Faith Properties v. First Commercial Bank

• Decision Date: 11 January 2008
• Docket Number: 1061149.
• Citation: 988 So.2d 485
• Parties: FAITH PROPERTIES, LLC, Marjan Vakili, and Kevin Vakili v. FIRST COMMERCIAL BANK.
• Court: Alabama Supreme Court

988 So.2d 485

FAITH PROPERTIES, LLC, Marjan Vakili, and Kevin Vakili v. FIRST COMMERCIAL BANK.

1061149.

Supreme Court of Alabama.

January 11, 2008.

Richard A. Bearden and Jeffrey W. Brumlow of Massey, Stotser & Nichols, P.C., Birmingham, for appellants.

William J. Gibbons, Jr., of Gibbons & Furman, P.C., Huntsville, for appellee.

WOODALL, Justice.

Faith Properties, LLC ("Faith"), Marjan Vakili, and her husband, Kevin Vakili, appeal from a summary judgment in favor of First Commercial Bank ("the Bank") in the Bank's action against them to set aside as fraudulent certain conveyances of real estate from the Vakilis to Faith. We vacate the judgment and dismiss the appeal.

I. Factual Background

The facts essential to the resolution of this case are undisputed. On October 19, 2005, the Bank filed a complaint (case no. CV-05-2125) against Kevin Vakili alleging breach of agreements personally guaranteeing payment of loans the Bank made to corporations Vakili owned. On November 29, 2005, the Vakilis sold their principal residence located at "The Ledges" in Huntsville.

On December 16, 2005, the Bank filed a "motion for temporary restraining order, preliminary injunction, and permanent injunction, and to seize sales proceeds of defendant, Kevin Vakili" ("the seizure motion"). In this motion, the Bank averred that proceeds from the sale of the Huntsville residence were to have been used to pay the loans, and it sought an order requiring Kevin Vakili "to tender one-half of the proceeds realized from the sale of the property ... to the Circuit Court of Madison County, ... so that the same [could] be held pending a hearing on [the] motion and the ultimate resolution of the complaint." That same day, the trial court entered a "temporary restraining order and order for writ of seizure," stating, in part:

"[The Bank] has made application in compliance with Rule 64(b) of the Alabama Rules of Civil Procedure[¹] for an Order prohibiting the Defendant, Kevin Vakili, from transferring or otherwise disposing of those proceeds he received from the sale of property he owned in Huntsville, Alabama, and for the seizure of said funds and the placement of the funds with the Circuit Court of Madison County. The court has examined the affidavit and exhibits attached thereto and finds that reasonable grounds exist to authorize issuance of this order. Accordingly,

"IT IS ORDERED, ADJUDGED AND DECREED THAT the Defendant, Kevin Vakili, is hereby ordered to immediately cease transferring, spending, using or encumbering any of the proceeds he received from the sale of that property he owned [in] Huntsville, Alabama, which sale occurred on or about November 29, 2005. Said Defendant's failure to comply with this order shall result in his being held in contempt of this order.

"IT IS FURTHER ORDERED, ADJUDGED AND DECREED THAT the Motion for Preliminary Injunction shall be heard on THURSDAY, DECEMBER 22, 2005, AT 4:30 P.M....

"IT IS FURTHER ORDERED, ADJUDGED AND DECREED THAT upon approval by the clerk of this court of the [Bank's] bond in the amount of $10,000.00, that the Defendant, Kevin Vakili, shall immediately pay into the registry of the Circuit Court of Madison County, Alabama, those sums that he received from the sale of the real property located at The Ledges in Huntsville, Alabama, which sale occurred on or about November 29, 2005. Said proceeds shall include one-half of the net proceeds received from said sale, which half is attributed to the one-half ownership interest that [he] had in said property. Defendant Kevin Vakili shall also provide proof to the court of the amount that he received from the sale of the property, including a copy of the closing statement or settlement statement received from the sale of said property.

"IT IS FURTHER ORDERED, ADJUDGED AND DECREED THAT should the Defendant fail to pay said sums into court within five (5) days of the date hereof, that the Sheriff or other duly constituted officer shall seize said funds and hold the same subject to further orders of this court.

"TAKE NOTICE THAT THE DEFENDANT IS ENTITLED AS A MATTER OF RIGHT TO A PRE-JUDGMENT HEARING ON THE ISSUE OF DISSOLUTION OF THE WRIT OF SEIZURE IF A WRITTEN REQUEST FOR HEARING IS SERVED UPON COUNSEL FOR [THE BANK] WITHIN FIVE (5) DAYS FROM THE DATE OF SEIZURE OF THE PROPERTY BY THE SHERIFF OR OTHER DULY CONSTITUTED OFFICER.

"SHOULD DEFENDANT DESIRE SUCH PRE-JUDGMENT HEARING, HE SHOULD FILE THE ORIGINAL OF HIS WRITTEN REQUEST FOR SETTING THE HEARING WITH THE CLERK OF THIS COURT AND A COPY OF SAID REQUEST SHOULD BE SERVED ON SAID COUNSEL FOR [THE BANK]. IF, AFTER TIMELY AND PROPER REQUEST, NO HEARING HAS BEEN HELD, THE WRIT OF SEIZURE AUTHORIZED HEREIN SHALL EXPIRE ON THE FIFTEENTH (15th) DAY AFTER THE SEIZURE OF THE PROPERTY BY THE SHERIFF OR OTHER DULY CONSTITUTED OFFICER. IF NO REQUEST FOR HEARING IS MADE, THE WRIT SHALL REMAIN IN EFFECT PENDING ORDERS OF THE COURT. HOWEVER, THE COURT, IN ITS DISCRETION, MAY HEAR A REQUEST FOR DISSOLUTION OF THE WRIT, ALTHOUGH SAID REQUEST IS SERVED MORE THAN FIVE (5) DAYS FROM THE DATE OF SEIZURE.

"IT IS FURTHER ORDERED THAT a copy of this order be served upon the defendant with the aforementioned writ of seizure."

(Capitalization in original.) The order roughly tracks the language of Rule 64, Ala. R. Civ. P.

On December 23, 2005, following a hearing at which Kevin Vakili did not appear, the court entered an "order for preliminary injunction," requiring Vakili to immediately "pay to the Clerk of the Court one half of the net proceeds received from [the sale of the Vakilis' residence], which half is attributed to the one-half ownership interest that Defendant Kevin Vakili had in the property" (the December 16 order and the December 23 order are hereinafter collectively referred to as "the attachment order").

Meanwhile, on December 19, 2005, a default judgment was entered against Kevin Vakili, and reflected in the State Judicial Information System, assessing damages in the amount of $705,710.01. On January 13, 2006, Vakili moved for relief from the default judgment, asserting as a ground the absence of effective service of process. On March 3, 2006, the trial court denied Vakili's motion.

On July 31, 2006, the Bank filed a "Motion for Leave to Amend Complaint and Add Third-party Defendants." The amended complaint purported to add Faith and Marjan Vakili as defendants. The Bank averred that three parcels of real estate — two of which were owned by Kevin and one of which was owned by Kevin and Marjan jointly — were transferred on December 16, 2005, to Faith for no consideration, and that Faith was owned by Marjan and the Vakilis' son. The complaint asserted claims under the Alabama Fraudulent Transfer Act, Ala.Code 1975, §§ 8-9A-4 and -5. It sought a judgment setting aside the transfers as void and declaring "that the properties [were] owned by the prior owners, Kevin Vakili and Marjan Vakili, as if no such subsequent transfer occurred." It further sought a judgment against Kevin Vakili declaring that the default judgment attached as a lien on the properties in favor of the Bank as of the date of the judgment.

On February 5, 2007, the Bank moved for a summary judgment on the claims in the amended complaint. Faith and the Vakilis filed a response in opposition to the motion for a summary judgment. Concurrently, they moved to dismiss the amended complaint for lack of jurisdiction, contending that case no. CV-05-2125 had become final and conclusive between the parties more than 30 days before the Bank attempted to amend the complaint.

On March 28, 2007, the trial court entered a summary judgment for the Bank. The judgment stated, in pertinent part:

"IT IS FURTHER ORDERED, ADJUDGED, and DECREED that the transfers of the three (3) tracts of properties from Kevin Vakili and Marjan Vakili to [Faith] ... constitute fraudulent conveyances pursuant to Alabama law and therefore are null and void and due to be set aside as if the transfers never occurred. Accordingly, title to the properties shall vest in the prior owners of said properties as if the transfers had never occurred.

"IT IS FURTHER ORDERED, ADJUDGED, and DECREED that upon the setting aside of said transfers, that [the Bank's] judgment recorded on December 20, 2005, shall attach as a lien to said three (3) properties as of the date of recordation pursuant to applicable law."

On April 26, 2007, the trial court entered an amended judgment denying the motion of Faith and the Vakilis to dismiss the amended complaint. From that judgment Faith and the Vakilis appealed, contending among other things, that the trial court "lost jurisdiction to entertain [the Bank's] July 31, 2006, Motion for Leave to Amend Complaint when it entered its March 3, 2006, denial of Vakili's post-judgment motion." Appellants' brief, at 26. We are thus presented with a threshold question regarding our subject-matter jurisdiction, the resolution of which turns on the degree of finality to be afforded the March 3, 2006, order denying Kevin Vakili's motion to set aside the default judgment.

II. Discussion

A judgment entered by a trial court without subject-matter jurisdiction is void. Ex parte Norfolk Southern Ry., 816 So.2d 469, 472 (Ala.2001). Thus, unless the trial court had subject-matter jurisdiction when it entered the summary judgment, that judgment was a nullity and must be set aside. Pinkerton Sec. & Investigation Servs., Inc. v. Chamblee, 961 So.2d 97 (Ala.2006).

In that connection, it is well settled that "a judgment is not subject to revision after all the claims of all parties have been adjudicated, absent a timely motion filed pursuant to Rules 55, 59, or 60, Ala. R. Civ. P." Pratt Capital, Inc. v. Boyett, 840 So.2d 138, 143 (Ala.2002) (emphasis added). See also Harper v. Brown, Stagner, Richardson, Inc., 845 So.2d 777, 779 (Ala.2002) (Rule 60, Ala. R. Civ. P., is not a vehicle by which to amend a complaint following a final judgment to "add new claims...