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08/26/94 BRUCE SUDDUTH AND BLONNIE C. SUDDUTH v.

August 26, 1994

BRUCE SUDDUTH AND BLONNIE C. SUDDUTH
v.
LARRY HOWARD



Appeal from Tuscaloosa Circuit Court. (CV-91-1036). Thomas S. Wilson, Trial Judge

Released for Publication December 2, 1994.

Houston, Hornsby, C. J., and Almon, Kennedy, and Cook, JJ., concur.

The opinion of the court was delivered by: Houston

HOUSTON, JUSTICE.

Bruce and Blonnie Sudduth, residents of Tuscaloosa County, sued Consolidated Management Systems, Inc. (a Florida corporation not registered to do business in Alabama) (hereinafter called "CMS"); Larry Howard (a Florida resident and the general manager of CMS); and Michael Howard (a Florida resident and the vice president of CMS), alleging breach of contract and fraud "arising out of CMS's marketing of a vending machine franchise 'opportunity' to the Sudduths in May 1991." *fn1 CMS, Larry Howard, and Michael Howard moved for summary judgments. The trial court entered a summary judgment for Larry Howard, holding that the State of Alabama lacked in personam jurisdiction over him; it denied the summary judgments for CMS and Michael Howard. The trial court certified the summary judgment for Larry Howard as final, pursuant to Rule 54(b), A.R.Civ.P. The Sudduths appeal. We reverse and remand.

The Sudduths contend that the trial court erred in entering the summary judgment for Larry Howard on the basis of lack of personal jurisdiction, because, they say:

"The evidence submitted in opposition to summary judgment -- seen in [the] light most favorable to [them as] the nonmoving parties -- tended to show that [Larry Howard] participated in, if not masterminded, a scheme to defraud and deceive potential investors, and that the scheme to defraud and deceive ultimately led to a fraud perpetrated on Alabama residents...."

The issue is whether, within the bounds of the Due Process Clause of the Fourteenth Amendment to the United States Constitution, Larry Howard, who is a Florida resident, had sufficient contacts with the state of Alabama to make it fair and reasonable to require him to come to Alabama from Florida to defend against the present action.

Viewing the evidence in the light most favorable to the Sudduths, the nonmoving parties, as we are required to do under the applicable standard of review, we find evidence of the following:

CMS was a closely held family-operated corporation headquartered in Merritt Island, Florida. It marketed investment "opportunities" in vending machines to potential small investors throughout the United States.

When CMS was incorporated in 1988, William Hooper, Larry Howard's father-in-law, who was in his 70s and was a retired automobile body mechanic living in Pompano Beach, Florida, served as president. Michalin Howard, Larry Howard's wife, who was in her mid-40s, held a high school diploma, and had been a housewife before her involvement in CMS, served as vice-president and owned 100% of the stock in the company. Larry Howard was the general manager.

Neither William Hooper nor Michalin Howard had any experience in selling vending or other business opportunities. Larry Howard was the only member of his family with any experience in selling business opportunities. He had been involved in the vending machine business since 1985 (in Alabama and Georgia) and with other business opportunities before that time.

In 1989, Michael Howard, the son of Larry and Michalin Howard and the grandson of William Hooper, graduated from college with a degree in marketing and joined CMS as a salesman. He had no prior experience in the vending opportunity business. In 1991, Michalin Howard replaced William Hooper as president of the company and Michael Howard became vice president of the company. Larry Howard continued as the general manager.

CMS sent salespeople into Alabama and maintained an ongoing relationship with at least seven owner-operators in the state; however, it never registered to do business in Alabama. CMS is no longer in business ...


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