Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_08-cv-01002/USCOURTS-almd-2_08-cv-01002-0/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 18:1962 Racketeering (RICO) Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

CROOKED CREEK PROPERTIES, INC., )

)

Plaintiff, )

)

v. ) CASE NO. 2:08-CV-1002-WKW[WO]

)

RICHARD ENSLEY, et al., )

)

Defendants. )

MEMORANDUM OPINION

Before the court are two motions to dismiss, one filed by Defendants Richard Ensley,

Patricia Ensley, Anita Liles and ES Capital, LLC (Doc. # 31), and the other filed by

Defendant Charles W. Edmondson (Doc. # 22). Defendants’ arguments in support of the

motions are overlapping. Plaintiff Crooked Creek Properties, Inc., opposes the motions, and

there has been no shortage of briefs filed in support of the parties’ respective positions.

1

(Docs. # 29, 32, 34, 35, 36, 38, 39, 40, 42. ) The motions to dismiss are predicated on

2

multiple theories. In a prior Order (Doc. # 74), the court granted Defendants’ motions to

dismiss (Docs. # 22, 31). This Memorandum Opinion sets forth the court’s reasoning for its

ruling.

 The individual Defendants – Richard Ensley, Patricia Ensley, Anita Liles and Charles W.

1

Edmondson – are referred to by last name. References to “Defendants” are to all movants, and Richard

Ensley and Patricia Ensley are referred to as the “Ensleys.” The corporate parties – ES Capital, LLC,

and Crooked Creek Properties, Inc. – are identified as “ES Capital” and “Crooked Creek.”

For ease of reference, the parties’ briefs are referred to by their assigned docket number. 2

Case 2:08-cv-01002-WKW-SRW Document 79 Filed 10/28/09 Page 1 of 53
I. JURISDICTION AND VENUE

Jurisdiction is exercised pursuant to 28 U.S.C. §§ 1331, 1332 and 1367. The parties

do not contest personal jurisdiction or venue, and the court finds allegations sufficient to

support both.

II. STANDARD OF REVIEW

A Rule 12(b)(6) motion to dismiss tests the sufficiency of the complaint against the

legal standard set forth in Rule 8: “a short and plain statement of the claim showing that the

pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2). “To survive a motion to dismiss, a

complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief

that is plausible on its face.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Determining whether a complaint states

a plausible claim for relief [is] . . . a context-specific task that requires the reviewing court

to draw on its judicial experience and common sense.” Id. at 1950 (brackets added; citation

omitted). “[F]acial plausibility” exists “when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. (citing Twombly, 550 U.S. at 556). Hence, while the complaint need not set out

“detailed factual allegations,” Twombly, 550 U.S. at 555, it must provide sufficient factual

amplification “to raise a right to relief above the speculative level,” id.; see also James River

Ins. Co. v. Ground Down Eng’g, Inc., 540 F.3d 1270, 1274 (11th Cir. 2008) (holding that

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Twombly formally retired “the often-criticized ‘no set of facts’ language previously used to

describe the motion to dismiss standard.” (citation omitted)).

III. FACTS

This action hasits genesisin protracted legal proceedings litigated in the circuit courts

of Montgomery and Autauga counties. Those proceedings have involved the Supreme Court

of Alabama on five occasions and the Alabama Court of Civil Appeals on two other

occasions. The state court proceedings began in 1995 and concluded in 2007 with a decision

of the Supreme Court of Alabama. See Walden v. Hutchinson, 987 So. 2d 1109 (Ala.

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2007). At the core of these controversies was a dispute about the ownership of Danya Park

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Garden Apartments (“Danya Apartments”) located in Prattville, Alabama, and the common

stock of a corporation that, at least at one point, owned 100 percent of the fee simple title to

Danya Apartments.

In the present litigation, Defendants argue that res judicata and/or collateral estoppel

foreclose Crooked Creek from reigniting the ownership dispute. Crooked Creek disputes

Defendants’ characterization of its claims and the applicability of res judicata and collateral

estoppel. To understand the arguments, it is helpful initially to outline some of the facts of

the Montgomery County Suit and the Autauga County Suit.

 All references to the Autauga County Suit and the Montgomery County Suit are to these 3

proceedings. 

 The procedural history of Ms. Walden’s long-running dispute in both the Autauga County and 4

Montgomery County courts is succinctly set out in the Supreme Court of Alabama’s opinion.

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Case 2:08-cv-01002-WKW-SRW Document 79 Filed 10/28/09 Page 3 of 53
A. The Montgomery County Suit

The key players in the Montgomery County Suit were Hugh V. Smith, Jr. (“Smith”)

and Willadean Walden (“Walden”). (Am. Compl. ¶ 2 (Doc. # 10).) As will be discussed

later, Crooked Creek is the successor-in-interest to Ms. Walden’s ownership interest in

Danya Apartments.

In 1995, Mr. Smith sued Ms. Walden in Montgomery County, and Ms. Walden

counterclaimed. Ultimately, Ms. Walden obtained a favorable judgment against Mr. Smith

for $187,166 in the Montgomery County Suit. (Am. Compl. ¶¶ 4, 5); Walden, 987 So. 2d

at 1111. Later, the judgment being unsatisfied, Ms. Walden commenced further proceedings

in the Montgomery County Suit to collect the judgment from Mr. Smith. On August 11,

2000, to enforce the judgment, the Montgomery County Circuit Court entered a judgment

vesting Ms. Walden with ownership of all of the common stock in Mr. Smith’s corporation

(Hugh V. Smith Enterprises, Inc.), the sole asset of which was Danya Apartments. (Am.

Compl. ¶ 4; Montgomery County Suit, Order, dated Aug. 11, 2000 (Doc. # 31-2, at 120).)

On June 5, 2002, however, the Montgomery County Circuit Court vacated the portion of its

August 11, 2000 judgment that awarded Ms. Walden ownership of the common stock of

Hugh V. Smith Enterprises, Inc., and instead awarded Ms. Walden a lien on the common

stock of the corporation that owned Danya Apartments sufficient to satisfy her judgment

against Mr. Smith. (Am. Compl. ¶ 4); see also Walden, 987 So. 2d at 1112 (“‘The portion

of the order of August [11], 2000, which awards the ownership of the stock of [Hugh V.

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Smith Enterprises, Inc.] to [Ms. Walden] is vacated in favor of the award of a lien on the

stock of [Hugh V. Smith Enterprises, Inc.] . . . .” (quoting Montgomery County Suit, June

5, 2002 Order) (second and fourth alterations added; emphasis omitted)). That judgment was

affirmed by the Alabama Court of Civil Appeals in March 2003, see Walden v. Smith, 883

So. 2d 743 (Ala. Civ. App. 2003) (table), and in April 2004, the Supreme Court of Alabama

denied Ms. Walden’s certiorari petition, see Ex parte Walden, 916 So. 2d 632 (Ala. 2004)

(table). See also Walden, 987 So. 2d at 1113 (reciting procedural history).

Mr. Smith also was indebted to others, including Mr. Ensley, who is a defendant in

this action. (Am. Compl. ¶ 5.) During the pendency of the appeal in the Montgomery

County Suit, Mr. Ensley, his wife, and a third individual formed ES Capital for the purpose

of conducting a one-time mortgage transaction. See Walden, 987 So. 2d at 1113; (Am.

Compl. ¶ 5.) ES Capital loaned Hugh V. Smith Enterprises, Inc., $580,000, the proceeds of

which were disbursed, in part, to pay off an existing mortgage on Danya Apartments and to

pay Mr. Ensley for management services. (Ex. K to Compl. (Doc. # 1)); see also Walden,

987 So. 2d at 1113-14. Ms. Walden was not the recipient of any of the funds. In return for

the loan, ES Capital received a promissory note and a first mortgage on Danya Apartments,

and the mortgage was recorded on August 4, 2003. See Walden, 987 So. 2d at 1114. An

agreement for the management of the rentals and income from Danya Apartments also was

executed in conjunction with the mortgage (“management agreement”). (Am. Compl.

¶¶ 7-8.) Under the terms of the management agreement, the rental payments from Danya

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Apartments were to be used to satisfy the mortgage debt. (Ms. Walden Aff. ¶ 4 (Ex. J to

Compl.); Management Agreement (Ex. M to Compl.).)

In October 2004, Ms. Walden’sjudgment against Mr. Smith remained unsatisfied, and

she again sought relief in the Montgomery County Suit. See Walden, 987 So. 2d at 1114.

Ultimately, the parties to the Montgomery County Suit consented to the entry of a judgment

vacating the June 5, 2002 judgment and reinstating the August 11, 2000 judgment. (Am.

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Compl. ¶ 6.) As a result of the consent judgment entered on November 4, 2004, the

Montgomery County Circuit Court declared that Ms. Walden was “the owner of the common

stock in Hugh V. Smith Enterprises, Inc.,” which owned Danya Apartments, and that Ms.

Walden was, “therefore, the owner of the fee simple title to [Danya Apartments], Prattville,

Alabama.” (Montgomery County Suit, Order, dated Nov. 4, 2004 (Ex. H to Compl.).)

6

B. The Autauga County Suit

In November 2004, Ms. Walden and Danya Park Garden Apartments, Inc., “formerly

known as Hugh V. Smith Enterprises, Inc.,” filed a civil action in the Autauga County Circuit

Court, naming as defendants, among others, the Ensleys and ES Capital. (Autauga County

7

 As noted in Walden, ES Capital and the Ensleys were not parties in the Montgomery County 5

Suit and, thus, did not agree or consent to the judgment. See 987 So. 2d at 1115.

 Other than the “therefore” in the quoted portion of the November 4, 2004 consent judgment, the

6

court has been unable to locate, in this vast record, any other indication that Ms. Walden personally and

individually owned in fee simple the real estate upon which Danya Apartments rest.

 Prior to Ms. Walden filing this action, Mr. Smith died, and the executrix of his estate was 7

named as a defendant in the Autauga County Suit. (Autauga County Suit, Compl. ¶¶ 8, 12.)

Additionally, other individuals who had allegedly infringed upon Ms. Walden’s ownership interest in

Danya Apartments, but who are not parties in the case before this court, were named in the Autauga

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Suit, Compl. (Doc. # 31-2). ) In the Autauga County Suit, Ms. Walden alleged that she

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“own[ed] all of the common stock in [Danya Park Garden Apartments, Inc.],” which in turn

owned Danya Apartments. (Autauga County Suit, Compl. ¶¶ 2, 9.)

9

Ms. Walden sought to quiet title in her to Danya Apartments and to “cancel the

management agreement.” (Autauga County Suit, Compl. (Counts I, IX).) Additionally, she

brought the following claims, among others: (1) a claim against the Ensleys for conspiracy

to “defraud” Ms. Walden out of her property (i.e., Danya Apartments) “by unlawful and

fraudulent means,” which included forming ES Capital to “us[e] [Danya Apartments] as

security for the mortgage loan” (Autauga County Suit, Compl. 21, 24 (Count III)); (2) a claim

that the defendants unlawfully trespassed upon Ms. Walden’s property, i.e., Danya

Apartments (Autauga County Suit, Compl. 24 (Count IV)); (3) a claim that the defendants

took “large sums of money from [Danya Apartments’] bank account” and “convert[ed] it to

their own use” (Autauga County Suit, Compl. 26 (Count V)); (4) a claim that the defendants

in their management of Danya Apartments “wrongly and without the permission” of Ms.

County Suit. Ms. Walden alleged, for instance, that, during the pendency of the Montgomery County

Suit and prior to his death, Mr. Smith wrongfully executed a quit claim dead to Danya Apartments to an

individual named George Hutchison (“Hutchison”) “to hinder, delay or prevent her from collecting the

judgment.” (Autauga County Suit, Compl. ¶ 20.) In the Autauga County Suit, Ms. Walden alleged that

her judgment “which vested ownership of the common stock in Hugh V. Smith Enterprises, Inc. in her

. . . preceded the recordation of [Mr.] Hutchison’s quit claim deed and that the quit claim deed was

“void.” (Autauga County Suit, Compl. ¶¶ 22, 24.) Because the facts surrounding these third party

interests are not material to resolution of the present motion to dismiss, further discussion is not needed. 

 Defendants have submitted certified copies of pertinent pleadings and orders from the Autauga 8

County Suit. (See Doc. # 31-2.)

 Ms. Walden was represented by her son Gatewood Walden, Esq., in the Autauga County Suit. 

9

Mr. Walden also represents Crooked Creek in the present litigation. 

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Walden converted substantialsums of money belonging to her (Autauga County Suit, Compl.

27 (Count VII)); (5) a claim against the Ensleys for theft of property, alleging that they

exerted unauthorized control over Ms. Walden’s property by collecting the rent from Danya

Apartments tenants and retaining the rent for themselves (Autauga County Suit, Am. Compl.

(Count IX)); and (6) a claim for ejectment in which Ms. Walden contended that she was “the

owner of the common stock in Danya Park Garden Apartments, Inc., formerly Hugh V.

Smith Enterprises, Inc., and its asset, [Danya Apartments],” and that the Ensleys and ES

10

Capital had withheld and detained the apartments from her and were continuing to convert

to their own use rental income that belonged to her (Autauga County Suit, 2d Am. Compl.

(Count IX)).

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The Autauga County Circuit Court rejected Ms. Walden’s claims and entered

summary judgment in favor of the Ensleys and ES Capital. It found that the June 5, 2002

judgment entered in the Montgomery County Suit, “which served to vacate the award of

stock to [Ms.] Walden in that case and thus permit the mortgage on [Danya Apartments], was

a final judgment and was ultimately affirmed through the appeal process.” (Autauga County

Suit, Summ. J. Op. 4 (Doc. # 31-2).) The Autauga County Circuit Court further found

that the Montgomery Court’s order of June 5, 2002, became the law of the case

such that the Montgomery Court lost its jurisdiction to override that decision,

when in November 2004, it ordered the reinstatement of its prior order of

 This appears to be an admission by Ms. Walden that the fee simple title to the real estate rested 10

in the corporation. The same admission appears in the pleadings in this case.

 The counts in the complaint and amendments are misnumbered. 11

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August 2000 thereby again awarding the common stock to [Ms.] Walden but

this time in derogation of the rights of certain Defendants in this cause who

now had an interest in the property, none of whom were parties to the

Montgomery litigation.

(Autauga County Suit, Summ. J. Op. 5, dated Dec. 2006 (Doc. # 31-2).) The Autauga

County Circuit Court also upheld the validity of the ES Capital mortgage on Danya

Apartments and the management agreement. It ordered

[t]hat the mortgage in favor of ES Capital, LLC is hereby adjudicated as a

good and valid mortgage on [Danya Apartments] as more particularly

described herein above. The mortgage is adjudicated as a superior lien to the

claims of the Plaintiffs and to claims of Defendant George Hutchison and/or

his assigns. The Court further finds that the management agreement executed

contemporaneously with the mortgage is otherwise valid and is due to be

enforced according to its terms.

(Autauga County Suit, Summ. J. Op. 6.) Summary judgment was entered in favor of the

Ensleys and ES Capital “as to all claims[.]” (Autauga County Suit, Summ. J. Op. 6 (¶ 3).)

On post-judgment cross-motions, the Autauga County Circuit Court denied Ms.

Walden’s motion to vacate, but granted ES Capital’s motion requesting an order directing

Ms. Walden not to interfere with the management of Danya Apartments during the pendency

of any appeal. The Autauga County Circuit Court ruled:

Plaintiff, her attorney and/or representatives shall not attempt to intercept any

further rents from said tenants nor attempt to change the locks on the offices

of said apartments or in any way interfere with the operation of said

apartments by Defendant ES Capital, LLC such that said Defendant shall be

entitled to all income received from the apartments which shall be applied

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toward the payment of its mortgage, the operating cost of said apartments and

otherwise pursuant to the management agreement and the other loan

documents executed contemporaneously with said mortgage.

(Autauga County Suit, Order ¶ 3, dated Jan. 2007 (Doc. # 31-2).)

The summary judgment entered in favor of the Ensleys and ES Capital in the Autauga

County Suit was affirmed on appeal by the Supreme Court of Alabama in November 2007.

See Walden, 987 So. 2d at 1122. The supreme court addressed Ms. Walden’s quiet-title

claim as pertained to the Ensleys and ES Capital. See id. at 1116. Ms. Walden argued that

12

the doctrine of lis pendens operated to cut off entirely their interests in Danya Apartments.

See id. at 1120. She contended that the Montgomery County Circuit Court’s November 4,

2004 consent judgment – entered more than seven months after the supreme court affirmed

and denied certiorari review in that case – made her the “lawful owner” of Danya Apartments

and invalidated ES Capital’s mortgage. See id. at 1120. The supreme court assumed without

deciding that the November 2004 consent judgment entered in the Montgomery County Suit

was valid, but nonetheless held that Ms. Walden could not prevail: “[Ms.] Walden does not

explain how the doctrine of lis pendens operates to invalidate a mortgage taken before the

end of an appellate process that is finally resolved in favor of the mortgagee.” Id. at 1121.

It explained:

Although ES [Capital] received its mortgage on June 29, 2003, after a final

judgment in [the Montgomery County Suit], and while that judgment was

under appellate review, that litigation was concluded by the judgment of this

 As noted by the Supreme Court of Alabama, this was the only claim Ms. Walden briefed. See 12

Walden, 987 So. 2d at 1116.

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Court on April 16, 2004, in a manner favorable to ES [Capital]. In other

words, ES [Capital] took its mortgage, subject to the risk that the judgment of

June 5, 2002, which gave Walden only a lien on the apartments, would be

reversed on appeal. That did not happen, of course. Instead, the judgment was

affirmed.

Id. Holding that Ms. Walden presented no basis for reversing the summary judgment entered

in favor of the Ensleys and ES Capital, the supreme court affirmed that part of the judgment

of the lower court in the Autauga County Suit. See id. at 1122.

The end result of the rulings in the Autauga County Suit, as affirmed by the Supreme

Court of Alabama, was as follows: (1) The mortgage of ES Capital constitutes a valid lien

on Danya Apartments; (2) ES Capital’s mortgage is a superior lien to the claims of Ms.

Walden; and (3) the management agreement by which ES Capital operates Danya Apartments

and collects rent is valid and enforceable, and ES Capital is entitled to collect these rent

payments without interference from Ms. Walden.

C. The Present Lawsuit

The decision by the Supreme Court of Alabama in the Autauga County Suit is the

precursor to this lawsuit, which is brought by Crooked Creek, a Nevada corporation. As

13

alleged, Crooked Creek is the assignee of and successor-in-interest to all of Ms. Walden’s

 As originally filed, the Complaint in this action was 203 pages in length and contained 637

13

numbered paragraphs, 170 footnotes and 14 exhibits. (Compl.) The court sua sponte dismissed the

Complaint, with leave granted to Crooked Creek to file an amended complaint in compliance with Rule 8

of the Federal Rules of Civil Procedure. (Order (Doc. # 5).) The 70-page Amended Complaint was filed

on January 13, 2009. The Amended Complaint is the operative complaint. 

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stock in the corporation that owns Danya Apartments. (Am. Compl. ¶ 11; see also Compl.

14

¶¶ 123, 228, 314; Compl., Ex. D (face page), describing Ms. Walden as Crooked Creek’s

“predecessor in interest.”)

Defendants are Mr. Ensley, Mrs. Ensley, ES Capital, Ms. Liles and Mr. Edmondson.

Although “Venture Services d/b/a Danya Apartments Management Group” (“Danya Group”)

is listed as a Defendant in the caption, the Amended Complaint describes Danya Group as

an association-in-fact enterprise in the context of the RICO claims. (Am. Compl. ¶¶ 27, 28.)

In the Amended Complaint, Danya Group is not a legal entity against whom monetary or

injunctive relief is sought, and Crooked Creek has not asserted otherwise in its briefs.

The Amended Complaint alleges that Mr. Ensley, Mrs. Ensley, Ms. Liles, Mr.

Edmondson and ES Capital “comprise the participants of Danya Group” (Am. Compl. ¶ 19),

with Mr. Ensley as the manager, Mrs. Ensley as the “financier and consultant,” Ms. Liles as

the on-site manager, Mr. Edmondson as an “accomplice” and legal advisor to Danya Group,

and ES Capital as the vehicle through which funds are “laundered” (Am. Compl. ¶ 20).

More particularly, Mr. Edmondson is alleged to have advised the Ensleys to pay funds from

the collection of rent from Danya Apartments to ES Capital “in the guise of mortgage

payments thereby creating the appearance of conducting a legitimate business transaction,”

when in fact, the rental payments belonged to Crooked Creek, the purported owner of all the

stock in the corporation that owns Danya Apartments. (Am. Compl. ¶ 98.) The primary

 The Amended Complaint describes Danya Apartments as “a HUD Section 8 housing project 14

for low-income families that receives federal subsidy funds.” (Am. Compl. ¶ 2.)

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injuries allegedly caused by the Ensleys are that they continue to retain payments collected

from the rental business of Danya Apartments. (Am. Compl. ¶ 121.) The Ensleys also are

accused of depositing the rental funds into a Danya Group bank account, from which Mr.

Edmondson has been paid for his legal services. (Am. Compl. ¶ 121.) It further is alleged

that Mr. Edmondson has received these payments, notwithstanding his knowledge that the

monies have been misappropriated from Crooked Creek. (Am. Compl. ¶ 121.) Ms. Liles’s

duties in connection with Danya Apartments are described as “leasing the apartment units,

evicting low-income families who fail to pay rent, keeping records, hiring and overseeing

repairmen . . . and . . . grounds keepers, and collecting tenants’ monthly rent checks.” (Am.

Compl. ¶ 30.) As alleged by Crooked Creek, the “agreed-upon goal” of the Ensleys, Ms.

Liles and Mr. Edmondson isto “loot[] [Crooked Creek’s] rental-property business,” and their

“long range goal” is to “completely tak[e]-over [Crooked Creek’s] business, lock-stock-andbarrel.” (Am. Compl. ¶ 125; see also Am. Compl. ¶ 132.)

Furthermore, Crooked Creek alleges that the management agreement is “the linchpin

of the illicit scheme.” (Am. Compl. ¶ 23.) Through use of the management agreement,

Defendants are accused of “systematically looting the business” (Am. Compl. ¶ 22), of taking

control of Danya Apartments in order “to misappropriate the rental income” (Am. Compl.

¶ 28), and of paying “the criminally derived proceeds . . . to themselves notwithstanding that

such payments are unapproved and unwarranted so-called management fees and . . .

professional fees” (Am. Compl. ¶ 39). In addition to being deprived of the rental fees from

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the apartments, Crooked Creek alleges that it has expended “substantial sums” to stop the

“trespassing” and “theft of the rental property earnings.” (Am. Compl. ¶ 46.)

The Ensleys and ES Capital, as explained above, also were defendants in the Autauga

County Suit. Mr. Edmondson is identified as an attorney who represented the Ensleys and

ES Capital in the Autauga County Suit. (See, e.g., Am. Compl. ¶¶ 121, 136, 139.) Ms. Liles

was not a party in the Autauga County Suit.

The Amended Complaint contains causes of action under both federal and state law.

The first four claims are brought pursuant to the Racketeer Influenced and Corrupt

Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq. The fifth through the tenth claims are

causes of action purportedly brought under various federal criminal statutes, including 18

U.S.C. §§ 1957 (money laundering), 1951(a) (extortion), 666(a) (theft or bribery concerning

programs receiving federal funds), and 2314 (transportation of stolen money). (Am. Compl.

¶¶ 142-72.) There also are numerous state law claims, including claims of civil liability for

alleged violations of criminal statutes. (Am. Compl. 60-66.)

IV. DISCUSSION

A. Claims for Alleged Violations of Federal and State Criminal Statutes

In the Amended Complaint, Crooked Creek brings several claims alleging that

Defendants have committed criminal acts prescribed by various federal and state statutes.

(Am. Compl. ¶¶ 142-72; Am. Compl. 60-66.) Defendants assert that these claims are due to

be dismissed for failure to state a claim because there is no private civil cause of action for

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violations of these alleged criminal offenses. (Doc. # 32, at 19-20; Doc. # 22, at 8-9.) In its

briefs, Crooked Creek has not challenged this argument, and for good reason.

1. Federal Criminal Statutes

The Eleventh Circuit has explained that an implied private right of action under a

federal statute should only be found where there is “‘clear evidence of Congress’s intent to

create a cause of action.’” McDonald v. S. Farm Bureau Life Ins. Co., 291 F.3d 718, 723

(11th Cir. 2002) (quoting Baggett v. First Nat’l Bank of Gainesville, 117 F.3d 1342, 1345

(11th Cir. 1997)). None of the federal criminal statutes relied upon by Crooked Creek

contains any hint that Congress intended to permit a private right of action. Additionally, no

authority has been cited that would permit a private action. To the contrary, as set out in the

accompanying footnote, courts uniformly have concluded that no private cause of action

exists under any of the statutes relied upon by Crooked Creek. On the basis of these

15

authorities and independent review, Counts Five through Ten alleging violations of federal

criminal statutes are due to be dismissed for failure to state a claim.

See Wisdom v. First Midwest Bank, of Poplar Bluff, 167 F.3d 402, 409 (8th Cir. 1999) 15

(“[N]either the statutory language of 18 U.S.C. § 1951 nor its legislative history reflect[s] an intent by

Congress to create a private right of action.” (collecting cases)); De Pacheco v. Martinez, 515 F. Supp.

2d 773, 787 (S.D. Tex. 2007) (“[F]ederal courts have not recognized a private right of action for breach

of § 1956, the money laundering statute.” (collecting cases)); Whitmire v. U.S. Veterans Admin., 661 F.

Supp. 720, 723 (W.D. Wash. 1986) (dismissing the plaintiff’s claim alleging a violation of 18 U.S.C.

§ 666 and observing that the plaintiff “presented no authority or analysis which would indicate that this

statute creates a private cause of action upon which he can base a suit”); Cooper v. North Jersey Trust

Co. of Ridgewood, N.J., 226 F. Supp. 972, 980 (S.D.N.Y. 1964) (“[N]o civil right is created by 18 U.S.C.

[§] 2314.”); Piorkowski v. Parziale, No. 3:02cv963, 2003 WL 21037353, at *8 (D. Conn. May 7, 2003)

(dismissing a plethora of claims alleging violations of federal criminal statutes, including 18 U.S.C.

§ 666, because none of the statutes “provide[s], explicitly or implicitly, a civil cause of action and the

plaintiff has cited no authority otherwise”).

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2. State Criminal Statutes

Crooked Creek also alleges numerous violations of state felony statutes, asserting that

the claims are proper pursuant to § 6-5-370 of the Alabama Code. (Am. Compl. 60-66.)

Defendants argue that Crooked Creek’s reliance on § 6-5-370 as permitting private causes

of action for criminal state law violations is misplaced. The court agrees.

Section 6-5-370 of the Alabama Code provides that “[f]or any injury, either to person

or property, amounting to a felony, a civil action may be commenced by the party injured

without prosecution of the offender.” Ala. Code § 6-5-370 (1975). In Lewis v. Fraunfelder,

796 So. 2d 1067 (Ala. 2000), the plaintiff asserted that § 6-5-370 permitted her to bring a

claim for mail fraud and credit card fraud, felony crimes. See id. at 1068 n.1 & 1069-70.

The Supreme Court of Alabama disagreed, explaining that the plaintiff had failed to state a

claim for which relief could be granted:

Section 6-5-370 abrogates the common-law rule of “suspension,” the rule that

“a civil action for injury to person or property, amounting to a felony, could

not be maintained without prosecution of the offender.” Section 6-5-370 does

not create a cause of action; rather, it merely allows a plaintiff to commence

a civil action even if the plaintiff does not pursue criminal prosecution of the

defendant.

Id. at 1070 (internal citations omitted); see also Preskitt v. Lyons, 865 So. 2d 424, 429 (Ala.

2003) (“§ 6-5-370 only eliminates an obstacle for plaintiffs with a valid cause of action; it

does not create a civil cause of action for any injury that amounts to a felony.”).

Based upon the holding in Lewis, the court finds that § 6-5-370 does not present a

vehicle through which Crooked Creek can bring claims alleging that Defendants violated

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state criminal statutes. Accordingly, the court finds that Defendants’ motions to dismiss

Crooked Creek’s claims predicated on violations of state criminal statutes are due to be

granted.

B. Res Judicata

Defendants also argue that the doctrine of res judicata precludes Crooked Creek from

litigating the matters decided adversely to its predecessor-in-interest Ms. Walden in the

Autauga County Suit. The facts to which all claims in this action, regardless of defendant,

are wed involve the validity of only two instruments: the mortgage and the management

agreement. Crooked Creek repeatedly and without shame asserts the invalidity of both of

these instruments despite the prior holding of the courts of Alabama that, once and for all,

for better or for worse, and no doubt rendering Crooked Creek and Ms. Walden sicker and

poorer, the two instruments are valid. Thus, the marriage here proposed by Crooked Creek

would appear to be annulled by either res judicata, collateral estoppel, or both. There is a

hitch, however.

Pursuant to 28 U.S.C. § 1738, a federal court is required to give a state court judgment

the same full faith and credit as that judgment would receive under the law of the state in

which the judgment was rendered. Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S.

280, 293 (2005); see also Green v. Jefferson County Comm’n, 563 F.3d 1243, 1252 (11th

Cir. 2009) (“When we are considering whether to give res judicata effect to a state court

judgment, we ‘must apply the res judicata principles of the law of the state whose decision

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is set up as a bar to further litigation.’” (quoting Kizzire v. Baptist Health Sys., Inc., 441 F.3d

1306, 1308-09 (11th Cir. 2006)); cf. Taylor v. Sturgell, 128 S. Ct. 2161, 2171 (2008) (“The

preclusive effect of a federal-court judgment is determined by federal common law.”).

Because the preclusive effect of a state court judgment is at issue, the court looks to Alabama

law on res judicata. What would facially appear to be the most logical and obvious rule

anywhere in the law – that where a court of competent jurisdiction, in a valid, litigated

judgment, extinguishes an issue, that issue may not be relitigated in a subsequent lawsuit by

the party against whom the issue was decided as to the whole world – is not so obvious in

Alabama and a minority of jurisdictions.

“The elements of res judicata, or claim preclusion, are (1) a prior judgment on the

merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the

parties, and (4) with the same cause of action presented in both suits.” Dairyland Ins. Co.

v. Jackson, 566 So. 2d 723, 725 (Ala. 1990); see also Whisman v. Ala. Power Co., 512 So.

2d 78, 81 (Ala. 1987) (observing that res judicata is “frequently referred to as a claim

preclusion”). “If those four elements are present, then any claim that was, or that could have

been, adjudicated in the prior action is barred from further litigation.” Chapman Nursing

Home, Inc. v. McDonald, 985 So. 2d 914, 919 (Ala. 2007). In Hughes v. Martin, 533 So. 2d

188 (Ala. 1988), the Supreme Court of Alabama discussed the policy underlying the doctrine

of res judicata:

Res judicata is a broad, judicially developed doctrine, which rests upon the

ground that public policy, and the interest of the litigants alike, mandate that

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there be an end to litigation; that those who have contested an issue shall be

bound by the ruling of the court; and that issues once tried shall be considered

forever settled between those same parties and their privies. The principle of

res judicata fosters reliance on judicial action, and tends to eliminate vexation

and expense to the parties, wasted use of judicial machinery and the possibility

of inconsistent results.

Id. at 190; cf. Jones v. Blanton, 644 So. 2d 882, 885 (Ala. 1994) (“The doctrine of collateral

estoppel, like the related doctrine of res judicata, serves to promote the efficient allocation

of our limited judicial resources, by preventing the unnecessary and pointless relitigation of

issues previously adjudicated.” (internal footnote omitted)).

Defendants argue that all four elements of res judicata are satisfied. Crooked Creek

counters those assertions. The court turns to the arguments on each of the elements of res

16

 Crooked Creek’s two threshold arguments lack merit. First, controlling precedent forecloses

16

Crooked Creek’s unsupported contention that the affirmative defense of res judicata cannot be raised in a

motion to dismiss. (Doc. # 36, at 2, 9; see also Doc. # 29, at 12 (“[A] motion to dismiss is not the proper

vehicle to raise the defense of res judicata.”).) The law is well established that res judicata may be

raised in a Rule 12(b)(6) motion to dismiss when the allegations on the face of the complaint “show that

an affirmative defense bars recovery on the claim.” Marsh v. Butler County, Ala., 268 F.3d 1014, 1022

(11th Cir. 2001). Indeed, there is authority that a court can raise the issue of res judicata sua sponte. See

Am. Furniture Co. v. Int’l Accommodations Supply, 721 F.2d 478, 482 (5th Cir. Unit A March 1981).

Second, Crooked Creek argues that the pleadings and judgments from the Autauga County Suit

and the Montgomery County Suit cannot be considered on a motion to dismiss. (Doc. # 36, at 2.)

However, a court can consider “documents incorporated into the complaint by reference, and matters of

which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322

(2007). Public records comprise a category of documents subject to judicial notice. See Bryant v. Avado

Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999); see also In re Am. Cont’l Corp./Lincoln Sav. & Loan

Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996) (“[A]mple authority exists which recognizes that matters

of public record, including court records in related or underlying cases which have a direct relation to the

matters at issue, may be looked to when ruling on a 12(b)(6) motion to dismiss.”). Moreover, “where the

plaintiff refers to certain documents in the complaint and those documents are central to the plaintiff’s

claim, then the Court may consider the documents part of the pleadings for purposes of Rule 12(b)(6)

dismissal[.]” Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997) (per

curiam). And “the defendant’s attaching such documents to the motion to dismiss will not require

conversion of the motion into a motion for summary judgment.” Id.

Here, Crooked Creek attached to its original complaint certain orders from the Montgomery

County Suit and the Autauga County Suit, as well as other documents integral to its claims, such as the

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judicata. Because Alabama is in the minority of jurisdictions as to the requirement of

substantial identity of the parties when res judicata is raised defensively, as here, more

discussion is needed as to this element.

1. A Final Judgment on the Merits

The Autauga County Suit was decided at the summary judgment stage, with the

Ensleys and ES Capital prevailing on the basis of their motion. The case law is cohesive that

a decision granting summary judgment is a final judgment on the merits for res judicata

purposes. See Williams v. Moore, ___ So. 2d ___, No. 2070284, 2008 WL 4531799, at *5

(Ala. Civ. App. 2008) (“A summary judgment operates as an adjudication on the merits of

a claim.” (quoting Bean v. Craig, 557 So. 2d 1249, 1253 (Ala. 1990)); see also Charles A.

Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure, § 4444 (3d ed.

2002) (collecting cases). Moreover, the Supreme Court of Alabama has explained that “[i]f

the judgment is general, and not based on any technical defect or objection, and the parties

had a full legal opportunity to be heard on their respective claims and contentions, it is on the

merits, although there was no actual hearing or argument on the facts of the case.” Bd. of

Trustees of Univ. of Ala. v. Am. Res. Ins. Co., 5 So. 3d 521, 533 (Ala. 2008) (citations and

internal quotation marks omitted).

management agreement. (See Compl., Exs. G, H, L, M.) Additionally, transactions occurring in the

Montgomery County Suit and Autauga County Suit are referenced in the Amended Complaint. Based

upon the above authorities, pleadings and orders from both state court lawsuits can be considered on the

motions to dismiss because they are matters of public record and are integral to Crooked Creek’s claims

for relief. 

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Here, in the Autauga County Suit, the circuit court granted summary judgment in

favor of the Ensleys and ES Capital “as to all claims” brought by Ms. Walden. (Autauga

County Suit, Summ. J. Op. 6.) The record also reflects that the motion was briefed

“exhaustive[ly]” and that “oral argument” was entertained. (Autauga County Suit, Summ.

J. Order 1.) The requirements of Board of Trustees of University of Alabama are satisfied

on these facts.

Crooked Creek, however, arguesthat the Autauga County Circuit Court’sfinding that

“the purported management agreement was valid was merely the expression of the court’s

opinion.” (Doc. # 36, at 10 n.6.) “It was not a decision on the merits.” (Doc. # 36, at 10 n.6;

see also Doc. # 36, at 16 (asserting that the Autauga County Circuit Court’s finding that the

management agreement was valid and enforceable was not supported by reasoning or “fully

investigated” or “tried”).) Crooked Creek cites Ingram v. Commissioner of Social Security

Administration, 496 F.3d 1253 (11th Cir. 2007) (see Doc. # 36, at 8), for its statement that

“[j]udicial opinions do not make binding precedents; judicial decisions do.” Ingram, 496

F.3d at 1265 (internal citation and quotation marks omitted). That observation was made for

the purpose of distinguishing between dicta and the holding of the case, see id., but was not

made within the context of applying Alabama’s elements of res judicata. Nonetheless,

17

Crooked Creek’s dicta argument is not persuasive. Where a matter is argued before the

Ingram was not a res judicata decision.

17

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court, and the court’s opinion passes on the issue, the language is not dicta. See Gillespie v.

U.S. Steel Corp., 321 F.2d 518, 529-30 (6th Cir. 1963).

Here, it is Ms. Walden who commenced the litigation in the Autauga County Suit and

who expressly raised the issue of the management agreement’s validity. Namely, in Count

IX of her state court complaint, Ms. Walden alleged that the management agreement was

void “because it was not made in good faith, and because she [Ms. Walden] did not consent

to, approve of, or acquiesce in said agreement.” (Autauga County Suit, Compl. ¶ 44.) As

relief, Ms. Walden requested the Autauga County Circuit Court to declare that the

management agreement was “void.” (Autauga County Suit, Compl. 28.) And in ruling on

the parties’ cross-motions for summary judgment, the Autauga County Circuit Court ruled

on the issue, finding that “the management agreement . . . [was] valid and [was] due to be

enforced according to its terms.” (Autauga County Suit, Order 6.) The issue of the

management agreement’s validity was argued before the Autauga County Circuit Court, and

a court ruling was issued. See Gillespie, 321 F.2d at 529-30. Ms. Walden cannot now

contend that the Autauga County Circuit Court’s conclusion is dicta. The first res judicata

element is satisfied on this record.

2. A Court of Competent Jurisdiction

Defendants assert that the Autauga County Suit “certainly” was “rendered by a court

of competent jurisdiction.” (Doc. # 32, at 11.) They contend that the Autauga County

Circuit Court had subject matter jurisdiction over the res because “[t]he real property that

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was the subject of the action (Danya Apartments) was in Autauga County.” (Doc. # 38, at 5.)

Crooked Creek, however, arguesthat the Autauga County Circuit Court’s judgment is “void”

on three grounds and, thus is not entitled to res judicata effect. (Doc. # 36, at 3, 11.)

First, Crooked Creek contends that the defendants in the Autauga County Suit

“lacked standing to challenge” the judgment entered in the Montgomery County Suit. (Doc.

# 36, at 12.) It argues that the absence of standing is “synonymous” with the absence of

subject matter jurisdiction. (Doc. # 36, at 13.) Second, Crooked Creek asserts that the

Autauga County Circuit Court lacked “subject matter jurisdiction” to address whether the

November 2004 consent judgment entered in the Montgomery County Suit was valid.

18

(Doc. # 29 ¶ 6.) Third, Crooked Creek contends that the grant of the defendants’ summary

judgment motion amounted to a due process violation by depriving it of a jury trial “on an

important factual issue” concerning the validity of the management agreement. (Doc. # 36,

at 11; see also Doc. # 40, at 5.)

 Crooked Creek is referring to the Autauga County Circuit Court’s Order granting summary

18

judgment in favor of the Ensleys and ES Capital. The Autauga County Circuit Court found that the

Montgomery County Circuit Court did not have “jurisdiction” in November 2004, which was after the

appeal process had concluded in that suit, to overrule its June 5, 2002 Order, which awarded Ms. Walden

only a lien on the common stock of the corporation that owned Danya Apartments sufficient to satisfy

her judgment against Mr. Smith, and to reinstate its August 2000 Order. (Autauga County Suit, Summ. J.

Op. 5.) As explained, the Montgomery County Circuit Court’s August 2000 Order “again award[ed] the

common stock to [Ms.] Walden,” but did so in contravention of the “law of the case,” and in derogation

of non-parties, the Ensleys and ES Capital, who had obtained a mortgage on Danya Apartments after the

June 5, 2002 Order. (Autauga County Suit, Summ. J. Op. 5.) Finding that ES Capital’s mortgage on

Danya Apartments was “valid,” the Autauga County Circuit Court adjudged the mortgage as “superior”

to Ms. Walden’s claim. (Autauga County Suit, Summ. J. Op. 6.)

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In Neal v. Neal, 856 So. 2d 766 (Ala. 2002), the Supreme Court of Alabama explained

that, for res judicata purposes, a court’s jurisdiction is not competent if its judgment is “void

for want of personal jurisdiction, subject-matter jurisdiction, or due process of law.” Id.

19

at 779; see also Lloyd Noland Found., Inc. v. HealthSouth Corp., 979 So. 2d 784, 795 (Ala.

2007) (“[F]or purposes of res judicata, the prior judgment must be rendered by a court of

competent jurisdiction. A court of competent jurisdiction is a court with jurisdiction over the

subject matter.”); Zickler v. Shultz, 603 So. 2d 916, 920 (Ala. 1992) (“Under Alabama law,

to be res judicata, a judgment must be rendered by a court with subject matter jurisdiction.”).

Neal further explained that “due process of law means notice, a hearing according to that

notice, and a judgment entered in accordance with such notice and hearing.” 856 So. 2d

at 782 (internal quotation marks omitted). Hence, a prior judgment is void for want of due

process where “on some critical motion or for some critical proceeding within that

 There is a trend among federal courts to apply res judicata, notwithstanding that the prior 19

federal-court judgment was rendered in the absence of subject matter jurisdiction. See Chicot County

Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 377 (1940) (holding that a federal district court’s

erroneous exercise of subject matter jurisdiction was not subject to collateral attack and was entitled to

res judicata effect); Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 604 n.3 (5th Cir. 1999)

(“‘Today, it is safe to conclude that most federal court judgments are res judicata notwithstanding a lack

of subject matter jurisdiction.’” (quoting 18A Charles A. Wright, Arthur R. Miller & Edward H. Cooper,

Federal Practice & Procedure § 4428 (2d ed. 2002))); Nemaizer v. Baker, 793 F.2d 58, 65 (2d Cir. 1986)

(“[I]f the parties could have challenged the court’s power to hear a case, then res judicata principles

serve to bar them from later challenging it collaterally.”). 

No case has been cited to indicate that this is the trend in Alabama, and the Alabama decisions

cited above are not in accord with that trend. See also Int’l Longshoremen’s Ass’n v. Davis, 470 So. 2d

1215, 1217 (Ala. 1985), aff’d, 476 U.S. 380 (1986) (A judgment entered without subject-matter

jurisdiction is void and may be set aside at any time, either on direct or collateral attack); cf. 18A Charles

A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 4428 (2d ed. 2002)

(“State judgments may prove more vulnerable than federal judgments to defeat in subsequent federal

litigation. So long as the lack of subject-matter jurisdiction is simply a matter of state law, it is clear that

a federal court should accord the res judicata effects dictated by state law.”).

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litigation,” the litigant was “deprived of the ‘notice, a hearing according to that notice, and

a judgment entered in accordance with such notice and hearing[.]’” Id.

However, a void judgment must be distinguished from an erroneous judgment.

Discussing res judicata, Neal held that a court’s “misinterpretations and misapplications of

law” are insufficient to demonstrate a violation of due process of law. 856 So. 2d at 782.

“The simple fact that a court has erroneously applied the law does not render its judgment

void.” Id. at 781 (internal quotation marks omitted); see also Ex parte R.S.C., 853 So. 2d 228,

235 (Ala. Civ. App. 2002) (“[A] judgment is not void simply because it is erroneous[.]”).

Crooked Creek’s argument that the Autauga County Suit’s judgment is void for lack

of standing – and thus not barred by res judicata – is not easily followed. This is because

Crooked Creek’s argument is made in the abstract. No attempt has been made to connect

general propositions of law to concrete facts. Standing generally is regarded as a

jurisdictional prerequisite to bringing a lawsuit. See Stalley ex rel. United States v. Orlando

Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008). Here, no argument is made

by Crooked Creek that Ms. Walden lacked standing to bring her prior action in the Autauga

County Circuit Court. Rather, Crooked Creek’s contention is that, in defending against Ms.

Walden’s claims, the defendants in the Autauga County Suit did not have standing to assert

any argument that had the effect of contradicting the November 2004 consent judgment

entered in the Montgomery County Suit. Crooked Creek, however, has not cited any authority

that supports its position. It cites only R.S.C. for the general principle that a judgment is void

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if there was no subject matter jurisdiction. (Doc. # 36, at 18.) But, Crooked Creek has failed

to demonstrate R.S.C.’s applicability to this case. R.S.C. is distinguishable on a number of

bases. For one thing, it involved a plaintiff’s, not a defendant’s, standing. See 853 So. 2d

at 236. For another, the factual issue is not comparable to this case; the issue in R.S.C. was

whether an aunt, who had physical custody of the father’s children, had standing to file a

contempt petition against the father for his failure to pay child support. See id. Crooked

Creek’s cursory and unsupported argument does not support a conclusion that the Autauga

County Circuit Court’s judgment is not competent because it is void for lack of standing.

Crooked Creek’s argument that the Autauga County Circuit Court did not have subject

matter jurisdiction to declare that the Montgomery County Circuit Court lacked jurisdiction

to enter its November 2004 consent judgment is shortsighted. Crooked Creek has not

submitted any authority that supports this line of attack on the jurisdiction of the Autauga

County Circuit Court. Again, the case law it cites supports only general propositions of law.

(Doc. # 29 ¶ 6.) Moreover, Crooked Creek did not advance this argument in the Autauga

County Suit or on appeal in the Supreme Court of Alabama.

“Subject-matter jurisdiction concerns a court’s power to adjudicate a case, not the

merits of the court’s decision in the case.” Ex parte Butler, 972 So. 2d 821, 825 (Ala. 2007).

In Alabama, “‘[a] trial court derives its jurisdiction from the Alabama Constitution and the

Alabama Code.’” Id. (quoting Ex parte Seymour, 946 So. 2d 536, 538 (Ala. 2006)). The

Autauga County Circuit Court is a court of general jurisdiction. See Ala. Const. art. VI,

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§ 139. The matters over which it can exercise original and equitable jurisdiction are set out

by statute. See Ala. Code §§ 12-11-30, 12-11-31. Whether a court has subject matter

jurisdiction to hear a particular case is to be assessed based upon the allegations in the

complaint. See Chestang v. Tensaw Land & Timber Co., 134 So. 2d 159, 165 (Ala. 1960).

Here, the crux of Ms. Walden’s complaint in the Autauga County Suit was a claim to

quiet title in Danya Apartments, brought pursuant to § 6-5-541 et seq., of the Alabama Code,

and the primary relief Ms. Walden sought was a “judgment or decree declaring that she ha[d]

the entire undivided fee simple interest in and to [Danya Apartments] with no restrictions

thereon.” (Autauga County Suit, Compl. 19.) No argument has been made in this or any

other court, and for good reason, that the Autauga County Circuit Court lacked subject matter

jurisdiction to decide the priorities of the parties as to Danya Apartments. An action to quiet

title gives the circuit court jurisdiction “to determine and settle [title] as between the [plaintiff]

and the defendants.” Stokes v. Cottrell, No. 2060887, ___ So. 2d ___, 2008 WL 682475, at

*5 (Ala. Civ. App. 2008) (citation and internal quotation marks omitted). And, “[w]hen a

plaintiff brings a quiet-title action, the defendant is required to defend the state of his or her

title to the property and, even in the absence of a cross-claim, is entitled to have title quieted

in him or her if he or she can establish superior title to the property.” Id. at *10 (citing Myers

v. Moorer, 134 So. 2d 168 (Ala. 1961)).

The Autauga County Circuit Court, acting within the realm of that jurisdiction,

established the priorities of the litigants’ claims to Danya Apartments. (Autauga County Suit,

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Summ. J. Op. 1-7.) Crooked Creek has not cited any authority that the Autauga County

Circuit Court’s findings adjudicating the priorities of the parties as to Danya Apartments –

even assuming arguendo that those findings were wrong – affected the court’s subject matter

jurisdiction. Rather, the court findsthat Crooked Creek’s argument boils down to an assertion

that the Autauga County Circuit Court misapplied the law when it concluded that ES Capital’s

mortgage was superior to Ms. Walden’s legal interest in Danya Apartments. As set out above,

however, under Alabama law, erroneous applications of the law do not bear on the court’s

subject matter jurisdiction and do not preclude the application of res judicata. See Neal, 856

So. 2d at 782.

Finally, Crooked Creek’s argument that the grant of summary judgment in favor of the

defendants in the Autauga County Suit was inconsistent with due process is not persuasive.

There is no allegation or argument from Crooked Creek that its predecessor-in-interest, Ms.

Walden, did not receive notice or an opportunity to be heard on the defendants’ summary

judgment motion filed in the Autauga County Suit. To the contrary, the proceedings in the

Autauga County Circuit Court reflect that Ms. Walden was represented by counsel, filed her

own summary judgment motion, and responded to the defendants’summary judgment motion.

Moreover, the Autauga County Circuit Court’s order granting summary judgment in the

defendants’ favor reflects that a hearing was held on the cross-motions for summary

judgment, and that the court heard “extensive oral argument by counsel for the respective

parties” and was “provided with exhaustive briefs.” (Autauga County Suit, Summ. J. Op. 1.)

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The court recognizes the strength of Crooked Creek’s belief that the Autauga County

Suit was wrongly decided. (See, e.g., Waldens’ Affs. (Exs. J & K to Compl.).) Crooked

Creek’s arguments that the Autauga County Circuit Court incorrectly applied the summary

judgment standard and erroneously found that no jury issue existed as to the management

agreement’s validity, however, simply do not call into question the jurisdictional competency

of the state court. These arguments focus on legal errors in the judgment, not on violations

of due process. The foregoing principles of law make clear that the res judicata consequences

of a final judgment on the merits are not altered by the fact that the judgment may have been

wrong. Crooked Creek has failed to make any showing that the Autauga County Circuit Court

did not accord Ms. Walden due process.

Crooked Creek’s predecessor in interest engaged the state court’s jurisdiction, invited

certain defendants into the case, set the agenda of issues to be decided, and appealed her loss

to the Supreme Court of Alabama. As a result, Crooked Creek is barred from claiming that

those proceedings, framed entirely by its predecessor, are void. Crooked Creek cannot have

it both ways. In sum, the second element of res judicata is satisfied.

3. Substantial Identity of the Parties

Citing Dairyland Insurance Co. v. Jackson, 566 So. 2d 723 (Ala. 1990), Defendants

argue that the third element of the res judicata test is satisfied based solely upon a

demonstration of privity between Crooked Creek and Ms. Walden. In Dairyland, the

Supreme Court of Alabama said that

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the “party identity criterion of res judicata does not require complete identity,

but only that the party against whom res judicata is asserted was either a party

or in privity with a party to the prior action or that the non-party’s interests were

adequately represented by a party in the prior suit, and the relationship between

the party and non-party is not so attenuated as to violate due process.”

566 So. 2d at 725-26 (quoting Whisman, 512 So. 2d at 82).

However, a subsequent decision of the Supreme Court of Alabama illustrates that

Dairyland cannot be stretched this far, see Thomas v. Lynn, 620 So. 2d 615, 617 (Ala. 1993),

and in fact places Alabama squarely in the minority of jurisdictions. In Thomas, referring to

Dairyland’s statement that the “‘party identity criterion’ . . . require[s] . . . only that the party

against whom res judicata is asserted was either a party or in privity with a party to the prior

action,” the Supreme Court of Alabama observed that the defendants “would have this Court

apply that abstract language literally and hold that, because the plaintiffs are the same in both

actions, the ‘party identity criterion’ has been met . . . .” Thomas, 620 So. 2d at 617 (quoting

Dairyland, 566 So. 2d at 725). Thomas explained that, in the cases upon which Dairyland

relied, there was no question but that the party who was raising the res judicata defense also

was a party to the prior action. See id. at 617 & n.1. The Thomas court held that to interpret

Dairyland’s statement literally would be “totally inconsistent with the classical statement” of

the element of the res judicata doctrine requiring a “substantial identity of the parties.” Id.

at 617. Thomas, thus, declined to interpret Dairyland’s holding as requiring a substantial

identity of parties only as to the parties against whom the defense is asserted.

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In the context of res judicata, “[s]ubstantial identity requires that the parties be

identical, sometimes referred to as the mutuality of estoppel requirement.” Greene v.

Jefferson County Comm’n, 13 So. 3d 901, 912 (Ala. 2008) (citation and internal quotation

marks omitted); see also Fisher v. Space of Pensacola, Inc., 461 So. 2d 790, 792 (Ala. 1984)

(declining to abandon res judicata’s “mutuality requirement[]”). There is, however, an

exception where a nonparty is in privity with a party in the prior action. See Greene, 13 So.

3d at 912. “Judgments can bind persons not party (or privy) to the litigation in question where

the nonparties’ interests were represented adequately by a party in the original suit.”

Whisman, 512 So. 2d at 82 (quoting Century 21 Preferred Props., Inc. v. Ala. Real Estate

Comm’n, 401 So. 2d 764, 770 (Ala. 1981)).

It has been recognized that Alabama “follows an expansive definition of privity, which

includes not only a successive interest to the same property right, but also ‘an identity of

interest in the subject matter of litigation.’” Wood v. Kesler, 323 F.3d 872, 877-80 & n.10

(11th Cir. 2003); see also Greene, 13 So. 3d at 912 (A party is in privity with a party to a prior

action when there is “an identity of interest in the subject matter of litigation.”). In Hughes

v. Martin, 533 So. 2d 188 (Ala. 1988), the court summarized the law on res judicata’s privity

requirement in Alabama:

“The term ‘privity’ has not been uniformly defined with respect to res judicata.

The following three definitions have appeared in Alabama cases: (1) the

relationship of one who is privy in blood, estate, or law; (2) the mutual or

successive relationship to the same rights of property; and (3) an identity of

interest in the subject matter of litigation. Largely defining privity by example,

the Alabama cases seem to resolve the question on an ad hoc basis in which the

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circumstances determine whether a person should be bound by or entitled to the

benefits of a judgment. The decision usually turns on whether the relationship

between the parties was close enough and whether adequate notice of the action

was received by the alleged privy; this test has been bolstered by the recent

tendency of the Alabama courts to analyze privity as an identity of interests.”

Id. at 191 (quoting Issue Preclusion in Alabama, 32 Ala. L. Rev. 500, 520-21 (1981)).

Moreover, “if a party has ‘a sufficient “laboring oar” in the conduct’ of the litigation,

then the principle of res judicata can be actuated.” Century 21 Preferred Props., 401 So. 2d

at 770 (quoting Montana v. United States, 440 U.S. 147, 155 (1979)); accord Gonzalez, LLC

v. DiVincenti, 844 So. 2d 1196, 1203 (Ala. 2002). In Montana, the Court explained that a

sufficient “[l]aboring oar” exists where the non-party “assume[s] control over litigation . . . .”

440 U.S. at 154. The Alabama Court of Civil Appeals applied the “laboring oar” concept in

Brown v. Brown, 680 So. 2d 321 (Ala. Civ. App. 1996). The issue in Brown involved the res

judicata effect of a prior federal court judgment awarding the deceased’s (Stirling Brown’s)

second wife, and not his first wife, the proceeds of his life insurance policy. See id. at 322.

Res judicata was raised defensively in Brown against the first wife as a bar to relitigating her

counterclaim seeking the proceedsfrom Stirling Brown’slife insurance policy. See id. at 323.

The parties in the prior federal court action were the first wife and the second wife,

individually. See id. at 322-23. In Brown, the first wife also was a party, and, while the

second wife was a party, she was named in her capacity as executrix of Stirling Brown’s

estate, not individually. See id. at 323. Although neither Stirling Brown nor his estate was

a party in the prior federal lawsuit, the Alabama Court of Civil Appeals explained that Stirling

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Brown’s “conduct . . . was very much at issue” in the federal lawsuit, and that both wives had

ample adversarial motive to vigorously argue that Stirling Brown’s conduct should be

interpreted in their favor. Id. at 324. The Brown court, thus, held that Stirling Brown’s estate

had a “sufficient ‘laboring oar’ in the conduct of the federal litigation.” Id.

Under Alabama law, the employer-employee relationship also can provide the

necessary privity to satisfy res judicata with respect to matters within the scope of that

relationship. In Thompson v. SouthTrust Bank, 961 So. 2d 876 (Ala. Civ. App. 2007), the

Alabama Court of Civil Appeals held that the privity requirement of res judicata “bar[s] a

plaintiff from prosecuting a lawsuit against an employee when the same plaintiff already has

suffered an adverse judgment on the merits in an action against the employer for the acts of

the employee, provided that the prior judgment for the employer was not based on grounds

personal to the employer.” Id. at 885. The court examined at length analogous cases from

other jurisdictionsthat had similarly held. One case was Emery v. Fowler, 39 Me. 326 (1855).

In Emery, the judgment entered against the defendant for trespass was reversed on

appeal as barred by a prior action. The defendant “had acted at the direction of his father,”

who in the prior lawsuit had been found not liable for the same conduct underlying the claim

against the defendant. Thompson, 961 So. 2d at 886 (discussing Emery). In Thompson, the

court quoted from Emery:

“This case requires that a single point only should be considered; whether one

who acts as the servant of another, in doing an act alleged to have been a

trespass, is to be considered as so connected with his principal, who

commanded the act to be done, that what will operate as a bar to the further

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prosecution of the principal, will operate as such for his servant . . . . In such

case the principal and servant would be one in interest and would be known to

the plaintiff to be so. To permit a person to commence an action against the

principal and to prove the acts alleged to be trespasses, to have been committed

by his servant acting by his order, and to fail upon the merits to recover, and

subsequently to commence an action against that servant and to prove and rely

upon the same acts as a trespass, is to allow him to have two trials for the same

cause of action, to be proved by the same testimony. In such cases the technical

rule, that a judgment can only be admitted between the parties to the record or

their privies, expands so far as to admit it, when the same question has been

decided and judgment rendered between parties responsible for the acts of

others.”

Thompson, 961 So. 2d at 886 (quoting Emery, 39 Me. at 329-32). The Thompson court also

observed that its holding was “in accord” with the federal common law of res judicata:

“Where a plaintiff has sued parties in serial litigation over the same transaction;

where plaintiff chose the original forum and had the opportunity to raise all its

claims relating to the disputed transaction in the first action; where there was

a ‘special relationship’ between the defendants in each action, if not complete

identity of parties; and where although the prior action was concluded, the

plaintiff’s later suit continued to seek essentially similar relief – the courts have

denied the plaintiff a second bite at the apple.”

Id. at 887 (quoting Lubrizol Corp. v. Exxon Corp., 871 F.2d 1279, 1288 (5th Cir. 1989)).

Applying the foregoing principles of law, the court examines whether the partiesin this

lawsuit are identical to or in privity with the parties in the Autauga County Suit. This

application is defensive in nature, i.e., the bar is raised against the plaintiff.

a. Crooked Creek

Crooked Creek correctly points out that it “was not a party” in the prior action. (Doc.

# 40, at 1 n.1.) Defendants assert, however, that, although not a party to the Autauga County

Suit, Crooked Creek is in privity with Ms. Walden, the plaintiff in the Autauga County Suit,

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because it is the successor-in-interest to Ms. Walden’s interest in Danya Apartments. (Doc.

# 32, at 11.) The court agrees with Defendants.

In Williams, an action to quiet title, one of the defendants brought a counterclaim

asserting her alleged ownership of the disputed property in the purported landowners’ action

to quiet title. See 2008 WL 4531799, at *3. The Alabama Court of Civil Appeals held that

the counterclaim brought by the defendant, who was a party in a prior suit that determined

ownership of the property, was barred by res judicata, even though the landowners were not

parties to that suit. 2008 WL 4531799, at *6. The landowners’ predecessors in title were

defendants in the prior suit: “[S]uccessors in title are in privity with their predecessors in

title” for purposes of res judicata. Id. The policy behind the res judicata principle of privity

in the context of successive property ownership is well established:

The ground upon which, and upon which alone, a judgment against a prior

owner is held conclusive against his successor in interest, is that the estoppel

runs with the property, that the grantor can transfer no better right or title than

he himself has, and that the grantee takes cum onere.

Postal Tel. Cable Co. v. City of Newport, Ky., 247 U.S. 464, 474-75 (1918). No basis has

been asserted, and none can be envisioned, for treating the assignment in interest of ownership

of personal property – the common stock in the corporation that owns Danya Apartments –

any differently than the transfer of the real property itself. See Taylor, 128 S. Ct. at 2172

(explaining that, for preclusion purposes, “substantive legal relationships,” including

“preceding and succeeding owners of property, bailee and bailor, and assignee and assignor,”

may justify a finding of privity (emphasis added)); Salvage One Demolition Co. v. Wallace,

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408 So. 2d 89, 90 (Ala. 1981) (For purposes of res judicata, the assignee to the contract in the

present action was in privity with its assignor in the prior action; the res judicata doctrine

“‘includes not only those who were actual parties but also all persons who are in privity with

them, that is, having a mutual or successive relationship to the same rights . . . .’” (citation

omitted)).

Here, Ms. Walden was the plaintiff in the Autauga County Suit. In the Autauga

County Suit, Ms. Walden alleged that she “own[ed] all of the common stock” in the

corporation that owned Danya Apartments. (Autauga County Suit, Compl. ¶¶ 2, 9.) It is

undisputed, and indeed alleged by Crooked Creek in this lawsuit, that Crooked Creek now

retains Ms. Walden’s stock: “[Ms.] Walden . . . conveyed all of her stock in Danya

Apartments to [Crooked Creek].” (Am. Compl. ¶ 11; see also Am. Compl. ¶ 17 (“[Crooked

Creek] alleges that it owns Danya Apartments.”).) Also, in the original complaint, Crooked

Creek explicitly acknowledged its successor-in-interest status. (Compl. ¶ 75.) Because

Crooked Creek – the plaintiff in this litigation – claims to be the successor-in-interest to the

ownership interest in Danya Apartments claimed by Ms. Walden, who was the plaintiff in the

Autauga County Suit, the court finds that the two parties are in privity.

b. The Ensleys and ES Capital

The Ensleys and ES Capital were defendants in the Autauga County Suit. (Autauga

County Suit, Compl. ¶¶ 4-6.) They also are defendants in this action. As to these parties, the

third res judicata element is satisfied.

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c. Ms. Liles

It is undisputed that Ms. Walden did not sue Ms. Liles, the “on-site manager” of Danya

Apartments (Am. Compl. ¶ 30), in the Autauga County Suit; thus, for res judicata to bar the

present action against her, Ms. Liles must be in privity with at least one of the prevailing

defendants in the Autauga County Suit. Although the argument from the parties is bleak on

this point, the court finds, for the reasons to follow, that Ms. Liles is entitled to the benefits

of the Autauga County Suit judgment.

First, as to Ms. Liles’s relationship with the Ensleys, the court is persuaded that the

principles elaborated upon in Thompson apply in this case. See 961 So. 2d at 876. Crooked

Creek’s predecessor-in-interest (Ms. Walden) received an adverse judgment, affirmed by the

Supreme Court of Alabama in November 2007, as to her claim that the Ensleys had

encroached upon her purported ownership interest in Danya Apartments. A year later, in

December 2008, Crooked Creek in this action sued Ms. Liles based on the same set of factual

circumstances – i.e., that Ms. Liles has “caus[ed] injury to” Crooked Creek’s purported

ownership of Danya Apartments and has joined the Ensleys in their “long term common

purpose” of “wresting away from [Crooked Creek] its property . . . .” (Autauga County Suit,

Compl. ¶ 31.) Crooked Creek has not explained how Ms. Liles, in her role as the on-site

manager, would have different rights than the Ensleys in the management of Danya

Apartments. Thompson supports the conclusion that Ms. Liles’s liability is coextensive with

the Ensleys. Whether Ms. Liles is deemed to be in a “special relationship” with the Ensleys

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or is categorized as an employee or agent of Danya Group’s principals (i.e., the Ensleys), on

the facts pleaded, Ms. Liles and the Ensleys are “one in interest” against whom the same relief

is sought “over the same transaction,” Thompson, 961 So. 2d at 886 & 887 (quoting Emery,

39 Me. at 326, & Lubrizol, 871 F.2d at 1288). Moreover, the Autauga County Suit judgment

was not “personal to” the Ensleys, Thompson, 961 So. 2d at 885, but rather was based upon

a holding that ES Capital’s mortgage on Danya Apartments and the management agreement

were valid instruments. In short, to allow Crooked Creek to relitigate the validity of the

mortgage and management agreement as to Ms. Liles is to allow it to have a “‘second bite at

the apple.’” Thompson, 961 So. 2d at 887 (quoting Lubrizol, 871 F.3d at 1288).

Second, an argument can be made that Ms. Liles is in privity with the Ensleys and ES

Capital based upon her “identity of interest” with them “in the subject matter of litigation.”

Hughes, 533 So. 2d at 191. As stated, in this lawsuit, it is alleged that Ms. Liles, in

conjunction with the other Defendants, operates the rental business of Danya Apartments

based upon a void mortgage and management agreement, and in contravention to Crooked

Creek’s purported ownership of all of the common stock of the corporation that owns Danya

Apartments. The legality of Ms. Liles’s conduct in this action is directly contingent upon both

the validity of ES Capital’s mortgage on Danya Apartments and the management agreement.

The validity of the Ensleys’ and ES Capital’s mortgage and the management agreement also

was the focal point of the Autauga County Suit. Namely, in the Autauga County Suit, Ms.

Walden vigorously fought for a judgment against the Ensleys and ES Capital that she was the

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owner of the stock in the corporation that owned Danya Apartments, with no restrictions on

that ownership, for cancellation of the defendants’ agreement governing the management of

Danya Apartments, and for damages for alleged infringements by the defendants on her

claimed ownership of Danya Apartments. In response, in the Autauga County Suit, the

Ensleys and ES Capital sought to defend and preserve a priority mortgage on Danya

Apartments and the validity of the management agreement. Based on these facts, the court

finds that Ms. Liles, ES Capital and the Ensleys have parity of interest in the subject matter

of the prior litigation. By virtue of the Autauga County Circuit Court’s judgment, which was

affirmed, that there was a valid, first priority mortgage on Danya Apartments and a valid

management agreement governing the operation of the rental business of Danya Apartments,

the Ensleys and ES Capital have been exonerated from any wrongdoing in the collection and

keeping of the rents from that rental business. Based upon an identity of interest among the

Ensleys, ES Capital and Ms. Liles, Ms. Liles is entitled to the same benefit the Ensleys and

ES Capital received from the Autauga County Suit judgment. The third element of res

judicata is satisfied as to Ms. Liles.

d. Mr. Edmondson

Crooked Creek argues, without citation to authority, that because Mr. Edmondson was

not a party to the Autauga County Suit, “res judicata cannot apply.” (Doc. # 40, at 8.) It is

true that Mr. Edmondson was not a party in that prior litigation. He, however, was employed

to represent two of the defendants – the Ensleys and ES Capital – in the Autauga County Suit.

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The issue is whether under Alabama law he is in privity with the Ensleys and ES Capital by

virtue of the fact that he was their counsel of record in the prior action.

Initially, as the attorney for the Ensleys and ES Capital in the Autauga County Suit,

there is no dispute that Mr. Edmondson had “adequate notice” of that suit. Hughes, 533 So.

2d at 191. Additionally, in the Autauga County Suit, Mr. Edmondson was able to “control,”

to a measurable extent, how the defense of that litigation proceeded. Taylor, 128 S. Ct.

at 2173. The Autauga County Suit record reflects that he defended the claims lodged against

the Ensleys and ES Capital through briefs and at oral argument. (Autauga County Suit,

Summ. J. Op. 1.) During this state court litigation, Mr. Edmondson actively advocated for the

Ensleys and ES Capital’s interests in preserving ES Capital’s mortgage on Danya Apartments

and the management agreement, and in defending against claims that the Ensleys were

wrongfully diverting from Ms. Walden the rental income from the apartments. These matters

again are at the heart of the claims that Mr. Edmondson is defending against in the present

litigation as the Ensleys and ES Capital’s co-defendant. The court finds that the control Mr.

Edmondson exerted in the prior action vis-a-vis his role as the attorney and agent for the

Ensleys and ES Capital gave him a sufficient voice in that litigation to contradict Ms.

Walden’s claims of ownership to Danya Apartments so as to satisfy the privity element of res

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judicata. Stated differently, Mr. Edmondson had an ample laboring oar himself in the conduct

of the Autauga County Suit proceedings.

20

e. Summary

Because all of the parties in this action were either parties or in privity with parties in

the prior litigation, the court finds that there is a “substantial identity of parties.” Accordingly,

the third res judicata element is satisfied as to all parties.

4. Same Cause of Action

Defendants argue that res judicata’s same-cause-of-action requirement is met. In

Chapman Nursing Home, the Supreme Court of Alabama addressed this element of the res

judicata test:

Discussing the same-cause-of-action element of res judicata, this Court has

noted that “the principal test for comparing causes of action [for the application

of res judicata] is whether the primary right and duty or wrong are the same in

each action.” This Court further stated: “Res judicata applies not only to the

exact legal theories advanced in the prior case, but to all legal theories and

claims arising out of the same nucleus of operative facts.” As a result, two

causes of action are the same for res judicata purposes “when the same

evidence is applicable in both actions.”

Thompson recognized that privity has been found to encompass “‘special relationship[s]’”

20

among defendants in the present and former actions. Thompson, 961 So. 2d at 877 (quoting Lubrizol, 871

F.2d at 1288). The phrase “special relationship” was not expanded upon in either Thompson or Lubrizol,

and both cases involved an employer-employee relationship, not an attorney-client relationship. See

Thompson, 961 So. 2d at 877; Lubrizol, 871 F.2d at 1288. Moreover, no published decision from an

Alabama court has been cited by the parties or found by the court discussing the attorney-client

relationship in the context of res judicata’s privity requirement. However, as an alternative rationale

supporting Mr. Edmondson’s motion to dismiss, see infra, and because the relationship of attorney-client

is one of the highest agencies known to the law, see, e.g., In re Hayes, 183 F.3d 162, 168 (2d Cir. 1999)

(“[T]he attorney-client relationship entails one of the highest fiduciary duties imposed by law.”), Mr.

Edmondson’s legal representation of the Ensleys in the Autauga County Suit is found on this record to be

a qualifying “special relationship.”

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985 So. 2d at 921 (internal citations and quotation marks omitted; emphasis in original);

accord Greene, 13 So. 3d at 913; accord Chiepalich v. Coale, No. 1061725, ___ So. 3d ___,

2009 WL 3335891, at *2 (Ala. 2009) (per curiam). However, an exception exists to

Chapman Nursing Home’s general precepts if “‘[t]he plaintiff was unable to rely on a certain

theory . . . or to seek a certain remedy or form of relief in the first action because of the

limitations on the subject matter jurisdiction of the courts or restrictions on their authority to

entertain multiple theories or demands for multiple remedies or forms of relief in a single

action . . . .’” Lloyd Noland Found., Inc., 979 So. 2d at 795 (citation omitted).

Defendants contend that in this litigation and in the Autauga County Suit, the same

wrong is asserted and the same proof is required because both lawsuits “center[] upon the

validity and enforceability of the [m]ortgage and [m]anagement [a]greement through which

ES Capital and the Ensleys retain the rental proceeds from the apartments.” (Doc. # 32,

at 12.) Furthermore, while recognizing that the federal-law causes of action in this litigation

were not asserted in the Autauga County Suit, Defendants contend that res judicata bars those

claims as well because the factual underpinnings mirror those of the Autauga County Suit and

because the circuit court’s subject matter jurisdiction was not an impediment to bringing those

causes of action. (Doc. # 32, at 12-13 & n.3.)

Having considered the arguments in light of the applicable law set out above, the court

finds that the primary right asserted by Ms. Walden in the Autauga County Suit was her right

to an unencumbered ownership interest in Danya Apartments. (See, e.g., Autauga County

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Suit, Compl. 19.) The primary wrong, in turn, centered on the defendants’ interference with

that ownership. That interference included, among other things, ES Capital’s mortgage on

Danya Apartments and the agreement entered into by certain of the defendants for the

management of Danya Apartments. Ms. Walden having lost her fight in the Autauga County

Suit, Crooked Creek, as the successor-in-interest to Ms. Walden’s claim against Danya

Apartments, continues in this lawsuit the quest for ownership of the stock in the corporation

that owns Danya Apartments. Crooked Creek vigorously argues that the management

agreement is “the linchpin of the illicit scheme” devised by the current Defendants (Am.

Compl. ¶ 23), and that ES Capital’s mortgage on Danya Apartments is void (Am. Compl.

¶¶ 217-18). Moreover, Crooked Creek also asks this court to “quiet” its “title” to Danya

Apartments (Am. Compl. 70; see also Am. Compl. ¶ 212), and seeks from Defendants the

return of proceeds from the rental business of Danya Apartments (Am. Compl. ¶ 172). All

of the injuries and damages claimed pertain to Defendants’ alleged conduct that purportedly

contravenes Crooked Creek’s asserted ownership of the common stock in the corporation that

owns Danya Apartments. Based upon a comparison of the Autauga County Suit and this

litigation, it is apparent that the primary rights sought to be vindicated and the primary wrongs

allegedly perpetrated against Crooked Creek are the same in this litigation as they were in the

Autauga County Suit.

Additionally, as stated, although not all of the causes of action are the same in the

present action and the Autauga County Suit, res judicata’s same-cause-of-action element will

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be satisfied if the claims in the former and present actions arise out of the same nucleus of

operative facts. Some of the causes of action are identical. For example, the present lawsuit

replicates the claims in the Autauga County Suit for quiet title and to declare the mortgage

void. (See Am. Compl. ¶¶ 212-18.) These overlapping claims – in the present and the former

litigation – focus on arguments that Ms. Walden and now Crooked Creek owns all of the

common stock in the corporation whose only asset is Danya Apartments, that the management

agreement is void, and that the defendants’ alleged control over Danya Apartments’ rental

management is unauthorized. The federal-law causes of action, i.e., the RICO counts,

elaborate upon what Crooked Creek contends is a calculated scheme by Defendants to injure

its ownership and business interests in Danya Apartments. (See, e.g., Am. Compl. ¶¶ 45-75.)

The scheme involves diversion of the income from the rental of Danya Apartments through

use of the mail, banks, computers and phones. (Am. Compl. ¶ 60.)

All in all, the court concludes that the conduct that forms the basis of this action and

the former action arises out of the same nucleus of operative facts. In its simplest terms, the

subject matter – ownership control of Danya Apartments and the validity of the mortgage –

is the same in both suits.

21

 Crooked Creek says that the “evidence necessary to establish the validity of ES Capital’s 21

mortgage varies materially from the evidence necessary to establish the elements” of other of its causes

of action brought in this lawsuit. (Doc. # 36, at 10.) The argument, however, is cursory and without

support. Based upon the foregoing factual comparison of the two lawsuits, the court has been unable to

envision any substantial evidentiary deviations.

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Furthermore, the court agrees with Defendants that Crooked Creek’s predecessor-ininterest could have brought the RICO claims in the Autauga County Suit. It is well

established that state courts have concurrent jurisdiction with federal courts over civil RICO

actions. See Tafflin v. Levitt, 493 U.S. 455, 458 (1990). Hence, the Eleventh Circuit, as well

as other courts, has applied claim preclusion principles in barring a second suit advancing

RICO claims that were not asserted in the prior proceedings. See Israel Disc. Bank Ltd. v.

Entin, 951 F.2d 311, 315 (11th Cir. 1992) (applying res judicata to bar RICO claims and

noting that, “[i]n determining whether the causes of action are the same, a court must compare

the substance of the actions, not their form” (internal quotation marks omitted)); Regions Bank

v. J.R. Oil Co., 387 F.3d 721, 732 (8th Cir. 2004) (holding that res judicata barred the plaintiff

from asserting a RICO claim that it failed to raise in the prior bankruptcy proceeding).

Accordingly, there were no “limitations on the subject matter jurisdiction” of the Autauga

County Circuit Court to entertain the RICO claims. Lloyd Noland Found., 979 So. 2d at 795.

Because the current RICO claims merely present a different legal avenue through which

Crooked Creek is attempting to challenge the validity of the mortgage on Danya Apartments

and the management agreement, Crooked Creek cannot avoid the res judicata effect of the

Autauga County Suit judgment by re-labeling its claims as falling under the proscriptions of

RICO.

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Crooked Creek, however, argues that in the Autauga County Suit, the state court

“split[]” Ms. Walden’s causes of action, thereby precluding the application of res judicata.

(Doc. # 36, at 10.) The court disagrees.

If in the first lawsuit, a plaintiff voluntarily omits claims that could have been decided

based upon the factual transaction alleged,resjudicata will bar a plaintiff’ssuccessive lawsuit

that relies upon the previously-omitted claims. This omission by a plaintiff has been referred

to as splitting a cause of action. See Ex parte Sears, Roebuck & Co., 895 So. 2d 265, 270

(Ala. 2004). As discussed above, this is what has occurred with the RICO claims brought by

Crooked Creek in thislawsuit. However, “[w]here the court doesthe splitting and dilatoriness

on the part of the plaintiff is not a consideration,” res judicata does not preclude the plaintiff

from filing a later action based upon the claims not addressed in the first action. Id.; see also

id. at 270-71 (citing Nilsen v. City of Moss Point, 701 F.2d 556, 563 (5th Cir. 1983), for the

principle that the rule “precluding litigants from splitting causes has no function where the

court itself, rather than the litigant, does the splitting and does it by reason of no default on

the part of the litigant, who timely advanced all his claims in the initial proceeding”).

Here, the Autauga County Circuit Court did not split any causes of action. To the

contrary, as stated above, it granted summary judgment in favor of the Ensleys and ES Capital

“as to all claims” brought by Ms. Walden. (Autauga County Suit, Summ. J. Op. 6.)

Additionally, on appeal from the Autauga County Circuit Court’s judgment, while the

Supreme Court of Alabama restricted its review, it did so solely because “[t]he only issue

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briefed by Walden [was] the quiet-title claim.” Walden, 987 So. 2d at 1116. Because Ms.

Walden in effect abandoned her claims for appellate review, she cannot successfully argue

that the Supreme Court of Alabama “d[id] the splitting.” Sears, Roebuck & Co., 895 So. 2d

at 270.

Having considered carefully the arguments of the parties, the court find that the fourth

element of res judicata is satisfied. Because all four elements have been met, the doctrine of

res judicata forecloses Crooked Creek’s claims in this litigation.

C. Collateral Estoppel

Defendants also rely on the doctrine of collateral estoppel. See Chapman Nursing

Home, 985 So. 2d at 919 (“Res judicata and collateral estoppel are two closely related,

judicially created doctrines that preclude the relitigation of matters that have been previously

adjudicated or, in the case of res judicata, that could have been adjudicated in a prior action.”);

see also Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So. 2d 507, 516 (Ala. 2002)

(“‘The doctrine of res judicata, while actually embodying two basic concepts, usually refers

to what commentators label “claim preclusion,” while collateral estoppel . . . refers to “issue

preclusion,” which is a subset of the broader res judicata doctrine.’” (citations omitted)). But

see Ex parte Ford Motor Credit Co., 772 So. 2d 437, 440 n.1 (Ala. 2000) (“There is some

dispute in Alabama cases whether ‘issue preclusion’ and ‘claim preclusion’ are separate

doctrines or are both subsets of the doctrine of res judicata.”). Because the doctrine of res

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judicata precludes this lawsuit, it is unnecessary to address the parties’ arguments on

collateral estoppel, although Defendants’ arguments are persuasive.

22

D. Additional Findings as to Mr. Edmondson: RICO Liability

Crooked Creek alleges that Mr. Edmondson engaged in activities prohibited by the

RICO statute, namely, (1) that he knew that the proceeds from a pattern of racketeering

activity were being invested in an enterprise engaged in interstate commerce, see 18 U.S.C.

§ 1962(a); (2) that he conducted or participated directly or indirectly through a pattern of

racketeering activity in the conduct of an enterprise engaged in interstate commerce, see

§ 1962(c); and (3) that he conspired with others to violate the foregoing prohibitions, see

§ 1962(d). (Am. Compl. ¶¶ 89-100, 106-41.)

Mr. Edmondson argues that he cannot be held liable under RICO because the

allegations in the operative complaint merely target his services as an attorney. The court

agrees.

 As discussed in a prior section of this opinion, under Alabama law, res judicata embodies a 22

mutuality requirement. See Greene, 13 So. 3d at 912. Alabama’s mutuality requirement also has not

been relinquished under the doctrine of collateral estoppel. See, e.g., Hurt v. Pullman, Inc., 764 F.2d

1443, 1450 (11th Cir. 1985) (“[T]he Alabama Supreme Court has . . . declined to abandon its mutuality

requirement” in the application of collateral estoppel.); Redmond v. Bankester, 757 So. 2d 1145, 1151 n.2

(Ala. 1999) (Collateral estoppel requires “‘mutuality,’ that is, both parties must have been bound by the

previous judgment or else neither party may invoke the doctrine of collateral estoppel.’”). However, its

function has been questioned and its scope eroded. See Little v. Pizza Wagon, Inc., 432 So. 2d 1269,

1274 (Ala. 1983) (Jones, J., concurring specially) (“[T]he time has come for us to recognize that

adherence to strict mutuality, when collateral estoppel is asserted in a defensive manner, is contrary to

the basic policy underlying the notion of preclusion. . . . Estoppel, in this situation, promotes judicial

economy and efficiency by reducing litigation and encouraging the use of our liberal joinder and

pleading rules.”). 

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In Handeen v. Lemaire, 112 F.3d 1339 (8th Cir. 1997), the Eighth Circuit explained

that “a growing number of courts, including our own, have held that an attorney or other

professional does not conduct an enterprise’s affairs through run-of-the-mill provision of

professional services.” Id. at 1348 (collecting cases); see also Reves v. Ernst & Young, 507

U.S. 170, 174-75 & 186 (1993) (holding that an accounting firm, which allegedly provided

the plaintiffs with erroneous information about the defendant’s financial solvency, was not

liable under RICO); Azrielli v. Cohen Law Offices, 21 F.3d 512, 521 (2d Cir. 1994) (An

attorney who “acted as no more than [an] attorney” could not be held liable under RICO.);

Univ. of Md. at Balt. v. Peat, Marwick, Main & Co., 996 F.2d 1534, 1539-40 (3d Cir. 1993)

(Mere performance of financial services, “even if they are later found to be deficient,” does

not open up an accounting firm “to liability under the federal racketeering statute.”). While

emphasizing that “[a]n attorney’s license is not an invitation to engage in racketeering”

activities proscribed by RICO, the Eighth Circuit observed, “[i]t is a good thing, we are sure,

that we find it extremely difficult to fathom any scenario in which an attorney might expose

himself to RICO liability by offering conventional advice to a client or performing ordinary

legal tasks (that is, by acting like an attorney).” Handeen, 112 F.3d at 1349.

Here, it is alleged that Mr. Edmondson served as legal counsel to the other named

Defendants, and that he failed in his duties to render lawful advice, thus facilitating the RICO

enterprise. (See Am. Compl. ¶¶ 20, 98, 121.) In Crooked Creek’s mostly conclusory words,

Mr. Edmondson “corruptly counsel[ed]” and “corruptly advise[d]” the Ensleys and Ms. Liles

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“by, among other things, wrongly placing legal roadblocks up in order for them to continue

looting Danya Apartments.” (Am. Compl. ¶ 121; see also Am. Compl. ¶¶ 139, 144.) It

further is alleged that, in return for his corrupt advice, Mr. Edmondson was paid with funds

collected from the rental business of Danya Apartments. (Am. Compl. ¶¶ 121, 136-37.)

Crooked Creek avers that “had it not been for [Mr.] Edmondson’s advice, counsel and help,”

the “criminal enterprise would have expired long ago.” (Am. Compl. ¶ 121.) In his role as

legal counsel, Mr. Edmondson allegedly joined the other Defendantsin an “unlawful objective

. . . to maintain autocratic control over [Crooked Creek’s] rental-property business in order

to have immediate, unfettered, unlimited, accessto itsfinancial resources, and, in the long run,

to wrest the business and property away from a financially exhausted and dispirited owner.”

(Am. Compl. ¶ 132.)

The court finds that these allegations place Mr. Edmondson squarely within the

principles espoused in the foregoing cases. His alleged corrupt role is confined to providing

legal services to the other Defendants. The fact that the advice purportedly was wrong or

tainted does not give rise to liability under RICO. Because the allegations challenge Mr.

Edmondson’s services as an attorney, they fail to present a basis for holding him liable under

RICO. Accordingly, the RICO claims against Mr. Edmondson are not only barred by res

judicata, but also are due to be dismissed on this basis.

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E. A Final Observation: The Rooker-Feldman Doctrine

It also bears mentioning that application of the Rooker-Feldman doctrine has been

urged by Mr. Edmondson (Doc. # 34, at 5-7), but not by the other Defendants. “The RookerFeldman doctrine prevents the lower federal courts from exercising jurisdiction over cases

brought by ‘state-court losers’ challenging ‘state-court judgments rendered before the district

court proceedings commenced.’” Lance v. Dennis, 546 U.S. 459, 460 (2006) (per curiam);

accord Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284 (2005).

Admittedly, this action seems to be an attempt to conceal, principally by way of RICO

claims, a motive to reverse the ruling by the Autauga County Circuit Court. Nonetheless, the

Rooker-Feldman doctrine is an “extremely narrow exception[] to the federal courts’ ‘virtually

unflagging’ duty ‘to adjudicate claims within their jurisdiction.’” Green, 563 F.3d at 1245.

In Lance, emphasizing the doctrine’s restricted use, the Court held that the Rooker-Feldman

doctrine “does not bar actions by nonparties to the earlier state-court judgment simply

because, for purposes of preclusion law, they could be considered in privity with a party to

the judgment.” Lance, 546 U.S. at 466; see also Exxon, 544 U.S. at 283 (observing that lower

courts have extended the Rooker-Feldman doctrine “far beyond the contours of the Rooker

and Feldman cases, . . . superseding the ordinary application of preclusion law pursuant to 28

U.S.C. § 1738”).

Crooked Creek was not a party to the Autauga County Suit. While Lance left open

whether “any circumstances, however limited” existed “in which Rooker-Feldman may be

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applied against a party not named in an earlier state proceeding[,]” 546 U.S. at 466 n.2, Mr.

Edmondson has not addressed whether such circumstances exist in this case. Because this

action is due to be dismissed on the ground of res judicata and because the argument for

application of the Rooker-Feldman doctrine is perfunctory as to the same-party requirement,

the court declines on this record to delve further into the applicability of the Rooker-Feldman

doctrine.

V. CONCLUSION

Based upon a careful study of the history of collateral estoppel and res judicata in

Alabama, it is unclear when one doctrine ends and the other begins, as the terminology used

by the courts is not always consistent and frequently is interchanged. It is clear, however, that

the result in this opinion is entirely consistent with the policies enunciated by Alabama courts

that parties should not be permitted to litigate the same matter in perpetuity: “[T]hose who

have contested an issue shall be bound by the ruling of the court[,] and . . . issues once tried

shall be considered foreversettled between those same parties and their privies.” Hughes, 533

So. 2d at 190. “The principle of res judicata fosters reliance on judicial action, and tends to

eliminate vexation and expense to the parties, wasted use of judicial machinery and the

possibility of inconsistent results.” Id.

Consistent with this principle and for the reasons set out herein, the court finds that

under Alabama law, all four elements of res judicata have been satisfied. The Autauga

County Suit constitutes a prior judgment on the merits, rendered by a court of competent

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jurisdiction, with the same subject matter as presented in this action, and with the same parties

or their privies. Res judicata, thus, bars Crooked Creek from bringing the present action.

Additionally, because there is not a private right of action under the federal and state

criminal statutes alleged, those claims cannot survive Rule 12(b)(6) scrutiny, and the RICO

claims against Mr. Edmondson fare no better. Because the operative complaint’s allegations

against Mr. Edmondson merely attack his work as an attorney for Defendants, they are

insufficient as a matter of law to sustain RICO liability. In sum, the foregoing sets out the

bases for the court’s prior Order (Doc. # 74) granting the motions to dismiss (Docs. # 22, 31)

filed by Defendants Richard Ensley, Patricia Ensley, Anita Liles, ES Capital, LLC, and

Charles W. Edmondson.

An appropriate judgment will be entered.

DONE this 28th day of October, 2009.

/s/ W. Keith Watkins

UNITED STATES DISTRICT JUDGE

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