Title: Ali v. Williamson

State: alabama

Issuer: Alabama Supreme Court

Document:

REL: November 22, 2019
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2019-2020
_________________________
1170896
_________________________
Muhammad Wasim Sadiq Ali
v. 
Mike Williamson
Appeal from Jefferson Circuit Court
(CV-14-900197)
STEWART, Justice.
This case challenges a default judgment entered by the
Jefferson Circuit Court ("the trial court") against Muhammad
Wasim Sadiq Ali and others in favor of Mike Williamson after
a case ordered to private arbitration was remanded to the
1170896
trial court.   Ali contends that the default judgment is void
because, he says, the trial court lacked personal jurisdiction
over him. We agree, and we reverse and remand.
Facts and Procedural History
On January 10, 2014, Williamson filed a complaint in the
trial court against RPM Cranes, LLC ("RPM"), asserting claims
of breach of contract, unjust enrichment, conversion,
unreasonable 
restraint 
of 
trade, 
and 
misrepresentation 
arising
from his alleged ownership of, his employment with, and the
termination of that employment with RPM.1 The complaint
contained the following factual allegations. Williamson,
Patrick Watson, Ali, and others formed  RPM, a regional
supplier of rental cranes based in Birmingham, in 2008. 
Williamson was employed as RPM's general manager.  Ali was the
primary investor and majority owner of RPM, and Ali and Watson
allegedly represented to Williamson at the time RPM was formed
that Williamson would own a 12% share of the company. In 2012,
Watson and Ali told Williamson that, in order to accrue his
12% equity interest in RPM at the end of his five-year
employment term, he needed to pay $1,000,000, and that, if
1According to the case-action summary, RPM was served by
certified mail.
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1170896
Williamson could not pay, his employment would be terminated
unless he signed an employment agreement. On March 27, 2012,
Williamson signed an employment agreement with RPM. The
agreement contained an arbitration clause, which provided, in
part, that "[a]ny disputes arising under or in connection with
this Agreement will be resolved by final and binding
arbitration in Birmingham, Alabama, in accordance with the
rules 
and 
procedures 
of 
the 
American 
Arbitration Association."
The employment agreement also contained a noncompetition
clause that prohibited Williamson, for two years following the
termination of his employment with RPM, from competing with
RPM and from being employed by any business that is in
competition with RPM.  In 2013, a dispute between Williamson
and RPM arose concerning Williamson's insurance coverage with
respect to RPM vehicles, and Watson instructed Williamson to
obtain an insurance policy in the amount of $5,000,000 naming
RPM as an additional insured. On May 13, 2013, RPM terminated
Williamson's employment "for cause," citing his failure to
obtain an appropriate certificate of insurance.  Ali and
Watson were not named as defendants in Williamson's original
complaint.  On February 18, 2014, RPM filed a motion in the
trial court to stay the proceedings and to compel arbitration
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1170896
of all claims asserted against it by Williamson. The trial
court entered an order granting RPM's motion and staying the
trial-court 
proceedings 
pending 
the 
outcome 
of 
the 
arbitration
proceedings. 
On November 7, 2014, Williamson filed a document in the
arbitration proceedings titled "amended claim," in which
Williamson purported to add Ali and Watson as opposing parties
in the arbitration proceedings and to assert the same claims
against them that he asserted against RPM in the original
complaint. RPM's attorney agreed to accept service of the
amended claim in the arbitration proceedings on behalf of Ali
and Watson. RPM, Ali, and Watson filed an answer in the
arbitration proceedings, and they also filed a 
counterclaim in
the arbitration proceedings against Williamson, asserting
claims of breach of fiduciary duty, breach of contract, and
tortious interference with business relations. On June 23,
2015, RPM filed in the trial court a notice of filing of
bankruptcy, and the trial court later granted RPM's counsel's
motion to withdraw as counsel.  According to the submissions
of the parties in the trial court, the United States
Bankruptcy Court for the Northern District of Alabama
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dismissed RPM's bankruptcy petition on February 10, 2016,
without granting RPM a discharge.
On July 28, 2016, Williamson filed a motion in the
arbitration proceedings requesting the arbitrator to dismiss
the arbitration proceedings and to remand the case back to the
trial court, stating that RPM, Ali, and Watson had abandoned
the arbitration proceedings and had failed to defend the
claims asserted against them.  In that motion, Williamson
stated that on April 13, 2016, the United States District
Court for the Northern District of Alabama sentenced Ali to 36
months' incarceration in a federal penitentiary for an
unrelated criminal  conviction.  On August 23, 2016, the
arbitrator granted Williamson's motion, stating that "this
arbitration proceeding is hereby dismissed for failure of
[RPM, Ali, and Watson] to engage in the arbitration
proceedings at the instance of [RPM].  This case is therefore
remanded to the Circuit Court." The arbitrator's order was not
filed with the trial court until it was submitted as an
exhibit to a motion filed by Williamson on March 22, 2017.
On February 15, 2017, Williamson filed a motion in the
trial court for a default judgment against RPM, Ali, and
Watson.  Ali and Watson were not listed as defendants in the
5
1170896
trial-court 
action 
when 
Williamson 
filed 
the 
motion. 
Nonetheless, Williamson asserted in his motion that, 
"[s]ince the referral [to arbitration],[RPM, Ali,
and Watson] have willfully failed to engage in the
litigation process. Moreover, [RPM, Ali, and Watson]
have made no effort to retain any new counsel to
defend them in these proceedings. Finally, [RPM,
Ali, and Watson] have failed to appear before this
Court at any scheduled status conference hearing.
Thus, it appears that [RPM, Ali, and Watson] do not
intend to defend [Williamson's] claims in the
instant proceedings. Accordingly, default judgment
is due to be entered against [RPM, Ali, and
Watson]."
On March 21, 2017, the trial court entered a default judgment
against RPM, Ali, and Watson and in favor of Williamson in the
amount of $1,000,000. On the same day, the trial court entered
an order vacating its default judgment without explanation. 
On March 22, 2017, Williamson filed a motion in the trial
court seeking to "correct the circuit clerk's record in
accordance with [the] remanded arbitration proceedings."  In
that motion, Williamson sought to add Ali and Watson as
defendants in the trial-court proceedings on the grounds that
Ali and Watson had been served with the amended claim in the
arbitration proceedings and had appeared in the matter by
filing an answer in the arbitration proceedings. On March 23,
2017, the trial court entered an order directing the circuit
6
1170896
clerk to add Ali and Watson as defendants in the trial-court
case. According to the case-action summary, the circuit-court
clerk, pursuant to the trial court's order, added Ali and
Watson as parties on March 24, 2017; however,  in the party-
information portion of the case-action summary, the address
fields for Ali and Watson were left blank.  Nothing in the
record indicates that service of process was attempted on Ali
or Watson after the entry of the trial court's March 23, 2017,
order.  On March 28, 2017, at 9:14 a.m., Williamson filed an
amended complaint with the trial court adding Ali and Watson
as defendants.  The amended complaint mirrored the amended
claim Williamson had filed in the arbitration proceedings in
2014.  On the same day at 9:15 a.m., Williamson filed a motion
in the trial court seeking permission to serve Ali and Watson
with the amended complaint by publication pursuant to Rule
4.3, Ala. R. Civ. P. In support of the motion, Williamson
attached the affidavit of his attorney, Joseph P. Schilleci,
Jr., which included the following averments: 
"1. Each of the defendants [was] originally
served with process for the amended complaint filed
against them in the prior arbitration proceedings of
this case.  Moreover, each of the defendants
answered said amended claim at that time.  However,
since those events, the defendants have each refused
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1170896
to 
participate 
in 
this 
litigation 
both 
at
arbitration and before this court. 
"....
"3. In addition, in 2015, the United States
government charged [Ali] with multiple charges that
resulted in him pleading guilty and receiving a
sentence of 36 months incarceration.  [Ali] is
currently 
an 
inmate 
in 
the 
United 
States
Penitentiary in Atlanta, Georgia ....
"....
"5. In light of the foregoing circumstances,
especially considering that ... the defendants have
all previously been apprised of the existence of and
nature of this litigation, further attempts to
obtain personal service against them will only be
met 
by 
continued 
efforts 
to 
evade 
service. 
Accordingly, service of the amended complaint by
publication in the proceedings before the Circuit
Court is necessary."
The trial court entered an order granting Williamson's motion
on March 29, 2017. Although the trial court permitted
Williamson to serve Ali and Watson by publication, there is no
proof in the record that the notice was ever published.  See
Rule 4.3(d)(5), Ala. R. Civ. P.
On May 19, 2017, Watson filed a motion to dismiss the
amended complaint on the ground that it failed to state a
claim upon which relief could be granted as to him. The trial
court set the matter for a hearing on August 4, 2017, although
there is no indication in the record that Ali received notice
8
1170896
of the hearing. The trial court entered an order on August 23,
2017, denying Watson's motion to dismiss.  The trial court
concluded that 
"Watson, as well as ... Ali and RPM, were named as
party defendants to the amended [claim] and then
were properly served with process, answered and
defended the amended [claim] at the arbitration
phase of this case until they abandoned that
defense. This history has become the law of the case
and is not subject to re-litigation."
In the same order, the trial court also concluded that the
amended complaint did not need to be served and that the
default-judgment order that it had entered on March 21, 2017,
"should be restored immediately." Accordingly, it entered a
default judgment against RPM, Watson, and Ali, awarding
Williamson $1,000,000 
against 
the 
three 
defendants jointly 
and
severally.
On September 22, 2017, Ali filed a motion to set aside
the default-judgment order. Ali argued that he was not served
with Williamson's March 28, 2017, amended complaint; that
Williamson did not follow the proper procedures for service by
publication; that the default judgment was entered without
having provided notice of the default-judgment hearing to Ali;
and that, although he had participated in the arbitration
proceedings, he was not a party to the trial-court action.
9
1170896
Although Ali's motion to set aside the default judgment was
filed within 30 days of the entry of the default judgment as
required by Rule 55(c), Ala. R. Civ. P., we construe Ali's
motion to be one requesting the trial court to set aside a
void judgment pursuant to Rule 60(b)(4), Ala. R. Civ. P.
Hughes v. Cox, 601 So. 2d 465, 467 n.3 (Ala. 1992)("Insofar as
[a motion to set aside a default judgment] argued that the
default judgment was void we will construe it as a motion
under Rule 60(b)(4), Ala. R. Civ. P.; insofar as it sought to
have the default judgment set aside on other grounds, we will
construe it as a motion under Rule 55(c), Ala. R. Civ. P.").
Accordingly, Ali's motion was not subject to the 90-day period
prescribed by Rule 59.1, Ala. R. Civ. P., and his motion was
not denied by operation of law. On April 26, 2018, the trial
court denied Ali's motion to set aside. Ali appealed.
Standard of Review
We review de novo a trial court's ruling on a Rule
60(b)(4), Ala. R. Civ. P., motion. See Northbrook Indem. Co.
v. Westgate, Ltd., 769 So. 2d 890, 893 (Ala. 2000).
"'The standard of review on appeal
from the denial of relief under Rule
60(b)(4) is not whether there has been an
abuse of discretion. When the grant or
denial of relief turns on the validity of
10
1170896
the judgment, as under Rule 60(b)(4),
discretion has no place. If the judgment is
valid, it must stand; if it is void, it
must be set aside. A judgment is void only
if 
the 
court 
rendering 
it 
lacked
jurisdiction of the subject matter or of
the parties, or if it acted in a manner
inconsistent with due process. Satterfield
v. Winston Industries, Inc., 553 So. 2d 61
(Ala. 1989).'
"Insurance Mgmt. & Admin., Inc. v. Palomar Ins.
Corp., 590 So. 2d 209, 212 (Ala. 1991)."
Image Auto, Inc. v. Mike Kelley Enters., Inc., 823 So. 2d 655,
657 (Ala. 2001).
Analysis
Ali contends that the trial court committed reversible
error by denying his motion to set aside the default judgment
because, he argues, the trial court lacked personal
jurisdiction over him.  He contends that he did not receive
notice of the amended complaint by publication or otherwise
and that the trial court did not obtain personal jurisdiction
over him through his participation in the arbitration
proceedings.
In its judgment, the trial court concluded that, under
the law-of-the-case doctrine, the events occurring in the
arbitration proceedings, including the filing of the amended
claim and the service of the claim on Ali and Watson, "carried
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1170896
forward" in the trial-court proceedings and that, thus, the
trial court obtained personal jurisdiction over Ali and Watson
when they were served with the amended claim in the
arbitration 
proceedings. 
Regarding 
the 
law-of-the-case
doctrine, this Court has stated:
"Generally, the law-of-the-case doctrine provides
that when a court decides upon a rule of law, that
rule should continue to govern the same issues in
subsequent stages in the same case. The purpose of
the doctrine is to bring an end to litigation by
foreclosing the possibility of repeatedly litigating
an issue already decided." 
Ex parte Discount Foods, Inc., 789 So. 2d 842, 846 n.4 (Ala.
2001)(citing Murphy v. FDIC, 208 F.3d 959 (11th Cir. 2000),
and Blumberg v. Touche Ross & Co., 514 So. 2d 922 (Ala.
1987)). In this case, no judicial determination had been made
regarding the propriety of service of process on Ali, and the
issue of personal jurisdiction had not been litigated before
Ali filed his motion to set aside the default judgment.  Thus,
the trial court incorrectly applied the law-of-the-case
doctrine as a basis for concluding that service of the amended
claim in the arbitration proceedings constituted service of
process of a complaint in the trial-court proceedings. 
Furthermore, the arbitration proceedings were not
governed by the Alabama Rules of Civil Procedure, but were
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1170896
instead governed by the rules and procedures of the American
Arbitration Association.  
The Alabama Rules of Civil Procedure
"govern procedure in the circuit courts" and "effect an
integrated 
procedural 
system 
vital 
to 
the 
efficient
functioning of the courts." Rule 1, Ala. R. Civ. P. Because
the arbitrator is not a trial-court judge, the filing of the
amended claim with the arbitrator did not constitute a filing
with the trial court. See Rule 5(e), Ala. R. Civ. P. ("The
filing of papers with the court as required by these rules
shall be made by filing them with the clerk of the court
....") Accordingly, the 
amended claim filed in the arbitration
proceedings did not commence a civil action against Ali and
Watson in the trial court.  See Rule 3, Ala. R. Civ. P. ("A
civil action is commenced by filing a complaint with the
court."). Similarly, the filing of the amended claim in the
arbitration proceedings did not constitute the filing of an
amended complaint in the trial court pursuant to Rule 15, Ala.
R. Civ. P.  In addition, RPM's attorney's agreement to accept
service of the amended claim on behalf of Ali and Watson in
the arbitration proceedings did not constitute service of
process of a complaint in the trial-court case pursuant to
Rule 4, Ala. R. Civ. P. In the arbitration proceedings, there
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1170896
was no trial-court clerk to issue and sign the summons as
required by Rule 4(a)(1) and (2), and there was no record from
which proof of service could be confirmed.  The filing and
service of the amended claim in the arbitration proceedings,
therefore, did not constitute perfected service of process of
a pleading in the trial-court case. Ali's participation in the
arbitration proceedings constituted only an agreement to
arbitrate privately Williamson's claims against him, and it
did not automatically make Ali a party in the trial-court case
that Williamson and commenced against RPM.  
After compelling Williamson's claims against RPM to
arbitration, the trial court retained jurisdiction over the
trial-court case for the purpose of effectuating or reviewing
the decision of the  arbitrator. See Smallwood v. Holiday
Dev., LLC, 38 So. 3d 718, 721 (Ala. 2009)("The trial court was
required by the [Federal Arbitration Act] to give effect to
the arbitrator's decision."). See also Lewis v. Oakley, 847
So. 2d 307, 330 (Ala. 2002) ("[I]t is prudent that the trial
court retain jurisdiction pending a decision by the
[arbitrator] concerning whether it will accept this dispute
for arbitration."). See also Rule 71B and Rule 71C, Ala. R.
Civ. P. (providing for the procedure for appeal from and
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1170896
enforcement 
of 
arbitration 
awards, 
respectively). 
The
arbitrator here did not render an award but, instead, decided
to dismiss the arbitration proceedings on the ground that Ali,
Watson, and RPM had failed to engage in the arbitration
process. The arbitrator thus concluded that Ali, Watson, and
RPM had waived their right to arbitrate, and it remanded the
matter to the trial court for further proceedings. See
Smallwood, 38 So. 3d at 721 n.1("[E]ven though two parties may
have contractually agreed to arbitrate any disputes that arise
between them, such disputes may nevertheless be resolved in
the court system if either party waives its right to compel
the other to arbitrate its claims."). "The trial court was
required by the [Federal Arbitration Act] to give effect to
the arbitrator's decision," and "[t]he proper way for the
trial court to give effect to the order of the arbitrator
would have been to schedule the 'further proceedings'
necessary for [Williamson] to pursue his claims against
[RPM]." Smallwood, 38 So. 3d at 721. On remand from
arbitration, however, the trial court did not automatically
become vested with personal jurisdiction over Ali and Watson
by virtue of their voluntary agreement to arbitrate privately
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1170896
their 
dispute 
with 
Williamson 
within 
the 
arbitration
proceedings that had already commenced between Williamson and
RPM. Ali and Watson were not parties to the trial-court case,
and, in order for the trial court to obtain jurisdiction over
them, they had to be made parties to that case pursuant to the
Alabama 
Rules 
of 
Civil 
Procedure. 
Nothing 
prohibited
Williamson from requesting the trial court to lift the stay so
that he could file an amended complaint adding Ali and Watson
as defendants while the arbitration proceedings were pending,
and Williamson could have filed an amended complaint adding
Ali and Watson as defendants immediately after the arbitrator
remanded the matter to the trial court. Williamson also could
have filed an independent action against Ali and Watson. 
Although Williamson ultimately filed 
an 
amended complaint
to add Ali and Watson as parties in the trial-court case, it
is undisputed that Ali never received service of the amended
complaint. This Court has stated:
"'The failure to effect proper service
under Rule 4, Ala. R. Civ. P., deprives the
trial court of personal jurisdiction over
the defendant 
and renders 
a default
judgment void.  Cameron v. Tillis, 952 So.
2d 352 (Ala. 2006); Image Auto, Inc. v.
Mike Kelley Enters., Inc., [823 So. 2d 655
(Ala. 2001)].  In Bank of America[Corp. v.
16
1170896
Edwards, 881 So. 2d 403 (Ala. 2003)], our
supreme court also stated:
"'"'One of the requisites of
personal 
jurisdiction 
over 
a
defendant is "perfected service
of process giving notice to the
defendant 
of 
the 
suit 
being
brought." Ex parte Volkswagenwerk
Aktiengesellschaft, 443 So. 2d
880, 884 (Ala. 1983).  "When the
service 
of 
process 
on 
the
defendant is contested as being
improper or invalid, the burden
of proof is on the plaintiff to
prove that service of process was
performed correctly and legally." 
Id.  A judgment rendered against
a defendant in the absence of
personal jurisdiction over that
defendant is void.  Satterfield
v. Winston Industries, Inc., 553
So. 2d 61 (Ala. 1989)."'
"'881 So. 2d at 405, quoting Horizons 2000,
Inc. v. Smith, 620 So. 2d 606, 607 (Ala.
1993).'
"Nichols v. Pate, 992 So. 2d 734, 736 (Ala. Civ.
App. 2008)."
Volcano Enters., Inc. v. Rush, 155 So. 3d 213, 217 (Ala.
2014).  Williamson made no attempt to serve Ali with the
amended complaint by sheriff or other process server or by
certified mail before seeking permission from the trial court
to serve Ali by publication pursuant to Rule 4.3, Ala. R. Civ.
P.  In his motion to serve Ali by publication and in the
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1170896
affidavit accompanying that motion, Williamson made no
meaningful assertion that Ali had avoided service, as is
required by Rule 4.3(c).  Furthermore, it is apparent from the
affidavit itself that Williamson knew of Ali's location, i.e.,
the federal penitentiary in Atlanta, but Williamson has not
provided any proof that attempts were made to serve Ali with
process at that location. To the contrary, the motion for
service by publication was filed only one minute after
Williamson filed the amended complaint, further indicating
that there had been no attempt to serve Ali personally with
the amended complaint. It follows that the trial court
exceeded its discretion in granting Williamson's motion for
service by publication. Moreover, we find nothing in the
record showing that notice was ever published in a newspaper
as is required by Rule 4.3(d). There is no publisher's
affidavit averring that the notice was published in a
newspaper, and there is no copy of a published notice. Without
any proof of service, by publication or by other means of
service, we are unable to determine whether Ali received any
notice of the trial-court case.
This Court has stated:
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1170896
"Where it appears on the face of the record that
a judgment is void, either from want of jurisdiction
of the subject matter or of the defendant, it is the
duty of the court, on application by a party having
rights and interests immediately involved, to vacate
the judgment ... at any time subsequent to its
rendition. Sweeney v. Tritsch, 151 Ala. 242, 44 So.
184 [(1907)]; Griffin v. Proctor, 244 Ala. 537, 14
So. 2d 116 [(1943)] ...." 
McDonald v. Lyle, 270 Ala. 715, 718, 121 So. 2d 885, 887
(1960). Williamson did not file an amended complaint with the
trial court naming Ali as a defendant until March 28, 2017,
and he failed to satisfy his burden of proving that service of
process on Ali was effectuated. In fact, the record shows
serious shortcomings in the attempts to perfect service of
process. Therefore, the trial court never acquired personal
jurisdiction over Ali, and its default judgment against him is
void. 
Conclusion
The trial court erred in denying Ali's Rule 60(b)(4)
motion to set aside the default judgment against him.  That
order is reversed, and this case is remanded for further
proceedings consistent with this opinion.
REVERSED AND REMANDED. 
Parker, C.J., and Bolin, Wise, and Sellers, JJ., concur.
19