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Shoals Extrusion, LLC v. Beal

Supreme Court of Alabama

April 19, 2019

Shoals Extrusion, LLC
Lonnie Beal

          Appeal from Lauderdale Circuit Court (CV-15-900394)


         Lonnie Beal sued his former employer, Shoals Extrusion, LLC, an aluminum-extrusion business in Florence, after his employment there was terminated in November 2015. Beal alleged that Shoals Extrusion breached the terms of his employment agreement by refusing to give him severance compensation and benefits to which he claims he was entitled. The Lauderdale Circuit Court entered a summary judgment in favor of Beal and awarded him $80, 800. This appeal followed. We reverse the summary judgment and remand the cause for further proceedings.

         Facts and Procedural History

         In late 2014, Beal was working at an extrusion business in Florence when his supervisor, Wilbur Craven, asked him if he would be interested in becoming the plant manager for Shoals Extrusion, a new business Craven and other individuals were starting.[1] Beal responded in the affirmative, and, in early 2015, he began formal discussions with Craven and Wade Gilchrist, another owner of Shoals Extrusion, about the new business and what the terms of his employment would be. After an agreement was reached in principle, Beal requested that Shoals Extrusion prepare a written employment agreement memorializing the agreed-upon terms.

         On March 27, 2015, Beal and Craven executed a five-year employment agreement that obligated Shoals Extrusion to pay Beal a $20, 000 signing bonus and a first-year salary of $70, 000. Shoals Extrusion also agreed to pay Beal's health-insurance premiums. In return, Beal agreed that "[t]he work week shall be [a] 40 plus hour work week and the days and the time shall be as set by [Shoals Extrusion]." The agreement further provided that, if Shoals Extrusion terminated Beal's employment during the five-year term of the agreement, it would pay Beal his "wages and benefits for the term of [one] year." For his part, Beal agreed that, if he chose to leave Shoals Extrusion before the five-year term of the agreement expired, he would pay back the $20, 000 signing bonus within 30 days of leaving the employ.

         On April 1, 2015, Beal began working for Shoals Extrusion. In July 2015, Shoals Extrusion opened its facility and started production with one shift beginning at 7:00 a.m. and continuing for approximately 8 to 10 hours, depending on the volume of orders. In August 2015, Shoals Extrusion began operating a second shift. According to Craven, the employees voted to move the start time of the first shift up to 6:00 a.m. so the second shift did not have to work as late. Beal, however, refused to change his schedule and continued to arrive at the facility at 7:00 a.m. or later.

         Craven and Gilchrist spoke with Beal on multiple occasions about Beal working additional hours to increase production at the facility. Craven and Gilchrist stated, however, that Beal repeatedly indicated that he was not willing to work more hours than he was working unless he received an ownership interest in Shoals Extrusion. They stated that Beal further told them that he would, in fact, reduce the hours he was working unless he received the ownership interest he was seeking. Craven stated that he eventually learned that Beal was also telling certain individuals in the industry that Shoals Extrusion was having financial problems. Shoals Extrusion subsequently decided to terminate Beal's employment.

         On November 23, 2015, Craven and Gilchrist met with Beal and terminated his employment with Shoals Extrusion. During the meeting, they asked Beal to execute a "severance and general release agreement" that would, by its terms, obligate Shoals Extrusion to pay Beal's salary through December 31, 2015, in return for Beal's releasing any claims he might have against Shoals Extrusion. Beal declined to sign the proposed severance agreement. Shoals Extrusion thereafter made no further payments to Beal, despite his demand that it owed him one year's salary plus benefits under the terms of the severance-pay provision in his employment agreement.

         On December 18, 2015, Beal sued Shoals Extrusion, asserting a breach-of-contract claim based on Shoals Extrusion's failure to pay him severance benefits following the termination of his employment. On February 17, 2016, Beal moved for a summary judgment on his claim. Shoals Extrusion filed a response opposing the motion, and the trial court conducted a hearing to consider the parties' arguments.

         On April 7, 2016, the trial court granted Beal's summary-judgment motion, reasoning that Shoals Extrusion was effectively arguing that it had terminated Beal's employment for cause despite the absence of a provision in the employment agreement authorizing termination for cause. The trial court noted Shoals Extrusion's defense that Beal had breached the implied duty of good faith by threatening to reduce his working hours unless he was given an ownership interest in the company, but the trial court found there was no evidence indicating that Beal had actually followed through on that threat. Although the trial court granted Beal's summary-judgment motion and held that Shoals Extrusion had breached the severance-pay provision in the employment agreement, the court did not assess damages, and no final judgment was entered at that time.

         On July 20, 2016, Beal amended his complaint to add Gilchrist as a defendant and to assert additional claims. The parties subsequently engaged in discovery related to those claims. On January 5, 2018, the trial court dismissed all the claims Beal had added in his amended complaint, leaving the amount of damages to be assessed on Beal's breach-of-contract claim against Shoals Extrusion as the only remaining issue before the court. On March 23, 2018, the trial court entered a final judgment reaffirming its April 7, 2016, order in which it held Shoals Extrusion liable for breaching the severance-pay provision in Beal's employment agreement and assessing damages in the amount of $80, 800 -- $70, 000 for one year of salary and $10, 800 for one year of health-insurance premiums. Shoals Extrusion thereafter filed a timely notice of appeal to this Court.

         Standard of Review

         Shoals Extrusion seeks the reversal of the summary judgment awarding Beal $80, 800 on his breach-of-contract claim. We review a ...

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