Clark v. Wells Fargo Bank, N.A.

• Decision Date: 15 May 2009
• Docket Number: 1071192.
• Citation: 24 So.3d 424
• Parties: Annette CLARK v. WELLS FARGO BANK, N.A.
• Court: Alabama Supreme Court

24 So.3d 424

Annette CLARK v. WELLS FARGO BANK, N.A.

1071192.

Supreme Court of Alabama.

May 15, 2009.

Roderick Graham, Birmingham, for appellant.

D. Keith Andress and James H. White IV of Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Birmingham, for appellee.

SHAW, Justice.¹

Annette Clark appeals from an order of the Jefferson Circuit Court dismissing, pursuant to Ala.Code 1975, § 6-5-440, her counterclaims against Wells Fargo Bank, N.A. ("Wells Fargo"). We reverse and remand.

Facts and Procedural History

On February 23, 2007, following the foreclosure on the mortgage on property owned by Clark, Wells Fargo filed an ejectment action against Clark in the Jefferson Circuit Court seeking damages for wrongful retention and possession of the foreclosed property, which, the complaint alleged, Clark had refused to vacate. Clark filed an initial answer to Wells Fargo's complaint on May 14, 2007, which asserted various affirmative defenses but contained no counterclaims.

Meanwhile, on March 23, 2007, Clark had initiated a separate federal action in the United States District Court for the Northern District of Alabama ("the federal court") against Wells Fargo and other Wells Fargo entities; Edith Pickett, an Alabama attorney, who, the complaint alleged, "was in charge of collecting the false debt in this case"; and Shapiro & Pickett, LLP ("S & P"), the law firm at which Pickett was a partner. As last amended, Clark's federal action, which indicated that it was brought pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., asserted the following claims stemming from the mortgage foreclosure: violation of the Fair Debt Collection Practices Act (count I); conversion (count II); breach of contract (count III); fraud (count IV); suppression (count V); conspiracy (count VI); negligent and wanton hiring, training, supervision, and retention (count VII); and wrongful foreclosure (count VIII). Clark further sought injunctive relief (count IX).

On September 11, 2007, Clark amended her answer in the case pending in the Jefferson Circuit Court to add counterclaims, which included a statement of factual allegations virtually identical to those alleged in Clark's federal complaint and which asserted the following claims against Wells Fargo: conversion of funds (count I); breach of contract (count II); fraud (count III); voiding of foreclosure sale (count IV); voiding of deed (count V); fraudulent foreclosure (count VI); injunctive relief (count VII); and malicious and fraudulent prosecution (count VIII).

Thereafter, on October 3, 2007, Wells Fargo moved to dismiss its complaint on the ground that Clark had vacated the property that was the subject of the foreclosure. The circuit court granted that motion on October 5, 2007.²

On December 7, 2007, the federal court apparently dismissed with prejudice counts II, III, and IV against Pickett and S & P; dismissed without prejudice counts I, III, and IV against Wells Fargo; dismissed without prejudice counts I, V, VI, VII, and VIII against Pickett and S & P; dismissed with prejudice count II against Wells Fargo for failure to state a claim; struck counts IX and X;³ and afforded Clark 15 days to amend her complaint accordingly.⁴ The federal court's case-action summary further indicates that Clark filed an amended complaint on December 21, 2007.

On January 14, 2008, Wells Fargo moved the Jefferson Circuit Court, pursuant to Ala.Code 1975, § 6-5-440, to dismiss Clark's counterclaims on the ground that the counts asserted as counterclaims in the circuit court action were "virtually identical to the allegations filed by Clark against Wells Fargo in the Federal District Court for the Northern District of Alabama" and that Clark was unable to maintain two actions against Wells Fargo based on a single dispute. In opposition to the motion to dismiss filed by Wells Fargo, Clark argued that § 6-5-440, which prohibits simultaneous actions for the same cause against the same party, does not apply here because, she said, that section "applies to situations where a plaintiff files a lawsuit in federal court and then files the same lawsuit in state court" and is thus inapplicable to situations in which the first-filed suit is in the state court.

The circuit court conducted a hearing on Wells Fargo's motion on January 18, 2008. Without making written findings of fact, the circuit court granted Wells Fargo's motion and dismissed Clark's counterclaims on March 14, 2008.⁵ Clark subsequently filed a motion to alter, amend, or vacate that decision and a contemporaneous motion for additional findings of fact or conclusions of law, both of which were opposed by Wells Fargo. The circuit court denied Clark's motions. Thereafter, Clark filed a "renewed" motion to alter, amend, or vacate,⁶ which was likewise denied. Clark appeals.

Standard of Review

"When the facts underlying a motion filed pursuant to § 6-5-440 are undisputed, as is the case here, our review of the application of the law to the facts is de novo. Greene v. Town of Cedar Bluff, 965 So.2d 773, 779 (Ala.2007)." Ex parte Metropolitan Prop. & Cas. Ins. Co., 974 So.2d 967, 969 (Ala.2007).

Discussion

On appeal, Clark argues, as she did below, that the circuit court erred in dismissing her counterclaims in the state-court action because, she says, § 6-5-440 does not provide for the dismissal of a state-court action when it is the first-filed action and a second, identical action is later filed in a federal court. We agree.

"The petitioners contend that the `cross-claims' filed . . . in the Clarke County action must be dismissed pursuant to Ala.Code 1975, § 6-5-440, which generally prohibits a plaintiff from maintaining duplicate actions:

"`No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times.'

"This Code section, by its plain language, forbids a party from prosecuting two actions for the `same cause' and against the `same party.' This Court has previously held that an action pending in a federal court falls within the coverage of this Code section:

"`"The phrase `courts of this state,' as used in § 6-5-440, includes all federal courts located in Alabama. This Court has consistently refused to allow a person to prosecute an action in a state court while another action on the same cause and against the same parties is pending in a federal court in this State."'

"Ex parte University of South Alabama Found., 788 So.2d 161, 164 (Ala.2000) (quoting Weaver v. Hood, 577 So.2d 440, 442 (Ala.1991) (citations in Weaver omitted in University of South Alabama)). Additionally, a compulsory counterclaim is considered an `action' for purposes of § 6-5-440. Penick v. Cado Sys. of Cent. Alabama, Inc., 628 So.2d 598, 599 (Ala. 1993)."

Ex parte Norfolk S. Ry., 992 So.2d 1286, 1289-90 (Ala.2008).

Our caselaw provides that, for purposes of § 6-5-440, when a compulsory counterclaim exists, a defendant is considered a "counterclaim plaintiff" at the time the underlying action is initiated:

"`This Court has held that the obligation . . . to assert compulsory counterclaims, when read in conjunction with § 6-5-440, Ala.Code 1975, which prohibits a party from prosecuting two actions for the same cause and against the same party, is tantamount to making the defendant with a compulsory counterclaim in the first action a "plaintiff" in that action (for purposes of § 6-5-440) as of the time of its commencement. See, e.g., Ex parte Parsons & Whittemore Alabama Pine Constr. Corp., 658 So.2d 414 (Ala.1995); Penick v. Cado Systems of Cent. Alabama, Inc., 628 So.2d 598 (Ala.1993); Ex parte Canal Ins. Co., 534 So.2d 582 (Ala.1988). Thus, the defendant subject to the counterclaim rule who commences another action has violated the prohibition in § 6-5-440 against maintaining two actions for the same cause.'

"Ex parte Breman Lake View Resort, L.P., 729 So.2d 849, 851 (Ala.1999). See also [Ex parte] University of South Alabama Found., 788 So.2d [161] at 165 [(Ala.2000)] (holding that a party in an action pending in a federal court was subject to the counterclaim rule and thus violated § 6-5-440 by commencing another action in a state court); Ex parte Parsons & Whittemore Alabama Pine Constr. Corp., 658 So.2d 414 (Ala. 1995) (holding that the prosecution in a subsequent action of claims that had been compulsory counterclaims in a previously filed declaratory-judgment action violated § 6-5-440)."

Ex parte Norfolk S. Ry., 992 So.2d at 1289-90 (emphasis added). See also Little Narrows, LLC v. Scott, 1 So.3d 973 (Ala. 2008); Ex parte J.C. Duke & Assocs., Inc., 4 So.3d 1092 (Ala.2008). Therefore, for purposes of applying § 6-5-440, when a defendant has the obligation to file a compulsory counterclaim, that defendant is considered a counterclaim plaintiff at the time the action is commenced.

Here, Clark actually filed the federal action before asserting her counterclaims in the state-court action. However, Clark's claims against Wells Fargo must be considered compulsory counterclaims because they are both logically related to and arose out of the same circumstances that gave rise to Wells Fargo's original ejectment claim. See J.C. Duke & Assocs., 4 So.3d at 1094 ("`Under the logical-relationship test "[a] counterclaim is compulsory if there is any logical relation of any sort between the original claim and the counterclaim." Committee Comments on the 1973 adoption of Rule 13, ¶ 6.'" (quoting Bedsole v. Goodloe, 912 So.2d 508, 521 (Ala.2005))). See also Calhoun v. Pennsylvania Nat'l Mut. Cas. Ins. Co., 676 So.2d 1332, 1333 (Ala.Civ.App.1996) ("Both Rule 13(a), Ala. R. Civ. P., and Rule 13(a), Fed. R.Civ.P., require a party to file as a counterclaim `any...