Harper v. Brown, Stagner, Richardson, Inc.
Harper v. Brown, Stagner, Richardson, Inc.
Opinion
Rolfe C. Harper III appeals from the Mobile Circuit Court's order granting a motion filed by Brown, Stagner, Richardson, Inc. ("BSR"), to dismiss Harper's declaratory-judgment action.
In December 2000, during a postjudgment deposition taken of Harper for the purpose of attempting to collect the judgment, BSR's attorney learned that Harper Sales was the name under which Redmond Brokerage Company Incorporated did business. At this time BSR's attorney raised the possibility that Harper could be held personally liable for the judgment against Harper Sales in the Jefferson Circuit Court. In January 2001, BSR recorded its judgment against Harper Sales in the Probate Court of Mobile County.
On February 2, 2001, BSR's counsel informed Harper's counsel that BSR believed that Harper was personally liable for the judgment against Harper Sales on the breach-of-contract action and that he could also be personally liable for the breach of the contract between Harper Sales and BSR and for fraudulently misrepresenting the corporate status of Harper Sales. On February 9, 2001, Harper filed a declaratory-judgment action against BSR in the Mobile Circuit Court, seeking to determine the rights, status, and other legal relations between the two parties. Harper asserted that he did not commit fraud by operating as "Harper Sales" or breach the contract between Harper Sales and BSR and that, therefore, he should not be held personally liable for the judgment in the Jefferson Circuit Court against Harper Sales. At the time Harper filed his declaratory-judgment action, no case involving Harper individually and BSR was pending or had been decided.
On March 6, 2001, BSR filed a Rule 60(b), Ala.R.Civ.P., motion in the Jefferson Circuit Court seeking leave to amend its complaint against Harper Sales to add as a defendant Harper in his individual capacity. The amended complaint alleged that Harper had personally breached the contract between BSR and Harper Sales and that he had committed fraud by using the trade name, Harper Sales, rather than the correct corporate name, Redmond Brokerage Company Incorporated, and it sought to pierce the corporate veil. The Jefferson Circuit Court allowed BSR to amend its complaint and purported to enter a summary judgment in favor of BSR on all counts.
In April 2002, more than a year after it sought to amend its complaint in the Jefferson Circuit Court to add Harper as an individual defendant, BSR filed a motion in the Mobile Circuit Court to dismiss Harper's declaratory-judgment action on the grounds that there was no justiciable controversy between the parties and that *Page 223 Harper did not have standing to bring the action.
On September 6, 2002, this Court reversed the Jefferson Circuit Court's summary judgment entered on BSR's amended complaint. See Harper v.Brown, Stagner, Richardson, Inc., [Ms. 1011109, Sept. 6, 2002]
For a declaratory-judgment action to withstand a motion to dismiss there must be a bona fide justiciable controversy that should be settled. Anonymous v. Anonymous,
The lack of a justiciable controversy may be raised by either a motion to dismiss or a motion for a summary judgment. Smith, 309 So.2d at 427. See also Rule 12, Ala.R.Civ.P.; Rule 56, Ala.R.Civ.P. However, a motion to dismiss is rarely appropriate in a declaratory-judgment action.Wallace v. Burleson,
"A controversy is justiciable where present `legal rights are thwarted or affected [so as] to warrant proceedings under the Declaratory Judgment statutes.'" Creola Land Dev., Inc., 828 So.2d at 288 (quoting Town ofWarrior v. Blaylock,
A declaratory-judgment action will not lie for an anticipatory claim.Creola Land Dev., Inc., 828 So.2d at 288 (citing City of Dothan v.Eighty-Four West, Inc.,
The trial court's ruling in a declaratory-judgment action carries no presumption of correctness; we must view the allegations in Harper's complaint as true and view them most strongly in his favor. Creola LandDev., Inc., supra, and Nance, supra. Therefore, we must assume, as Harper alleged, that BSR mentioned Harper's individual liability during his December 2000 deposition and that BSR's attorney told Harper's attorney in February 2001 that BSR believed Harper was personally liable for the judgment against Harper Sales in the Jefferson Circuit Court. Furthermore, we need only determine whether Harper could have possibly prevailed in his declaratory-judgment action. Based upon the specific statements of BSR's attorney and the actions taken by BSR before Harper filed the complaint in his declaratory-judgment action, we hold that Harper could possibly have prevailed on that action.
The sole issue presented in this case is whether a justiciable controversy existed between Harper in his individual capacity, and BSR at the time Harper filed *Page 225 the declaratory-judgment action. While BSR correctly recognizes that a declaratory-judgment action will not lie for an anticipatory claim, it fails to recognize that one of the purposes of the Declaratory Judgment Act is to enable parties between whom litigation is inevitable to have the issues speedily determined to prevent unnecessary injuries.
The facts in this case indicate that a lawsuit by BSR against Harper was inevitable. Four things happened before Harper's declaratory-judgment action was filed that could lead one to believe that BSR intended to sue Harper in his individual capacity. First, there was the judgment in the Jefferson Circuit Court for BSR in the amount of $113,155.34, against Harper Sales, a company with which Harper was closely affiliated. Second, there was Harper's postjudgment deposition in which BSR's attorney indicated that Harper may be personally liable for the judgment against Harper Sales. Third, there was the rendering of the judgment against Harper Sales in the Probate Court of Mobile County, where Harper resides. Fourth, there was the statement by BSR's attorney to Harper's attorney on February 2, 2001, in which BSR's attorney stated that he thought Harper was personally liable for the judgment against Harper Sales on the breach-of-contract claim. All of these factors, viewed together, indicate that BSR's suing Harper was inevitable.
BSR also asserts that a "justiciable controversy" exists only after a legal action has been filed. However, a controversy is also justiciable where an individual's legal rights are frustrated or affected and a controversy does not require the filing of a legal action. To require the actual filing of a lawsuit before a declaratory-judgment action could be filed would thwart the primary purpose of the Declaratory Judgment Act, which is to afford relief from uncertainty and insecurity with respect to the rights, status, and other legal relations of parties. Furthermore, the Declaratory Judgment Act is to be read liberally, which also militates against the narrow interpretation BSR advocates.
Harper sought to have a court clarify the uncertain issue whether he could be individually liable for the judgment in the Jefferson Circuit Court against Harper Sales. Based upon the relationship and legal history between BSR and Harper Sales and upon Harper's involvement in that relationship, there appeared to be a definite and concrete controversy regarding the legal relationship between BSR and Harper. Additionally, all of the facts giving rise to the claim BSR eventually filed against Harper in September 2001 occurred before the declaratory-judgment action was filed. Harper was not required to wait until BSR sued him to have his rights and obligations determined. Harper's declaratory-judgment action was an alternative relief available to him, it was not dependent upon the absence of another adequate remedy.
Motions to dismiss are rarely appropriate in a declaratory-judgment action; this is one of those cases in which such a motion is not appropriate. Thus, the trial court's dismissal of Harper's declaratory-judgment action was reversible error.
REVERSED AND REMANDED
Moore, C.J., and See, Brown, and Harwood, JJ., concur.
Reference
- Full Case Name
- Rolfe C. Harper III v. Brown, Stagner, Richardson, Inc.
- Cited By
- 28 cases
- Status
- Published