Title: Ex parte Allen M. Overton and Cindy Waldrop. PETITION FOR WRIT ( 299 ) OF MANDAMUS: CIVIL (In re: Allen M. Overton and Cindy Waldrop v. Prince Family Housing, Inc, Michelle Brown and North River Insurance Company)

State: alabama

Issuer: Alabama Supreme Court

Document:

11/09/07overton
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, 2007-2008
_________________________
1050973
_________________________
Ex parte Allen M. Overton and Cindy Waldrop
PETITION FOR WRIT OF MANDAMUS
(In re:  Allen M. Overton and Cindy Waldrop
v.
Prince Family Housing, Inc., Michelle Brown,
and North River Insurance Company)
____________________
1051505
____________________
Allen M. Overton and Cindy Waldrop
v.
2
North River Insurance Company
(Appellate proceedings from Marshall Circuit Court, CV-00-
200107)
BOLIN, Justice.
Allen M. Overton and Cindy Waldrop petition for a writ of
mandamus compelling Judge Tim Jolley of the Marshall Circuit
Court to vacate his order of March 6, 2006, granting the Rule
60(b), Ala. R. Civ. P., motion of North River Insurance
Company ("North River") and vacating default judgments entered
in 2002 against North River's insured, Prince Family Housing,
Inc. ("Prince"), and Prince's employee, Michelle Brown. Prince
is in the business of selling manufactured homes. We grant the
petition and issue the writ.
Overton and Waldrop also filed an appeal, case no.
1051505, out of an "abundance of caution" in the event this
Court determined that the trial court's order setting aside
the default judgments was an appealable order. An order
granting a motion seeking relief from a judgment under Rule
60(b), 
Ala. 
R. 
Civ. 
P., 
is 
generally 
considered 
an
interlocutory 
order 
because 
further 
proceedings 
are
contemplated by the trial court; therefore, such an order is
not appealable. R.E. Grills, Inc. v. Davison, 641 So. 2d 225
(Ala. 1994); Ex parte Short, 434 So. 2d 728 (Ala. 1983).  It
1050973, 1051505
3
is only in some circumstances that an order granting relief
under Rule 60(b) is treated as a final judgment for purposes
of appeal. See Sanders v. Blue Cross-Blue Shield of Alabama,
Inc., 368 So. 2d  8 (Ala. 1979). In Sanders, the plaintiff
filed an action in the circuit court, alleging tort claims
against Blue Cross-Blue Shield. Those claims were subsequently
dismissed.  The plaintiff then filed an action in the district
court, alleging breach-of-contract claims against Blue Cross-
Blue Shield.  Blue Cross-Blue Shield pleaded the affirmative
defense of res judicata.  Before the district court ruled, the
plaintiff returned to the circuit court and filed a Rule 60(b)
motion seeking to set aside the dismissal.  The circuit court
granted the motion, noting that the plaintiff had not alleged
breach of contract in his complaint in the circuit court. The
circuit court's order was final because no further proceedings
were contemplated in the circuit court and the plaintiff
intended to proceed in the district court, the contract claim
being within the jurisdictional limit of the district court.
Therefore, this Court denied Blue Cross-Blue Shield's petition
for a writ of mandamus, holding that the Rule 60(b) order
granting relief was sufficient to support an appeal. In the
1050973, 1051505
4
present case, however, review by a petition for a writ of
mandamus is appropriate.  Therefore, we dismiss the appeal. 
North 
River 
issued 
a 
commercial 
general-liability
insurance policy to Prince effective for the year ending
January 5, 2000. The insurance policy provided that North
River would pay those sums the insured became legally
obligated to pay as damages because of bodily injury or
property damage covered by the insurance policy.  
Blythe Insurance Agency obtained the policy for Prince
through an insurance broker, Acordia of Michigan; Denis Porter
was the Blythe employee who sold the policy to Prince.
Acordia 
represents 
insurance 
companies that offered a
specialty line of insurance for mobile-home retail-sales
dealers.  Acordia would send Blythe a statement each month,
and Blythe would collect the premiums from the insured (in
this case, Prince) and send Acordia a check for the amount
received less its commission. Blythe's name and address
appeared on the face of the policy issued to Prince in the
space designated "Agent Name and Address." Blythe is referred
to as the "agent" on five other pages in the policy. Blythe's
address is the only address contained in the policy.     
1050973, 1051505
5
In May 2000, First Merit Bank, N.A., sued Prince and its
employees, Michelle Brown and Patrick Boatright, alleging that
the defendants misrepresented certain information to the bank
to obtain financing for a mobile home purchased by Overton for
Waldrop. Merit Bank claimed breach of the universal lender-
dealer agreement it had entered into with Prince and sought
damages in the amount of the unpaid loan plus interest, costs,
and attorney fees. Prince gave Blythe notice of the action;
Blythe, in turn, gave notice to Crum & Forster Insurance
Company on June 14, 2000, by facsimile. North River is a
subsidiary of Crum & Forster. According to the testimony of
Phillip Blythe, the owner of Blythe, Acordia had instructed
Blythe to send all notices of claims involving insureds
directly to the insurance company involved. Phillip Blythe
testified that in accordance with those instructions, Blythe,
acting on behalf of its insured, would forward claims directly
to the insurance company.  Blythe used its own forms for such
notices.
On June 15, 2000, Crum & Forster acknowledged receipt of
the notice of Merit Bank's action against Prince, denied
Prince's request for coverage, and refused to provide it with
1050973, 1051505
6
a defense.  Blythe was sent a copy of the denial letter.
Overton and Waldrop concede that the policy did not provide
coverage for the claims Merit Bank asserted against Prince.
On December 11, 2000, Prince and its employees filed a
third-party complaint against Overton and Waldrop, claiming
that Overton and Waldrop made false representations to them,
which they, in turn, submitted to Merit Bank.  On July 6,
2001, Overton and Waldrop filed a counterclaim against Prince
and its employees, including claims of breach of contract and
fraud. Overton and Waldrop state that Prince and its employees
failed to appear and defend the counterclaim, and on August
27, 2001, they filed a motion for a default judgment against
Prince and its employees. On August 28, 2001, counsel for
Overton and Waldrop received documents as a result of a third-
party subpoena that indicated that North River had issued the
insurance policy to Prince and that Blythe was the agent. That
same day, counsel faxed a copy of the motion for a default
judgment and mailed a copy of the motion and counterclaim to
Blythe. On October 1, 2001, counsel sent another letter to
Blythe, enclosing copies of the applications for entry of
default and supporting affidavits.
1050973, 1051505
7
On December 3, 2001, Prince and Brown each filed Chapter
7 bankruptcy petitions.  Overton and Waldrop filed motions
with the bankruptcy court seeking relief from the automatic
stay in both cases. In separate agreements filed in the two
bankruptcy cases, Overton and Waldrop entered into agreements
with Prince and Brown providing that the motions for relief
from the automatic stay could be granted for the sole purpose
of allowing Overton and Waldrop to pursue their claims against
Prince and Brown in the state court.  The agreements further
provided that Overton and Waldrop could "seek to enforce any
judgment obtained against the debtor solely against any
available proceeds of insurance, but the automatic stay shall
continue in effect as to any attempts to collect any monies
from the debtor or assets of the debtor or to otherwise
enforce any judgment against the debtor." On February 26,
2002, the bankruptcy court approved the agreements.
On April 25, 2002, default judgments were entered in
favor of Overton and Waldrop and against Prince and Brown, in
the total amount of $3 million. Overton was awarded $250,000
in compensatory damages and $250,000 in punitive damages
against Brown and the same amount against Prince. Waldrop was
1050973, 1051505
Boatright is now deceased.
1
North River sought relief from the default judgments
2
under Rule 60(b)(4) and (b)(6).  Specifically, North River
argued that the default judgments were void under Rule
60(b)(4) because the default judgments were entered in
violation of the automatic bankruptcy stay "because they were
based on the showing made by the plaintiffs at a hearing that
was held while the stay was in effect."  North River also
argued that the default judgments were void under Rule
60(b)(4) because providing notice of the action against Prince
and Brown to Blythe, as the independent agent,  was not notice
to North River.  Under Rule 60(b)(6), North River argued that
the default judgments should be set aside because the damages
awards were excessive and because North River did not have an
opportunity to appear and defend its interest because of lack
8
awarded $500,000 in compensatory damages and $500,000 in
punitive damages against Brown and the same amount against
Prince. No default judgment was entered against Boatright.1
On June 6, 2002, Overton and Waldrop filed a garnishment
proceeding against North River, which responded: "No coverage.
No contractual liability to [Prince and Brown]." They filed a
motion contesting North River's answer to the garnishment
process, and the trial court established the issue before it
as: "Whether or not North River Insurance Co. owes coverage to
Prince Family Housing under the allegations in this case as
proven."  On October 28, 2003, North River filed a Rule 60(b),
Ala. R. Civ. P., motion to set aside the default judgments
entered against its insureds.2
1050973, 1051505
of notice. Last, North River argued that the default judgments
should be set aside because Overton and Waldrop were to give
notice of their third-party complaint against Prince and Brown
to "all creditors and other parties in interest" according to
the bankruptcy court's order and that failure to notify North
River amounted to a "fraud upon the court."        
9
Overton and Waldrop state that, over the next three
years, they and North River engaged in discovery regarding the
issue to be tried in the garnishment proceedings and that on
March 6, 2006, the trial court entered an order purporting to
set aside the default judgments, stating:
"This matter is before the Court on the motion
of the garnishee, The North River Insurance Company
('North River'), for relief from default judgments
under Ala. R. Civ. P. 60(b).  After considering the
evidence, briefs, and oral argument of the parties,
the Court concludes that North River is entitled to
relief from judgments under Rule 60(b)(4), because
North River did not receive notice before, or
promptly after, the default judgments were entered.
The judgments are void for that reason.  Moreover,
even if the judgments were not void, the Court
concludes that North River would be entitled to
relief under Rule 60(b)(6), for the reasons advanced
by North River in its motion and supporting briefs.
The Court notes that, in reaching this conclusion,
the Court applied the factors specified in Kirtland
v. Ft. Morgan Authority Sewer Service, Inc., 524 So.
2d 600 (Ala. 1988), and determined that all of those
factors support an order granting relief from the
default judgments entered in this case.  North
River's motion for relief from the judgments is due
to be, and the same hereby is, Granted."
1050973, 1051505
10
Because North River was not a party to the action
resulting in the default judgments in favor of Overton and
Waldrop and against Prince and Brown, on May 23, 2007, we
issued the following show-cause order to North River:
"Respondent/Appellee, North River Insurance
Company, is hereby ordered to show cause, in
writing, within 21 days of the date of this order,
why this cause should not be dismissed for lack of
standing.  Upon motion of North River Insurance
Company as garnishee, the trial court entered an
order setting aside default judgments in favor of
Allen Overton and Cindy Waldrop and against Prince
Family Housing, Inc., and Michelle Brown.  As the
garnishee, North River Insurance Company answered
that it had no contractual duty or obligation to its
insured, Prince Family Housing, Inc.  It appears to
this Court that, pursuant to Rule 60(b), Ala. R.
Civ. P., North River Insurance Company is without
standing to attack the underlying judgment, to which
it appears North River Insurance Company is a
stranger."
In response, North River asserts that it had standing to
seek relief from the judgments under the principles applied by
this Court in Ex parte Employees Mutual Casualty Co., 845 So.
2d 773 (Ala. 2002). It also cites decisions from other
jurisdictions to support a finding that North River has
standing 
to 
seek 
relief 
from 
the 
judgments. 
In 
the
alternative, North River argues that a nonparty may have
standing to seek relief from a judgment under extraordinary
1050973, 1051505
11
circumstances based on Grace v. Bank Leumi Trust Co. of New
York, 443 F.3d 180 (2d Cir. 2006).
Overton and Waldrop filed a motion for leave to respond
to the show-cause order, and we granted their motion. Overton
and Waldrop argue that Employers Mutual does not support the
proposition that North River had standing to file a Rule 60(b)
motion in the underlying action, to which it was not a party.
They also argue that North River had the opportunity to defend
its insureds (Prince and Brown) and that it had notice of the
claims against the insureds before the garnishments were
filed.
Although neither party in its briefs to this Court raises
the issue whether North River had standing to file a Rule
60(b), Ala. R. Civ. P., motion to seek relief from judgments
entered in an action to which it was not a party, standing is
a component of subject-matter jurisdiction and can be raised
at any time.  State v. Property at 2018 Rainbow Drive, 740 So.
2d 1025 (Ala. 1999).
Rule 60(b) provides, in pertinent part:
"On motion and upon such terms as are just, the
court may relieve a party or a party's legal
representative from a final judgment, order, or
proceeding for the following reasons: (1) mistake,
1050973, 1051505
12
inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence which by due diligence
could not have been discovered in time to move for
a new trial under Rule 59(b); (3) fraud (whether
heretofore denominated intrinsic or extrinsic),
misrepresentation, or other misconduct of an adverse
party; (4) the judgment is void; (5) the judgment
has been satisfied, released, or discharged, or a
prior judgment upon which it is based has been
reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective
application; or (6) any other reason justifying
relief from the operation of the judgment. ..."
(Emphasis added.) North River was not a party to the action
resulting in the judgments in favor of Overton and Waldrop and
against Prince and Brown. North River was also not a "party's
legal representative" as that term is used in Rule 60(b).  A
legal representative under Rule 60(b) is "one who by operation
of law is tantamount to a party in relationship to the matter
involved in the principal action."  Western Steel Erection Co.
v. United States, 424 F.2d 737, 739 (10th Cir. 1970)
(interpreting Rule 60(b), Fed. R. Civ. P.). "A 'legal
representative' is one 'who stands in the place and stead of'
another, such as an heir at law."  Mobay Chem. Co. v. Hudson
Foam Plastics Corp., 277 F. Supp. 413, 416 (D.C. N.Y.
1967)(citing Ingerton v. First Nat'l Bank & Trust Co. of
Tulsa, 291 F.2d 662, 664 (10th Cir. 1961)).  A trustee in
1050973, 1051505
13
bankruptcy is a party's legal representative for the purposes
of Rule 60(b).  See  Heyman v. M.L. Marketing Co., 116 F.3d 91
(4th 
Cir. 
1997)(trustee 
assumed 
the 
role 
of 
debtor-
corporation's management and became the legal representative
of the bankruptcy estate for purposes of Rule 60(b), giving
the trustee standing to file a Rule 60(b) motion). 
North River cites Ex parte Employers Mutual Casualty Co.,
supra, in support of its position. In Employers Mutual, the
insurer denied coverage and declined to provide its insured a
defense. The insured eventually consented to a judgment
against it and in favor of the plaintiff.  In a separate
action, the insured sued its insurer and the plaintiff in the
underlying action.  The plaintiff filed a cross-claim against
the insurer, and the insurer filed a counterclaim against its
insured and a cross-claim against the plaintiff.  The insurer
sought a declaratory judgment on the issue whether there was
collusion to defraud involved in the consent judgment between
the insured and the plaintiff.  The trial court struck the
defense on the ground that the insurer could not challenge the
judgment because it had declined to defend the insured and had
failed to intervene as a party in the underlying action or to
1050973, 1051505
14
challenge or appeal the consent judgment.  The insured filed
a petition for a writ of mandamus, and this Court granted the
petition, holding that the insurer, in the separate action,
was not barred from asserting the defense to collusion to
defraud.  In response to the trial court's conclusion that the
insurer could not attack the consent judgment because it had
not intervened in the underlying action to challenge it, this
Court stated: "Indeed, intervention would have been required
to bring a challenge under the rule mentioned by the trial
court -- Rule 60(b), Ala. R. Civ. P. -- because that rule
applies only to parties or their legal representatives."  845
So. 2d at 776.
North River cites Employers Mutual in support of its
contention that "it was unnecessary for North River to
intervene, because it became a party to the action against the
insureds when the garnishments were issued in that action."
(Response to show cause order, p. 5.) However, Employers
Mutual actually supports the position that North River did not
have standing to file a Rule 60(b) motion seeking relief from
the default judgments entered in favor of Waldrop and Overton
and against Prince and Brown.  North River did not intervene
1050973, 1051505
15
in the underlying action, and as the garnishee, it was not a
party or a party's legal representative for the purposes of
seeking relief from the default judgments under Rule 60(b).
"Plaintiffs cite Rule 60(b)[, Fed. R. Civ. P.,]
as granting to this court the authority to modify
the prior consent decree in order to 'relieve a
party or his legal representative from a final
judgment, order, or proceeding ... [for] any ...
reason justifying relief from the operation of the
judgment.' Plaintiffs would have us apply this rule
even to those plaintiffs in the instant action who
were not parties in the original suit. We do not
read the rule so broadly. The rule specifically
refers to 'a party or his legal representative.' We
take this to mean that only one who was a party to
the original action which gave rise to the final
judgment or order now being attacked may be heard to
complain of the unfair or incorrect ramifications of
that judgment. This is especially true in cases
where, as here, even after individuals are notified
of the pendency of an action, the results of which
are potentially adverse to their interests, those
individuals voluntarily opt not to intervene in the
proceeding 
in 
order 
to 
guarantee 
that 
their
interests are adequately represented. Should this
court determine otherwise we would be faced with a
system, haunted by the spectre of uncertainty and
instability of judgments since final determinations
might be attacked by anyone at any time should the
law be changed subsequent to the original decision.
We decline to place the structure of the decision
making process on such a shaky foundation, thereby
ignoring our overriding interest in the finality and
repose of judgments."
Smith v. Missouri Pacific R.R. (No. 74-565, July 31,
1978)(W.D. La. 1978)(not reported in F. Supp.).
1050973, 1051505
16
North River cites State Farm Mutual Insurance Co. v.
Senn, 277 Ala. 508, 172 So. 2d 533 (1965), for the proposition
that an insurance company, even though a stranger to the
judgment against its insured, could move to set aside the
judgment.  In Senn, an insurance company appealed from the
trial court's order refusing to expunge a judgment against its
alleged insured. This Court held that the judgment was void on
its face because the trial court, which had ex mero motu
granted a motion for a new trial after the time for taking an
appeal had run, lacked jurisdiction. Although the insurance
company was a stranger to the underlying judgment, this Court
stated that because the judgment was void on its face, it was
a nullity, and a court, on motion of a stranger, "'may purge
the records of the court of such void and impertinent
matter.'" 277 Ala. at 511, 172 So. 2d at 535 (quoting Aiello
v. Aiello, 272 Ala. 505, 508, 133 So. 2d 18, 20 (1961)). We
note that the plaintiff in the underlying action in Senn had
argued that the insurance company was estopped from attempting
to expunge the record because it had failed to provide a
defense for its insured on the basis that he was not an
insured of the company.  Without deciding whether estoppel was
1050973, 1051505
The Committee Comments on 1973 Adoption to Rule 60(b)
3
provide:
"Subdivision (b). This subdivision specifies
certain limited grounds upon which final judgments
may be attacked, even after the normal procedures of
motion for a new trial and appeal are no longer
available. The rule simplifies and amalgamates the
procedural devices available at common law and in
chancery to make such extraordinary attacks upon the
judgment or decree.
"Present Alabama 
practice 
recognizes 
a 
number 
of
devices for making an extraordinary attack on a
judgment. A judgment at law may be challenged by: a
motion for rehearing within four months from
rendition of the judgment, Code of Ala., Tit. 7, §
279, Jones, The Four Months Statute, 1 Ala. Law. 237
(1940); a motion to vacate the judgment as void,
Griffin v. Proctor, 244 Ala. 537, 14 So. 2d 116
(1943); a petition for supersedeas, Thompson v.
Lassiter, 86 Ala. 536, 6 So. 33 (1888); a writ of
error coram nobis or coram vobis, Smith v. State,
245 Ala. 161, 16 So. 2d 315 (1944); an independent
proceeding in equity, Choctaw Bank v. Dearmon, 223
Ala. 144, 134 So. 648 (1931); and by collateral
attack, A.B.C. Truck Lines v. Kenemer, 247 Ala. 543,
25 So. 2d 511 (1946). A decree in equity may be
challenged by: a motion to vacate or expunge from
the record, Griffin v. Proctor, 244 Ala. 537, 14 So.
17
appropriate, this Court stated that the record did not
indicate whether the insurance company had failed to provide
a defense and that it would not consider statements in the
briefs not supported by the record.  Senn is distinguishable
from the present case because it was released before the
adoption of the Alabama Rules of Civil Procedure.       
3
1050973, 1051505
2d 116 (1943); a bill of review or bill in the
nature of a bill of review, Equity Rule 66,
Cunningham v. Wood, 224 Ala. 288, 140 So. 351
(1932); and by collateral attack, Merchants Nat.
Bank of Mobile v. Morris, 252 Ala. 566, 42 So. 2d
240 (1949). This wealth of devices to challenge the
judgment or decree is complicated by overlapping
grounds for relief, varying time limits, and
differences in procedural details."
18
In Kem Manufacturing Corp. v. Wilder, 817 F.2d 1517 (11th
Cir. 1987), a nonparty appealed from the district court's
denial of his Rule 60(b), Fed. R. Civ. P., motion to set aside
the judgment in an underlying action. The nonparty alleged
that the parties to the underlying action committed fraud both
against him and on the district court and that he must be
granted standing under Rule 60(b) to argue these contentions
to the district court.  The United States Court of Appeals for
the Eleventh Circuit rejected his assertion and affirmed the
order of the district court denying the nonparty's Rule 60(b)
motion.  
Kem Manufacturing had sued the defendants under various
legal theories, including fraud for allegedly converting Kem's
business opportunities to their own benefit.  The nonparty was
noticed for deposition, and his deposition was used at trial.
After trial, the federal district court, with the parties'
1050973, 1051505
19
agreement, granted a partial mistrial and scheduled another
trial limited to the remaining issues. A confession of
judgment was entered in which the defendants acknowledged a
breach of fiduciary duty and also that they owed Kem actual
damages plus interest. In his Rule 60(b) motion, the nonparty
alleged that Kem and the defendants had inflated the judgment
and that Kem and the defendants had agreed that Kem would seek
to collect the judgment against the nonparty, who was being
sued in the state court by Kem as the indemnitor of the
defendants. The federal appeals court held that the nonparty
did not have any legal relationship with any party that makes
him in any way a party's legal representative under Rule
60(b): 
"[T]he term legal representative was intended to
reach only those individuals who were in a position
tantamount to that of a party or whose legal rights
were otherwise so intimately bound up with the
parties that their rights were directly affected by
the final judgment.  See, e.g., Dunlop [v. Pan
American World Airways, Inc.], 672 F.2d [1044] at
1052 [(2d Cir. 1982)]; Western Steel Erection Co.
[v. United States], 424 F.2d [737] at 739 [(10th
Cir. 1970)]; Mobay [Chem. Co. v. Hudson Foam
Plastics Corp.], 277 F. Supp. [413] at 416 [(S.D.
N.Y. 1967)]. The final judgment in this action does
not directly affect any property or other legal
right of [the nonparty].  Nor does [the nonparty]
have any legal relationship with any party that
makes him in any way a party's legal representative.
1050973, 1051505
20
Both parties in this litigation have their own
counsel or are representing themselves, and thus
[the nonparty] cannot in any pragmatic sense be
considered the representative of any party to this
litigation.  Indeed, his position is at odds with
both parties to this litigation."
817 F.2d at 1520.
The nonparty in Kem also argued that he had privity with
the defendants as the defendants' purported indemnitor so as
to have standing to file a Rule 60(b) motion.  The court
stated:
"[The nonparty]'s argument must fail.  In the
first place, the law is unclear regarding whether a
party's indemnitor is in privity with a party to the
litigation for the purposes of standing under Rule
60(b), and this alone represents a serious obstacle
to [the nonparty]'s argument.  It is not clear that
the privity exception does any more than restate in
different language the rule that persons tantamount
to a party may be allowed standing.  But even
assuming, without deciding, that such a relationship
would be sufficient to invoke the privity exception,
[the nonparty] himself denies that he is [the
defendants'] indemnitor. [The nonparty] cannot be
considered an indemnitor.  This is especially true
where [the nonparty] himself is presumably arguing
in another court that there is no indemnity
agreement, and where [the nonparty] was quite
clearly well apprised of this action during the
course of its litigation.  The final judgment here
did not bind [the nonparty] in any way, and it most
particularly did not address, much less decide, the
question 
of 
whether 
he 
is 
[the 
defendants']
indemnitor. Moreover, those questions are apparently
already before an alternative forum well equipped to
handle them; [the nonparty] still has available an
1050973, 1051505
21
effective opportunity to raise any of the legal
claims he asked to argue in the Rule 60(b) motion.
Thus, under the circumstances of this case [the
nonparty] is not in privity with [the defendants] as
that term is used in defining standing under Rule
60(b) and therefore has no standing to bring a Rule
60(b) motion."
817 F.2d at 1520.
We agree with the Eleventh Circuit Court of
Appeals that an exception based on privity for the purposes of
standing under Rule 60(b) appears to do nothing "more than
restate in different language the rule that persons tantamount
to a party may be allowed standing."  817 F.2d at 1520.
In the alternative, North River argues that it is
entitled 
to 
standing 
as 
a 
nonparty 
because 
of 
the
extraordinary circumstances of this case. It cites Grace v.
Bank Leumi Trust Co., supra, in support of its position.
Grace relied upon Dunlop v. Pan American World Airways, Inc.,
672 F.2d 1044 (2d Cir. 1982). In Dunlop, the United States
Court of Appeals for the Second Circuit stated that standing
is generally not available for nonparties who seek relief from
a judgment under Rule 60(b), Fed. R. Civ. P. There is an
exception to the general rule when the facts demonstrate that
the nonparty movant is "sufficiently connected and identified"
1050973, 1051505
22
with the action that resulted in the judgment. 672 F.2d at
1052.
In Dunlop, airline employees filed separate complaints in
state 
court 
alleging 
individual 
instances 
of 
age
discrimination 
in 
their 
employment 
terminations.
Subsequently, the Secretary of Labor brought an age-
discrimination action against an airline on behalf of other
employees under federal employment laws. The individual
employees were unable to pursue their state-law claims while
the Secretary  and the airline engaged in extensive discovery.
The federal action was eventually settled. The individual
employees, who were not parties to the federal litigation,
moved pursuant to Rule 60(b)(6) to amend the stipulation of
settlement by making it clear that it did not as a matter of
federal law or agreement bar their pursuit of their individual
state-law age-discrimination claims against the airline. The
trial court denied their motion on the grounds that the
individual employees lacked standing to invoke Rule 60. The
Court of Appeals held that although Rule 60(b)(6) would not
ordinarily be available to nonparties to modify final
judgments, on the facts of that case the individual employees
1050973, 1051505
23
were sufficiently connected with the Secretary's action to
entitle them to standing. The Court of Appeals specifically
stated that its holding was "extremely narrow" in that the
employees' motion sought "only to modify a federal judgment
solely to protect state claims in accordance with federal law"
and was not an attempt to intervene in an ongoing action by
the Secretary to assert the employees individual federal
rights.  672 F.2d at 1053.
Grace v. Bank Leumi Trust Co., supra, also involved a
very narrow set of circumstances allowing a nonparty standing
to bring a Rule 60(b) motion seeking relief from a judgment.
Grace involved complex litigation concerning taking a public
corporation private in a freeze-out merger. In 1985, the
former minority shareholders of the corporation sued the
corporation and the majority shareholder, among others,
alleging violations of federal securities law and state law in
connection with the freeze-out merger. In 1996, the former
minority shareholders sought to add new defendants, citing
numerous mortgage and loan transactions that had taken place
subsequent to and in some cases years after the events alleged
in the original complaint.  The trial court denied the motion
1050973, 1051505
24
to amend the complaint because the original complaint did not
place the new defendants on notice of any continuing course of
conduct and the proposed amendment did not seek to state a new
legal theory or amplify facts alleged in the original
complaint; rather, it set forth a new set of operational facts
allegedly violative of a different set of laws.  Grace v.
Rosenstock, 169 F.R.D. 473 (E.D. N.Y. 1996). Because the
former minority shareholders had entered into a settlement
with the corporation, the corporation was not represented by
counsel, and the corporation was by then judgment-proof, the
former 
minority 
shareholders, 
as 
judgment 
creditors, 
attempted
to use the judgment as a predicate for a fraudulent-conveyance
action against the defendants they had attempted to add as new
defendants to their original action. The Court of Appeals
held that the defendants were "sufficiently connected and
identified with" the settlement so as to have standing to file
a Rule 60(b) motion, where the former minority shareholders'
own admissions and the evidence indicated that they had
obtained the judgment to pursue collection of that judgment by
recapturing the fraudulent conveyances from the defendants.
The court in Grace v. Bank Leumi Trust Co. made it clear that
1050973, 1051505
25
its decision was limited to the facts of that case, stating:
"We thus carve out an exceedingly narrow exception to the
well-established rule that litigants, who were neither a
party, nor party's legal representative to a judgment, lack
standing under Rule 60(b)."  443 F.3d at 189.         
We are not persuaded by North River's argument that the
particular facts in the present case support its broad
interpretation of Rule 60(b) as it pertains to standing as a
nonparty. Grace held that
"where plaintiffs enter into a settlement agreement
with a judgment-proof, pro se defendant with the
intent at the time of the settlement to collect from
a third party that allegedly received fraudulent
conveyances, and further, they attempt to use the
judgment as a predicate for a fraudulent conveyance
action against the third party, the party is
'strongly affected' by the judgment and entitled to
standing to bring a Rule 60(b) motion."
443 F.3d at 188. Emphasizing that its holding was limited to
the particular facts presented by that case, the court in
Grace stated:
"In this case, however, there is a strong
possibility that the predicate judgment that forms
the basis of this fraudulent conveyance action is
the result of a settlement process devoid of due
process protections and marred by serious procedural
shortcomings. 
There 
is 
the 
appearance 
that
plaintiffs 
and 
defendants 
entered 
settlement
negotiations with the mutual intent of laying the
1050973, 1051505
26
burden of compensating plaintiffs squarely on non-
party movants. Should the fraudulent conveyance
claims be heard on the merits, the trial court could
choose not to look behind the judgment for any
improprieties. We thus carve out an exceedingly
narrow exception to the well-established rule that
litigants, who were neither a party, nor a party's
legal representative to a judgment, lack standing to
question a judgment under Rule 60(b)."
443 F.3d at 189.
The 
present 
case 
does 
not 
involve 
a 
fraudulent
conveyance; instead, it involves a proceeding seeking to
garnish the proceeds of an insurance policy. In the
garnishment proceeding, North River is the garnishee, and the
money sought by a judgment creditor in a garnishment action
must be due to the judgment debtor absolutely and without
contingency. Escambia Chem. Corp. v. United Ins. Co. of
America, 396 So. 2d 66 (Ala. 1981).  North River's answer in
the garnishment proceeding is that it owed no coverage and had
no contractual liability to Prince and Brown.  Overton and
Waldrop have the burden of establishing that insurance
coverage is an asset of Prince and Brown, as the judgment
debtors. § 6-6-458, Ala. Code 1975; see also Sun Ins. Co. v.
Doster-Northington Drug Co., 164 Ala. 572, 51 So. 414
(1909)(when the garnishee denies under oath any liability to
1050973, 1051505
27
the principal defendant, the burden is on the plaintiff to
show the contrary). Additionally, North River can bring a
separate action seeking a declaration that there is no
insurance coverage for Overton and Waldrop's counterclaim
against Prince and Brown. In a declaratory-judgment action,
North River would not be collaterally estopped from litigating
facts relating to Prince and Brown's liability to Overton and
Waldrop because those facts were not "actually litigated" when
the default judgments were entered.  See Crowder v. Red
Mountain Mining Co., 127 Ala. 254, 260, 29 So. 847, 849-50
(1900)("The judgment in the former suit being by default, no
contest was had, and consequently no issues were litigated.
This being true, the judgment pleaded could not operate as a
bar or as an estoppel in the second suit.").
North River did not have standing to seek relief from the
default judgments entered in favor of Overton and Waldrop and
against  Prince and Brown.  Accordingly, the trial court erred
in granting North River's Rule 60(b) motion, and we grant
Overton and Waldrop's petition in case no. 1050973 and order
the trial court to vacate that order. For the reasons stated
earlier, we dismiss the appeal in case no. 1051505.   
1050973, 1051505
28
1050973 -- PETITION GRANTED; WRIT ISSUED.
1051505 –- APPEAL DISMISSED.
Cobb, C.J., and See, Lyons, Woodall, Stuart, Smith, and
Parker, JJ., concur.
Murdock, J., concurs in the result.