Greene v. Connelly

• Decision Date: 06 August 1993
• Parties: Garrett A. GREENE v. David M. CONNELLY, individually and as trustee of the Alabama Plastic Surgery, P.A. Pension Trust. 1911785.
• Court: Alabama Supreme Court

Page 346

628 So.2d 346

Garrett A. GREENE v. David M. CONNELLY, individually and as trustee of the Alabama Plastic Surgery, P.A. Pension Trust.

1911785.

Supreme Court of Alabama.

Aug. 6, 1993.

As Modified on Denial of Rehearing

Sept. 24, 1993.

W. McCollum Halcomb of Sirote & Permutt, P.C., Birmingham, for appellant.

Marvin H. Campbell, Montgomery, for appellee.

ALMON, Justice.

Garrett A. Greene appeals from an order setting aside the domestication of a default judgment entered by a California Superior Court against Dr. David M. Connelly, individually and as trustee of the Alabama Plastic Surgery, P.A. Pension Trust. The issue is whether, under California law, Connelly engaged in sufficient contacts with the State of California to subject himself to the in personam jurisdiction of a California superior court.

In 1984, Connelly became interested in investing in applications for cellular telephone licenses issued by the Federal Communications Commission ("FCC"). In urban areas of the country, the FCC established a licensing system under which licenses were granted to provide cellular telephone services in "metropolitan statistical areas" ("M.S.A.s"). To select the licensees, the FCC devised a lottery system.

In 1985, Connelly entered into a contract with American National Cellular, a marketing firm, to prepare and submit an application to operate a cellular telephone system in 15 M.S.A.s. Among the M.S.A.s included in the application were Visalia, California; Charleston, West Virginia; Johnstown, Pennsylvania; Orange County, New York; Hamilton-Middletown, Ohio; and Fayetteville, North Carolina. American National Cellular was a California company. Connelly paid a fee of $85,000 to American National Cellular, which was remitted to its offices in California. During the preparation of the application, Connelly made several telephone calls to American National Cellular.

After submitting this application, Connelly entered into agreements with other parties to improve his chances of acquiring an interest in a cellular telephone license through the lottery. Along with other applicants, Connelly joined organizations called "lottery groups." One such group Connelly joined was Cellular America Lottery Group, located in Freehold, New Jersey. Under their agreement with Cellular America, Connelly and other applicants agreed that if anyone in the group had his number drawn, he would share ownership with the rest of the lottery group. This agreement with Cellular America, which Dr. Connelly executed, specifically referred to 11 M.S.A.s, of which one was the Visalia, California, market. Dr. Connelly was unaware of the identities of the other members of this lottery group; they were simply people who had made similar applications.

About this time, Garrett Greene also submitted applications for an FCC license and joined another lottery group like Cellular America, called Settlecom, which was located in Washington, D.C. To improve their chances of success still further, Greene and Connelly, independently of each other, joined yet another lottery group, called Cross-Settlecom. Although a separate corporate entity, Cross-Settlecom was managed by Settlecom and was also located in Washington, D.C. Under the Cross-Settlecom agreement, members of different lottery groups agreed to share any interest they acquired by virtue of their original agreement with members of other lottery groups.

Under these agreements, Greene came to share in a minority interest acquired by Connelly. The application of a member of Connelly's lottery group, Cellular America, was drawn in the lottery. As a result of the agreement with Cellular America, Connelly acquired a minority interest in the license for the Visalia M.S.A. By virtue of the Settlecom agreement, Settlecom matched Connelly, who was a member of the winning lottery group, with two members of two other lottery groups, Greene and a third party named J.D. Hughes. Therefore, under the Settlecom agreement, Connelly, Greene, and Hughes each became a 33 1/3% owner of a .5617% minority interest in the Visalia M.S.A. license. Until Connelly received a notification from Settlecom, Connelly had never heard of Greene. The matching was performed solely by Settlecom. Connelly did not become aware that Greene was a California resident until, shortly after the minority interest had been awarded, Greene sent him a letter with a proposed agreement regarding the sharing of the fractional interest. Connelly did not sign and return the agreement. Other than by a letter Connelly sent to Greene in California, the two never communicated. They never spoke over the telephone.

The owner of a 50.01% majority interest in the Visalia-Tulare-Porterville, California, M.S.A. sold its interest to a company called McCaw Communications of the Pacific, Inc. As majority owner of the license, McCaw had authority to dictate all terms of the operation of the license. McCaw managed the license and maintained its offices in Kirkland, Washington. In May 1988, McCaw sent Connelly and all the other owners of an interest in the license a copy of a proposed partnership agreement. The minority interest members of the partnership did not participate in the management of the partnership, except to the extent that one member of the governing executive committee was a minority interest member. Connelly did not enter into this partnership and remained merely a joint holder of a minority interest in the license.

In September 1988, the executive committee sent a "First Capital Call" to Connelly and the other minority interest owners asking them to make a proportionate capital contribution or else risk dilution or forfeiture of their interest. Connelly paid the entire capital call attributable to the .5617% interest held jointly by Connelly, Greene, and Hughes. In November 1988, Connelly sent Greene, who then, as before, resided in California, a letter informing him of these latest developments and requesting reimbursement. Connelly also sent such a letter to Hughes. In March 1989, Greene responded with a letter, informing Connelly that he would remit his share of the capital call upon receipt of evidence showing Alabama Plastic Surgery's ownership of the 0.5617% interest. Neither Greene nor Hughes ever paid his share of the capital call.

In August 1989, Connelly assigned the .5617% interest in the Visalia M.S.A. and interests he owned in two other M.S.A.s to McCaw Cellular Interests, Inc., a subsidiary of McCaw. After signing this agreement in Montgomery, Alabama, Connelly sent the contract to the offices of McCaw Cellular Interests, Inc., in Kirkland, Washington. For the assignment of the three interests, Alabama Plastic Surgery received $224,000, of which $100,000 was attributable to the interest in the Visalia M.S.A. Connelly did not share the proceeds with either Greene or Hughes.

In January 1990, Greene filed an action for damages against Dr. Connelly, individually and as trustee of the Alabama Plastic Surgery, P.A. Pension Trust, in the California Superior Court for Santa Clara County. Greene alleged conversion, breach of fiduciary duty, fraud, breach of contract, and bad faith denial of contract as a result of the August 1989 assignment of the .5617% interest to McCaw Cellular Interests, Inc. The Sheriff's Department of Montgomery County personally served Connelly with a copy of the summons. Connelly did not appear or otherwise defend, and a default judgment was entered against him on June 6, 1990.

In June 1990, McCaw Cellular Interests, Inc., and McCaw Communications of the Pacific, Inc., filed a declaratory judgment action in the United States District Court for the Middle District of Alabama to determine title to the minority interest that Connelly had assigned to McCaw. On June 20, 1990, Greene filed a "Notice of Filing of Foreign Judgment" in the Circuit Court of Montgomery County, and a certificate of judgment was subsequently issued. In November 1991, the parties to the declaratory judgment action reached a settlement, and on November 13, 1991, Greene filed a "Process of Garnishment" naming Alabama Plastic Surgery, P.A., as garnishee. Connelly and the garnishee were served with process of garnishment; however, neither responded. On January 21, 1992 a writ of execution was filed, and on January 22, 1992, a conditional judgment was entered against Alabama Plastic Surgery, P.A., and it was served on Dr. Connelly on January 27, 1992. On March 9, 1992, Dr. Connelly filed a "Cross-Petition to Vacate Foreign Judgment." After an evidentiary hearing and oral argument, the trial court entered an order setting aside the domestication of the California judgment on the grounds that under California law, Connelly and Alabama Plastic Surgery, P.A. Pension Fund had not engaged in sufficient economic activity within the State of California to subject them to the jurisdiction of its state courts.

We respond initially to Greene's argument that Connelly waived any objection to the validity of and execution on the California state court judgment. Our enactment of the Uniform Enforcement of Foreign Judgments Act, § 6-9-230 et seq., Alabama Code 1975, provides that "a [properly authenticated and filed foreign judgment] has the same effect and is subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of a circuit court of this state and may be enforced or satisfied in like manner." § 6-9-232. Therefore, once the judgment is domesticated, Connelly must resort to procedures applicable to any other judgment originally entered by a circuit court in order to set it aside.

Rule 60, Ala.R.Civ.P., establishes the grounds on which a party may seek relief from a final judgment, order, or proceeding. Because Connelly's "Cross-petition to Vacate Foreign Judgment" challenged the validity of the California judgment by arguing that it is void for lack of in personam jurisdiction, it is in essence a Rule...