Sumblin v. Zachary Ward

1

Andy Sumblin v. Zachary Ward, as administrator of the Estate of Keith Ward

No. CL-2023-0197

Alabama Court of Civil Appeals

July 19, 2024

Appeal from Coffee Circuit Court (CV-19-900012)

LEWIS JUDGE.

Andy Sumblin appeals from a judgment entered by the Coffee Circuit Court ("the trial court") in favor of Zachary Ward as administrator of the Estate of Keith Ward ("the Estate"). We reverse the judgment and remand this cause with instructions.

Procedural History

On February 20, 2019, Sumblin d/b/a M.O.D. Sod ("Sumblin"), filed a complaint seeking to collect a debt allegedly owed by Keith Ward d/b/a Ward Lawn Care ("Ward"). After Ward failed to answer the complaint, Sumblin filed, on April 11, 2019, a motion seeking an entry of default and a default judgment. On August 21 2019, Sumblin filed a summaryjudgment motion. On September 12, 2019, the trial court entered a judgment; that judgment was amended on that same day. In its final form, the judgment provided, in pertinent part:

"This matter came before the Court on the Motion for Entry of Default and for Default Judgment filed by [Sumblin] on April 11, 2019.... Having considered the Motion and all matters brought before the Court and for good cause shown, it is hereby ORDERED ADJUDGED and DECREED as follows:

"1. The Motion for entry of default is GRANTED.

"2. The Motion for default judgment is GRANTED and a final default judgment is ENTERED in favor of . Sumblin and against . Ward in the amount of Thirteen Thousand Two Hundred Forty-Three and 74/100 Dollars ($13,243.74), plus costs."

(Capitalization in original.)

Over two years later, on January 6, 2022, "the Estate of Keith Ward" filed a motion seeking to vacate the trial court's judgment pursuant to Rule 60(b)(6), Ala. R. Civ. P., along with exhibits in support of the motion. On March 24, 2022, Sumblin filed a response in opposition to the Rule 60(b)(6) motion and moved the trial court to strike the exhibits attached thereto. On March 25, 2022, the Estate responded to Sumblin's March 24, 2022, filing.

After a hearing on March 29, 2022, the trial court entered an order on April 6, 2022, vacating the September 12, 2019, judgment. On April 15, 2023, Sumblin filed a suggestion of the death of Ward and a motion requesting that the Estate be substituted as the defendant. That motion was granted on April 18, 2022. An answer to the complaint was thereafter filed on September 14, 2022. After a trial, the trial court entered a judgment on February 17, 2023, providing:

"This matter came before the Court for bench trial on [Sumblin's] complaint seeking damages for an unpaid debt owed by Defendant Ward Lawn Care and Defendant Ward. Upon considering the evidence[,] the Court awarded damages to [Sumblin] in the amount of $12,091.39.

"[Sumblin] sought damages for an unpaid debt of $8,594.95, plus interest[,] attorney fees, and court costs. Because the evidence showed [Ward] was likely incompetent beginning in November 2017, the Court declined to award damages for interest accrued past December 2017.

"The evidence showed ... Ward ... owned and operated a lawn care business, Ward's Lawn Care. [Sumblin's] business records indicated [Ward] purchased sod for several years and routinely paid the bill after an invoice was sent to [Ward]. During late 2017, [Ward] became delinquent on paying his bill. [Sumblin] mailed [Ward] several invoices and a letter demanding payment. Despite the debt owed, [Ward] did not respond to the letter and [Sumblin] continued to sell sod to [Ward]. [Sumblin] filed suit and [Ward] failed to answer. A default judgment was entered against [Ward] but was later set aside after the Court learned [Ward] had become stricken with brain cancer and had died. The evidence showed [Ward] likely lacked sound mental capacity after he underwent two surgeries to remove a brain tumor. Testimony showed [Ward] began experiencing symptoms of confusion, memory loss, and paralysis during the same time he uncharacteristically failed to pay his bills. Because the evidence showed [Ward's] mental capacity began to fail in November 2017, the Court finds [Ward] should not be liable for interest accrued after December 2017.

"[Sumblin] requested the ... [E]state be liable for the unpaid debt. The evidence showed [Ward] purchased sod on behalf of his business, 'Ward's Lawn Care.' [Ward] paid for the sod using checks labeled with the company's name[,] 'Ward's Lawn Care.' [Sumblin] provided business records showing that 'Ward's Lawn Care' owed the debt. [Sumblin's] sod farm manager testified [Ward] purchased sod at the reduced merchant rate because he owned and operated a landscape company, 'Ward's Lawn Care.' Finally, the [Estate] provided evidence showing [Ward] had properly registered the lawn care business, 'Ward's Lawn Care' with the Alabama Secretary of State.

"Alabama appellate courts have held that 'permitting the piercing of the corporate veil is not a power that is lightly exercised. The concept that a corporation is a legal entity existing separate and apart from its shareholders is well settled in this state.' Co-Ex Plastics, Inc. v. AlaPak, Inc., 536 So.2d 37 (Ala. 1988). Alorna Coat Corp. v. Behr, 408 So.2d 496 (Ala. 1981). The Courts have established that 'the corporate veil may be pierced where a corporation is set up as a subterfuge, where shareholders do not observe the corporate form, where the legal requirements of corporate law are not complied with, where the corporation maintains no corporate records, where the corporation maintains no corporate bank account, where the corporation has no employees, where corporate and personal funds are intermingled and corporate funds are used for personal purposes, or where an individual drains funds from the corporation.' See, e.g., Forester &Jerue, Inc. v. Daniels, 409 So.2d 830 (Ala. 1982); Hamrick v. First National Bank of Stevenson, 518 So.2d 1242 (Ala. 1987); Deupree v. Ruffino, 505 So.2d 1218 (Ala. 1987); Messick v. Moring, 514 So.2d 892 (Ala. 1987); East End Memorial Association v. Egerman, 514 So.2d 38 (Ala. 1987).

"While the Court recognizes [Sumblin] is owed a significant unpaid debt, this Court is reluctant to create the slippery slope precedent of piercing the corporate veil based on the evidence presented in this case. Upon consideration of the foregoing, it is ORDERED, ADJUDGED, and DECREED:

"1. The Court finds in favor of [Sumblin] and against Defendant Ward's Lawn Care.

2. [Sumblin] is awarded damages in the amount of $12,091.39. (The total damages were calculated as follows: $8,594.95 unpaid debt: plus $388.92 in finance charges through December 2017; plus $412.36 court costs: plus $2,695.16 attorney fee calculated by figuring 30% of unpaid debt.)

"3. The Court denies [Sumblin's] request to find ...Ward or his estate individually liable."

"4. Any other relief sought and not granted herein is denied." (Capitalization in original.)

Sumblin timely filed his notice of appeal to this court on March 30, 2023.

Discussion

I. Order Setting Aside the Default Judgment

On appeal, Sumblin first argues that the trial court erred by granting the Rule 60(b)(6) motion to set aside the default judgment. The Estate argues that, because Sumblin did not file a petition for a writ of mandamus from the order granting the Rule 60(b)(6) motion, he may not challenge that order on appeal. We note, however, that our supreme court has explained:

"[O]rdinarily 'interlocutory orders merge with final judgments' and, therefore, most interlocutory orders may be appealed once a final judgment is entered. McCormack v. AmSouth Bank, N.A., 759 So.2d 538, 541 (Ala. 1999). See also Barnes v. George, 569 So.2d 382, 383 (Ala. 1990) (allowing challenge to grant of Rule 60(b)(2) motion for new trial after judgment in the new trial)."

Caton v. City of Pelham, 329 So.3d 5, 19 (Ala. 2020); see also R.E. Grills, Inc. v. Davison, 641 So.2d 225, 227 (Ala. 1994) ("[U]nless in the circumstances of the case a petition for a writ of mandamus is the only procedure available to secure relief, a party does not waive a right to appeal from a trial court's interlocutory order or ruling solely by not filing such a petition."). Therefore, we will proceed to address the merits of Sumblin's argument.

Sumblin specifically argues that the Estate failed to meet its burden of introducing arguments and evidence of all three factors set forth in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600 (Ala. 1988). See Sampson v. Cansler, 726 So.2d 632, 633 (Ala. 1998) (explaining that, "[a]lthough Kirtland involved a Rule 55(c)[,Ala. R. Civ. P.] motion to set aside a default judgment, [the supreme court] also appl[ies] the Kirtland analysis to Rule 60(b)[, Ala. R. Civ. P.] motions to set aside default judgments").

In Kirtland, our supreme court set forth the following mandatory factors that a trial court must consider when ruling on a motion to set aside a default judgment: "1) whether the defendant has a meritorious defense; 2) whether the plaintiff will be unfairly prejudiced if the default judgment is set aside; and 3) whether the default judgment was a result of the defendant's own culpable conduct." Kirtland, 524 So.2d at 605; see also Sampson v. Cansler, 726 So.2d 632, 633 (Ala. 1998). Sumblin initially focuses on whether the Estate showed the presence of a meritorious defense.

With respect to a party's burden of proving the Kirtland factors, particularly proving a meritorious defense, our supreme court has explained:

"'[T]he trial court has broad discretion ... in deciding whether to deny or to grant a motion to set aside a default judgment. In exercising that discretion, the trial court must apply the three-factor analysis set forth in Kirtland. However, the law is well settled that "'"in order to

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