Devan Lowe, Inc. v. Stephens

• Decision Date: 14 June 2002
• Citation: 842 So.2d 703
• Parties: DEVAN LOWE, INC. v. Michael E. STEPHENS. Michael E. Stephens v. Devan Lowe, Inc.
• Court: Alabama Court of Civil Appeals

842 So.2d 703

DEVAN LOWE, INC. v. Michael E. STEPHENS.

Michael E. Stephens v. Devan Lowe, Inc.

2001088.

Court of Civil Appeals of Alabama.

June 14, 2002.

Certiorari Petitions Denied August 16, 2002.

E. Allen Dodd, Jr., and J. David Dodd of Scruggs, Dodd, Dodd & Bazemore, Fort Payne, for appellant/cross-appellee Devan Lowe, Inc.

G. Thomas Sullivan of Vincent, Hasty, Sullivan & Elliott, P.C., Birmingham, for appellee/cross-appellant Michael E. Stephens.

Alabama Supreme Court 1011770 and 1011817.

On Application for Rehearing

CRAWLEY, Judge.

The opinion of this court issued on April 26, 2002, is withdrawn, and the following is substituted therefor. This is an appeal and a cross-appeal from a judgment in a garnishment. On November 3, 1999, Michael E. Stephens sued Carl Hubbard on a promissory note the parties had executed in 1994, seeking recovery of principal and interest in the amount of $323,633.11. On April 8, 2000, Stephens ultimately obtained a default judgment against Hubbard and at a separate hearing, conducted on June 16, 2000, proved damages in the amount of $336,339.94.

On August 11, 2000, Stephens filed a writ of garnishment against Devan Lowe Pontiac-Cadillac-GMC (Devan Lowe, Inc.) (hereinafter referred to as "Lowe"), an automobile dealership, seeking to garnish commissions Lowe owed Hubbard as a result of his employment at Lowe's. Lowe filed an answer to the garnishment on September 7, 2000, stating that it was not indebted to Hubbard and that Hubbard was not in its employ. Thereafter on September 22, 2000, Stephens filed an answer contesting the veracity of the garnishee's answer pursuant to § 6-6-458, Ala.Code 1975, and supported that pleading with an affidavit of one of Lowe's staff members who confirmed that Hubbard continued to work at Lowe.

The matter was set for trial on January 12, 2001. The hearing proceeded as scheduled, and the testimony of only one witness was presented—Barbara Burks. Burks had served as Lowe's office manager for the past 30 years. She testified that Hubbard had sold cars over the Internet on a commission basis for Lowe since 1998. Burks also testified that Hubbard had arranged for his commissions to be paid at the rate of $150 per one-week pay period and had arranged for his wife¹ to receive the remainder of his pay (usually over $2,000). In addition, the couple received health-care benefits, the use of a demonstrator vehicle, and the use of a cellular phone. Burks testified that she understood that Devan Lowe, the owner of Lowe, became uncomfortable with this arrangement because he learned from Hubbard that he had devised the compensation plan so that it would not interfere with Hubbard's disability benefits. Burks testified that her boss told her that he did not want to be involved in any type of "welfare fraud." Burks testified that for this reason Hubbard was encouraged to devise another arrangement, and he created the Dolphin Developers, L.L.C.

Burks testified that she did not know if Dolphin Developers had a business license, or if it was registered to do business in the state of Alabama. Burks also testified that she did not know who the officers of the company were or who the owners were. She testified that, as office manager, she simply complied with a personal request made by Carl Hubbard and his wife Katrina Hubbard, that any check addressed to either of them be made out to Dolphin Developers, L.L.C., instead. Burks testified that there was no written agreement or contract between Lowe and Hubbard or Dolphin Developers reflecting the payment terms.

Burks testified that Katrina Hubbard gave her a letter with the new payment instructions for their future commissions on August 12, 2000. Burks testified that as of September 1, 2000, the Hubbards were dropped from Lowe's group health insurance plan, and from August 12 until December 31, Burks reported their income by means of a 1099 statement. Burks maintained in her testimony that after August 12, 2000, the Hubbards were no longer employees of Lowe. The first check made out to Dolphin Developers, L.L.C., is contained in the record and is dated August 24, 2000. Burks testified that Lowe was not served notice of the garnishment action until August 30, 2000. However, Burks admitted that Carl Hubbard performed the same services for Lowe he had performed in the past; he was simply compensated for those services through a different entity—Dolphin Developers, L.L.C. Burks testified that she was not invoiced for the services; the compensation was paid on commission, exactly as it had been paid in the past. Burks also testified that Hubbard continued to have the use of a demonstrator vehicle and a cellular phone—privileges customarily reserved for Lowe's employees.

The trial court entered a judgment in favor of Stephens in the amount of $24,350 or the amount Lowe had paid Dolphin Developers, L.L.C., on behalf of Carl Hubbard after it was served with the garnishment on August 30, 2000. Lowe appeals from the judgment, claiming that the evidence was insufficient to support the trial court's finding that Hubbard was employed by Lowe. Stephens cross-appeals, claiming that the trial court erred in failing to award the entire amount of the default judgment entered against Hubbard against Lowe as the garnishee.

Lowe contends that the ore tenus presumption does not apply in a case such as this, in which only one person testified. We disagree. It is not necessary that there be a dispute or absolute contradiction in the testimony in order to invoke the ore tenus presumption. That presumption is grounded on the trial court's superior position to evaluate the witnesses' demeanor and credibility and assess the weight of their testimony. Architectura, Inc. v. Miller, 769 So.2d 330 (Ala.Civ.App.2000). Recent cases in which trial courts have denied waivers of parental consent to minors seeking abortions have employed the ore tenus presumption, even though the minor seeking the waiver was the sole witness to testify at the hearing. Ex parte Anonymous, 810 So.2d 786 (Ala.2001); Ex parte Anonymous, 806 So.2d 1269 (Ala.2001); Ex parte Anonymous, 803 So.2d 542 (Ala.2001).

Hubbard was not performing body work, or cleaning cars, selling tires, or performing mechanical services for Lowe. These services would lend themselves far more easily to an independent-contractor payment arrangement. Hubbard was selling automobiles over the Internet on a commission basis. Lowe is an automobile dealership. Selling automobiles is the essence of Lowe's business. Lowe has no independent contractors who sell cars for it on a commission basis. The evidence reflects that nothing significant changed about Hubbard's employment between August, when he was employed by Lowe, and September, when Lowe was paying Hubbard's commission to Dolphin Developers, L.L.C. Hubbard was receiving the same salary, he was receiving the same benefits through COBRA² that he received when he was being paid by Lowe, and Hubbard still had the use of a demonstrator vehicle and a cellular phone. In reviewing the judgment of a trial court based on ore tenus evidence, a presumption of correctness attaches to the court's conclusion on factual issues, and its factual determination will not be disturbed unless it is clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. Marvin's Inc. v. Robertson, 608 So.2d 391 (Ala.1992). Before entering its judgment, the trial court stated in open court:

"You don't have any kind of contract at all? Okay. I'm simply not going to let you just, at their request, make a check payable to somebody else. If you get a contract, we'll have another argument about it later.... Starting with the September 6th [payment], that would make it at $24,350 that has been paid to Dolphin [Developers] but it's a direct result of the work, apparently, of—from the evidence I have—of Carl Hubbard. And you're entitled to [a] judgment for that amount."

In light of the presumption accorded the trial court's factual...