Martin v. Cash Express Inc.

Decision Date30 September 2010
Docket Number1070562.
Citation60 So.3d 236
PartiesEric A. MARTIN et al.v.CASH EXPRESS, INC., et al.
CourtAlabama Supreme Court


Michael C. Skotnicki of Haskell Slaughter Young & Rediker, LLC, Birmingham; Lange Clark, Birmingham; Daniel D. Sparks of Christian & Small, LLP, Birmingham; and J. Curtis Wright II, Gadsden, for appellants.Larry W. Morris of Morris, Haynes & Hornsby, Alexander City; Gregory Cusimano of Cusimano, Keener, Roberts & Raley, Gadsden; and Roy McCord of McCord & Martin, Gadsden, for appellees.PARKER, Justice.

This is an appeal from the order of the Etowah Circuit Court dismissing a putative class action against payday lender Cash Express, Inc., and others for lack of standing of the plaintiffs. We affirm.


On February 12, 2002, Eric A. Martin and Neva Martin filed a class-action complaint against Cash Express, Inc., and 35 Cash Express limited liability companies located in Alabama (hereinafter referred to collectively as “Cash Express”), and fictitiously named defendants, asserting in counts 1 through 6 conspiracy, usurious rates, unjust enrichment, unconscionability, the tort of outrage, and money had and received. On August 2, 2002, the Martins filed a motion in the trial court to stay the action pending the resolution of a case then pending before this Court in which the issue to be decided was whether payday loans were subject to the Alabama Small Loan Act, § 5–18–1 et seq., Ala.Code 1975, or other provisions of Title 5 of Ala.Code 1975. See Austin v. Alabama Check Cashers Ass'n, 936 So.2d 1014 (Ala.2005). On November 22, 2005, after this Court released its decision in Austin, the Martins' counsel, by letter, requested that the case be removed from the trial court's administrative docket, and a hearing date was set. During the three-year hiatus, the case had been transferred from Judge Stewart, who had retired, to Judge Malone.

On June 29, 2006, Cash Express filed a motion for a summary judgment arguing that the Martins were judicially estopped from pursuing their action because they had failed to declare the action as a contingent asset in their Chapter 13 bankruptcy proceeding. According to the summary-judgment motion, the Martins had petitioned for bankruptcy on July 3, 2000, and had been discharged in bankruptcy on April 6, 2006. Because the action against Cash Express was filed on February 12, 2002, Cash Express argues, the Martins were required by law to amend their bankruptcy filing to inform the bankruptcy court of the pending action, but had not. In support of its motion for a summary judgment, Cash Express provided the trial court with a copy of the Martins' entire bankruptcy file on August 11, 2006. On December 19, 2006, the trial court denied Cash Express's motion without a written order. On January 25, 2007, Cash Express moved the trial court to reconsider its order denying Cash Express's summary-judgment motion, and Judge Kimberley, who had by then replaced Judge Malone as the trial judge, denied the motion without an order on January 29, 2007.

While Cash Express's summary-judgment motion was pending, the Martins, on August 17, 2006, filed an amended complaint without obtaining permission to do so from the trial court as required by Rule 15, Ala. R. Civ. P. The amended complaint added five new class plaintiffs, Tyrone Knight, Kevin Lyons, Clarence Peoples, Janice Richard,1 and Claude Russaw. Peoples later declined consideration as a class representative, and Russaw dismissed his claim against Cash Express; Judge Malone denied Cash Express's motion to strike the amended complaint on December 19, 2006.

On April 19, 2007, Gregory Cusimano, an attorney who had been a law partner of Judge Kimberley's until Judge Kimberley took office following the November 2006 election, filed his notice of appearance on behalf of Cash Express. On April 24, 2007, Judge Kimberley recused himself, although the Martins did not file a motion seeking his recusal and had not challenged Cusimano's appearance with a motion to disqualify him as counsel for Cash Express. The case was then assigned to Judge Millican.

On June 25, 2007, Cash Express filed a motion for a partial summary judgment; the trial court set the motion for a hearing on August 27, 2007. On July 9, 2007, the plaintiffs filed a motion for class certification. Cash Express filed for an extension of time to respond to the motion for class certification because depositions of the class representatives had not been completed. After initially denying the motion, the trial court, on reconsideration, canceled the scheduled hearing and scheduled instead a status conference for August 27, 2007. The trial court ordered all counsel to attend and to brief the court on the background of the case, the issues, and the positions of the parties.

Addressing the claims of each individual plaintiff, Cash Express on November 14, 2007, filed a motion to dismiss or, alternatively, for a summary judgment. As to the claims of Neva Martin, Cash Express quoted from the amended complaint filed August 17, 2006, which defined the putative class as:

“85. Plaintiffs aver that this action is maintainable as a class action, and therefor[e] bring this action and the foregoing counts, as a class action on behalf of a class of borrowers who obtained loans or extensions of credit or credit transactions in the forms hereinabove described from defendants in the six years next preceding the filing of the original Complaint to the later of 1). effective date of the Alabama Deferred Presentment Services Act; or 2). the date Cash Express became duly licensed under the Alabama Deferred Presentment Services Act (the ‘Class Period’). The issues of law and fact (concerning these types of financial transactions) to be determined in this Action are common to all the class members. Plaintiffs are members of the Class. Excluded from the Class are ... (c) any person or entity who was or is an officer, director, employee, or a shareholder....”

(Emphasis added.) Cash Express produced Neva Martin's deposition in which, Cash Express argues, she admitted that she had been an employee of Cash Express at the time she borrowed money from Cash Express. Cash Express argued that Neva Martin was not qualified to participate as a class member because the member qualifications are defined by the amended complaint.

As to Eric Martin, Cash Express argued:

Eric Martin was Neva Martin's spouse. According to Mrs. Martin, Eric Martin never filled out any application for any of the loans with Cash Express that were in his name. Neva Martin did that. Dep. Neva Martin, p. 57. The Martins had a joint checking account. Dep. Neva Martin, p. 84.

Eric Martin testified that he was not aware that his name was being signed to accounts at Cash Express. Dep. Eric Martin, pp. 11–12. He testified that he ‘would say that [he] didn't borrow the money.’ Dep. Eric Martin, p. 14. He also testified that he had never ‘gone in there and done business.’ Id. p. 23. Mr. Martin did not feel that Cash Express owed him any money. Id., p. 21. While he did testify that he thought that one signature on one check was his, Id. p. 16, his wife testified that Eric Martin never made one loan at Cash Express, and that the loan that was made in his name was made by her and for her. Dep. Neva Martin, p. 55. Eric Martin thought of the transactions that were made as being ‘for both of us.’ Dep. Eric Martin, p. 14.

“It is axiomatic that a class representative must be a member of the class he or she purports to represent. Ex parte Prudential Ins. Co. of America, 721 So.2d 1135, 1137 (Ala.1998). Because Eric Martin never did business with Cash Express by his own admission or at most was merely a conduit through which his wife, Neva Martin, an ex-employee of Cash Express, took out Cash Express loans, he is not a class member and must be dismissed from the action also.”

Cash Express also argued that the Martins are judicially estopped from bringing claims against Cash Express because, as discussed above, they did not list the action against Cash Express as a contingent asset in their bankruptcy proceeding.

As to Knight and Lyons, Cash Express argued that each should be dismissed from the action because each had allowed Cash Express to take a default judgment against him for the debts at issue. Cash Express argued:

“A default judgment is determinative of the issues presented in the complaint on which it is based, both in the action in which it is taken and in all subsequent actions. State Farm Mut. Automobile Ins. Co., Inc. v. Day, 414 So.2d 105, 106 (Ala.Civ.App.1982). ‘When a judgment by default is entered, it generally is treated as a conclusive and final adjudication of the issues necessary to justify the relief awarded and is given the same effect as between the parties as a judgment rendered after a trial on the merits.’ Wright, Miller & Kane, Federal Practice and Procedure Civil 3d § 2684 p. 29. The default judgment represents an admission of the facts of the complaint by the defendant. Jones v. McGaha, 470 So.2d 1272, 1273 (Ala.Civ.App.1985). Because of such an admission, there can be no finding in favor of the party against whom the judgment has been taken for something he has already admitted. Gibson v. Elba Exchange Bank, 96 So.2d 756, [266 Ala. 426,] 429 (Ala.1957). See also, Ex parte State ex rel. J.Z., 668 So.2d 566 (Ala.1995)(Alabama Supreme Court refused to relitigate the issue of paternity that was determined by default judgment 12 years earlier.) ‘Valid default judgments establish claim and defense preclusion in the same way as litigated judgments, and are equally entitled to enforcement in other jurisdictions.’ Wright, Miller & Kane, Federal Practice and Procedure Civil 3d § 4442, p. 236.

“By allowing the default judgment to be taken against him, Mr. Knight [and Lyons each] admitted that the debt was valid and due to be repaid by him. A finding in his favor in the instant case would be contrary to that...

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