Wausau Dev. Corp. v. Natural Gas & Oil, Inc.

• Decision Date: 22 November 2013
• Docket Number: 1120614.
• Citation: 144 So.3d 309
• Court: Alabama Supreme Court
• Parties: WAUSAU DEVELOPMENT CORPORATION v. NATURAL GAS & OIL, INC.

144 So.3d 309

WAUSAU DEVELOPMENT CORPORATION

v.NATURAL GAS & OIL, INC.

1120614.

Supreme Court of Alabama.

Nov. 22, 2013.

Eric A. Tiebauer, Jr., of the Tiebauer Law Offices, LLC, Waynesboro, Mississippi, for appellant.

H. Gregory Pearson and Charles E. Harrison of Junkin, Pearson, Harrison, Junkin & Pate, LLC, Tuscaloosa, for appellee.

PARKER, Justice.

Wausau Development Corporation (“WDC”) appeals a judgment entered by the Lamar Circuit Court (“the circuit court”) in favor of Natural Gas & Oil, Inc. (“NGO”). We reverse the circuit court's judgment.

Facts and Procedural History

On March 19, 2012, NGO filed a complaint seeking a judgment determining the validity of certain oil and gas leases held by WDC to particular wells located in Lamar County (“the wells”). NGO alleged that WDC was a Mississippi corporation with a principal office located in Mississippi and that WDC was not authorized to conduct business in Alabama because WDC was not registered as a foreign entity as required by § 10A–1–7.01, Ala.Code 1975.¹ NGO also alleged that WDC had obtained leases to the wells but that, by their terms, WDC's leases had expired and had not been held open by production. NGO further alleged that it had obtained new and current leases on the wells.

On April 30, 2012, WDC filed a motion for a more definite statement pursuant to Rule 12(e), Ala. R. Civ. P, and a motion to dismiss for failure to join an indispensable party pursuant to Rule 12(b)(7), Ala. R. Civ. P. On May 31, 2012, the circuit court held a hearing on WDC's motions. On June 4, 2012, the circuit court issued an order noting that WDC's motion for a more definite statement had been withdrawn and an order denying WDC's motion to dismiss.

On June 19, 2012, WDC filed an answer and counterclaims against NGO. WDC admitted that it was a Mississippi corporation and that it was not authorized to conduct business in Alabama. However, WDC denied NGO's allegation that WDC did not possess valid leases to the wells and that NGO did hold valid leases to the wells. WDC also expressly reserved the right to amend its answer and to raise additional defenses as discovery proceeded. WDC also asserted three counterclaims against NGO: breach of contract, slander of title, and unjust enrichment.

On July 10, 2012, NGO filed a motion to dismiss the counterclaims for failure to state a claim upon which relief could be granted pursuant to Rule 12(b)(6), Ala. R. Civ. P; the circuit court denied the motion on the same day.

On July 16, 2012, NGO filed a motion for a judgment on the pleadings as to the three counterclaims asserted by WDC. On August 6, 2012, WDC filed a response to NGO's motion, requesting that NGO's motion be struck pursuant to Rule 12(g), Ala. R. Civ. P., as attempting to assert arguments not made in the original Rule 12 motion. On August 10, 2012, the circuit court held a hearing on NGO's motion for a judgment on the pleadings.

On September 17, 2012, the circuit court entered an order, which states, in pertinent part:

“[NGO] alleges in paragraph three of the complaint that [WDC] is not authorized to do business in Alabama. In its answer [WDC] admits that it is not qualified to do business and did not dispute this claim when [NGO] made the same allegation in its motion for a judgment on the pleadings. A business not qualified to do business in this state may not use its courts to enforce contracts or agreements. Sanjay, Inc. v. Duncan Constr. Co., 445 So.2d 876 (Ala.1983). See, Ala.Code 1975, [§ ] 10A[–2]–15.02[ (a) ]. Accordingly, [NGO's] motion for a judgment on the pleadings is granted.

“IT IS ORDERED ADJUDGED AND DECREED as follows:

“1. That a judgment is entered in favor of [NGO] and against [WDC] on all claims [and] counterclaims ....”

(Capitalization in original.) The circuit court's order also determined that the leases obtained by WDC to the wells were void, divested WDC of any and all interest in the leases, and declared NGO's leases to be valid and current.

The circuit court's judgment in favor of NGO relied upon Alabama's “door-closing” statute, § 10A–2–15.02(a), Ala.Code 1975, which states: ²

“(a) A foreign corporation transacting business in this state without registering as required under Section 10A–1–7.01 or without complying with Chapter 14A of Title 40 may not maintain a proceeding in this state without so registering and complying. All contracts or agreements made or entered into in this state by foreign corporations prior to registering to transact business in this state shall be held void at the action of the foreign corporation or by any person claiming through or under the foreign corporation by virtue of the contract or agreement; but nothing in this section shall abrogate the equitable rule that he or she who seeks equity must do equity.”

The door-closing statute is a capacity defense that must be raised by a party that has been sued by a foreign corporation that has not registered with the State of Alabama pursuant to § 10A–1–7.01. See Penick v. Most Worshipful Prince Hall Grand Lodge F & A M of Alabama, Inc., 46 So.3d 416, 425 (Ala.2010) (“A foreign corporation's failure to obtain authorization to do business in Alabama is a capacity defense and does not per se implicate standing and subject-matter jurisdiction.”). However, the capacity defense afforded defendants by the door-closing statute is not applicable to actions by foreign entities that involve interstate commerce “because ‘businesses engaged in interstate commerce are protected by the commerce clause in the United States Constitution, U.S. Const., Art. I, § 8, cl. 3, and are therefore immune from the effects of the “door closing” statutes.’ ” TradeWinds Envtl. Restoration, Inc. v. Brown Bros. Constr., L.L.C., 999 So.2d 875, 879 (Ala.2008) (quoting Stewart Mach. & Eng'g Co. v. Checkers Drive In Rests. of North America, Inc., 575 So.2d 1072, 1074 (Ala.1991)).

On October 15, 2012, WDC filed a postjudgment motion pursuant to Rule 59(e), Ala. R. Civ. P., to alter, amend, or vacate the circuit court's September 17, 2012, judgment. Consistent with this Court's holding in Stewart and TradeWinds, WDC argued, among other things, that the circuit court's judgment violated the Commerce Clause of the United States Constitution because this case involves “an article of commerce which is wholly interstate in nature.” On January 14, 2013, WDC's postjudgment motion was denied by operation of law pursuant to Rule 59.1, Ala. R. Civ. P. WDC appeals.

Standard of Review

“ ‘When a motion for judgment on the pleadings is made by a party, “the trial court reviews the pleadings filed in the case and, if the pleadings show that no genuine issue of material fact is presented, the trial court will enter a judgment for the party entitled to a judgment according to the law.” B.K.W. Enters., Inc. v. Tractor & Equip. Co., 603 So.2d 989, 991 (Ala.1992). See also Deaton, Inc. v. Monroe, 762 So.2d 840 (Ala.2000). A judgment on the pleadings is subject to a de novo review. Harden v. Ritter, 710 So.2d 1254, 1255 (Ala.Civ.App.1997). A court reviewing a judgment on the pleadings accepts the facts stated in the complaint as true and views them in the light most favorable to the nonmoving party. Id. at 1255–56. If matters outside the pleadings are presented to and considered by the trial court, then the motion for a judgment on the pleadings must be treated as a motion for a summary judgment. See Rule 12(c), Ala. R. Civ. P. Otherwise, in deciding a motion for a judgment on the pleadings, the trial court is bound by the pleadings. See Stockman v. Echlin, Inc., 604 So.2d 393, 394 (Ala.1992).’ ”

Medlock v. Safeway Ins. Co. of Alabama, 15 So.3d 501, 507 (Ala.2009) (quoting Universal Underwriters Ins. Co. v. Thompson, 776 So.2d 81, 82–83 (Ala.2000)). Here, no evidence was presented to the circuit court. Therefore, this Court conducts a de novo review, looking only to the pleadings to determine whether the circuit court erred in entering a judgment in favor of NGO.

Discussion

WDC argues that the circuit court exceeded its discretion by granting NGO's motion for a judgment on the pleadings because, it says, the undisputed facts in the pleadings do not support the circuit court's judgment as a matter of law. We agree.

The circuit court based its judgment on the door-closing statute because WDC was not authorized to conduct business in Alabama. In its October 15, 2012, postjudgment motion, WDC argued that the circuit court's judgment was in contravention of the Commerce Clause of the United States Constitution because WDC's business activities in Alabama involved interstate commerce. In TradeWinds, supra, this Court explained the interstate-commerce exception to the door-closing statute:

“ ‘A foreign corporation that has not been authorized to do business in Alabama is not barred from enforcing its contracts in the courts of this state, however, “unless the business conducted here by [the] nonqualified corporation [ ] is considered ‘intrastate’ in nature.” ' Building Maintenance Pers., Inc. v. International Shipbuilding, Inc., 621 So.2d 1303, 1304 (Ala.1993) (quoting Wise v. Grumman Credit Corp., 603 So.2d 952, 953 (Ala.1992)). This is because ‘businesses engaged in interstate commerce are protected by the commerce clause in the United States Constitution, U.S. Const., Art. I, § 8, cl. 3, and are therefore immune from the effects of the “door closing” statutes.’ Stewart Mach. & Eng'g Co. v. Checkers Drive In Rests. of N. America, Inc., 575 So.2d 1072, 1074 (Ala.1991).”

999 So.2d at 878–79. WDC's postjudgment motion was denied by operation of law pursuant to Rule 59.1, Ala. R. Civ. P.; therefore, its argument regarding the Commerce Clause exception to § 10A–2–15.02(a) was not considered by the circuit court. Barter v. Burton Garland Revocable Trust, 124 So.3d 152, 156 (Ala.Civ.App.2013) (“In the present case, the trial court permitted the postjudgment motion to be denied by operation of law, which indicates that the trial...