Appeals Court Affirms Breach of Contract Claim and Reverses Attorney Fees Case from Shelby County, Alabama

This is a breach of contract case and an award of attorney fees in Shelby County, Alabama. MAE Hardwoods, Inc. is a manufacturer of custom wooden building materials. The owner of MAE Hardwoods purchased the assets of American Hardwoods, Inc. American Hardwoods was purchased in bankruptcy proceedings. The purchase agreement specified that the assets purchased by Mason included the goodwill of American Hardwoods, Inc., and the right to use the name “American Hardwoods.”

MAE Hardwoods, Inc., was doing business as “American Hardwoods.” Major Millworks, Inc., is a company located in Alabama that provides services and goods for homebuilding projects. In 2006, MAE Hardwoods provided goods to Millworks and Millworks paid the invoice for same.

In 2009, MAE Hardwoods delivered materials to a project in Gadsden where Millworks was performing work. Partial payments were made but there was an outstanding bill for $25,533.16. MAE Hardwoods filed suit against Roy Roddam and Millworks for breach of contract.

The invoices were sent to Millworks on the letterhead of “American Hardwoods, Inc.” MAE Hardwoods alleged that it had entered into a contract with Roddam and Millworks in 2006 wherein it agreed to extend a line of credit to Roddam and Millworks for supplied materials. The contract contained the name of “American Hardwoods, Inc.”

At trial, Hope Roddam testified that she is Roddam’s daughter-in-law. She claimed that Roddam had sold the company to her and his son in 2007. Roddam’s defense was that the signature on the contract belonged to her father-in-law and not related to the Gadsden project in 2009.

Hope also testified that the homeowner on the Gadsden project had ordered some molding and materials from MAE Hardwoods directly. The trial court held in favor of MAE Hardwoods and it awarded 18 percent interest based on the unpaid invoices. The court also awarded $7,500 in attorney fees for a total judgment of $46,821.06.

Affirmed in part; reversed in part.

Roddam and Millworks argued that MAE Hardwoods was not a party to the contract and therefore, lacked standing to enforce the contract. The court held, “Without abandoning his real name a person may adopt any name, style or signature wholly different from his own name by which he may transact business, execute contracts, issue negotiable paper and sue or be sued.” State v. Taylor, 415 So.2d 1043, 1046-47 (Ala. 1982).

Also, corporations acquire good will and an assignee of the corporation may use the old corporate name. “We conclude that Roddam and Millworks have failed to show reversible error regarding the trial court’s determination that MAE Hardwoods was the proper party to the contract.” Pursuant to the contract, Roddam was responsible for the amounts owed for purchase orders that he placed. He was also liable as a surety for orders made either for his benefit or for as long as he had an interest in Millworks.

As to the award of attorney fees, a court cannot order the payment of an attorney fee without first receiving evidence of the amount of those fees and then determining the reasonableness of that amount. There was not any evidence presented regarding the amount of attorney fees incurred. The award of attorney fees to MAE Hardwoods is due to be reversed.

Generally, most business contracts have a clause related to attorney fees. I am surprised that this company did not have such a clause in its business contract. If you are a business or contractor and have a breach of contract claim, please call my office to discuss collection of your unpaid invoices.

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