Title: Afassco, Inc. v. Sanders
Citation: N/A
Docket Number: 1120801
State: Alabama
Issuer: Alabama Supreme Court
Date: November 22, 2013

REL: 11/22/2013
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, 2013-2014
____________________
1120801
____________________
Afassco, Inc.
v.
Comer Ladon Sanders
Appeal from Houston Circuit Court
(CV-12-900451)
STUART, Justice.
Afassco, Inc., a Nevada-based distributor of medical and
safety equipment, appeals the judgment of the Houston Circuit
Court holding that a judgment Afassco obtained in a Nevada
state court against former Afassco employee Comer Ladon
1120801
Sanders, an Alabama resident, was void because the Nevada
court lacked personal jurisdiction over Sanders.  We reverse
and remand.
I.
In early 2005, Sanders responded to an advertisement in
the Dothan Eagle placed by Afassco seeking a sales
representative.  Sanders subsequently met with Afassco's
president, Don Schumaker, and another Afassco representative
from the Birmingham area at a Dothan hotel to discuss his
potential employment, and, on February 7, 2005, Sanders
entered into a formal employment agreement with Afassco.  That
agreement contained clauses providing that Sanders would not
disclose or appropriate Afassco's trade secrets and that
Sanders would not associate or have any financial interest in
any competing companies while working as an Afassco employee
or for a period of two years after his separation of
employment from Afassco.  The employment agreement also
specifically provided that it would be governed by Nevada law. 
Sanders did not travel to Nevada for training before
commencing his employment; however, he did travel to Nevada
for two days of training in October 2005. 
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1120801
As part of his duties as an Afassco sales representative,
Sanders periodically visited Afassco customers, typically
businesses 
and 
government 
entities, 
in 
his 
assigned 
territory,
which encompassed parts of Alabama, Florida, and Georgia, and
ensured that their on-site first-aid kits were fully stocked. 
After restocking customers' kits, Sanders would fax a list of
the products that had been restocked to Afassco headquarters
in Nevada, which then sent him a check based on their agreed-
upon commission rate.  Sanders was also provided a company
credit card to use for all business-related expenses.
The evidence in the record indicates that Sanders
generally did a good job working as a sales representative and 
servicing his accounts; however, he was repeatedly counseled
that he needed to improve his record-keeping, particularly
with regard to submitting required reports and receipts to
Afassco headquarters.  That evidence also indicates that the
Afassco 
administrative 
staff 
viewed 
him 
as 
being 
insubordinate
and uncooperative when they attempted to work through the
problems they were having with him.  On June 3, 2008, Afassco
terminated Sanders's employment.
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Thereafter, Sanders established a new company called
Advanced First Aid Service.  Afassco alleges that Sanders then
improperly used Afassco's customer lists and proprietary
information 
and 
began 
supplying 
Afassco 
customers 
with 
medical
and safety equipment for Advanced First Aid 
Service's account. 
Afassco further alleges that, with regard to at least some of
those customers, Sanders never informed them that he was no
longer employed by Afassco and that he, in fact, restocked
those customers with supplies and equipment he had failed to
return to Afassco after his employment had been terminated. 
Afassco eventually recovered approximately $3,500 in Afassco
inventory from him, although, it alleges, an audit indicates
that an additional $88,000 in inventory was missing.  Afassco
also pursued a criminal case against Sanders.1
On January 19, 2012, Afassco sued Sanders in Nevada state
court, asserting claims of misappropriation of trade secrets,
It is not clear from the record what criminal charges
1
were brought against Sanders; however, the parties agree in
their briefs that he was found not guilty on all charges at
the conclusion of a jury trial held in the Houston Circuit
Court.  Sanders 
thereafter 
initiated an action against Afassco
in the United States District Court for the Middle District of
Alabama, alleging defamation, abuse of process, and malicious
prosecution.  Afassco asserts that Sanders's federal action
has been stayed pending the resolution of this appeal.
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1120801
tortious interference with contractual relations, breach of
contract, and conversion.  On February 5, 2012, Sanders was
served with a copy of Afassco's complaint in Dothan.  Sanders
did not file an answer or otherwise respond to the complaint
within the 20-day period provided by Nevada law, and, on March
1, 2012, the Nevada court accordingly entered a default
against Sanders.  See Rule 12(a)(1), Nev. R. Civ. P. ("A
defendant shall serve an answer within 20 days after being
served with the summons and complaint ...."), and Rule 55(a),
Nev. R. Civ. P. ("When a party against whom a judgment for
affirmative relief has failed to plead or otherwise defend as
provided by these rules and that fact is made to appear by
affidavit or otherwise, the clerk shall enter the party's
default.").
On April 2, 2012, Sanders filed a pro se motion with the
Nevada court, asking it to dismiss Afassco's action against
him because, Sanders alleged, the Nevada court lacked
jurisdiction over him.   In that motion, Sanders asserted that
2
In his brief to this Court, Sanders notes that the copy
2
of his motion to dismiss found in the record is not file-
stamped by the Nevada court and that the record contains no
order of the 
Nevada 
court's specifically addressing 
his motion
to dismiss.  He accordingly takes the position that he merely
mailed a copy of the motion to Afassco's attorney and never
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1120801
he had never been a citizen of Nevada, that he had never done
business in Nevada, that he had never advertised to do
business in Nevada, and that he had "no connections with the
State of Nevada whatsoever."  On April 16, 2012, Afassco filed
a motion in opposition to Sanders's motion to dismiss, arguing
that the Nevada court could properly exercise personal
jurisdiction over Sanders based on his relationship with
Afassco and that Sanders had waived any right to assert the
lack of personal jurisdiction as a defense based on his
failure to raise that issue within 20 days of being served
with Afassco's complaint. 
It appears that the Nevada court never explicitly ruled
on Sanders's motion to dismiss.  On June 20, 2012, Afassco
filed a motion seeking a default judgment accompanied by
supporting evidence establishing the damages it claimed in
accordance with the claims asserted in its complaint.  See
Rule 55(b)(2), Nev. R. Civ. P. ("If, in order to enable the
court to enter [default] judgment or to carry it into effect,
it is necessary to take an account or to determine the amount
actually filed or otherwise submitted it.  However, Afassco
has since supplemented the record to include a copy of
Sanders's motion that was stamped by the Nevada court at 2:24
p.m. on April 2, 2012.
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1120801
of damages or to establish the truth of any averment by
evidence or to make an investigation of any other matter, the
court may conduct such hearings or order such references as it
deems necessary and proper ....").  On July 17, 2012, the
Nevada court entered a default judgment in favor of Afassco,
awarding it $349,492 and permanently enjoining Sanders from
"servicing current or former Afassco customers and using
Afassco's 
proprietary 
information, 
including 
invoices, 
pricing
methods, products and product names."  On September 6, 2012,
the Nevada court awarded Afassco an additional $7,097 in costs
and attorney fees.  The record indicates that Sanders was sent
notice of both Afassco's motion for a default judgment and 
the default judgment.  Sanders filed no appeal of the default
judgment in the Nevada court system.
On October 26, 2012, Afassco moved the Houston Circuit
Court to domesticate the judgment entered against Sanders by
the Nevada court pursuant to the terms of Alabama's Uniform
Enforcement of Foreign Judgments Act, § 6-9-230 et seq., Ala.
Code 1975.  Sanders was served with Afassco's motion on
October 30, 2012, and, on November 1, 2012, the trial court
entered an order domesticating the judgment.  On November 7,
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1120801
2012, Sanders moved the trial court for relief from the
foreign judgment, arguing that the Nevada court lacked
jurisdiction over him and that its judgment was accordingly
void and unenforceable.  Afassco thereafter filed a response,
and on March 21, 2013, the trial court conducted a hearing to
consider the parties' arguments.  On March 27, 2013, the trial
court granted Sanders's motion for relief from the foreign
judgment, holding that the judgment was "void due to the lack
of personal jurisdiction over the defendant."  On April 8,
2013, Afassco filed its notice of appeal to this Court.
II.
Sanders's motion for relief from a foreign judgment was
filed pursuant to Rule 60(b)(4), Ala. R. Civ. P., which
authorizes a trial court "to relieve a party ... from a final
judgment" if "the judgment is void."  See Ex parte Trinity
Auto. Servs., Ltd., 974 So. 2d 1005, 1009 (Ala. Civ. App.
2006) ("Both our Supreme Court and this court have held that
the appropriate procedural mechanism by which to collaterally
attack a foreign judgment on the basis that the judgment is
void for lack of jurisdiction is by a motion filed pursuant to
Rule 60(b)(4).").  In Orix Financial Services, Inc. v. Murphy,
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1120801
9 So. 3d 1241, 1244 (Ala. 2008), we explained that we review
de novo a trial court's ruling on such a motion:
"'The standard of review on appeal
from the denial [or granting] of relief
under Rule 60(b)(4) is not whether there
has been an abuse of discretion.  When the
grant or denial of relief turns on the
validity of the judgment, as under Rule
60(b)(4), discretion has no place.  If the
judgment is valid, it must stand; if it is
void, it must be set aside.  A judgment is
void only if the court rendering it lacked
jurisdiction of the subject matter or of
the parties, or if it acted in a manner
inconsistent 
with 
due 
process. 
 
Satterfield
v. Winston Industries, Inc., 553 So. 2d 61
(Ala. 1989).'
"[Insurance Management & Administration, Inc. v.
Palomar Insurance Corp., 590 So. 2d 209, 212 (Ala.
1991).]  Additionally, we note that '[t]he validity
and effect of a foreign judgment, of course, are to
be determined by the law of the state in which it
was rendered.'  Morse v. Morse, 394 So. 2d 950, 951
(Ala. 1981) (citing Forbes v. Davis, 187 Ala. 71, 65
So. 516 (1914))."
III.
Afassco argues that the trial court erred by holding the
judgment entered against Sanders by the Nevada court to be
void for lack of personal jurisdiction because, it argues, (1)
Sanders waived any right to subsequently contest personal
jurisdiction  in an Alabama action by first appearing and
raising that issue in the Nevada action and (2) Sanders's
9
1120801
contacts with Nevada during the course of his relationship
with Afassco were sufficient, Afassco argues, so that the
Nevada court's exercise of jurisdiction over him 
complied 
with
the requirements of due process.  See, e.g., Consipio Holding,
BV v. Carlberg, 282 P.3d 751, 754 (Nev. 2012) ("Nevada's
long-arm statute permits personal jurisdiction over a
nonresident defendant unless the exercise of jurisdiction
would violate due process.  [Nev. Rev. Stat. §] 14.065(1). 
'Due 
process 
requires 
"minimum 
contacts" 
between 
the 
defendant
and the forum state "such that the maintenance of the suit
does not offend traditional notions of fair play and
substantial justice."'  Trump [v. District Court], 109 Nev.
[687,] 698, 857 P.2d [740,] 747 [(1993)] (quoting Mizner v.
Mizner, 84 Nev. 268, 270, 439 P.2d 679, 680 (1968)).").  We
first consider Afassco's argument that Sanders has waived the
right to assert that the Nevada court lacked personal
jurisdiction over him when it entered the default judgment
against him and in favor of Afassco.
In Insurance Corp. of Ireland, Ltd. v. Compagnie des
Bauxites de Guinee, 456 U.S. 694 (1982), the Supreme Court of
the United States summarized a party's options when he or she
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1120801
is named as a defendant in an action and does not believe that
the court in which the action was filed has personal
jurisdiction over him or her.  First, "[the] defendant is
always free to ignore the judicial proceedings, risk a default
judgment, and then challenge that judgment on jurisdictional
grounds in a collateral proceeding."  456 U.S. at 706 (citing 
Baldwin v. Traveling Men's Ass'n, 283 U.S. 522, 525 (1931)). 
Alternatively, the defendant may voluntarily appear in the
action to make an initial challenge to the court's
jurisdiction; 
however, 
"[b]y 
submitting 
to 
the 
jurisdiction 
of
the court for the limited purpose of 
challenging 
jurisdiction,
the defendant agrees to abide by that court's determination on
the issue of jurisdiction:  That decision will be res judicata
in any further proceedings."  456 U.S. at 706 (citing Baldwin,
283 U.S. at 524).  
In the instant action, Sanders initially chose to ignore
the Nevada action when he was served; however, after a default
was entered, he filed a motion to dismiss the action based on
the Nevada court's alleged lack of personal jurisdiction over
him.  By filing that motion to dismiss, Sanders submitted to
the jurisdiction of the Nevada court at least for the limited
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1120801
purpose of challenging jurisdiction, and that court's
determination 
of 
the 
personal-jurisdiction 
issue 
is
accordingly res 
judicata 
in 
any 
further 
proceedings. 
Insurance Corp. of Ireland, 456 U.S. at 706.  However, Sanders
argues that, even if he did submit the issue of personal
jurisdiction to the Nevada court, that court did not, in fact,
consider that issue and, accordingly, there can be no res
judicata effect.  Sanders argues that there is nothing in the
record indicating that the Nevada court considered his motion
to dismiss, nor is there any mention of the jurisdictional
issue in the default judgment that was finally entered. 
Accordingly, Sanders argues, the trial court properly granted
his Rule 60(b)(4) motion for relief from the foreign judgment. 
See Pirtek USA, LLC v. Whitehead, 51 So. 3d 291, 296 (Ala.
2010) (stating that an Alabama court need not give full faith
and credit to a foreign judgment if the issue of jurisdiction
was not fully and fairly litigated by the foreign court or the
issue of jurisdiction was not finally decided by the foreign
court).
However, Sanders fails to recognize that, regardless of
whether the Nevada court ever considered the substance of his
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1120801
personal-jurisdiction argument, the personal-jurisdiction
issue was still fully and fairly litigated if the Nevada court
decided it on procedural grounds as opposed to substantive
grounds.  In Insurance Corp. of Ireland, the Supreme Court of
the United States explained:
"Because 
the 
requirement 
of 
personal
jurisdiction represents first of all an individual
right, it can, like other such rights, be waived. 
...  [U]nlike subject-matter jurisdiction, which
even an appellate court may review sua sponte, under
Rule 12(h), Fed. R. Civ. P., '[a] defense of lack of
jurisdiction over the person ... is waived' if not
timely raised in the answer or a responsive
pleading.
"In 
sum, 
the 
requirement 
of 
personal
jurisdiction may be intentionally waived, or for
various reasons a defendant may be estopped from
raising the issue.  These characteristics portray it
for what it is –– a legal right protecting the
individual.  The plaintiff's demonstration of
certain historical facts may make clear to the court
that it has personal jurisdiction over the defendant
as a matter of law –– i.e., certain factual showings
will have legal consequences ––  but this is not the
only way in which the personal jurisdiction of the
court may arise.  The actions of the defendant may
amount to a legal submission to the jurisdiction of
the court, whether voluntary or not.
"The expression 
of 
legal 
rights 
is 
often 
subject
to certain procedural rules:  The failure to follow
those rules may well result in a curtailment of the
rights.  Thus, the failure to enter a timely
objection to personal jurisdiction constitutes,
under Rule 12(h)(1), a waiver of the objection.
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1120801
"....
"...[T]he manner in which the court determines
whether it has personal jurisdiction may include a
variety of legal rules and presumptions, as well as
straightforward factfinding.  A particular rule may
offend the due process standard of Hammond Packing
[Co. v. Arkansas, 212 U.S. 322 (1909)], but the mere
use of procedural rules does not in itself violate
the defendant's due process rights."
456 U.S. at 703-07.  Like Rule  12(h)(1), Federal Rules of
Civil Procedure, Rule 12(h)(1), Nevada Rules of Civil
Procedure, and Rule 12(h)(1), Alabama Rules of Civil
Procedure, provide that a defense of lack of personal
jurisdiction is waived if not timely asserted.  See also
Hansen v. Eighth Judicial Dist. Court ex rel. County of Clark,
116 Nev. 650, 656-57, 6 P.3d 982, 986 (2000) ("Objections to
personal jurisdiction ... are waived, however, if not made in
a timely motion or not included in a responsive pleading such
as an answer.  See Rules 12(g) and (h)(1), Nev. R. Civ. P. 
Thus, to avoid waiver of a defense of lack of jurisdiction
over the person ... the defendant should raise its defenses
either in an answer or pre-answer motion." (footnote
omitted)).  
By failing to assert lack of personal jurisdiction as an
affirmative defense within the 20 days allowed by Nevada law,
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Sanders waived the right to assert that defense in the Nevada
court.  Had Sanders elected to completely ignore the Nevada
action, he could nevertheless have asserted that defense when
Afassco attempted to domesticate the resulting judgment in
Alabama.  Insurance Corp. of Ireland, 456 U.S. at 706. 
However, after default was entered against him –– but before
the default was reduced to judgment –– Sanders appeared in the
Nevada court and moved to dismiss the action on personal-
jurisdiction grounds, thus consenting to the Nevada court's
determination of the jurisdiction issue.  The Nevada court did
not grant his motion to dismiss, and Sanders did not, after
the final default judgment was entered, move for relief from
the default judgment pursuant to Rule 60(b), Nev. R. Civ. P.,
which sets forth the procedure for moving to have a default
judgment set aside, nor did he file an appeal to the Supreme
Court 
of 
Nevada 
asserting 
his 
personal-jurisdiction 
argument.  
3
Thus, although Sanders did not prevail on his personal-
Similar to Alabama courts, Nevada courts have a stated
3
policy in favor of deciding cases on the merits, Hotel Last
Frontier Corp. v. Frontier Properties, Inc., 79 Nev. 150, 155,
380 P.2d 293, 295 (1963), and judges "are afforded broad
discretion in ruling on Rule 60(b) motions [to set aside
default judgments]."  Kahn v. Orme, 108 Nev. 510, 513, 835
P.2d 790, 792 (1992).
15
1120801
jurisdiction argument, he did assert it, and it was finally
decided, if only on procedural grounds.  Sanders is
accordingly bound by that decision, and he cannot seek to now
relitigate the issue in an Alabama forum.  
We note that our decision is supported by previous
Alabama caselaw on this topic.  In Stribling Equipment, Inc.
v. Crager, 891 So. 2d 299 (Ala. 2004), an Alabama defendant
sued in a Mississippi court filed two answers to the
complaint, neither of which asserted lack of personal
jurisdiction as a defense.  Id. at 301.  Both of those answers
were subsequently stricken by the Mississippi court.  Id.  The
Alabama defendant had no other participation in the
Mississippi action, and a judgment was eventually entered
against him.  Id.  After the Mississippi plaintiff moved an
Alabama court to domesticate the judgment, the Alabama
defendant moved for relief from the judgment, arguing that the
Mississippi court had lacked personal jurisdiction over him. 
Id. at 301-02.  The Alabama court granted his motion; however,
on appeal, this Court reversed that court's judgment, noting
–– as was the case with Sanders –– that the Alabama defendant
had waived his right to contest personal jurisdiction in the
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1120801
foreign action because he had appeared in the action but
failed to assert that defense in the time prescribed by the
law of the foreign forum.  Id. at 302-03. 
Similarly, in Package Express Center, Inc. v. Maund, 957
So. 2d 1137, 1139 (Ala. Civ. App. 2006), Alabama defendants
sued in a Tennessee court filed an initial motion to dismiss
the action on personal-jurisdiction grounds and a subsequent
answer making the same argument.  The Tennessee court never
specifically addressed their personal-jurisdiction argument,
and, after they subsequently participated in and lost at
trial, the Tennessee court entered a judgment against them. 
Id. at 1139-40.  Their appeal of that judgment to the
Tennessee Court of Appeals was also unsuccessful.  Id.  After
the Tennessee plaintiff domesticated the judgment in Alabama,
an Alabama court granted the Alabama defendants' motion for
relief from the judgment, concluding that the issue of
personal jurisdiction had not been fully and fairly litigated
in the absence of any indication from the Tennessee court that
it had considered the personal-jurisdiction argument that the
defendants had unquestionably raised.  Id. at 1140.  The
Tennessee plaintiff appealed that judgment to the Court of
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1120801
Civil Appeals, which reversed the trial court's judgment,
holding that, even though the Alabama defendants had raised a
challenge to the foreign court's exercise of personal
jurisdiction over them, they subsequently waived that
challenge when they failed to pursue it to an end before the
Tennessee trial court or, subsequently, the Tennessee
appellate court.  Id. at 1142.  In the instant case, Sanders
similarly raised a personal-jurisdiction challenge, but he
then failed to take steps, such as the filing of a Rule 60(b)
motion or an appeal, to follow up on his challenge.  Sanders
accordingly waived his personal-jurisdiction objection and
cannot now argue that it was not fully and fairly litigated.
IV.
Afassco sued Sanders in a Nevada court, eventually
obtaining a default judgment in its favor for $349,492 plus an
additional sum for costs and attorney fees.  After Afassco
domesticated the judgment in Alabama in an attempt to collect
on it, Sanders moved an Alabama court for relief from the
judgment, arguing that the Nevada court lacked personal
jurisdiction over him.  The Alabama court agreed and entered
a judgment granting Sanders's motion.  However, because
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1120801
Sanders filed a motion in the Nevada court asking it to
dismiss Afassco's action based on the alleged lack of personal
jurisdiction, he consented to the court's determination of
that issue.  He accordingly waived any right to subsequently
litigate that issue in another forum.  Because of that waiver,
it is unnecessary to consider the substance of Sanders's
argument that the Nevada court lacked personal jurisdiction
over him, and we accordingly pretermit all consideration of
that issue.  The judgment of the trial court is reversed and
the cause remanded for further proceedings consistent with
this opinion.
REVERSED AND REMANDED.
Moore, C.J., and Parker, Shaw, and Wise, JJ., concur.
19