Crooked Creek Properties, Inc. v. Ensley et al
MEMORANDUM OPINION re two motions to dismiss, one filed by Defendants Richard Ensley, Patricia Ensley, Anita Liles, and ES Capital, LLC (Doc. 31 ), and the other filed by Defendant Charles W. Edmondson (Doc. 22 ). In a prior Order (Doc. 74 ), the court granted Defendants' motions to dismiss (Docs. 22 , 31 ). This Memorandum Opinion sets forth the court's reasoning for its ruling as further set out in the opinion. An appropriate judgment will be entered. Signed by Honorable William Keith Watkins on 10/28/2009. (dmn)
IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION C R O O K E D CREEK PROPERTIES, INC., P la in tif f , v. R IC H A R D ENSLEY, et al., D e f e n d a n ts. ) ) ) ) ) ) ) ) )
CASE NO. 2:08-CV-1002-WKW[WO]
M E M O R A N D U M OPINION B e f o re the court are two motions to dismiss, one filed by Defendants Richard Ensley, P a t r i c i a Ensley, Anita Liles and ES Capital, LLC (Doc. # 31), and the other filed by D e f e n d a n t Charles W. Edmondson (Doc. # 22). Defendants' arguments in support of the m o tio n s are overlapping. Plaintiff Crooked Creek Properties, Inc., opposes the motions, and th e re has been no shortage of briefs filed in support of the parties' respective positions.1 (D o c s. # 29, 32, 34, 35, 36, 38, 39, 40, 42.2 ) The motions to dismiss are predicated on m u ltip le theories. In a prior Order (Doc. # 74), the court granted Defendants' motions to d is m is s (Docs. # 22, 31). This Memorandum Opinion sets forth the court's reasoning for its r u lin g .
The individual Defendants Richard Ensley, Patricia Ensley, Anita Liles and Charles W. Edmondson are referred to by last name. References to "Defendants" are to all movants, and Richard Ensley and Patricia Ensley are referred to as the "Ensleys." The corporate parties ES Capital, LLC, and Crooked Creek Properties, Inc. are identified as "ES Capital" and "Crooked Creek."
For ease of reference, the parties' briefs are referred to by their assigned docket number.
I. JURISDICTION AND VENUE J u ris d ic tio n is exercised pursuant to 28 U.S.C. §§ 1331, 1332 and 1367. The parties d o not contest personal jurisdiction or venue, and the court finds allegations sufficient to s u p p o rt both. I I. STANDARD OF REVIEW A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint against the le g a l standard set forth in Rule 8: "a short and plain statement of the claim showing that the p le a d e r is entitled to relief," Fed. R. Civ. P. 8(a)(2). "To survive a motion to dismiss, a c o m p la in t must contain sufficient factual matter, accepted as true, to `state a claim to relief th a t is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell A tl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "Determining whether a complaint states a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 1950 (brackets added; citation o m itte d ). "[F]acial plausibility" exists "when the plaintiff pleads factual content that allows th e court to draw the reasonable inference that the defendant is liable for the misconduct a lle g e d ." Id. (citing Twombly, 550 U.S. at 556). Hence, while the complaint need not set out " d e ta ile d factual allegations," Twombly, 550 U.S. at 555, it must provide sufficient factual a m p lif ic a tio n "to raise a right to relief above the speculative level," id.; see also James River I n s . Co. v. Ground Down Eng'g, Inc., 540 F.3d 1270, 1274 (11th Cir. 2008) (holding that
Twombly formally retired "the often-criticized `no set of facts' language previously used to d e s c rib e the motion to dismiss standard." (citation omitted)). I I I. FACTS T h is action has its genesis in protracted legal proceedings litigated in the circuit courts o f Montgomery and Autauga counties. Those proceedings have involved the Supreme Court o f Alabama on five occasions and the Alabama Court of Civil Appeals on two other o c c a s io n s . The state court proceedings began in 1995 and concluded in 2007 with a decision o f the Supreme Court of Alabama.3 See Walden v. Hutchinson, 987 So. 2d 1109 (Ala. 2 0 0 7 ).4 At the core of these controversies was a dispute about the ownership of Danya Park G a rd e n Apartments ("Danya Apartments") located in Prattville, Alabama, and the common s to c k of a corporation that, at least at one point, owned 100 percent of the fee simple title to D a n ya Apartments. In the present litigation, Defendants argue that res judicata and/or collateral estoppel f o re c lo s e Crooked Creek from reigniting the ownership dispute. Crooked Creek disputes D e f e n d a n ts ' characterization of its claims and the applicability of res judicata and collateral e s to p p e l. To understand the arguments, it is helpful initially to outline some of the facts of th e Montgomery County Suit and the Autauga County Suit.
All references to the Autauga County Suit and the Montgomery County Suit are to these proceedings. The procedural history of Ms. Walden's long-running dispute in both the Autauga County and Montgomery County courts is succinctly set out in the Supreme Court of Alabama's opinion.
T h e Montgomery County Suit T h e key players in the Montgomery County Suit were Hugh V. Smith, Jr. ("Smith")
a n d Willadean Walden ("Walden"). (Am. Compl. ¶ 2 (Doc. # 10).) As will be discussed la te r, Crooked Creek is the successor-in-interest to Ms. Walden's ownership interest in D a n ya Apartments. In 1995, Mr. Smith sued Ms. Walden in Montgomery County, and Ms. Walden c o u n te rc la im e d . Ultimately, Ms. Walden obtained a favorable judgment against Mr. Smith f o r $187,166 in the Montgomery County Suit. (Am. Compl. ¶¶ 4, 5); Walden, 987 So. 2d a t 1111. Later, the judgment being unsatisfied, Ms. Walden commenced further proceedings i n the Montgomery County Suit to collect the judgment from Mr. Smith. On August 11, 2 0 0 0 , to enforce the judgment, the Montgomery County Circuit Court entered a judgment v e s tin g Ms. Walden with ownership of all of the common stock in Mr. Smith's corporation (H u g h V. Smith Enterprises, Inc.), the sole asset of which was Danya Apartments. (Am. C o m p l. ¶ 4; Montgomery County Suit, Order, dated Aug. 11, 2000 (Doc. # 31-2, at 120).) On June 5, 2002, however, the Montgomery County Circuit Court vacated the portion of its A u g u s t 11, 2000 judgment that awarded Ms. Walden ownership of the common stock of H u g h V. Smith Enterprises, Inc., and instead awarded Ms. Walden a lien on the common s t o c k of the corporation that owned Danya Apartments sufficient to satisfy her judgment a g a in s t Mr. Smith. (Am. Compl. ¶ 4); see also Walden, 987 So. 2d at 1112 ("`The portion o f the order of August , 2000, which awards the ownership of the stock of [Hugh V.
Smith Enterprises, Inc.] to [Ms. Walden] is vacated in favor of the award of a lien on the s to c k of [Hugh V. Smith Enterprises, Inc.] . . . ." (quoting Montgomery County Suit, June 5 , 2002 Order) (second and fourth alterations added; emphasis omitted)). That judgment was a f f irm e d by the Alabama Court of Civil Appeals in March 2003, see Walden v. Smith, 883 S o . 2d 743 (Ala. Civ. App. 2003) (table), and in April 2004, the Supreme Court of Alabama d e n ie d Ms. Walden's certiorari petition, see Ex parte Walden, 916 So. 2d 632 (Ala. 2004) (ta b le ). See also Walden, 987 So. 2d at 1113 (reciting procedural history). Mr. Smith also was indebted to others, including Mr. Ensley, who is a defendant in th is action. (Am. Compl. ¶ 5.) During the pendency of the appeal in the Montgomery C o u n ty Suit, Mr. Ensley, his wife, and a third individual formed ES Capital for the purpose o f conducting a one-time mortgage transaction. See Walden, 987 So. 2d at 1113; (Am. C o m p l. ¶ 5.) ES Capital loaned Hugh V. Smith Enterprises, Inc., $580,000, the proceeds of w h ic h were disbursed, in part, to pay off an existing mortgage on Danya Apartments and to p a y Mr. Ensley for management services. (Ex. K to Compl. (Doc. # 1)); see also Walden, 9 8 7 So. 2d at 1113-14. Ms. Walden was not the recipient of any of the funds. In return for th e loan, ES Capital received a promissory note and a first mortgage on Danya Apartments, a n d the mortgage was recorded on August 4, 2003. See Walden, 987 So. 2d at 1114. An a g re e m e n t for the management of the rentals and income from Danya Apartments also was e x e c u te d in conjunction with the mortgage ("management agreement"). (Am. Compl. ¶ ¶ 7-8.) Under the terms of the management agreement, the rental payments from Danya
Apartments were to be used to satisfy the mortgage debt. (Ms. Walden Aff. ¶ 4 (Ex. J to C o m p l.); Management Agreement (Ex. M to Compl.).) In October 2004, Ms. Walden's judgment against Mr. Smith remained unsatisfied, and s h e again sought relief in the Montgomery County Suit. See Walden, 987 So. 2d at 1114. U ltim a te ly, the parties to the Montgomery County Suit consented to the entry of a judgment v a c a tin g the June 5, 2002 judgment and reinstating the August 11, 2000 judgment.5 (Am. C o m p l. ¶ 6.) As a result of the consent judgment entered on November 4, 2004, the M o n tg o m e ry County Circuit Court declared that Ms. Walden was "the owner of the common s to c k in Hugh V. Smith Enterprises, Inc.," which owned Danya Apartments, and that Ms. W a ld e n was, "therefore, the owner of the fee simple title to [Danya Apartments], Prattville, A la b a m a ." (Montgomery County Suit, Order, dated Nov. 4, 2004 (Ex. H to Compl.).)6 B. T h e Autauga County Suit In November 2004, Ms. Walden and Danya Park Garden Apartments, Inc., "formerly k n o w n as Hugh V. Smith Enterprises, Inc.," filed a civil action in the Autauga County Circuit C o u rt, naming as defendants, among others, the Ensleys and ES Capital.7 (Autauga County
As noted in Walden, ES Capital and the Ensleys were not parties in the Montgomery County Suit and, thus, did not agree or consent to the judgment. See 987 So. 2d at 1115. Other than the "therefore" in the quoted portion of the November 4, 2004 consent judgment, the court has been unable to locate, in this vast record, any other indication that Ms. Walden personally and individually owned in fee simple the real estate upon which Danya Apartments rest. Prior to Ms. Walden filing this action, Mr. Smith died, and the executrix of his estate was named as a defendant in the Autauga County Suit. (Autauga County Suit, Compl. ¶¶ 8, 12.) Additionally, other individuals who had allegedly infringed upon Ms. Walden's ownership interest in Danya Apartments, but who are not parties in the case before this court, were named in the Autauga
Suit, Compl. (Doc. # 31-2).8 ) In the Autauga County Suit, Ms. Walden alleged that she " o w n [ e d ] all of the common stock in [Danya Park Garden Apartments, Inc.]," which in turn o w n e d Danya Apartments.9 (Autauga County Suit, Compl. ¶¶ 2, 9.) M s . Walden sought to quiet title in her to Danya Apartments and to "cancel the m a n a g e m e n t agreement." (Autauga County Suit, Compl. (Counts I, IX).) Additionally, she b ro u g h t the following claims, among others: (1) a claim against the Ensleys for conspiracy to "defraud" Ms. Walden out of her property (i.e., Danya Apartments) "by unlawful and f ra u d u le n t means," which included forming ES Capital to "us[e] [Danya Apartments] as s e c u rity for the mortgage loan" (Autauga County Suit, Compl. 21, 24 (Count III)); (2) a claim th a t the defendants unlawfully trespassed upon Ms. Walden's property, i.e., Danya A p a rtm e n ts (Autauga County Suit, Compl. 24 (Count IV)); (3) a claim that the defendants to o k "large sums of money from [Danya Apartments'] bank account" and "convert[ed] it to th e ir own use" (Autauga County Suit, Compl. 26 (Count V)); (4) a claim that the defendants in their management of Danya Apartments "wrongly and without the permission" of Ms.
County Suit. Ms. Walden alleged, for instance, that, during the pendency of the Montgomery County Suit and prior to his death, Mr. Smith wrongfully executed a quit claim dead to Danya Apartments to an individual named George Hutchison ("Hutchison") "to hinder, delay or prevent her from collecting the judgment." (Autauga County Suit, Compl. ¶ 20.) In the Autauga County Suit, Ms. Walden alleged that her judgment "which vested ownership of the common stock in Hugh V. Smith Enterprises, Inc. in her . . . preceded the recordation of [Mr.] Hutchison's quit claim deed and that the quit claim deed was "void." (Autauga County Suit, Compl. ¶¶ 22, 24.) Because the facts surrounding these third party interests are not material to resolution of the present motion to dismiss, further discussion is not needed. Defendants have submitted certified copies of pertinent pleadings and orders from the Autauga County Suit. (See Doc. # 31-2.) Ms. Walden was represented by her son Gatewood Walden, Esq., in the Autauga County Suit. Mr. Walden also represents Crooked Creek in the present litigation.
Walden converted substantial sums of money belonging to her (Autauga County Suit, Compl. 2 7 (Count VII)); (5) a claim against the Ensleys for theft of property, alleging that they e x e rte d unauthorized control over Ms. Walden's property by collecting the rent from Danya A p a rtm e n ts tenants and retaining the rent for themselves (Autauga County Suit, Am. Compl. (C o u n t IX)); and (6) a claim for ejectment in which Ms. Walden contended that she was "the o w n e r of the common stock in Danya Park Garden Apartments, Inc., formerly Hugh V. S m ith Enterprises, Inc., and its asset, [Danya Apartments]," 1 0 and that the Ensleys and ES C a p ita l had withheld and detained the apartments from her and were continuing to convert to their own use rental income that belonged to her (Autauga County Suit, 2d Am. Compl. (C o u n t IX)).11 T h e Autauga County Circuit Court rejected Ms. Walden's claims and entered s u m m a ry judgment in favor of the Ensleys and ES Capital. It found that the June 5, 2002 ju d g m e n t entered in the Montgomery County Suit, "which served to vacate the award of s to c k to [Ms.] Walden in that case and thus permit the mortgage on [Danya Apartments], was a final judgment and was ultimately affirmed through the appeal process." (Autauga County S u it, Summ. J. Op. 4 (Doc. # 31-2).) The Autauga County Circuit Court further found that the Montgomery Court's order of June 5, 2002, became the law of the case s u c h that the Montgomery Court lost its jurisdiction to override that decision, w h e n in November 2004, it ordered the reinstatement of its prior order of
This appears to be an admission by Ms. Walden that the fee simple title to the real estate rested in the corporation. The same admission appears in the pleadings in this case.
The counts in the complaint and amendments are misnumbered.
August 2000 thereby again awarding the common stock to [Ms.] Walden but th is time in derogation of the rights of certain Defendants in this cause who n o w had an interest in the property, none of whom were parties to the M o n tg o m e ry litigation. (Autauga County Suit, Summ. J. Op. 5, dated Dec. 2006 (Doc. # 31-2).) The Autauga C o u n ty Circuit Court also upheld the validity of the ES Capital mortgage on Danya A p a rtm e n ts and the management agreement. It ordered [ t]h a t the mortgage in favor of ES Capital, LLC is hereby adjudicated as a g o o d and valid mortgage on [Danya Apartments] as more particularly d e s c rib e d herein above. The mortgage is adjudicated as a superior lien to the c la im s of the Plaintiffs and to claims of Defendant George Hutchison and/or h is assigns. The Court further finds that the management agreement executed c o n te m p o ra n e o u s ly with the mortgage is otherwise valid and is due to be e n f o rc e d according to its terms. (A u ta u g a County Suit, Summ. J. Op. 6.) Summary judgment was entered in favor of the E n sle ys and ES Capital "as to all claims[.]" (Autauga County Suit, Summ. J. Op. 6 (¶ 3).) O n post-judgment cross-motions, the Autauga County Circuit Court denied Ms. W a ld e n 's motion to vacate, but granted ES Capital's motion requesting an order directing M s . Walden not to interfere with the management of Danya Apartments during the pendency o f any appeal. The Autauga County Circuit Court ruled: P la in tif f , her attorney and/or representatives shall not attempt to intercept any f u rth e r rents from said tenants nor attempt to change the locks on the offices o f said apartments or in any way interfere with the operation of said a p a rtm e n ts by Defendant ES Capital, LLC such that said Defendant shall be e n title d to all income received from the apartments which shall be applied
toward the payment of its mortgage, the operating cost of said apartments and o th e rw is e pursuant to the management agreement and the other loan d o c u m e n ts executed contemporaneously with said mortgage. (A u ta u g a County Suit, Order ¶ 3, dated Jan. 2007 (Doc. # 31-2).) The summary judgment entered in favor of the Ensleys and ES Capital in the Autauga C o u n ty Suit was affirmed on appeal by the Supreme Court of Alabama in November 2007. See Walden, 987 So. 2d at 1122. The supreme court addressed Ms. Walden's quiet-title c la im as pertained to the Ensleys and ES Capital.1 2 See id. at 1116. Ms. Walden argued that th e doctrine of lis pendens operated to cut off entirely their interests in Danya Apartments. See id. at 1120. She contended that the Montgomery County Circuit Court's November 4, 2 0 0 4 consent judgment entered more than seven months after the supreme court affirmed a n d denied certiorari review in that case made her the "lawful owner" of Danya Apartments a n d invalidated ES Capital's mortgage. See id. at 1120. The supreme court assumed without d e c id in g that the November 2004 consent judgment entered in the Montgomery County Suit w a s valid, but nonetheless held that Ms. Walden could not prevail: "[Ms.] Walden does not e x p la in how the doctrine of lis pendens operates to invalidate a mortgage taken before the e n d of an appellate process that is finally resolved in favor of the mortgagee." Id. at 1121. It explained: A lth o u g h ES [Capital] received its mortgage on June 29, 2003, after a final ju d g m e n t in [the Montgomery County Suit], and while that judgment was u n d e r appellate review, that litigation was concluded by the judgment of this
As noted by the Supreme Court of Alabama, this was the only claim Ms. Walden briefed. See Walden, 987 So. 2d at 1116.
Court on April 16, 2004, in a manner favorable to ES [Capital]. In other w o rd s , ES [Capital] took its mortgage, subject to the risk that the judgment of J u n e 5, 2002, which gave Walden only a lien on the apartments, would be re v e rs e d on appeal. That did not happen, of course. Instead, the judgment was a f f irm e d . Id . Holding that Ms. Walden presented no basis for reversing the summary judgment entered in favor of the Ensleys and ES Capital, the supreme court affirmed that part of the judgment o f the lower court in the Autauga County Suit. See id. at 1122. T h e end result of the rulings in the Autauga County Suit, as affirmed by the Supreme C o u rt of Alabama, was as follows: (1) The mortgage of ES Capital constitutes a valid lien o n Danya Apartments; (2) ES Capital's mortgage is a superior lien to the claims of Ms. W alden; and (3) the management agreement by which ES Capital operates Danya Apartments a n d collects rent is valid and enforceable, and ES Capital is entitled to collect these rent p a ym e n ts without interference from Ms. Walden. C. T h e Present Lawsuit T h e decision by the Supreme Court of Alabama in the Autauga County Suit is the p re c u rs o r to this lawsuit, which is brought by Crooked Creek, a Nevada corporation.1 3 As a lle g e d , Crooked Creek is the assignee of and successor-in-interest to all of Ms. Walden's
As originally filed, the Complaint in this action was 203 pages in length and contained 637 numbered paragraphs, 170 footnotes and 14 exhibits. (Compl.) The court sua sponte dismissed the Complaint, with leave granted to Crooked Creek to file an amended complaint in compliance with Rule 8 of the Federal Rules of Civil Procedure. (Order (Doc. # 5).) The 70-page Amended Complaint was filed on January 13, 2009. The Amended Complaint is the operative complaint.
stock in the corporation that owns Danya Apartments.1 4 (Am. Compl. ¶ 11; see also Compl. ¶ ¶ 123, 228, 314; Compl., Ex. D (face page), describing Ms. Walden as Crooked Creek's " p re d e c e s s o r in interest.") Defendants are Mr. Ensley, Mrs. Ensley, ES Capital, Ms. Liles and Mr. Edmondson. Although "Venture Services d/b/a Danya Apartments Management Group" ("Danya Group") is listed as a Defendant in the caption, the Amended Complaint describes Danya Group as a n association-in-fact enterprise in the context of the RICO claims. (Am. Compl. ¶¶ 27, 28.) In the Amended Complaint, Danya Group is not a legal entity against whom monetary or in ju n c tiv e relief is sought, and Crooked Creek has not asserted otherwise in its briefs. T h e Amended Complaint alleges that Mr. Ensley, Mrs. Ensley, Ms. Liles, Mr. E d m o n d s o n and ES Capital "comprise the participants of Danya Group" (Am. Compl. ¶ 19), w ith Mr. Ensley as the manager, Mrs. Ensley as the "financier and consultant," Ms. Liles as th e on-site manager, Mr. Edmondson as an "accomplice" and legal advisor to Danya Group, a n d ES Capital as the vehicle through which funds are "laundered" (Am. Compl. ¶ 20). More particularly, Mr. Edmondson is alleged to have advised the Ensleys to pay funds from th e collection of rent from Danya Apartments to ES Capital "in the guise of mortgage p a ym e n ts thereby creating the appearance of conducting a legitimate business transaction," w h e n in fact, the rental payments belonged to Crooked Creek, the purported owner of all the s to c k in the corporation that owns Danya Apartments. (Am. Compl. ¶ 98.) The primary
The Amended Complaint describes Danya Apartments as "a HUD Section 8 housing project for low-income families that receives federal subsidy funds." (Am. Compl. ¶ 2.)
injuries allegedly caused by the Ensleys are that they continue to retain payments collected f ro m the rental business of Danya Apartments. (Am. Compl. ¶ 121.) The Ensleys also are a c c u s e d of depositing the rental funds into a Danya Group bank account, from which Mr. E d m o n d s o n has been paid for his legal services. (Am. Compl. ¶ 121.) It further is alleged th a t Mr. Edmondson has received these payments, notwithstanding his knowledge that the m o n ie s have been misappropriated from Crooked Creek. (Am. Compl. ¶ 121.) Ms. Liles's d u tie s in connection with Danya Apartments are described as "leasing the apartment units, e v ic tin g low-income families who fail to pay rent, keeping records, hiring and overseeing re p a irm e n . . . and . . . grounds keepers, and collecting tenants' monthly rent checks." (Am. C o m p l . ¶ 30.) As alleged by Crooked Creek, the "agreed-upon goal" of the Ensleys, Ms. L ile s and Mr. Edmondson is to "loot [Crooked Creek's] rental-property business," and their " lo n g range goal" is to "completely tak[e]-over [Crooked Creek's] business, lock-stock-andb a rre l." (Am. Compl. ¶ 125; see also Am. Compl. ¶ 132.) F u rth e rm o re , Crooked Creek alleges that the management agreement is "the linchpin o f the illicit scheme." (Am. Compl. ¶ 23.) Through use of the management agreement, D e f e n d a n ts are accused of "systematically looting the business" (Am. Compl. ¶ 22), of taking c o n tro l of Danya Apartments in order "to misappropriate the rental income" (Am. Compl. ¶ 28), and of paying "the criminally derived proceeds . . . to themselves notwithstanding that s u c h payments are unapproved and unwarranted so-called management fees and . . . p ro f e ss io n a l fees" (Am. Compl. ¶ 39). In addition to being deprived of the rental fees from
the apartments, Crooked Creek alleges that it has expended "substantial sums" to stop the " tre s p a s s in g " and "theft of the rental property earnings." (Am. Compl. ¶ 46.) The Ensleys and ES Capital, as explained above, also were defendants in the Autauga C o u n ty Suit. Mr. Edmondson is identified as an attorney who represented the Ensleys and E S Capital in the Autauga County Suit. (See, e.g., Am. Compl. ¶¶ 121, 136, 139.) Ms. Liles w a s not a party in the Autauga County Suit. The Amended Complaint contains causes of action under both federal and state law. T h e first four claims are brought pursuant to the Racketeer Influenced and Corrupt O rg a n iz a tio n s Act ("RICO"), 18 U.S.C. § 1961 et seq. The fifth through the tenth claims are c a u s e s of action purportedly brought under various federal criminal statutes, including 18 U .S .C . §§ 1957 (money laundering), 1951(a) (extortion), 666(a) (theft or bribery concerning p ro g ra m s receiving federal funds), and 2314 (transportation of stolen money). (Am. Compl. ¶ ¶ 142-72.) There also are numerous state law claims, including claims of civil liability for a lle g e d violations of criminal statutes. (Am. Compl. 60-66.) IV. DISCUSSION A. C la im s for Alleged Violations of Federal and State Criminal Statutes In the Amended Complaint, Crooked Creek brings several claims alleging that D e f e n d a n ts have committed criminal acts prescribed by various federal and state statutes. (Am. Compl. ¶¶ 142-72; Am. Compl. 60-66.) Defendants assert that these claims are due to b e dismissed for failure to state a claim because there is no private civil cause of action for
violations of these alleged criminal offenses. (Doc. # 32, at 19-20; Doc. # 22, at 8-9.) In its b rie f s , Crooked Creek has not challenged this argument, and for good reason. 1. F e d e r a l Criminal Statutes
T h e Eleventh Circuit has explained that an implied private right of action under a f e d e ra l statute should only be found where there is "`clear evidence of Congress's intent to c re a te a cause of action.'" McDonald v. S. Farm Bureau Life Ins. Co., 291 F.3d 718, 723 (1 1 th Cir. 2002) (quoting Baggett v. First Nat'l Bank of Gainesville, 117 F.3d 1342, 1345 ( 1 1 th Cir. 1997)). None of the federal criminal statutes relied upon by Crooked Creek c o n ta in s any hint that Congress intended to permit a private right of action. Additionally, no a u th o rity has been cited that would permit a private action. To the contrary, as set out in the a c c o m p a n yin g footnote, courts uniformly have concluded that no private cause of action e x is ts under any of the statutes relied upon by Crooked Creek.1 5 On the basis of these a u th o ritie s and independent review, Counts Five through Ten alleging violations of federal c rim in a l statutes are due to be dismissed for failure to state a claim.
See Wisdom v. First Midwest Bank, of Poplar Bluff, 167 F.3d 402, 409 (8th Cir. 1999) ("[N]either the statutory language of 18 U.S.C. § 1951 nor its legislative history reflect[s] an intent by Congress to create a private right of action." (collecting cases)); De Pacheco v. Martinez, 515 F. Supp. 2d 773, 787 (S.D. Tex. 2007) ("[F]ederal courts have not recognized a private right of action for breach of § 1956, the money laundering statute." (collecting cases)); Whitmire v. U.S. Veterans Admin., 661 F. Supp. 720, 723 (W.D. Wash. 1986) (dismissing the plaintiff's claim alleging a violation of 18 U.S.C. § 666 and observing that the plaintiff "presented no authority or analysis which would indicate that this statute creates a private cause of action upon which he can base a suit"); Cooper v. North Jersey Trust Co. of Ridgewood, N.J., 226 F. Supp. 972, 980 (S.D.N.Y. 1964) ("[N]o civil right is created by 18 U.S.C. [§] 2314."); Piorkowski v. Parziale, No. 3:02cv963, 2003 WL 21037353, at *8 (D. Conn. May 7, 2003) (dismissing a plethora of claims alleging violations of federal criminal statutes, including 18 U.S.C. § 666, because none of the statutes "provide[s], explicitly or implicitly, a civil cause of action and the plaintiff has cited no authority otherwise").
S ta te Criminal Statutes
C ro o k e d Creek also alleges numerous violations of state felony statutes, asserting that th e claims are proper pursuant to § 6-5-370 of the Alabama Code. (Am. Compl. 60-66.) Defendants argue that Crooked Creek's reliance on § 6-5-370 as permitting private causes o f action for criminal state law violations is misplaced. The court agrees. Section 6-5-370 of the Alabama Code provides that "[f]or any injury, either to person o r property, amounting to a felony, a civil action may be commenced by the party injured w ith o u t prosecution of the offender." Ala. Code § 6-5-370 (1975). In Lewis v. Fraunfelder, 7 9 6 So. 2d 1067 (Ala. 2000), the plaintiff asserted that § 6-5-370 permitted her to bring a c la im for mail fraud and credit card fraud, felony crimes. See id. at 1068 n.1 & 1069-70. The Supreme Court of Alabama disagreed, explaining that the plaintiff had failed to state a c la im for which relief could be granted: S e c tio n 6-5-370 abrogates the common-law rule of "suspension," the rule that " a civil action for injury to person or property, amounting to a felony, could n o t be maintained without prosecution of the offender." Section 6-5-370 does n o t create a cause of action; rather, it merely allows a plaintiff to commence a civil action even if the plaintiff does not pursue criminal prosecution of the d e f e n d a n t. Id . at 1070 (internal citations omitted); see also Preskitt v. Lyons, 865 So. 2d 424, 429 (Ala. 2 0 0 3 ) ("§ 6-5-370 only eliminates an obstacle for plaintiffs with a valid cause of action; it d o e s not create a civil cause of action for any injury that amounts to a felony."). B a se d upon the holding in Lewis, the court finds that § 6-5-370 does not present a v e h ic le through which Crooked Creek can bring claims alleging that Defendants violated 16
state criminal statutes. Accordingly, the court finds that Defendants' motions to dismiss C ro o k e d Creek's claims predicated on violations of state criminal statutes are due to be g ra n te d . B. R e s Judicata D e f e n d a n ts also argue that the doctrine of res judicata precludes Crooked Creek from l i t i g a t i n g the matters decided adversely to its predecessor-in-interest Ms. Walden in the A u ta u g a County Suit. The facts to which all claims in this action, regardless of defendant, a r e wed involve the validity of only two instruments: the mortgage and the management a g re e m e n t. Crooked Creek repeatedly and without shame asserts the invalidity of both of th e s e instruments despite the prior holding of the courts of Alabama that, once and for all, f o r better or for worse, and no doubt rendering Crooked Creek and Ms. Walden sicker and p o o re r, the two instruments are valid. Thus, the marriage here proposed by Crooked Creek w o u ld appear to be annulled by either res judicata, collateral estoppel, or both. There is a h itc h , however. Pursuant to 28 U.S.C. § 1738, a federal court is required to give a state court judgment th e same full faith and credit as that judgment would receive under the law of the state in w h ic h the judgment was rendered. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 2 8 0 , 293 (2005); see also Green v. Jefferson County Comm'n, 563 F.3d 1243, 1252 (11th C ir. 2009) ("When we are considering whether to give res judicata effect to a state court ju d g m e n t, we `must apply the res judicata principles of the law of the state whose decision
is set up as a bar to further litigation.'" (quoting Kizzire v. Baptist Health Sys., Inc., 441 F.3d 1 3 0 6 , 1308-09 (11th Cir. 2006)); cf. Taylor v. Sturgell, 128 S. Ct. 2161, 2171 (2008) ("The p re c lu siv e effect of a federal-court judgment is determined by federal common law."). Because the preclusive effect of a state court judgment is at issue, the court looks to Alabama la w on res judicata. What would facially appear to be the most logical and obvious rule a n yw h e re in the law that where a court of competent jurisdiction, in a valid, litigated ju d g m e n t, extinguishes an issue, that issue may not be relitigated in a subsequent lawsuit by th e party against whom the issue was decided as to the whole world is not so obvious in A la b a m a and a minority of jurisdictions. "The elements of res judicata, or claim preclusion, are (1) a prior judgment on the m e rits , (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the p a rtie s , and (4) with the same cause of action presented in both suits." Dairyland Ins. Co. v . Jackson, 566 So. 2d 723, 725 (Ala. 1990); see also Whisman v. Ala. Power Co., 512 So. 2 d 78, 81 (Ala. 1987) (observing that res judicata is "frequently referred to as a claim p re c lu sio n " ). "If those four elements are present, then any claim that was, or that could have b e e n , adjudicated in the prior action is barred from further litigation." Chapman Nursing H o m e , Inc. v. McDonald, 985 So. 2d 914, 919 (Ala. 2007). In Hughes v. Martin, 533 So. 2d 1 8 8 (Ala. 1988), the Supreme Court of Alabama discussed the policy underlying the doctrine o f res judicata: Res judicata is a broad, judicially developed doctrine, which rests upon the g ro u n d that public policy, and the interest of the litigants alike, mandate that 18
there be an end to litigation; that those who have contested an issue shall be b o u n d by the ruling of the court; and that issues once tried shall be considered f o re v e r settled between those same parties and their privies. The principle of re s judicata fosters reliance on judicial action, and tends to eliminate vexation a n d expense to the parties, wasted use of judicial machinery and the possibility o f inconsistent results. Id . at 190; cf. Jones v. Blanton, 644 So. 2d 882, 885 (Ala. 1994) ("The doctrine of collateral e s to p p e l, like the related doctrine of res judicata, serves to promote the efficient allocation o f our limited judicial resources, by preventing the unnecessary and pointless relitigation of is su e s previously adjudicated." (internal footnote omitted)). Defendants argue that all four elements of res judicata are satisfied. Crooked Creek c o u n te rs those assertions.1 6 The court turns to the arguments on each of the elements of res
Crooked Creek's two threshold arguments lack merit. First, controlling precedent forecloses Crooked Creek's unsupported contention that the affirmative defense of res judicata cannot be raised in a motion to dismiss. (Doc. # 36, at 2, 9; see also Doc. # 29, at 12 ("[A] motion to dismiss is not the proper vehicle to raise the defense of res judicata.").) The law is well established that res judicata may be raised in a Rule 12(b)(6) motion to dismiss when the allegations on the face of the complaint "show that an affirmative defense bars recovery on the claim." Marsh v. Butler County, Ala., 268 F.3d 1014, 1022 (11th Cir. 2001). Indeed, there is authority that a court can raise the issue of res judicata sua sponte. See Am. Furniture Co. v. Int'l Accommodations Supply, 721 F.2d 478, 482 (5th Cir. Unit A March 1981). Second, Crooked Creek argues that the pleadings and judgments from the Autauga County Suit and the Montgomery County Suit cannot be considered on a motion to dismiss. (Doc. # 36, at 2.) However, a court can consider "documents incorporated into the complaint by reference, and matters of which a court may take judicial notice." Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Public records comprise a category of documents subject to judicial notice. See Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999); see also In re Am. Cont'l Corp./Lincoln Sav. & Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996) ("[A]mple authority exists which recognizes that matters of public record, including court records in related or underlying cases which have a direct relation to the matters at issue, may be looked to when ruling on a 12(b)(6) motion to dismiss."). Moreover, "where the plaintiff refers to certain documents in the complaint and those documents are central to the plaintiff's claim, then the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6) dismissal[.]" Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997) (per curiam). And "the defendant's attaching such documents to the motion to dismiss will not require conversion of the motion into a motion for summary judgment." Id. Here, Crooked Creek attached to its original complaint certain orders from the Montgomery County Suit and the Autauga County Suit, as well as other documents integral to its claims, such as the
judicata. Because Alabama is in the minority of jurisdictions as to the requirement of substantial identity of the parties when res judicata is raised defensively, as here, more d is c u s sio n is needed as to this element. 1. A Final Judgment on the Merits
T h e Autauga County Suit was decided at the summary judgment stage, with the E n sle ys and ES Capital prevailing on the basis of their motion. The case law is cohesive that a decision granting summary judgment is a final judgment on the merits for res judicata p u rp o s e s . See Williams v. Moore, ___ So. 2d ___, No. 2070284, 2008 WL 4531799, at *5 (A la . Civ. App. 2008) ("A summary judgment operates as an adjudication on the merits of a claim." (quoting Bean v. Craig, 557 So. 2d 1249, 1253 (Ala. 1990)); see also Charles A. W rig h t, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure, § 4444 (3d ed. 2 0 0 2 ) (collecting cases). Moreover, the Supreme Court of Alabama has explained that "[i]f th e judgment is general, and not based on any technical defect or objection, and the parties h a d a full legal opportunity to be heard on their respective claims and contentions, it is on the m e rits , although there was no actual hearing or argument on the facts of the case." Bd. of T r u s te e s of Univ. of Ala. v. Am. Res. Ins. Co., 5 So. 3d 521, 533 (Ala. 2008) (citations and in te rn a l quotation marks omitted).
management agreement. (See Compl., Exs. G, H, L, M.) Additionally, transactions occurring in the Montgomery County Suit and Autauga County Suit are referenced in the Amended Complaint. Based upon the above authorities, pleadings and orders from both state court lawsuits can be considered on the motions to dismiss because they are matters of public record and are integral to Crooked Creek's claims for relief.
Here, in the Autauga County Suit, the circuit court granted summary judgment in f a v o r of the Ensleys and ES Capital "as to all claims" brought by Ms. Walden. (Autauga C o u n ty Suit, Summ. J. Op. 6.) The record also reflects that the motion was briefed " e x h a u s tiv e [ ly]" and that "oral argument" was entertained. (Autauga County Suit, Summ. J . Order 1.) The requirements of Board of Trustees of University of Alabama are satisfied o n these facts. C ro o k e d Creek, however, argues that the Autauga County Circuit Court's finding that " th e purported management agreement was valid was merely the expression of the court's o p in io n ." (Doc. # 36, at 10 n.6.) "It was not a decision on the merits." (Doc. # 36, at 10 n.6; s e e also Doc. # 36, at 16 (asserting that the Autauga County Circuit Court's finding that the m a n a g e m e n t agreement was valid and enforceable was not supported by reasoning or "fully in v e s tig a te d " or "tried").) Crooked Creek cites Ingram v. Commissioner of Social Security A d m in is tr a tio n , 496 F.3d 1253 (11th Cir. 2007) (see Doc. # 36, at 8), for its statement that " [ j ] u d ic ia l opinions do not make binding precedents; judicial decisions do." Ingram, 496 F .3 d at 1265 (internal citation and quotation marks omitted). That observation was made for th e purpose of distinguishing between dicta and the holding of the case, see id., but was not m a d e within the context of applying Alabama's elements of res judicata.1 7 Nonetheless, C ro o k e d Creek's dicta argument is not persuasive. Where a matter is argued before the
Ingram was not a res judicata decision.
court, and the court's opinion passes on the issue, the language is not dicta. See Gillespie v. U .S . Steel Corp., 321 F.2d 518, 529-30 (6th Cir. 1963). H e re , it is Ms. Walden who commenced the litigation in the Autauga County Suit and w h o expressly raised the issue of the management agreement's validity. Namely, in Count IX of her state court complaint, Ms. Walden alleged that the management agreement was v o id "because it was not made in good faith, and because she [Ms. Walden] did not consent to , approve of, or acquiesce in said agreement." (Autauga County Suit, Compl. ¶ 44.) As re lie f , Ms. Walden requested the Autauga County Circuit Court to declare that the m a n a g e m e n t agreement was "void." (Autauga County Suit, Compl. 28.) And in ruling on th e parties' cross-motions for summary judgment, the Autauga County Circuit Court ruled o n the issue, finding that "the management agreement . . . [was] valid and [was] due to be e n f o r c e d according to its terms." (Autauga County Suit, Order 6.) The issue of the m a n a g e m e n t agreement's validity was argued before the Autauga County Circuit Court, and a court ruling was issued. See Gillespie, 321 F.2d at 529-30. Ms. Walden cannot now c o n te n d that the Autauga County Circuit Court's conclusion is dicta. The first res judicata e le m e n t is satisfied on this record. 2. A Court of Competent Jurisdiction
D e f e n d a n ts assert that the Autauga County Suit "certainly" was "rendered by a court o f competent jurisdiction." (Doc. # 32, at 11.) They contend that the Autauga County C ir c u it Court had subject matter jurisdiction over the res because "[t]he real property that
was the subject of the action (Danya Apartments) was in Autauga County." (Doc. # 38, at 5.) Crooked Creek, however, argues that the Autauga County Circuit Court's judgment is "void" o n three grounds and, thus is not entitled to res judicata effect. (Doc. # 36, at 3, 11.) First, Crooked Creek contends that the defendants in the Autauga County Suit "lacked standing to challenge" the judgment entered in the Montgomery County Suit. (Doc. # 36, at 12.) It argues that the absence of standing is "synonymous" with the absence of s u b je c t matter jurisdiction. (Doc. # 36, at 13.) Second, Crooked Creek asserts that the A u ta u g a County Circuit Court lacked "subject matter jurisdiction" to address whether the N o v e m b e r 2004 consent judgment entered in the Montgomery County Suit was valid.18 (D o c . # 29 ¶ 6.) Third, Crooked Creek contends that the grant of the defendants' summary ju d g m e n t motion amounted to a due process violation by depriving it of a jury trial "on an im p o rta n t factual issue" concerning the validity of the management agreement. (Doc. # 36, a t 11; see also Doc. # 40, at 5.)
Crooked Creek is referring to the Autauga County Circuit Court's Order granting summary judgment in favor of the Ensleys and ES Capital. The Autauga County Circuit Court found that the Montgomery County Circuit Court did not have "jurisdiction" in November 2004, which was after the appeal process had concluded in that suit, to overrule its June 5, 2002 Order, which awarded Ms. Walden only a lien on the common stock of the corporation that owned Danya Apartments sufficient to satisfy her judgment against Mr. Smith, and to reinstate its August 2000 Order. (Autauga County Suit, Summ. J. Op. 5.) As explained, the Montgomery County Circuit Court's August 2000 Order "again award[ed] the common stock to [Ms.] Walden," but did so in contravention of the "law of the case," and in derogation of non-parties, the Ensleys and ES Capital, who had obtained a mortgage on Danya Apartments after the June 5, 2002 Order. (Autauga County Suit, Summ. J. Op. 5.) Finding that ES Capital's mortgage on Danya Apartments was "valid," the Autauga County Circuit Court adjudged the mortgage as "superior" to Ms. Walden's claim. (Autauga County Suit, Summ. J. Op. 6.)
In Neal v. Neal, 856 So. 2d 766 (Ala. 2002), the Supreme Court of Alabama explained th a t, for res judicata purposes, a court's jurisdiction is not competent if its judgment is "void f o r want of personal jurisdiction, subject-matter jurisdiction, or due process of law." 1 9 Id. a t 779; see also Lloyd Noland Found., Inc. v. HealthSouth Corp., 979 So. 2d 784, 795 (Ala. 2 0 0 7 ) ("[F]or purposes of res judicata, the prior judgment must be rendered by a court of c o m p e te n t jurisdiction. A court of competent jurisdiction is a court with jurisdiction over the s u b je c t matter."); Zickler v. Shultz, 603 So. 2d 916, 920 (Ala. 1992) ("Under Alabama law, to be res judicata, a judgment must be rendered by a court with subject matter jurisdiction."). Neal further explained that "due process of law means notice, a hearing according to that n o tic e , and a judgment entered in accordance with such notice and hearing." 856 So. 2d a t 782 (internal quotation marks omitted). Hence, a prior judgment is void for want of due p ro c e s s where "on some critical motion or for some critical proceeding within that
There is a trend among federal courts to apply res judicata, notwithstanding that the prior federal-court judgment was rendered in the absence of subject matter jurisdiction. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377 (1940) (holding that a federal district court's erroneous exercise of subject matter jurisdiction was not subject to collateral attack and was entitled to res judicata effect); Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 604 n.3 (5th Cir. 1999) ("`Today, it is safe to conclude that most federal court judgments are res judicata notwithstanding a lack of subject matter jurisdiction.'" (quoting 18A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4428 (2d ed. 2002))); Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir. 1986) ("[I]f the parties could have challenged the court's power to hear a case, then res judicata principles serve to bar them from later challenging it collaterally."). No case has been cited to indicate that this is the trend in Alabama, and the Alabama decisions cited above are not in accord with that trend. See also Int'l Longshoremen's Ass'n v. Davis, 470 So. 2d 1215, 1217 (Ala. 1985), aff'd, 476 U.S. 380 (1986) (A judgment entered without subject-matter jurisdiction is void and may be set aside at any time, either on direct or collateral attack); cf. 18A Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4428 (2d ed. 2002) ("State judgments may prove more vulnerable than federal judgments to defeat in subsequent federal litigation. So long as the lack of subject-matter jurisdiction is simply a matter of state law, it is clear that a federal court should accord the res judicata effects dictated by state law.").
litigation," the litigant was "deprived of the `notice, a hearing according to that notice, and a judgment entered in accordance with such notice and hearing[.]'" Id. However, a void judgment must be distinguished from an erroneous judgment. Discussing res judicata, Neal held that a court's "misinterpretations and misapplications of la w " are insufficient to demonstrate a violation of due process of law. 856 So. 2d at 782. "The simple fact that a court has erroneously applied the law does not render its judgment v o id ." Id. at 781 (internal quotation marks omitted); see also Ex parte R.S.C., 853 So. 2d 228, 2 3 5 (Ala. Civ. App. 2002) ("[A] judgment is not void simply because it is erroneous[.]"). C ro o k e d Creek's argument that the Autauga County Suit's judgment is void for lack o f standing and thus not barred by res judicata is not easily followed. This is because C ro o k e d Creek's argument is made in the abstract. No attempt has been made to connect g e n e ra l propositions of law to concrete facts. Standing generally is regarded as a
ju ris d ic tio n a l prerequisite to bringing a lawsuit. See Stalley ex rel. United States v. Orlando R e g 'l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). Here, no argument is made b y Crooked Creek that Ms. Walden lacked standing to bring her prior action in the Autauga C o u n ty Circuit Court. Rather, Crooked Creek's contention is that, in defending against Ms. W a ld e n 's claims, the defendants in the Autauga County Suit did not have standing to assert a n y argument that had the effect of contradicting the November 2004 consent judgment e n te re d in the Montgomery County Suit. Crooked Creek, however, has not cited any authority th a t supports its position. It cites only R.S.C. for the general principle that a judgment is void
if there was no subject matter jurisdiction. (Doc. # 36, at 18.) But, Crooked Creek has failed to demonstrate R.S.C.'s applicability to this case. R.S.C. is distinguishable on a number of b a s e s . For one thing, it involved a plaintiff's, not a defendant's, standing. See 853 So. 2d a t 236. For another, the factual issue is not comparable to this case; the issue in R.S.C. was w h e th e r an aunt, who had physical custody of the father's children, had standing to file a c o n te m p t petition against the father for his failure to pay child support. See id. Crooked C re e k 's cursory and unsupported argument does not support a conclusion that the Autauga C o u n ty Circuit Court's judgment is not competent because it is void for lack of standing. Crooked Creek's argument that the Autauga County Circuit Court did not have subject m a tte r jurisdiction to declare that the Montgomery County Circuit Court lacked jurisdiction to enter its November 2004 consent judgment is shortsighted. Crooked Creek has not s u b m itte d any authority that supports this line of attack on the jurisdiction of the Autauga C o u n ty Circuit Court. Again, the case law it cites supports only general propositions of law. (Doc. # 29 ¶ 6.) Moreover, Crooked Creek did not advance this argument in the Autauga C o u n ty Suit or on appeal in the Supreme Court of Alabama. "Subject-matter jurisdiction concerns a court's power to adjudicate a case, not the m e rits of the court's decision in the case." Ex parte Butler, 972 So. 2d 821, 825 (Ala. 2007). In Alabama, "`[a] trial court derives its jurisdiction from the Alabama Constitution and the A la b a m a Code.'" Id. (quoting Ex parte Seymour, 946 So. 2d 536, 538 (Ala. 2006)). The A u ta u g a County Circuit Court is a court of general jurisdiction. See Ala. Const. art. VI,
§ 139. The matters over which it can exercise original and equitable jurisdiction are set out b y statute. See Ala. Code §§ 12-11-30, 12-11-31. Whether a court has subject matter ju ris d ic tio n to hear a particular case is to be assessed based upon the allegations in the c o m p la in t. See Chestang v. Tensaw Land & Timber Co., 134 So. 2d 159, 165 (Ala. 1960). H e re , the crux of Ms. Walden's complaint in the Autauga County Suit was a claim to q u ie t title in Danya Apartments, brought pursuant to § 6-5-541 et seq., of the Alabama Code, a n d the primary relief Ms. Walden sought was a "judgment or decree declaring that she ha[d] th e entire undivided fee simple interest in and to [Danya Apartments] with no restrictions t h e r e o n ." (Autauga County Suit, Compl. 19.) No argument has been made in this or any o th e r court, and for good reason, that the Autauga County Circuit Court lacked subject matter ju ris d ic tio n to decide the priorities of the parties as to Danya Apartments. An action to quiet title gives the circuit court jurisdiction "to determine and settle [title] as between the [plaintiff] a n d the defendants." Stokes v. Cottrell, No. 2060887, ___ So. 2d ___, 2008 WL 682475, at * 5 (Ala. Civ. App. 2008) (citation and internal quotation marks omitted). And, "[w]hen a p la in tif f brings a quiet-title action, the defendant is required to defend the state of his or her title to the property and, even in the absence of a cross-claim, is entitled to have title quieted in him or her if he or she can establish superior title to the property." Id. at *10 (citing Myers v . Moorer, 134 So. 2d 168 (Ala. 1961)). The Autauga County Circuit Court, acting within the realm of that jurisdiction, e s ta b lis h e d the priorities of the litigants' claims to Danya Apartments. (Autauga County Suit,
Summ. J. Op. 1-7.) Crooked Creek has not cited any authority that the Autauga County C irc u it Court's findings adjudicating the priorities of the parties as to Danya Apartments e v e n assuming arguendo that those findings were wrong affected the court's subject matter ju r is d ic tio n . Rather, the court finds that Crooked Creek's argument boils down to an assertion th a t the Autauga County Circuit Court misapplied the law when it concluded that ES Capital's m o rtg a g e was superior to Ms. Walden's legal interest in Danya Apartments. As set out above, h o w e v e r, under Alabama law, erroneous applications of the law do not bear on the court's s u b je c t matter jurisdiction and do not preclude the application of res judicata. See Neal, 856 S o . 2d at 782. F in a lly, Crooked Creek's argument that the grant of summary judgment in favor of the d e f e n d a n ts in the Autauga County Suit was inconsistent with due process is not persuasive. There is no allegation or argument from Crooked Creek that its predecessor-in-interest, Ms. W a ld e n , did not receive notice or an opportunity to be heard on the defendants' summary ju d g m e n t motion filed in the Autauga County Suit. To the contrary, the proceedings in the A u ta u g a County Circuit Court reflect that Ms. Walden was represented by counsel, filed her o w n summary judgment motion, and responded to the defendants' summary judgment motion. Moreover, the Autauga County Circuit Court's order granting summary judgment in the d e f e n d a n ts ' favor reflects that a hearing was held on the cross-motions for summary ju d g m e n t, and that the court heard "extensive oral argument by counsel for the respective p a rtie s " and was "provided with exhaustive briefs." (Autauga County Suit, Summ. J. Op. 1.)
The court recognizes the strength of Crooked Creek's belief that the Autauga County S u it was wrongly decided. (See, e.g., Waldens' Affs. (Exs. J & K to Compl.).) Crooked C re e k 's arguments that the Autauga County Circuit Court incorrectly applied the summary ju d g m e n t standard and erroneously found that no jury issue existed as to the management a g re e m e n t's validity, however, simply do not call into question the jurisdictional competency o f the state court. These arguments focus on legal errors in the judgment, not on violations o f due process. The foregoing principles of law make clear that the res judicata consequences o f a final judgment on the merits are not altered by the fact that the judgment may have been w ro n g . Crooked Creek has failed to make any showing that the Autauga County Circuit Court d id not accord Ms. Walden due process. Crooked Creek's predecessor in interest engaged the state court's jurisdiction, invited c e rta in defendants into the case, set the agenda of issues to be decided, and appealed her loss to the Supreme Court of Alabama. As a result, Crooked Creek is barred from claiming that th o s e proceedings, framed entirely by its predecessor, are void. Crooked Creek cannot have it both ways. In sum, the second element of res judicata is satisfied. 3. S u b s ta n tia l Identity of the Parties
C itin g Dairyland Insurance Co. v. Jackson, 566 So. 2d 723 (Ala. 1990), Defendants a rg u e that the third element of the res judicata test is satisfied based solely upon a d e m o n s tra tio n of privity between Crooked Creek and Ms. Walden. In Dairyland, the S u p re m e Court of Alabama said that
the "party identity criterion of res judicata does not require complete identity, b u t only that the party against whom res judicata is asserted was either a party o r in privity with a party to the prior action or that the non-party's interests were a d e q u a te ly represented by a party in the prior suit, and the relationship between th e party and non-party is not so attenuated as to violate due process." 5 6 6 So. 2d at 725-26 (quoting Whisman, 512 So. 2d at 82). However, a subsequent decision of the Supreme Court of Alabama illustrates that D a ir y la n d cannot be stretched this far, see Thomas v. Lynn, 620 So. 2d 615, 617 (Ala. 1993), a n d in fact places Alabama squarely in the minority of jurisdictions. In Thomas, referring to D a ir y la n d 's statement that the "`party identity criterion' . . . require[s] . . . only that the party a g a in s t whom res judicata is asserted was either a party or in privity with a party to the prior a c tio n ," the Supreme Court of Alabama observed that the defendants "would have this Court a p p ly that abstract language literally and hold that, because the plaintiffs are the same in both a c tio n s, the `party identity criterion' has been met . . . ." Thomas, 620 So. 2d at 617 (quoting D a ir y la n d , 566 So. 2d at 725). Thomas explained that, in the cases upon which Dairyland re lie d , there was no question but that the party who was raising the res judicata defense also w a s a party to the prior action. See id. at 617 & n.1. The Thomas court held that to interpret D a ir y la n d 's statement literally would be "totally inconsistent with the classical statement" of th e element of the res judicata doctrine requiring a "substantial identity of the parties." Id. a t 617. Thomas, thus, declined to interpret Dairyland's holding as requiring a substantial id e n tity of parties only as to the parties against whom the defense is asserted.
In the context of res judicata, "[s]ubstantial identity requires that the parties be id e n tic a l, sometimes referred to as the mutuality of estoppel requirement." Greene v. J e ffe r s o n County Comm'n, 13 So. 3d 901, 912 (Ala. 2008) (citation and internal quotation m a rk s omitted); see also Fisher v. Space of Pensacola, Inc., 461 So. 2d 790, 792 (Ala. 1984) (d e c lin in g to abandon res judicata's "mutuality requirement"). There is, however, an e x c e p tio n where a nonparty is in privity with a party in the prior action. See Greene, 13 So. 3 d at 912. "Judgments can bind persons not party (or privy) to the litigation in question where th e nonparties' interests were represented adequately by a party in the original suit." Whisman, 512 So. 2d at 82 (quoting Century 21 Preferred Props., Inc. v. Ala. Real Estate C o m m 'n , 401 So. 2d 764, 770 (Ala. 1981)). It has been recognized that Alabama "follows an expansive definition of privity, which in c lu d e s not only a successive interest to the same property right, but also `an identity of in te re s t in the subject matter of litigation.'" Wood v. Kesler, 323 F.3d 872, 877-80 & n.10 (1 1 th Cir. 2003); see also Greene, 13 So. 3d at 912 (A party is in privity with a party to a prior a c tio n when there is "an identity of interest in the subject matter of litigation."). In Hughes v . Martin, 533 So. 2d 188 (Ala. 1988), the court summarized the law on res judicata's privity re q u ire m e n t in Alabama: " T h e term `privity' has not been uniformly defined with respect to res judicata. T h e following three definitions have appeared in Alabama cases: (1) the re la tio n s h ip of one who is privy in blood, estate, or law; (2) the mutual or s u c c e s s iv e relationship to the same rights of property; and (3) an identity of in te re s t in the subject matter of litigation. Largely defining privity by example, th e Alabama cases seem to resolve the question on an ad hoc basis in which the 31
circumstances determine whether a person should be bound by or entitled to the b e n e f its of a judgment. The decision usually turns on whether the relationship b e tw e e n the parties was close enough and whether adequate notice of the action w a s received by the alleged privy; this test has been bolstered by the recent te n d e n c y of the Alabama courts to analyze privity as an identity of interests." Id . at 191 (quoting Issue Preclusion in Alabama, 32 Ala. L. Rev. 500, 520-21 (1981)). M o re o v e r, "if a party has `a sufficient "laboring oar" in the conduct' of the litigation, th e n the principle of res judicata can be actuated." Century 21 Preferred Props., 401 So. 2d a t 770 (quoting Montana v. United States, 440 U.S. 147, 155 (1979)); accord Gonzalez, LLC v . DiVincenti, 844 So. 2d 1196, 1203 (Ala. 2002). In Montana, the Court explained that a s u f f ic ie n t "[l]aboring oar" exists where the non-party "assume[s] control over litigation . . . ." 440 U.S. at 154. The Alabama Court of Civil Appeals applied the "laboring oar" concept in B ro w n v. Brown, 680 So. 2d 321 (Ala. Civ. App. 1996). The issue in Brown involved the res ju d ic a ta effect of a prior federal court judgment awarding the deceased's (Stirling Brown's) s e c o n d wife, and not his first wife, the proceeds of his life insurance policy. See id. at 322. Res judicata was raised defensively in Brown against the first wife as a bar to relitigating her c o u n te rc la im seeking the proceeds from Stirling Brown's life insurance policy. See id. at 323. The parties in the prior federal court action were the first wife and the second wife, in d iv id u a lly. See id. at 322-23. In Brown, the first wife also was a party, and, while the s e c o n d wife was a party, she was named in her capacity as executrix of Stirling Brown's e s ta te , not individually. See id. at 323. Although neither Stirling Brown nor his estate was a party in the prior federal lawsuit, the Alabama Court of Civil Appeals explained that Stirling
Brown's "conduct . . . was very much at issue" in the federal lawsuit, and that both wives had a m p le adversarial motive to vigorously argue that Stirling Brown's conduct should be in te rp re te d in their favor. Id. at 324. The Brown court, thus, held that Stirling Brown's estate h a d a "sufficient `laboring oar' in the conduct of the federal litigation." Id. Under Alabama law, the employer-employee relationship also can provide the n e c e s s a ry privity to satisfy res judicata with respect to matters within the scope of that re la tio n s h ip . In Thompson v. SouthTrust Bank, 961 So. 2d 876 (Ala. Civ. App. 2007), the A la b a m a Court of Civil Appeals held that the privity requirement of res judicata "bar[s] a p la in tif f from prosecuting a lawsuit against an employee when the same plaintiff already has s u f f e re d an adverse judgment on the merits in an action against the employer for the acts of th e employee, provided that the prior judgment for the employer was not based on grounds p e rs o n a l to the employer." Id. at 885. The court examined at length analogous cases from o th e r jurisdictions that had similarly held. One case was Emery v. Fowler, 39 Me. 326 (1855). In Emery, the judgment entered against the defendant for trespass was reversed on a p p e a l as barred by a prior action. The defendant "had acted at the direction of his father," w h o in the prior lawsuit had been found not liable for the same conduct underlying the claim a g a in s t the defendant. Thompson, 961 So. 2d at 886 (discussing Emery). In Thompson, the c o u rt quoted from Emery: " T h is case requires that a single point only should be considered; whether one w h o acts as the servant of another, in doing an act alleged to have been a tre sp a s s , is to be considered as so connected with his principal, who c o m m a n d e d the act to be done, that what will operate as a bar to the further 33
prosecution of the principal, will operate as such for his servant . . . . In such c a s e the principal and servant would be one in interest and would be known to th e plaintiff to be so. To permit a person to commence an action against the p rin c ip a l and to prove the acts alleged to be trespasses, to have been committed b y his servant acting by his order, and to fail upon the merits to recover, and s u b s e q u e n tly to commence an action against that servant and to prove and rely u p o n the same acts as a trespass, is to allow him to have two trials for the same c a u s e of action, to be proved by the same testimony. In such cases the technical ru le , that a judgment can only be admitted between the parties to the record or th e ir privies, expands so far as to admit it, when the same question has been d e c id e d and judgment rendered between parties responsible for the acts of o th e r s ." T h o m p s o n , 961 So. 2d at 886 (quoting Emery, 39 Me. at 329-32). The Thompson court also o b s e rv e d that its holding was "in accord" with the federal common law of res judicata: " W h e re a plaintiff has sued parties in serial litigation over the same transaction; w h e re plaintiff chose the original forum and had the opportunity to raise all its c la im s relating to the disputed transaction in the first action; where there was a `special relationship' between the defendants in each action, if not complete id e n tity of parties; and where although the prior action was concluded, the p la in tif f 's later suit continued to seek essentially sim
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?