253 So. 3d 438
Ala. Civ. App.2017Background
- In June–November 2015 Montoya sued Ivan and April Phillips in Shelby District Court; the Phillipses filed a seven-count counterclaim (negligence, wantonness, breach of contract, misrepresentation, breach of express and implied warranty, slander of title). Trial was set for November 19, 2015.
- The Phillipses’ counsel moved to withdraw on November 4, 2015; the district court granted the motion but did not continue the trial.
- On November 19, 2015 the district court entered an order stating the Phillipses “failed to appear to plead or otherwise defend” and entered a default judgment for Montoya for $9,502.50. The district-court order did not mention or expressly resolve the Phillipses’ counterclaims.
- On September 29–30, 2016 Ivan Phillips sued Montoya in Shelby Circuit Court asserting the same seven causes of action that had been asserted as counterclaims in the district-court action. Montoya moved to dismiss or, in the alternative, for summary judgment on res judicata grounds, attaching the district-court filings.
- The circuit court treated Montoya’s motion as one for summary judgment and granted it, dismissing Phillips’s circuit-court complaint as barred by res judicata; Phillips appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether res judicata bars Phillips’s circuit action | Phillips: no prior judgment on the merits because counterclaims were not adjudicated; default judgment is not a bar | Montoya: prior district-court default judgment disposed of the Phillipses’ counterclaims and thus precludes relitigation | Held: Affirmed — res judicata applies; default judgment is a prior judgment on the merits and implicitly denied the counterclaims |
| Whether a default judgment constitutes a judgment on the merits for res judicata | Phillips: default is not a merits adjudication of counterclaims that were not litigated | Montoya: default judgment counts as a prior judgment on the merits for res judicata | Held: Default judgment qualifies as a prior judgment on the merits for res judicata purposes (citing McDonald) |
| Whether district court had subject-matter jurisdiction over counterclaims | Phillips: counterclaims might seek damages beyond district-court limits, so district court lacked jurisdiction | Montoya: counterclaims requested unspecified damages; no showing they sought beyond district limits, so district court had jurisdiction | Held: No evidence of damages beyond district limits; jurisdiction not defeated |
| Whether the record shows the district court implicitly denied the counterclaims | Phillips: district-court order did not mention counterclaims; no evidence counterclaims were resolved; thus no final judgment | Montoya: entry of default for failure to appear implicitly denied counterclaims; those claims could have been litigated in the district court | Held: Majority — implicit denial is sufficient; dissent disagreed, arguing the default order did not resolve counterclaims and the district action may not be final |
Key Cases Cited
- Ex parte Price, 244 So.3d 949 (Ala. 2017) (treating motion relying on outside filings as summary-judgment motion)
- Lloyd Noland Found., Inc. v. HealthSouth Corp., 979 So.2d 784 (Ala. 2007) (summary-judgment review principles)
- General Motors Corp. v. Kilgore, 853 So.2d 171 (Ala. 2002) (standard for reviewing summary judgment)
- American Liberty Ins. Co. v. AmSouth Bank, 825 So.2d 786 (Ala. 2002) (summary-judgment evidentiary standard)
- Ex parte Chesnut, 208 So.3d 624 (Ala. 2016) (elements of res judicata)
- McDonald v. U.S. Die Casting & Dev. Co., 628 So.2d 433 (Ala. 1993) (default judgment is a prior judgment on the merits for res judicata)
- Chapman Nursing Home, Inc. v. McDonald, 985 So.2d 914 (Ala. 2007) (articulating res judicata elements)
- Jones v. DeRamus, 199 So.3d 74 (Ala. Civ. App. 2015) (implicit denial of counterclaim when judgment follows evidentiary hearing)
- Horton v. Perkins, 17 So.3d 235 (Ala. Civ. App. 2009) (same)
- Roberts v. Security Trust & Sav. Bank of Brilliant, 470 So.2d 674 (Ala. 1985) (judgment for plaintiff implicitly denies counterclaim)
- Hingle v. Gann, 368 So.2d 22 (Ala. 1979) (boundary judgment without money damages implicitly denied counterclaims for damages)
- Ervin v. Stackhouse, 64 So.3d 666 (Ala. Civ. App. 2010) (failure to award damages can imply denial)
- Ex parte Moody, 620 So.2d 28 (Ala. Civ. App. 1993) (compulsory counterclaim jurisdictional considerations)
- Kirtland v. Fort Morgan Authority Sewer Servs., Inc., 524 So.2d 600 (Ala. 1988) (factors for setting aside default)
- Houston Health Clubs, Inc. v. First Court of Appeals, 722 S.W.2d 692 (Tex. 1986) (different presumptions for finality after conventional trial vs default/summary judgment)
- Chase Manhattan Bank, N.A. v. Lindsay, 787 S.W.2d 51 (Tex. 1990) (summary/default judgments that do not mention counterclaims leave them unadjudicated)
- Connecticut Nat'l Bank v. Oxenhandler, 30 Conn. App. 541, 621 A.2d 300 (Conn. App. 1993) (default for failure to appear implicitly includes judgment on counterclaims)