Opinion ID: 1714942
Heading Depth: 2
Heading Rank: 3

Heading: Gerling's Procedural Arguments Concerning the Garnishment

Text: Gerling asserts that the circuit court erred in denying its motions to dismiss Wheelwright's garnishment proceeding against it because, it says, the writ of garnishment was a compulsory counterclaim to its declaratory-judgment action pursuant to Rule 13(a), Ala.R.Civ.P., and Rule 13(a), Fed.R.Civ.P. [11] Gerling relies on the following statement in Rule 13(a): A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction. Gerling argues that the garnishment arises out of the transaction or occurrence that is the subject matter of its declaratory-judgment action. That is, Gerling contends that the issue in its declaratory-judgment action is the extent to which its policies provide coverage for Dorsey against Wheelwright's claims and that that is the exact issue raised by Wheelwright's garnishment proceeding. Thus, Gerling argues, because the garnishment was not filed as a compulsory counterclaim in its declaratory-judgment action, assertion of the garnishment is barred pursuant to the authority of Ex parte Cincinnati Insurance Co., 806 So.2d 376 (Ala.2001). That case held: The purpose of Rule 13 `is to avoid circuity of actions and to enable the court to settle all related claims in one action and thereby avoid a wasteful multiplicity of litigation on claims that arose from a single transaction or occurrence.' Grow Group, Inc. v. Industrial Corrosion Control, Inc., 601 So.2d 934, 936 (Ala.1992), citing 6 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure: Civil § 1409 (2d ed.1990). To effect the purpose of Rule 13, the consequence for failing to assert a compulsory counterclaim is a bar against the assertion of that claim in any other action. See Brooks v. Peoples Nat'l Bank of Huntsville, 414 So.2d 917, 920 (Ala.1982); Owens v. Blue Tee Corp., 177 F.R.D. 673, 682 (M.D.Ala.1998). 806 So.2d at 379. We conclude that this argument is without merit; Gerling's declaratory-judgment action was filed in October 2000, and Wheelwright did not have a judgment on which it could file a garnishment until March 23, 2001, long after the time for filing a responsive pleading to the declaratory-judgment action had passed. [12] Rule 13(a) is inapplicable because Wheelwright had no garnishment claims pending at the time of serving the pleading the pleader has against any opposing party. As stated in 6 Charles Alan Wright et al., Federal Practice and Procedure: Civil § 1411 (2d ed.1990): [T]he party need not assert a counterclaim that has not matured at the time he serves his pleading. This is derived from the language in the rule limiting its application to claims the pleader has `at the time of serving the pleading.' A counterclaim acquired by defendant after he has answered will not be considered compulsory, even if it arises out of the same transaction as does plaintiff's claim. (Footnotes omitted.) See also Wells v. Geneva County Bd. of Educ., 646 So.2d 98, 99 (Ala.Civ.App.1994)(The proper time to assert a counterclaim is in the responsive pleading ....). The circumstances of this case are properly addressed by Rule 13(e), Ala.R.Civ.P., which states that [a] claim which either matured or was acquired by the pleader after serving a pleading may, with the permission of the court, be presented as a counterclaim by supplemental pleading. Wheelwright's garnishment proceeding could have been presented in the declaratory-judgment action as a permissive counterclaim. See Safeco Ins. Co. of America v. Sims, 435 So.2d 1219 (Ala.1983); Brooks v. Peoples Nat'l Bank of Huntsville, 414 So.2d 917 (Ala.1982). Finally, the United States District Court for the Middle District of Alabama considered and rejected Gerling's attempt to remove the garnishment proceeding, on the ground that the garnishment proceeding, with Gerling standing in the shoes of Dorsey, an Alabama corporation, lacked the requisite diversity for federal court adjudication. The federal court stayed the declaratory-judgment action in deference to the Barbour Circuit Court's determination of the coverage issues in the garnishment proceeding. The purpose of Rule 13(a) as articulated in Cincinnati Insurance, supra, of avoiding circuity and multiplicity of actions, is therefore accomplished. Gerling also argues that the circuit court erred in denying its motion to dismiss the garnishment action because of the operation of Ala.Code 1975, § 6-5-440. That statute, sometimes referred to as the abatement statute, states: No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times. Essentially, Gerling asserts that Ex parte Canal Insurance Co., 534 So.2d 582 (Ala. 1988), requires the dismissal of Wheelwright's garnishment action. That case held that § 6-5-440 required the dismissal of state-court breach-of-contract, fraud, and bad-faith claims against an insurer, which duplicated claims in a pending counterclaim in the federal district court, thereby recognizing federal district courts as courts of this state under the statute. We reject this argument. Our disposition immediately above of Gerling's compulsory-counterclaim argument removes the underpinning of the argument Gerling makes in this regard, which is as follows: The obligation imposed on a defendant under Ala. R. Civ. P. 13(a) to assert a compulsory counterclaim, when read in conjunction with § 6-5-440 `is tantamount to making the defendant with a compulsory counterclaim a plaintiff in that action (for the purposes of § 6-5-440) as of the time of its commencement.' Ex parte Breman Lake View Resort, L.P., 729 So.2d 849 (Ala.1999). (Gerling's brief at p. 50.) Our determination that Wheelwright's garnishment action against Gerling was not a compulsory counterclaim in Gerling's declaratory-judgment action results in the conclusion that Wheelwright was not a plaintiff in two actions. It sought to proceed as a plaintiff only in the circuit court.