United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION 
MICHAEL PUTNAM UNITED STATES MAGISTRATE JUDGE
a breach of contract action between two travel agencies
involved in providing travel-related services to the Veterans
Administration. After initially joining forces to win and
execute a contract with the VA, disputes between them
resulted in a breach in their contractual relationship and
ultimately to this action. The court conducted a non-jury
bench trial on March 20-22, 2017, allowing the parties to
file post-trial briefs by May 18, 2017. Based on the
testimony, evidence, and arguments of counsel, the court
reaches the following findings of fact and conclusions of
Findings of Fact
Plaintiff ADTRAV Corporation is a commercial travel
management company located in Birmingham, Alabama,
specializing in providing travel services to corporate and
governmental clients. The sole owner and CEO of ADTRAV is
Roger Hale. Since 2000, ADTRAV has operated as a national
travel agency for various governmental entities, with about
40% of ADTRAV's business being government travel
Defendant Duluth Travel, Inc., is a smaller travel agency
headquartered in Duluth, Georgia, near Atlanta. Its owner and
principal is Arthur Salus. The VA regarded Duluth as being a
“Service Disabled Veteran-Owned Small Business, ”
eligible to compete for a set-aside contract for travel
services for VA employees and beneficiaries.
the mid-1980s ADTRAV gained approval from the General
Services Administration (“GSA”) to provide travel
services for government agencies. This required setting up a
dedicated telephone line which government employees could
call to arrange official travel. Under its government
contracts, ADTRAV was required to make periodic reports
related to the costs, fees, and charges incurred for official
2004, Hale met Salus and Ed Arias, an employee of Duluth, at
a travel trade conference and they began discussing how they
could work together to obtain a travel-services contract from
the VA. Duluth had the proper designation as a “Service
Disabled Veteran-Owned Small Business” and ADTRAV had
the experience and resources to run a government contract.
December 2005, ADTRAV and Duluth entered into the first of a
series of agreements to jointly solicit and carry out a
contract with the VA. That agreement was soon superseded by
another agreement on January 12, 2006, then by an amended
agreement later in January 2006, which became the operative
contract between Duluth and ADTRAV for the next several
Under the 2006 agreement, the parties agreed to divide the VA
work between them, “striving” to reach the goal
that Duluth would perform 51% of the work and ADTRAV 49%. The
parties set up a dedicated telephone line for VA clients to
call for travel-related services. The telephone was
programmed to divide incoming calls between the agencies on
the basis of 51% of calls to Duluth and 49% of calls to
ADTRAV. It was always understood, however, that
“whoever did the work, got the money.”
Arias, Vice President of Operations at Duluth, was tasked
with monitoring the division to work between the parties to
strive to the goal of a 51% to 49% division of the work.
arrangement was understood as a division of work, not
necessarily income. The 2006 contract did not require a
strict arithmetic division of income on a 51% to 49% basis.
Rather, the agreement divided the work between the parties
with a goal of achieving a 51% to %49 division of income.
parties recognized that the division of income in any
particular timeframe would not necessarily reach the 51% to
49% goal. Because ADTRAV was performing the “back
office” accounting, it sent weekly and monthly reports
to Duluth, detailing the income and expenditures related VA
travel. Arias was responsible for receiving and reviewing the
reports for Duluth and making any adjustments in workload
between Duluth and ADTRAV to try to achieve the goal. The
parties clarified this understanding in a modification to
their joint operating agreement, dated October 23, 2007,
Distribution of Worldspan Segment Fees and Vendor
Commissions and Overrides: Worldspan segment fees
will be distributed to Duluth and ADTRAV based on a monthly
transaction percentage. The monthly transaction
percentage shall be equal to the total number of airline
transactions handled by each partner divided by the total
number of transaction processed for the month. Both
partners understand that the intent is for this distribution
to be made on a 51%/49% (Duluth/ADTRAV) basis. If the actual
percentage for any month varies from this amount by more than
5%, both partners agree to develop a plan to modify the
business practices in order to achieve the 51%/49%
distribution. [Italics added].
(Pl.'s Ex. 5, Doc. 134-6). This modification made clearer that the
51% to 49% distribution was based on the division of
work, not a strict division of the revenue.
joint operating agreement between the parties also included a
license from ADTRAV for Duluth to use proprietary software
and “scripts” developed by ADTRAV, including
“with respect to the all Worldspan scripting
(‘Scripts') developed by ADTRAV, specifically the
‘ticketing script', ‘WOW script['] and
any other scripts that ADTRAV may develop for use by Licensee
on the Department of Veteran's Affairs (VA) account; and
any of the ‘RezSuite' software including but not
limited to RezProfiler, RezTracker, RezProfiler [sic],
RezCritique, RezViewer, RezOptions, RezRequest and
RezReporter and is effective October 3, 2007 (the
‘Effective Date').” (Pl.'s Ex. 6, Doc.
134-6). In return for that license, Duluth was to pay ADTRAV
$0.50 for each reservation made by Duluth pursuant to the VA
Under the 2006 (and later) agreement, revenue for travel
services to the VA came from distinct streams. First, the VA
would pay a “transaction fee” (sometimes referred
to as an “air service fee”) for every reservation
or booking made by Duluth or ADTRAV under the VA contract.
Second, segment fees were paid by Worldspan, an airline
reservation service,  for every “segment” of an
airline flight booked by Duluth or ADTRAV through the
Worldspan system. Segment fees were in the nature of a
commission, collected from the airline and paid to the travel
agent making the booking. These fees were collected from the
airlines by Worldspan and reported and paid to Duluth or
ADTRAV using an “ARC” (Airline Report of
Commission) number. (See Tr. at 565). For purposes
of the VA contract, both Duluth and ADTRAV used Duluth's
ARC number to make airline reservations. Third, Worldspan
paid a $230, 000 “signing bonus” for entering
into a five-year contract with it. Fourth, hotels paid
commissions for reservations, usually equal to ten percent of
the total room charge for the reservation. In most instances,
commissions were collected from hotels and paid to travel
agents through “consolidators” such as Pegasus,
TACS, and Paymode, although some hotels paid commissions
directly to travel agents by mailing them a check. Frequently
such a check would represent commissions from multiple
reservations with little information concerning the amount of
each separate booking and commission. Finally, rental car
companies also paid commissions, but this was a relatively
small part of the VA-contract business.
administer the revenue from the VA contract, Duluth and
ADTRAV opened a joint banking account in 2007, into which all
VA-related revenue was to be deposited. That account was
replaced by another joint bank account in February 2011.
majority of income flowing into the joint bank account came
from the transaction fees paid by the VA for each
travel-related transaction (airline booking, hotel
reservation, etc.) performed by Duluth or ADTRAV under the
contract. Approximately seventy-five percent of the revenue
attributable the VA travel business came from these
transaction fees paid by the VA.
Worldspan provided a “double MIR” reporting
system that electronically populated ADTRAV's TRAMS
accounting system with ARC data related to airline bookings,
passenger information, fees, and charges. Because this was a
“double MIR, ” Duluth also received an electronic
copy of the Worldspan reports directly from Worldspan. Arias
used these reports to check the accuracy of the net weekly
and net monthly reports submitted to Duluth by ADTRAV.
From 2007 to 2009, Duluth made no complaints to ADTRAV about
the accuracy or completeness of the financial reports it
2009, a controversy developed between Duluth and ADTRAV over
bidding on a travel contract for the Commonwealth of
Pennsylvania. Duluth first identified the business
opportunity and brought it to ADTRAV's attention.
Initially ADTRAV believed that it could partner with Duluth
to bid on the Pennsylvania “small business”
contract, but soon discovered that the “small
business” had to be a Pennsylvania business. ADTRAV
then pursued the Pennsylvania contract without Duluth, which
Duluth believed was unethical since it was Duluth who brought
the potential business to ADTRAV in the beginning.
settle the dispute, the parties renegotiated the VA joint
operating agreement to increase Duluth's share of the
work (and corresponding income) to 60% in return for
elimination of the provision in the 2006 agreement requiring
the parties to share future business opportunities unrelated
to the VA contract.
2010, the parties became aware that the VA planned to rebid
its travel-management contract. In anticipation of
participating in the rebidding, the parties entered into a
new joint operating agreement, dated December 16, 2010,
hereafter as the “2010 Agreement”). Parts of the
agreement became effective immediately, while other parts
became effective only if and when the parties successfully
won the VA travel-contract rebid. The division of work (and
corresponding revenue) was changed to 75% for Duluth and 25%
for ADTRAV, effective upon successfully obtaining the VA
travel contract anticipated to be let in October 2011.
Beginning in 2010, pursuant to the 2010 Agreement, all
Worldspan revenue was shifted to the Duluth ARC number and
reported to Duluth. Duluth caused the revenue to be deposited
into its exclusive bank account, rather than the joint
account set up by the parties. ADTRAV protested the fact that
the ARC revenue was not going into the joint bank account,
but Duluth continued to have the deposit made to its account.
March 2011, Duluth also deposited all of a $230, 000.00
incentive bonus paid by Worldspan, although this was unknown
to ADTRAV at the time and was discovered only later. When
discovered later, Duluth and ADTRAV reached agreement on June
19, 2012, that Duluth would pay ADTRAV its share of the
incentive bonus in three installments, of which $34, 500 was
due in April 2013. (Plaintiff's Ex. 53, Doc. 134-15). The
April 2013 installment was never paid.
was not until August 8, 2011, that the VA issued its
solicitation for bids on the new travel-services contract, to
be effective October 1, 2011. However, the VA awarded the new
contract to Alamo, not Duluth. Duluth and ADTRAV jointly
protested the award, and the VA awarded Duluth a
“bridge” contract while the protest was underway.
Ultimately, the VA upheld the protest and awarded the new
travel contract to Duluth, effective April 1, 2012.
(Plaintiff's Ex. 44, Doc. 134-14).
2012, however, Arthur Salus had determined that he no longer
wanted Duluth to partner with ADTRAV for VA business and he
was seeking a way to end the relationship. On December 31,
2012, Duluth refused to extend Arias's employment
contract and he ceased working for Duluth.
Beginning in January 2013, Duluth stopped paying ADTRAV its
share of Worldspan segment fees, hotel and car rental
commissions, and Duluth's share of airline “debit
memos.” Duluth also stopped paying technology
fees for the use of ADTRAV's “scripts, ”
although it continued to use the “WOW” script for
some time. Duluth stopped paying accounting fees to ADTRAV.
Unknown to ADTRAV and in apparent anticipation of the bidding
of a new VA travel contract in the fall of 2013, Duluth
entered into an agreement on May 1, 2013, for another
company, Travel Incorporated, to provide the “back
office” accounting ADTRAV had been providing under the
June 11, 2013, Duluth received notice of a new VA
solicitation for bids for travel services. Three days later,
on Friday, June 14, 2013, Duluth notified ADTRAV by email
letter that it would no longer need ADTRAV to perform
“back office” accounting and reporting for the VA
contract. (Plaintiff's Ex. 62, Doc. 134-21). Duluth shut
off ADTRAV's access to the Duluth ARC number and
Worldspan, depriving ADTRAV of the ability to make VA-related
airline reservations. Importantly, although the June 14
letter states that Duluth was undertaking the action because
ADTRAV “failed to honor the terms of the
Agreement” and “committed acts that would amount
to material breach, ” Duluth explicitly stated that it
“is not our intent… even to terminate the
Agreement.” (Plaintiff's Ex. 62, Doc. 134-21).
Rather, Duluth asserted that the 2010 Agreement would expire
at the end of September 2013, upon the expiration of the
then-ongoing VA travel contract.
ADTRAV responded to the email notice, demanding that Duluth
“reinstate our full access to the VA portions of both
the Worldspan and TRAMS systems by Monday to correct this
egregious breach of our operating agreement.”
(Plaintiff's Ex. 63, Doc. 134-22). Access was restored by
Duluth on Monday, June 17, 2013.
June 24, 2013, ADTRAV mailed a letter to Duluth, responding
to the assertions made in the June 14 letter. ADTRAV's
letter outline eight ways in which it believed Duluth was in
violation of the 2010 Agreement and the corrections needed to
remedy the violations. The letter also demanded four payments
ADTRAV claimed were due under the 2010 Agreement:
1. ADTRAV's portion of the January 2013 to May 2013 VA
revenue in the amount of $40, 018.29 as shown on [an]
2. ADTRAV's final payment of the Worldspan “signing
bonus” in the amount of $34, 500 that was due in April
3. ADTRAV's portion of the Worldspan revenue in the
amount of $30, 378.84 that was withheld during Duluth's
negotiation with Worldspan (Travelport) for the waiver of the
4. ADTRAV to distribute $6, 560.72 to ADTRAV and $13, 416.15
to Duluth representing the hotel and car commission collected
during the January to May, 2013 period. This money [was then]
in the joint bank account.
Ex. 64, Doc. 134-23). Duluth made none of the payments
Also unknown to ADTRAV, Duluth bid on the new VA contract
without the participation of ADTRAV, and was awarded a new VA
accommodated contract on October 1, 2013, lasting for one
year to October 1, 2014.
November and December 2013, the parties met several times to
negotiate a resolution of their disputes. It appears,
however, that ADTRAV continued to actively partner with
Duluth to provide travel-related services to the VA during
this period. See Plaintiff's Exs. 331-335, Docs.
134-254 through 134-258. Using the “Partner
Splits” documents from October 2012 to September 2013
(Plaintiff's Exs. 319-330. Docs. 134-242 through 134-253)
as a measure of VA-business activity during those months,
Duluth had average monthly net revenue of approximately $9,
644, compared to ADTRAV's average net revenue of $6,
362.Together, Duluth and ADTRAV issued a
monthly average of 9, 387 tickets for all airlines through
Worldspan and Sabre. By comparison, in the months of October
2013 through January 2014 (see Plaintiff's Exs.
331-334, Docs. 134-254 through 134-257), Duluth's monthly
average revenue was approximately $5, 252 and ADTRAV's
was $2, 624. In October 2013 through December 2013, they
issued an average of 5, 781 tickets in each month through
Worldspan and Sabre.
Ultimately, on January 10, 2014, ADTRAV mailed the following
letter to Duluth:
This letter is to notify Duluth Travel, Inc.
(“Duluth”) that because of Duluth's
nonpayment of amounts owed to ADTRAV, Inc.
(“ADTRAV”), ADTRAV will cease providing services
to Duluth on January 17, 2014. Duluth should make appropriate
arrangements prior to that date.
Duluth owes ADTRAV over $200, 000.00, some of it for services
rendered over a year ago. ADTRAV has been extremely patient
with Duluth and has been trying since June to get paid for
services rendered. It is undisputed that Duluth owes ADTRAV
$86, 751.32 through November 2013 for work performed on the
VA account. In spite of the fact that this undisputed amount
is owed, Duluth has refused to pay it to ADTRAV. In addition,
Duluth owes ADTRAV $143, 646.13 as ADTRAV's portion of
World Span revenue earned and payable under the contracts.
On November 21, 2013, ADTRAV advised Duluth that ADTRAV would
cease providing services if ADTRAV did not receive payment.
In spite of not being paid, ADTRAV continued to work in hopes
that Duluth would do the right thing and pay ADTRAV the
amounts due. On December 13, 2013, ADTRAV again advised
Duluth that it would cease providing services if it was not
paid for the services previously rendered. Notwithstanding
ADTRAV's reasonable request that it be paid for services
rendered, Duluth has refused to do so. Duluth continues to
withhold payment and try and use these withheld funds to
force ADTRAV to make concessions to Duluth. ADTRAV is not
willing to modify its agreement or release amounts owed to it
in order to obtain money clearly due it. Furthermore, ADTRAV
is not willing to continue working without compensation.
Accordingly, ADTRAV will cease to provide services to Duluth
on January 17, 2014, and, effective on that date, Duluth will
no longer be authorized to utilize any of ADTRAV's
technology or software. Upon receipt of payment in full along
with appropriate assurances of timely future payments, ADTRAV
will discuss resuming services.
This termination of services will not apply to Duluth's
access to and use of the VA pseudo city numbers with SABRE
that are currently assigned to ADTRAV. Likewise, ADTRAV
expects Duluth to continue providing the same access to the
Worldspan pseudo city numbers currently assigned to Duluth
for the provision of services used by ADTRAV.
In light of Duluth's conduct, ADTRAV is not interested in
pursuing with Duluth the contract for VA embedded travel
services. Since the embedded travel services are not included
in the contract, each party is free to pursue those services
separately or in conjunction with another party.
We regret that Duluth chose to continue to refuse to pay
ADTRAV for services rendered. In light of Duluth's
unjustified refusal to make payment and after months of
trying to obtain payment, ADTRAV has no choice but to
immediately commence litigation to recover these past due
amounts, as well as its damages from Duluth's breach of
(Plaintiff's Ex. 73, Doc. 134-25). ADTRAV filed the
instant complaint that day, January 10, 2014.
Despite this letter, ADTRAV stated in an email exchange on
January 16, that it would continue to make two agents
available to take VA-travel calls, but Duluth declined to
utilize ADTRAV's agents, believing that ADTRAV was
“trying to back up on [its] notice that they were
cutting all services.” (Plaintiff's Ex. 125, Doc.
Despite the January 10 letter, Duluth continued to use
ADTRAV's “WOW” script without paying a
technology fee of $0.50 per transaction. On January 30, 2014,
ADTRAV's attorneys emailed and mailed a letter to
Duluth's counsel, saying:
ADTRAV Travel Management, Inc. (“ADTRAV”) has
reason to believe that Duluth Travel Inc.
(“Duluth”) is currently using technology and
software owned by ADTRAV without ADTRAV's permission and
without compensating ADTRAV for its use. In fact, it appears
that Duluth actively reinstalled an earlier version of the
software without authorization, in order to enable Duluth to
obtain unauthorized access to ADTRAV's software and
technology in conscious violation of the proprietary rights
of ADTRAV. As previously stated, Duluth is not authorized to
use ADTRAV's technology and software and must immediately
cease using it and remove all such technology and software
from its computers and systems. Please confirm in writing
when this has been done.
If Duluth does not immediately cease using ADTRAV's
software and technology in violation of ADTRAV's
proprietary rights, then ADTRAV will seek assistance from the
Court to address this willful conversion of ADTRAV's
(Plaintiff's Ex. 74, Doc. 134-26). Plaintiff's Ex.
414 (Docs. 134-334 through 352) shows the use of the
“WOW” script from at least January 1 through May
31, 2014. After May 31, Duluth cut off ADTRAV's access to
Duluth's Worldspan reports.
Duluth received total revenue of $1, 743, 656.84 under its VA
accommodated contract from October 1, 2013, to September 30,
2014, when it expired.
Conclusions of Law
a breach of contract action in which both parties allege that
the other substantially breached the material terms of their
2010 Agreement for managing travel-related services for the
Veterans' Administration. Plaintiff ADTRAV initiated the
action by filing the complaint in 2014, to which Duluth
answered and counterclaimed.
Choice of Laws
first question the court must confront-one that neither party
briefed- is whether to apply the substantive contract law of
the State of Alabama or the State of Georgia to the issues
raised in this matter. The 2010 Agreement itself is
ambiguous, containing the following provision:
This Agreement and all obligations of the parties hereunder
shall be interpreted, construed, and enforced in accordance
with the laws of the State of Georgia and Alabama; provided,
however, that if Georgia's conflict or choice of law
rules, statutes or constitutional provisions would choose the
law of another state, each party waives such rules, statutes
or constitutional provisions and agrees that Georgia
substantive, procedural and constitutional law shall
(Plaintiff's Ex. 22, Doc. 134-10, ¶ 25). While the
first clause of the provision seems to indicate that the
contract be construed simultaneously under both
Alabama and Georgia law, the latter clause seems to point to
application of Georgia law, even if Georgia's own choice
of law rules dictate the use of the law of another state.
earlier Memorandum Opinion granting partial summary judgment
(Docs. 92), the court clearly relied on Alabama law to
interpret and apply the provisions of the 2010 Agreement, and
neither party has raised any issue with the court having done
so. Indeed, to the extent any state-law authority is cited in
either party's post-trial briefs, it is almost
exclusively Alabama law. See, e.g., Duluth's
Post-Trial Brief, Doc. 146, at pp. 11, 18, 24; ADTRAV's
Post-Trial Brief, Doc. 145, at pp. 8, 20, 21, 22. The parties
seem to agree that Alabama law should control, as no one has
argued otherwise, even after the court expressly used Alabama
law to resolve summary judgment motions. By and large,
moreover, there appears to be little material difference
between Alabama law and Georgia law on the substantive
contractual issues discussed here. For these reasons, the
court will rely on Alabama law, noting any significant
differences that may exist in Georgia law.
Breach of Contract
parties do not dispute the existence of a contractual
agreement between them or that it was based on sufficient
consideration. The question presented here is whether either
party breached the 2010 Agreement by failing to substantially
perform under it.
elements of a breach-of-contract claim are “(1) a valid
contract binding on the parties; (2) the plaintiff's
performance under the contract; (3) the defendant's
nonperformance; and (4) resulting damages. ECR
Properties, LLC v. Camden County Dev., LLC, 998
F.Supp.2d 1295, 1303 (M.D. Ala. 2014) (citing Barrett v.
Radjabi-Mougadam, 39 So.3d 95, 98 (Ala.2009)). Both
parties allege, either in the complaint or the
defendant's counterclaim, that the other failed to
perform the substantial obligations of the Agreement.
state and prove a claim for breach of contract, Alabama law
requires a plaintiff to prove its own substantial
performance of its obligations under the contract.
In order to prevail on a breach-of-contract claim, a
plaintiff must prove, among other things, “[its] own
performance under the contract.” State Farm Fire
& Cas. Co. v. Williams, 926 So.2d 1008, 1013 (Ala.
2005). In order to satisfy that element, the plaintiff must
prove that it substantially performed its obligations under
the contract. See Mac Pon Co. v. Vinsant Painting &
Decorating Co., 423 So.2d 216, 218 (Ala.1982).
“Substantial performance of a contract does not
contemplate exact performance of every detail but performance
of all important parts.” Id. “Whether a
party has substantially performed a promise under a contract
is a question of fact to be determined from the circumstances
of each case.” Cobbs v. Fred Burgos Constr.
Co., 477 So.2d 335, 338 (Ala.1985).
Superior Wall & Paver, LLC v. Gacek, 73 So.3d
714, 721 (Ala. Civ. App. 2011); see also Sweetwater
Investors, LLC v. Sweetwater Apartments Loan LLC, 810
F.Supp.2d 1288, 1295 (M.D. Ala. 2011). “If a plaintiff
substantially performs, ‘immaterial deviations will not
prevent recovery of the contract price, less the amount
required to indemnify for injuries sustained by such
deviations.'” ECR Properties, LLC v. Camden
County Dev., LLC, 998 F.Supp.2d 1295, 1304 (M.D. Ala.
2014) (quoting Huffman-East Dev. Corp. v. Summers Elec.
Supply Co., 288 Ala. 579, 263 So.2d 677, 680
Furthermore, “[a] material breach of a contract
‘is one that touches the fundamental purposes of the
contract and defeats the object of the parties in making the
contract.'” Bentley Systems, Inc. v. Intergraph
Corp., 922 So.2d 61, 93 (Ala. 2005) (quoting Sokol
v. Bruno's, Inc., 527 So.2d 1245, 1248 (Ala.1988)).
“‘Substantial performance is the antithesis of
material breach. If a breach is material, it follows that
substantial performance has not been rendered.'”
Harrison v. Family Home Builders, LLC, 84 So.3d 879,
889 (Ala. Civ. App. 2011) (quoting John D. Calamari &
Joseph M. Perillo, The Law of Contracts § 11.18(b) (4th
ed. 1998)). “‘“Breach” consists of
the failure without legal excuse to perform any promise
forming the whole or part of the contract.'”
Hanuman, LLC v. Summit Hotel OP, LP, No.
2:13-CV-02234-HNJ, 2017 WL 4508158, at *4 (N.D. Ala. Oct. 2,
2017) (quoting McGinney v. Jackson, 575 So.2d 1070,
1071 (Ala. 1991)).
the plaintiff must prove that the defendant's
non-performance is material, not merely trivial or
insignificant. The non-performance must be “one that
touches the fundamental purposes of the contract and defeats
the object of the parties in making the contract.'”
Bentley Systems, Inc. v. Intergraph Corp., 922 So.2d
61, 93 (Ala. 2005) (quoting Sokol v. Bruno's,
Inc., 527 So.2d 1245, 1248 (Ala.1988)); see also
Hanuman, LLC v. Summit Hotel OP, LP, No.
2:13-CV-02234-HNJ, 2017 WL 4508158, at *4 note 5 (N.D. Ala.
Oct. 2, 2017); Nationwide Mut. Ins. Co. v. Clay, 525
So.2d 1339, 1343 (Ala. 1987) (“Under general principles
of contract law, a substantial breach by one party
excuses further performance by the other.”) (emphasis
added); Birmingham News Co. v. Fitzgerald, 133 So.
31, 32 (Ala. 1931) (“Every breach of a contract is, of
course, inconsistent with the contract; but every breach by
one party does not authorize the other to renounce it in
toto”) (citation omitted).
a party to a contract may terminate the contract based on the
alleged failure of the other party to substantially perform,
the first party must be able to show that second party's
failure of performance was so serious that it constitutes a
defense to any action by the second party due to the
termination of the contract by the first party. As the
Alabama Court of Civil Appeals has explained:
“‘[N]ot every partial failure to comply with the
terms of a contract by one party... will entitle the other
party to abandon the contract at once.'”
Birmingham News Co. v. Fitzgerald, 222 Ala. 386,
388, 133 So. 31, 32 (1931) (quoting 6 R.C.L. p. 926). In the
case now before us, in order for the [plaintiffs] to
establish that they had the right to unilaterally terminate
the contract…, they bore the burden of proving that
[defendant] had committed a breach of the contract that was
“‘of so material and substantial a nature as
would constitute a defense to an action brought by
[defendant] for [plaintiffs'] refusal to proceed with the
contract.'” Id. (quoting 3 Williston on
Contracts § 1467). “Whether or not a given breach
is so material or essential may ...