Facts
- Alabama state and local officials assembled an incentive package to induce Hyundai to build an automobile manufacturing plant in Montgomery, including providing “free land.”
- The Industrial Development Board of the City of Montgomery (IDB) obtained option agreements on multiple parcels as the vehicle through which public funds flowed and to facilitate tax incentives; the City and County provided purchase funds.
- Two sets of landowners (the “McLemore group” and the “Russells”) executed separate option agreements with the IDB for their properties.
- Each option agreement included a “most-favored-nation” clause that the landowners claimed entitled them to the highest per-acre price paid to any landowner whose land was acquired for the project.
- The landowners alleged that after the IDB exercised the options, they were paid less per acre than at least one other landowner included in the site assembly.
- The landowners sued the IDB and Hyundai for breach of contract, alleging the IDB acted on Hyundai’s behalf and that the most-favored-nation pricing obligation was violated.
- The trial court granted summary judgment for Hyundai and the IDB; the landowners appealed, and the appeals were consolidated.
Issues
- Whether subsequent agreements or amendments modified or superseded the original option agreements’ most-favored-nation pricing provisions.
- Whether the most-favored-nation clause required matching the highest per-acre price paid for any other parcel in the project, and whether that obligation survived later contract documents.
- Whether Hyundai and/or the IDB could be held liable for breach of contract under the written agreements and the asserted agency/beneficiary theories.
- Whether genuine issues of material fact and competing inferences about contractual intent and effect precluded summary judgment.
Decision
- The Supreme Court of Alabama affirmed the summary judgments in part, reversed in part, and remanded.
- The court held that summary judgment was improper on portions of the disputes where the interaction between the most-favored-nation clause and later agreements could not be resolved as a matter of law.
- The court left intact portions of the trial court’s rulings where the contract language and record conclusively favored the defendants.
Legal Principles
- Parties may modify their agreement; when a subsequent agreement contradicts an earlier agreement, the later agreement controls.
- Summary judgment is reviewed de novo; evidence is viewed in the light most favorable to the nonmovant, and judgment is improper if material fact disputes exist.
- Unambiguous contract language is enforced as written; related documents may be read together to determine overall intent.
- If the contract documents and surrounding circumstances support more than one reasonable inference about intent or modification, fact issues may require trial rather than summary judgment.
Conclusion
The court issued a mixed disposition in consolidated land-option disputes arising from a public incentive package for Hyundai, holding that although some claims failed as a matter of law, other claims involving the continued effect of a most-favored-nation clause and the effect of later agreements presented factual and interpretive disputes that could not be resolved on summary judgment and required further proceedings.