Dahyalal H. Patel
Ashish Shah, individually and in his capacity as president, treasurer, director, and controlling shareholder of Subway No. 43092, Inc.;Ramesh Shah, individually and in his capacity as secretary of Subway No. 43092, Inc.; and Subway, Inc.
from Madison Circuit Court (CV-12-901307)
PARKER, CHIEF JUSTICE.
H. Patel filed an action seeking to enforce his ownership
rights as a shareholder in Subway No. 43092, Inc. ("the
corporation"), against shareholder Ashish Shah
("Shah"); Shah's father, Ramesh Shah
("Ramesh"); and the corporation (hereinafter
referred to collectively as "the Shah defendants").
The Madison Circuit Court entered a summary judgment in favor
of the Shah defendants. Patel appeals. We affirm in part and
reverse in part.
Facts and Procedural History
2007, Shah, the owner of eight Subway restaurants in and
around Madison County, prepared to open a ninth Subway
restaurant in Huntsville ("the restaurant"). In
July 2008, Shah formed the corporation for the purposes of
owning and operating the restaurant. Shah owned 90 percent of
the stock of the corporation and Ramesh owned 10 percent.
2008, Patel met with Shah about Shah's plan to open the
restaurant. At some point, Patel and Shah orally agreed that
Patel would purchase a 25 percent ownership interest in the
corporation. Because Shah estimated that start-up costs for
the restaurant would be $240, 000, Patel agreed to purchase a
25 percent interest in the corporation for $60, 000, payable
in monthly installments. After the restaurant opened in December
2008, Shah began making periodic distributions of profits to
April 2009, Shah orally agreed to sell Patel an additional
five percent interest for $12, 000, which Patel paid that
month. In December 2009, Patel began making the monthly
payments on the purchase price for his original 25 percent
interest, and he eventually paid the $60, 000. Accordingly,
Patel owned a 30 percent interest in the corporation, and he
continued to receive distributions of profits of the
September 2012, Patel sued the Shah defendants, alleging that
Shah had misrepresented the start-up costs for the restaurant
in calculating the price of Patel's 25 percent interest.
Patel alleged that the actual start-up costs were $140, 000
rather than $240, 000, as Shah had represented. Accordingly,
Patel alleged that he either overpaid for his interest or
acquired more than a 50 percent interest in the corporation.
Patel further alleged that the distributions of profits he
received were not proportional to his interest, even assuming
that his interest was 30 percent. In addition, he claimed
that Shah had withheld Patel's share of franchise- sales
commissions that the corporation received from its
franchisor, Doctor's Associates, Inc. Finally, Patel
alleged that Shah had engaged in illegal business practices
such as hiring illegal immigrants and filing false tax
returns. Patel's complaint asserted claims of breach of
contract and unjust enrichment. Patel also asserted several
tort claims, including claims of shareholder oppression,
civil conspiracy, breach of fiduciary duties, fraudulent
suppression, misrepresentation, conversion, waste, statutory
violations, and fraud. The Shah defendants asserted
several counterclaims against Patel. The circuit court
consolidated Patel's case with cases filed by other
persons against Shah relating to the ownership and operation
of other restaurants. The restaurant was subsequently sold to
a third party in 2016, and the proceeds were placed in escrow
pending final resolution of Patel's action.
Shah defendants moved for a summary judgment in Patel's
case based on their affirmative defense that Patel's
breach-of-contract claim was barred by the Statute of Frauds,
§ 8-9-2, Ala. Code 1975. The Shah defendants also argued
that Patel's tort claims were barred by the applicable
statutes of limitations and that, if they were not
time-barred, there were no genuine issues of material fact as
to those claims. The circuit court granted the motion for a
summary judgment. The circuit court later dismissed the Shah
defendants' counterclaims on August 20, 2018. Patel filed
his notice of appeal on October 1, 2018. The other
consolidated cases remain pending in the circuit court.
Standard of Review
review a summary judgment de novo. McClendon v.
Mountain Top Indoor Flea Market, Inc., 601 So.2d
957, 958 (Ala. 1992).
"'A summary judgment is proper when there is no
genuine issue of material fact and the moving party is
entitled to a judgment as a matter of law. Rule 56(c)(3),
Ala. R. Civ. P. The burden is on the moving party to make a
prima facie showing that there is no genuine issue of
material fact and that it is entitled to a judgment as a
matter of law. In determining whether the movant has carried
that burden, the court is to view the evidence in a light
most favorable to the nonmoving party and to draw all
reasonable inferences in favor of that party. To defeat a
properly supported summary judgment motion, the nonmoving
party must present "substantial evidence" creating
a genuine issue of material fact -- "evidence of such
weight and quality that fair-minded persons in the exercise
of impartial judgment can reasonably infer the existence of
the fact sought to be proved."'"
Pritchett v. ICN Med. Alliance, Inc., 938 So.2d 933,
935 (Ala. 2006) (quoting Capital Alliance Ins. Co. v.
Thorough-Clean, Inc., 639 So.2d 1349, 1350 (Ala. 1994)).
addressing the merits of Patel's appeal, we first address
this Court's jurisdiction to consider the appeal while
the other consolidated cases remain pending below. By
granting the Shah defendants' summary-judgment motion and
dismissing the Shah defendants' counterclaims against
Patel, the circuit court resolved all the claims and disposed
of all the parties in Patel's case. At that time, Patel
could not immediately appeal the judgment in his case without
an order from the circuit court certifying the judgment as
final under Rule 54(b), Ala. R. Civ. P. See Hanner v.
Metro Bank & Protective Life Ins. Co., 952 So.2d
1056, 1061 (Ala. 2006) (holding that "a trial court must
certify a judgment as final pursuant to Rule 54(b), Ala. R.
Civ. P., before a judgment on fewer than all the claims in a
consolidated action can be appealed").
11 days after the circuit court dismissed the counterclaims,
after having earlier entered the summary judgment, in
Patel's case, this Court overruled Hanner in
Nettles v. Rumberger, Kirk & Caldwell, P.C.,
[Ms. 1170162, August 31, 2018]___So. 3d___ (Ala. 2018). We
held that, "[o]nce a final judgment has been entered in
a case, it is immediately appealable, regardless of whether
it is consolidated with another still pending case."
Nettles, __ So.3d at___. After Nettles was
released, Patel filed his notice of appeal in his case.
Hence, this case presents the question whether Patel was
entitled to appeal under Nettles or was required to
wait under Hanner for the disposition of the other
cases that had been consolidated with his.
overruling Hanner, we noted that "we are
overruling clear precedent on which other litigants may
have relied -- in determining, for example, if and
when a notice of appeal is due. In such a case,
we think a prospective-only application of today's
decision is appropriate." Nettles, ___ So.3d
at___ n.1 (emphasis added). In light of our reliance-based
declaration that Nettles would be prospective only,
Nettles applies only to cases in which (a) the
judgment was entered after Nettles was released or
(b) the appellant filed a timely notice of appeal under Rule
4, Ala. R. App. P., after Nettles was released.
Here, Patel did the latter; he did not rely on
Hanner. Therefore, Nettles applies to
Patel's appeal, which was properly filed without waiting
until the circuit court resolved the other consolidated
cases. Accordingly, this Court has jurisdiction over
support of the motion for a summary judgment, the Shah
defendants asserted that Patel's breach-of-contract claim
was barred by the Statute of Frauds because the claim was
based on oral agreements to purchase stock. The Shah
defendants also argued that Patel's tort claims were
barred by the applicable statutes of limitations and that, if
they were not time-barred, there was no genuine issue of
material fact as to those claims. Patel contends that his
claims were not barred by the Statute of Frauds or by a
statute of limitations and that there were genuine issues of
material fact as to his tort claims.
Statute of Frauds
breach-of-contract claim was based on his status as a
shareholder in the corporation. Thus, his claim hinges on the
enforceability of his two oral stock-purchase agreements with
stock-purchase agreements, the Statute of Frauds provides:
"In the following cases, every agreement is void unless
such agreement or some note or memorandum thereof expressing
the consideration is in writing and subscribed by the party
to be charged therewith or some other person by him thereunto
lawfully authorized in writing:
"(8) ... [E]very agreement for the sale or purchase of
securities other than through the facilities of a national
stock exchange or of the ...