Title: Bernals, Inc., and Maria E. Adan v. Kessler-Greystone, LLC
Citation: N/A
Docket Number: 1091121
State: Alabama
Issuer: Alabama Supreme Court
Date: March 25, 2011

Rel: 3/25/2011
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2010-2011
_________________________
1091121
_________________________
Bernals, Inc., and Maria E. Adan
v.
Kessler-Greystone, LLC
Appeal from Jefferson Circuit Court
(CV-08-467)
WOODALL, Justice.
Maria E. Adan appeals from a default judgment for
$84,271.24 in favor of Kessler-Greystone, LLC. ("Kessler"), on
Kessler's claim against Adan and Bernals, Inc ("Bernals"),
seeking accelerated rental payments and attorney fees.
Bernals appeals from a summary judgment in favor of Kessler
1091121
2
for $130,029.44 in attorney fees and the same accelerated
rental payments on Kessler's claim against Adan and Bernals
and in favor of Kessler on counterclaims that Bernals asserted
against Kessler.  We vacate the judgments, dismiss the action,
and dismiss the appeal.
I. Facts and Procedural History
This dispute arose out of a "Lease Agreement made and
entered into on ... the 8th day of June, 2005, between Taylor
Properties, LLC [('Taylor'),] an Alabama limited liability
company, or its successors and assigns (hereinafter called
'Landlord'), and Bernals, Inc., [an] Alabama corporation
(hereinafter called 'Tenant')."  The leased premises consisted
of suites 113 and 114 in a building in Shelby County known as
Greystone Park.  "The Leased Premises [were] to be used and
occupied by Tenant" as a "Cuban Restaurant -- Dine In & Take
Out."  The lease was signed by Maria E. Adan, the sole owner
of Bernals.  Bernals subsequently used the leased space to
operate a Cuban restaurant called Cuban Grill 280.  Adan also
executed a "guarantee of lease," whereby she agreed to
personally guarantee "full and prompt payment of rent."  
1091121
3
On September 1, 2005, Taylor entered into a contract with
Brentwood Properties, Inc. ("Brentwood"), whereby Brentwood
agreed to manage and operate the Greystone Park premises on
behalf of Taylor  ("the Brentwood-Taylor agreement").  As part
of its responsibilities under the Brentwood-Taylor agreement,
Brentwood was to collect all rents due from the tenants of
Greystone Park.  In addition, the Brentwood-Taylor agreement
specified that Brentwood was to "take all reasonable necessary
action to enforce tenant leases, including but not limited to
serving tenants with notices to vacate the leased premises ...
and undertaking collection and eviction procedures."  The
Brentwood-Taylor agreement was to terminate on August 31,
2007, or upon the sale of Greystone Park.  On February 1,
2007, Taylor sold Greystone Park to Kessler. 
On February 7, 2008, Brentwood sued Bernals and Adan
alleging breach of contract.  Brentwood's complaint stated:
"1.
On or about the 8th day of June, 2005, the
Plaintiff, Brentwood Properties, Inc., and the
Defendant, Bernals, Inc., entered into a written
lease agreement for certain premises in the building
known as Greystone Park ....
"2.
On or about the 25th day of July, 2005, ... Adan
... executed a personal guaranty for the above
stated written lease agreement.
1091121
4
"3.
[Bernals and Adan] breached the said agreements
by failing to pay the proper rental amounts, by
failing to pay the proper late fees, and by failing
to pay the proper utility fees.
"4.
[Brentwood] claims a reasonable attorney's fee
... pursuant to the said agreements.
"WHEREFORE, [Brentwood] demands judgment against the
Defendants 
in 
the 
sum 
of 
[$75,000], 
plus 
a
reasonable sum as attorney's fees, plus interest and
costs."
Several months later, on July 1, 2008, Brentwood entered into
a written property-management agreement with Kessler ("the
Brentwood-Kessler 
agreement"), 
similar 
to 
the 
Brentwood-Taylor
agreement.
On March 20, 2009, Brentwood filed a motion for a summary
judgment.  In their reply to that motion, Bernals and Adan
argued that Brentwood had no standing to sue based on an
alleged breach of the lease agreement because Brentwood was
not a party to the lease agreement.  On April 13, 2009, the
trial court denied Brentwood's summary-judgment motion.
On April 14, 2009, Brentwood filed a motion to substitute
Kessler for itself in the action.  The trial court granted
that motion.  On April 17, 2009, Bernals filed  counterclaims
against Kessler alleging breach of contract, fraud, breach of
warranty of quiet enjoyment, trespass, and negligence. 
1091121
5
A bench trial of the case was scheduled for April 28,
2009.  A few days before that date, a dispute surfaced for the
first time regarding the spelling of Adan's name.  Adan's name
had appeared in the style of the complaint and on subsequent
pleadings and motions as "Marca E. Adan," and the action had
been so styled. 
On the day set for trial, the parties -- including Adan
-- appeared in court.  The dispute over Adan's name was again
taken up at that time.  It is undisputed that no such person
as "Marca" E. Adan exists.  It is likewise undisputed that
"Maria" E. Adan had signed the lease and the guarantee and
that she and her counsel were present in court on the day set
for trial.  
According to Adan's affidavit, the proceedings ended
after approximately an hour, and the trial was to be continued
to a later date.  Nevertheless, on May 1, 2009, the trial
court entered, in pertinent part, the following order:
"Upon oral motion made by the plaintiff,
Kessler-Greystone, LLC, the name of the defendant,
Marca E. Adan, is hereby changed to reflect the
Defendant's correct and proper name, Maria E. Adan.
"Further, the Court finds that service of the
Summons and Complaint was properly made upon said
defendant, Maria E. Adan, at her personal residence
1091121
6
address, and that said defendant, Maria E. Adan, is
the signatory to the said lease agreement and
personal 
guaranty 
forming 
the 
basis 
to 
the
plaintiffs, Kessler-Greystone, LLC's, Complaint.
"Further, the Court finds that the defendant,
Maria E. Adan, failed to appear for trial in the
above-referenced matter.
"Therefore, judgment by default is hereby
entered in favor of plaintiff, Kessler-Greystone,
LLC, and against defendant, Maria E. Adan, in the
amount 
of 
Eighty-Four 
Thousand 
Two 
Hundred
Seventy-One and 24/100 Dollars ($84,271.24), plus
costs of court."
(Emphasis added.)
Adan moved to set aside the default judgment.  That
motion was denied.  On December 11, 2009, Kessler filed a
motion for a summary judgment on Bernals's conterclaims
against it and a renewed motion for a summary judgment on its
claims against Bernals.  On February 2, 2010, the trial court
granted Kessler's motion for a summary judgment as to
Bernals's counterclaims and entered a judgment against Bernals
in the sum of $130,029.44.
On February 16, 2010, Kessler filed a motion to revise
the judgment against Adan to coincide with the amount of the
judgment entered against Bernals.  On February 26, 2010,
Bernals filed a motion to alter, amend, or vacate the judgment
1091121
7
against it.  On March 29, 2010, the trial court denied
Kessler's motion to revise the judgment against Adan.  On
April 2, 2010, the trial court denied Bernals's motion to
alter, amend, or vacate the judgment.  
On May 13, 2010, Bernals and Adan filed a notice of
appeal to this Court from those judgments.  On appeal, they
renew their challenge to Brentwood's standing to commence this
action, that is, to invoke the subject-matter jurisdiction of
the trial court.  That challenge is dispositive of this case.
II. Discussion
The question of standing implicates the subject-matter
jurisdiction of the court.  Ex parte Howell Eng'g & Surveying,
Inc., 981 So. 2d 413, 419 (Ala. 2006).  "When a party without
standing purports to commence an action, the trial court
acquires no subject-matter jurisdiction."  State v. Property
at 2018 Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999).
Moreover, "[t]he jurisdictional defect resulting from the
plaintiff's lack of standing cannot be cured by amending the
complaint to add a party having standing."  Cadle Co. v.
Shabani, 4 So. 3d 460, 463 (Ala. 2008).  "When the absence of
subject-matter jurisdiction is noticed by, or pointed out to,
1091121
8
the trial court, that court has no jurisdiction to entertain
further motions or pleadings in the case.  It can do nothing
but dismiss the action forthwith."  Id.  When a circuit court
lacks subject-matter jurisdiction, all orders and judgments
entered in the case, except an order of dismissal, are void ab
initio.  Redtop Market, Inc. v. State, [Ms. 1060855, December
30, 2010] ___ So. 3d ___ (Ala. 2010).  Thus, if Brentwood
lacked standing to commence this action, then the absence of
subject-matter jurisdiction was not cured by the substitution
of Kessler, and every order and judgment entered by the trial
court is void.
 "Standing ... turns on 'whether the party has been
injured in fact and whether the injury is to a legally
protected right.'" 2018 Rainbow Drive, 740 So. 2d at 1027
(quoting Romer v. Board of County Comm'rs of the County of
Pueblo, 956 P.2d 566, 581 (Colo. 1998) (Kourlis, J.,
dissenting)).  Brentwood's initial complaint sought damages
and attorney fees from Bernals and Adan for an alleged breach
of the lease agreement, alleging therein that Brentwood leased
the premises to Bernals.  However, it is undisputed that
Brentwood was not a party to the lease agreement.  "'It is
1091121
9
well-settled law that 'one not a party to, or in privity with
a contract, cannot sue for its breach.'" Dunning v. New
England Life Ins. Co., 890 So. 2d 92, 97 (Ala. 2003) (quoting
Twine v. Liberty Nat'l Life Ins. Co., 294 Ala. 43, 50, 311 So.
2d 299, 305 (1975)).  
Kessler's sole response to the jurisdictional challenge
is an assertion that Brentwood had standing to sue based on a
breach of the lease agreement as a third-party beneficiary of
that agreement.  See Russell v. Birmingham Oxygen Serv., Inc.,
408 So. 2d 90 (Ala. 1981) (noting that "a third person has no
rights under a contract between others," and no standing to
sue based on a breach of that contract, "unless the
contracting parties intend that the third person receive a
direct benefit enforceable in court").  According to Kessler,
"the lease agreement entered into between Taylor ... and
Bernals on June 8, 2005, was for the benefit of the property
manager, Brentwood, .... because on September 1, 2005, Taylor
and Brentwood entered into [a] written agreement whereby
Brentwood agreed to manage and operate the property on behalf
of Taylor."  Kessler's brief, at 15 (emphasis added).  
1091121
10
This argument is without merit.  It proposes that the
purpose of the lease agreement was to benefit Brentwood by
providing Brentwood some property to manage.  This argument
confuses cause and effect and has the proverbial "tail wagging
the dog."  As a matter of common experience, leases are made
for the intended benefit of the lessor and lessee.  In other
words, managers of rental property under separate agreements
benefit 
only 
incidentally 
from 
the 
lessor-lessee 
relationship.
See generally John D. Calamari & Joseph M. Perillo, The Law of
Contracts § 17.3 (4th ed. 1998) ("The presumption is that the
parties contract for their own benefit and not for the benefit
of a third person.").  
In that connection, it is well established that "[t]o
recover [as a] third-party-beneficiary ..., the claimant must
show: (1) that the contracting parties intended, at the time
the contract was created, to bestow a direct benefit upon a
third party; (2) that the claimant was the intended
beneficiary of the contract; and (3) that the contract was
breached."  Ex parte Steadman, 812 So. 2d 290, 295 n.3 (Ala.
2001) (emphasis added); see also Swann v. Hunter, 630 So. 2d
374, 376 (Ala. 1993).  The record contains no evidence
1091121
11
indicating that, at the time they executed the lease
agreement, Bernals and Taylor had in view, or intended to
benefit, Brentwood.  Brentwood is not mentioned in the lease
agreement.  Indeed, ¶ 36.11 of the lease agreement directs all
payments under the lease to be made directly to Taylor at
Taylor's address.  In short, Brentwood is not a third-party
beneficiary of the lease agreement.
In any event, assuming -- without deciding -- that an
agreement giving Brentwood authority to "take all reasonable
necessary action to enforce tenant leases, including ...
undertaking collection and eviction procedures," would give
Brentwood standing to commence this action, Bernals has raised
serious "questions [regarding] the very existence of [such an
agreement] being in place" when the complaint was filed.
Reply brief, at 11 (emphasis added).  The record suggests that
there was no management agreement in force on February 7,
2008, when Brentwood filed its complaint, the Brentwood-Taylor
agreement having terminated, either upon the sale of Greystone
Park on February 1, 2007, or upon the expiration of the
agreement on August 31, 2007.  The Brentwood-Kessler agreement
was not executed until July 1, 2008, five months after this
1091121
12
action was filed.  Thus, Brentwood purported to commence this
action during a hiatus in the management agreement of, at the
very least, five months.  
Although Kessler asserts that "at Kessler's request,
Brentwood continued its management ... of the premises" after
the purchase of Greystone Park from Taylor, Kessler's brief,
at 5, the only evidence provided for that assertion is a
letter from Kessler to Avery A. Clenney, president of
Brentwood ("the Greystone Park letter").  The Greystone Park
letter stated, in pertinent part: "[Kessler] purchased
Greystone Park on February 1, 2007, and was assigned the
management 
agreement 
between 
[Taylor] 
and 
[Brentwood].
[Kessler] hereby agrees to extend the existing management
agreement for two years from the expiration date."  
The Greystone Park letter is dated February 3, 2007.
However, the record indicates that the Greystone Park letter
was created in August 2008 and was backdated to February 3,
2007, to create the appearance of an uninterrupted, written
management authority.  Specifically, on August 26, 2008,
approximately seven months after the complaint was filed,
Clenney sent two e-mails to a Kessler employee, Zack Hutto.
1091121
13
On one e-mail, the subject line was "Greystone Park Letter."
The e-mail read: 
"Zack,
"Here is my suggestion for the letter about
Greystone Park's management agreement.  Please see
attached.
"Avery"
Attached to the e-mail was the Greystone Park letter.  On the
second e-mail, the subject line was "Date of Letter."  That e-
mail read: 
"Zack,
"Be sure to date the letter sometime in February of
2007.
"Avery"
(Emphasis added.)  
This evidence is unrebutted -- Kessler does not mention
the e-mails or address in any manner the evidence of
backdating the Greystone Park letter.
"[W]hen the parties have not provided sufficient
legal or factual justification for [the court's
subject-matter] jurisdiction, this Court is not
obligated to embark on its own expedition beyond the
parties' arguments in pursuit of a reason to
exercise jurisdiction. The burden of establishing
the existence of subject-matter jurisdiction falls
on the party invoking that jurisdiction."
1091121
14
Crutcher v. Williams, 12 So. 3d 631, 635 (Ala. 2008).  In
other words, this Court is not duty-bound "to construct
theories and search the record for facts to support the
existence of jurisdiction for plaintiffs who choose to stand
mute in the face of a serious jurisdictional challenge."
Blevins v. Hillwood Office Ctr. Owners' Ass'n, [Ms. 1090512,
June 18, 2010] ___ So. 3d ___, ___ (Ala. 2010) (some emphasis
added)(appeal and case dismissed when the plaintiff/appellant
"essentially" did not dispute a serious challenge to
standing).
III. Conclusion  
Given the cursory manner in which Kessler has confronted
the substantial standing issue presented in this case, Kessler
has not met its burden of demonstrating the existence of
subject-matter jurisdiction.  Thus, we hold that the complaint
failed to invoke the subject-matter jurisdiction of the trial
court.  Therefore, every order and judgment entered in this
case was void, including the judgments from which this appeal
was taken.  A void judgment will not support an appeal.
Health Care Auth. for Baptist Health v. Davis, [Ms. 1090084,
January 14, 2011] ___ So. 3d ___, ___ (Ala. 2011).
1091121
15
Consequently, the judgments are vacated, and the case and the
appeal are dismissed.
JUDGMENTS VACATED; CASE DISMISSED; AND APPEAL DISMISSED.
Stuart, Bolin, Parker, Shaw, Main, and Wise, JJ., concur.
Cobb, C.J., concurs in the result in part and dissents in
part.
Murdock, J., dissents.
1091121
16
COBB, Chief Justice (concurring in the result in part and
dissenting in part).
When this Court decided Cadle Co. v. Shabani, 4 So. 3d
460 (Ala. 2008) ("Cadle"), Justice Murdock wrote a powerful
dissent. See Cadle, 4 So. 3d at 463 (Murdock, J., dissenting).
I concurred in the result in Cadle, with the following special
writing:
"Under other circumstances, 
I 
would 
find 
Justice
Murdock's dissent persuasive, particularly with
respect to the savings in judicial resources that
would be effected if the filing and prosecution of
an entirely new legal action could be avoided.
However, under the circumstances of this case, it
does not appear to me that the jurisdictional
impediment first noted in Cadle Co. v. Shabani, 950
So. 
2d 
277 
(Ala. 
2006), 
was 
ever 
removed.
Accordingly, I concur in the result."
4 So. 3d at 463 (Cobb, C.J., concurring in the result).
The rationale in Justice Murdock's dissent in Cadle is
entirely applicable to the case at hand.  Further, the present
case powerfully illustrates the waste of judicial resources,
and the prejudice to all parties, caused by this Court's
incorrect decision in Cadle. Brentwood Properties, Inc., filed
this case on February 7, 2008.  After the defendants pointed
out that Brentwood lacked standing to bring the action, the
trial 
court 
substituted 
Kessler-Greystone, 
LLC 
("Kessler"), 
as
1091121
17
plaintiff.  Subsequently, Bernals, Inc., filed counterclaims
against Kessler, all of which arose out of the same
transactions and occurrences that led to Kessler's breach-of-
contract claims.  Both Kessler's claims against Bernals and
Bernals's counterclaims against Kessler proceeded to a
judgment on the merits on February 2, 2010 -- after two years
of litigation. Now, nearly another year later, and after
nearly three years of litigation, the trial court's judgment
is being vacated and the case dismissed without a disposition
of the merits of this dispute.
Because I disagree with this Court's opinion in Cadle, I
must dissent from today's holding that "'[t]he jurisdictional
defect resulting from the plaintiff's lack of standing cannot
be cured by amending the complaint to add a party having
standing.'" ___ So. 3d at ___  (quoting Cadle, 4 So. 3d at
463).  In my view, the Court should consider Bernals's appeal
on the merits.  Therefore, I dissent from the Court's
dismissal of Bernals's appeal. 
Further, I recognize that, under Cadle, the judgment
against Maria E. Adan is void and is due to be vacated.
Cadle, 4 So. 3d at 463 (holding that, once the absence of
1091121
18
subject-matter jurisdiction is pointed out to a trial court,
every act of the trial court, other than dismissing the case
for lack of jurisdiction, is void).  Because I disagree with
Cadle, I dissent from the holding that the judgment against
Adan is void.  However, in my view, Adan's appeal is not due
to be decided on the merits.  The trial court's May 1, 2009,
order entering a default judgment against Adan was certified
as final pursuant to Rule 54(b), Ala. R. Civ. P. On the same
day the trial court entered the default judgment against her,
Adan moved to set aside the judgment of default; the trial
court did not rule on the motion to set aside the default
within 90 days after its filing, and it was denied on the 91st
day by operation of law.  Adan filed her appeal over one year
after filing the motion to set aside the default judgment. In
Lauterbach v. Gordon, Dana, Still, Knight & Gilmore, LLC, [Ms.
1090953, August 13, 2010] __ So. 3d __, __ (Ala. 2010), a
motion to set aside a default judgment was automatically
denied after 90 days because the trial court had not ruled on
the motion. In Lauterbach, this Court held that, to be timely,
a notice of appeal would have to be filed within 42 days of
the date the motion to set aside the default judgment was
automatically denied.  Under Lauterbach, Adan's appeal is due
to be dismissed for lack of jurisdiction because it is
1091121
19
untimely.  See Lauterbach, __ So. 3d at __ (dismissing an
untimely appeal for lack of jurisdiction). 
Accordingly, I concur in the result as to the dismissal
of Adan's appeal, and I dissent from the decision to vacate
the default judgment against her. In all other respects, I
respectfully dissent.