Ex Parte Puccio
Ex Parte Puccio
Opinion
John Puccio petitions this Court for a writ of mandamus ordering the trial court to grant his Rule 12(b)(2), Ala. R. Civ. P., motion to dismiss him as a defendant in an action brought by Richard Grant and Abigayle Grant on the basis that the trial court lacks personal jurisdiction over him.
On October 22, 2003, the Grants sued Cambridge Credit Counseling Corporation, Puccio, Jessica Spence, and several fictitiously named parties in the Montgomery Circuit Court, seeking damages and injunctive relief arising out of the Grants' participation in a debt-management program offered by Cambridge Credit for the payment of credit-card debt.1 On June 1, 2004, the Grants filed a motion for leave to amend their complaint.2 On June 2, 2004, Puccio moved to dismiss the complaint on the ground that as to him the trial court lacked personal jurisdiction. Puccio attached to his motion to dismiss an affidavit, stating that he had no bank accounts or other financial interests in Alabama and that he had never personally spoken to the Grants. He also stated that he had executed the service agreement between the Grants and Cambridge Credit in the course and scope of his duties as president of Cambridge Credit. On June 8, 2004, the trial court granted the Grants' motion to amend. In their amended complaint, the Grants asserted Cambridge Credit was an alter ego of Puccio. On June 25, 2004, Puccio filed a motion entitled "Supplement to Motion to Dismiss," again addressing whether Puccio had minimum contacts with Alabama so as to subject him to jurisdiction here and addressing the alter-ego argument raised in the Grants' amended complaint. On July 6, 2004, Puccio filed a "Notice of Filing Corrected Exhibit 1 to Motion to Dismiss." To that filing Puccio attached a certified copy of a motion to dismiss with attachments, which he had filed in the United States District Court when the action had been removed to the federal court. One of the attachments is a signed affidavit by Puccio, which contains substantially the same factual averments as the affidavit he filed on June 2, 2004. However, the affidavit attached to the July 6, 2004, filing was not a sworn affidavit.3 At a hearing on July 7, 2004, the parties addressed the minimum-contacts argument and the alter-ego argument. The trial court denied the motion to dismiss on August 19, 2004. Puccio timely filed his petition on September 27, 2004. *Page 1072
A petition for a writ of mandamus is the appropriate remedy by which to challenge an interlocutory order on the issue of personal jurisdiction, and a writ will issue only upon a showing of "(a) a clear legal right in the petitioner to the order sought, (b) an imperative duty upon the respondent to perform, accompanied by a refusal to do so, (c) the lack of another adequate remedy, and (d) the properly invoked jurisdiction of the court." Ex parte McInnis,
Ex parte McInnis,"In considering a Rule 12(b)(2), Ala. R. Civ. P., motion to dismiss for want of personal jurisdiction, a court must consider as true the allegations of the plaintiff's complaint not controverted by the defendant's affidavits, Robinson v. Giarmarco Bill, P.C.,
74 F.3d 253 (11th Cir. 1996), and Cable/Home Communication Corp. v. Network Productions, Inc.,902 F.2d 829 (11th Cir. 1990), and `where the plaintiff's complaint and the defendant's affidavits conflict, the . . . court must construe all reasonable inferences in favor of the plaintiff.' Robinson,74 F.3d at 255 (quoting Madara v. Hall,916 F.2d 1510 ,1514 (11th Cir. 1990)). `For purposes of this appeal [on the issue of in personam jurisdiction] the facts as alleged by the . . . plaintiff will be considered in a light most favorable to him [or her].' Duke v. Young,496 So.2d 37 ,38 (Ala. 1986)."
In Ex parte Covington Pike Dodge, Inc.,
"[I]f the defendant makes a prima facie evidentiary showing that the Court has no personal jurisdiction, `the plaintiff is then required to substantiate the jurisdictional allegations in the complaint by affidavits or other competent proof, and he may not merely reiterate the factual allegations in the complaint.' Mercantile Capital, LP v. Federal Transtel, Inc.,
193 F.Supp.2d 1243 ,1247 (N.D.Ala. 2002) (citing Future Tech. Today, Inc. v. OSF Healthcare Sys.,218 F.3d 1247 ,1249 (11th Cir. 2000)). See also Hansen v. Neumueller GmbH,163 F.R.D. 471 ,474-75 (D.Del. 1995) (`When a defendant files a motion to dismiss pursuant to Fed.R.Civ.P.12 (b)(2), and supports that motion with affidavits, plaintiff is required to controvert those affidavits with his own affidavits or other competent evidence in order to survive the motion.') (citing Time Share Vacation Club v. Atlantic Resorts, Ltd.,735 F.2d 61 ,63 (3d Cir. 1984))."
In his motion to dismiss filed on June 2, 2004, Puccio argued that, as a corporate officer of Cambridge Credit, he lacked sufficient minimum contacts with Alabama to satisfy the requirements of personal jurisdiction. However, Puccio's motion to dismiss the original complaint is moot because the Grants subsequently amended their complaint. An amended complaint supersedes the previously filed complaint and becomes the operative pleading, unless it subsequently is modified. Graysonv. Hanson,
Due-process concerns are satisfied when a nonresident defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe Co.v. Washington,
Elliott,"`General contacts, which give rise to general personal jurisdiction, consist of the defendant's contacts with the forum state that are unrelated to the cause of action and that are both "continuous and systematic." Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408 ,414 n. 9, 415,104 S.Ct. 1868 ,80 L.Ed.2d 404 (1984)[citations omitted]. Specific contacts, which give rise to specific jurisdiction, consist of the defendant's contacts with the forum state that are related to the cause of action. Burger King Corp. v. Rudzewicz,471 U.S. 462 ,472-75 ,105 S.Ct. 2174 ,85 L.Ed.2d 528 (1985). Although the related contacts need not be continuous and systematic, they must rise to such a level as to cause the defendant to anticipate being haled into court in the forum state. Id.'"
In Thames v. Gunter-Dunn, Inc.,
"In this case there was no allegation that the corporate entity was a sham or a facade intended only to protect the individual appellees. Nor was there a showing that the appellees engaged in any business for personal gain or profit *Page 1074 or any transaction which was outside the scope of their employment with the bank. Thus the corporation could not be said to have acted as an agent of the individual appellees so as to become their alter egos and to warrant personal jurisdiction over them."
Ex parte Sekeres,
In their amended complaint, the Grants state that Puccio established Cambridge Credit as a
"27. Cambridge Credit Counseling Corp. promotes itself as America's premier Not-For-Profit Debt Management organization.
"28. Yet, in order to keep and grow its large fees from consumers such as the Grants, Cambridge Credit, its officers, agents, and employees have entered into a pattern and practice of fraudulent conduct, which included the fraud practiced upon the Grants, resulting in increasingly aggressive self-serving deals for Cambridge Credit Counseling Corp.
"29. The Grants discovered the fraudulent conduct within a year of filing this lawsuit.
"30. On information and belief, the Grants allege that Cambridge Credit, John Puccio, and other affiliated entities are part of a single commercial enterprise linked by common ownership of, and active and pervasive control by, John Puccio, and characterized by a confused intermingling of activity in the defendants' common enterprise with other affiliated entities.
"31. Cambridge Credit's Form 9906 for 2001 reports salaries of $624,000.00 for President John Puccio and the same amount for his brother Richard Puccio as Strategic Planner.
"32. Defendant John Puccio as the President of Cambridge Credit participated in defrauding customers by scheming and orchestrating a plan and pattern of training employees to behave with deceptive trade practices.
"33. Defendant John Puccio as the President of Cambridge Credit participated in the breach of fiduciary duty as evidenced by his signing of the service agreement.
"34. By virtue of being the alter ego of Cambridge Credit, John Puccio is enabled to intertwine the operations of various entities for the purpose of defrauding plaintiffs and others similarly situated, as set forth in this complaint.
"35. John Puccio, as the alter ego of the corporation is, and has been, conducting, managing, and controlling the affairs of the corporation, as though it were his own for-profit business.
"36. On information and belief, profits made by Cambridge Credit are siphoned away by John Puccio, his family relatives, and other affiliated for-profit entities through compensation, employee benefit packages, and/or other means.
"37. On information and belief, Cambridge Credit Counseling Corporation is the alter ego of John Puccio and organized and operated as part of a common enterprise with other affiliated entities.
"38. On information and belief, the ultimate mission of the common enterprise is to assert the non-profit and tax-exempt status of Cambridge Credit to allow for unregulated and unscrupulous business practices.
"39. On information and belief, avoidance of federal regulation has allowed enormous business asset growth for Cambridge Credit; John Puccio, the ultimate intended beneficiary of that growth, has directly or indirectly profited by the siphoning of Cambridge Credit's assets achieved through the organization's non-profit status."
Puccio correctly argues that, as a corporate officer of Cambridge Credit, *Page 1076
he lacks sufficient minimum contacts with Alabama to satisfy the requirements of personal jurisdiction. Personal jurisdiction over an individual corporate officer or employee "may not be predicated upon jurisdiction over the corporation itself."Thames, supra,
It is undisputed that Cambridge Credit is subject to personal jurisdiction in Alabama. Cambridge Credit has made appearances in court without objection.7 An objection based on lack of personal jurisdiction is waived if it is not timely asserted. Rule 12(h)(1), Ala. R. Civ. P.; see also Pardazi v. Cullman Med.Ctr.,
We note that Puccio's second motion to dismiss does not specifically address the factual allegations raised in the Grants' amended complaint that Cambridge Credit is Puccio's alter ego, i.e., that Puccio established Cambridge Credit as a 501(c)(3) entity to use the tax-exempt status and exemption from certain federal regulations to operate Cambridge Credit as his own for-profit business. Rather, Puccio simply argued that he was not an Alabama resident and that he had insufficient contacts with Alabama to subject him to jurisdiction of its courts and "the addition of the alter ego allegation . . . still does not vest this Court with personal jurisdiction." In construing the allegations in the Grants' complaint not controverted by Puccio as true, as we are required to do for the purposes of Puccio's motion to dismiss, Ex parte Covington Pike Dodge, supra, we cannot say that the trial court erred in denying the motion.
Puccio contends that the Grants failed to allege that Cambridge Credit was a sham or a facade corporation in order to support their alter-ego theory. Although the Grants do not specifically use the words "sham" or "facade," it is abundantly clear from their amended complaint that they are alleging that Puccio used the corporate status of Cambridge Credit as his alter ego to avoid personal liability and to gain personal profits. "`Although the limitation of personal liability is a valid corporate attribute, the corporate entity will be disregarded when it is used solely to avoid personal liability of the owner while reserving *Page 1077
to the owner the benefits gained through the use of the corporate name.'" Culp v. Economy Mobile Homes, Inc.,
At the hearing on the motion to dismiss, the trial court indicated that dismissal would be premature because the Grants had not had ample opportunity to fully investigate their claims. Puccio argues that the trial court's characterization of a Rule 12(b)(2), Ala. R. Civ. P., motion as premature eviscerates the intent of Rule 12(b), which, he says, requires a motion to dismiss for lack of personal jurisdiction to be filed at this stage of the proceedings.8 He argues that requiring a defendant to raise the threshold defense of lack of personal jurisdiction early in the proceedings ensures that the trial court has personal jurisdiction over the defendant before it addresses the merits of the case. However, even though a defendant timely files a motion to dismiss, a plaintiff may be entitled to discovery solely on the issue of personal jurisdiction raised in the motion to dismiss. See generally Exparte Covington Pike Dodge, Inc., supra; Ex parte TroncalliChrysler Plymouth Dodge, Inc.,
Puccio has not shown that he has a clear and undisputable right to a dismissal of the Grants' claims against him for lack of personal jurisdiction. Therefore, the petition for the writ of mandamus is denied. However, we note:
Ex parte McInnis, supra,"A denial of a Rule 12(b)(2)[, Ala.R.Civ.P.,] motion to dismiss for lack of personal jurisdiction is interlocutory and preliminary only. After such a denial, the continuation of personal jurisdiction over a defendant who appropriately persists in challenging it in the defendant's answer to the complaint and by motion for summary judgment or at trial depends on the introduction of substantial evidence to prove the plaintiff's jurisdictional allegations in the plaintiff's complaint."
PETITION DENIED.
NABERS, C.J., and SEE, LYONS, HARWOOD, STUART, SMITH, and PARKER, JJ., concur.
WOODALL, J., concurs in the result.
Reference
- Full Case Name
- Ex Parte John Puccio. (In Re Richard Grant and Abigayle Grant v. Cambridge Credit Counseling Corporation).
- Cited By
- 28 cases
- Status
- Published