ALFA Auto Sales, L.L.C. v. Miller

• Decision Date: 03 April 2015
• Docket Number: 2140282.
• Citation: 177 So.3d 903
• Parties: ALFA AUTO SALES, L.L.C., et al. v. Linda A. MILLER and Laymon Miller.
• Court: Alabama Court of Civil Appeals

177 So.3d 903

ALFA AUTO SALES, L.L.C., et al.

v.Linda A. MILLER and Laymon Miller.

2140282.

Court of Civil Appeals of Alabama.

April 3, 2015.

T. Jefferson Deen III, Mobile, for appellants.

Edward A. Dean and Lindsay S. Hurt of Armbrecht Jackson LLP, Mobile, for appellees.

DONALDSON, Judge.

On March 1, 2013, Linda A. Miller and Laymon Miller filed a complaint in the Mobile Circuit Court ("the trial court") against Alfa Auto Sales, L.L.C., Alfa Automotive, L.L.C., Moe Al Sheikh, and Jamal Alshaikh (hereinafter referred to collectively as "the Alfa defendants"), and American Credit Acceptance, L.L.C. ("American Credit"). In the complaint, the Millers alleged, among other things, that they had negotiated with Alshaikh, a salesperson employed by Alfa Auto Sales, L.L.C., and Alfa Automotive, L.L.C., for the purchase of a used automobile. The Millers claimed that they had agreed with Alshaikh to an interest rate of 5% for the unpaid balance of the purchase price for the car; however, the Millers claimed that Alshaikh had "induced" them to sign a contract obligating them to pay 21% interest on the unpaid balance. The Millers claimed that, when they raised the issue of the different interest rate, the Alfa defendants gave them a memo that stated: "Attention: the interest rate will be changed to 5%, per [Alshaikh], in reference to their contract with us/Alfa." The Alfa defendants later transferred the financing documents containing the 21% interest rate to American Credit. American Credit later transferred the financing documents back to one of the Alfa defendants. The Millers claimed that the Alfa defendants later repossessed the car and took possession of items of personal property belonging to the Millers. The Millers also alleged that American Credit had engaged in wrongful conduct regarding the collection of payments. The Millers sought compensatory and punitive damages against the Alfa defendants for conversion and wrongful repossession, and they sought compensatory and punitive damages against the Alfa defendants and American Credit for fraud. The Millers also sought a judgment declaring that there were no valid liens on the car and for a return of the payments they had made for the car. The complaint did not contain a jury demand.

Alfa Auto Sales, L.L.C., Alfa Automotive, L.L.C., and Moe Al Sheikh were each served with a summons and a copy of the complaint on March 2, 2013. Jamal Alshaikh was served with a summons and a copy of the complaint on March 4, 2013. On April 8, 2013, the Millers moved for an entry of default against the Alfa defendants pursuant to Rule 55(a), Ala. R. Civ. P. On April 9, 2013, the trial court entered a default against the Alfa defendants and set a hearing for the Millers to prove damages for June 7, 2013. On April 22, 2013, American Credit filed an answer, asserting numerous affirmative defenses.

On May 19, 2013, the Alfa defendants filed a motion through counsel to set aside the April 9, 2013, entry of default. Although the motion referred to a default judgment, no judgment had been entered. In the motion, the Alfa defendants claimed, among other things, that they had a meritorious defense to the claims asserted in the complaint because, they asserted, Linda Miller had voluntarily entered into the agreement for a 21% interest rate and the documents signed by Linda Miller authorized the repossession of the car.¹ Specifically, the motion stated:

"[The Alfa defendants] expect to defend this case on the grounds that Plaintiff voluntarily entered the sales agreement and that the terms of the agreement were readily available for her review before agreeing to and signing the contract. Based upon the documents Plaintiff attached to her Complaint, [the Alfa defendants] have a meritorious defense to this Complaint."

The Alfa defendants asserted that, to set aside the entry of default, they were not required to prove that they would prevail at trial, but only that they were "prepared to present a plausible defense."

The Alfa defendants also claimed in the motion that the Millers would not be prejudiced if the entry of default was set aside, stating:

"[Between the date of service and the entry of default, the Alfa defendants] and Plaintiff were communicating in an attempt to resolve the dispute. Upon information and belief, all of the relevant witnesses are still in Mobile County, in good health, and available to testify. There is no piece of evidence that is subject to rot or decay or disappearing at any time, in short, there is no possible prejudice that Plaintiff may suffer as a result of this Court setting aside the Default Judgment it entered."

The Alfa defendants also addressed whether their failure to respond to the complaint within 30 days was the result of their culpable conduct:

"[The Alfa defendants] ... acknowledge that they did not file an answer to the complaint in the prescribed time. However, they would point out that Plaintiff moved for default on the first business day after the answer was due and that this Court granted that Motion on the next day. [The Alfa defendants] were in communication with the Plaintiff in an attempt to settle the matter during the time after the case was filed and believed that Plaintiff was going to come to their place of business to sign a new contract. Therefore, they did not file an answer during the 35 days between receiving the Complaint and Plaintiff's Motion for Default. While this inaction may be negligent, it certainly does not rise to the level of incessant and flagrant disrespect for court rules, disregard for Judicial authority, or intentional non-responsiveness, indeed, Plaintiff moved for default so quickly that [the Alfa defendants] were in default only 36 days after they were served with the Complaint."

The Millers filed a response to the motion on June 4, 2013, arguing that the financing document containing the 21% interest rate was void and asserting facts in support of their claims for relief against the Alfa defendants. The Millers did not address whether they would suffer any prejudice in the litigation if the entry of default was set aside, nor did they address the assertion of the Alfa defendants that their failure to respond to the complaint within 30 days was not culpable.

A hearing was held on the record on June 7, 2013. Alshaikh testified at the hearing, stating that he had an employee take the summonses and complaints to an attorney after being served and that he also had an employee take the motion for entry of default to the attorney. Alshaikh claimed that he thought the attorney was addressing the complaint. On cross-examination, the Millers' attorney asked Alshaikh about the history of the business known as "Alfa Automotive" and how Alfa Automotive arranged for financing for cars it sold, and the Millers' attorney extensively questioned Alshaikh about the facts concerning the transaction with the Millers and the repossession of the car. Twice the attorney for the Alfa defendants objected that the questioning was "getting into deposition territory." After the questioning was completed, counsel for the Millers attempted to introduce payment records for the car. Counsel for the Alfa defendants objected and stated:

"What we've got to show [the court] is that there's a valid defense. Our defense at this point is that [Linda Miller] signed a 21 percent contract and she was behind on it. If they can dispute that they can do that at trial. We don't have to absolute hands down win the case right now even though [counsel for the Millers] is attempting to try the whole thing."

The June 7 hearing concluded without a ruling. On June 21, 2013, the Millers filed their first amended complaint to add Vehicle Acceptance Corporation and Alabama Recovery Associates as the sixth and seventh defendants in the case and to assert claims against those defendants arising from the purchase and repossession of the car. The first amended complaint repeated the claims for damages against the Alfa defendants. No jury demand was made in the first amended complaint. The Millers also filed discovery requests directed to the newly added defendants.

On July 16, 2013, the Millers filed a second amended complaint, adding Gerald Smith d/b/a Alabama Recovery Associates as the eighth defendant and asserting a claim against Smith arising from the purchase and repossession of the car. The second amended complaint repeated the claims for damages against the Alfa defendants. The second amended complaint contained a jury demand.

On September 10, 2013, the Millers moved for the entry of default against Smith and Alabama Recovery Associates. The Millers sought a judgment against those defendants for $100,000 "based on evidence presented at the hearing held June 7, 2013, and the record already before the Court." Default was entered against Smith and Alabama Recovery Associates on September 12, 2013.

On October 31, 2013, the Millers moved to dismiss, with prejudice, American Credit and Vehicle Acceptance Corporation as defendants in the case. In their motion to dismiss, the Millers stated that "[t]he claims against Alfa Auto Sales, LLC, Alfa Automotive, LLC, Moe Al Sheikh, Jamal Alshaikh, Alabama Recovery Associates and Gerald Smith remain pending." On November 1, 2013, the trial court entered an order dismissing, with prejudice, American Credit and Vehicle Acceptance Corporation as defendants, and incorporating the language used by the Millers in their motion to dismiss regarding the pending claims against the remaining defendants.

Also, on November 1, 2013, the trial court entered an order denying the May 19, 2013, motion of the Alfa defendants to set aside the entry of default against them. The trial court set a hearing to begin on December 13, 2013, regarding proof of damages.

There is no transcript of a hearing conducted on December 13, 2013. On December 13, 2013, the trial court entered a judgment against the Alfa defendants, Gerald Smith, and Alabama Recovery Associates for...