Source: https://caselaw.findlaw.com/al-supreme-court/1196775.html
Timestamp: 2019-04-22 11:04:29+00:00

Document:
Annette CLARK v. WELLS FARGO BANK, N.A.
Annette Clark appeals from an order of the Jefferson Circuit Court dismissing, pursuant to Ala.Code 1975, § 6-5-440, her counterclaims against Wells Fargo Bank, N.A. (“Wells Fargo”). We reverse and remand.
On February 23, 2007, following the foreclosure on the mortgage on property owned by Clark, Wells Fargo filed an ejectment action against Clark in the Jefferson Circuit Court seeking damages for wrongful retention and possession of the foreclosed property, which, the complaint alleged, Clark had refused to vacate. Clark filed an initial answer to Wells Fargo's complaint on May 14, 2007, which asserted various affirmative defenses but contained no counterclaims.
Meanwhile, on March 23, 2007, Clark had initiated a separate federal action in the United States District Court for the Northern District of Alabama (“the federal court”) against Wells Fargo and other Wells Fargo entities; Edith Pickett, an Alabama attorney, who, the complaint alleged, “was in charge of collecting the false debt in this case”; and Shapiro & Pickett, LLP (“S & P”), the law firm at which Pickett was a partner. As last amended, Clark's federal action, which indicated that it was brought pursuant to the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., asserted the following claims stemming from the mortgage foreclosure: violation of the Fair Debt Collection Practices Act (count I); conversion (count II); breach of contract (count III); fraud (count IV); suppression (count V); conspiracy (count VI); negligent and wanton hiring, training, supervision, and retention (count VII); and wrongful foreclosure (count VIII). Clark further sought injunctive relief (count IX).
On September 11, 2007, Clark amended her answer in the case pending in the Jefferson Circuit Court to add counterclaims, which included a statement of factual allegations virtually identical to those alleged in Clark's federal complaint and which asserted the following claims against Wells Fargo: conversion of funds (count I); breach of contract (count II); fraud (count III); voiding of foreclosure sale (count IV); voiding of deed (count V); fraudulent foreclosure (count VI); injunctive relief (count VII); and malicious and fraudulent prosecution (count VIII).
On December 7, 2007, the federal court apparently dismissed with prejudice counts II, III, and IV against Pickett and S & P; dismissed without prejudice counts I, III, and IV against Wells Fargo; dismissed without prejudice counts I, V, VI, VII, and VIII against Pickett and S & P; dismissed with prejudice count II against Wells Fargo for failure to state a claim; struck counts IX and X;3 and afforded Clark 15 days to amend her complaint accordingly.4 The federal court's case-action summary further indicates that Clark filed an amended complaint on December 21, 2007.
On January 14, 2008, Wells Fargo moved the Jefferson Circuit Court, pursuant to Ala.Code 1975, § 6-5-440, to dismiss Clark's counterclaims on the ground that the counts asserted as counterclaims in the circuit court action were “virtually identical to the allegations filed by Clark against Wells Fargo in the Federal District Court for the Northern District of Alabama” and that Clark was unable to maintain two actions against Wells Fargo based on a single dispute. In opposition to the motion to dismiss filed by Wells Fargo, Clark argued that § 6-5-440, which prohibits simultaneous actions for the same cause against the same party, does not apply here because, she said, that section “applies to situations where a plaintiff files a lawsuit in federal court and then files the same lawsuit in state court” and is thus inapplicable to situations in which the first-filed suit is in the state court.
The circuit court conducted a hearing on Wells Fargo's motion on January 18, 2008. Without making written findings of fact, the circuit court granted Wells Fargo's motion and dismissed Clark's counterclaims on March 14, 2008.5 Clark subsequently filed a motion to alter, amend, or vacate that decision and a contemporaneous motion for additional findings of fact or conclusions of law, both of which were opposed by Wells Fargo. The circuit court denied Clark's motions. Thereafter, Clark filed a “renewed” motion to alter, amend, or vacate,6 which was likewise denied. Clark appeals.
“When the facts underlying a motion filed pursuant to § 6-5-440 are undisputed, as is the case here, our review of the application of the law to the facts is de novo. Greene v. Town of Cedar Bluff, 965 So.2d 773, 779 (Ala.2007).” Ex parte Metropolitan Prop. & Cas. Ins. Co., 974 So.2d 967, 969 (Ala.2007).
On appeal, Clark argues, as she did below, that the circuit court erred in dismissing her counterclaims in the state-court action because, she says, § 6-5-440 does not provide for the dismissal of a state-court action when it is the first-filed action and a second, identical action is later filed in a federal court. We agree.
Ex parte Norfolk S. Ry., 992 So.2d 1286, 1289-90 (Ala.2008).
Ex parte Norfolk S. Ry., 992 So.2d at 1289-90 (emphasis added). See also Little Narrows, LLC v. Scott, 1 So.3d 973 (Ala.2008); Ex parte J.C. Duke & Assocs., Inc., 4 So.3d 1092 (Ala.2008). Therefore, for purposes of applying § 6-5-440, when a defendant has the obligation to file a compulsory counterclaim, that defendant is considered a counterclaim plaintiff at the time the action is commenced.
Because Clark's state-court action is considered to have been filed before the action in the federal court, § 6-5-440 does not apply.
“Unquestionably, the statutory and case law of this state stands for the proposition that a person cannot prosecute two suits at the same time, for the same cause against the same party. The purpose of the rule is to avoid multiplicity of suits and vexatious litigation. Title 7, § 146, Code; Foster v. Napier, 73 Ala. 595 (1883); Sessions v. Jack Cole Co., 276 Ala. 10, 158 So.2d 652 (1963). The rule had been applied where one suit is filed in federal court and another is filed in state court, and this Court has held that a state court action can be abated if there is pending a federal court action involving the same cause against the same party. Fegaro v. South Central Bell, 287 Ala. 407, 252 So.2d 66 (1971); Watson v. Mobile & O. RR., 233 Ala. 690, 173 So. 43 (1937). It should be noted, however, that in Fegaro and Watson, the state suit was filed after the federal suit was filed. In other words, to quote Alabama's statute, ‘the pendency of the former (federal suit) is a good defense to the latter (state suit).’ We are faced with the opposite situation here. The question is: Does the rule of Fegaro and Watson apply? We think not.
Johnson v. Brown-Serv. Ins. Co., 293 Ala. 549, 551, 307 So.2d 518, 520 (1974). See also First Tennessee Bank, N.A. v. Snell, 718 So.2d 20, 27 n. 3 (Ala.1998) (See, J., concurring in the result) (“I note that this Court has properly held that Alabama's statutory abatement rule does not operate where the first-filed action is pending in a state court and the second-filed action is pending in a federal court. The abatement statute does not provide for abatement of first-filed actions, and cannot abate federal court actions.”).
293 Ala. at 551-52, 307 So.2d at 520. Further, in order to effect the intended purpose of the statute of “avoid[ing] multiplicity of suits and vexatious litigation,” Johnson, 293 Ala. at 551, 307 So.2d at 520, even though it may not dismiss the first-filed state action, the state court does have other options at its disposal, including a stay of all state-court proceedings pending the outcome of the federal action. See 1 Am.Jur.2d Actions § 72 (2008); E.H. Schopler, Annotation, Stay of Civil Proceedings Pending Determination of Action in Federal Court in Same State, 56 A.L.R.2d 335 (1957).
Finally, Wells Fargo has not provided any contrary authority demonstrating that § 6-5-440 is applicable in this case. In fact, in its brief to this Court, Wells Fargo acknowledges that “[t]he abatement statute does not apply if a plaintiff files a lawsuit in state court, and then the plaintiff later files the same lawsuit in federal court.” (Wells Fargo's brief, at p. 16.) In support of that statement, Wells Fargo cites this Court's decision in Ex parte LaCoste, 733 So.2d 889 (Ala.1998), in which we concluded that, because the named defendant in the plaintiff's first-filed state-court action had not yet been named as a defendant in substantially similar class-action litigation pending in federal court at the time the plaintiff's state-court action was filed, the plaintiff's action “was not subject to dismissal under § 6-5-440.” 733 So.2d at 894.
For the foregoing reasons, the circuit court's dismissal of Clark's state-court counterclaims was improper. Therefore, we reverse the order of the circuit court dismissing Clark's counterclaims, and we remand the cause for further proceedings consistent with this opinion.
COBB, C.J., and LYONS, WOODALL, and PARKER, JJ., concur.

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