(251) 299-0101

WAIVER OF AFFIRMATIVE DEFENSE - TRIAL BY IMPLIED CONSENT - ACCELERATION OF ORAL LOAN AGREEMENT - GERSTENECKER V. GERSTENECKER

Gerstenecker v. Gerstenecker, [Ms. 1160144, May 19, 2017] __ So. 3d __ (Ala. 2017). This plurality opinion authored by Justice Parker, (Stuart, C.J., Wise, and Bryan, JJ., concur and Shaw, J., concurs in the result) affirms in part and reverses in part the circuit court’s judgment on a claim for breach of an oral loan agreement. Janice, then the mother-in-law of Julie, agreed to pay $78,000 in student loans of Julie so long as Julie made monthly payments. After making only a few payments to Janice, Julie defaulted. During this time, Julie became estranged from Janice’s son, and they ultimately divorced.

Following a bench trial, the circuit court awarded Janice a judgment for the entire unpaid balance of the $78,000 loan. The circuit court also ruled that Julie had waived the defense of statute of frauds by failing to assert it in her initial answer and asserting it instead on the eve of trial.

The Court rejected Janice’s argument that the statute of frauds issue was tried by implied consent pursuant to Rule 15(b) by holding

“When a party contends that an issue was tried by express or implied consent and the evidence on that issue is also relevant to the issue expressly litigated, there is nothing to indicate that a new issue was raised at trial, and the pleadings are not deemed amended under Rule 15(b).”

Ms. *11, quoting McCollum v. Reeves, 521 So. 2d 13, 17 (Ala. 1987) (citing Wright & Miller, Federal Practice and Procedure, Civil, § 1493 (1971)).

The Court rejected Julie’s argument that the evidence did not establish that she accepted Janice’s offer. The Court noted that “conduct of one party from which the other may reasonably draw the inference of assent to an agreement is effective as acceptance.” Ms. *15, quoting Mayo v. Andress, 373 So. 2d 620, 624 (Ala. 1979), quoting, in turn, Deeco, Inc. v. 3-M Co., 435 So. 2d 1260, 1262 (Ala. 1983).

However, the Court reversed the circuit court’s judgment to the extent it awarded Janice the entire outstanding loan balance because there was no evidence the parties agreed on an acceleration-of-payments clause in the event that Julie breached the agreement to repay the $78,000 on a monthly basis. Ms. *23.

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