Century 21 Preferred Properties, Inc. v. Alabama Real Estate Commission

• Decision Date: 17 July 1981
• Citation: 401 So.2d 764
• Parties: CENTURY 21 PREFERRED PROPERTIES, INC., a Corporation, et al., v. The ALABAMA REAL ESTATE COMMISSION, et al. The ALABAMA REAL ESTATE COMMISSION, et al. v. CENTURY 21 PREFERRED PROPERTIES, INC., a Corporation, et al. 79-803, 79-885.
• Court: Alabama Supreme Court

Page 764

401 So.2d 764

CENTURY 21 PREFERRED PROPERTIES, INC., a Corporation, et al., v. The ALABAMA REAL ESTATE COMMISSION, et al.

The ALABAMA REAL ESTATE COMMISSION, et al. v. CENTURY 21 PREFERRED PROPERTIES, INC., a Corporation, et al.

79-803, 79-885.

Supreme Court of Alabama.

July 17, 1981.

Sydney R. Prince, III, Carroll H. Sullivan and Edward C. Greene of Inge, Twitty, Duffy & Prince, Mobile, and Charles A. Stakely of Rushton, Stakely, Johnston & Garrett, Montgomery, for appellants.

T. W. Thagard, Jr., and David R. Boyd of Smith, Bowman, Thagard, Crook & Culpepper, Montgomery, and George K. Williams of Williams, Spurrier & Rice, Huntsville, for appellees.

JONES, Justice.

This cause was initiated by Century 21 Preferred Properties, Inc., Century 21 Ambassador Realty, Inc., Century 21 Lofton Real Estate, Inc., and Lynn Clowers Real Estate Company, Inc., against the Alabama Real Estate Commission, et al., seeking injunctive relief against the enforcement of a regulation relating to franchisee advertising. ¹

Suit was filed in the Circuit Court of Morgan County, Alabama, on November, 1, 1979, and, subsequently, the suit was transferred to Montgomery County pursuant to Code 1975, § 6-3-20. Plaintiffs allege:

1) The regulation exceeds the scope of the Commission's rule-making authority.

2) The legislation is unconstitutional as being tantamount to "special legislation." ²

3) The regulation was illegal and void because its enforcement has the effect of restraining trade. ³

4) The regulation unlawfully impairs the obligation of contracts.

5) The regulations were passed without prior "notice" or opportunity to be heard by any of the affected parties, such action being violative of procedural due process.

The Commission's, and its member Defendants', answer sets up various grounds of general denial plus the defense of res judicata, pleading a former federal court adjudication of identical issues.

Immediately prior to the preliminary injunction hearing, counsel for the parties stipulated (obviating the need for the injunction) that enforcement of the regulation would be suspended pending a determination of the merits of the case. On July 8, 1980, the trial court entered an order denying Plaintiffs-Appellants' requested relief, but, thereafter, granted Appellants' motion for an injunction pending appeal.

By this appeal, Century 21 franchisees and a Realty World franchisee ask that this Court: 1) reverse the trial court and render a judgment in their favor; or, in the alternative, 2) prohibit enforcement of said regulation until Appellants are afforded the rights of procedural due process; or 3) grant Appellants a new trial in the circuit court of Morgan County inasmuch as the trial judge allegedly erred in transferring the case from Morgan County to Montgomery County.

The Commission filed timely notice of its cross-appeal from that part of the trial judge's order holding that Appellees' affirmative defenses of res judicata, collateral estoppel, and lack of clean hands were inapplicable to the case. These cross-appeal contentions are based upon certain prior litigations in federal court involving other Century 21 franchisee parties plaintiff.

The trial court's order, relative to the res judicata issue, reads:

"If successful, the defendants' res judicata defense would constitute a bar to the prosecution of this action. Accordingly, it will be considered first.

"The defendants strenuously contend that the claims in the instant case have or should (under the doctrine of 'pendent jurisdiction') have been litigated in the Mobile litigation, and that although the plaintiffs are not technically the same here as in the Mobile case, they are substantially identical. They contend that the Mobile judgment should bind the current plaintiffs because their interests were represented adequately by the parties in the earlier suit. See, e. g., Southwest Airlines Co. v. Texas International Airlines, Inc., 546 F.2d 84, 94-5 (5th Cir. 1977), and Aerojet-General Corporation v. Askew, 511 F.2d 710, 719 (5th Cir. 1975).

"In support of their contention, defendants point out that the interests of the plaintiffs in both suits, i. e., the use of the existing Century 21 tradename and trademark, are identical; that Mr. Prince, Regional Counsel for Century 21, represented the plaintiffs in each case; and that the plaintiffs in the federal litigation have the ability, through Mr. Prince and their franchise agreement, to control the prosecution of this litigation. Substantial evidence supporting their contentions has been presented to and considered by the Court.

"Plaintiffs argue that the doctrine of res judicata has no application, since the federal court litigation involved only federal, and not state, law claims, and since the parties in the two cases are not identical, and were not in privity. The Court notes, however, that on the first day of the trial of this case, the plaintiffs sought and were granted permission to amend their complaint. The amendment added federal due process claims which were litigated in the Mobile federal suit.

"Although the Court considers the defendants' argument to have considerable appeal under the instant facts, it nevertheless concludes that, in the absence of some controlling precedent in Alabama law, the facts are insufficient to bar the instant case under the doctrine of res judicata.

"For substantially similar reasons, the Court concludes that the defenses of collateral estoppel and clean hands lack sufficient merit to warrant dismissal of this action."

Because of our holding favorable to the Appellees with respect to the res judicata issue, we address only one issue presented by the appeal: the propriety vel non of the trial court's order transferring the case to Montgomery County.

On the Appeal

VENUE

Acknowledging the general law that a suit against a State agency with statewide jurisdiction can be brought only in the county of its principal place of business, Appellants nevertheless urge that "the statutory scheme under which (the Commission) operates" affords Appellants an election to sue either in Morgan County or Montgomery County. The thrust of this argument (citing Boswell v. Citronelle-Mobile Gathering, Inc., 292 Ala. 344, 294 So.2d 428 (1974)), seeks to juxtapose portions of §§ 34-27-36 (authorizing the Commission to revoke or suspend real estate licenses) and 34-27-38 (providing the mechanism for judicial review of such administrative orders by the circuit court of the licensee's residence) with the general rule limiting venue to Montgomery County.

From this perceived premise, Appellants conclude:

"It is quite clear that the (appeals procedure of Section 34-27-38) contemplates and in fact authorizes the review of decisions made by the Commission pursuant to the authority vested in the Commission under Section 34-27-36. Inasmuch as it was upon this statutory provision, Section 34-27-36, that the Commission relied in promulgating the '50-50 Rule', it follows that the appellants were certainly entitled to avail themselves of the statutorily prescribed procedure by which a judicial review of the Commission's decision to promulgate this regulation could be achieved."

This argument and its effort to analogize this case with Boswell lack persuasion for two reasons: 1) the Boswell Court was aided by a specific statutory provision (The Uniform Disposition of Unclaimed Property Act, §§ 35-12-20, et seq.), allowing suits thereunder either in Montgomery County or the county of the aggrieved party's residence; and 2) § 34-27-38 the statute here under consideration deals specifically with suspension or revocation proceedings. The fact that the outcome of this declaratory judgment case may ultimately result in a proceeding in which a real estate licensee is charged with violating the challenged regulation does not abrogate the operative effect of the general rule that the venue for a suit of this nature lies exclusively in Montgomery County, the principal place of business of the Alabama Real Estate Commission. Alabama Youth Services Board v. Ellis, 350 So.2d 405 (Ala.1977).

On the Cross-Appeal ⁴

RES JUDICATA

Posture of the Case

On August 10, 1978, Century 21 Real Estate Corp., the franchisor and owner of the trademarks and tradenames in question; Century 21 of the South, a franchisee of Century 21; and numerous Century 21 sub-franchisees from throughout Alabama filed suit in the United States District Court in Mobile, alleging numerous constitutional and statutory deficiencies in the Commission's "50:50" Rule. Subsequently, the Commission agreed to refrain from enforcing such promulgation pending a determination of its validity in federal court by a trial on the merits. Prior to trial, Century 21 filed a motion to stay the Mobile federal action pending the forthcoming decision from the United States Supreme Court concerning the validity of a similar "50:50" regulation from the State of Nevada.

On December 22, 1978, District Judge Virgil Pittman granted Century 21's motion to stay, explaining:

"The attorneys for the plaintiffs and defendants agreed that the issues before the United States Supreme Court in the case of Century 21 Real Estate Corporation, et al. v. Nevada Real Estate Advisory Commission, et al. (440 U.S. 941, 99 S.Ct. 1415, 59 L.Ed.2d 630), Supreme Court Docket Number 78-683 will be dispositive of all the issues in the case before this court without the necessity of taking testimony."

On March 5, 1979, the Supreme Court summarily affirmed the Nevada three-judge District Court panel decision, upholding the validity of the "50:50" Rule. Century 21 Real Estate Corp. v. Nevada Real Estate Advisory Commission, 440 U.S. 941, 99 S.Ct. 1415, 59 L.Ed.2d 630 (1979). Thereafter, the Commission moved for summary judgment on the basis of the parties' agreement to be bound by the Supreme Court determination. On August 20, 1979, Judge Pittman granted the Commission's motion for...