Ex parte The Boys and Girls Clubs of South Alabama, Inc. (In re: State of Alabama et al. v. The Boys and Girls Clubs of South Alabama, Inc., and The Community Foundation of South Alabama)
1130051
SUPREME COURT OF ALABAMA
July 3, 2014
SPECIAL TERM, 2014; REL: 07/03/2014; (Baldwin Circuit Court, CV-13-900812)
PETITION FOR WRIT OF MANDAMUS
MURDOCK, Justice.
The Boys and Girls Clubs of South Alabama, Inc. (“BGCSA“), seeks a writ of mandamus ordering the Baldwin
I. Facts and Procedural History
This is the third action that has come before this Court arising out of a dispute between BGCSA and the Eastern Shore Clubs concerning certain funds. Many of the pertinent underlying facts were provided in our opinion in the first action, The Boys & Girls Clubs of South Alabama, Inc. v. Fairhope-Point Clear Rotary Youth Programs, Inc., 114 So. 3d 817 (Ala. 2012). In that case we explained that BGCSA
“operates several facilities in Mobile County to promote, as stated in its certificate of incorporation, ‘the health, social, educational, vocational, and character development’ of youth in Baldwin and Mobile Counties. In 1996, it was also operating facilities in Baldwin County. In particular, it operated a facility in Fairhope sometimes referred to as the ‘Fairhope Boys and Girls Club’ (‘the Fairhope Club‘). It operated another such facility in Daphne sometimes referred to as the ‘Daphne Boys and Girls Club’ (‘the Daphne Club‘).”
On November 13, 1996, B.R. Wilson, Jr., one of the incorporators and a principal benefactor of BGCSA, executed a deed transferring to BGCSA approximately 17 acres of real estate (“the property“). Contemporaneously with the execution of the deed, Wilson gave a letter to BGCSA that stated Wilson‘s intentions and stipulations concerning his gift of the property. The letter stated that BGCSA was “‘free to ultimately dispose of this property,‘” but that it was Wilson‘s “‘desire and understanding that [BGCSA] will use the proceeds from any such disposition for [BGCSA‘s] facilities and/or activities in the Fairhope-Point Clear area.‘” 114 So. 3d at 818. Wilson died in 1997.
“In March 2000, [BGCSA] sold the property and deposited the proceeds into three separate accounts, two of which were separately earmarked for the Daphne Club and for the Fairhope Club. However, on May 31, 2009, the Club discontinued its operations in Daphne and Fairhope, citing ‘operating deficits’ as a contributing factor. It transferred the remainder of the proceeds from the sale of the property to an account in the Community Foundation of South Alabama (‘the bank‘).
“On June 1, 2009, the facilities in Daphne and Fairhope were reopened by volunteers and former [BGCSA] personnel, who began operating the youth centers under their own independent management structures. Subsequently, some of these individuals
incorporated Rotary Inc. and Wilson Inc., under which they continued to operate the facilities in Fairhope and Daphne, respectively.”
On April 22, 2010, the Eastern Shore Clubs filed an action in the Baldwin Circuit Court seeking declaratory and injunctive relief against BGCSA. The Eastern Shore Clubs alleged that BGCSA “ha[d] used,” or, perhaps, was “anticipat[ing] using,” the proceeds from the sale of the property (“the Wilson funds“) for its own operations, rather than for the benefit of the Eastern Shore Clubs. A bench trial ensued. On March 15, 2012, the Baldwin Circuit Court entered a judgment in which it concluded that Wilson‘s intent was that the Wilson funds should be used for the “exclusive benefit of the Fairhope and Daphne Clubs.” The Baldwin Circuit Court ordered the disbursal of the remainder of the Wilson funds, namely $1,104,081.78, as follows: $893,377.02 to Rotary Inc. and $210,704.76 to Wilson Inc.
BGCSA appealed the Baldwin Circuit Court‘s judgment to this Court. In Boys & Girls Clubs of South Alabama, this Court vacated the Baldwin Circuit Court‘s judgment and dismissed the case and the appeal. This Court reasoned that
“No act of a nonprofit corporation and no conveyance or transfer of real or personal property to or by a nonprofit corporation shall be invalid by reason of the fact that the corporation was without capacity or power to do an act or to make or receive a conveyance or transfer, but lack of capacity or power may be asserted:
“(1) In a proceeding by a member or a director against the nonprofit corporation to enjoin the doing or continuation of unauthorized acts, or the transfer of real or personal property by or to the nonprofit corporation. ...
“(2) In a proceeding by the nonprofit corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through members in a representative suit, against the officers
or directors of the nonprofit corporation for exceeding their authority. “(3) In a proceeding by the Attorney General, as provided in this chapter, to dissolve the nonprofit corporation, or in a proceeding by the Attorney General to enjoin the nonprofit corporation from performing unauthorized acts, or in any other proceeding by the Attorney General.”
Based on the requirements of
“It is undisputed that [BGCSA] is a nonprofit corporation within the purview of the [Alabama Nonprofit Corporation Law], and [the Eastern Shore Clubs] do not claim, or purport, to be members or directors of [BGCSA]. Thus, it is clear that Rotary Inc. and Wilson Inc. are not such persons as are authorized by
§ 10A-3-2.44 to commence an action against [BGCSA] relating to the transactions challenged in this case. In short, ... Rotary Inc. and Wilson Inc. have failed to demonstrate that they are proper parties to sue [BGCSA] over the disposition of the [Wilson funds]. Consequently, the complaint filed by Rotary Inc. and Wilson Inc. failed to invoke the subject-matter jurisdiction of the trial court.”
114 So. 3d at 821 (footnote omitted).
On May 16, 2013, BGCSA filed in the Mobile Circuit Court a declaratory-judgment action against the Eastern Shore Clubs seeking entitlement to the Wilson funds and the right to spend the funds as it sought fit (“the Mobile action“). On June 6,
On June 13, 2013, the Eastern Shore Clubs filed a motion to dismiss the Mobile action contending that, under the principles stated in Boys & Girls Clubs of South Alabama, BGCSA lacked standing to bring the action. On August 26, 2013, the Mobile Circuit Court denied the Eastern Shore Clubs’ motion.
The Eastern Shore Clubs petitioned this Court for a writ of mandamus, which sought an order directing the Mobile Circuit Court to dismiss the Mobile action for the same reason they asserted in their motion to dismiss. On December 9, 2013, this Court denied the mandamus petition by order (no. 1121540).
On June 13, 2013, the attorney general‘s office, on behalf of the Eastern Shore Clubs,1 filed a declaratory-judgment action in the Baldwin Circuit Court against BGCSA and
II. Standard of Review
“‘[A] writ of mandamus is an extraordinary remedy, which requires the petitioner to demonstrate a clear, legal right to the relief sought, or an abuse of discretion.’ Ex parte Palm Harbor Homes, Inc., 798 So. 2d 656, 660 (Ala. 2001). Mandamus is the appropriate remedy to correct a trial court‘s failure to properly apply
§ 6-5-440 . See Ex parte Chapman Nursing Home, Inc., 903 So. 2d 813 (Ala. 2004); Ex parte Breman Lake View Resort, L.P., 729 So. 2d 849, 852 (Ala. 1999).”
Ex parte J.E. Estes Wood Co., 42 So. 3d 104, 108 (Ala. 2010).
The contentions of the parties are straightforward. BGCSA contends that the present action is barred by
“No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times.”
BGCSA notes that the Mobile action and the present action are both declaratory-judgment actions seeking to determine who is entitled to the Wilson funds and that the same principal parties -- BGCSA and the Eastern Shore Clubs -- are involved in both actions. BGCSA further observes that the Mobile action was filed on May 16, 2013, while the present action was filed on June 13, 2013. BGCSA argues that all the requirements of
The attorney general and the Eastern Shore Clubs do not dispute that the two actions concern the same cause. Indeed, in their brief the attorney general and the Eastern Shore
The attorney general and the Eastern Shore Clubs contend that their action is not barred because, they argue, the Mobile Circuit Court lacked subject-matter jurisdiction over the Mobile action in that BGCSA lacked “standing” to file the Mobile action under the principles enunciated in Boys & Girls Clubs of South Alabama. The attorney general and the Eastern Shore Clubs in essence argue that BGCSA brought an action against the Eastern Shore Clubs under
We begin our analysis by reiterating that the opinion in Boys & Girls Clubs of South Alabama, upon which the Eastern Shore Clubs seek to rely, was a plurality opinion. As such, that opinion does not represent binding precedent. Furthermore, although that plurality opinion was premised on a purported lack of “standing” by the Eastern Shore Clubs, precedent from this Court makes it clear that a deficiency in the plaintiffs’ claim of the nature at issue in that action was a failure to state a claim upon which relief could be granted, not a lack of standing. We have noted that “our
“‘Standing goes to the existence of sufficient adversariness to satisfy both Article III case-or-controversy requirements and prudential concerns. In determining standing, the nature of the injury asserted is relevant to determine the existence of the required personal stake and concrete adverseness. ... The focus of the cause-of-action inquiry must not be confused with standing — it does not go to the quality or extent of the plaintiff‘s injury, but to the nature of the right asserted.‘”
42 So. 3d at 1220 (quoting 13A Charles Alan Wright, Arthur K. Miller, and Edward H. Cooper, Federal Practice & Procedure § 3531.6 (2008)) (emphasis omitted; emphasis added).
The argument of the attorney general and the Eastern Shore Clubs is also problematic because it incorrectly characterizes the nature of the Mobile action. As noted above, the attorney general and the Eastern Shore Clubs assume that
Instead, BGCSA seeks a judgment clarifying its right to the Wilson funds as a result of the doubt created by the March 15, 2012, judgment of the Baldwin Circuit Court that this Court vacated in Boys & Girls Clubs of South Alabama. The Mobile Circuit Court observed in its order denying the Eastern Shore Clubs’ motion to dismiss the Mobile action that
Because the Mobile action is not governed by
Having confirmed the fact that the Mobile action is properly before the Mobile Circuit Court, we address the only remaining question: Whether
The only difference between the two actions noted by the Eastern Shore Clubs -- the presence of the attorney general as a party in the present action but not in the Mobile action -- has no bearing on a determination of whether the present action is subject to abatement because the attorney general does not claim any independent interest in the subject of the cause of the two actions.
This Court has observed that “[t]he application of
This Court has explained:
“Our caselaw requires that ‘there is a substantial identity of parties in the two actions.’ Ex parte Ford Motor Credit Co., 772 So. 2d 437, 440 (Ala. 2000). Substantial identity requires that the ‘“‘parties be identical, sometimes referred to as the mutuality of estoppel requirement.‘“’ Stewart v. Brinley, 902 So. 2d 1, 10 (Ala. 2004) (quoting McMillian v. Johnson, 878 F. Supp. 1473, 1520 (M.D. Ala. 1995)). ‘“An exception is made to this requirement for parties in privity with a party to the prior action.“’ Stewart, 902 So. 2d at 10 (quoting McMillian, 878 F. Supp. at 1520) (emphasis omitted). A party is deemed to be in privity with a party to a prior action when there is ‘“‘an identity of interest in the subject matter of litigation.‘“’ Stewart, 902 So. 2d at 11 (quoting Hughes v. Martin, 533 So. 2d 188, 191 (Ala. 1988),
quoting in turn Issue Preclusion in Alabama, 32 Ala. L. Rev. 500, 521 (1981)). “....
“This Court has stated: ‘“‘“A person may be bound by a judgment even though not a party to a suit if one of the parties to the suit is so closely aligned with his interests as to be his virtual representative.“‘“’ Gonzalez, LLC v. DiVincenti, 844 So. 2d 1196, 1203 (Ala. 2002) (quoting Green v. Wedowee Hosp., 584 So. 2d 1309, 1315 (1991), quoting other cases).”
Greene v. Jefferson Cnty. Comm‘n, 13 So. 3d 901, 912 (Ala. 2008) (emphasis added).
Assuming, without deciding, that the attorney general has “standing” to bring the claims he asserts in the present action and that he has asserted cognizable claims in the action, those claims indisputably are asserted for the benefit of, or in derivation of the purported rights of, the Eastern Shore Clubs. Applying the foregoing principles of “privity” and “virtual representation,” it is clear that there is a “substantial identity” of parties as between the Mobile action and the present action.
Further, we note that the fact that the Eastern Shore Clubs are plaintiffs in the present action but are defendants
“This Court has held that the obligation imposed on a defendant under Rule 13(a), Ala. R. Civ. P., to assert compulsory counterclaims, when read in conjunction with
§ 6-5-440, Ala. Code 1975 , which prohibits a party from prosecuting two actions for the same cause and against the same party, is tantamount to making the defendant with a compulsory counterclaim in the first action a ‘plaintiff’ in that action (for purposes of§ 6-5-440 ) as of the time of its commencement. See, e.g., Ex parte Parsons & Whittemore Alabama Pine Constr. Corp., 658 So. 2d 414 (Ala. 1995); Penick v. Cado Systems of Cent. Alabama, Inc., 628 So. 2d 598 (Ala. 1993); Ex parte Canal Ins. Co., 534 So. 2d 582 (Ala. 1988). Thus, the defendant subject to the counterclaim rule who commences another action has violated the prohibition in§ 6-5-440 against maintaining two actions for the same cause.”
Ex parte Breman Lake View Resort, L.P., 729 So. 2d 849, 851 (Ala. 1999). Given that the claims asserted by the Eastern Shore Clubs in the present action constitute compulsory counterclaims in relation to the claims asserted by BGCSA in the Mobile action, the present action is subject to abatement under
The existence of the Mobile action requires the dismissal of the present action. See Ex parte J.E. Estes Wood Co., 42 So. 3d at 109 (observing that “where
IV. Conclusion
PETITION GRANTED; WRIT ISSUED.
Stuart, Shaw, and Wise, JJ., concur.
Bolin, Parker, Main, and Bryan, JJ., concur in the result.
Moore, C.J., dissents.