Hugh W. Brown, Jr., and Alabama MBA, Inc. v. W.P. Media, Inc.

Summary

The Supreme Court of Alabama reviewed a summary judgment in favor of W.P. Media, Inc., in a breach-of-contract action involving an operating agreement for a joint venture. The court held that W.P. Media was estopped from denying Alabama MBA, Inc.'s corporate existence because it had contracted and participated with Alabama MBA as a corporation. The court also held that the filing of Alabama MBA's articles of incorporation established its corporate existence before the action was filed, reversed the summary judgment, and remanded the case.

Holdings

1. Alabama MBA did not exist as a de facto corporation at the time the operating agreement was executed because the record contained no substantial evidence of a bona fide and colorable attempt to incorporate before execution of the agreement.
2. W.P. Media's conduct in entering into and participating in the operating agreement and joint venture estopped it from denying Alabama MBA's corporate existence for purposes of challenging the validity of the operating agreement.
3. Alabama MBA was properly incorporated when it filed the action because filing the articles of incorporation was conclusive proof that the conditions precedent to incorporation had been satisfied; subsequent organizational and record-keeping requirements did not constitute prerequisites to incorporation or to maintaining the action.
4. Summary judgment for W.P. Media was improper because Alabama MBA established grounds preventing W.P. Media from challenging the operating agreement on the basis of Alabama MBA's corporate existence and because Alabama MBA was a real party in interest.

Questions Presented

1. Whether Alabama MBA's failure to file articles of incorporation before executing the operating agreement rendered the agreement invalid or prevented Alabama MBA from maintaining a breach-of-contract action.
2. Whether W.P. Media was estopped from denying Alabama MBA's corporate existence after contracting and dealing with Alabama MBA as a corporation.
3. Whether Alabama MBA was properly incorporated and a real party in interest when it filed the action despite delays in holding an organizational meeting and maintaining corporate records.

Disposition

reversed_and_remanded