DGB, LLC et al. v. Michael Hinds et al.

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REL: 06/30/2010 Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA OCTOBER TERM, 2009-2010 1081767 DGB, L L C , e t a l . v. M i c h a e l Hinds Appeal from B a l d w i n et a l . Circuit Court (CV-08-9001120) LYONS, Justice. DGB, L L C ("DGB"), D a v i d C. G i b s o n V a n c e a p p e a l P. H e r r i c k , B r a d l e y P. K a t z , a n d from a judgment o f t h eBaldwin Circuit Court d i s m i s s i n g t h e i r claims against m u l t i p l e defendants. affirm the t r i a l and remand court's the case judgment i n p a r t , r e v e r s e to the trial court We i t i n part, f o r further 1081767 proceedings. Procedural Herrick, a limited Harbor"). Katz, and Vance own company liability known On F e b r u a r y (collectively History "the DGB. as 5, 2 0 0 8 , DGB, investors") K i r k l a n d ; Ray J a c o b s e n ; D e c a t u r , DGB Bon i s part-owner Harbor, LLC Herrick, Katz, sued ("Bon and Vance Michael Hinds; ("Decatur"); LLC of Gulf Paul Stream P r o p e r t i e s , I n c . ("Gulf S t r e a m " ) ; F r u i t t i c h e r - L o w e r y A p p r a i s a l Group, Inc. ("Fruitticher"); ("Seaside"), stated i n the Montgomery claims suppression, of of duty, defendants real property i n v e s t o r s amended t h e i r add claims enrichment, action was Michael against and The LLC complaint fraudulent oppression, conspiracy Harbor's located i n Baldwin Eden Jones Hinds, and The c o m p l a i n t t o Bon Company, misrepresentation, negligence, related Title Court. fraud, shareholder v a r i o u s named d e f e n d a n t s . the Seaside Circuit fraudulent securities fiduciary The and breach against the a l l e g e d m i s c o n d u c t by J u l y 2005 p u r c h a s e of County. 2008 t o add H i n d s ' s w i f e , as a d e f e n d a n t and t o the fraudulent complaint Hindses for transfer. t r a n s f e r r e d to the Baldwin 2 i n May conversion, In October Circuit unjust 2008, Court. the Gulf 1081767 Stream and K i r k l a n d s u b s e q u e n t l y against them. They argued that moved to dismiss the claims that the i n v e s t o r s ' claims were b a r r e d by t h e a p p l i c a b l e s t a t u t e s o f l i m i t a t i o n ; t h a t t h e investors state lacked a claim 12(b)(6), to plead Rule upon w h i c h A l a . R. their 9(b), identical their relief the i n v e s t o r s had f a i l e d could C i v . P.; and t h a t be granted, A l a . R. motion. C i v . P. Decatur see the i n v e s t o r s had fraud claims with p a r t i c u l a r i t y complaint. transfer standing; that to Rule failed as r e q u i r e d b y and t h e H i n d s e s filed an T h e i n v e s t o r s r e s p o n d e d a n d m o v e d t o amend On M a r c h 3, 2 0 0 9 , e x c e p t claim asserted against f o r the fraudulent- the Hindses, the t r i a l court d i s m i s s e d the i n v e s t o r s ' c l a i m s a g a i n s t Gulf Stream, K i r k l a n d , Decatur, and t h e H i n d s e s . granted the On t h e same i n v e s t o r s ' motion for day, the t r i a l leave to court amend their complaint. Jacobsen, the Fruitticher, investors' claims arguments as t h e o t h e r and a second filed accounting investors against amended a third then them, defendants. and d i s s o l u t i o n filed and S e a s i d e asserting The complaint, 3 the investors adding o f Bon H a r b o r . amended moved t o d i s m i s s complaint, responded a claim Within same f o r an a week, t h e stating t h e same 1081767 claims and [trial noting court's] [investors'] their trial transfer the allegations." against specificity t h e same in a a l lbut "address[ed] The d e f e n d a n t s stating Ultimately, dismissed claim complaint over to dismiss, motions. court t h e new concern fraud motions previous that the of the a l l renewed grounds series the as their of orders, the investors' fraudulent- the Hindses. On A u g u s t 24, 2009, on the i n v e s t o r s ' motion, the t r i a l court c e r t i f i e d i t s orders of dismissal as 54(b), C i v . P. investors appealed. Facts In any against trial from of enrichment transfer brief their against A l a . R. i n t h e T h i r d Amended on a p p e a l , court's claims d i s m i s s a l of t h e i r and from alleging the Hindses. the t r i a l conversion The The Complaint the investors expressly and Seaside claim against court. Rule the t r i a l Fruitticher dismissal under as A l l e g e d their appeal final and waive claims court's unjust investors' fraudulent- the Hindses remains pending before the Accordingly, i n v e s t o r s ' claim seeking the only claims an a c c o u n t i n g before us a r e t h e and d i s s o l u t i o n o f Bon Harbor and t h e i r c l a i m s a l l e g i n g f r a u d u l e n t m i s r e p r e s e n t a t i o n , fraudulent suppression, securities 4 fraud, shareholder 1081767 oppression, conspiracy Hinds breach against ("Hinds"), of fiduciary Gulf and Stream, duty, negligence, Kirkland, Jacobson. In Decatur, their and Michael third amended complaint the i n v e s t o r s a l l e g e the f o l l o w i n g f a c t s r e l e v a n t to those claims. Hinds and and Gulf formed asked Stream. Bon Baldwin Kirkland, In Harbor County. Herrick, Herrick, DGB, At early about and purchased $2,000,000. Bon Stream, Decatur and and develop real the Hinds to i n v e s t i n the agreed, a 40% and in interest Hinds and Kirkland investors allege negotiate and Harbor that in Bon Decatur Gulf Stream property in and Kirkland development. 2005, their Harbor for i s owned by D e c a t u r , Gulf of roles managerial decisions." and, land their respective managers a c t e d as m a n a g e r s o f Bon they execute because therefore, June own DGB. and Harbor, same t i m e , Vance Vance other e n t i t i e s , 2005, purchase K a t z , and Katz, company, to through as M a n a g i n g through entrusted Hinds transactions purported and on Harbor. The Kirkland "to behalf expertise and Members h a v i n g a u t h o r i t y The investors Decatur and 5 also Gulf allege Stream, of as Bon their t o make that, as alleged 1081767 majority members o f Bon "fiduciary obligations Harbor, Hinds to protect expectations of the [investors] and K i r k l a n d the l e g i t i m a t e Bon Baldwin 2005 the purchase Harbor County ("the transaction"). investors that $10,000,000. of" real purchased the At 14.36 Hinds and purchase Hinds and investment acres on of July Kirkland price real 6, Kirkland's property 2005 the ("the request, investors' appears that transaction. purchase and financed and Vance Seaside The investors contribution Vance personally this as fact are closing contributed remaining unclear, for Hinds i t the toward the does not or by specify Herrick, $7,500,000 f r o m U n i t e d Bank, w h i c h H e r r i c k , guaranteed. was Although agent was made t h r o u g h DGB The to the Fruitticher $2,500,000 amended c o m p l a i n t directly. through a loan of acted p r i c e ; the t h i r d whether t h i s Katz, allegations in July property a p p r a i s e d the p r o p e r t y at a p p r o x i m a t e l y $14,000,000. the facts Harbor. represented for facts including p r o p e r t y b y Bon property") 1 them and t o d i s c l o s e m a t e r i a l s u r r o u n d i n g Bon H a r b o r ' s b u s i n e s s a c t i v i t i e s , surrounding owed and K i r k l a n d was Katz, d i d not A l t h o u g h t h e c o m p l a i n t a l l e g e s t h a t t h i s o c c u r r e d on J u l y 6, 2 0 0 5 , o t h e r d o c u m e n t s i n t h e r e c o r d i n d i c a t e t h a t t h e d a t e on w h i c h t h e p u r c h a s e o c c u r r e d was J u l y 8, 2 0 0 5 . 1 6 1081767 contribute unclear any funds whether to the J u l y they guaranteed 2005 t r a n s a c t i o n , the loan Bon H a r b o r p u r c h a s e d t h e p r o p e r t y to the i n v e s t o r s , property for from days before from U n i t e d Bank. from Jacobsen. Bon Harbor Unknown purchased f o r $10,000,000, Jacobsen had p u r c h a s e d the $5,000,000. whom allege just and i t i s The Jacobsen that Hinds third amended purchased complaint and K i r k l a n d , property does not the property. The the state investors and t h r o u g h them D e c a t u r and G u l f S t r e a m , knew t h a t J a c o b s e n h a d p u r c h a s e d t h e p r o p e r t y f o r one-half what Bon H a r b o r paid from the i n v e s t o r s , "before, transaction. The investors concealed "entirely f o r i t but concealed Kirkland The was and t h a t investors also during, allege under the investors allege that July price--to 2005 The i n v e s t o r s the property, he also the control" information of Hinds " d i d not have a c c e s s " and to i t . and to d i s c l o s e facts material to transaction--including them b u t f a i l e d 2005 Hinds, K i r k l a n d , Decatur, G u l f Stream had f i d u c i a r y d u t i e s the the that fact the J u l y and a f t e r " that Jacobsen's purchase t o do s o . allege that "obtained" funds H i n d s and K i r k l a n d u s e d Bon H a r b o r 7 before from assets Jacobsen Bon Harbor to obtain purchased and that options on 1081767 and to develop their own p r o p e r t i e s p u r c h a s e d b y Bon H a r b o r . Kirkland concealed The silence by property they records were 2007 initiated United when by Bank constructive 2006, related actual they United litigation") knowledge when Hinds to the July related and claims review de that and K i r k l a n d the t r i a l them. learn to obtain the whether They a l s o their allege that i n separate litigation to the transaction they could concealed sent them facts ("the n o t have until had February t a x documents transaction. Standard We Hinds and of the concealed deposed of the f a c t s 2005 to knowledge Bank from initiatives a fraud." were that property t h e y " r e l i e d on t h e d e f e n d a n t s ' themselves committing to the allege information independent for d i d n o t have until 6, allege that forgoing fiduciaries The i n v e s t o r s a l l of this investors adjacent of Review court's dismissal of the i n v e s t o r s ' novo. "On a p p e a l , a d i s m i s s a l i s n o t e n t i t l e d t o a presumption of correctness. Jones v. Lee County C o m m i s s i o n , 394 S o . 2 d 9 2 8 , 930 ( A l a . 1 9 8 1 ) ; A l l e n v. J o h n n y B a k e r H a u l i n g , I n c . , 545 S o . 2 d 7 7 1 , 772 ( A l a . C i v . A p p . 1 9 8 9 ) . The a p p r o p r i a t e standard of r e v i e w u n d e r R u l e 1 2 ( b ) ( 6 ) [ , A l a . R. C i v . P . , ] i s w h e t h e r , when t h e a l l e g a t i o n s o f t h e c o m p l a i n t a r e v i e w e d most s t r o n g l y i n the pleader's favor, i t 8 1081767 appears that the pleader c o u l d p r o v e any s e t o f circumstances that would e n t i t l e her to relief. R a l e y v . C i t i b a n c o f A l a b a m a / A n d a l u s i a , 474 So. 2 d 6 4 0 , 641 ( A l a . 1 9 8 5 ) ; H i l l v . F a l l e t t a , 589 So. 2 d 746 (Ala. Civ. App. 1991). In making this determination, t h i s C o u r t does not c o n s i d e r whether the plaintiff will ultimately prevail, but only whether she may possibly prevail. Fontenot v. Bramlett, 470 So. 2 d 6 6 9 , 671 ( A l a . 1 9 8 5 ) ; R i c e v . U n i t e d I n s . Co. o f A m e r i c a , 465 So. 2 d 1 1 0 0 , 1101 ( A l a . 1 9 8 4 ) . We n o t e t h a t a R u l e 1 2 ( b ) ( 6 ) d i s m i s s a l i s p r o p e r o n l y when i t a p p e a r s b e y o n d d o u b t t h a t t h e p l a i n t i f f c a n p r o v e no s e t o f f a c t s i n s u p p o r t o f the claim that would entitle the plaintiff to r e l i e f . G a r r e t t v . H a d d e n , 495 So. 2 d 6 1 6 , 617 ( A l a . 1 98 6 ) ; H i l l v . K r a f t , I n c . , 496 So. 2 d 7 6 8 , 769 (Ala. 1986)." Nance v. Matthews, 622 So. 2d 297, 299 ( A l a . 1993). Analysis The dismissal trial of court the on erred in dismissing Jacobson by not investors' brief asserted appeal, did the Hinds, specify claims. investors their (hereinafter in their I. to each The in events g i v i n g r i s e J u l y 2005. The investors to to the of Gulf for i t s in trial the court grounds Stream, collectively their as and "the of L i m i t a t i o n Statutes motions that Kirkland, referred defendants") as grounds Accordingly, argue claims Decatur, the dismiss. to the i n v e s t o r s ' claims filed 9 their initial occurred complaint i n 1081767 February 2008, Regarding more the dissolution than investors' of Bon two and claim Harbor, § a half for an 10-12-38, years later. accounting and A l a . Code 1975, provides: "On a p p l i c a t i o n b y o r f o r a member, t h e c i r c u i t court f o r the county i n which the a r t i c l e s of o r g a n i z a t i o n a r e f i l e d may d e c r e e d i s s o l u t i o n o f a limited liability company whenever i t i s not r e a s o n a b l y p r a c t i c a b l e t o c a r r y on t h e b u s i n e s s i n conformity with the a r t i c l e s of organization or o p e r a t i n g agreement." (Emphasis added.) Accordingly, DGB, as a member of Bon Harbor, c o u l d have sought a j u d i c i a l d i s s o l u t i o n o f Bon H a r b o r "whenever" DGB i t was practicable to carry could Harbor's a r t i c l e s there i s no barred of and on t h e b u s i n e s s § 10-12-38. f o r concluding by a s t a t u t e of 8-6-19(f), that that applicable A l a . Code claims statutes of their limitations 1975. with" As a claim Bon result, i s time- claims fall 10 period applies t o each S e e , e . g . , §§ The are untimely of l i m i t a t i o n . remaining this reasonably limitations. statutory these "not i n conformity the investors' remaining claims. argue all that of organization. basis A two-year show 6-2-38(l), defendants, therefore, and a r e b a r r e d The i n v e s t o r s within by t h e argue the savings that clause 1081767 of § 6-2-3, A l a . Code 1975, w h i c h states: "In a c t i o n s seeking relief on t h e g r o u n d o f f r a u d where t h e s t a t u t e has c r e a t e d a b a r , t h e c l a i m m u s t n o t be c o n s i d e r e d a s h a v i n g a c c r u e d u n t i l t h e discovery by the aggrieved party of the fact c o n s t i t u t i n g t h e f r a u d , a f t e r w h i c h he m u s t h a v e t w o years w i t h i n which to prosecute h i s a c t i o n . " The their investors argue fraud-based fraudulent their duty, claims civil and cases, to other and existence applies torts to a to to breach of We 2 t h a t § 6-2-3 i n fraud fraudulent only also oppression, have r e c o g n i z e d of a cause of a c t i o n . ' " 435 fraud--but and n e g l i g e n c e . not a r i s i n g not misrepresentation, securities conspiracy, applies o f A l a b a m a , N.A., 6-2-3 of shareholder T h i s C o u r t h a s s t a t e d : "We 'applied § claims--fraudulent suppression, remaining fiduciary that in agree. may be appropriate of the H o l d b r o o k s v. C e n t r a l Bank So. 2d 1250, 1251 concealment ( A l a . 1983) (quoting T o n s m e i r e v . T o n s m e i r e , 285 A l a . 4 5 4 , 4 5 7 , 233 S o . 2 d 4 6 5 , 467 (Ala. 1970)). regarding More specifically, a predecessor of § this Court has explained, 6-2-3: "While t h i s s t a t u t e i s u s u a l l y a p p l i c a b l e to cases wherein f r a u d i s the b a s i s of the cause of action, i t i s the s e t t l e d construction that i t s 2 that they Although the defendants argued before the t r i a l court the savings clause applied only to fraud-based claims, do n o t r e a s s e r t t h a t a r g u m e n t on a p p e a l . 11 1081767 purpose is to make a v a i l a b l e at law the rule t h e r e t o f o r e p r e v a i l i n g i n e q u i t y ; and a p p l i e s t o a f r a u d u l e n t concealment of the e x i s t e n c e of a cause o f a c t i o n f r o m t h e p a r t y i n whose f a v o r t h e c a u s e o f a c t i o n e x i s t s . A p a r t y c a n n o t p r o f i t by h i s own wrong in concealing a cause of action against h i m s e l f u n t i l b a r r e d b y l i m i t a t i o n . The s t a t u t e o f l i m i t a t i o n s c a n n o t be c o n v e r t e d i n t o an instrument of fraud." Hudson v. Moore, overruled on (Ala. other 239 Ala. 130, g r o u n d s by 1997)(emphasis added). 133, Ex p a r t e 194 So. Sonnier, 147, 707 149 (1940) So. 2d 635 3 S e e a l s o P a y t o n v . M o n s a n t o Co., 801 So. 2d 8 2 9 , 834 (Ala. 2001)(stating regarding complaint a l l e g i n g negligence, wantonness, b r e a c h of a d u t y to warn, f r a u d , m i s r e p r e s e n t a t i o n and d e c e i t , p r i v a t e and p u b l i c n u i s a n c e , trespass, battery, a s s a u l t , n e g l i g e n t and i n t e n t i o n a l i n f l i c t i o n of emotional d i s t r e s s , s t r i c t l i a b i l i t y , and b r e a c h o f r i p a r i a n r i g h t s t h a t "the plaintiff can overcome a defense of limitations by a v e r m e n t and p r o o f o f c i r c u m s t a n c e s p e r m i t t i n g t o l l i n g of the r u n n i n g o f t h e l i m i t a t i o n s p e r i o d , s u c h as f r a u d on t h e p a r t of the defendant i n c o n c e a l i n g the wrongdoing . . . . " ) ; A n g e l l v . S h a n n o n , 455 So. 2d 8 2 3 , 8 2 3 - 2 4 ( A l a . 19 8 4 ) ( a p p l y i n g § 6-2¬ 3 a n d R u l e 9 ( b ) , A l a . R. C i v . P., to a breach-of-contract c l a i m ) ; M i l l e r v . M o b i l e C o u n t y B d . o f H e a l t h , 409 So. 2d 420 (Ala. 1981)(applying § 6-2-3 and R u l e 9(b) to a b r e a c h - o f c o n t r a c t c l a i m ) ; Amason v. F i r s t S t a t e Bank of L i n e v i l l e , 369 So. 2d 5 4 7 , 550 ( A l a . 1979) ( " [ S e c t i o n 6-2-3] w o u l d i n e f f e c t s t a y the r u n n i n g of the g e n e r a l s t a t u t e of l i m i t a t i o n s f o r torts (one y e a r ) u n t i l s u c h t i m e as A m a s o n d i s c o v e r e d , or ought to have d i s c o v e r e d , t h e f r a u d . " ) ; Van A n t w e r p v. Van A n t w e r p , 242 A l a . 92, 1 0 0 , 5 So. 2d 7 3 , 80 (1941) (stating r e g a r d i n g a p r e d e c e s s o r o f § 6-2-3 t h a t " t h i s s t a t u t e makes p r o v i s i o n f o r a l i m i t a t i o n o f one y e a r f r o m t h e d a t e o f ... discovery, provided i t s discovery was concealed by some a c t i v i t y o f d e f e n d a n t , a m o u n t i n g t o a f r a u d . And in this connection i t i s n o t l i m i t e d t o a c t i o n s b a s e d on f r a u d . " ) ; R u t l e d g e v . F r e e m a n , 914 So. 2d 364, 369 ( A l a . C i v . A p p . 2004) 3 12 1081767 In 189 B & B P r o p e r t i e s v. ( A l a . C i v . App. plaintiff's concealment rule' that respect rule' to 1997), assertion "without tolls the negligence Dryvit the of Court stating: running of the wantonness based (Ala. Henson v. 1993)). 4 Celtic The Life Court Civil on actions. 621 2d found a 'discovery period The 708 So. So. 2d Appeals' So. fraudulent limitations I n s . Co., of 708 " T h e r e i s no i s a p p l i c a b l e only to f r a u d a c t i o n s . " (citing Inc., of C i v i l Appeals tolling merit," or Systems, with 'discovery 2d at 1268, conclusion 192 1274 is ( " A l t h o u g h t h e w o r d i n g o f § 6-2-3 indicates that i t applies o n l y t o f r a u d a c t i o n s , t h a t s e c t i o n and i t s p r e d e c e s s o r have l o n g b e e n h e l d t o a p p l y t o any c a u s e o f a c t i o n t h a t has b e e n fraudulently concealed from a plaintiff." (citations o m i t t e d ) ) ; C r o w e v . C i t y o f A t h e n s , 733 So. 2d 4 4 7 , 453 ( A l a . C i v . App. 1 9 9 9 ) ( a p p l y i n g p l e a d i n g r e q u i r e m e n t s o f R u l e 9(b) t o c o n v e r s i o n a c t i o n ) ; C i t y o f G a d s d e n v . H a r b i n , 398 So. 2 d 7 0 7 , 709 (Ala. Civ. App. 1981)("It is well settled that a f r a u d u l e n t c o n c e a l m e n t of a t o r t o r i n j u r y by t h e d e f e n d a n t w i l l t o l l the r u n n i n g of the s t a t u t e of l i m i t a t i o n s u n t i l the t o r t or i n j u r y i s d i s c o v e r e d o r c o u l d have been d i s c o v e r e d by due diligence."). T h i s C o u r t h a s s t a t e d t h a t § 6-2-3 does not p r o v i d e a "discovery rule" for non-fraud claims. See, e.g., Boyce v. C a s s e s e , 941 So. 2d 932 , 94 6 n.2 (Ala. 2006); Sanders v. P e o p l e s B a n k & T r u s t Co., 817 So. 2 d 6 8 3 , 68 6 ( A l a . 2001 ) ; T r a v i s v . Z i t e r , 681 So. 2 d 1 3 4 8 , 1355 ( A l a . 1 9 9 6 ) ; Henson v. C e l t i c L i f e I n s . Co., 621 So. 2 d 12 68 , 1274 ( A l a . 1 993); T r u s t Co. B a n k v . S t a t e , 420 So. 2d 10, 13 ( A l a . 1 9 8 2 ) ; S i n g e r A s s e t F i n . Co. v . C o n n e c t i c u t Gen. L i f e I n s . Co., 975 So. 2 d 375, 382 ( A l a . C i v . App. 2007 ); and Williams v. N o r w e s t F i n . A l a b a m a , I n c . 723 So. 2 d 97, 104 ( A l a . C i v . A p p . 1 9 9 8 ) . These cases, however, o n l y disavow a g e n e r a l " d i s c o v e r y r u l e " f o r 4 13 1081767 inconsistent 6-2-3 with action of a c t i o n exists." Furthermore, from concealed allegation We Systems, A l a . at i s misplaced that to overrule extent the fraudulent concealment of a cause existence of a B So. r e l i a n c e on See Properties application of § their claims. claims, This plaintiff's limitations, within the v. Dryvit with our to the action. " a p p l i e s to the f r a u d u l e n t concealment cause supra, § of 6-2-3 C o u r t has complaint action," may apply stated: on Hudson, clause even to "When, a s i t s face the complaint savings Henson, footnote 6-2-3 i n v e s t o r s have s u f f i c i e n t l y a l l e g e d the f r a u d u l e n t of 149. fraudulently i t conflicts of at t h a t d e c i s i o n d i d not & B that recognizing the 194 of a c t i o n . the § 6-2-3 the cause defendant decisions Because of the therefore Inc., because their in this i s barred § non-fraud claims; they do not concealment of a cause of a c t i o n . 14 6-2-3." speak to i f the non-fraud case, the by t h e s t a t u t e Miller the of concealment m u s t a l s o show t h a t he o r s h e of § favor 133, Appeals' that of of the cause the e x i s t e n c e supra. 239 above, of the e x i s t e n c e i n whose the Court of C i v i l any cited concealment the p a r t y Hudson, So. 2 d a t 1 2 7 4 , involve 4, principle, "applies to a fraudulent a cause 621 the s e t t l e d v. of falls Mobile fraudulent 1081767 C o u n t y Bd. o f H e a l t h , burden that i s u p o n he who he comes Lineville, 369 from tolling 1348, the b e n e f i t i t . " Amason 2d 547, 551 on t h e s t a t u t e v. provisions First of l i m i t a t i o n s This to State ( A l a . 1979). do n o t a p p l y . " "[T]he o f § 6-2-3 show Bank of However, i s proper the face of the complaint, i t i s apparent 1351 claims So. ( A l a . 1981). claims within " d i s m i s s a l based if, 409 S o . 2 d 420 , 422 T a v i s v. Z i t e r , a only that the 681 S o . 2 d ( A l a . 1996). Court fall has within held that to show a plaintiff's o f § 6-2-3 the savings clause that a complaint must a l l e g e t h e t i m e and c i r c u m s t a n c e s o f t h e d i s c o v e r y o f t h e cause 823, of a c t i o n . 823-24 See, e.g., A n g e l l ( A l a .1984); v. Shannon, 455 So. P a p a s t e f a n v. B & L C o n s t r . Co., ( A l a . 1978). The c o m p l a i n t must 356 So. 2 d 1 5 8 , 160 the facts the cause o f a c t i o n o r i n j u r y and what p r e v e n t e d t h e p l a i n t i f f o r c i r c u m s t a n c e s by w h i c h also 2d the defendants concealed from d i s c o v e r i n g the f a c t s s u r r o u n d i n g the i n j u r y . Smith v. (Ala. 2003); So. 2d See a l s o National 339, Sec. 347 Lowe v . E a s t E n d Mem'l H o s p . & H e a l t h C t r s . , 477 Amason, ( A l a . 1985); 8 60 Miller, 369 S o . 2 d a t 5 5 0 . 15 So. 2d See, e.g., 345, 341-42 I n s . Co., allege 409 343, So. 2d at 422. 1081767 In medical that Miller, clinic they the and plaintiffs, alleged had injured concealment, c l i n i c and the m a n u f a c t u r e r had defective and from defective and the unreasonably the and wife, sued the manufacturer of a c o n t r a c e p t i v e Regarding product husband Plaintiff dangerous.'" the wife plaintiffs some years device before. that the " ' f r a u d u l e n t l y conceal[ed] the dangerous after they 409 So. alleged only a condition knew 2d said 422. of product This stated: "The c o m p l a i n t f a i l s t o a l l e g e a n y o f t h e f a c t s o r c i r c u m s t a n c e s by w h i c h t h e a p p e l l e e s c o n c e a l e d the c a u s e o f a c t i o n o r i n j u r y . The c o m p l a i n t a l s o f a i l s to allege what prevented Mrs. Miller from d i s c o v e r i n g f a c t s s u r r o u n d i n g t h e i n j u r y . See A m a s o n v . F i r s t S t a t e B a n k o f L i n e v i l l e , 369 So. 2 d 547 (Ala. 1 9 7 9 ) ; G a r r e t t v . R a y t h e o n Co., 368 So. 2d 516 (Ala. 1979) . The p l a i n t i f f s make o n l y g e n e r a l i z e d a l l e g a t i o n s to support their claim for fraudulent concealment. Although under modern r u l e s of civil practice the pleadings only need to put the d e f e n d i n g p a r t y on n o t i c e o f t h e c l a i m s a g a i n s t h i m , Rule 9(b)[, Ala. R. Civ. P.,] qualifies the g e n e r a l i z e d p l e a d i n g s p e r m i t t e d by R u l e 8 ( a ) , [ A l a . R. C i v . P . ] . 'The p l e a d i n g m u s t show t i m e , p l a c e a n d the contents or substance of the false r e p r e s e n t a t i o n s , the f a c t s m i s r e p r e s e n t e d , and an identification of what has been o b t a i n e d . ' Rule 9(b), ... Committee Comments. The allegations c o n t a i n e d i n c o u n t 6 f a i l t o meet t h e requirements of Rule 9. T h u s , t h e t r i a l c o u r t d i d not e r r i n g r a n t i n g the motion to d i s m i s s i n f a v o r of [the defendant]." 16 [the] was Court 1081767 409 S o . 2 d a t 422 I n Lowe, hospital (emphasis the administrator i n 1983 seeking had of a decedent's recovery w r o n g f u l d e a t h i n 1980. hospital added). f o r the decedent's The p l a i n t i f f fraudulently alleged concealed and had plaintiff f u r t h e r a l l e g e d t h a t he " ' d i s c o v e r e d hospital] of 477 Court determined that In had been Smith, against an discovered wrong Relying with her claims her complaint 477 the from the death. The i n J u l y o f 1983 false and that [the to the B a s e d on M i l l e r , this So. 2d a t 342. alleged company and multiple alleged tort that w i t h i n two y e a r s o f f i l i n g insurance and Lowe, "'fail[ed] circumstances that the s t a t u t o r y l i m i t a t i o n s i n her community t h a t on M i l l e r alleged facts giving rise So. 2d a t 340. plaintiff insurance when s h e " ' h e a r d concealed t o show t h a t tolled. the were sued a the a l l e g a t i o n s of the complaint d i d not facts sufficient period the decedent's [the h o s p i t a l ] had f r a u d u l e n t l y cause of a c t i o n . ' " state causing simply i t s conduct plaintiff representations denied estate by w h i c h to policy.'" this the appellees 17 860 Court allege there she had her complaint may be 345-46. concluded that Smith's of 2d something at any So. claims the concealed facts the cause or of 1081767 action or [Smith] from d i s c o v e r i n g So. injury,' 2 d a t 347 Based that (quoting facts what prevented the allege argue, the investors' claims. We as a were disagree. t o be model than them. see of t h e i r claims Nance, alleges 1) discovery 622 So. the of 2d time their at the most 299, causes the Therefore, the dismissed the the t h i r d unlike the of the the defendants action, in a generalized circumstances circumstances amended for inclusion third by they properly favorable the argue discovering from Although and t h a t and 860 nor have Lowe, and S m i t h , just Viewed i n the l i g h t of a c t i o n concealed. complaint, have discovery prevented or circumstances considered in Miller, more what the defendants facts court allegations at issue alleged Smith, investors trial i s not l i k e l y book and c o n c e a l e d a cause defendants form allege 409 S o . 2 d a t 4 2 2 ) . have not a l l e g e d the investors complaint to facts surrounding the [fraud].'" Lowe, the defendants alleged 'fail[ed] Miller, on M i l l e r , the investors which and investors of their concealed to the investors, amended complaint of 2) the the investors' facts or c i r c u m s t a n c e s by which t h e d e f e n d a n t s concealed the investors' causes 3) of action or injury, 18 and what prevented the 1081767 i n v e s t o r s from d i s c o v e r i n g the f a c t s s u r r o u n d i n g t h e i r i n j u r y . First, causes Bank and allege that they discovered their o f a c t i o n when t h e y w e r e d e p o s e d i n 2 0 0 7 i n t h e U n i t e d litigation. The circumstances action. 2d the investors investors, of See A n g e l l , their therefore, discovery allege of their the time causes of 455 S o . 2 d a t 8 2 3 - 2 4 ; P a p a s t e f a n , 356 S o . a t 160. Second, funds from Hinds the and purposes, facts investors Bon H a r b o r Kirkland and that allege used Bon Jacobsen $5,000,000 just before days was defendants; and t h a t prevented" the during, investors, and the J u l y the defendants after therefore, from the allege their own also allege that the these the the property f o r transaction; control that of the c o n c e a l e d "and o t h e r w i s e discovering July for that concealed 2005 under obtained and had p u r c h a s e d entirely investors knew had the property; funds The i n v e s t o r s knew t h a t before, Harbor the defendants from the i n v e s t o r s . information Jacobsen b e f o r e he p u r c h a s e d defendants this that 2005 the facts or the information transaction. circumstances The by which the defendants concealed the i n v e s t o r s ' causes of a c t i o n or injury. See M i l l e r , 409 S o . 2 d a t 4 2 2 ; L o w e , 19 477 S o . 2 d a t 1081767 342; and Smith, 860 Regarding Hinds, July this to managers at the investors and Gulf disclose allege to but that them Hinds Bon Harbor negotiation and consummation and Kirkland experience. The to In DGB their as investors an appeal, of the Kirkland, and Gulf Stream information e x i s t e d among t h e m . in the the trial trial Court does ultimately not but as entrusted the 2005 t r a n s a c t i o n knowledge Decatur owed to and and Gulf fiduciary member. parties argue extensively Decatur, owed duty the whether this d i s m i s s a l of the prevail, acting questions whether Hinds, proceedings, consider were that investors fiduciary H o w e v e r , w h a t e v e r may court court's and the H a r b o r and the fiduciary the superior allege minority on merits their that Specifically, so. July m e m b e r s o f Bon briefs the disclose of had investors the allege concerning Kirkland the of Stream do and also alleged regarding to that because Stream were m a j o r i t y duties and also information failed of Hinds 347. point, 2005 t r a n s a c t i o n investors 2d Kirkland, Decatur, obligations So. 20 l a t e r be appeal the whether to relationships determined comes t o investors' claims whether only any us from and "this [investors] will [they] may possibly 1081767 prevail." the Nance, third amended investors' that and 622 Hinds, 2d a t 299. complaint are favor, fiduciary So. see and Nance, other When t h e a l l e g a t i o n s o f viewed supra, most the investors relationships existed Decatur, K i r k l a n d , and Gulf Stream those defendants to d i s c l o s e information 2) that those allegations, prevail defendants we on cannot this sufficiently failed say point. alleged strongly do that Based cannot investors, the defendants on possibly therefore, have owed t h e m d u t i e s additional circumstance Kirkland, action and Gulf or i n j u r y . Finally, investors had Stream See amended actual knowledge Bon Harbor of Hinds funds, of property; information the that and fact the because funds i t was of personal did entirely 21 the before Jacobsen investors Smith, complaint Kirkland's that Hinds, investors' Lowe, and third property, or Miller, no obtained which concealed the the had by paid not and these and t h a t t h e y b r e a c h e d t h o s e d u t i e s or them to the i n v e s t o r s so. he under causes an of supra. that that o f Bon access the Jacobsen the Harbor $5,000,000 have as purchased use to Decatur, alleges fact 1) obligated disclose information fact the allege between investors that The that to in f o r the to the c o n t r o l of that the 1081767 defendants; that execution of investors did the the investors entrusted p u r c h a s e t o H i n d s and not obtain the the negotiation K i r k l a n d ; and property the underlying records that the t r a n s a c t i o n b e c a u s e t h e y r e l i e d on t h e d e f e n d a n t s ' s i l e n c e representations the investors their regarding have discovery Miller, Lowe, alleged of and the of yet before See subsequent trial sufficient facts savings clause investors' at this II. of claims stage of the the circumstances surrounding supra. Any investors' Nance, supra. that § 6-2-3. on the the their or the proceedings the was regarding the the is not shown a t be claims Accordingly, See inactions investors their prevented injury. question actions ground of Accordingly, that W h a t e v e r may proceedings, showing price. and any have fall alleged within the d i s m i s s a l of the statute of l i m i t a t i o n s error. Standing The parties standing next to m a i n t a i n an injury defendants to argue dispute whether their claims defendants argue that is purchase facts Smith, reasonableness us. the and Bon that any the investors against the defendants. i n j u r y r e s u l t i n g from t h e i r Harbor, the not to investors' 22 the are The actions investors. claims have The therefore 1081767 derivative and DGB i n n a t u r e and t h a t , V a n c e h a v e no s t a n d i n g was required defendants pursue The and, to themselves The Howard, under that individually, Accordingly, maintain contend demand demand a derivative claim investors t o seek r e l i e f first i f that the i n d i v i d u a l claims cite 950 S o . 2 d 1 1 3 1 was members of have just against they to have market i n t h e LLC's value considered their claim was whether ("the company Bon 1975. 5 to Harbor. i n Carey to unenforceable. On v. property ("the L L C " ) . petitioners") for a price sought a t o p u r c h a s e an allegedly appeal, the p e t i t i o n e r s had s t a n d i n g relief. then injury Carey i n v o l v e d property f o r declaratory to standing decision j u d g m e n t d e c l a r i n g t h a t a n o t h e r member's o p t i o n interest sue t h e the defendants. Court's LLC alleged injury (Ala. 2006). the Harbor unsuccessful, h e l d by a f a m i l y - o w n e d l i m i t e d l i a b i l i t y Certain Bon Katz, a n d 2) § 1 0 - 1 2 - 2 5 , A l a . Code argue, this 1) H e r r i c k , individually, that they not investors defendants as a r e s u l t , this to below Court maintain B a s e d on t h e l a n g u a g e o f S e c t i o n 1 0 - 1 2 - 2 5 ( a ) s t a t e s : "A member may b r i n g an a c t i o n in the r i g h t of a l i m i t e d l i a b i l i t y company t o r e c o v e r a judgment i n i t s favor i f t h e members o r managers with a u t h o r i t y t o do s o h a v e r e f u s e d t o b r i n g t h e a c t i o n o r i f a n e f f o r t t o c a u s e t h o s e members o r m a n a g e r s t o b r i n g t h e a c t i o n i s n o t l i k e l y t o s u c c e e d . " S e e a l s o R u l e 2 3 . 1 , A l a . R. C i v . P. 5 23 1081767 the Declaratory Court stated Judgment A c t , that the § 6-6-223, A l a . Code. 1975, petitioners relief they ' i n t e r e s t e d under' or i f t h e i r other legal relations agreement." because 950 the property So. held by an that action with respect derivatively Court any "any pursued injury only their property held by standing to seek capacities." 950 In case, any derivative assert claims § by the the that LLC So. the on 2d at behalf their or the option to an that, interest in As a result, bring a declaratory-judgment itself 950 or So. alleged with by 2d this the p e t i t i o n e r s had relief in that their Court and plaintiffs 1136. not This alleged individual interests therefore, the LLC," the at by they in the "lacked individual 1137. investors on status, LLC. the and, i f injury LLC separate, only Court determined injury rest[ed] declaratory claim only to by' seek only 10-12-25. concluded to this right to agreement 'rights, related only the to that under further This i n j u r y to the determined be LLC, option affected 1135. option the the [were] at challenged p e t i t i o n e r s was could 2d to "standing declaratory [were] relating had this own 24 have of Bon behalf. not attempted Harbor; to state instead They a l l e g e t h a t they the 1081767 defendants made representations from directly information directly them surrounding t h e J u l y 2005 t r a n s a c t i o n . regarding as a result, Herrick, Katz, the and the $7,500,000 loan therefore, were personally interested Kirkland and the from any investors funds investors result were injury the required that have However, the third as a r e s u l t no United Bank and, in July 2005 the based claims that they are had 2005 t o pay transaction the remaining individual injury as a on amended conduct, Harbor's injury recover standing on Bon described above, i n C a r e y , we c o n c l u d e to themselves derivative 25 states of the defendants' the a l l e g a t i o n s not complaint to standing i n v e s t o r s have a l l e g e d therefore, personally actions. the circumstances presented their they B a s e d on t h e s e a l l e g a t i o n s , they s u f f e r e d that t o Bon H a r b o r behalf. the the extent investors unlike argue that of the defendants' To Vance to the J u l y $2,500,000 o f t h e p u r c h a s e p r i c e . the circumstances The i n v e s t o r s a l s o a l l e g e t h a t n e i t h e r H i n d s n o r contributed that concealed and c o n c e a l m e n t s and guaranteed transaction. and They a l l e g e t h a t r e l i e d on t h e d e f e n d a n t s ' r e p r e s e n t a t i o n s that, to in to maintain that individually; nature; their and, claims 1081767 against III. the defendants. S u f f i c i e n c y of Finally, court the erred their of suppression, because the R. as Civ. alleged A. not P. them are misrepresentation "In of mind of Comments on of fraud argue, fraudulent 9(b), A l a . R. Civ. third can argue with P., and amended complaint granted be that sufficiently their Hinds, Rule 9(b), fraud or or mistake Malice, intent, a p e r s o n may 1973 trial stated and are 12(b)(6), Ala. d i s m i s s a l under Rule against a l l averments particularity. they are relief asserted Jacobsen. constituting because, the none of the claims pleaded. Misrepresentation investors and to that fraud Rule defendants Fraudulent The Stream, which appeal claims counts of t h e i r subject The on misrepresentation, r e q u i r e d by upon against their securities remaining claims argue fraudulent and particularity therefore investors in dismissing claims state Pleading be Adoption claim Decatur, A l a . R. Civ. mistake, the shall be averred generally." of 9 explain: 26 fraudulent Kirkland, k n o w l e d g e , and Rule of P., Gulf provides: circumstances stated with other condition The Committee 1081767 "[T]his special requirement [ i n R u l e 9 ( b ) ] as t o f r a u d and m i s t a k e does n o t r e q u i r e e v e r y e l e m e n t i n s u c h a c t i o n s t o be s t a t e d w i t h p a r t i c u l a r i t y . I t simply commands the pleader to use more than g e n e r a l i z e d or c o n c l u s o r y statements to s e t out the f r a u d c o m p l a i n e d o f . The p l e a d i n g m u s t show t i m e , p l a c e and t h e c o n t e n t s or s u b s t a n c e o f t h e false representations, t h e f a c t m i s r e p r e s e n t e d , and an i d e n t i f i c a t i o n o f w h a t h a s b e e n o b t a i n e d . ... But knowledge by t h e d e f e n d a n t of t h e f a l s i t y of the r e p r e s e n t a t i o n a n d r e l i a n c e on t h e r e p r e s e n t a t i o n b y the p l a i n t i f f c a n s t i l l be g e n e r a l l y a l l e g e d . ... [ I ] t s h o u l d be e x p e c t e d t h a t t h e c o u r t s w i l l s t r i v e to f i n d the d e t a i l s n e c e s s a r y f o r the s u f f i c i e n c y of such a c o m p l a i n t , i f the p l e a d i n g g i v e s f a i r n o t i c e to the o p p o s i n g p a r t y " See "The also B e t h e l v. purpose opposing this party." 371 So. 2d So. 2d 912, In of Thorn, 899, their the Gulf Stream: facts 1) is 2d to 1154, give see (Ala. notice Inc. v. this was they Decatur, a l s o K a b e l v. B r a d y , complaint, regarding Hinds, Jacobsen the investors Decatur, purchased Kirkland, and G u l f Stream i n f o r m a t i o n from the i n v e s t o r s ; entirely under concealed from the to the Henderson, 519 the control "and of otherwise 27 3) and property for those knew a n d that allege Kirkland $5,000,000 j u s t d a y s b e f o r e t h e J u l y 2005 t r a n s a c t i o n ; Hinds, 1999). 1987). amended that 1158 fair Montgomery, ( A l a . 1979); (Ala. third following rule So. Winn-Dixie 901 916 757 2) that concealed this information defendants; prevented" the 4) that investors 1081767 from d i s c o v e r i n g t h e i n f o r m a t i o n b e f o r e , d u r i n g , and a f t e r t h e purchase an of the property; 5) t h a t H i n d s a p p r a i s a l of the property that Jacobsen had p u r c h a s e d days before; 6) purchase Harbor price Katz, from and the property Hinds and the property knowledge f o r $5,000,000 Kirkland was with obtained reported that $10,000,000 the that $ 1 0 , 0 0 0 , 0 0 0 ; 7) for Bank, and the remaining Bon and the investors $2,500,000 toward were Hinds's that required t h e J u l y 2005 to the t r a n s a c t i o n ; 8) t h a t t h e i n v e s t o r s d i d n o t o b t a i n t h e p r o p e r t y underlying only and Vance p e r s o n a l l y g u a r a n t e e d t h e $7,500,000 United contribute f o r $14,000,000 of the property purchased Herrick, loan that and K i r k l a n d t r a n s a c t i o n because they records relied and K i r k l a n d ' s s i l e n c e and r e p r e s e n t a t i o n s on regarding the t r a n s a c t i o n . Based allege on t h e f o r e g o i n g , i t i s a p p a r e n t t h a t t h e i n v e s t o r s the time of the misrepresentations D e c a t u r , K i r k l a n d , and G u l f Stream the misrepresentations property was p r o p e r t y was value of $10,000,000 $14,000,000), the property made by Hinds, (July 2005), the content of (that the purchase price of the and the appraised value of the the facts misrepresented was $5,000,000), 28 the (that the defendant's 1081767 knowledge Decatur, of the falsity K i r k l a n d , and Gulf had p u r c h a s e d the p r o p e r t y July 2005 of (Bon twice Herrick, value; guaranteed a $2,500,000 toward that Jacobsen the purchased Katz, loan; result and and the of the the property for personally investors the Vance's contributed the t r a n s a c t i o n ) . investors misrepresentations complaint and Harbor $7,500,000 knowledge (Hinds, f o r $5,000,000 o n l y days b e f o r e transaction), i t s representations Stream's misrepresentations The the did not allege occurred. included the However, sufficient place their allegations where third to the amended place the d e f e n d a n t s on n o t i c e o f t h e a c t s c o m p l a i n e d o f ; t h e i n v e s t o r s , therefore, satisfied the V a n l o o c k v . C u r r a n , 489 pleading i s perhaps sufficiently The trial 2d 5 2 5 , w i t h the purpose Rule 9(b). See (Ala. 1986)("While o f R u l e 9(b) the i n that i t f a i r n o t i c e of the acts complained of."). c o u r t , t h e r e f o r e , e r r e d i n d i s m i s s i n g the i n v e s t o r s ' fraudulent-misrepresentation Kirkland, 534 of n o t a model o f c l a r i t y and s p e c i f i c i t y , i t comports gives the defendants So. requirements and Regarding Gulf claim as to Hinds, Decatur, Stream. Jacobsen, the i n v e s t o r s have a l l e g e d o n l y 29 that 1081767 he sold it. the It property does not investors them. of or Accordingly, particularity therefore, B. the as The a duty on concealment (3) Whatley pleaded by 2005) So. with 2d of the or a third with facts pleaded their as with trial to to claim Jacobsen The claim their claim a claim court, Jacobsen. of part Contract (quoting 61, duty of of fraudulent fraudulent the defendant nondisclosure of the to h i s or her 63 particularity Regarding material 9(b). this the for direct dealings against Rule inducement L.L.C. v. 682 any of paid Gulf Stream, K i r k l a n d , Decatur, Hinds, the p l a i n t i f f Plan, had i n v e s t o r s have not asserted a c t i o n by (Ala. allegations he Suppression elements defendant; 891 the m i s r e p r e s e n t e d any required against "'(1) (2) he f o r more t h a n misrepresentation investors suppression facts; from Jacobsen the Fraudulent Jacobsen. Harbor c o r r e c t l y dismissed The are: that that fraudulent Bon appear amended c o m p l a i n t the to to of (Ala. v. Mail 1 996)). under Rule disclose, 30 to disclose facts to act; by (4) injury.'" Freightliner, C a r r i e r s , L.L.C., Lambert suppression material plaintiff and the 932 So. Handlers This claim 2d 883, Benefit must be allege 1) 9(b). investors 1081767 that Hinds and K i r k l a n d , to d i s c l o s e m a t e r i a l to the i n v e s t o r s ; as m a n a g e r s o f Bon H a r b o r , h a d a d u t y facts regarding 2) t h a t t h e J u l y 2005 D e c a t u r and G u l f transaction S t r e a m , as members o f Bon H a r b o r , h a d a d u t y t o d i s c l o s e m a t e r i a l facts the 3) July 2005 transaction to the investors; D e c a t u r , K i r k l a n d , and G u l f with the investors material facts investors; Kirkland based had 4) that superior to Jacobsen, have fraudulent Decatur, the not investors Kirkland, these whether against any owed fiduciary entrusted and a to 2005 to the Hinds and transaction not a l l e g e d t o them. pleaded their As as d i s c u s s e d the merits to claim to 31 he disclose of Hinds, above, of the relationship with have s t a t e d that Therefore, the the question to the them. As s t a g e o f t h e l i t i g a t i o n we m u s t the investors disclose knowledge. have duty Hinds, relationships transaction the July Stream, that a duty Jacobsen. regarding defendants or had of sufficiently and G u l f s t a t e d above, a t t h i s only investors information suppression had 2005 experience p a r t i e s argue e x t e n s i v e l y whether July the investors any d u t y t o d i s c l o s e investors the they the negotiation on t h e i r As which regarding and with under Stream had f i d u c i a r y regarding consider any s e t o f f a c t s upon 1081767 which they Considering may possibly prevail. the a l l e g a t i o n s l i s t e d See above, Nance, supra. the investors have s u f f i c i e n t l y a l l e g e d that these defendants had d u t i e s - - a r i s i n g from their status as m a n a g e r s , disclose information Herrick, Katz, members, and fiduciaries--to t o DGB, a s a member o f B o n H a r b o r , a n d t o and Vance, as g u a r a n t o r s of the United Bank loan. Regarding facts the concealment by Hinds, investors allege Harbor before Decatur, or nondisclosure Kirkland, and of Gulf 1) t h a t Jacobsen had obtained he p u r c h a s e d the property; Stream, funds f r o m Bon and K i r k l a n d u s e d Bon H a r b o r f u n d s f o r t h e i r own p u r p o s e s ; 3) that Jacobsen property days before that Bon H a r b o r the that have, Gulf knew was e n t i r e l y the prevented" before, purchased defendants information 5) the during, therefore, Stream from after alleged him f o r $10,000,000; these concealed investors and just facts and that 4) the i n t h e c o n t r o l o f t h e d e f e n d a n t s ; and defendants the f o r $5,000,000 i t from of that the Hinds purchased 2) material from discovering "and the the transaction. that The otherwise information investors Hinds, Decatur, Kirkland, and facts regarding the July 2005 concealed material 32 1081767 transaction from them. Regarding whether these defendants to a c t , the investors July 2005 transaction property relied allege records that underlying on t h e a c t i o n s , Decatur, and that Kirkland, the silence, and Gulf Bon the property Herrick, Katz, they p a r t i c i p a t e d i n the did not transaction Stream. acted purchased they obtain because and r e p r e s e n t a t i o n s whether the i n v e s t o r s Harbor induced the investors to their that i t svalue, that g u a r a n t e e d t h e $7,500,000 U n i o n Bank l o a n , and t h a t t h e i n v e s t o r s c o n t r i b u t e d to the t r a n s a c t i o n . each element Hinds, as of Decatur, required correctly by their Rule dismissed but Decatur, Kirkland, Securities Section a erred security investors, therefore, fraudulent-suppression Kirkland, Jacobsen C. The and G u l f 9(b). the alleged claim against the fraudulent-suppression and G u l f that claim particularity trial claim as to court as to Hinds, Stream. Fraud 8 - 6 - 1 9 ( a ) ( 2 ) , A l a . Code 1975, g r a n t s a right $2,500,000 have Stream w i t h Therefore, i n dismissing regarding they allege f o r twice and Vance p e r s o n a l l y they of Hinds, Finally, injury, the of a c t i o n against 33 a seller the buyer of who sold the 1081767 security or any o m i s s i o n stated: 1975, by " b y means o f a n y u n t r u e to state statement of a m a t e r i a l a material "[A] c l a i m o f a v i o l a t i o n requires (1) a s a l e fact." (4) t h e omission." 1191 ignorance o r an o f f e r t o s e l l Blackmon of ( A l a . 2006). particularity The This against Hinds, briefs on relates t o DGB's asserted Decatur, appeal, Fin. claim Code a s e c u r i t y (2) (3) o f m a t e r i a l as to Corp., must fact the untruth or 953 S o . 2 d 1 1 8 0 , be pleaded with the claim of s e c u r i t i e s fraud and G u l f investors maintain purchase Stream. that In t h e i r this claim o f a 40% i n t e r e s t i n Bon H a r b o r i n whether a c l a i m under § 8-6-19(a)(2) may arise the i n v e s t o r s have n o t a l l e g e d any f a l s e s t a t e m e n t o r o m i s s i o n of material relating did o f an i n t e r e s t i n a n L L C . f a c t by H i n d s , Decatur, Kirkland, Moreover, or Gulf Stream t o DGB's p u r c h a s e o f an i n t e r e s t i n B o n H a r b o r . investors, fraud the sale their Kirkland, I t i s unclear from has under Rule 9 ( b ) . investors June 2005. the buyer v. N e x i t y Court of § 8-6-19(a)(2), Ala. means o f a f a l s e s t a t e m e n t o r o m i s s i o n and This fact therefore, upon w h i c h have relief not e r r i n dismissing not stated a claim c a n be g r a n t e d , the claim. 34 The of s e c u r i t i e s and t h e t r i a l court 1081767 D. Shareholder The investors against brief Hinds, Oppression asserted Decatur, on a p p e a l , Kirkland, the investors Code 1975, and a l e g a l that the t r i a l 10-12-21(h) duties this a claim court states only and G u l f cite treatise erred of shareholder only that Stream. their that Section discharge t o a member-managed company and i t s o t h e r Ala. contention claim. " [ a ] member s h a l l chapter or under the o p e r a t i n g In t h e i r § 10-12-21(h), to support i n dismissing oppression the members u n d e r agreement and e x e r c i s e any r i g h t s c o n s i s t e n t l y w i t h t h e o b l i g a t i o n o f good f a i t h and f a i r dealing." showing The i n v e s t o r s that Kirkland, § 10-12-21(h) or Gulf Stream, claim of "shareholder cited any third amended c o m p l a i n t This authority Court have n o t c i t e d has applies or that oppression." showing any Alabama that adequately § to authority Hinds, 10-12-21(h) Nor have Decatur, supports the the a l l e g a t i o n s state such a investors of claim. stated: " R u l e 2 8 ( a ) ( 1 0 ) , A l a . R. A p p . P., r e q u i r e s t h a t a r g u m e n t s i n an a p p e l l a n t ' s b r i e f c o n t a i n 'citations to t h e c a s e s , s t a t u t e s , o t h e r a u t h o r i t i e s , and p a r t s of t h e r e c o r d r e l i e d on.' Further, ' i t i s well settled that a failure to comply with the requirements of Rule 28(a)(10) r e q u i r i n g c i t a t i o n of authority i n support of the arguments presented provides t h i s Court with a basis f o r d i s r e g a r d i n g 35 a their 1081767 t h o s e a r g u m e n t s . ' S t a t e Farm M u t . A u t o . I n s . Co. v . M o t l e y , 909 S o . 2 d 8 0 6 , 822 ( A l a . 2 0 0 5 ) ( c i t i n g E x p a r t e S h o w e r s , 812 S o . 2 d 277 , 2 8 1 ( A l a . 2001 ) ) . This i s so, because ' " i t i s not the f u n c t i o n of t h i s C o u r t t o do a p a r t y ' s l e g a l r e s e a r c h o r t o make a n d address legal arguments f o r a party based on u n d e l i n e a t e d g e n e r a l p r o p o s i t i o n s not supported by s u f f i c i e n t a u t h o r i t y o r a r g u m e n t . " ' B u t l e r v . Town o f A r g o , 871 S o . 2 d 1, 20 ( A l a . 2 0 0 3 ) ( q u o t i n g D y k e s v . L a n e T r u c k i n g , I n c . , 652 S o . 2 d 248 , 2 5 1 ( A l a . 19 9 4 ) ) . " J i m m y Day P l u m b i n g (Ala. 2007) complied (emphasis added). with the requirements P., we w i l l we a f f i r m & Heating, not consider their the t r i a l court's I n c . v. Smith, Because t h e i n v e s t o r s have n o t of Rule 2 8 ( a ) ( 1 0 ) , A l a . R. C i v . a r g u m e n t s as t o t h i s dismissal of this E. Breach The i n v e s t o r s a l l e g e a claim of breach against Hinds, Red c l a i m , and claim. of F i d u c i a r y Duty Decatur, Bay v. K i n g , confidential 964 S o . 2 d 1, 9 of f i d u c i a r y K i r k l a n d , and G u l f Stream. 482 S o . 2 d 274 relationship was ( A l a . 1985), I n Bank o f a fiduciary defined: "'"A c o n f i d e n t i a l r e l a t i o n s h i p i s o n e i n w h i c h one p e r s o n o c c u p i e s toward another such a p o s i t i o n o f a d v i s e r o r c o u n s e l o r as reasonably to inspire confidence t h a t he will a c t i n good f a i t h f o r the other's i n t e r e s t s , o r when o n e p e r s o n h a s g a i n e d the c o n f i d e n c e o f another and p u r p o r t s t o act o r a d v i s e w i t h t h e o t h e r ' s i n t e r e s t i n mind; where trust and confidence are r e p o s e d b y o n e p e r s o n i n a n o t h e r who, a s a 36 duty or 1081767 r e s u l t , g a i n s an i n f l u e n c e o r s u p e r i o r i t y o v e r t h e o t h e r ; a n d i t a p p e a r s when t h e c i r c u m s t a n c e s make i t c e r t a i n t h e p a r t i e s do n o t d e a l on e q u a l t e r m s , b u t , o n t h e o n e s i d e , t h e r e i s an o v e r m a s t e r i n g i n f l u e n c e , o r , on t h e o t h e r , w e a k n e s s , d e p e n d e n c e , o r trust, justifiably reposed; i n both an u n f a i r advantage i s p o s s i b l e . I t a r i s e s i n cases i n which c o n f i d e n c e i s r e p o s e d and a c c e p t e d , o r i n f l u e n c e a c q u i r e d , and i n a l l the v a r i e t y of r e l a t i o n s i n which dominion may be e x e r c i s e d by one person over another." "'15A 482 C.J.S. Confidential So. 2d a t 284. N.A., the See a l s o K & C Dev. C o r p . 597 S o . 2 d 6 7 1 , 675 investors fiduciary allege duties by information their have own misrepresenting from purposes, property. Finally, Katz, as a r e s u l t purchased and Vance and by of the property to with investors fiduciary f o r twice concealing funds f o r the July value that 2005 of the they were a c t i o n s because Bon i t s value, Herrick, t h e $7,500,000 37 The and the actual defendants' of their breached allege above, existence by u s i n g Bon H a r b o r investors of these guaranteed defendants. proceeding knowledge the the information the investors, despite Harbor with these v. AmSouth Bank, As d i s c u s s e d alleged that these defendants transaction injured ( A l a . 1992). sufficiently relationships further (1967).'" United Bank loan, 1081767 and the investors contributed transaction. Based stated a claim of may granted, be on the breach and $2,500,000 t o w a r d the the of foregoing, fiduciary trial court the duty erred July investors 2005 have upon w h i c h relief in dismissing the claim. F. Civil The investors Hinds, an Decatur, alleged intentional This Conspiracy Court state Kirkland, Gulf conspiracy torts" has a claim civil Stream, among alleged of them in their conspiracy against and Jacobsen based to "commit third amended the on ... complaint. stated: "'Alabama r e c o g n i z e s [civil conspiracy] as a s u b s t a n t i v e t o r t . ' P u r c e l l Co. v . S p r i g g s Enters., I n c . , 431 So. 2d 5 1 5 , 522 ( A l a . 1983). 'In e s s e n c e , civil conspiracy i s a c o m b i n a t i o n o f two o r more p e r s o n s t o do: (a) s o m e t h i n g t h a t i s u n l a w f u l ; [or] (b) s o m e t h i n g t h a t i s l a w f u l b y u n l a w f u l m e a n s . ' I d . See a l s o E i d s o n v . O l i n C o r p . , 527 So. 2d 1 2 8 3 , 1285 (Ala. 1988). 'In a conspiracy, the acts of coconspirators are a t t r i b u t a b l e to each other.' W i l l i a m s v . A e t n a F i n . Co., 83 O h i o S t . 3 d 464, 476, 700 N . E . 2 d 859, 868 (1998)." Ex parte civil Reindel, conspiracy wrongdoer, assisted, 963 claim So. 2d 614, 621 n.11 operates to extend, liability in to actors encouraged, or tort planned 38 the (Ala. 2007). beyond who wrongdoer's "A the active have merely acts." 16 1081767 Am. Jur. 2d Conspiracy conspiracy must [Drill Parts (Ala. have 1993).] underlying Cattle, Serv. itself I n c . v. (2009). a valid Co. v. '[A] act C a l l e n s v. (Ala. & § 57 Joy would not 621 Mfg. support So. 2d B a s e d on these 619 an of Home, 769 the trial court also correctly dismissed 2d J 1993)." 273, defendants their the Triple (Ala. So. 1280 i f action.' t h a t , because the i n v e s t o r s ' u n d e r l y i n g c l a i m s were the 2d fail 1225 a action. So. must 1221, principles, alleging cause Co., claim J e f f e r s o n County Nursing 2000). plaintiff underlying conspiracy Chambers, "A 280 argue dismissed, c l a i m of civil conspiracy. We in have p r e v i o u s l y c o n c l u d e d dismissing the misrepresentation Hinds, Decatur, allege and that those that trial claims investors' the of fraudulent suppression Kirkland, and Gulf fraudulent The worked together, i n f o r m a t i o n t o and material The have alleged that Hinds, and Decatur, acted this investors. combination K i r k l a n d , Gulf together to engage i n u n l a w f u l 39 with conceal investors, therefore, of p e r s o n s Stream, to investors Jacobsen, to knowingly misrepresent f a c t s from the erred as t h e y r e l a t e Stream. d e f e n d a n t s a g r e e d and court and and entities-¬ Jacobsen--agreed conduct that injured 1081767 the investors. underlying are Because relief to may be the t r i a l have investors see court each erred valid coconspirators Reindel, supra, conspiracy of c i v i l against alleged upon of these the which defendants. i n dismissing this claim. Negligence The other, a claim granted G. Kirkland. burden state " I n any proving of defendant, Glass a the v. Birmingham The managers o f Bon Harbor bears the of R.R., a duty causation, 905 that owed and by the damage." S o . 2 d 7 8 9 , 794 ( A l a . Hinds and Kirkland, a n d i n d i v i d u a l s t o whom t h e as investors culminating i n the J u l y 2005 care respect that that going a duty Hinds forward and with knowledge that the value investors were required by and owed transaction; injured Hinds the p l a i n t i f f duty, allege against the negotiations transaction, by that Southern claim case, existence of investors entrusted a negligence negligence breach 2004). care each have s t a t e d Accordingly, had investors causes o f a c t i o n and because a c t s o f attributable investors the Hinds and of of with Kirkland breached the 2005 July the property to pay; and t h a t Kirkland's 40 to that duty transaction was less than the investors conduct in that of with the were they 1081767 contributed Herrick, United $2,500,000 Katz, Bank loan. Accordingly, of negligence trial court erred their 2005 transaction the investors i n dismissing have this on a p p e a l , the investors dismissing t h e i r c l a i m f o r an a c c o u n t i n g Bon Harbor. As n o t e d a b o v e , R u l e 2 8 ( a ) ( 1 0 ) , requires that citations to authority. appellants Court t o do a p a r t y ' s legal arguments not argument."'" Jimmy support "'"[I]t legal for a propositions do n o t c i t e a n y based supported by in Trucking, Because with the requirements will not consider the investors of Rule their have 28(a)(10) arguments 41 authority quoting So. 2d 2 4 8 , 251 failed as t o t h i s a n d we or (quoting (Ala. 2003), I n c . , 652 of t h i s general 964 S o . 2 d a t 9 871 S o . 2 d 1, 20 with and address undelineated sufficient Day P l u m b i n g , v. Lane arguments o r t o make on erred A l a . R. C i v . P., i s not the function research party court and d i s s o l u t i o n o f their B u t l e r v . Town o f A r g o , 1994)). and t h e claim. in (Ala. a and D i s s o l u t i o n brief Dykes stated may b e g r a n t e d , a u t h o r i t y t o support t h e i r argument t h a t t h e t r i a l turn and g u a r a n t e e d t h e $7,500,000 upon w h i c h r e l i e f Accounting In the July and Vance p e r s o n a l l y claim H. toward affirm to comply claim, the we trial 1081767 court's dismissal of this resolution of claim. the remaining r e m a n d may g i v e rise compatible a renewal this with We note, claims t o new f a c t s however, t h a t t h e i n this proceeding and c i r c u m s t a n c e s of the matters made on that are the basis of claim. Conclusion A c c o r d i n g l y , we a f f i r m t h e t r i a l investors' claim Harbor, of t h e i r suppression fraud court's fiduciary relate claims further and o f t h e i r We We remand negligence Kirkland, t h e cause consistent with I N PART; R E V E R S E D C . J . , and Woodall, Murdock, J J . , concur. 42 of breach of Stream, and they their fraudulent court f o r opinion. I N PART; AND Stuart, of reverse the to the t r i a l this claims a n d , as and G u l f misrepresentation o f Bon and f r a u d u l e n t - oppression. conspiracy, Decatur, proceedings Cobb, Jacobsen, and s h a r e h o l d e r fraudulent AFFIRMED and against civil to Hinds, suppression. and d i s s o l u t i o n d i s m i s s a l of the i n v e s t o r s ' claims duty, of accounting fraudulent-misrepresentation claims securities trial f o r an court's dismissal ofthe Smith, REMANDED. Bolin, Parker,

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