Sibille v. Davis et al

Filing 84

MEMORANDUM OPINION AND ORDER: It is ORDERED that Ms. Sibille's 70 Motion for Summary Judgment is GRANTED on grounds of collateral estoppel and that the counterclaims brought by Century Park, LLC, T. K. Davis III, Donald H. Allen, and Warren A. Stiles are DISMISSED with prejudice as further set out in the order. It is further ORDERED that Ms. Sibille's 70 Motion for Summary Judgment is DENIED as to the counterclaims brought by Patricia Y. Davis as further set out in the order. Signed by Chief Judge William Keith Watkins on 1/13/2015. (Attachments: # 1 Civil Appeals Checklist)(dmn, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
EASTERN DIVISION
ARLYN RICE SIBILLE,
Plaintiff,
v.
T. K. DAVIS, III, PATRICIA Y.
DAVIS, and MY HEIDI, LLC,
Defendants.
T.K. DAVIS III, PATRICIA Y.
DAVIS, CENTURY PARK, LLC,
DONALD H. ALLEN, and
WARREN A. STILES, MD,
Counterclaim Plaintiffs,

v.
ARLYN RICE SIBILLE,
Counterclaim Defendant.

)
)
)
)
)
)
)
)
)
)

CASE NO. 3:13-CV-566-WKW
[WO]

)
)
)
)
)
)
)
)
)
)
)
)
)

MEMORANDUM OPINION AND ORDER
Plaintiff Arlyn Rice Sibille brings this action under the Alabama Uniform
Fraudulent Transfer Act, Alabama Code §§ 8-9A-1, et seq., and also is defending
counterclaims. Before the court is Ms. Sibille’s motion for summary judgment
(Doc. # 70) on the counterclaims on grounds of collateral estoppel.

The

Counterclaim Plaintiffs – T. K. Davis III, Patricia Y. Davis, Century Park, LLC,

Donald H. Allen, and Warren A. Stiles – filed a response in opposition. (Doc.
# 78.) After careful consideration of the arguments of counsel, the relevant law,
and the evidentiary submissions, the court finds that the motion for summary
judgment is due to be granted on the counterclaims of all Defendants, with the
exception of Patricia Y. Davis.
I. JURISDICTION AND VENUE
The court exercises subject-matter jurisdiction pursuant to 28 U.S.C.
§ 1332(a). Personal jurisdiction and venue are uncontested.
II. STANDARD OF REVIEW
To succeed on summary judgment, the movant must demonstrate “that there
is no genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The court must view the evidence and
the inferences from that evidence in the light most favorable to the nonmovant.
Jean-Baptiste v. Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010).
The party moving for summary judgment “always bears the initial
responsibility of informing the district court of the basis for its motion.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986).

This responsibility includes

identifying the portions of the record illustrating the absence of a genuine dispute
of material fact. Id.; Fed. R. Civ. P. 56(c)(1)(A). Or, the movant can assert,
without citing the record, that the nonmoving party “cannot produce admissible
2

evidence to support” a material fact. Fed. R. Civ. P. 56(c)(1)(B). If the movant
meets its burden, the burden shifts to the nonmoving party to establish – with
evidence beyond the pleadings – that a genuine dispute material to each of its
claims for relief exists. Celotex, 477 U.S. at 324. A genuine dispute of material
fact exists when the nonmoving party produces evidence allowing a reasonable fact
finder to return a verdict in its favor. Waddell v. Valley Forge Dental Assocs., 276
F.3d 1275, 1279 (11th Cir. 2001).
III. BACKGROUND
The sole question raised by the summary judgment motion is whether a
judgment rendered in the Circuit Court of Lee County, Alabama, has collateral
estoppel effect on the issue of whether Ms. Sibille’s signature on a warranty deed
is a forgery, an issue that undisputedly is material to the counterclaims in this case.
Resolution of the question of collateral estoppel’s effect necessitates a comparison
between the state court proceedings and this litigation.
A.

The Prior State Court Proceedings
On July 15, 2011, Ms. Sibille brought a breach-of-contract action in the

Circuit Court of Lee County, Alabama (the “State Court Action”), against Century
Park and three of its members, Mr. Davis, Mr. Allen, and Dr. Stiles.

The

controversy arose out of Century Park and its members’ purchase of 145 acres in
Lee County from Ms. Sibille and her brother, John Rice, in 2001. Ms. Sibille
3

allegedly conveyed by warranty deed her 25% interest in the 145 acres to Century
Park in exchange for a promissory note in the amount of $500,000, plus interest.
(See Promissory Note, at 1 (Doc. # 73) (providing that “for value received, the
undersigned promise to pay to the order of Arlyn Rice Sibille . . . the principal sum
of . . . $500,000,” plus interest (emphasis omitted)). Century Park’s members, who
included Mr. Davis, Mr. Allen, and Dr. Stiles, allegedly signed a guarantee for the
note thereby personally guaranteeing the payment of all amounts due under the
note. Mr. Davis’s spouse, Patricia Y. Davis, who is a party in this case, was not
involved in the 2001 transaction.
The promissory note, which was dated January 18, 2001, was due and
payable after ten years. At the note’s maturity, a principal balance of $300,000,
plus interest, remained. In the State Court Action, Ms. Sibille brought breach-ofcontract claims, alleging that the defendants had defaulted on the promissory note
and guarantee by failing to pay the balance of the note at maturity. See generally
Merchants Bank v. Head, ___ So. 3d ___, 2014 WL 2242474, at *3 (Ala. 2014)
(“A promissory note is a form of contract; therefore, it must be construed under
general contract principles.” (citation and internal quotation marks omitted)).
The defendants collectively filed an answer in the State Court Action and
raised affirmative defenses, including failure of consideration. Subsequently, Mr.
Davis amended his answer individually to add additional affirmative defenses,
4

including fraudulent inducement. No defendant pleaded forgery as an affirmative
defense.
Ms. Sibille moved for summary judgment on her breach-of-contract claims.
(See Sibille’s Mot. Summ. J. (Doc. # 78).) The defendants responded and, for the
first time, disputed the authenticity of Ms. Sibille’s signature on the warranty deed.
(Davis & Century Park’s Resp. to Summ. J. Mot. (Doc. # 72-1), at 4 n.4 (noting the
“apparent lack of an authentic signature of Sibille on the Warranty Deed”) 1; at 6
(“It is abundantly clear from a cursory examination of the Warranty Deed and the
Affidavit of Sibille attached to her Complaint, that Sibille’s signature on the
Warranty Deed is not Authentic.”); at 10 (“The Warranty Deed purporting to
transfer that interest, on its face, appears to be a forgery.”); see also Davis &
Century Park’s Resp. to Renewed Summ. J. Mot., at 4 (Doc. # 72-3) (“Sibille’s
signature on the Warranty Deed is an obvious forgery.”); at 5 (“A cursory
examination of the signatures reveals that Sibille’s signature on the Warranty Deed
is a forgery.”).) To combat the contention of the defendants, Ms. Sibille submitted
her own affidavit, attesting that the signature on the warranty deed was hers.
(Sibille’s Aff. ¶ 4 (Doc. # 72-4).) The parties have not submitted any document
evidencing the circuit court’s written or oral ruling on Ms. Sibille’s summary

1

Mr. Allen and Dr. Stiles adopted Mr. Davis and Century Park’s arguments on summary
judgment. (See Allen & Stiles’s Resp. to Pl.’s Summ. J. Mot. (Doc. # 72-2).)
5

judgment motions; however, the fact that the case proceeded to trial necessarily
reflects the denial of Ms. Sibille’s summary judgment motions.
The circuit court presided over a bench trial for two days in October 2013.
At the beginning of the trial, Ms. Sibille’s counsel moved in limine to exclude any
evidence that Ms. Sibille’s signature on the warranty deed is a forgery on grounds
of statute of limitations, latches, estoppel, and lack of standing. Defense counsel
responded that the defendants had raised the issue of the forged deed in the
responses to the summary judgment motions, and he (counsel) summarized the
pretrial arguments. He argued further that the signature on the warranty deed was
“blatantly dissimilar” to the signatures of Ms. Sibille on other documents, such as
on a subordination agreement and affidavits Ms. Sibille signed and submitted
during the course of the litigation. (Trial Tr., at 9–14.) The circuit court denied
the motion in limine, but granted leave to Ms. Sibille’s counsel to make objections
contemporaneously with the offering of the disputed evidence. During the bench
trial, Ms. Sibille’s counsel made objections, primarily with respect to the form of
questioning about the allegedly forged deed; some of the objections were
sustained, and others were overruled.2 (See, e.g., Trial Tr., at 63, 68, 71, 77–81,
209.)
2

At trial, the defendants contended both that they did not sign a guarantee with Ms.
Sibille to personally guarantee the promissory note and that Ms. Sibille’s signature on the
warranty deed was forged.
6

Ms. Sibille did not attend the trial and, thus, was not questioned about the
authenticity of her signature on the warranty deed.3 But the defendants offered
multiple documents purportedly containing Ms. Sibille’s signature for comparison
purposes. (Trial Tr., at 129–30, 203, 207.) Those documents included a certified
copy of the warranty deed, affidavits, and a subordination agreement. (Trial Tr.,
at 68, 76–79, 184.) The circuit court admitted them, but with the caveat that at that
time, the documents were received, not as proof that the signatures were Ms.
Sibille’s, but only as proof that the documents contained a notarized signature
purporting to be Ms. Sibille’s. (Trial Tr., at 78–80, 184.) Additionally, Ms.
Sibille’s mother testified at trial. Ms. Sibille’s mother, who had notarized her
daughter’s signature on the subordination agreement, equivocated as to whether
she independently could identify her daughter’s signature. (Trial Tr., at 204, 206,
210–12, 222.)
On November 1, 2013, the circuit court entered judgment in Ms. Sibille’s
favor upon the promissory note and guarantee, but the judgment does not
encompass findings of fact and conclusions of law. (See Judgment (Ex. 4 to Doc.
# 78) (“Upon consideration of the evidence presented, the Court finds that the
Defendants are liable to Plaintiff pursuant to the subject Promissory Note and
3

The circuit court admitted Ms. Sibille’s deposition testimony. It is noted, though, that,
in the action pending before this court, Mr. Allen attests that, while he became “suspicious that
the [warranty] deed was forged” prior to the trial in the State Court Action, by that point Ms.
Sibille already had been deposed. (Allen’s Aff. (Ex. to Doc. # 78).)
7

Guaranty.”).) Judgment was entered in the amount of $300,000 in principal and
$69,000 in interest, and later was amended to include an award of attorney’s fees
and costs.
On November 27, 2013, the defendants filed a motion for new trial. They
urged a new trial on grounds that there was “new evidence” concerning the forgery
of the warranty deed, that by forging the warranty deed, Ms. Sibille “obtained the
judgment through fraud, including fraud on the court,” and that the forged
warranty deed could not supply consideration for the contracts. (Defs.’ Mot. for
New Trial (Doc. # 72-8).) The defendants further informed the circuit court that
they had obtained the services of a handwriting expert to opine on whether Ms.
Sibille’s signature on the warranty deed was a forgery. They requested the circuit
court to reopen the judgment, conduct an evidentiary hearing, and render new
findings of fact concerning the possible forgery and fraud. The circuit court denied
the motion without reasoning in an Order entered on January 2, 2014.
The defendants appealed the judgment.

On November 14, 2014, the

Alabama Supreme Court affirmed the judgment with no opinion. (See Ex. A
to Doc. # 80.)
B.

This Litigation
On August 8, 2013, during the pendency of the State Court Action, Ms.

Sibille filed this lawsuit in diversity against Mr. Davis and his wife, Patricia Y.
8

Davis, pursuant to the Alabama Fraudulent Transfer Act, Alabama Code §§ 8-9A1, et seq. In the Complaint’s first rendition, Ms. Sibille alleged that Mr. Davis, by
warranty deed recorded on September 27, 2011, had conveyed an undivided onehalf interest in one of his real property assets to his wife, Mrs. Davis, as tenants in
common. Ms. Sibille contended that Mr. Davis fraudulently conveyed his interest
in the property, valued at more than $100,000, to avoid collection on any judgment
entered in the State Court Action. Ms. Sibille asked this court to set aside the
allegedly fraudulent conveyance.
Since the filing of the Complaint, the claims and parties have expanded as
revealed by the governing Second Amended Complaint and the counterclaims.4 In
the Second Amended Complaint, Ms. Sibille reasserts her fraudulent-conveyance
claims against Mr. and Mrs. Davis and adds My Heidi, LLC, as an additional
defendant. Ms. Sibille alleges that on August 19, 2011 (which was during the
pendency of the State Court Action), Mr. Davis created My Heidi, LLC, with onehalf of the voting power assigned to his wife, and between September 26, 2011,
and October 12, 2012, transferred five parcels of property, collectively valued at
more than $1.6 million, to My Heidi, LLC.

Ms. Sibille contends that these

conveyances to My Heidi, LLC, also were made with the “intent to hinder, delay,

4

The parties refiled their pleadings in response to the court’s Order dismissing the
indecipherable pleadings and permitting filings anew. In defense counsel’s words, the court
gave the parties a “mulligan” by permitting them to replead. (Doc. # 77, at ¶ 9.)
9

or defraud [Ms. Sibille] in her efforts to collect on [the] promissory note and
subsequent judgment” in the State Court Action. (2d Am. Compl., at ¶ 41 (Doc.
# 55).)

Ms. Sibille asks the court to set aside Mr. Davis’s conveyances and

assignments to Mrs. Davis and My Heidi, LLC.
On August 4, 2014, Defendants filed an answer, denying liability and
asserting that “due to the apparent forgery of Sibille’s signature on the warranty
deed in favor of Century Park, Defendants deny that Century Park conveyed title
or clear title to the developed parcels to third-parties.” (Answer to 2d Am. Compl.,
at ¶ 13.)

Mr. Davis and Mrs. Davis, but not My Heidi LLC, also filed

counterclaims and joined three additional Counterclaim Plaintiffs: Century Park,
LLC; Mr. Allen; and Dr. Stiles.

Accordingly, there are five Counterclaim

Plaintiffs.
The counterclaims arise from averments that Ms. Sibille’s signature on the
warranty deed is a forgery. Counterclaim Plaintiffs allege that, on the day of the
closing, Ms. Sibille, an out-of-state resident, was not present in the State of
Alabama and that Ms. Sibille’s brother had a third party sign Ms. Sibille’s name on
the warranty deed. Her brother then allegedly presented Ms. Sibille’s forged
signature to the bank’s notary public, who notarized Ms. Sibille’s purported
signature on the warranty deed. (Counterclaim, at ¶¶ 22–24.) They contend
further that, because the warranty deed was forged, it is void, and that, therefore,
10

there was not a lawful transfer of the 145 acres, and the promissory note “was not
supported by any legal consideration.” (Counterclaim, at ¶ 25.)
Based upon these facts, the first counterclaim alleges that Ms. Sibille
tortiously interfered with the Counterclaim Plaintiffs’ contractual and business
relations with third parties “by obtaining and/or attempting to collect on a
Judgment that was obtained through fraudulent means.” (Counterclaim, at ¶ 38.)
The second counterclaim avers that Ms. Sibille has abused the process of the court
by bringing this lawsuit “with full knowledge that she forged the deed that was the
basis of the State Court Action.” (Counterclaim, at ¶ 43.) Counterclaim Plaintiffs
further allege that “[a]n actual dispute and controversy has arisen between [Ms.]
Sibille and Counterclaim Plaintiffs regarding whether the Deed conveyed by [Ms.]
Sibille to Century Park was forged and, if so, the legal consequences thereof.”
(Counterclaim, at ¶ 48.) Counterclaim Plaintiffs request a declaratory judgment
that the warranty deed “purportedly conveyed by [Ms.] Sibille to Century Park on
or about January 18, 2001, was a forgery.” (Counterclaim, at 17.)
Ms. Sibille filed an answer to the counterclaims, denying the allegations of
liability, and raising affirmative defenses, including collateral estoppel. At the
same time, Ms. Sibille filed a motion for summary judgment on grounds of
collateral estoppel. She contends that the counterclaims “rely exclusively on an
allegation that the Warranty Deed conveying the property at the root of this action
11

was forged,” but that the circuit court in the State Court Action decided this issue
of the alleged forgery in her favor. Accordingly, Ms. Sibille contends that the
doctrine of collateral estoppel bars Counterclaim Plaintiffs from relitigating the
issue of whether the warranty deed was forged and that summary judgment is due
to be entered in her favor on the counterclaims.
IV. DISCUSSION
Alabama law governs for purposes of the collateral estoppel analysis. See
Cmty. State Bank v. Strong, 651 F.3d 1241, 1263 (11th Cir. 2011) (“In considering
whether to give preclusive effect to state-court judgments under res judicata or
collateral estoppel, the federal court applies the rendering state’s law of
preclusion.”). Collateral estoppel, also known as issue preclusion, “is an equitable
defense that bars a party from relitigating an issue that has been resolved in an
earlier case.” Bonner v. Lyons, Pipes & Cook, P.C., 26 So. 3d 1115, 1121 (Ala.
2009). Under Alabama law, collateral estoppel has four elements: (1) The issue in
the prior case is identical to the issue in the present case; (2) a court of competent
jurisdiction actually litigated the issue in the prior action; (3) resolution of that
issue was necessary to the prior judgment; and (4) the same parties or their
respective privies are involved in the two actions. See Lloyd Noland Found., Inc.
v. HealthSouth Corp., 979 So. 2d 784, 795–96 (Ala. 2007); Stewart v. Brinley, 902
So. 2d 1, 9 (Ala. 2004).
12

“The burden is on the party asserting collateral estoppel to prove that the
issue it is seeking to bar was determined in the prior adjudication.” Lee L. Saad
Constr. Co. v. DPF Architects, P.C., 851 So. 2d 507, 520 (Ala. 2002). If all four
elements are present, “the prior judgment is conclusive as to those issues actually
determined in the prior suit.” Campbell v. Campbell, 561 So. 2d 1060, 1061 (Ala.
1990) (quotation marks and citations omitted).
Ms. Sibille argues that she has demonstrated all four elements.
Counterclaim Plaintiffs contend otherwise, focusing their arguments on the second
and third elements. Each element is addressed below.
A.

Whether the Issues Are Identical (First Element)
A comparison of the State Court Action with the present action reveals a

common issue directly relevant to the pending motion for summary judgment.
During the State Court Action, the defendants raised the issue of whether Ms.
Sibille’s signature on the warranty deed is a forgery in their summary judgment
briefing, at trial, and in a post-trial motion. Counterclaim Plaintiffs reassert the
same issue in their answer and counterclaims in this litigation. Because the same
issue arises in both this action and the State Court Action, Ms. Sibille has satisfied
the first element of collateral estoppel.

13

B.

Whether the Issue Was Actually Litigated and Necessary to the

Judgment (Second and Third Elements)
The discussion turns to the second and third elements.5 As to the second
element, an issue is “actually litigated” when it “is properly raised, by the
pleadings or otherwise, and is submitted for determination, and is determined.”6
Restatement (Second) of Judgments, § 27 cmt. d. “Only issues actually decided in
a former action are subject to collateral estoppel.” Leverette ex rel. Gilmore v.
Leverette, 479 So. 2d 1229, 1237 (Ala. 1985).

An issue may be “actually

decided,” either “expressly or by necessary implication in the first case.” Joiner v.
State, 500 So. 2d 81, 82 (Ala. Cr. App. 1986), disavowed on other grounds in Hall
v. State, 521 So. 2d 1373 (Ala. Cr. App. 1988); see also Wheeler v. First Ala. Bank
of Birmingham, 364 So. 2d 1190, 1200 (Ala. 1978) (An issue is actually litigated
where resolution of the issue “is obviously implied from the holding of the
5

As sometimes is the case, in this action, whether the issue was actually decided (second
element) is inextricably intertwined with whether the issue was necessary to the judgment in the
State Court Action (third element). 18 Wright, Miller, & Cooper, Federal Practice and Procedure
§ 4421, at 545 (2d ed. 2002) (“The necessity principle may become mingled with the
requirements of actual litigation and actual decision” for purposes of the collateral-estoppel
analysis). Hence, these components of collateral estoppel are addressed together in Part IV.B.
6

As to the third element’s requirement that the court had competent jurisdiction, no
argument has been made that the Circuit Court of Lee County did not have subject-matter
jurisdiction over the action, or is not a court of competent jurisdiction for other reasons. See
Lloyd Noland Found., Inc., 979 So. 2d at 795 (“[F]or purposes of res judicata, the prior judgment
must be rendered by a court of competent jurisdiction. A court of competent jurisdiction is a
court with jurisdiction over the subject matter.”); see also Stroeker v. Harold, 111 So. 3d 138
147–48 (Ala. Civ. App. 2012) (noting that an “essential element” of both res judicata and
collateral estoppel “is that the claim or issue has been or could have been decided in a prior
action by a court of competent jurisdiction” (emphasis added)).
14

court.”).

For purposes of the third element of collateral estoppel, “[a]

determination ranks as necessary or essential only when the final outcome hinges
on it.” Bobby v. Bies, 556 U.S. 825, 835 (2009) (citing 18 Wright, Miller, &
Cooper, Federal Practice and Procedure § 4421, at 543 (2d ed. 2002)). On the
other hand, “[i]f issues are determined but the judgment is not dependent upon the
determinations, relitigation of those issues in a subsequent action between the
parties is not precluded.” Restatement (Second) of Judgments, § 27 cmt. h.
Based on the forgoing principles, Ms. Sibille must demonstrate first, that the
defendants in the State Court Action properly raised the issue of the allegedly
forged warranty deed, second, that the State Court Action actually decided the
issue in Ms. Sibille’s favor, and third, that the issue was necessary to the state court
judgment.
1.

Whether the Issue Was Properly Raised

Ms. Sibille contends that the defendants in the State Court Action properly
raised the issue of whether her signature on the warranty deed is a forgery. She
points to the defendants’ briefing in response to her summary judgment motions, to
the extensive arguments of counsel during the bench trial, and to the defendants’
post-trial motion. Counterclaim Plaintiffs contend, however, that the defendants in
the State Court Action did not properly raise the issue because they did not assert
forgery as an affirmative defense to the breach-of-contract claim.
15

Counterclaim Plaintiffs are correct that the defendants in the State Court
Action did not raise forgery as an affirmative defense in their answers. Ms. Sibille
would be hard pressed to argue now that the defendants in the State Court Action
pleaded forgery as an affirmative defense because the word “forgery” appears
nowhere in the defendants’ pleadings in the State Court Action. The relevant
inquiry, upon which the briefing is scant, is whether Alabama law required the
defendants to plead forgery as an affirmative defense.
The parties cite no authority that, under Alabama law, the defendants’
reliance on forgery in the State Court Action was an affirmative defense. There is
authority from an intermediate Alabama court, however, indicating that Alabama
law does not require a defendant to plead forgery as an affirmative defense to a
breach-of-contract claim. See Sherman Int’l Corp. v. Summit Gen. Contractors,
Inc., 848 So. 2d 263 (Ala. Civ. App. 2002). Elaboration of the facts and holding in
Sherman International is helpful to show why the decision applies here.
In Sherman International, a breach-of-contract action, the Alabama Court of
Civil Appeals addressed whether the defendants had to plead as an affirmative
defense that their signatures on a guarantee had been forged. The court observed
that “[f]orgery is not one of the affirmative defenses listed in Rule 8(c)” of the
Alabama Rules of Civil Procedure and that it had uncovered “no previous Alabama
case that specifically state[d] whether forgery is an affirmative defense to a breach16

of-contract claim.” 848 So. 3d at 268. It found guidance, however, in Alabama’s
definition of an affirmative defense:

An affirmative defense is “‘new matter

which, assuming the complaint to be true, constitutes a defense to it.’” Id. (quoting
Bechtel v. Crown Cent. Petroleum Corp., 451 So. 2d 793, 795 (Ala. 1984)
(emphasis added)).
The Alabama Court of Civil Appeals explained that the complaint’s
allegation that the defendants “individually guaranteed the contract cannot be
assumed true if [the defendants’] defense is that their signatures to that contract
were forged.” Id. Accordingly, the court held that forgery was “not an affirmative
defense because it [was] not external to [the plaintiff’s] claims against them.” Id.
at 268. Whether the defendants signed “the contract in question [was] an essential
internal element of [the plaintiff’s] claim.” Id. The court concluded, therefore,
that the defendants’ “general denial of the complaint was sufficient to preserve
their opportunity to assert the alleged forgeries at the summary-judgment stage and
on appeal.” Id.
Sherman International is not on all fours because the forgery here is that of
the opposing party’s on the warranty deed that allegedly supplied consideration for
the promissory note and guarantee, not the party’s signature on the promissory note
or guarantee. Nonetheless, Sherman International’s principles dictate that the

17

defendants in the State Court Action did not have to plead forgery as an affirmative
defense.
To prevail on a breach-of-contract claim under Alabama law, a plaintiff
must show “the existence of a valid contract binding upon the parties in the
action.” Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So. 2d 665, 673 (Ala.
2001). A valid contract requires consideration. See Kelso v. Int’l Wood Prods.,
Inc., 588 So. 2d 877, 878 (Ala. 1991) (“It is a well-settled general rule that
consideration is an essential element of, and is necessary to the enforceability or
validity of, a contract.”). And “‘[c]onsideration must be present when the contract
is made.’” Self v. Slaughter, 16 So. 3d 781, 787 (Ala. 2008) (quoting Fant v.
Champion Aviation, Inc., 689 So. 2d 32, 37 (Ala. 1997)). However, a forged deed
is void from its inception under Alabama law, see Shefield v. Andrews, 679 So. 2d
1052, 1054 (Ala. 1996) (“A forged deed is void, and completely ineffectual to pass
title.” (citation and internal quotation marks omitted)), and, thus, cannot form the
consideration for a valid contract.
Here, the consideration for the promissory note and the guarantee was the
warranty deed’s transfer of clear title to the 145 acres. If Ms. Sibille forged the
warranty deed, as the defendants in the State Court Action contended, then the
allegations in the State Court Action complaint that Ms. Sibille and the State Court
Action defendants entered into valid contracts cannot be assumed true. Forgery
18

goes to an essential element of Ms. Sibille’s breach-of-contract action and attacks
the legal existence of the contracts from their inception. Forgery is not a new
matter that arose after the contracts’ formation that now permits the defendants to
avoid the contracts. Consequently, whether Ms. Sibille forged the warranty deed
“is an essential internal element” of her breach-of-contract claim. Sherman Int’l,
848 So. 2d at 268. Absent the parties’ citation to contrary authority or argument
that materially distinguishes Sherman International, the court finds that, under
Alabama law, the State Court Action defendants did not have to plead forgery as
an affirmative defense.

It was properly placed in issue by a general denial.

Accordingly, based on this record, the court finds that the defendants properly
raised the issue of Ms. Sibille’s alleged forgery of the warranty deed in the State
Court Action.
2.

Whether the Issue Was Actually Decided and Necessary to the

Judgment
The parties have not pointed to any Order evidencing an express written or
oral ruling in the State Court Action on the issue of whether Ms. Sibille’s signature
on the warranty deed is a forgery.7

Nonetheless, the circuit court impliedly

7

The circuit court’s written judgment did not contain analysis. Additionally, the trial
transcript reveals no express oral ruling – one way or the other – on the issue of whether the
warranty deed contained Ms. Sibille’s forged signature.
19

resolved the issue in Ms. Sibille’s favor, and resolution of the issue was necessary
to support the judgment.
To reach the judgment in the State Court Action that the defendants were
“liable to [Ms. Sibille] pursuant to the subject Promissory Note and Guaranty”
(Judgment, at 1), the circuit court necessarily concluded that Ms. Sibille had
satisfied each element of her breach-of-contract claims, including the existence of
a valid contract. As discussed earlier, if the circuit court had found that Ms.
Sibille’s signature on the warranty deed had been forged, then under Alabama law,
the deed would have been void, see Sheffield, 679 So. 2d at 1054, and there would
have been no consideration for the promissory note and guarantee at the time those
contracts allegedly were made and, thus, no valid contracts. It must be presumed,
therefore, that the circuit court rejected the State Court Action defendants’
argument that the warranty deed was forged, and that the circuit court necessarily
found the existence of valid contracts supported by adequate consideration.
That the circuit court actually decided the issue “is obviously implied from
the holding of the court,” Wheeler, 364 So. 2d at 1200, and, for the same reason,
the “final outcome hinge[s]” on resolution of the issue, Bobby, 556 U.S. at 835.
Accordingly, by the process of reasonable inference, the circuit court impliedly
resolved the issue of the allegedly forged warranty deed in Ms. Sibille’s favor, and

20

it was necessary for the circuit court to resolve that issue against the defendants in
order to find in favor of Ms. Sibille.
Counterclaim Plaintiffs argue, however, that the issue was not actually
litigated or necessary to the resolution of the State Court Action because the circuit
court “heard no testimony” and did not “receive[ ] any evidence concerning the
deed forgery,” but instead heard “only a mere passing argument from defense
counsel.” (Doc. # 78, at 7.) But the circuit court record from the State Court
Action refutes this argument. To summarize, one of the principal arguments the
defendants raised in the summary judgment briefing was the alleged forgery of the
warranty deed. (See Resp. to Summ. J. Mot., at 4 n.4, 6, 10; see also Resp. to
Renewed Summ. J. Mot., at 4–5.) Then, at the beginning of the bench trial, the
circuit court entertained extensive arguments on Ms. Sibille’s motion in limine for
outright exclusion of evidence concerning the authenticity of Ms. Sibille’s
signature on the warranty deed and on defense arguments that the authenticity of
Ms. Sibille’s signature was central to their defense.

The circuit court also

acknowledged its familiarity with the issue of the validity of the signature on the
warranty deed from the summary judgment proceedings. (Trial Tr., at 10–11.) It
then denied Ms. Sibille’s motion in limine, subject to Ms. Sibille’s right to renew
her objections during the course of the trial. Defense counsel reasserted the issue
of the allegedly forged warranty deed during the first witness’s testimony (see
21

Trial Tr., at 65–68) and objected to the warranty deed’s admission to the extent
that Ms. Sibille was offering the warranty deed to prove that she had executed it
(Trial Tr., at 61–63). The circuit court also admitted probative evidence on this
issue, and the parties point to no salient evidence offered during the trial on the
forgery issue that the trial court excluded. A certified copy of the warranty deed
itself was in evidence, as well as at least five documents containing signatures
purporting to be Ms. Sibille’s and exemplars of Ms. Sibille’s mother’s signature
obtained during the trial.8 Additionally, the defendants’ post-trial motion focused
principally on the issue of the suspected forged deed.
Based upon a careful review of the record from the State Court Action, the
court finds that the arguments on the issue of the authenticity of the deed’s
signature were not merely made in passing, but that the parties actually litigated
the issue of the forged deed, that the circuit court actually decided the issue, and
that resolution of the issue was necessary to the judgment. Accordingly, Ms.
Sibille satisfies the second and third elements of collateral estoppel.
C.

Whether There is an Identity of Parties (Fourth Element)
Alabama courts adhere to the doctrine of mutuality of estoppel. See Jones v.

Blanton, 644 So. 2d 882, 886 (Ala. 1994) (“Although many courts, including the
8

In the State Court Action, the defendants asserted their suspicion that Ms. Sibille’s
mother had forged the signature on the warranty deed. (See, e.g., Post-Trial Motion for Release
of Original Court Documents (Doc. # 72-7 (“Defendants contend that Plaintiff’s signature on the
Deed was forged by her mother, Camellia Rice, or another female.”).)
22

Federal courts, have dispensed with the mutuality requirement, it remains the law
in Alabama.”); see also Jim Parker Bldg. Co., Inc. v. G & S Glass & Supply Co., 69
So. 3d 124, 132 (Ala. 2011) (reaffirming the doctrine’s applicability).

The

doctrine of mutuality of estoppel means that
collateral estoppel operate[s] only between parties (and their
respective privies) who or which have already opposed each other in
at least one claim that has been litigated to a judgment. If neither a
party nor any of that party’s privies has litigated at least one claim to a
judgment against another party nor any of the other party’s privies,
. . . collateral estoppel can[not] bar either of those parties or any of
that party’s privies from suing the other party or any of the other’s
privies.
Stewart v. Brinley, 902 So. 2d 1, 9 (Ala. 2004).
The parties to the counterclaims in this litigation are, on one side, Century
Park, Mr. Davis, Mrs. Davis, Mr. Allen, and Dr. Stiles and, on the other side, Ms.
Sibille. The parties to the claims in the State Court Action are identical with
respect to Mr. Davis, Century Park, Mr. Allen, Dr. Stiles, and Ms. Sibille, and the
fourth element is met as to these parties. Mrs. Davis was not a party, however, in
the State Court Action. Ms. Sibille’s argument, which merely is that the parties
“are identical” (Doc. # 71, at 7), does not acknowledge Mrs. Davis’s different
status. Ms. Sibille presents no argument, therefore, for finding the fourth element
satisfied as to Mrs. Davis.

Accordingly, she has not met her burden of

demonstrating that she can invoke collateral estoppel against Mrs. Davis.

23

D.

Counterclaim Plaintiffs’ Additional Argument
Counterclaim Plaintiffs advance a final argument for avoiding the bar of

collateral estoppel. They contend that they now have additional evidence, namely,
the original warranty deed obtained post-trial and a retained handwriting expert,
whose preliminary assessment of forgery they argue could change the outcome of
the forged warranty deed issue. (Doc. # 78, at 3.) But they cite no authority that
the procurement of this evidence on an issue in existence prior to and essential to
the State Court Action judgment defeats the bar of collateral estoppel, and the
court located no Alabama law directly on point. As explained in an authoritative
treatise, however,
[n]ewly discovered evidence may bear either upon a fact situation in
existence at the time the former judgment was rendered, or upon a fact
situation which thereafter has come into existence. Where the fact
situation was in existence at the time the judgment was rendered, the
case is clearly within the rule stated in this annotation . . . , and res
judicata applies.
...
The rule that the discovery of new evidence does not affect the
doctrine of res judicata also applies where a judgment is relied upon
as precluding, by way of collateral estoppel, the litigation of an issue
essential to, and litigated and determined by, the former judgment.
Comment Note, Res Judicata as Affected by Newly Discovered Evidence After
Judgment, 149 A.L.R. 1195 (2011); see also McLellan v. Columbus I-70 West
Auto-Truckstop, Inc., 525 F. Supp. 1233, 1235 (N.D. Ill. 1981) (observing that,
under Illinois law, “[a] party against whom collateral estoppel is asserted has the
24

burden of demonstrating that newly discovered evidence was essential to a proper
decision in the prior action and that he was in no way responsible for the lack of
such evidence in the prior action.”).
Against the foregoing general principles, there are at least two problems
with Counterclaim Plaintiffs’ argument.

First, they have not shown that the

evidence upon which they rely is newly discovered, rather than just new. See
generally Wal-Mart Stores, Inc. v. Pitts, 900 So. 2d 1240, 1245 (Ala. Civ. App.
2004) (explaining that “newly discovered evidence” is evidence “which by due
diligence could not have been discovered in time to move for a new trial” and that
“[n]ewly discovered evidence means evidence in existence at the time of trial of
which the movant was unaware.” (citations and internal quotation marks omitted)).
In the State Court Action, the issue of the warranty deed’s alleged forgery squarely
was at issue, and the circuit court admitted a certified copy of the warranty deed
during the trial. The Counterclaim Plaintiffs do not contend, for obvious reasons,
that they were unaware at the time of the trial that an original warranty deed
existed. They also present no argument as to why, with the exercise of due
diligence, they could not have obtained the original warranty deed or a handwriting
expert for use during the trial proceedings in the State Court Action. Moreover,
the defendants in the State Court Action made a similar argument to the circuit
court in a post-trial motion to reopen the record to permit further evidence on the
25

issue of the allegedly forged deed, and in particular, advised the circuit court about
their recent retention of a handwriting expert. The circuit court denied that request,
and notably, the Alabama Supreme Court left that ruling undisturbed. While
understandably the Counterclaim Plaintiffs are displeased with the circuit court’s
adverse ruling on their “new evidence” argument (Doc. # 72-8), they present no
grounds for why they should get the proverbial second bite at the apple to argue
again in this litigation the issue of the warranty deed’s alleged forgery.
Second, and relatedly, the situation upon which Counterclaim Plaintiffs now
rely, namely, their suspicion that the signature on the warranty deed is a forgery,
existed at the time the circuit court entered its judgment, was litigated, and was
essential to the State Court Action judgment.

Application of collateral estoppel,

therefore, remains in play. Accordingly, the court finds that the Counterclaim
Plaintiffs’ unearthing of additional (but not newly discovered) evidence does not
defeat the preclusive effect of collateral estoppel.
V. CONCLUSION
“The doctrine of collateral estoppel . . . serves to promote the efficient
allocation of [courts’] limited judicial resources, by preventing the unnecessary and
pointless relitigation of issues previously adjudicated.” Jones v. Blanton, 644 So.
2d 882, 885 (Ala. 1994) (internal footnote omitted). It also promotes the finality of
judgments. Ms. Sibille has demonstrated each element of collateral estoppel as to
26

Century Park, Mr. Davis, Mr. Allen, and Dr. Stiles, and, therefore, relitigation of
the issue of the allegedly forged warranty deed between Ms. Sibille and these
defendants is unnecessary and pointless. These four Counterclaim Plaintiffs are
collaterally estopped from arguing that Ms. Sibille’s signature on the warranty
deed is a forgery, and summary judgment on the counterclaims, which hinge upon
a contrary finding, is warranted. Ms. Sibille has not shown, however, that the
doctrine of collateral estoppel bars Mrs. Davis, who was not a party to the State
Court Action, from relitigating the issue of the allegedly forged warranty deed.
Accordingly, it is ORDERED that Ms. Sibille’s motion for summary
judgment (Doc. # 70) is GRANTED on grounds of collateral estoppel and that the
counterclaims brought by Century Park, LLC, T. K. Davis III, Donald H. Allen,
and Warren A. Stiles are DISMISSED with prejudice.
It is further ORDERED that Ms. Sibille’s motion for summary judgment
(Doc. # 70) is DENIED as to the counterclaims brought by Patricia Y. Davis.
DONE this 13th day of January, 2015.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

27