Bank of America Corp. v. Edwards

• Decision Date: 22 August 2003
• Citation: 881 So.2d 403
• Parties: BANK OF AMERICA CORPORATION v. Addie L. EDWARDS.
• Court: Alabama Supreme Court

881 So.2d 403

BANK OF AMERICA CORPORATION v. Addie L. EDWARDS.

1011559.

Supreme Court of Alabama.

August 22, 2003.

Rehearing Denied November 14, 2003.

James C. Huckaby, Jr., John W. Scott, and L. Jackson Young, Jr., of Huckaby Scott & Dukes, P.C., Birmingham, for appellant.

John W. Parker, Mobile, for appellee.

BROWN, Justice.

Bank of America Corporation appeals from the Mobile Circuit Court's refusal to set aside a default judgment. We reverse and remand.

Facts and Procedural History

On July 25, 2001, Addie L. Edwards sued several defendants in the Mobile Circuit Court; one of those defendants was Bank of America Corporation. Because Bank of America is a foreign corporation, Edwards served the corporation by certified mail at the following address: 225 East John Carpenter Freeway, Irving, Texas 75062. Bank of America filed nothing in response, and on October 1, 2001, the Mobile Circuit Court entered a default judgment against Bank of America and awarded Edwards $85,000.

While researching an unrelated legal matter in Alabama, counsel for Bank of America discovered the default judgment. On December 3, 2001, Bank of America moved the Mobile Circuit Court to vacate the default judgment pursuant to Rule 60(b)(4), Ala. R. Civ. P.¹ Specifically, Bank of America argued that the trial court's judgment was void because, it argued, the trial court lacked jurisdiction over Bank of America. Bank of America alleged that the Irving, Texas, address to which the summons and complaint were sent was not Bank of America's usual place of business; instead, Bank of America alleged that its usual place of business was at 100 North Tyron Street, Charlotte, North Carolina. Bank of America further averred that the Irving, Texas, address was the usual place of business for one of its subsidiaries, NationsCredit Financial Services Corporation ("NationsCredit").

On February 5, 2002, the Mobile Circuit Court denied Bank of America's motion to vacate the default judgment. Bank of America moved the court to reconsider its judgment, and on March 27, 2002, the court denied the motion and certified its order as final pursuant to Rule 54(b), Ala. R. Civ. P. Bank of America appeals.

Standard of Review

We review de novo a trial court's ruling on a Rule 60(b)(4), Ala. R. Civ. P., motion. See Northbrook Indem. Co. v. Westgate, Ltd., 769 So.2d 890, 893 (Ala.2000).

"`The standard of review on appeal from the denial of relief under Rule 60(b)(4) is not whether there has been an abuse of discretion. When the grant or denial of relief turns on the validity of the judgment, as under Rule 60(b)(4), discretion has no place. If the judgment is valid, it must stand; if it is void, it must be set aside. A judgment is void only if the court rendering it lacked jurisdiction of the subject matter or of the parties, or if it acted in a manner inconsistent with due process. Satterfield v. Winston Industries, Inc., 553 So.2d 61 (Ala.1989).'

"Insurance Mgmt. & Admin., Inc. v. Palomar Ins. Corp., 590 So.2d 209, 212 (Ala.1991)."

Image Auto, Inc. v. Mike Kelley Enters., Inc., 823 So.2d 655, 657 (Ala.2001).

Discussion

Bank of America contends that the trial court should have granted its Rule 60(b)(4), Ala. R. Civ. P., motion because, it argues, Bank of America was never properly served pursuant to Rule 4(c)(6), Ala. R. Civ. P. Because it was never properly served, Bank of America's argument continues, the trial court had no jurisdiction to enter the default judgment against the corporation, thus rendering the judgment void. We agree.

"One of the requisites of personal jurisdiction over a defendant is `perfected service of process giving notice to the defendant of the suit being brought.' Ex parte Volkswagenwerk Aktiengesellschaft, 443 So.2d 880, 884 (Ala.1983). `When the service of process on the defendant is contested as being improper or invalid, the burden of proof is on the plaintiff to prove that service of process was performed correctly and legally.' Id. A judgment rendered against a defendant in the absence of personal jurisdiction over that defendant is void. Satterfield v. Winston Industries, Inc., 553 So.2d 61 (Ala.1989)."

Horizons 2000, Inc. v. Smith, 620 So.2d 606, 607 (Ala.1993).

Rule 4(c), Ala. R. Civ. P., governs service of process on a corporation:

"Service of process ... shall be made as follows:

"....

"(6) ... Upon a corporation, either domestic or foreign, by serving the agent authorized by appointment or by law to receive service of process or by serving the corporation by certified mail at any of its usual places of business or by serving an officer or an agent of the corporation...."

"`Failure of proper service under Rule 4 [Ala. R. Civ. P.] deprives a court of jurisdiction and renders its judgment void.'" Northbrook Indem. Co. v. Westgate, Ltd., 769 So.2d at 893 (quoting Ex parte Pate, 673 So.2d 427, 428-29 (Ala.1995)).

In support of its motion to vacate the default judgment, Bank of America submitted an affidavit of Lloyd H. Harrison, Jr., assistant vice president of Bank of America. Harrison averred that the Irving, Texas, address to which Edwards sent her complaint was not a usual place of business for Bank of America; instead, according to Harrison, the Irving, Texas, address is the usual place of business for NationsCredit, a subsidiary of Bank of America. Harrison stated that Bank of America's usual place of business is located in Charlotte, North Carolina. Furthermore, Harrison testified that NationsCredit is not an authorized agent to receive service of process for Bank of America.

On appeal, Edwards responds to Harrison's testimony by asserting that "it is clear that the 225 East John Carpenter Freeway, Irving, Texas address was a usual place of business of Bank of America, a foreign corporation, and as Rule 4(c)(6) allows service at any of its usual places of business, service pursuant to that Rule is effective in this cause." (Edwards's brief at 6.) Apparently, Edwards assumes that service upon a subsidiary of Bank of America, without more, is sufficient to constitute service upon Bank of America. Our caselaw, however, holds otherwise.

"[T]he parent-subsidiary relationship alone is not ordinarily enough to establish agency for the purpose of service of process. Jones v. Volkswagen of America, Inc., 82 F.R.D. 334, 335 (E.D.Tenn.1978).

"The party seeking to prove proper service must at least show that the parent corporation `exercises such control and domination over the subsidiary that it no longer has a will, mind or existence of its own, and operates merely as a department of the parent corporation.' Professional Investors Life Ins. Co., Inc. v. Roussel, 445 F.Supp. 687, 698 (D.Kan.1978). Alternatively, the party seeking to have service on the subsidiary and the parent may show that

"`[T]he parent corporation has complete control over the subsidiary, conducting its business and creating its policies... (or the subsidiary) is a mere adjunct and instrumentality of the parent ... (or the) subsidiary corporation is merely a "dummy" by means of which the parent corporation does business in the state....'

"Fletcher's Cyclopedia of the Law of Private Corporations, § 8773 at 527-528, cited in, Stoehr v. American Honda Motor Co., Inc., 429 F.Supp. 763, 766 (D.Neb.1977). Hence, as the court in Stoehr, supra, noted, inquiry regarding the agency of a subsidiary is essentially a factual one. Id. at 766."

Ex parte Volkswagenwerk Aktiengesellschaft, 443 So.2d 880, 884 (Ala.1983).

This Court has discussed some of the factors to be considered in determining the extent of a parent company's control and domination over a subsidiary.

"It is manifestly impossible to catalogue the infinite variations of fact that can arise but there are certain common circumstances which are important and which, if present in the proper combination, are controlling. These are as follows:

"`"(a) The parent corporation owns all or most of the capital stock of the subsidiary.

"`"(b) The parent and subsidiary corporations have common directors or officers."'

"(c) The parent corporation finances the subsidiary.

"`"(d) The parent corporation subscribes to all the capital stock of the subsidiary or otherwise causes its incorporation.

"`"(e) The subsidiary has grossly inadequate capital."'

"(f) The parent corporation pays the salaries and other expenses or losses of the subsidiary.

"`"(g) The subsidiary has substantially no business except with the parent corporation or

...