Lifestar Response of Ala. v. Admiral Ins.

Decision Date06 February 2009
Docket Number1060776.
Citation17 So.3d 200
PartiesLIFESTAR RESPONSE OF ALABAMA, INC. v. ADMIRAL INSURANCE COMPANY.
CourtAlabama Supreme Court

David B. Anderson and Ryan K. Cochran of Waller, Lansden, Dortch & Davis, LLP, Birmingham; and Clarence L. McDorman, Birmingham, for appellant.

Murray H. Gibson, Jr., and Steven W. Money, of Gibson, Rodgers & Money, LLC, Tuscaloosa, for appellee.

BOLIN, Justice.

This appeal arises out of a legal-malpractice action brought by Lifestar Response of Alabama, Inc. ("Lifestar"), against its defense lawyers and Admiral Insurance Company ("Admiral") for failing to have a default judgment set aside in the underlying case, the details of which are set out in Lifestar Response of Alabama, Inc. v. Lemuel, 908 So.2d 207 (Ala.2004).

Underlying litigation

The facts, as summarized in Lemuel, supra, are as follows:

"On November 19, 1998, Lifestar and Care entered into an `Asset Purchase Agreement' pursuant to which Lifestar purchased all of the assets of Care. Care was in the business of operating a basic and advanced life-support ambulance and medical-transportation service. Lifestar identified itself in the agreement as an Alabama corporation having its principal place of business in Holtsville, New York, and Care identified itself as an Alabama corporation having its principal place of business at 939 South Perry Street, Montgomery, Alabama 36104. That location was conveyed to Lifestar in the transaction. Other features of the transaction pertinent to the issues in this case were that `the corporate name "Care Ambulance Service of Alabama, Inc." and any derivative thereof in the State of Alabama and East of the Mississippi River and any and all fictitious names used by [Care] and ... telephone numbers and facsimile numbers or pager numbers utilized by [Care]' were sold to Lifestar, and Care agreed to `change its corporate name to a name dissimilar' and to discontinue using the name Care Ambulance Service in the State of Alabama, except as might be required in order to collect accounts receivable generated before the closing of the asset-purchase transaction. Lawrence Branch, a `key employee' who was `in charge of running the day-to-day operation' of Care, was to stay on as an employee of Lifestar for two years.

"Care ceased business operations and Lifestar assumed the operation of the ambulance service. Lifestar continued to use the tradename `Care Ambulance Service,' advertising itself by that name in the Montgomery area telephone directory, also using the shorter tradename, `Care Ambulance.'

"On November 8, 2000, Darnell Eugene Lemuel became ill at his home in Montgomery. His wife, Mildred Lemuel, and their daughter, Naquita McDonald, were with him. Late that night Ms. McDonald telephoned emergency `911' and within two or three minutes two employees of `Care Ambulance' arrived. The circumstances of what they did, or omitted to do, on that occasion will be discussed later in this opinion; eventually they transported Mr. Lemuel to Baptist Medical Center South. His condition was critical when he arrived at the hospital, and he was pronounced dead at that facility on November 10.

"On November 7, 2002, Ms. Lemuel, both as the administratrix of Mr. Lemuel's estate and in her own right, sued `Care Ambulance Service of Alabama, Inc.' and the two employees who had attended to Mr. Lemuel, designated by the fictitious names `ABC' and `DEF.' The complaint alleged that Care, `a corporation registered in the State of Alabama with principal place of business at 939 South Perry Street in Montgomery, Alabama,' had been contacted after Mr. Lemuel had `passed out' in his house and that, although the responding employees were informed that he was on medication for high blood pressure and diabetes and observed that he was drifting in and out of consciousness, they `made no effort to provide appropriate life support measures.' The complaint charged that the two employees breached their duty to provide emergency medical treatment in various specified respects and that Care had failed to employ and dispatch properly qualified personnel. The summons directed service on Care at its South Perry Street address, to Branch's attention. Deputy Glenn Mannich of the Montgomery Sheriff's Department delivered the summons and complaint to the Perry Street address on January 7, 2003, and Karen Robertson, employed by Lifestar as its human resource manager, accepted the service and signed Deputy Mannich's `service log.' At the hearing conducted on July 22, 2003, on Lifestar's motion to set aside the default judgment, Deputy Mannich testified that he had served `eight or ten papers' on Care Ambulance Service at the Perry Street address during the preceding four years and that Robertson was `one of the people that does accept the papers for the company.' He confirmed that she had previously signed for the papers on behalf of `Care Ambulance Service of Alabama, Inc.'

"In an affidavit dated July 16, 2003, in support of Lifestar's motion to set aside the default judgment and its objection to the plaintiff's motion to amend the judgment, Robertson stated that she had no personal recollection of the delivery of the summons and complaint but stated:

"`If I was personally delivered a copy of the Summons and Complaint in the Lemuel lawsuit, I would not have read the Complaint, nor noted the identity of the person or company being served. I would have given the Complaint to Vanessa Hill, our billing clerk, to forward to the home office of Lifestar along with other business documents usually transmitted to our home office.'

"Lifestar has not undertaken to account otherwise for the disposition of the summons and complaint, although its attorney acknowledged at the July 22 hearing: `I'm not going to say the ball didn't get dropped here as far as wherever this suit went,' and Lifestar states in its principal brief to this Court that `[a]s far as can be determined, the Complaint served upon Karen Robertson was transmitted to the home office of Lifestar, but from there it is unclear as to its routing.' (Lifestar's brief, p. 39.)

"No appearance was filed on behalf of Care, and the plaintiff's attorney, Timothy C. Halstrom, applied for a default judgment. On May 16, 2003, Judge Price signed an order scheduling `a hearing on default damages' for May 28. According to Judge Price's subsequent order of July 31, 2003, notice of that hearing was issued by the circuit clerk to Care at its Perry Street address. (The order scheduling that hearing bears the notation at its bottom `cc: Timothy Halstrom, Esq.; Lawrence S. Branch, Pro Se.') No one appeared at the May 28 hearing except Halstrom, Ms. Lemuel, McDonald, and Dallas Johnson, an expert witness. Testimony was given by Ms. Lemuel, McDonald, and Johnson, and numerous exhibits were introduced. At the conclusion of the hearing Judge Price entered a default judgment in favor of the plaintiff in the amount of $5,000,000.

"On June 3, 2003, Halstrom received a telephone call from an individual identifying himself as Bob Fraulich, a representative of Lifestar. According to Halstrom's representations made to Judge Price without objection at the July 22 hearing on the motion to set aside the default judgment, Fraulich was calling from New York, was aware of the default judgment against Care, and explained that `"Care is not that company. We are Lifestar Response Corporation Alabama, Inc., doing business as Care Ambulance Service. So you have got the wrong one, you can't collect the judgment."' In its brief to this Court, Lifestar states, `Actually what was said by Lifestar's representative was the Default Judgment was taken against the wrong party, not that Lemuel had sued using the "wrong name."' (Lifestar's brief, p. 9.)

"Based on that information, Halstrom filed a motion, reciting the content of that telephone conversation and including other information, to amend the judgment to operate against `Life Star Response Corp. of Alabama d/b/a Care Ambulance Service.' Copies of the motion were sent by mail to Fraulich and to `Life Star Response Corp. of Alabama d/b/a Care Ambulance Service.' The motion mailed to Lifestar was duly received at the Perry Street address the following day.

"On June 12 attorney Jack B. Hinton, Jr., entered his notice of appearance on behalf of Care. The following day Halstrom faxed to him a copy of the motion to amend the judgment. Also on that day, Judge Price entered an order setting Halstrom's motion for hearing on June 26, with copies to Halstrom and Hinton. On June 23, 2003, attorney B[e]rt P. Taylor filed a notice of appearance on behalf of `Lifestar Response of Alabama, Inc., d/b/a Care Ambulance Service,' and a motion seeking a continuance of the June 26 hearing on the basis that he and his client `just recently learned' of the default judgment and the motion to amend. On June 24 Taylor filed a `corrected motion to continue hearing,' reidentifying his client as `Lifestar Response of Alabama, Inc., d/b/a Care Ambulance,' combining `Life' and `Star' in the name of the corporate entity and dropping `Service' at the end of its tradename. Halstrom filed an amendment to his motion, asking that the defendant be redesignated as `Lifestar Response of Alabama, Inc., d/b/a Care Ambulance Service.' Judge Price rescheduled the hearing on all pending motions for July 14; that hearing was ultimately conducted on July 22.

"On July 18, 2003, Care filed a motion to set aside the default judgment pursuant to Rule 55(c), Ala. R. Civ. P., and Rule 60(b)(1), (4), and (6), Ala. R. Civ. P.; on that same day, Lifestar filed its `objection to plaintiff's motion to amend judgment and motion to set aside default judgment.' Care asserted in its motion that Lifestar had faxed to it on May 29 a copy of Judge Price's May 16 order setting the hearing on damages for May 28 and that, upon receiving that order, Care had faxed a copy of it to its legal counsel in California. Care alleged that it had a...

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