author: PITTMAN, Judge.

text:
    William C. STARR, Sr. v. Michael A. WILSON et al. Michael A. Wilson v. Rodney C. Jones and William C. Starr, Sr.
    2070281 and 2070731.
    Court of Civil Appeals of Alabama.
    Dec. 19, 2008.

      Elizabeth M. Borg of McAdory Borg Law Firm, P.C., Auburn, for appellant/cross-appellee William C. Starr, Sr.
    Phillip E. Adams, Jr., and Blake L. Oliver of Adams, Umbach, Davidson & White, LLP, Opelika, for appellee/cross-appellant Michael A. Wilson.
    J. Tutt Barrett of Dean & Barrett, Ope-lika, for appellee Rodney C. Jones.
   PITTMAN, Judge.

These appeals, which were transferred to this court by the Alabama Supreme Court pursuant to Ala.Code 1975, § 12-2-7(6), concern the purchase of a particular parcel of real property as to which a stranger to that transaction had apparently been previously granted a “right of first refusal” allowing him, at his option, to purchase the parcel should an agreement to convey the parcel be reached between its owner and any buyer.

In May 2005, Michael A. Wilson filed a complaint in the Lee Circuit Court naming as defendants Rodney C. Jones and William C. Starr, Sr., and seeking both equitable relief and damages based upon substantive claims of breach of contract, intentional interference with business or contractual relations, and conspiracy to commit a lawful act by unlawful means. In his complaint, Wilson averred that he and Jones had entered into an agreement to convey a parcel of real property from Jones to Wilson (which other portions of the record identify as “Lot 2-B” of a particular subdivision in Auburn) and that the parties had simultaneously agreed that Wilson would be afforded a “right of first refusal” allowing him a right to purchase a second, adjoining parcel in that subdivision (“Lot 2-A”). According to the complaint, Jones breached the agreement by conveying Lot 2-A to Starr without notifying Wilson or permitting him to exercise the claimed right of first refusal. Wilson sought, among other things, a trial by jury, an award of damages, temporary and permanent injunctive relief, and a judgment directing specific performance of the alleged agreement under which Wilson claimed the right of first refusal. Jones and Starr filed answers to the complaint; Starr’s answer included a claim under the Alabama Litigation Accountability Act, Ala.Code 1975, § 12-19-270 et seq. (“the ALAA”). After those answers were filed and a hearing was held, the trial court entered a preliminary injunction in July 2005 preventing Starr from encumbering, selling, improving, or changing Lot 2-A and requiring Wilson to post an injunction bond.

In June 2006, Starr filed a counterclaim against Wilson in which Starr averred that Wilson had recorded the agreement containing the right of first refusal after Starr had purchased Lot 2-A from Jones; that pleading reasserted Starr’s ALAA claim and asserted new claims of intentional interference with business or contractual relations and slander of title. Starr subsequently asserted a cross-claim against Jones and various fictitiously named defendants asserting claims of negligence and fraud, and Jones asserted a cross-claim against Starr and a third-party claim against Starr’s attorney, Stephen D. Benson, asserting claims of breach of contract, fraud, and intentional interference with business or contractual relations; all parties filed responses to those pleadings, and Benson and Starr asserted ALAA counterclaims against Jones.

After discovery had taken place, Benson filed a motion for a summary judgment as to Jones’s third-party claim and Starr filed a motion for a summary judgment on the claims brought against him by Wilson in his complaint and by Jones in his cross-claim. Wilson voluntarily dropped his conspiracy claim at that point. Following a hearing, the trial court rendered a summary judgment dissolving the preliminary injunction and determining that the claimed right of first refusal was void and that therefore, as a matter of law, Wilson had no valid claims against Jones or Starr; however, the trial court also released Wilson from the injunction bond, denied all requests for awards of attorney fees and costs, and ordered that all “other actions pending in [the] case” (ie., all other claims) be “dismissed” as “moot.” That judgment was entered on November 6, 2007.

On November 27, 2007, Starr filed a postjudgment motion requesting, among other things, that the trial court “reinstate” his counterclaim against Wilson. On December 5, 2007, Benson filed a similar postjudgment motion to “reinstate” his ALAA counterclaim against Jones. On December 6, 2007, Wilson filed a post-judgment motion requesting that the trial court vacate its judgment to the extent that it denied his claims. The trial court directed the parties to file responses to the postjudgment motions and indicated that it would permit oral argument on the motions. Starr filed a notice of appeal on December 18, 2007, which this court docketed as case no. 2070281; pursuant to Rule 4(a)(5), Ala. R.App. P., that appeal was held in abeyance pending a decision regarding the outstanding postjudgment motions.

Although the trial court held a hearing on the postjudgment motions and may have indicated an intent to grant certain aspects of the relief requested by Starr and Benson, no order granting or denying any of the postjudgment motions was entered within 90 days of their respective filing dates. Thus, each motion was denied, pursuant to Rule 59.1, Ala. R. Civ. P., as of the 90th day following its filing, see Roden v. Roden, 937 So.2d 83, 85 (Ala.Civ.App.2006), and the trial court’s subsequent order purporting to grant Starr’s and Benson’s postjudgment motions and to deny Wilson’s postjudgment motion was a nullity. See United States Steel Corp. v. McBrayer, 908 So.2d 947, 951 (Ala.Civ.App.2005), and Moragne v. Moragne, 888 So.2d 1280, 1282 (Ala.Civ.App.2004). Wilson filed a timely notice of appeal on April 16, 2008, 42 days after the denial of his postjudgment motion (see Rule 4(a)(3), Ala. R.App. P.); that appeal was docketed as case no. 2070731 in this court. Because neither Jones nor Benson have appealed from the trial court’s judgment, the correctness of the trial court’s judgment as to their claims against each other and as to Jones’s claims against Starr is not presented for review.

Wilson’s appeal challenges the correctness of the trial court’s rulings as to his breach-of-contract claim against Jones and his intentional-interference claim against Starr. Starr’s appeal challenges the correctness of the trial court’s ruling as to the claims asserted against Wilson in Starr’s counterclaim.

We will first consider the correctness of the summary judgment against Wilson on his breach-of-contract claim against Jones. Our standard of review is well settled:

“An appellate court reviews a summary judgment by the same standard the tidal court uses in determining whether to grant a summary-judgment motion. Pryor v. Brown & Root USA, Inc., 674 So.2d 45, 47 (Ala.1995); Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988). A summary judgment is appropriate if there is no genuine issue of material fact and the movant is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. The movant has the burden of making a prima facie showing that there is no genuine issue of material fact and that he is entitled to a judgment as a matter of law. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). If the moving party makes that prima facie showing, then the burden shifts to the nonmoving party, who then has the burden of presenting substantial evidence creating a genuine issue of material fact. Id. In determining whether the evidence creates a genuine issue of material fact, this court must review the record in the light most favorable to the non-movant and must resolve all reasonable doubts against the movant. Wayne J. Griffin Elec., Inc. v. Dunn Constr. Co., 622 So.2d 314 (Ala.1993). 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 Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).”

Millican v. McKinney, 886 So.2d 841, 843 (AIa.Civ.App.2003).

Viewed in a light most favorable to Wilson, the record reveals the following facts. On August 28, 2003, Jones and Wilson, in their individual capacities, entered into a written contract that provided, in pertinent part, that in consideration for a total payment of $250,000 (including an earnest-money payment of $3,000), Jones would convey Lot 2-B to Wilson and would grant Wilson a right of first refusal as to Lot 2-A. That contract stated:

“1. DESCRIPTION: SELLER [i.e., Jones] shall sell to PURCHASER [i.e., Wilson] and [Wilson] shall purchase from [Jones] the real estate located on Webster Road in Auburn, Alabama described as follows ... [legal description of Lot 2-B],
“2. PURCHASE PRICE: The purchase price is $250,000.00, payable $3,000.00 as earnest money upon execution of this Agreement by [Jones], receipt of which' is hereby acknowledged by [Jones], and the remainder of $247,000.00 payable in full upon consummation of this sale.
“3. CLOSING: This sale shall be closed on or before 90 days from and after the date this Agreement is signed by [Jones] which is the date of this Agreement as hereinabove set forth. The closing shall be at a place, date and time to be designated by [Wilson] and [Wilson] shall give [Jones] written notice of same no later than 5 days prior to the closing date. [Jones] shall give possession of said property to [Wilson] at closing.
“4. DEFAULT: In the event [Wilson] fails to carry out and perform the terms of this Agreement for any reason except default of [Jones], he shall forfeit the above stated earnest money which shall be retained by or for the account of [Jones] as consideration for the execution of this contract and as agreed liquidated damages and in full settlement for any claims for damages, and [Jones] agrees to cancel this contract. If [Jones] fails to perform any of the covenants of this contract, the aforesaid earnest money and the consideration for any closing date extension paid by [Wilson], at the option of [Wilson], shall be returned to him on demand; or [Wilson] shall have only the right of specific performance.
“5. EXTENSION: [Wilson] shall have the right to extend the closing date of this transaction an additional 30 days beyond the original 90-day period as hereinabove provided, upon giving written notice to [Jones] on or before the end of said 90-day period and upon paying to [Jones] simultaneously with giving said notice the sum of $2,000.00 in consideration for granting the 30-day extension. Said $2,000.00 payment is not part of and shall not apply to the above stated purchase price and is fully nonrefundable.
“9. TIME IS OF THE ESSENCE: Time is of the essence for this Sale and Purchase Agreement.
“14. OTHER AGREEMENTS: No agreements or representations, unless incorporated in this contract, shall be binding upon either of the parties.
“15. RIGHT OF FIRST REFUSAL-OTHER PROPERTY: [Jones] owns a lot adjacent to [Lot 2-B] located on the north side thereof and described as Lot [2-A], In addition to the sale and conveyance hereinabove described and as part of the consideration for the $250,000.00 to be paid by [Wilson] to [Jones], [Jones] also agrees to and does hereby grant to [Wilson] a Right of First Refusal to purchase said lot together with all improvements located thereon and appurtenances thereto appertaining. In the event [Jones] shall receive from a third party at any time[ ] a bona fide offer to purchase said Lot 2-A, whether such price be first fixed by [Jones] or the third party, and [Jones] shall decide to sell the same for such amount, [Jones] shall promptly give [Wilson] written notice of the terms of such offer and of his willingness to sell for the price offered, and [Wilson] shall have the first refusal and privilege of purchasing said property at such price. Within 15 days of receiving said written notice from [Jones], [Wilson] shall give written notice to [Jones] of his intention to exercise his right of refusal and to purchase the property for such amount offered by the third party, and [Wilson] shall have 30 days from providing said written notice to [Jones] to close the purchase at that price. In the event [Wilson] shall fail to give [Jones] written notice of his intention to exercise his right of refusal within 15 days of receiving notice from [Jones] of the third party offer, [Wilson] shall not be obligated to purchase and [Jones] may thereafter sell said property to the third party making the original offer. ... This Right of First Refusal granted herein is for a five-year period only and shall terminate and become null and void five (5) years from the date of the parties^] closing of the sale and the purchase of [Lot 2-B].”

Jones did not convey Lot 2-B to Wilson within 90 days of the execution of the contract for sale, and it does not appear that Wilson paid additional consideration to Jones to obtain the automatic 30-day extension as provided in the contract. However, on January 15, 2004, Jones did convey Lot 2-B via a warranty deed naming as grantee a limited-liability company, “Affordable Self Storage, LLC” (“Affordable”), in which Wilson apparently had a controlling ownership interest. That deed did not refer to the August 28, 2003, contract between Jones and Wilson and did not contain a right of first refusal.

On April 21, 2005, Starr was telephoned by an area real-estate agent who stated that he could sell Starr Lot 2-A; that lot was adjacent to a parcel already owned by Starr. Starr and the agent immediately agreed on a price ($425,000) and sought to close a purchase transaction swiftly. On April 22, 2005, Jones purported to convey Lot 2-A to Starr via a quitclaim deed; Jones admitted in his answer that that purported conveyance of Lot 2-A had not been in conformity with the contractual right of first refusal and that out of “absent mindedness” he had “failed to recall the right of first refusal existed.”

On April 25, 2005, after becoming aware of Starr’s attempt to purchase Lot 2-A, Wilson orally notified Jones that he intended to exercise the right of first refusal; that notice was given three days after Jones had executed the deed to Lot 2-A and one day after he had delivered it to Benson. In response to Wilson’s oral notice, Jones attempted to notify the real-estate agent and Benson of the existence of the right of first refusal and apparently unsuccessfully sought to prevent Benson from delivering the deed to Starr. Although disputed, there is evidence in the record indicating that some sort of oral agreement between attorneys representing Wilson and Starr was reached under which Starr would agree to convey Lot 2-A to Wilson; Starr, for his part, denied both the existence of and the validity of any such alleged agreement. On April 27, 2005, Jones wrote Wilson a letter in which he stated that he had a contract to sell Lot 2-A at a price of $425,000, requested that Wilson “accept this as your notice of right of first refusal” as to Lot 2-A, and asked Wilson to “exercise your right within the contracted time period.” One day later, on April 28, 2005, Starr recorded the April 22, 2005, deed of Lot 2-A from Jones.

In entering its summary judgment against Wilson, the trial court concluded that Wilson did not have a valid right of first refusal as to Lot 2-A because the August 28, 2003, sales agreement was void. The trial court made that voidness determination on several stated grounds, including (a) lack of consideration, (b) failure of the parties to consummate their agreement within the times set forth in the agreement, and (c) the conveyance of Lot 2-B to Affordable rather than Wilson. However, none of the reasons stated by the trial court supports the summary judgment against Wilson on his claims against Jones.

We first consider the issue of lack of consideration. The trial court, in its judgment, cited Gulf Coast Realty Co. v. Professional Real Estate Partners, Inc., 926 So.2d 992, 1000 (Ala.2005), which cited a trial court’s opinion that had relied on Foy v. Foy, 484 So.2d 439, 442 (Ala.1986), as support for the proposition that “ ‘consideration for [an] option is a thing apart from the consideration for the sale of the land.’ ” However, the trial court in this case failed to note that in Gulf Coast the Supreme Court distinguished Foy and held that a development agreement containing a number of mutual covenants, including an option to purchase, was supported by consideration even though the agreement did not separately state consideration for the option; the Supreme Court stressed that, to the extent that its previous cases had required a “separate expression of consideration” for an option, that requirement “applies only to option contracts that are nudum pactum on their face, that is, those contracts that constitute only gratuitous promises by the would-be seller and thus fail for lack of consideration.” 926 So.2d at 1001.

In contrast, the Supreme Court in Gulf Coast cited with approval its decision in Rice v. Sinclair Refining Co., 256 Ala. 565, 56 So.2d 647 (1952), in which it was held that a lease and its amendments that contained an option to purchase constituted a single contract and that payment of rent under the lease provisions of the contract was consideration that was “sufficient to support the option to purchase under the contract so that it [could not] be withdrawn during the period specified for its continuance.” Rice, 256 Ala. at 573, 56 So.2d at 653. Thus, the proper rule is that stated by a noted treatise on the law of contracts:

“[W]here the option is simply a subsidiary part of a larger transaction, ... the consideration for the option is seldom a definitely determinable portion of what the option holder gives to the other party. It is not at all necessary for the parties to agree upon such a division of the total consideration given by the option holder. It is not necessary for either the parties or the court to make a separate valuation of the option in order that it should be enforceable.”

3 Eric M. Holmes, Corbin on Contracts § 11.7 (Rev. ed. 1996) (emphasis added); accord HGS Homes, Inc. v. Kelly Residential Group, Inc., 948 S.W.2d 251, 255 (Mo.Ct.App.1997). The failure of the August 28, 2003, agreement to separately enumerate consideration for the right of first refusal thus does not, as a matter of law, render the agreement void for lack of consideration.

Another rationale advanced by the trial court in support of the summary judgment against Wilson on his breaeh-of-contract claim against Jones is the failure of the parties to consummate the sale of Lot 2-B within the 90-day period set forth in the agreement or any potential extension thereof. As we have noted, the agreement between Wilson and Jones provided that “[t]his sale shall be closed on or before 90 days” after the date Jones signed it, i.e., August 28, 2003, or alternatively as much as 30 days later had Wilson paid an additional $2,000 to Jones (emphasis added); it further provided that time was of the essence of the contract. However, Lot 2-B was not conveyed until January 15, 2004, after the expiration of the contractual 90-day closing period (or a 30-day extension thereof).

Those facts, however, do not compel a conclusion that the entire contract automatically terminated and was of no force and effect after the 90-day closing period had expired. It is well settled under Alabama law that “[e]ven where time is expressly declared to be of the essence of the contract, such [a] provision may be waived by the conduct of the party for whose benefit the stipulation is made.” Thompson v. Thompson, 257 Ala. 10, 13, 57 So.2d 393, 395 (1952); see also Nelson v. Vick, 462 So.2d 935, 937-38 (Ala.Civ.App.1984) (recognizing rule in affirming trial court’s judgment in which sellers were found to have waived strict compliance with land-sale contract provisions regarding time for buyer’s payment of purchase-money installments). In this case, Jones conveyed Lot 2-B, to a corporation under Wilson’s control, less than two months after the expiration of the period in which the parties to the contract had originally intended that conveyance to take place. Moreover, when the right of first refusal as to Lot 2-A was brought to Jones’s attention more than a year after Lot 2-B had been conveyed, Jones sent Wilson a letter that, by its terms, was intended as a “notice of [that] right of first refusal” and that requested Wilson to exercise that right in accordance with the terms of the contract. As this court noted in Massey v. Jackson, 726 So.2d 656, 659 (Ala.Civ.App.1998), “[w]hether a party has waived strict compliance with the terms of a contract is a question of fact.” Viewing the record evidence in a light most favorable to Wilson, as we must, we conclude that there is substantial evidence from which a jury could properly conclude that Jones waived the closing-deadline and time-is-of-essence provisions of the August 28, 2003, contract that had benefited Jones alone or both Jones and Wilson mutually.

The trial court also concluded, and Jones and Starr also contend, that Wilson had no standing to assert any right of first refusal because Jones conveyed Lot 2-B to Affordable rather than Wilson. However, the August 28, 2003, contract contains no provision that would have expressly required Jones to deed the property only to Wilson. Generally, when a party is entitled to a conveyance of real property under a written instrument, but directs the titleholder of that property to convey the property to a third person, the titleholder, by doing as directed, has fully performed under the instrument. See Burt v. Henry, 10 Ala. 874, 883 (1846); see also Atkinson v. St. Matthias Church, 217 Mich. 204, 209, 185 N.W. 713, 714 (1921) (land contract between purchaser and vendor “did not stand in the way of’ purchaser’s consenting that title be conveyed to third party); Mallin v. Good, 93 Ill.App.3d 843, 848, 49 Ill.Dec. 168, 172, 417 N.E.2d 858, 862 (1981) (purchasers of real property remained in contractual privity with sellers even after property was deeded at purchasers’ request to a third-party nominee). That Affordable was deeded Lot 2-B does not, ipso facto, render it and not Wilson the proper party to enforce a breach of the August 28, 2003, agreement between Wilson and Jones.

Jones and Starr contend, however, that the contract for purchase, including its right of first refusal, was destroyed by virtue of the doctrine of merger by deed. Properly understood, the merger doctrine provides that in the ordinary ease, “in the absence of fraud or mistake, when a contract to convey has been consummated by execution and delivery of a deed, the preliminary contract becomes functus offi-cio, and the deed becomes the sole memorial of the agreement, and upon it the rights of the parties rest.” Ridley v. Moyer; 230 Ala. 517, 520, 161 So. 526, 528 (1935). However, it is well settled that “there are cases in which certain preliminary stipulations, such as are independent and collateral and not such preliminary agreement as would be merged in the conveyance, survive the deed and confer independent causes of action.” Id. (emphasis added); Rickenbaugh v. Asbury, 28 Ala.App. 375, 380, 185 So. 181, 184 (1938) (execution, delivery, and acceptance of deed did not destroy the obligation of the purchaser under the contract of sale to supply water to the seller for domestic purposes). A preemptive right of first refusal such as appears in the August 28, 2003, agreement, which is triggered when Jones “shall receive from a third party at any time ” an offer to purchase Lot 2-A and agree to sell Lot 2-A, is properly viewed as an independent and collateral agreement that survives the deed to Lot 2-B. See Stoneburner v. Fletcher, 408 N.E.2d 545, 549 (Ind.Ct.App.1980) (preemptive right to purchase adjoining lot survived conveyance of principal property); Landa v. Century 21 Simmons & Co., 237 Va. 374, 384, 377 S.E.2d 416, 421 (1989) (right of first refusal as to particular tract in contract to convey other tract “remained executory and survived the deed”); see also Winberg v. Cimfel, 248 Neb. 71, 79, 532 N.W.2d 35, 40-41 (1995).

Because substantial evidence would warrant a conclusion that Jones breached a valid right of first refusal held by Wilson as to Lot 2-A, we must conclude that the trial court erred in entering its summary judgment as to Wilson’s breach-of-contract claim against Jones. In so concluding, we emphasize that by no means do we hold that Wilson must necessarily prevail at trial on his claim, only that he is entitled to a trial.

We reach a different result, however, with respect to Wilson’s intentional-interference claim against Starr. That claim, as Wilson notes in his brief, requires proof of five elements:

“1) the existence of a contract or business relation; 2) the defendant’s knowledge of the contract or business relation; 3) intentional interference by the defendant with the contract or business relation; 4) the absence of justification for the defendant’s interference; and 5) damage to the plaintiff as a result of the interference.”

Soap Co. v. Ecolab, Inc., 646 So.2d 1366, 1371 (Ala.1994). The second of those elements amounts to a significant barrier to Wilson’s claim against Starr in this case; no evidence has been adduced indicating that, at the time that Jones deeded Lot 2-A to Starr, Starr had any knowledge of Wilson’s right of first refusal. In perhaps a tacit acknowledgment of that lack of knowledge, Wilson contends on appeal that Starr’s conduct after becoming aware of the right of first refusal — recording the deed to Lot 2-A and failing to adhere to the alleged oral agreement — will support an intentional-interference claim.

Wilson’s contentions are unsound. The sole “damage” Wilson claims in his appellate brief to have flowed from Starr’s actions is limited to an infringement of Wilson’s right to purchase and hold Lot 2-A in accordance with the first-refusal provisions of the August 28, 2003, contract. However, that damage was, as a matter of law, incurred when Jones executed and delivered the deed to Lot 2-A in exchange for Starr’s payment of the agreed purchase price so as to give Starr a colorable ownership interest in Lot 2-A, not when Starr gave notice via recordation of the existence of that interest. It is well settled that Alabama’s recording statute “does not render void an unrecorded deed except for the benefit of those particular classes of persons named in the statute” (Murphree v. Smith, 291 Ala. 20, 24, 277 So.2d 327, 329 (1973)), i.e., “purchasers for a valuable consideration, mortgagees and judgment creditors without notice.” Ala. Code 1975, § 35-4-90(a). Because there is no issue in this case concerning any mortgagees or judgment creditors of Jones and no indication that any other person has purchased Lot 2-A from Jones after Starr, Starr’s recording of the deed to Lot 2-A gave the conveyance no more validity than it had before its recordation and had no legal effect upon Wilson’s interests. Similarly, because oral contracts to convey real property are void unless all or part of the purchase price has been paid by, and possession has been transferred to, the purchaser (see Ala.Code 1975, § 8 — 9—2(5)), Starr’s refusal to be bound by any executo-ry oral agreement to convey Lot 2-A that may have been reached by his and Wilson’s attorneys amounts to nothing more than an exercise of Starr’s legal rights to deem the agreement void rather than an actionable interference in the contractual relations of Wilson and Jones. See Tom’s Foods, Inc. v. Carn, 896 So.2d 443, 455 (Ala.2004). We thus conclude that the summary judgment as to Wilson’s claim against Starr was correctly entered.

Having determined that the trial court correctly entered the summary judgment as to Wilson’s claims against Starr, we must now consider Starr’s appeal from the summary judgment as to his claims against Wilson asserted in his counterclaim. As we have noted, the trial court determined that those claims, which consisted of an ALAA claim, a claim of intentional interference with business or contractual relations, and a claim of slander of title, were to be summarily adjudicated as being “moot.” Although that court subsequently purported to enter an order vacating its judgment as to Starr’s claims, it did so outside its jurisdiction.

Starr correctly notes that a “moot” case is one that leaves nothing for the court to decide, i.e., “ ‘ “a case which seeks to determine an abstract question which does not rest on existing facts or rights, or involve conflicting rights so far as plaintiff is concerned.” ’ ” Chapman v. Gooden, 974 So.2d 972, 983 (Ala.2007) (quoting Case v. Alabama State Bar, 939 So.2d 881, 884 (Ala.2006), quoting in turn American Fed’n of State, County & Mun. Employees v. Dawkins, 268 Ala. 13, 18, 104 So.2d 827, 830-31 (1958)). In this case, Starr’s ALAA claim against Wilson might have been rendered moot had the trial court, or this court on review, explicitly or implicitly determined that Wilson’s claims against Starr in this case were not brought without substantial justification in fact or law, thereby failing the condition set forth in the ALAA to affix liability upon a litigant (see generally Ala.Code 1975, §§ 12-19-271 and 12-19-272). Because the issue whether Wilson, without justification, brought his claims against Starr in this action remains undecided, however, there remains a “conflict” as to Starr’s and Wilson’s “existing rights” to be resolved by the trial court. Similarly, the trial court’s determination that Starr is entitled to a judgment as a matter of law as to Wilson’s claim does not prevent Starr from prevailing on his slander-of-title and intentional-interference claims against Wilson; those claims are in no way contingent upon the validity of any other claim asserted in the case. We thus agree with Starr that the trial court erred in entering the summary judgment as to Starr’s claims against Wilson.

For the foregoing reasons, in case no. 2070731 (Wilson’s appeal), we affirm the summary judgment as to the intentional-interference claim against Starr, but we reverse that judgment as to the breach-of-contract claim against Jones. In case no. 2070281, we reverse the trial court’s summary judgment, entered on the ground of mootness, as to Starr’s claims against Wilson; Wilson’s motion to strike and dismiss is denied. The cause is remanded for further proceedings consistent with this opinion.

2070281 — REVERSED AND REMANDED.

2070731 — AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

THOMPSON, P.J., and BRYAN, THOMAS, and MOORE, JJ., concur.

      . Although Rule 13(f), Ala. R. Civ. P., appears to require leave of court to assert a counterclaim omitted from a defendant's answer, Rule 15(a), Ala. R. Civ. P., permits amendment of any pleading as of right on or before the 42d day before the first setting of a case for trial; because the case had not been set for a trial at the time Starr filed his counterclaim, Rule 15(a) may properly be said to prevail over Rule 13(f) here so as to render the counterclaim proper without leave of court. See 1 Champ Lyons, Jr., & Ally W. Howell, Alabama Rules of Civil Procedure Annotated § 15.3 (2004).

      .
      "A 'right of first refusal' is a conditional option empowering its holder with a preferential right to purchase a property on the same terms offered by or to a bona fide purchaser. It is known more technically as a ‘preemptive option,’ as a ‘right of preemption,’ or simply as a ‘preemption’ and is a right to buy before or ahead of others.”
      77 Am Jur.2d Vendor & Purchaser § 34 (2006) (footnotes omitted).


source: Caselaw Access Project

author: MOORE, Judge.

license: Public Domain

text:
    ALABAMA DEPARTMENT OF REVENUE v. JIM BEAM BRANDS COMPANY, INC.
    2070768.
    Court of Civil Appeals of Alabama.
    Dec. 19, 2008.
    Ron Bowden, gen. counsel, and Keith Maddox, asst, counsel, for appellant Alabama Department of Revenue.
    Duane A. Graham and Brandon D. Hu-ghey of Armbrecht Jackson LLP, Mobile, for appellee.
   MOORE, Judge.

This is a corporate-income-tax case. The facts are undisputed. Jim Beam Brands Company, Inc., is a multistate corporation doing business in Alabama. Jim Beam filed amended Alabama corporate tax returns for the 1993 and 1994 tax years. In those amended returns, Jim Beam claimed additional interest-expense deductions attributable to its Alabama business activities. After auditing those amended returns, the Alabama Department of Revenue (“the Department”) disallowed the interest-expense deductions claimed by Jim Beam, asserting that Jim Beam had incorrectly apportioned its interest-expense deductions to Alabama. The Department claimed that Jim Beam had incorrectly used the “gross-income-ratio” formula, pursuant to the version of § 40-18-35(a)(2), Ala.Code 1975, in effect in 1993 and 1994, when Jim Beam should have apportioned its interest-expense deductions to Alabama using the three-factor formula set forth in the version of Regulation 810-3-31-.02, Ala. Admin. Code (Dep’t of Revenue), in effect in 1993 and 1994. Based on its decision to disallow Jim Beam’s deductions, the Department assessed a total of $18,077.43 against Jim Beam for the 1993 and 1994 tax years.

Jim Beam appealed the assessment to the Department’s Administrative Law Division, and the appeal was assigned to an administrative law judge (“ALJ”). The ALJ issued an opinion and preliminary order, upholding the Department’s assessment based on the disallowance of Jim Beam’s interest-expense deductions. The ALJ’s preliminary order was made final on May 19, 2004.

Jim Beam appealed the ALJ’s final order to the Montgomery Circuit Court on June 11, 2004. On April 29, 2008, the Montgomery Circuit Court reversed the ALJ’s final order and entered a judgment in favor of Jim Beam, concluding that Jim Beam had properly calculated its interest-expense deductions pursuant to § 40-18-35 and that the Department had improperly elevated an agency regulation over a statute. The Department appeals from the judgment of the Montgomery Circuit Court. We affirm the judgment of the circuit court.

Standard of Review

In Bean Dredging, L.L.C. v. Alabama Department of Revenue, 855 So.2d 513 (Ala.2003), the Alabama Supreme Court thoroughly set out an appellate court’s standard of review in appeals from administrative proceedings before the Department:

“The circuit court reviews de novo an order of an administrative law judge in the State Department of Revenue; however, the order is presumed prima facie correct and the burden is on the appealing party to show otherwise. § 40-2A-9(g)(2), Ala.Code 1975.
“[The appellate court’s] standard of review is different from that applied by the circuit court in reviewing an administrative law judge’s order. When reviewing a ease in which the trial court sat without a jury and heard evidence in the form of stipulations, briefs, and the writings of the parties, [an appellate] court sits in judgment of the evidence; there is no presumption of correctness. Old Southern Life Ins. Co. v. Williams, 544 So.2d 941, 942 (Ala.1989); Craig Constr. Co. v. Hendrix, 568 So.2d 752, 756 (Ala.1990). When [an appellate] court must determine if the trial court misapplied the law to the undisputed facts, the standard of review is de novo, and no presumption of correctness is given the decision of the trial court. State Dep’t of Revenue v. Garner, 812 So.2d 380, 382 (Ala.Civ.App.2001); see also Ex parte Graham, 702 So.2d 1215 (Ala.1997).”

855 So.2d at 516-17. In this case, the circuit court based its decision entirely upon the briefs and arguments of the parties’ attorneys and the record of the proceedings before the ALJ. Thus, we must sit in judgment of the evidence, and the circuit court’s ruling carries no presumption of correctness. We also note that the ALJ’s decision was also based entirely upon the arguments of the parties’ attorneys, because the facts before it were undisputed.

History of § I0-18-35(a)(2), Ala.Code 1975, and the Gross-Income-Ratio Formula

As early as 1935, Alabama’s corporate-income-tax scheme allowed corporations an interest deduction using a formula referred to as the “gross-income-ratio” formula or the “gross-receipts” formula. See Ala. Acts 1935, Act No. 194, § 345.28; and Ala. Acts 1939, Act No. 399. Although the deduction allowed to corporations for their interest expenses was recodified numerous times in the intervening years, as of 1993 and 1994 the deduction was codified at § 40-18-35, Ala. Code 1975. That statute, entitled “Deductions allowed to corporations generally,” provided, in pertinent part:

“(a) ... In computing the net income of foreign corporations doing business in this state subject to the tax imposed by Section 40-18-31, there shall be allowed as deductions the items described in the following numbered subdivisions of this section, but only if, and to the extent that, such items are referable to or arise in connection with income of such corporations arising from sources within the State of Alabama; the proper apportionment and allocation of deductions of such foreign corporations with respect to the income arising from sources within and without the State of Alabama shall be determined under the rules and regulations prescribed by the department of revenue; provided, that in the case of foreign corporations doing business partly within and partly without Alabama where income is apportioned and allocated to Alabama the expense incurred by such corporation in connection with earning such income shall be apportioned to Alabama in such manner as shall fairly reflect the net income of the corporation attributable to its operations in Alabama; provided, that none of the deductions allowed by subdivision (13) of this section shall be subject to any such apportionment or allocation and all thereof shall be allowed in full, any provisions thereof to the contrary notwithstanding. Subject to the limitations contained in the preceding sentence, there shall be allowed as deductions in computing the net income of corporations:
“(2) All interest paid or accrued within the taxable year on its indebtedness except on indebtedness incurred or continued to purchase or carry obligations or securities, other than obligations of the United States issued after September 24, 1917, the interest upon which is wholly exempt from taxation under this title as income to the taxpayer; in the case of a foreign corporation, the proportion of such interest which shall be deductible shall be a portion of such interest determined by the ratio the amount of its gross income from sources within the State of Alabama bears to the amount of its gross income from all sources both within and without the State of Alabama.”

Section 40 — 18—35(a)(2) was amended in 1998 to delete the gross-income ratio from a foreign corporation’s interest-deduction calculation. See Ala. Acts 1998, Act No. 98-502. In 1999, the interest deduction was deleted altogether from § 40-18-35. See Ala. Acts 1999, Act No. 99-664, § 1. It is undisputed, however, that the gross-income-ratio formula for calculating a corporation’s allowable deductions for interest expense set out in § 40-18-35(a)(2) was valid and in effect as of 1993 and 1994, the tax years at issue in this case.

Background of Regulation 810-3-31-02 and the Three-Factor Formula

Alabama first adopted a corporate-income-tax scheme in 1933; those tax statutes were substantially amended in 1935. See Ala. Acts 1935, Act No. 194 (“the 1935 Act”). The 1935 Act required foreign corporations doing business in Alabama or owning income-producing property in Alabama to pay an income tax. See Ala. Acts 1935, Act No. 194, § 398. In response to the 1935 Act, the Department promulgated Regulation 398.2, which required multi-state corporations to apportion income to Alabama by separate geographical accounting or by the average of three factors: property, the cost of manufacturing, and sales.

Alabama first adopted the Multistate Tax Compact (“the MTC”) in 1967. See Ala. Acts 1967, Act No. 395. Alabama’s version of the MTC is currently codified at § 40-27-1, Ala.Code 1975. The MTC adopted a three-factor formula to calculate business income to be apportioned to this state; those factors consist of property, payroll, and sales. As currently codified, this formula is stated as follows: “All business income shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three.” § 40-27-1, Art. IV, ¶ 9.

The MTC does not specifically address the topic of interest-expense deductions. However, the Department asserts that, because business income is calculated under the three-factor formula, interest-expense deductions must also be calculated under that formula.

At the time Alabama adopted the MTC, the Department amended Regulation 398.2 to address the MTC. The Department amended Regulation 398.2 numerous times, and, in 1982, it was renumbered as Regulation 810-3-31-.02. A version of Regulation 810-3-31-.02 is still in effect today.

As of 1982, a portion of Regulation 810-3-31-.02 addressing “Deductions of Foreign Corporations” provided that “[cjorporations which report to Alabama in accordance with Reg. 810-3-31-.02 shall apportion their allowable deductions based upon that regulation as well as this regulation and Sec. 40-18-35.” Regulation 810-3-31-.02(l)(b). As best we can determine, that version of Regulation 810-3-31-.02 was in effect in 1993 and 1994. The version of § 40-18-35(a)(2) quoted earlier was also in effect.

Analysis

We are asked to decide if the circuit court correctly concluded that the specific language of § 40-18-35(a)(2), which, during the pertinent tax years, directed a foreign corporation to calculate interest-expense deductions pursuant to the gross-income-ratio formula, prevails over the more general language of Regulation 810-3-31-.02, which, during the pertinent tax years, directed a foreign corporation to “apportion their allowable deductions based upon that regulation as well as this regulation and Sec. 40-18-35.”

In Alco Standard Corp. v. State Department of Revenue, Administrative Law Division, Docket No. 94-335, the ALJ for the Department addressed this very issue. In Aleo Standard,, the taxpayer and the Department disputed the proper method of calculating the corporation’s interest-expense deduction to be applied to the taxpayer’s 1990, 1991, and 1992 tax returns. The Department had assessed the taxpayer using the three-factor formula set forth in Regulation 810-3-31-.02, but the taxpayer asserted that the gross-income-ratio formula set forth in § 40-J.8-35(a)(2) was the proper method to apply. The taxpayer appealed the Department’s assessment.

On appeal, the Department’s ALJ held in favor of the taxpayer, stating:

“[Section 40-18-35(a)(2), Ala.Code 1975,] provides a clear statutory method for prorating a foreign corporation’s interest expense to Alabama. If a regulation is contrary to the plain language of a statute, the regulation must be rejected and the statute followed. Ex parte City of Florence, 417 So.2d 191 (Ala.1982). The Alabama Supreme Court in Ex parte Jones Manufacturing Company, Inc., 589 So.2d 208 (Ala.1991), at page 210, stated as follows:
“ ‘The provisions of a statute will prevail in any case of a conflict between a statute and an agency regulation. Ex parte State Dep’t of Human Resources, 548 So.2d 176 (Ala.1988). An administrative regulation must be consistent with the statutes under which its promulgation is authorized. Ex parte City of Florence, 417 So.2d 191 (Ala.1982). An administrative agency cannot usurp legislative powers or contravene a statute. Alabama State Milk Control Bd. v. Graham, 250 Ala. 49, 33 So.2d 11 (1947). A regulation cannot subvert or enlarge upon statutory policy. Jefferson County Bd. of Educ. v. Alabama Bd. of Cosmetology, 380 So.2d 913 (Ala.Civ.App.1980).’
“In the Department’s defense, § 40-18-35(a) does provide that ‘the proper apportionment and allocation of deductions of such foreign corporations with respect to the income arising from sources within and without the State of Alabama shall be determined under the rules and regulations prescribed by the department of revenue.’ However a specific statute relating to a specific subject is regarded as an exception to and must prevail over a general statute relating to a broad subject. Ex parte Jones Manufacturing Co, Inc., supra, at page 211. Consequently, § 40-18-35(a)(2), which gives a specific formula that must be followed in prorating interest to Alabama, must control over the general provision that allows the Department to issue regulations relating to the apportionment and allocation of a deduction. Section 40-18-35(a)(2) must govern as to its specific field of operation, i.e., the proration of interest.
“An argument can also be made (by either the Taxpayer or the Department) that the gross income formula set out in § 40-18-35(a)(2) does not ‘fairly reflect the net income of the corporation attributable to its operations in Alabama,’ as mandated by § 40-18-35(a). But again, the plain language of § 40-18-35(a)(2) must control.
“Department Reg. 810-3-31-,02(l)(a)5.(i) clearly conflicts with the formula set out in § 40 — 18—35(a)(2), and is accordingly rejected.”

Aleo Standard, Docket No. 94-335 at 4-5 (footnote omitted). The Department did not appeal the ALJ’s decision in Aleo Standard.

In this case, on appeal to the Administrative Law Division, the ALJ concluded that Aleo Standard had been incorrectly decided. In concluding that the formula required by the regulation should be given priority over the formula required in the statute, the ALJ relied on language found in § 40-18-35(a) that provided that “the proper apportionment and allocation of deductions ... shall be determined under the rules and regulations prescribed by the department of revenue” and that “[deductions to foreign corporations] shall be apportioned to Alabama in such manner as shall fairly reflect the net income of the corporation.” The ALJ also relied heavily on the last sentence of § 40-18-35(a), which stated: “Subject to the limitations contained in the preceding sentence, there shall be allowed as deductions in computing the net income of corporations [a deduction for interest expense calculated pursuant to the gross-income-ratio formula].”

The ALJ also concluded that, since 1967, when the Department incorporated the MTC rules into its regulations, the Department had consistently required corporations to allocate and apportion their interest deductions pursuant to those regulations. The ALJ, relying on Pilgrim v. Gregory, 594 So.2d 114 (Ala.Civ.App.1991), placed great weight on the Department’s interpretation of § 40-18-35 because it was the agency charged with its enforcement.

On appeal to this court, the Department’s arguments track the grounds stated by the ALJ in its order. The Department relies on the language of § 40-18-35(a), and argues that the legislature declared that any deduction allowed for interest expense was to be calculated according to the method specified by the Department’s regulations rather than by the method specified in the statute. The Department also argues that the three-factor formula is the only method that fairly reflects the net income of the corporation attributable to Jim Beam’s operations in Alabama as required by the statute. The Department also asserts that the express language of § 40-18-35(a) made application of the gross-income-ratio formula subject to the limitations identified therein, the application of which mandated the use of the three-factor formula. The Department also asserts that, absent a compelling reason otherwise, its interpretation of the statute should be given great weight.

We cannot agree with the Department. In § 40-18-35, the legislature specifically adopted the gross-income-ratio formula as the proper means of determining a foreign corporation’s interest-expense deduction to be apportioned in Alabama. It cannot be disputed that the formula adopted in § 40-18-35(a)(2) was specific to the field of calculating interest-expense deductions allowed to foreign corporations. It also cannot be disputed that the three-factor formula, urged by the Department as the only proper method of computing interest-expense deductions, conflicts with the gross-income-ratio formula. “The provisions of a statute will prevail in any case of a conflict between a statute and an agency regulation.” Ex parte Jones Mfg. Co., 589 So.2d 208, 210 (Ala.1991). See also Ex parte Crestwood Hosp. & Nursing Home, Inc., 670 So.2d 45 (Ala.1995) (accord); Ex parte City of Birmingham, 992 So.2d 30, 32 (Ala.Civ.App.2008) (accord); Kids’ Klub, Inc. v. State Dep’t of Hum. Res., 874 So.2d 1075 (Ala.Civ.App.2003) (accord); and 1A N. Singer, Sutherland Statutory Construction § 31.02 (4th ed. 1985) (accord).

“It is axiomatic that administrative rules and regulations must be consistent with the constitutional or statutory authority by which their promulgation is authorized. See C. Sands, Sutherland Statutory Construction § 31.02 (4th ed. 1973). ‘A regulation ... which operates to create a rule out of harmony with the statute, is a mere nullity.’ Lynch v. Tilden Produce Co., 265 U.S. 315, 44 S.Ct. 488, 68 L.Ed. 1034 (1924). This is because an administrative board or agency is purely a creature of the legislature, and has only those powers conferred upon it by its creator. Woodruff v. Beeland, 220 Ala. 652, 127 So. 235 (1930).”

Ex parte City of Florence, 417 So.2d 191, 193-94 (Ala.1982).

We also reject the Department’s argument that the language of § 40-18-35(a) authorized the Department to adopt and apply a formula for calculating interest-expense deductions different than the one specifically set forth in § 40-18-25(a)(2). If we were to interpret the language of § 40-18-35(a) in the manner urged by the Department, it would mean that the legislature had authorized the Department to negate the application of the gross-income-ratio formula specified in § 40-18-35(a)(2) at any time by simply adopting a different formula, as it did by adopting Regulation 810-3-31-.02.

However,
“[i]t is never supposed that the Legislature intended in one act to introduce contradictory provisions; and it is never so declared unless that conclusion is required by the terms employed. It is the office of construction to reconcile inhar-mony of legislative terms, if that may be done without any assumption opposed to the language used.”

Mooring v. State ex rel. Braswell, 207 Ala. 34, 37, 91 So. 869, 871 (1921). Moreover, as a general rule, the Department is not authorized to subvert a statute, see Ex parte Jones Mfg. Co., 589 So.2d at 210 (“A regulation cannot subvert or enlarge upon statutory policy.”), or to render statutory language meaningless, see Ex parte Uniroyal Tire Co., 779 So.2d 227, 236 (Ala.2000) (“Tt must be presumed,’ however, that statutes are enacted with a ‘meaningful purpose.’ ” (quoting Adams v. Mathis, 350 So.2d 381, 385-86 (Ala.1977))). Thus, we construe the provision of § 40-18-35(a), which stated that “the proper apportionment and allocation of deductions of such foreign corporations ... shall be determined under the rules and regulations prescribed by the department” to mean that the apportionment shall be calculated pursuant to the Department’s rules and regulations to the extent those rules and regulations do not conflict with the provisions set forth in § 40-18-35 and other statutes addressed to that issue.

Further, we note that the language of § 40-18-35(a) was more general and was directed at deductions allowed to foreign corporations in general, while § 40-18-35(a)(2) was directed specifically at the method to be used in calculating interest-expense deductions for foreign corporations. As noted by the AL J in Aleo Standard and by the trial court in the instant case, any conflict or inconsistency in § 40-18-35(a) and § 40-18-35(a)(2) is resolved by application of the principle that a specific statutory provision must prevail over a more general statutory provision relating to a broad subject. See Ex parte Jones Mfg. Co., 589 So.2d 208 at 211.

In Ex parte Jones Manufacturing, supra, our supreme court rejected the Department’s argument that it had been granted by statute the authority to adopt such rules and regulations “ ‘as said department shall deem desirable’ ” governing the methods of ascertaining and determining gains and income. 589 So.2d at 210-11. Pursuant to that purported authority, the Department had promulgated a regulation applying certain recapture principles to a corporation’s complete liquidation of all of its assets. Id. The application of that regulation, however, conflicted with a statute in which the legislature had specifically stated that a corporation shall not be required to recognize a gain upon the sale of all of its assets. Id.

The court in Ex parte Jones noted that, under the Department’s interpretation of its authority, a conflict between two statutes would be created. Id. at 211. Although the court concluded that no conflict between the two statutes existed because it held that the Department had no authority to adopt regulations that violated existing statutes, the court noted that, even if a conflict were found, the more specific statute would govern as to its specific field of operation. Id.

In this case, the language of § 40-18-35(a) broadly recognized that the deductions allowed to foreign corporations, as a general topic, were to be “determined under the rules and regulations prescribed by the department” and were to “be apportioned to Alabama in such manner as shall fairly reflect the net income of the corporation attributable to its operations in Alabama.” However, the legislature then proceeded to set forth a specific method of calculating the specific deduction allowed foreign corporations for interest expense. Thus, to the extent there is any conflict between the language of § 40-18-35(a), which contained the more general language purportedly requiring application of the regulation setting out the three-factor formula, and § 40-18-35(a)(2), which contained the more specific language requiring application of the gross-income-ratio formula, the more specific language of subsection (a)(2) must be given priority.

The Department also argues that the three-factor formula is the only method that fairly reflects the net income of the corporation attributable to Jim Beam’s operations in Alabama, as required by the statute. However, such an argument appears to challenge the appropriateness of the method adopted by the legislature in § 40-18-35(a)(2) for calculating interest-expense deductions, an issue not appropriately directed to this court. See Jansen v. State ex rel. Downing, 273 Ala. 166, 168, 137 So.2d 47, 48 (1962) (“all questions of propriety, wisdom, necessity, utility and expediency in the enactment of laws are exclusively for the legislature, and are matters with which the courts have no concern”). See also DeKalb County LP Gas Co. v. Suburban Gas, Inc., 729 So.2d 270, 276 (Ala.1998) (“[I]t is our job to say what the law is, not to say what it should be.”).

The Department also argues that, absent a compelling reason otherwise, its interpretation of the statute should be given great weight. We do not disagree with this general statement of the law.

“[I]t is well established that in interpreting a statute, a court accepts an administrative interpretation of the statute by the agency charged with its administration, if that interpretation is reasonable. Ex parte State Dep’t of Revenue, [683 So.2d 980 (Ala.1996) ] (citing Alabama Metallurgical Corp. v. Alabama Pub. Serv. Comm’n, 441 So.2d 565 (Ala.1983)). Absent a compelling reason not to do so, a court will give great weight to an agency’s interpretations of a statute and will consider them persuasive. Ex parte State Dep’t of Revenue, supra (citing Moody v. Ingram, 361 So.2d 513 (Ala.1978)).”

State v. Pettaway, 794 So.2d 1153, 1157 (Ala.Civ.App.2001). However, as established above, when the Department’s interpretation conflicts with the applicable statute, the Department’s regulation cannot stand.

Finally, the Department attempts to argue that the three-factor formula adopted in Regulation 810-3-31-.02 satisfied the requirements of § 40-18-35(a)(2). We disagree. The Department has consistently argued that the gross-income-ratio formula and the three-factor formula are distinct and contradictory methods of calculating interest-expense deductions. If that were not so, then this litigation would have been pointless because application of the formulas would have yielded the same deduction for Jim Beam’s 1993 and 1994 tax years. Additionally, the ALJ in Aleo Standard unequivocally concluded that the two formulas were in conflict. We agree with that conclusion.

We, therefore, agree with the circuit court that the ALJ’s decision was erroneous. We affirm the circuit court’s judgment.

AFFIRMED.

THOMPSON, P.J., and PITTMAN, BRYAN, and THOMAS, JJ., concur.

      . Unless otherwise noted, references in this opinion to § 40-18-35, Ala.Code 1975, and Regulation 810-3-31-.02, Ala. Admin. Code, are to the versions of that Code section and regulation in effect during the applicable tax years — i.e., 1993 and 1994.

      . Because the parties dispute only if the gross-income-ratio formula was to be applied — -not how the formula works or how it was to be applied in this case — we need not address the mathematical formula or functions involved.

      . Although Alabama adopted the MTC, it appears that the MTC did not become effective in Alabama until several years later. Although the Department amended its regulation in response to the MTC in 1967, the Department challenged the validity of the MTC in Alabama as late as 1993. See State Dep't of Revenue v. MGH Mgmt., Inc., 627 So.2d 408, 411 (Ala.Civ.App.1993) (rejecting the Department’s challenge to the validity and effectiveness of the MTC in Alabama and recognizing that the MTC became effective in Alabama in 1977, upon the recodification of the Alabama Code). Although the regulations adopted in 1967 are not challenged in this appeal, it is unclear how they could have been valid if the MTC did not become effective in Alabama until 1977.

      . We have correctly quoted the regulation as it existed in 1993 and 1994. It is not completely clear, however, to what "this regulation” and "that'regulation” were intended to refer.

      . In Aleo Standard, the same versions of § 40-18-35(a) and Regulation 810-3-31-.02 that apply in this case were in effect during the tax years at issue in that case.