EX PARTE ATLANTIS DEVELOPMENT CO., INC.

• Decision Date: 03 September 2004
• Citation: 897 So.2d 1022
• Parties: Ex parte ATLANTIS DEVELOPMENT COMPANY, INC., Bobby R. Ajdarodini, and Javad Ajdarodini. (In re Pace Properties, an Alabama general partnership, and JBJ Partnership v. Atlantis Development Company, Inc., et al.).
• Court: Alabama Supreme Court

897 So.2d 1022

Ex parte ATLANTIS DEVELOPMENT COMPANY, INC., Bobby R. Ajdarodini, and Javad Ajdarodini.

(In re Pace Properties, an Alabama general partnership, and JBJ Partnership v. Atlantis Development Company, Inc., et al.).

1030475.

Supreme Court of Alabama.

September 3, 2004.

F. Page Gamble of Garrison Scott Gamble & Rosenthal, P.C., Birmingham, for petitioners.

Robert C. Gammons of Stephens, Millirons, Harrison & Gammons, P.C., Huntsville, for respondents.

LYONS, Justice.

Atlantis Development Company, Inc., Bobby R. Ajdarodini, and Javad Ajdarodini (hereinafter collectively referred to as "Atlantis") petition this Court for a writ of mandamus. Atlantis seeks relief from an order of the trial court granting the motion of Pace Properties, an Alabama general partnership, and JBJ Partnership (hereinafter collectively referred to as "Pace") to strike Atlantis's jury demand. The issue is whether, under Rule 38(b), Ala. R. Civ. P., Atlantis's demand for a jury trial, made simultaneously with a counterclaim for fraud filed more than 30 days after the fraud issue was raised as an affirmative defense in Atlantis's answer to the complaint, was timely. We answer that question in the negative; accordingly, we deny the petition.

I. Factual Background and Procedural History

Atlantis purchased real property that had been subdivided into lots from Pace and issued promissory notes secured by the property. Pace conveyed the property by a general warranty deed, but failed to disclose that the previous owner had a right of redemption as to certain of the lots. Atlantis began building homes on the lots. When the previous owner sold its right of redemption, the purchaser of the right, John Lary, L.L.C., filed an action in the Madison Circuit Court, and the property became the subject of litigation involving numerous parties and claims. John Lary, L.L.C. v. JBJ Partnership, Case No. CV-97-563. In that action, Atlantis, a defendant, filed a cross-claim against codefendants JBJ Partnership and its individual partners, James E. Pace, James P. Pace, and William B. Pace, alleging fraud based on JBJ and the Paces' failure to disclose the outstanding right of redemption. In the same document, Atlantis also filed a cross-claim against codefendant E. Ray McKee, Jr., and a counterclaim against the plaintiff, John Lary, L.L.C. Atlantis demanded a jury trial on its cross-claims and on the counterclaim.

On February 21, 2003, Pace Properties and JBJ Partnership, one of the defendants on Atlantis's cross-claim in the first action, filed the present action, also in the Madison Circuit Court, claiming that Atlantis had defaulted on certain promissory notes that were the subject of the litigation in John Lary, L.L.C. v. JBJ Partnership. Atlantis answered on April 3, 2003, alleging, among others, the following affirmative defense: "Defendants were defrauded by [Pace], who sold property with defective title, while at the same time warranting that title was clear, the details of which is [sic] set forth in Civil Action Number 97-563 pending in the Circuit Court of Madison County, Alabama." Contemporaneously, Atlantis filed a motion to dismiss or, alternatively, to consolidate Pace's action with the pending action because, according to Atlantis, the claims Pace was asserting were already the subject of John Lary, L.L.C. v. JBJ Partnership.

After hearing oral argument on the issues on June 27, 2003, the trial court denied Atlantis's motions. On August 28, 2003, Atlantis, now required to litigate its defenses and claims in a second action, filed a counterclaim and demanded a jury trial. The counterclaim alleged that Atlantis had suffered losses on the costs of housing construction, materials, financing, and litigation because of Pace's fraudulent conduct in failing to disclose the outstanding right of redemption on certain of the property Atlantis had purchased from Pace. On September 12, 2003, Pace filed a motion to strike the jury demand. The trial court granted Pace's motion. Atlantis now petitions this Court for a writ of mandamus, arguing that its jury demand was timely and that the trial court therefore erred in granting Pace's motion to strike the demand, and asking this Court to order the trial court to vacate its order granting Pace's motion.

II. Standard of Review

A petition for a writ of mandamus is the appropriate vehicle for seeking review by this Court of a denial of a demand for a jury trial. "Mandamus is an extraordinary remedy, however, requiring a showing that there is: '(1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court.'" Ex parte Jackson, 737 So.2d 452, 453 (Ala.1999) (quoting Ex parte Alfab, Inc., 586 So.2d 889, 891 (Ala.1991)). Because mandamus is an extraordinary remedy, the standard of review on a petition for a writ of mandamus is whether there is a clear showing of error on the part of the trial court. Ex parte Finance America Corp., 507 So.2d 458, 460 (Ala.1987).

III. Analysis

Rule 38(b), Ala. R. Civ. P., requires a party seeking a trial by jury on an issue to make that demand "not later than thirty (30) days after the service of the last pleading directed to such issue." Waiver of the right to a trial by jury occurs when a party fails to comply with the deadline established by Rule 38(b). See Rule 38(d) ("The failure of a party to serve and file a demand as required by this rule and to file it as required by Rule 5(d)[, Ala. R. Civ. P.,] constitutes a waiver by the party of trial by jury."). Consequently, when Rule 38(b) and Rule 38(d) are read together, as they must be, a pleading "`raises an issue' only once within Rule 38(b)'s meaning when it introduces it for the first time." Guajardo v. Estelle, 580 F.2d 748, 752-53 (5th Cir.1978).

Rule 13(a), Ala. R. Civ. P., requires that a "pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against the opposing party," subject to exceptions, one of which the trial court here found not applicable. Rule 7(a), Ala. R. Civ. P., entitled "Pleadings," provides: "There shall be a complaint and an answer; a reply to a counterclaim denominated as such...." Rule 7(a) does not state, "There shall be a complaint, an answer and a counterclaim; a reply to a counterclaim denominated as such...." A counterclaim must therefore be asserted in an answer. This conclusion is buttressed by Rule 13(f), Ala. R. Civ. P., "Omitted Counterclaim," which provides: "When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment." (Emphasis added.) The only reasonable interpretation of Rule 13(f) is that "amendment" refers to an amendment to the answer.

In this proceeding, Pace's complaint was filed on February 21, 2003. Atlantis served its answer on April 3, 2003, asserting, among other things, the defense of fraud. Atlantis did not demand a trial by jury in the answer. The answer constituted the last pleading directed to the issues as to which a jury might have been demanded, because a reply to an answer is not provided for in the rules. See Rule 7(a). The time in which to demand a trial by jury on the issues in the complaint and the answer therefore expired 30 days after April 3, 2003. Consequently, the demand for a jury trial first asserted in the counterclaim asserting fraud, a document that must be viewed as an amendment to the previously served answer asserting fraud as a defense, is untimely, because it was not served until August 28, 2003, more than three months after the expiration of the deadline established by Rule 38(b).

In Baggett v. Sims, 387 So.2d 792 (Ala.1980), this Court held a jury demand asserted in a counterclaim to be timely. The defendant in Baggett, unlike Atlantis, initially served a motion to dismiss unaccompanied by an answer. A motion to dismiss is not a pleading. See Polytec, Inc. v. Utah Foam Prods., Inc., 439 So.2d 683, 687 (Ala.1983) ("A motion to dismiss is not a responsive pleading within the meaning of [Rule 15]. Rule 7(a)."). Thus, the service of the motion to dismiss in Baggett did not trigger the commencement of the 30-day period for asserting a jury demand pursuant to Rule 38(b), because that rule refers to "the last pleading directed to such issue." (Emphasis added.) The trial court in Baggett denied the motion to dismiss and allowed the defendant 20 days in which to answer. Within the 20-day period, the defendant served an answer and a counterclaim. Thus, before the service of the answer and counterclaim there had been no waiver of the right to a trial by jury because the critical 30-day period "after the service of the last pleading directed to such issue" had not begun to run. Baggett thus correctly held that the period would not run until 30 days after the service of the reply to the counterclaim, the last pleading directed to the issue as to which the jury demand was being made.

This case is indistinguishable from Ex parte Twintech Industries, Inc., 558 So.2d 923 (Ala.1990). In that case, the defendant asserted the affirmative defense of fraud in its initial answer, served a counterclaim eight days later that contained no allegations of fraud, and did not at that time demand a trial by jury. Three years later, the defendant amended its answer to assert a counterclaim based on fraud. This Court there stated:

"In the instant case, the record does not indicate that the fraud claims set forth in Twintech's amendment [asserting a counterclaim for fraud] created a new issue. To the contrary, Twintech had already raised fraud as an affirmative defense in its answer, and, within 30 days of filing that answer, could have demanded a jury. Its failure to timely file a jury

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