A.T. Stephens Enterprises, Inc. v. Arnold Johns, et al.

Breach of Contract - Conspiracy to Steal - Conversion - A.T. Stephens Enterprises, Inc., filed this action against
Scott Transportation, Inc.; Austin Transportation, Inc.; Best
Leasing, Inc.; Best Systems, Inc.; Transport Credit Inc.;
Transportation Holding Company, Inc.; Transway Systems, Inc.;
Arnold E. Johns; Roger Manis; Don Clay; and Doug Ford. All of the
individual defendants were associated with Scott Transportation
("Scott"). The plaintiff sought damages based on allegations of
breach of contract and conspiracy to steal, convert, or dissipate
all of the assets of Scott and to defraud its creditors.

Arnold Johns owns Best Systems ("Best"). Best owns Scott,
which Johns also incorporated.

On August 10, 1994, the plaintiff leased 17 trucks to Scott
and assigned drivers for those trucks. The lease payments were to
be based on the number of miles each truck was driven. Scott gave
the plaintiff weekly settlement statements showing the amounts due
for mileage and taking credit for payments made by Scott to the
plaintiff.

On September 19, 1994, Scott entered into an agency agreement
with Sun Line Express ("Sun Line"), so that Sun Line handled the
day-to-day management of Scott. On September 22, 1994, Scott
agreed to make payments directly to the plaintiff's secured
creditors rather than to the plaintiff. Scott would write a check
to Sun Line, which would then write checks to the plaintiff's
creditors. The checks written by Sun Line were not honored by the
drawee bank.

Any checks from Scott to the plaintiff went through an
intermediary, Employer's Contract Services ("Employer's"). On
October 8, 1994, Scott sent to the plaintiff a statement claiming
that it had paid $15,826.19 to Employer's, but Employer's refused
to send the money to the plaintiff because Scott's check was not
honored by the drawee bank. In addition, Scott represented to the
plaintiff that it had escrowed insurance premiums of $455 a week.
However, these funds were not escrowed. The plaintiff, because of
these representations by Scott, continued to allow Scott to use
its trucks and drivers. Eventually, the absence of payments
became evident and the plaintiff sued.

The jury returned a verdict for the plaintiff, awarding $45,386 for breach of contract, $162,000 for conspiracy to defraud, and $150,000 in punitive damages. The court entered a judgment on that verdict; however, the court then granted the defendants' Rule 50(b), Ala.R.Civ.P., motion and set aside the judgment for the $162,000 and the $150,000. Thus, the court left in place a judgment for only $45,386 (the contract award). The trial court explained this ruling by stating that it had discovered errors in the record, including an improper charge to the jury concerning conspiracy to commit fraud, which required that it grant the defendants' Rule 50(b) motion.

Unknown

Unknown

Reversed and remanded by the Supreme Court of Alabama. See: ___ So.2d ___ (Ala. 1-21-2000). Note: The above date reflects the appellate court decision date, not the original trial date. Reported by kkm.