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Slamen v. Slamen

Supreme Court of Alabama

December 22, 2017

Darlene Slamen et al.
v.
Herbert A. Slamen

         Appeal from Jefferson Circuit Court (CV-16-904003)

          STUART, Chief Justice.

         Darlene Slamen ("Darlene"), Charles Martin ("Charles"), Wilhelmina Martin ("Wilhelmina"), and Harris Partnership, LLP ("Harris LLP") (hereinafter collectively referred to as "the defendants"), appeal from an order of the Jefferson Circuit Court requiring them to respond to discovery requests propounded upon them by Herbert A. Slamen ("Herbert"), arguing that all discovery should be stayed while the parties arbitrate their dispute pursuant to an arbitration provision in the partnership agreement that created Harris LLP, and that was executed by Herbert, Darlene, Charles, and Wilhelmina. Insofar as the defendants' appeal challenges the trial court's management of discovery, we treat it as a petition for the writ of mandamus, and we grant the petition and issue the writ.

         I.

         The facts giving rise to the underlying dispute in this case were previously set forth by this Court in Slamen v. Slamen, [Ms. 1160578, September 22, 2017] So. 3d, (Ala. 2017) ("Slamen I"):

"Herbert and Darlene married in 1981 and later formed Harris LLP, of which Herbert, Darlene, Charles, and Wilhelmina each own a 25% share. In 2008, Herbert was diagnosed with chronic obstructive pulmonary disease, and, in 2010, he moved to Thailand because, Darlene said, he wanted 'to enjoy what remained of his life.' After moving to Thailand, Herbert was dependent upon Darlene to send him the proceeds generated from his assets so that he could pay for living expenses and medical treatment. Payments in an agreed amount were deposited in a checking account in Thailand set up in Herbert's name. In addition to his interest in Harris LLP, Herbert's assets include a house in Alabama, a house in Florida, and an interest in the dental practice from which Herbert had retired. In 2013, Herbert, via his attorney in fact, established the Herbert A. Slamen Revocable Living Trust ('the trust') to facilitate the management of his assets, and he thereafter transferred his assets, including his interest in Harris LLP, to the trust. Herbert was the beneficiary of the trust, and both he and Darlene were the appointed cotrustees.
"On October 27, 2016, Herbert sued the defendants, alleging that he had revoked the trust but that Darlene, purportedly under her authority as cotrustee, had nevertheless transferred the assets of the trust to herself. As a result, Herbert alleged, the defendants had 'failed to distribute proceeds from [Harris LLP] to [Herbert] and instead made all payments directly to Darlene.' Herbert also alleged that Darlene had sold the Alabama and Florida houses and that she had 'benefitted financially' from the operation of the dental practice, but, the allegation continued, Herbert had 'realized no proceeds' from those assets. According to Herbert, Darlene's allegedly unauthorized transfer of his assets to herself and her alleged refusal to send him the proceeds generated from his assets were part of 'an illicit scheme to gather all of [his] assets for herself.' Given those allegations, Herbert asserted claims of breach of a fiduciary duty, negligence, fraud, conversion, conspiracy, intentional infliction of emotional distress, identity theft, and tortious interference with a business relationship. As relief, Herbert sought compensatory and punitive damages and, for the breach-of-a-fiduciary-duty claim, specifically sought 'damages in an amount equal to the proceeds properly due from [his] business interests.'"

         When the defendants were served with Herbert's complaint, they were simultaneously served with several discovery requests.

         The defendants thereafter moved the trial court to dismiss Herbert's complaint and to stay discovery until their motion to dismiss was ruled on. On March 21, 2017, the trial court denied both the defendants' requests but granted Herbert's request for a preliminary injunction enjoining the defendants from spending any funds belonging to Harris LLP except those funds required to pay ordinary business expenses. The defendants thereafter filed both a petition for the writ of mandamus seeking review of the trial court's denial of their motion to dismiss and an appeal asking this Court to reverse the trial court's entry of a preliminary injunction against them. Although this Court ultimately denied their petition for a writ of mandamus by order (no. 1160558, April 20, 2017), in Slamen I we granted the defendants the appellate relief they sought and directed the trial court to dissolve the preliminary injunction entered against them. ___ So.3d at ___.

         On April 26, 2017, the defendants moved the trial court to compel arbitration of this dispute based on the following arbitration provision in the partnership agreement that created Harris LLP:

"The parties agree that any dispute arising from this partnership agreement, or the conduct of [Harris LLP's] business, shall be resolved in the following manner:
"....
"[T]he dispute shall be resolved by binding arbitration before a mutually acceptable arbitrator pursuant to the commercial arbitration rules of the American Arbitration Association using one arbitrator. Such arbitration shall be conducted in Jefferson County, Alabama. Each partner shall initially pay an equal share of the arbitrator's fee. However, in his award, the arbitrator shall have the power to assess all or a part of his fee to any partner as may be just and equitable, such as for having acted unreasonably."

         At a hearing that had previously been scheduled for the next day to consider matters related to discovery and the then still operative preliminary injunction, Herbert opposed the motion to compel arbitration, arguing (1) that the defendants had waived their right to enforce the arbitration provision and (2) that some of his claims were outside the scope of the arbitration provision. At the conclusion of the hearing, the trial court ordered Herbert to file a formal response to the defendants' motion to compel arbitration and ordered the defendants to respond to Herbert's outstanding discovery requests within 30 days.[1] Herbert subsequently filed the ordered response, in which he asserted the same arguments made at the April 27 hearing; the defendants, however, did not respond to Herbert's discovery requests, instead moving the trial court on May 16, 2017, to stay all discovery until it ruled on their motion to compel arbitration. On May 25, 2017, the trial court denied the defendants' request for a stay and ...


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