Farm could “repair, rebuild or replace the property with other property of like kind and quality” in order to settle a loss. The “Conditions” section also imposed upon the insured certain duties in the event of a loss, including the duties to “take all reasonable steps to protect the covered property from further damage” and to “keep a record of your emergency and temporary repair expenses.” The policy further provided that it was rendered void if the insured “intentionally conceal[s] or misrepresents a material fact concerning ... a claim under this policy.”

On Friday, February 16, 2001, an intense thunderstorm struck downtown Birmingham in the late afternoon. WhiteG-roup’s office building suffered extensive wind damage from the storm, which blew off portions of the roof; as a result of damage to the roof, the interior of the building suffered water damage. Early on Monday morning, February 19, Doris Ladd, the office manager for BFW, telephoned the office of WhiteGroup’s State Farm agent, Don Taylor, to report the storm damage. Zane Smith in Taylor’s office told Ladd that the claim would be reported to State Farm’s claim office and that someone from that office would contact WhiteGroup. Ladd then began contacting commercial-roofing contractors. Later that day, Brian DeCicco from State Farm’s claim office telephoned Ladd. Ladd says that DeCicco told her that because of the widespread damage in the Birmingham area caused by the storm, it might be as long as a week before an adjuster could inspect the building. Ladd testified in her deposition that when she expressed concern about the lengthy delay because it was still raining and the storm damage was severe, DeCicco “said to me to do the repairs and keep the receipts.” She further testified that she did not recall DeCic-co saying anything about the repairs being temporary.

White then contacted Chip Braswell at Quality Architectural Metal & Roofing, Inc. (“Quality Roofing”), about repairing the damaged roof. Braswell visited the WhiteGroup office building on February 20 and met with White. Braswell inspected the roof and temporarily covered the portions of the roof that had sustained the heaviest damage to prevent further water damage in the building. The WhiteGroup building had what is referred to as a “built-up” roof consisting of asphalt and gravel. A built-up roof is applied by alternating plies of tar/asphalt and a base coat of felt paper or fiberglass.

On February 21, Braswell transmitted to White by facsimile a proposal to repair the roof by replacing the built-up roof with a roof consisting of a single-ply rubber membrane, described by Quality Roofing as a “fully adhered EPDM single-ply roofing system.” A single-ply roof is applied by gluing a rubber membrane to the roofs substrate and taping the seams together. The price for the EPDM roof stated on the February 21 proposal was $43,395. Bras-well also explained to White that time was of the essence in having a new roof installed, not only because the building had sustained heavy damage, but also because the company was receiving so many requests for roofing repairs.

At some point after February 21, Quality Roofing prepared an amended proposal dated February 23 to apply the EPDM roof for $39,950. In his deposition, Bras-well testified that the lower price was attributable to White’s “negotiating skills,” and that White “got [him] down some” on the price. That February 23 proposal was in the Quality Roofing file. However, White testified that he never received a proposal for $39,950 and that he first learned of the February 23 proposal when Quality Roofing sent him an invoice on May 30 for $39,950.

Because of the widespread damage caused by the February 16 thunderstorm and the number of claims generated as a result of it, State Farm dispatched to Birmingham a national catastrophe team (“CAT team”), consisting of a group of adjusters supervised by a team manager. CAT team adjusters travel to the affected area from various locations throughout the United States. A CAT team adjuster from Minnesota, Ella Lingard, was assigned to the WhiteGroup claim. Jim Roche was Lingard’s CAT team manager. Lingard met with White on February 22, took pictures, and measured the roof. White presented to Lingard the February 21 proposal from Quality Roofing in the amount of $43,395. White stated that during a telephone conversation Lingard had from his office with someone in her office, he overheard her indicate that the claim had been approved. He testified that Lingard authorized him to proceed with the repairs and that she told him it would be a day before State Farm had the check processed for the claim. At that point, White signed the February 21 proposal to signify his acceptance of it and forwarded it to Quality Roofing. Quality Roofing prepared to begin work on February 23.

On February 23, Lingard telephoned White at 7:42 a.m.; White had not yet arrived at the office, and Lingard left him a message to call her back. White tried to return Lingard’s call several times during the day, but he was unable to reach her. She eventually telephoned him and left another message, stating that she needed a signed copy of the Quality Roofing proposal and asking whether the proposed new roof was an upgrade.

On February 24, White again attempted to return Lingard’s telephone call. He was unable to reach her, but he spoke with someone named Shaun at State Farm. White told Shaun he would fax the signed proposal to State Farm as Lingard had requested. Ladd faxed the February 21 proposal and confirmed that it was received. White also told Shaun that the proposed new roof was not an upgrade.

On February 26, Quality Roofing began work at the WhiteGroup building. On February 28, White tried to contact Lin-gard to inquire about the status of the claim, but he was never able to reach her. He eventually left a message with someone named “Miami” at a State Farm office. By March 1, White had become frustrated because he had heard nothing from Lin-gard. He telephoned his agent, Don Taylor, and complained about his problems communicating with Lingard and about the fact that he had not yet received the check for payment of the roof.

Taylor then telephoned Jim Roche, the CAT team leader, who in turn telephoned White. When White told Roche he had been trying to reach Lingard about the status of his check, Roche told White that Lingard had returned to Minnesota. White says Roche told him that Lingard had not done a good job on the roof claim and that she did not normally handle commercial buildings and was not experienced in that area. State Farm says that Lin-gard had to leave Birmingham because of a family emergency.

Roche told White that State Farm’s estimate for the replacement of the roof was $21,316.91. State Farm arrived at this estimate by using a computerized estimating tool called “Xactimate.” White told Roche that both DeCicco and Lingard had told him to have the roof repaired and that he would send Roche a letter outlining the chronology of the events that had occurred up to that point. White wrote that letter on March 2.

State Farm reassigned Lingard’s CAT claims to Steve Harrison, an independent adjuster State Farm hired to assist with storm-damage claims in the Birmingham area. Harrison took over all of Lingard’s claims except the WhiteGroup roof claim, which Roche handled himself. Harrison handled WhiteGroup’s claims for damage to the interior of the building and its business-interruption claim. On March 5, Harrison met with White to review the estimate from a general contractor to repair the interior damage to the building. Quality Roofing completed the replacement of the roof on March 14. In a letter dated March 20, Harrison sent WhiteG-roup a cheek for $47,799.46, representing State Farm’s payment for the damage to the interior and exterior of the building, an amount that included the estimated cost to install a built-up roof, a lesser sum than White claimed had been approved, and a check for $3,449.65, representing State Farm’s payment for the water-damaged personal property. State Farm later sent WhiteGroup a check for $55,059.65, representing State Farm’s payment of WhiteG-roup’s business-interruption claim.

White wrote Roche again on March 23 regarding the denial of the full amount of the roof claim. Roche replied on March 26, in which he maintained that neither DeCicco nor Lingard had authorized White to repair the roof. Roche’s letter stated: “The difference between [State Farm’s] settlement and your demand is the cost of the upgraded roof that was installed.” On April 11, White sought legal counsel regarding State Farm’s refusal to pay for the replacement of the roof. After White retained counsel, State Farm gave him “the benefit of the doubt” and offered in August 2001 to pay the difference between its estimate and the Quality Roofing proposal. State Farm says it did so because it had been provided with additional evidence indicating that the replacement roof was not an upgrade. White and WhiteGroup rejected State Farm’s offer.

Whether the EPDM roof was an upgrade over the built-up roof that existed at the time of the storm is disputed by the parties. White testified that to him the new roof was not an upgrade because it had only a 10-year warranty whereas the roof it replaced had a 20-year warranty. Braswell testified that the EPDM roof was not an upgrade. He said the difference was that a single-ply roof was more economical than a built-up roof. “When you compare insulation, warranty, sheet metal and scope, everything is apples and apples, single-ply is going to be cheaper.” Bras-well also testified that in his opinion State Farm’s estimate of $21,316.91 to replace the WhiteGroup building roof with a built-up roof was incomplete, omitting sheet metal, costs for a crane, building permit, warranty, insulation, tools, and equipment, and labor costs, thus omitting $25,423 in total additional estimated costs.

White and WhiteGroup sued State Farm and Taylor. The complaint alleged bad-faith failure to pay an insurance claim in State Farm’s failing to properly investigate the claim and in failing to properly subject the results of its investigation to a cognitive evaluation and review, breach of contract, misrepresentation in that DeCic-co and Lingard stated to White that Whi-teGroup could proceed to repair the roof, and negligent and/or wanton failure on State Farm’s part to adequately supervise and monitor Lingard’s activities. State Farm and Taylor’s answer included several affirmative defenses, but unclean hands, contributory bad faith, or comparative bad faith was not among them.

State Farm and Taylor filed a motion for a summary judgment in which they argued that State Farm had paid all benefits due under the policy and thus had not breached the contract, that State Farm had promptly paid or had offered to pay all policy benefits and that their actions were reasonable and not taken in bad faith, that White had not reasonably relied on any alleged misrepresentations made by State Farm agents, and that White was guilty of contributory bad faith, which, State Farm and Taylor argued, negated their liability. White and WhiteGroup opposed the summary-judgment motion, arguing that they had presented uncontroverted evidence indicating that State Farm employees had misrepresented to White that he could proceed to repair and replace the roof, that State Farm had breached the contract, and that an unsupported allegation that White may have acted in bad faith did not relieve State Farm and Taylor of their liability, or, alternatively, that whether White had acted in bad faith was a matter of disputed fact. White and WhiteGroup also argued that State Farm’s refusal to pay the roof claim in its entirety was wrongful and without an arguable reason and that it had intentionally or recklessly failed to conduct an adequate investigation of the facts before denying the roof claim. Finally, White and WhiteGroup argued that State Farm negligently failed to adequately supervise and monitor Lingard.

John Hill, a section manager for State Farm, testified that under the loss-settlement clauses of WhiteGroup’s policy covering the building, if the insured provides a signed contract for repairs, State Farm will pay replacement-cost benefits. Hill acknowledged that Lingard had a duty to tell White that State Farm would not pay the entire amount of the Quality Roofing proposal and acknowledged that there was no evidence in State Farm’s claim file indicating that Lingard ever gave White that information. Hill stated that nothing in WhiteGroup’s policy defined “like kind and quality,” a phrase used to describe the nature of the replacement State Farm would cover. A loss-settlement clause in the policy refers to “like kind and quality” as well as “comparable material and quality.” Hill testified that State Farm properly refused to pay the amount presented by the Quality Roofing proposal because the proposal was for an upgraded roof. Hill noted that Roche documented in the claim log on March 1 that the fact that the proposal was for an upgraded roof was “confirmed by the contractor.” Hill also noted that there was no documentation by Roche of the identity of the person with whom he had confirmed that fact and no further notations of what that person had said. Without this notation, Hill stated, State Farm had no basis upon which to pay anything less than the amount presented in the proposal. Hill also stated that if State Farm authorized the repairs, it should have paid the entire $43,395 indicated in the proposal.

White and WhiteGroup’s expert witness, Alesia Cook, a former State Farm specialist, testified that in her opinion Lingard and State Farm had violated certain duties in adjusting WhiteGroup’s roof claim. According to Cook, Lingard failed to document any specific notes of her conversation with White, nor did she describe in any writing the damage to the roof. Further,

Lingard and State Farm failed to document any attempt to reconcile their estimate of the cost to replace the roof with that of Quality Roofing. Cook stated that State Farm also failed to properly document its position that the replacement roof was an upgrade. Cook also testified that in her opinion Lingard’s use of Xactimate to compute the estimate was not proper because Xactimate is a residential estimating tool and should not be used for estimating commercial claims.

The trial court held a hearing on the motion for a summary judgment, after which the court found as a matter of law that White and WhiteGroup’s claims were barred on the basis that WThite had unclean hands because he failed to advise State Farm that Quality Roofing had submitted a lower proposal than the proposal White submitted to State Farm. The trial court entered a summary judgment in favor of State Farm and Taylor on all claims. White and WhiteGroup appealed only from that aspect of the summary judgment entered in favor of State Farm.

II. Standard of Review

“The standard by which this Court will review a motion for summary judgment is well established:
“ ‘The principles of law applicable to a motion for summary judgment are well settled. To grant such a motion, the trial court must determine that the evidence does not create a genuine issue of material fact and that the movant is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. When the movant makes a prima facie showing that those two conditions are satisfied, the burden shifts to the nonmovant to present “substantial evidence” creating a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989); § 12-21-12(d)[,] Ala.Code 1975. Evidence is “substantial” if it is 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 As-sur. Co. of Florida, 547 So.2d 870, 871 (Ala.1989).
“ ‘In our review of a summary judgment, we apply the same standard as the trial court. Ex parte Lumpkin, 702 So.2d 462, 465 (Ala.1997). Our review is subject to the caveat that we must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).’ ”

Payton v. Monsanto Co., 801 So.2d 829, 832-33 (Ala.2001) (quoting Ex parte Alfa Mut. Gen. Ins. Co., 742 So.2d 182, 184 (Ala.1999)).

III. Analysis

A. BadrFaith Failure to Pay an Insurance Claim

This Court in two recent cases has provided comprehensive discussions of the tort of bad-faith failure to pay an insurance claim. In Employees’ Benefit Ass’n v. Grissett, 732 So.2d 968 (Ala.1998), we stated:

“[National Security Fire & Casualty Co. v. Bowen, 417 So.2d 179 (Ala.1982),] set out these requirements for a plaintiff to prove a bad-faith failure to pay:
“ ‘(a) an insurance contract between the parties and a breach thereof by the defendant;
“ ‘(b) an intentional refusal to pay the insured’s claim;
“ ‘(c) the absence of any reasonably legitimate or arguable reason for that refusal (the absence of a debatable reason);
“ ‘(d) the insurer’s actual knowledge of the absence of any legitimate or arguable reason;
“ ‘(e) if the intentional failure to determine the existence of a lawful basis is relied upon, the plaintiff must prove the insurer’s intentional failure to determine whether there is a legitimate or arguable reason to refuse to pay the claim.’
417 So.2d at 183. Requirements (a) through (d) represent the ‘normal’ case. Requirement (e) represents the ‘abnormal’ case.
“The rule in ‘abnormal’ cases dispensed with the predicate of a prever-dict JML [judgment as a matter of law] for the plaintiff on the contract claim if the insurer had recklessly or intentionally failed to properly investigate a claim or to subject the results of its investigation to a cognitive evaluation. Blackburn v. Fidelity & Deposit Co. of Maryland, 667 So.2d 661 (Ala.1995); Thomas v. Principal Financial Group, 566 So.2d 735 (Ala.1990). A defendant’s knowledge or reckless disregard of the fact that it had no legitimate or reasonable basis for denying a claim may be inferred and imputed to an insurer when it has shown a reckless indifference to facts or proof submitted by the insured. Gulf Atlantic Life Ins. Co. v. Barnes, 405 So.2d 916, 924 (Ala.1981).
“So, a plaintiff has two methods by which to establish a bad-faith refusal to pay an insurance claim: he or she can prove the requirements necessary to establish a ‘normal’ case, or, failing that, can prove that the insurer’s failure to investigate at the time of the claim presentation procedure was intentionally or recklessly omissive.”

732 So.2d at 976 (footnote omitted).

In State Farm Fire & Casualty Co. v. Slade, 747 So.2d 293 (Ala.1999), we elaborated on the rule in the “abnormal” case:

“[W]e reject the Slades’ argument that in the abnormal bad-faith case in which the insurer fails to properly investigate the insured’s claim contractual liability is not a prerequisite to bad-faith liability, and the Slades’ argument that the tort of bad faith provides a cause of action that is separate and independent of an insurance contract. In so doing, we make it clear that in order to recover under a theory of an abnormal case of bad-faith failure to investigate an insurance claim, the insured must show (1) that the insurer failed to properly investigate the claim or to subject the results of the investigation to a cognitive evaluation and review and (2) that the insurer breached the contract for insurance coverage with the insured when it refused to pay the insured’s claim.
“This is nothing new. Under the elements established in [National Security Fire & Casualty Co. v.] Bowen, [417 So.2d 179 (Ala.1982) ], the plaintiff has always had to prove that the insurer breached the insurance contract. Practically, the effect is that in order to prove a bad-faith-failure-to-investigate claim, the insured must prove that a proper investigation would have revealed that the insured’s loss was covered under the terms of the contract.”

747 So.2d at 318. In Singleton v. State Farm Fire & Casualty Co., 928 So.2d 280, 283 (Ala.2005), we reviewed the discussion in Slade of the previously recognized distinction between “normal” and “abnormal” bad-faith cases:

“In the ‘normal’ bad-faith case, the plaintiff must show the absence of any reasonably legitimate or arguable reason for denial of a claim. [State Farm Fire & Cas. Co. v.] Slade, 747 So.2d [293] at 306 [ (Ala.1999) ]. In the ‘abnormal’ case, bad faith can consist of: 1) intentional or reckless failure to investigate a claim, 2) intentional or reckless failure to properly subject a claim to a cognitive evaluation or review, 3) the manufacture of a debatable reason to deny a claim, or 4) reliance on an ambiguous portion of a policy as a lawful basis for denying a claim. 747 So.2d at 306-07....
“ ‘Bad faith ... is not simply bad judgment or negligence. It imports a dishonest purpose and means a breach of known duty, i.e., good faith and fair dealing, through some motive of self-interest or ill will.’ Slade, 747 So.2d at 303-04 (quoting Gulf Atlantic Life Ins. Co. v. Barnes, 405 So.2d 916, 924 (Ala.1981)).”

Thus, White and WhiteGroup have two available methods by which they can establish a bad-faith refusal to pay an insurance claim. They can prove the requirements necessary to establish a “normal” case, or they can prove that one or more of State Farm’s actions consists of bad faith in an “abnormal” case. Moreover, in an “abnormal” case, State Farm cannot use ambiguity in the contract as a basis for claiming a legitimate or arguable reason for not paying the claim. Otherwise, an insurance company would have the incentive to write an ambiguous policy in order to create a defense to a bad-faith claim.

“White and "Whitegroup argue that they can prove the requirements necessary to establish both a normal bad-faith case and an abnormal bad-faith case. As to the “normal” bad-faith claim, "White and Whi-teGroup argue that on March 20, 2001, State Farm paid a portion of their roof claim based on the estimate generated by State Farm’s Xactimate computer program, rather than the full amount of the Quality Roofing proposal, thereby breaching the contract between WhiteGroup and State Farm. "White and WhiteGroup argue that State Farm based its partial denial of the claim on an incomplete and inadequate estimate prepared by an adjuster who had left Birmingham during the process of adjusting the claim, failing to document any specifics of her conversation with "White and failing to describe the damage to the roof. White and WhiteGroup also argue that State Farm failed to properly document its position that the EPDM roof was an upgrade and that State Farm therefore had no reasonably legitimate or arguable basis for failing to pay the entire roof-replacement claim.

As to the “abnormal” bad-faith claim, "White and WhiteGroup argue that State Farm failed to properly investigate the validity of their claim and failed to subject the results of any investigation it did conduct to a cognitive evaluation and review. White and WhiteGroup argue that, when Lingard left Birmingham, State Farm had only an inadequate computer estimate from an inexperienced adjuster who had made no attempt to reconcile the estimate with “real life” estimates, and that Roche, the supervisor who took over the claim after Lingard left, conducted no further investigation. It is undisputed that although a notation in the claims file indicates that Roche confirmed with “the contractor” that the new roof was an upgrade from the one being replaced, Roche did not document with whom he spoke or what the individual had said. Braswell testified in his deposition that the roof was not an upgrade and that he did not recall telling anyone from State Farm that it was an upgrade.

State Farm argues that White and Whi-teGroup did not present substantial evidence indicating that State Farm breached the contract because, it argues, its investigation demonstrated that the new EPDM roof and the old built-up roof were not “of like kind and quality.” Further, State Farm argues, it promptly reopened its investigation to consider new claim information submitted on WhiteGroup’s behalf. State Farm further argues that even if White and WhiteGroup can show that it breached the contract, they must prove not only a mere nonpayment of a claim, but also must prove that the nonpayment was in bad faith — i.e., without any reasonable ground for dispute. If any one of its reasons for denying the claim is at least arguable, State Farm contends, then White and WhiteGroup cannot prove bad faith. Even if its investigation was not perfect, State Farm says, the presence of a built-up roof on the building at the time of the storm, the ready availability of the same type of replacement roof after the storm, and WhiteGroup’s election nevertheless to install a rubber-membrane roof were legitimate and arguable reasons for State Farm to conclude that it owed White and WhiteGroup only the cost of a replacement built-up roof.

Based on the present state of the record in this case, we conclude that material questions of fact exist that make a summary judgment on the bad-faith claim improper. White and his office manager, Ladd, testified that two different State Farm agents told them to repair the roof. White insists that Lingard not only authorized him to proceed with the repairs, but she also told him it would be a day before State Farm had the check processed for the claim. White says no one at State Farm ever told him that there was a question whether State Farm would pay the claim. John Hill, a State Farm manager, testified that if State Farm authorized the repairs, then it should have paid the entire $43,395 proposed by Quality Roofing. Other State Farm employees testified, however, that if Lingard had indeed authorized White to proceed with the repairs proposed by Quality Roofing, it would not have been necessary for her to have prepared an estimate, which she did.

As to the question whether the EPDM roof was an upgrade, the evidence is also disputed. The sole basis for State Farm’s argument that the roof was an upgrade is a notation in the claim file by Roche, Lingard’s manager, that stated only that the Quality Roofing proposal of $43,395 was “due to an upgrade” and that that had been “confirmed by the contractor.” Braswell disputes the characterization of the rubber-membrane roof as an upgrade. Notably, the record contains no testimony from either Lingard or Roche. The policy provides no assistance. Certainly the two roofs are different, but the term “upgrade” is not mentioned, much less defined, in the policy. The policy provides that State Farm will replace damaged property with property “of like kind and quality.” Whether the EPDM roof was “of like kind and quality” as compared to a built-up roof is a critical question that cannot be answered at this stage in these proceedings.

At this point in the proceedings, we cannot determine whether the alleged bad faith in this case is of the normal or abnormal variety. Further proceedings are necessary before a fact-fínder can determine whether State Farm breached its contract with WhiteGroup; if it did, whether that breach was in bad faith; and if it did not, whether one or more of its actions consisted of bad faith in an “abnormal” case. Moreover, we cannot determine whether White was guilty of bad faith. The testimony concerning when and whether he knew that Quality Roofing had revised its proposal from $43,395 to $39,950 is disputed. Upon the present state of the record, we pretermit consideration at this time of whether Alabama should recognize “contributory bad faith” on the part of the insured as a defense to the tort of bad-faith failure to pay an insurance claim, and if we should recognize that defense, what effect it would have upon the tort of bad faith.

B. Misrepresentation

We now turn to White and WhiteG-roup’s misrepresentation claim. Concerning such a claim, we stated in Slade:

“[W]e disagree with State Farm’s contention that there is no separate tort of fraud or fraudulent suppression in the handling of an insurance claim. An insurer’s conduct in connection with the denial of a claim made under its policy may support a fraud action even in a setting where the insured alleges a bad-faith refusal to pay a claim. Jones v. Alabama Farm Bureau Mut. Cas. Co., 507 So.2d 396, 401 (Ala.1986). To support such a claim, however, the insurer must have induced the insured to act, or to fail to act, in reliance on the alleged fraud. Mat401.”

747 So.2d at 320.

White and WhiteGroup state that they agreed to Quality Roofing’s proposal and that they became obligated to pay for the new roof only after Lingard authorized them to proceed with the repairs to the roof. In his March 2 letter to Roche, White stated that on February 22, “Ella Lingard, State Farm adjuster, came out and took pictures, measured roof and measured interior, received a copy of the proposal from Quality Roof and gave us another claim number_ Ms. Lingard indicated that she would be handling our file and that we should go ahead and get our roof repaired as discussed with Brian DeCicco.” White further stated that while Lingard was at his building, she “called her office and talked to someone about the situation,” and that he “overheard [Lingard] indicating that we had received approval from someone at State Farm and we did have a claim number.” White then stated in the letter:

“Ms. Ella Lingard indicated very clearly to us that we should move forward and get the roof repaired because of the impending damages that could result to the interior from rain getting into the building. It appeared that Ms. Lingard communicated this to her manager or someone at State Farm.”

In his deposition, White testified as follows:

“Q. Is it your position that you felt like you had authorization to get that roof fixed, whatever it cost?
“A. Yes.
“Q. Based on what you understood Mr. DeCicco to say?
“A. Correct.
“Q. Without a bid, or ever being presented it?
“A. Oh, yeah. I mean, ... his statement to Ms. Ladd, as she stipulated to me, as pointed out here in this — on the 19th, was to make the repairs and keep all the receipts. He did not stipulate that you need to get some bids and submit some bids to us, or do anything, because it will be a week before an adjuster will be out, see. So the building wasn’t going to hold a week.
“Q. Is it possible that Mr. DeCicco told Ms. Ladd to get temporary repairs done and keep the receipts? Temporary repairs, like as shown in the invoice from Quality with the dates of February 19th and February 21st on it?
“A. I don’t think it was — I think it’s possible the agent said exactly what’s stipulated here in these notes. And furthermore, Ms. Lin-gard, when she was there, the temporary repairs had been made. So as she stipulated — as she stated, go on and get it repaired as discussed with Brian DeCicco. If she was only talking about the temporary repairs, they had already been done.
“Q. All right. Do you know if Ms. Lingard knew that the temporary repairs had already been done?
“A. I escorted her on top of the roof, and she observed them.
“Q. Okay. So it’s your testimony that you were authorized to do these repairs even before you had received the bid from Quality?
“A. Yes.
Q. Continuing with your entry for February 22, you state that Ms. Lin-gard called her office and talked to someone about the situation.
“A. Uh-huh.
“Q. And you overheard her indicating that we had received approval from someone at State Farm, and we did have a claim number, is that right?
“A. Uh-huh.
“Q. But your — it’s your testimony that Ms. Lingard, again, affirmatively extended authorization to make the repairs as discussed with DeCicco?
“A. Without question. Without question.
“Q. Okay.
“A. I mean, she stated while we were on the roof that, you know, y’all did a good job of going on and getting the temporary repairs done. Y’all need to proceed, you know, with this proposal here. And she took a copy of it. And then she got down off the building and ... then she called her office on her cell phone to talk to someone, and she was explaining to them what she had. And then when she ... I got down, she said, ‘well, you know, y’all just move right ahead on and get it done.’ ...”

Lingard’s alleged authorization to White to proceed with repairing the roof constitutes a statement of existing fact rather than a misrepresentation as to an event to take place in the future that would implicate issues surrounding proof of promissory fraud. Construing the facts in a light most favorable to the nonmovant, Payton v. Monsanto Co., 801 So.2d at 888, we note that White testified that after Lingard inspected the roof and after she had spoken by telephone with someone at State Farm, she authorized him to have the roof repaired pursuant to the proposal from Quality Roofing, a copy of which White had provided to her. Therefore, White and WhiteGroup argue, they relied upon Lingard’s representation, and that reliance was reasonable.

State Farm contends that Lingard did not authorize White and WhiteGroup to proceed with the roof repair pursuant to the Quality Roofing proposal because, it argues, if she had so authorized the repairs, State Farm would have had no reason to have her inspect the roof and prepare a damage estimate. State Farm argues that because Quality Roofing presented its proposal before Lingard’s visit to the building and it was the only contractor White considered, White could not have relied on Lingard’s alleged representation in selecting Quality Roofing. State Farm also argues that although White may have approved the $43,395 offer presented by Quality Roofing on February 21, he was not bound by that proposal because he was later able to negotiate a better price of $39,950.

We conclude that material questions of fact exist that also make a summary judgment on the misrepresentation claim improper. The parties dispute whether Lin-gard authorized White to proceed with the roof repairs and whether his reliance on that representation was reasonable. Furthermore, the alleged renegotiated proposal for the roof replacement is again at issue, and as we have previously stated, whether and when White knew about that proposal before he received the invoice from Quality Roofing is disputed.

C. Negligent and/or Wanton Supervision

Finally, we address White and WhiteGroup’s claim that State Farm negligently and/or wantonly failed to adequately supervise Lingard. White and WhiteG-roup argue that Lingard used a software program to generate an estimate for repairing the roof that was appropriate only for use on residential roofing, not commercial roofing. White testified that Roche admitted to him that Lingard lacked experience in adjusting commercial-roof claims and that she had not done a good job on the CAT team in Birmingham. State Farm adamantly denies that any such admissions were ever made. As we have previously noted, conspicuously lacking in the record before us is testimony from either Roche or Lingard. As in the bad-faith and misrepresentation claims, material questions of fact make a summary judgment improper as to the negligent and/or wanton supervision claim.

State Farm’s refusal to pay White and WhiteGroup’s claim is the proximate cause of any loss they experienced. The theory of State Farm’s alleged negligent and/or wanton failure to supervise Lingard in permitting her to state incorrectly that State Farm would pay the claim is inconsistent with the theory that State Farm is obligated under the contract with WhiteGroup to pay the claim for the new roof. If she correctly stated the import of the contract, then no loss was suffered by her being negligently or wantonly supervised. However, Rule 8(e)(2), Ala. R. Civ. P., allows a plaintiff to assert inconsistent theories in the complaint; in such event the plaintiff may elect to submit one or both claims to the jury, whereupon the jury should be instructed to determine which claim is supported by the evidence. Here, if the trier of fact ultimately concludes that State Farm is not obligated to pay under the contract, then its failure to adequately supervise Lingard could be actionable on the basis of White’s claim that Lingard led him to incur an expense he would otherwise not have incurred had she been properly supervised and had she not misled him as to approval of the claim. A summary judgment at this stage of the proceedings on the claim that State Farm failed to adequately supervise Lingard is premature.

IV. Conclusion

Because genuine issues as to material facts exist precluding a summary judgment on White and WhiteGroup’s claims, we reverse the judgment entered by the trial court and remand the ease for further proceedings.

REVERSED AND REMANDED.

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

STUART, J., concurs in the result.

NABERS, C.J., concurs in the result in part and dissents in part.

NABERS, Chief Justice

(concurring in the result in part and dissenting in part).

I concur in the majority’s decision to reverse the summary judgment for State Farm as to White and WhiteGroup’s bad-faith, breach-of-contract, and negligent-supervision claims. I respectfully dissent, however, from the Court’s decision to reverse the summary judgment as to the fraud claim. White and WhiteGroup’s fraud claim is not based on a false representation of an existing fact. Instead, White and WhiteGroup allege that State Farm promised to pay for the EPDM roof but failed to perform on its promise. This presents a promissory-fraud claim and requires proof of intent to defraud at the time the promise is made. Mantiply v. Mantiply, 951 So.2d 638, 653 (Ma.2006). Although there are disputed facts as to whether Lingard authorized repairs to the roof and whether White and WhiteGroup reasonably relied on that authorization, White and WhiteGroup have failed to present substantial evidence indicating that Lingard acted with the intent to defraud.

Because it is stated in the present tense, the statement that an insured “is authorized” to make repairs sounds as if it refers to an existing fact. It does not. “Authorization” is simply another way of saying that the insurer promises to pay for the repairs in question. Absent evidence of intent to defraud, State Farm’s failure to fulfill such a promise cannot serve as the basis for a fraud claim. Because we may affirm the judgment of a trial court for any valid reason, I would hold that White and WhiteGroup’s failure to present substantial evidence of intent to defraud requires us to affirm the judgment as to the fraud claim.

      . There is some confusion about when Bras-well first visited the WhiteGroup building. All of the testimony presented indicates that Braswell met with White on February 20 and made temporary repairs to the roof on that day. However, Braswell’s invoice for temporary repairs indicates that they were made on February 19 and 21.

      . White and WhiteGroup do not appeal from that aspect of the summary judgment entered in favor of Taylor. They have, therefore, waived any argument they may have had as to that aspect of the judgment. Waddell & Reed, Inc. v. United Investors Life Ins. Co., 875 So.2d 1143, 1167 (Ala.2003).

      . Nothing in the record indicates what new information State Farm considered when it reconsidered its decision to pay only a portion of the claim for the replacement of the roof and offered to pay the balance of the claim.

      . The trial court grounded its summary judgment for State Farm on a finding of unclean hands, although no such defense had been pleaded by State Farm. Assuming, arguendo, its availability, the conflicting evidence as to White’s conduct does not permit us to affirm the summary judgment on this ground.

      . The reference to a discussion with DeCicco presumably refers to the previously mentioned conversation between DeCicco and Doris Ladd, White's office manager, in which DeCicco, according to Ladd, authorized the repairs.

      . White’s contention that he overheard Lin-gard receive authorization from State Farm during a telephone conversation, standing alone, would not support a misrepresentation claim. See Seward v. Dickerson, 844 So.2d 1207 (Ala.2002), in which this Court concluded that the donor of a winning lottery ticket could not have reasonably relied upon the recipient’s alleged representation that if she won, she would share her winnings with her coworkers. We held that the recipient did not acquire the ticket from the donor by fraudulent misrepresentation because the representation was not made to the donor; rather, the donor merely overheard the recipient assent to a question asked of her by one of her coworkers.

      . White testified that he relied upon the statement that the repairs had been authorized. That statement refers to an existing fact. The Chief Justice in his special writing states, "Because it is stated in the present tense, the statement that an insured 'is authorized’ to make repairs sounds as if it refers to an existing fact. It does not. 'Authorization' is simply another way of saying that the insurer promises to pay for the repairs in question.” 953 So.2d at 354-55. Under this reasoning, an event that has previously occurred (authorization of the repairs) is transformed into an event yet to take place because the past event contemplates additional action in the future based on the fact of the previous event. Such a construction of the evidence violates the established rule that on a motion for a summary judgment the court must accept the tendencies of the evidence most favorable to the nonmoving party. Ziade v. Koch, 952 So.2d 1072 (Ala.2006).


author: NABERS, Chief Justice.

text:
    Dr. J. Gregory SULLIVAN v. EASTERN HEALTH SYSTEM, INC.
    1040172.
    Supreme Court of Alabama.
    Aug. 25, 2006.

      John W. Haley and Sandra Payne Hag-wood of Hare, Wynn, Newell & Newton, LLP, Birmingham, for appellant.
    Mark W. Lee and Dorothy A. Powell of Parsons, Lee & Juliano, P.C., Birmingham, for appellee.
   NABERS, Chief Justice.

Dr. J. Gregory Sullivan, the plaintiff in a breach-of-eontract action against Eastern Health System, Inc. (“EHS”), appeals from a summary judgment entered in favor of EHS, arguing that the trial court erred in holding that he had failed to establish, by substantial evidence, the existence of a genuine issue of material fact. We affirm.

I.

From September 1987 until July 2001, Dr. Sullivan enjoyed medical-staff privileges at Medical Center East (“the hospital”), a full-service hospital in Birmingham operated by EHS. In June 2001, Dr. Sullivan’s application for reappointment for medical-staff privileges was before the hospital’s medical staff executive committee (“the committee”) for consideration. The committee recommended to the hospital’s governing board that Dr. Sullivan’s privileges not be renewed based on a number of instances in which the committee had found that Dr. Sullivan had not acted in accordance with hospital regulations and procedures. On June 19, 2001, a letter to Dr. Sullivan was prepared informing him of the committee’s recommendation not to renew his privileges. The letter advised Dr. Sullivan that, under Article X of the medical-staff bylaws of the hospital (“the bylaws”), he was entitled to ask for a hearing to review the committee’s decision and stated that if he did not request a hearing within 30 days of the receipt of the letter, the right to such a hearing would be deemed to have been waived. The letter was signed by George McGowan, the hospital’s chief executive officer. According to the affidavit of hospital employee Trudy Stricklin, the letter was mailed the next day via certified mail, return-receipt requested, to Dr. Sullivan at his business address. The postal receipt returned to the hospital indicated that the letter was delivered to Dr. Sullivan’s office on June 22, 2001, and that Luisa Cook, an employee of Dr. Sullivan’s, signed for the letter. It is undisputed that, within the 30-day period beginning June 22, 2001, Dr. Sullivan did not request a hearing to contest the committee’s recommendation not to renew his medical-staff privileges. Accordingly, on July 24, 2001, McGowan sent Dr. Sullivan another letter stating that, because Dr. Sullivan had not requested a hearing to review the committee’s recommendation within the 30-day period after he was provided with written notice of the committee’s recommendation, his right to request such a hearing had been deemed waived, and the committee’s recommendation that his medical-staff privileges not be renewed was final.

On July 27, 2001, Dr. Sullivan hand delivered a letter to McGowan’s office, stating that he had just learned that morning, from another physician at the hospital, that he had an outstanding issue with the committee and that the committee was awaiting a response from him in regard to a letter sent to him detailing the matter. He further stated that he had not received the letter, but he acknowledged that his office had been undergoing extensive renovations over the previous three months and that “it [was] possible that an unopened letter was a casualty of the construction.” Dr. Sullivan requested a copy of the letter and indicated that he intended to respond to it once he received it.

After Dr. Sullivan received a copy of the June 19 letter, he requested a hearing. EHS declined to grant him one. An August 1, 2001, letter signed by McGowan and sent to Dr. Sullivan by certified mail stated, in whole:

“Please allow this letter to serve as notice to you that the Governing Board of Medical Center East met on August 1, 2001 regarding your application to be recredentialed to the Medical Staff of Medical Center East. The Governing Board has voted to accept the recommendation of the Executive Committee of the Medical Staff that your reapplication for privileges be denied. Due to the fact that you have waived your right to a hearing, in accordance with the Medical Staff By-Laws, this decision is final.”

On May 23, 2002, after subsequent requests for a hearing were also denied, Dr. Sullivan sued EHS in the Jefferson Circuit Court alleging breach of contract. Specifically, Dr. Sullivan alleged that the medical-staff bylaws constituted a contract between him and EHS and that EHS had breached that contract by failing to provide him with a hearing at which to contest the committee’s recommendation that the governing board not renew his medical-staff privileges. EHS argued that it had complied with the bylaws and that Dr. Sullivan had waived his right to a hearing by failing to request a hearing within 30

days following the delivery to his office of the June 19 letter informing him of the committee’s recommendation. On August 25, 2004, EHS moved for a summary judgment on that basis. On September 23, 2004, the trial court granted the motion and entered a summary judgment in favor of EHS. Dr. Sullivan appeals.

II.

“In reviewing the disposition of a motion for summary judgment, ‘we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact,’ Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988), and whether the movant was ‘entitled to a judgment as a matter of law.’ Wright v. Wright, 654 So.2d 542 (Ala.1995); Rule 56(c), Ala. R. Civ. P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is ‘substantial’ if it is 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.’ Wright, 654 So.2d at 543 (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989)). Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359 (Ala.1993); Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990).”

Hobson v. American Cast Iron Pipe Co., 690 So.2d 341, 344 (Ala.1997). Accordingly, this Court’s review of a summary judgment is de novo. Thus we review the evidence to determine if there is a genuine issue of material fact as to when Dr. Sullivan received notice of the committee’s recommendation that the hospital not renew his medical-staff privileges and, thus, whether EHS breached its contract with Dr. Sullivan by failing to provide him with a hearing to appeal the committee’s recommendation not to renew his medical-staff privileges.

III.

In order to establish the elements of a breach-of-contract claim, Dr. Sullivan must show: (1) that a valid contract existed between him and EHS; (2) that he performed under the contract; (3) that EHS failed to perform under the contract; and (4) that he was damaged as a result. Reynolds Metals Co. v. Hill, 825 So.2d 100, 105 (Ala.2002) (citing State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293, 303 (Ala.1999)). EHS has not disputed Dr. Sullivan’s claims that the medical-staff bylaws constituted a contract between him and EHS or that he may have suffered damage as a result of the nonrenewal of his medical-staff privileges. Nor has EHS alleged that Dr. Sullivan somehow first breached the contract, thus excusing any future nonperformance of its own. Therefore, the only issue in this case is whether there is any issue of material fact as to when Dr. Sullivan received notice of the committee’s recommendation and, thus, whether EHS’s refusal to grant Dr. Sullivan a hearing constituted a failure to perform by EHS according to the terms of the contract contained in the medical-staff bylaws.

Article X, section A, paragraph 1, of the bylaws states, in pertinent part:

“When a practitioner receives notice of any action which has been taken against him ... with respect to reappointment, and the action against him will adversely affect his appointment or status as a member of the Medical Staff or his exercise of clinical privileges, he shall be entitled to a hearing....”

Thus, pursuant to bylaws, Dr. Sullivan was entitled to a hearing to contest the committee’s recommendation not to renew his privileges. EHS acknowledges this fact; however, it argues that Dr. Sullivan subsequently waived his right to a hearing by failing to request such a hearing within the period prescribed by Article X, section B, which states:

“1. Prompt written notice by certified mail to his last known address, or hand delivered mail to the practitioner’s office, return receipt requested, shall be given by the Chief Operating Officer to the practitioner concerned of any adverse recommendation or decision.
“2. Notice of adverse recommendation or decision shall at least: (a) advise him of his right to a hearing or an appellate review pursuant to Article X of these Bylaws; (b) specify that he shall have thirty (30) days following the date of receipt of such notice within which to request a hearing or an appellate review; (c) state that failure to request a hearing or an appellate review within the specified time period shall constitute a waiver of his rights to same.
“3. Failure of a practitioner to request any hearing or any appellate review provided to him by the Bylaws within thirty (30) days of the delivery of notice to his office or the mailing of notice to his last known address, of any action taken which is adverse to practitioner, shall constitute waiver of his right to a hearing or appellate review.”

According to these provisions, EHS is not obligated to ensure that a practitioner himself has in fact received the notice. Rather, the bylaws provide that a practitioner is entitled to notice sent “by certified mail to [the practitioner’s] last known address, or hand delivered mail to the practitioner’s office, return receipt requested.” Dr. Sullivan argues that there is a genuine of material fact as to when he received notice of the committee’s recommendation not to renew his medical-staff privileges and that summary judgment was improper.

In support of his argument that the issue of when he received the letter notifying him of the committee’s recommendation that the hospital not renew his privileges presents a jury question, Dr. Sullivan first cites numerous cases applying the common-law principle generally referred to as the “mailbox rule” or the “letter presumption.” As articulated by this Court in Corinth Bank & Trust Co. v. Cochran, 219 Ala. 81, 83, 121 So. 66, 67 (1929), this principle stands for the proposition that

“[a] letter properly addressed, stamped, and mailed is presumed to have been received in due course. Evidence denying the receipt of the letter does not render the evidence of the mailing inadmissible. Neither is it conclusive. Whether it was so mailed and received becomes a jury question.”

In recent years, this Court has affirmed the ongoing validity of Cochran and this principle in Ex parte Alfa Mutual General Insurance Co., 742 So.2d 182 (Ala.1999), Sisson v. State Farm Fire & Casualty Co., 824 So.2d 708 (Ala.2001), and McCray v. State Farm Fire & Casualty Ins. Co., 892 So.2d 363 (Ala.2004). Dr. Sullivan argues that, based on Cochran and its progeny, he is entitled to a jury trial based solely on the fact that he has presented evidence indicating that he did not receive the June 19 letter that was mailed by Stricklin to his office. However, Dr. Sullivan’s reliance on the letter presumption is misguided because, in this case, no presumption of receipt need be made.

As it has been historically applied, the letter presumption creates a presumption of receipt of a letter based on proof of the mailing of a letter. In the instant case, EHS has not asked this Court to presume that the June 19 letter was delivered to Dr. Sullivan based solely on its representation that the letter was properly addressed, stamped, and mailed, or even on the basis of a postal certificate showing that the letter was mailed. EHS instead relies on the return receipt created by the United States Postal Service establishing that Dr. Sullivan’s employee Luisa Cook personally signed for the letter on June 22. It is unnecessary for this Court to rely on the letter presumption to presume that the June 19 letter was delivered when there is tangible proof of delivery in the form of the signed return receipt.

Although the letter presumption is not relevant to this case, this Court still must consider the second argument raised by Dr. Sullivan — whether EHS made a prima facie showing that it provided Dr. Sullivan the notice of the committee’s recommendation required by the bylaws, and, if so, whether Dr. Sullivan then presented substantial evidence creating a genuine issue of material fact as to whether such notice was provided. The bylaws require that written notice of any adverse recommendation by the committee be made “by certified mail to [the practitioner’s] last known address ... return receipt requested.” In support of its position, EHS relies on the sworn statement of hospital employee Trudy Stricklin stating that “[t]he letter dated June 19, 2001, was sent by certified mail to Dr. Sullivan at his business address.” EHS also has submitted the certified-mail receipts indicating mailing on June 20 and the return receipt signed by Luisa Cook on June 22. Stricklin stated in her affidavit that “these [receipts submitted as evidence] are the receipts for the June 19, 2001 letter mailed to Dr. Sullivan.” Altogether, this evidence constitutes a prima facie showing not only that the June 19 letter providing notice of the committee’s recommendation was properly sent to Dr. Sullivan’s last known address via certified mail, return receipt requested, which is all the bylaws require, but also that the letter was in fact received by Dr. Sullivan’s office.

The burden therefore shifted to Dr. Sullivan to present substantial evidence indicating that he did not receive the June 19 letter, even if an envelope was in fact delivered to his office. In his brief to this Court, Dr. Sullivan summarized the evidence he submitted to the trial court on this point as follows:

“1. The affidavit of Luisa Cook Shew.[] Ms. Show’s affidavit states that it was not her ‘job or responsibility to open Dr. Sullivan’s mail.’ Ms. Shew further states that her signing the receipt for the certified envelope would not enable her to know what was in the envelope because she would not have opened it. (Thus, Ms. Shew’s signing for the envelope does not prove that the envelope contained the letter in question.)
“2. The affidavit of Barri Harrison. Ms. Harrison, Dr. Sullivan’s office assistant, states that her job duties included opening Dr. Sullivan’s mail so that she could assist him in responding to it. She stated that she ‘reviewed the mail to determine whether [she] could respond ... or if [she] needed to meet with Dr. Sullivan in order to respond.’ Ms. Harrison states that she ‘never opened a certified letter that contained [the letter].’ Her affidavit further states that the significance of the letter would have been obvious to her and that, had she received a letter of such importance, she would have immediately brought it to Dr. Sullivan’s attention. In addition, she states that if ‘such a letter [had] been received, [she] would definitely remember it.’
“3. The deposition testimony of Dr. Sullivan. Dr. Sullivan testified that, rather than receiving the letter in his office, he first heard of the letter’s existence on July 27, 2001, when another doctor told him about it. Dr. Sullivan requested a hearing within 30 days of this date, which would have made his request for a hearing timely under the Hospital Bylaws. In fact, when Dr. Sullivan did become aware of the letter’s existence, on July 27, 2001, he responded to the letter, in writing, ‘within about an hour.’ He personally delivered his response to Mr. McGowan’s office, but Mr. McGowan was not in. However, Dr. Sullivan did request a hearing when he spoke with Mr. McGowan shortly thereafter.”

(Dr. Sullivan’s brief, pp. 5-7.) (Citations to the record omitted.) This evidence, when viewed in the light most favorable to Dr. Sullivan, does not support a reasonable inference of the fact he seeks to prove— that the June 19 letter was not delivered to his office. See Hobson, 690 So.2d at 344.

Dr. Sullivan’s theory is that the return receipt signed by Cook on June 22 might have represented the delivery of some other certified letter sent to him by EHS in the same time frame. When Dr. Sullivan raised this theory at his February 17, 2003, deposition, defense counsel specifically requested that they be provided with copies of any other certified letters Dr. Sullivan received from EHS during the period around June 22, 2001. No such letters have been submitted as evidence or otherwise identified. Neither is there any evidence other than that set forth above that would support the proposition, also raised by Dr. Sullivan, that EHS might have mailed him an empty envelope. “[F]air-minded persons in the exercise of impartial judgment” could not reasonably infer that the return receipt signed by Cook represented a receipt for an empty envelope or a letter other than the one informing Dr. Sullivan of the committee’s recommendation that his medical-staff privileges not be renewed without some concrete evidence to that effect from whoever opened the certified envelope. Dr. Sullivan’s hypotheses are speculative.

Under the standard of review for a summary judgment, we must resolve all reasonable doubts against EHS, as the movant, and in favor of Dr. Sullivan, as the nonmovant; however, speculation alone cannot create a reasonable doubt. “Evidence that affords nothing more than a mere speculation, conjecture, or guess is completely insufficient to warrant the submission of a case to a jury.” Smoyer v. Birmingham Area Chamber of Commerce, 517 So.2d 585, 588 (Ala.1987) (citing Sprayberry v. First Nat’l Bank, 465 So.2d 1111 (Ala.1984), and Headrick v. United Ins. Co. of America, 279 Ala. 82, 181 So.2d 896 (1966)).

IV.

The issue before this Court is whether there is substantial evidence indicating that Dr. Sullivan did not receive notice of the committee’s decision and that EHS, thus, breached its contract with Dr. Sullivan by failing to provide him with notice, as prescribed by the medical-staff bylaws, which would have afforded him a hearing before his medical-staff privileges were terminated. Dr. Sullivan has failed to establish by substantial evidence that a question of fact exists as to whether EHS fulfilled the notice requirement in the bylaws when it mailed the June 19 letter via certified mail, return-receipt requested. Accordingly, EHS was entitled to a judgment as a matter of law on Dr. Sullivan’s breach-of-contract claim, and the trial court’s summary judgment in its favor is affirmed.

AFFIRMED.

LYONS, WOODALL, SMITH, and PARKER, JJ., concur.

      . This case was originally assigned to another Justice on this Court; it was reassigned to Chief Justice Nabers on June 26, 2006.

      . The relevant text of the June 19 letter stated:
      "Please be advised that the Medical Staff Executive Committee at its meeting on June 12, 2001 has recommended to the Governing Board that your application for reappointment for clinical privileges be denied.

      "Please be advised that this recommendation of non-renewal entitles you to a hearing and an appellate review as provided in Article X of the Medical Staff By-laws.
      Furthermore, you have 30 days following the receipt of this letter within which to request a hearing. If you fail to request a hearing within this 30 day period of time, you will thereafter waive your right to such a hearing.”

      . As director of quality services, Stricklin was the coordinator of all investigations involving medical staff at the hospital. Her duties included keeping meeting minutes and sending out correspondence for the hospital’s quality-review committees.

      . The substance of Dr. Sullivan’s July 27 letter indicates that he had not yet received the second letter from McGowan dated July 24.

      . EHS also argued that it was entitled to a summary judgment based on the immunity provided by the Health Care Quality Improvement Act, see 42 U.S.C. § 11111. However, because the trial court ruled that EHS was entitled to a summary judgment on another ground, it did not find it necessary to consider that argument. For that same reason, this Court likewise does not find it necessary to consider EHS's immunity argument.

      . Although the letter presumption is not applicable to this case because we need not presume that a letter was delivered when a signed return receipt establishes that it indeed was, recent caselaw applying the principle does bolster the conclusion we reach in this case. In Sisson, this Court considered the following certified question from the United States District Court for the Northern District of Alabama pursuant to Rule 18, Ala. R.App. P.:

        “ 'Whether, under the facts of this case, the insured's denial of receipt of a notice of policy cancellation or nonrenewal creates an issue of fact as to mailing where the insurer’s proof of mailing includes the Postal Service's Certificate of Mailing indicating its receipt of the notice to plaintiff for mailing on January 15, 1998.’ ”
      824 So.2d at 709. This Court answered the question in the negative, holding that a certified receipt issued by the United States Postal Service indicating that a letter was mailed was sufficient to establish that the letter was in fact mailed. 824 So.2d at 711.

      . It appears that at some point after she signed for the letter, Luisa Cook changed her name to Luisa Cook Shew.


author: LYONS, Justice. STUART, Justice

text:
    Ex parte William Keith ROBEY. (In re William Keith Robey v. State of Alabama).
    1051454.
    Supreme Court of Alabama.
    Sept. 1, 2006.
    William Keith Robey, pro se.
   LYONS, Justice.

WRIT DENIED. NO OPINION.

SEE, WOODALL, SMITH, and PARKER, JJ., concur.

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

STUART, Justice

(dissenting).

I dissent from the majority’s decision to deny this petition for a writ of certiorari because I believe that this Court needs to address the issue presented by the petition and clarify the law on subject-matter jurisdiction in criminal cases.

In 1992, William Keith Robey pleaded guilty to possession of a controlled substance. The trial court entered a judgment of conviction and imposed sentence. Robey did not appeal. In 2006, Robey filed a petition for postconviction relief, pursuant to Rule 32, Ala. R.Crim. P., in the circuit court claiming that the trial court was without jurisdiction to render judgment or to impose sentence for his conviction for possession of a controlled substance. See Rule 32.1(b), Ala. R.Crim. P. According to Robey, the trial court at the pronouncement of his sentence failed to inform him of his right to appeal the conviction and his right to have counsel appointed to represent him on appeal. Robey argued that this alleged procedural deficiency during the pronouncement of his sentence divested the trial court of jurisdiction to hear and determine his case. The circuit court, after receiving a response from the State, summarily denied the petition.

The Court of Criminal Appeals affirmed the circuit court’s denial of Robey’s Rule 32 petition in an unpublished memorandum. Robey v. State (CR-05-1300, June 16, 2006), — So.2d — (Ala.Crim.App.2006) (table). In its unpublished memorandum, the Court of Criminal Appeals held that the circuit court properly denied Robey’s petition because Robey presented a nonjurisdictional claim that was procedurally barred as successive (see note 1) and that was outside the limitations period. See Rule 32.2(b) and (e), Ala. R.Crim. P.

Robey filed a petition for a writ of certiorari with this Court, seeking review of the Court of Criminal Appeals’ decision. In his petition for a writ of certiorari, Robey contends that the holding of the Court of Criminal Appeals that his claim in his postconviction petition was nonjurisdictional conflicts with that court’s holding in Lancaster v. State, 638 So.2d 1370, 1373 (Ala.Crim.App.1993). The Court of Criminal Appeals in Lancaster stated:

“Thus, the appellant’s presence at the sentencing hearing, his ability to speak on his behalf before sentence is pronounced, notification of his right to appeal, and his right to have counsel appointed on appeal are jurisdictional matters, which cannot be waived. Because the appellant’s claims of lack of jurisdiction are not procedurally barred and are not contested, the trial court should have held an evidentiary hearing on the appellant’s petition, which was meritorious on its face.... ”

(Emphasis added.) Although Robey appears to allege a meritorious ground of conflict between the holding of the Court of Criminal Appeals in its unpublished memorandum in his case and its holding in Lancaster, a subsequent opinion by the Court of Criminal Appeals renders the holding in Lancaster — that the failure to inform a defendant of his right to appeal

creates a jurisdictional defect — no longer good law.

Robey’s alleged jurisdictional claim in his postconviction petition is based on an alleged procedural deficiency at his sentencing. Robey maintains that the trial court failed to comply completely with the requirements for pronouncement of sentence set forth in Rule 26.9(b), Ala. R.Crim. P., and that that failure divested the trial court of subject-matter jurisdiction to render judgment and to impose a sentence.

In Shaw v. State, 949 So.2d 184 (Ala.Crim.App.2006), the Court of Criminal Appeals held that a procedural defect at sentencing does not create jurisdictional issues. The Court of Criminal Appeals stated that “a claim that the defendant was not afforded an allocution is not jurisdictional and is subject to the procedural bars set out in Rule 32.2, Ala. R.Crim. P.” 949 So.2d at 187. Like the trial court’s duty to inform a defendant at the pronouncement of sentence of his right to appeal and to have counsel appointed on appeal, allocution is a procedural requirement at the pronouncement of sentence. Rule 26.9(b)(1), Ala. R.Crim. P., provides that the trial court has a duty to “[ajfford the defendant an opportunity to make a statement in his or her own behalf before imposing sentence.” A defendant’s not being afforded an opportunity to speak at sentencing may be a constitutional issue, but this procedural defect does not divest the trial court of jurisdiction to impose sentence. Therefore, comparable procedural defects in the sentencing procedure, such as the trial court’s failure to inform a defendant of the right to appeal and the right to counsel on appeal, do not divest the trial court of jurisdiction to impose sentence.

Based on the change in the law subsequent to the Court of Criminal Appeals’ issuance of its opinion in Lancaster, I conclude that Lancaster is no longer good law, that Robey does not present a jurisdictional claim in his postconviction petition, and that he is not entitled to the relief he requested.

I, however, would issue the writ and then issue an opinion of this Court affirming the judgment of the Court of Criminal Appeals and unequivocally establishing that the failure to inform a defendant during sentencing of his right to appeal or to have counsel appointed does not divest the trial court of subject-matter jurisdiction.

As Justice Bowen stated in his dissent in Lancaster:

“A defendant undoubtedly has the constitutional right to be present and attended by counsel at sentencing, Mempa v. Rhay, 389 U.S. 128, 88 S.Ct. 254, 19 L.Ed.2d 336 (1967), and to have counsel appointed on appeal, Douglas v. California, 372 U.S. 353, 83 S.Ct. 814, 9 L.Ed.2d 811 (1963), as well as the statutory right to speak on his own behalf before sentence is pronounced, Rule 26.9(b)(1), [Ala].R.Crim.P., and to be informed of his right to appeal, Ala.Code 1975, § 12-22-130; Rule 26.9(b)(4).
“While all of the foregoing rights are fundamental, all of them can be waived. See Rule 26.7 (waiver of the defendant’s presence at sentencing, which necessarily subsumes waiver of allocution and notice of right to appeal); Rule 6.1(b) (waiver of right to counsel). If a right can be waived, it is not a prerequisite to subject matter jurisdiction. ‘[A] defendant can not be deemed to have waived an objection that the trial court does not have jurisdiction of the subject matter.’ City of Dothan v. Holloway, 501 So.2d 1136,1139 (Ala.1986).
“Neal v. State, 257 Ala. 496, 59 So.2d 797, 798 (1952), does ... state that ‘the continuous presence of the defendant from arraignment to sentence is an essential part of the process provided for the trial of the defendant and without which the court has no jurisdiction to pronounce judgment against him.’ In view of the Alabama Supreme Court’s recent pronouncements on the nonwaiv-ability of subject matter jurisdiction, the language in Neal must be understood to mean ‘personal’ rather than subject matter jurisdiction.”

638 So.2d at 1374.

The law in Alabama regarding a trial court’s personal and subject-matter jurisdiction over a criminal defendant is convoluted, and the definition of subject-matter jurisdiction, i.e., a trial court’s authority to render judgment and to impose sentence, is tortured with inaccuracy and confusion. This Court should seize the first opportunity to clarify the definition of a trial court’s subject-matter jurisdiction in a criminal case. Because I believe that this petition presents an excellent opportunity to continue the clarification of the law on subject-matter jurisdiction that this Court began in Ex parte Seymour, I respectfully dissent from the majority’s decision to deny the writ.

NABERS, C.J., and BOLIN, J., concur.

      . Robey had previously filed a postconviction petition pursuant to Rule 32, Ala. R.Crim. P., which the circuit court had summarily dismissed. The Court of Criminal Appeals affirmed the circuit court’s judgment by an unpublished memorandum. Robey v. State
        (No.CR-03-l 210), 920 So.2d 615 (Ala.Crim. App.2004) (table).

      . Robey, a pro se petitioner, satisfied the procedural requirements for pleading his petition for a writ of certiorari, including properly pleading his ground of conflict pursuant to Rule 39(a)(1)(D), Ala. R.App. P.

      . In Ex parte Seymour, 946 So.2d 536, 537 n. 3 (Ala.2006), this Court reminded:
      "The language jurisdiction to render judgment or impose sentence’ refers to the court’s jurisdiction over the subject matter, as opposed to the person. Although a court must have both personal jurisdiction and subject-matter jurisdiction in an action, Woolf v. McGaugh, 175 Ala. 299, 303, 57 So. 754, 755 (1911), defects in personal jurisdiction are waived if they are not raised before the trial court. City of Do-than v. Holloway, 501 So.2d 1136, 1139 (Ala. 1986). The Rule 32.1(b) exception applies only to claims alleging that the trial court lacked subject-matter jurisdiction."

      . When I use the term "procedural defects,” I do not refer to defects at sentencing that create an illegal sentence, such as the imposition of a sentence outside the proper range of punishment for the conviction. Procedural defects involve failures to fully comply with the Rules of Criminal Procedure, and a defendant can waive such defects. Although those defects may create constitutional issues, they do not divest the trial court of subject-matter jurisdiction.

      . I note that on August 25, 2006, the Court of Criminal Appeals, in another case involving this same petitioner, overruled Lancaster. See Robey v. State, 950 So.2d 1235 (Ala.Crim. App.2006).


author: SEE, Justice.

text:
    F.L. CRANE & SONS, INC. v. MALOUF CONSTRUCTION CORPORATION et al.
    1050206.
    Supreme Court of Alabama.
    Sept. 1, 2006.

      Charles J. Potts and Benjamin C. Heinz of Alford, Clausen & McDonald, LLC, Mobile, for appellant.
    L. Bratton Rainey III and D. Trice Stabler of Luther, Oldenburg & Rainey, P.C., Mobile, for appellee Malouf Construction Corporation.
   SEE, Justice.

F.L. Crane & Sons, Inc. (“Crane”), appeals the trial court’s order denying its motion to compel arbitration and mediation, see Rule 4(d), Ala. R.App. P.; Crane purports also to appeal the trial court’s order denying its motion to dismiss for improper venue. We affirm the trial court’s denial of Crane’s motion to compel arbitration. Insofar as Crane’s appeal challenges the trial court’s denial of its motion to dismiss, we treat it as a petition for the writ of mandamus, and we deny the petition.

Facts and Procedural History

Malouf Construction Corporation (“Mal-ouf’), a Mississippi corporation, entered into a contract with Palm Beach Condominiums, LLC (“Palm Beach”), for the construction of the Palm Beach Condominiums in Orange Beach (“the prime contract”). Malouf then entered into a subcontract with Crane, in which Crane agreed to furnish and install an exterior insulation-and-finish system on the condominiums (“the subcontract”).

The subcontract contains a choice-of-law provision, which says that Mississippi law will govern any dispute arising between Malouf and Crane. That provision reads as follows:

“The Subcontract is deemed to have been made in the State of Mississippi regardless of the place of actual negotiation, execution, and performance, and the parties hereby agree that the laws of the State of Mississippi shall govern the interpretation, effect, enforcement, and all other aspects of both this Subcontract and the rights and obligations of Contractor and Subcontractor hereunder. This consensual choice of law shall apply irrespective of principles of conflict of laws, envoi, forum non conve-niens, or other considerations.”

The subcontract also contains a forum-selection clause, which states that any dispute between Crane and Malouf will be litigated either in Madison County, Mississippi, or in the Southern District of Mississippi. The forum-selection clause reads as follows:

“Any dispute between the parties shall be resolved by litigation in a court of competent jurisdiction located either in Madison County, Mississippi, if a state court action, or in the Southern District of Mississippi, if a federal court action .... By execution of this Subcontract, Subcontractor irrevocably waives any objection, now or in the future, to such venue and agrees not to assert in any such court that any action or proceeding has been brought in an inconvenient or inappropriate forum.”

The subcontract also incorporates into the subcontract the terms of the prime contract between Malouf and Palm Beach: “The Subcontractor [Crane] shall be bound to the Contractor [Malouf] by all terms and conditions of this Subcontract and by all terms and conditions of the Prime Contract between the Owner [Palm Beach] and Contractor [Malouf], which is incorporated by reference into this Subcontract and is an integral part of this Subcontract.”

However, the alternative-dispute-resolution (“ADR”) provisions of the subcontract and the prime contract appear to conflict. Paragraph 4.5.1 of the prime contract provides for mandatory mediation; it states:

“Any Claim arising out of or related to the [Prime] Contract ... shall ... be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party.”

Similarly, paragraph 4.6.1 of the prime contract provides for mandatory arbitration; it states:

“Any Claim arising out of or related to the [Prime] Contract ... shall ... be subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by mediation in accordance with the provisions of Paragraph 4.5.”

In contrast, the subcontract provides for permissive ADR procedures and provides that no ADR procedures shall be mandatory. Paragraph 27.1 of the subcontract purports to govern

“all claims, disputes, and other matters in controversy or question between the Contractor and the Subcontractor arising out of or relating to th[e] Subcontract. ...”

Paragraph 27.2 of the subcontract states that, in the event of a dispute,

“the parties shall consider alternative dispute resolution (ADR) ... but no such ADR procedure shall be mandatory unless both contractor and subcontractor enter into a separate agreement to submit their disputes to ADR.”

The prime contract outlines a detailed ADR procedure, requiring the contractor and the owner (here, Palm Beach) to submit any disputes to the architect. After the architect renders a decision in the dispute, the parties must proceed to mediation and then to arbitration. However, the prime contract in paragraph 4.4.1 limits the application of these provisions: “The Architect will not decide disputes between [Malouf] and persons or entities other than [Palm Beach].”

After the condominiums were built, Palm Beach Owner’s Association, Inc. (“the Association”), whose membership comprises all record owners of the units in the Palm Beach Condominiums, sued Mal-ouf and Palm Beach in the Baldwin Circuit Court, alleging defects in the construction. Malouf filed a third-party complaint against Crane and several other subcontractors, alleging breach of contract, breach of warranty, and negligent performance.

Crane answered Maloufs third-party complaint, asserting as a defense that Mal-oufs claims against it were subject to resolution by mandatory binding arbitration. In its amended answer, Crane also asserted as a defense that the forum-selection clause in the subcontract required the claims to be litigated, if at all, in a state court in Madison County, Mississippi, or in the United States District Court for the Southern District of Mississippi. Crane moved the trial court to compel arbitration and to stay the proceedings or, in the alternative, to dismiss the case without prejudice on the basis that venue in the Baldwin Circuit Court was improper under the forum-selection clause.

Malouf responded that the trial court should enforce the permissive arbitration and mediation provisions of the subcontract instead of the mandatory provisions in the prime contract. Malouf also argued that the forum-selection clause in the subcontract should not be enforced because trying the case in Mississippi would result in serious inconvenience to Malouf.

After a hearing, the trial court, in separate orders, denied Crane’s motion to compel mediation and arbitration and denied Crane’s motion to dismiss the action based on improper venue. Crane appeals both orders.

Standard of Review

The parties agree that Mississippi law governs the substantive issues of this case. They also agree that Alabama law governs the procedural issues, including the standard of review. Alabama courts apply a de novo standard of review to the denial of a motion to compel arbitration. See Leeman v. Cook’s Pest Control, Inc., 902 So.2d 641, 644 (Ala.2004) (“ ‘ “[T]he standard of review of a trial court’s ruling on a motion to compel arbitration at the instance of either party is a de novo determination of whether the trial judge erred on a factual or legal issue to the substantial prejudice of the party seeking review.” ’ ” (quoting other cases)). When reviewing the enforcement of, or the refusal to enforce, a forum-selection clause, however, Alabama courts must determine whether the trial court exceeded its discretion. See Ex parte Procom Servs., 884 So.2d 827, 830 (Ala.2003).

Analysis

I. Crane’s Motion to Compel Arbitration and Mediation

This Court has held that, when determining whether parties agreed to arbitrate a particular dispute, the court must apply “ ‘ “ordinary state-law principles that govern the formation of contracts.” ’ ” AmSouth Bank v. Dees, 847 So.2d 923, 933 (Ala.2002) (quoting Ex parte Messer, 797 So.2d 1079, 1082 (Ala.2001), quoting in turn First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)). Because this contract is governed by the substantive law of Mississippi, we use Mississippi contract principles to construe the arbitration and mediation provisions.

Under Mississippi law, a court must consider three factors when ruling on a motion to compel arbitration: (1) whether a valid written agreement to arbitrate exists; (2) whether an arbitrable issue exists; and (3) whether any defense available under Mississippi contract law, such as fraud, duress, or unconscionability, applies to invalidate the arbitration agreement. East Ford v. Taylor, 826 So.2d 709, 713 (Miss.2002). The parties agree that this appeal hinges on the first prong: whether the prime contract and the subcontract created an agreement requiring Malouf to arbitrate its claims against Crane.

The parties disagree as to which clauses of which contract should apply. Crane argues that the requirement in the prime contract of mediation and arbitration applies to this dispute because the subcontract. incorporates the provisions of the prime contract. Thus, it asserts, “the mandatory, binding mediation and arbitration clauses in Paragraphs 4.5 and 4.6 of the Prime Contract control to the exclusion of the voluntary dispute resolution clauses in Paragraph 27.2 of the Subcontract.” (Crane’s brief, p. 23.) Malouf contends that the prime contract is irrelevant to the dispute between it and Crane because it governs only the relationship between Palm Beach and Malouf; Malouf argues that the subcontract governs the relationship between Malouf, the contractor, and Crane, the subcontractor. Thus, Malouf argues, this Court should look to the terms of the subcontract and under the subcontract “it is very clear that arbitration and mediation are voluntary.” (Mal-ouf s brief, p. 17.)

The subcontract provides that Malouf and Crane “shall be bound ... by all terms and conditions of [the] Subcontract and by all terms and conditions of the Prime Contract.” Subcontract, paragraph 2. The ADR procedures in the prime contract purport to govern “any claims arising out of or related to the [Prime] Contract.” Prime contract, paragraph 4.5.1. Although these provisions appear to conflict, they bind different parties and therefore create no ambiguity or conflict.

Under Mississippi law, when a court is construing the terms of a contract, the “cardinal rule of construction is to give effect to the mutual intentions of the parties.” Lamb Constr. Co. v. Town of Renova, 573 So.2d 1378, 1383 (Miss.1990). In doing so, a court accepts the plain meaning of the terms as expressing the intent of the parties where no ambiguity exists. A & F Props., LLC v. Madison County Bd. of Supervisors, 933 So.2d 296 (Miss.2006).

The subcontract and the prime contract do not conflict; the ADR provisions in the subcontract and the prime contract apply to different parties. The provisions of the subcontract apply directly to the relationship between the subcontractor and the contractor (here, Crane and Malouf). The “Resolution of Claims and Disputes” section of the prime contract, on the other hand, applies expressly to disputes between the contractor and the owner (here, Malouf and Palm Beach). Specifically, the prime contract requires that “all Claims between the Contractor and Owner” be submitted to the architect “as a condition precedent to mediation, arbitration or litigation.” Further, both the “Mediation” and the “Arbitration” sections of the prime contract provide for mediation and arbitration “after initial decision by the Architect or 30 days after submission of the Claim to the Architect.” Prime contract, paragraphs 45-4.6. Because the prime contract states that “[t]he Architect will not decide disputes between the Contractor and persons or entities other than the Owner,” it is unmistakable that the ADR procedures in the prime contract are intended only to govern disputes between Malouf and Palm Beach.

Crane argues that the prime contract governs this dispute because the subcontract incorporates the terms of the prime contract. That incorporation results in the adoption of the terms of the prime contract into the subcontract. Sorrells v. Alexander Bros., 165 Miss. 466, 144 So. 560, 562 (1932). However, it does not abolish the dispute-resolution scheme in place in the subcontract between Malouf and Crane. See Perry v. United States ex rel. Newell, 146 F.2d 398, 400 (5th Cir.1945) (“[W]hile a reference in a subcontract to the provisions, plans and specifications of a general contract imports them into the subcontract where not inconsistent with its terms, it is quite well settled that such a reference is not effective beyond this, and that if the subcontract contains words of definite limitation, they will be given effect and the reference limited accordingly.”). Nor does it create an ambiguity in the agreement because, as previously discussed, the provisions in the subcontract and the prime contract govern different disputes between different parties.

II. Crane’s Motion to Dismiss Based on Improper Venue

We have held that a petition for the writ of mandamus is the proper method for obtaining review of an order denying a motion to dismiss seeking the enforcement of an outbound forum-selection clause. Ex parte CTB, Inc., 782 So.2d 188, 190 (Ala. 2000). However, instead of petitioning for the writ of mandamus, Crane appealed. In its brief, Malouf argues that we should refrain from reviewing the trial court’s order because it was presented to us as an appeal and not as a petition for a writ of mandamus.

Crane urges us to treat its appeal from the order denying its motion to dismiss as a petition for the writ of mandamus. Crane cites two cases in support. In one, this Court treated a notice of appeal as a petition for the writ of mandamus. Morrison Rests, Inc. v. Homestead Village of Fairhope, Ltd., 710 So.2d 905 (Ala.1998) (stating that “[t]his Court has previously held that a petition for a writ of mandamus is the appropriate method of challenging an order referring a case to arbitration,” and treating Morrison’s appeal as a petition for the writ of mandamus). In the other, this Court treated a petition for a writ of mandamus as a notice of appeal. Ex parte Burch, 730 So.2d 143 (Ala.1999). Crane also argues that Rules 1 and 2 of the Alabama Rules of Appellate Procedure likewise compel us to treat its appeal from the denial of its motion to dismiss as a petition for the writ of mandamus. Rule 1, Ala. R.App. P., provides: “[These rules] shall be construed so as to assure the just, speedy, and inexpensive determination of every appellate proceeding on its merits.” Rule 2, Ala. R.App. P., allows for the suspension of the requirements or provisions of any of the appellate rules “[i]n the interest of expediting decision.”

In Ex parte Burch, we treated a petition for the writ of mandamus addressed to a trial court’s denial of a motion in limine as a notice of appeal. We stated in Burch that there is “no bright-line test for determining when this Court will treat a particular filing as a mandamus petition and when it will treat it as a notice of appeal.” 730 So.2d at 146. Instead, we consider the facts of the particular case in deciding whether to treat the filing as a petition or as an appeal:

“The question we come to, then is this: Do the circumstances of this case make it such that the policies set forth in Rule 1[, Ala. R.App. P.,] will be served by resolving the matter presented to us? Or, will those policies be better served by requiring, as we do in the normal case, strict compliance with our appellate rules and thus not reviewing the trial court’s interlocutory ruling?”

730 So.2d at 147.

In Burch, we treated the petition as a petition for a permissive appeal under Rule 5, Ala. R.App. P., because the hearing transcript revealed the trial court’s belief that this Court’s resolution of the motion in limine was “important to materially advancing th[e] litigation.” 730 So.2d at 147-48. Similarly, we believe that deciding the issue of the enforceability of this forum-selection clause on its merits will further the “just, speedy, and inexpensive determination ... on [the] merits” of the case favored by Rule 1, Ala. R.App. P.

It is well-settled that mandamus is an extraordinary writ, requiring a showing that there is “(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.” Morrison Restaurants, 710 So.2d at 907 (quoting Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala.1991)). Crane has not demonstrated a “clear legal right” to a writ of mandamus ordering the trial court to dismiss Malouf s claims against it based on the outbound forum-selection clause in the subcontract. This Court has recognized that outbound forum-selection clauses actually “ ‘implicate the venue of a court....’” Ex parte CTB, Inc., 782 So.2d at 190 (quoting and approving language from dissent in O’Brien Eng’g Co. v. Continental Machs., Inc., 738 So.2d 844, 849 (Ala.1999) (See, J., dissenting)). Therefore, an outbound forum-selection clause raises procedural issues and is governed by the law of the forum jurisdiction — in this case, the law of Alabama. See, e.g., Ex parte Procom Servs., Inc., 884 So.2d 827 (Ala.2003) (deciding the validity of an outbound forum-selection clause under Alabama law despite a choice-of-law clause in the contract stating that Texas law governed disputes between the parties). In Alabama, we review the trial court’s decision on the enforcement of such a clause to determine whether the trial court exceeded its discretion in deciding not to enforce the outbound forum-selection clause. See Ex parte Procom Servs., 884 So.2d at 830.

Forum-selection clauses are enforceable under Alabama law. Ex parte Rymer, 860 So.2d 339, 341 (Ala.2003). However, this Court has held that a forum-selection clause should not be enforced if the chosen forum would be “ ‘seriously inconvenient for the trial of the action.’ ” Ex parte Leasecomm Corp., 886 So.2d 58, 62 (Ala.2003) (quoting Ex parte CTB, Inc., 782 So.2d at 191). Such a “serious inconvenience” arises if enforcement of the forum-selection clause “ ‘would result in two lawsuits involving similar claims or issues being tried in separate courts.’ ” 886 So.2d at 63 (quoting Alpha Sys. Integration, Inc. v. Silicon Graphics, Inc., 646 N.W.2d 904, 909 (Minn.Ct.App.2002)) (emphasis omitted). Malouf argues that just such a serious inconvenience would exist in this case if we ordered the trial court to enforce the outbound forum-selection clause. In the underlying action, the Association has asserted claims against Malouf arising from Malouf s general construction of the Palm Beach Condominiums; Malouf has, in turn, brought third-party claims against Crane and several other subcontractors. Malouf argues that enforcement of the outbound forum-selection clause in this case would move the litigation of the claims between Malouf and Crane to Mississippi, where, Malouf argues, they would be litigating claims and issues identical to those being tried in Alabama between Malouf and the Association and between Malouf and the other subcontractors, all of which arose out of the same construction job as did Maloufs claims against Crane. If its claims against Crane are transferred, Malouf argues, it would be subject to duplicative discovery and litigation.

Crane asks us to transfer the claims involving Malouf and Crane to Mississippi, while all the other related claims remain in Alabama. Crane argues that the action brought in Alabama by the Association involves claims and parties “wholly unrelated to anything Crane did in the construction of Palm Beach Condominiums,” and that the action in Mississippi would involve the “sole issue” whether Crane properly completed its work during the construction. Crane is correct that the action brought by the Association involves other parties unrelated to Maloufs third-party action against Crane and therefore involves issues that may not be present in the third-party action, but the opposite is not necessarily true. Maloufs claims against Crane involve issues that will be litigated in the Association’s action. Both cases will likely involve interpretation of the same contract terms, and Malouf s testimony as to its activities during construction will be necessary in both actions. Litigation of the same issues, arising out of the same construction project, could therefore cause Malouf “serious inconvenience.”

Based on these facts, we cannot conclude that the trial court exceeded its discretion when it refused to enforce the outbound forum-selection clause and denied the motion to dismiss the action based on improper venue. Therefore, Crane has no “clear legal right” to the writ of mandamus.

Conclusion

Crane has not demonstrated that the trial court clearly erred by denying its motion to compel arbitration. Thus, we affirm the trial court’s denial of Crane’s motion to compel arbitration. Also, the trial court did not exceed its discretion in denying Crane’s motion to dismiss. Thus, we deny Crane’s petition for the writ of mandamus.

PETITION DENIED; AFFIRMED.

NABERS, C.J., and LYONS, HARWOOD, WOODALL, STUART, SMITH, BOLIN, and PARKER, JJ., concur.

      . Although it is not clear from the record, Crane apparently is also a Mississippi corporation.

      . Crane contends that the conflict can be resolved by reference to paragraph 2 of the subcontract, which states that in the event of a conflict "the Subcontractor shall perform Work and obligations of the higher quality, larger quantity, greater expense, tighter schedule, and more stringent requirements.” Crane would apply this language to the dispute at issue, arguing that mandatory ADR is, by definition, "more stringent” than is permissive ADR. However, we do not find this argument persuasive. By its terms, this provision resolves conflicts regarding the subcontractor's “Work and obligations” only.

      . Paragraph 27.1 of the subcontract states:
      "[A]ll claims, disputes, and other matters in controversy or question between the Contractor and the Subcontractor arising out of or relating to this Subcontract ... shall be decided in accordance with this Section.”