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McLemore v. Hyundai Motor Manufacturing Alabama, LLC

Alabama Supreme Court
7 So.3d 318 (2008)


The task of Montgomery, Alabama's Industrial Development Board (IDB) (codefendant) was to attract outside businesses by offering them tax breaks and other incentives. IDB targeted Hyundai Motor Manufacturing Alabama, LLC (Hyundai) (codefendant), which needed a free tract of land on which it could build its new plant. IDB entered into option contracts with Price McLemore and other landowners (plaintiffs) to buy their land for a Hyundai industrial park. The contracts included a most-favored-nation (MFN) clause promising each landowner the same $4,500 per-acre that IDB would pay the other landowners. Joy Shelton refused to sign an option contract, so IDB initially left her property outside project boundaries. IDB changed its mind when it learned that railroad tracks had to be laid over Shelton's land in order to service Hyundai's plant. Shelton's property was suddenly indispensable. IDB was willing to pay Shelton much more than $4,500 per acre, but it balked at having to pay the same high price to the other landowners. City, state, and Hyundai officials helped IDB circumvent this problem by working together, without IDB's direct involvement, to arrange Hyundai's purchase of Shelton's land for $12,000 per acre. The city treated this land as an independent parcel rather than as part of IDB's industrial park. McLemore and the other landowners sued IDB and Hyundai for breaching the MFN. The trial court granted summary judgment for IDB and Hyundai, and the landowners appealed to the Supreme Court of Alabama.

Rule of Law


Holding and Reasoning (Stuart, J.)

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