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Recherche, LLC v. Baldwin County Electric Membership Corp.

Supreme Court of Alabama

October 18, 2019

Recherche, LLC, and Brooks Davis, individually and on behalf of all others similarly situated
v.
Baldwin County Electric Membership Corporation

          Appeal from Baldwin Circuit Court (CV-12-900820)

          STEWART, JUSTICE.

         This appeal involves the interpretation of the patronage-refund requirements imposed on electric cooperatives by § 37-6-20, Ala. Code 1975. Recherche, LLC, individually and on behalf of all other current and former members of Baldwin County Electric Membership Corporation ("the members"), filed a class-action complaint in the Baldwin Circuit Court ("the trial court") against Baldwin County Electric Membership Corporation ("Baldwin EMC"), seeking a judgment declaring the rights of the members to a return of "Patronage Capital" or "Capital Credits," which the members assert are "excess revenues" due to be distributed to the members under § 37-6-20. Brooks Davis subsequently filed a motion to intervene to represent all former members of Baldwin EMC. Recherche and Davis asserted that Baldwin EMC's method of allocating excess revenues to capital accounts violates § 37-6-20. The trial court dismissed the action, and Recherche and Davis appealed. We affirm.

         Facts and Procedural History

         The procedural history of the action underlying this appeal is lengthy; accordingly, we will discuss only those facts relevant to the issue of Baldwin EMC's distribution of excess revenues. Recherche, LLC, a domestic limited-liability company located in Baldwin County and a member of Baldwin EMC, initiated the underlying class action against Baldwin EMC in June 2012. In May 2014, Davis filed a motion to intervene, which the trial court initially denied. On September 21, 2015, after Davis had appealed that determination, this Court vacated the trial court's order denying intervention and ordered the trial court to allow Davis to intervene. (Case no. 1140057.) Thereafter, Davis filed a class-action complaint in intervention.[1] Baldwin EMC amended its answer numerous times and filed multiple dispositive motions that were denied throughout the course of the underlying proceedings.

         On May 3, 2018, Recherche and Davis filed a joint amended complaint to which they attached the Baldwin EMC bylaws. On June 7, 2018, Baldwin EMC filed a motion to dismiss and a supporting brief in which it argued that its method of allocating capital credits to members' capital accounts as provided in its bylaws complied with § 37-6-20 and that the following federal precedent supported the dismissal of the class action: Davis v. Central Alabama Electric Cooperative, No. 15-0131-WS-C, Sept. 8, 2015 (S.D. Ala. 2015)(not selected for publication in F.Supp.), Caver v. Central Alabama Electric Cooperative, No. 15-0129-WS-C, Sept. 8, 2015 (S.D. Ala. 2015)(not selected for publication in F.Supp.)("Caver I"), and Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135, 1141 (11th Cir. 2017)("Caver II"). Baldwin EMC attached to its motion the Baldwin EMC bylaws and copies of the opinions issued in Davis, Caver I, and Caver II. On July 16, 2018, Recherche and Davis filed a response in opposition to Baldwin EMC's motion. On July 24, 2018, the trial court denied Baldwin EMC's motion to dismiss.

         On July 30, 2018, however, the trial court entered the following order withdrawing its July 24, 2018, order and granting Baldwin EMC's motion to dismiss:

"The MOTION TO DISMISS [RECHERCHE AND DAVIS'S] AMENDED COMPLAINT PURSUANT TO RULE 12(B)[, Ala. R. Civ. P., ] is hereby GRANTED based solely upon the Caver arguments asserted by [Baldwin EMC]. The opinion of the Eleventh Circuit Court of Appeals in Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135 (11th Cir. 2017), upheld Rule 12 orders of dismissal by the United States District Court for the Southern District of Alabama. While that opinion is not binding precedent on this Court, it is the only appellate opinion to interpret the subject statute. The Court is convinced that, given the number of identical cases pending in Alabama state courts, the Alabama Supreme Court's consideration of the statute is necessary to ultimately resolve the issue of how electric cooperatives must distribute excess revenues under the controlling statute. [Recherche and Davis's] appeal of this Order granting [Baldwin EMC's] motion will allow for just that. Accordingly, [RECHERCHE AND DAVIS'S] AMENDED COMPLAINT is hereby DISMISSED WITH PREJUDICE."

(Capitalization in original.) Recherche and Davis timely filed a notice of appeal to this Court.

         Standard of Review

         The trial court stated that it based its decision "solely upon" Baldwin EMC's reliance on Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135 (11th Cir. 2017). Although Baldwin EMC attached its bylaws to its motion to dismiss, Recherche and Davis had already submitted a copy of those bylaws as an exhibit to their amended complaint. "Exhibits attached to a pleading become part of the pleading." Ex parte Price, 244 So.3d 949, 955 (Ala. 2017) (citing Rule 10(c), Ala. R. Civ. P.). Accordingly, because the trial court did not consider evidentiary matters outside the pleadings so as to convert Baldwin EMC's motion to dismiss to a motion for a summary judgment, we apply the standard of review applicable to Rule 12(b)(6), Ala. R. Civ. P., motions.

"'The appropriate standard of review of a trial court's [ruling on] of a motion to dismiss is whether "when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle [the pleader] to relief." Nance v. Matthews, 622 So.2d 297, 299 (Ala. 1993); Raley v. Citibanc of Alabama/Andalusia, 474 So.2d 640, 641 (Ala. 1985). ...'
"Lyons v. River Road Constr., Inc., 858 So.2d 257, 260 (Ala. 2003)."

Liberty Nat'l Life Ins. Co. v. University of Alabama Health Servs. Found., P.C., 881 So.2d 1013, ...


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