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Ex parte Action Auto Sales, Inc.

Supreme Court of Alabama

September 1, 2017

Ex parte Action Auto Sales, Inc.
v.
Pine City Motors, LLC; L.M. Stewart; and Cathy Cargile In re: Action Auto Sales, Inc.

         Clarke Circuit Court, CV-15-35

          PETITION FOR WRIT OF MANDAMUS

          SELLERS, Justice.

         Action Auto Sales, Inc. ("AAS"), has petitioned this court for a writ of mandamus directing the Clarke Circuit Court ("the trial court") to vacate orders denying AAS's objection to L.M. Stewart and Cathy Cargile's notice of intent to serve subpoenas on nonparties Merchants Bank and accountant Eddie Nicholes and denying AAS's motion for a protective order and to issue an order granting its motion. We grant the petition and issue the writ.

         The materials before this court indicate the following. AAS, a financing company, made loans to Pine City Motors, LLC ("Pine City"), so that Pine City could purchase vehicles for resale. Pursuant to various financing agreements and promissory notes, AAS held security interests in the vehicles purchased by Pine City for resale. Stewart and Cargile purchased a vehicle from Pine City, which allegedly was encumbered by a security interest held by AAS. Stewart and Cargile suggest that, after they took possession of the vehicle, Pine City failed to satisfy its debt to AAS, and AAS or Pine City retained physical possession of the certificate of title for the vehicle. Thereafter, AAS sued Pine City, Stewart, and Cargile, requesting damages and a judgment directing Stewart and Cargile to return the vehicle to AAS.

         Stewart and Cargile filed a counterclaim against AAS and a cross-claim against Pine City. Pointing to various Alabama statutes, Stewart and Cargile asserted that their rights in the vehicle are superior to AAS's and that AAS or Pine City improperly retained possession of the certificate of title for the vehicle. Stewart and Cargile also demanded compensatory and punitive damages, asserting theories of negligence and wantonness and conspiracy between AAS and Pine City.

         During the period at issue, Vivian Paul was the sole shareholder of AAS. Paul testified during deposition that, on occasion, she had personally loaned or contributed funds to AAS so that AAS could, in turn, make loans to Pine City. Paul testified that AAS used an account at Merchants Bank to facilitate loans to Pine City and that the funds Paul transferred to AAS were deposited into that account.

         Paul's testimony suggests that some of or all the transfers she made to AAS were not evidenced by promissory notes. She testified, however, that Nicholes, who worked as the accountant for AAS and for Paul personally, kept track of the loans and contributions Paul had made to AAS, as well as debts owed AAS by Pine City. Paul testified that she, too, had kept records of her transactions with AAS on her personal computer but that, around the time Pine City defaulted on its obligations to AAS, Paul had obtained a new computer and was unable to access her records regarding the transactions on the new computer. According to Stewart and Cargile's answer to AAS's mandamus petition, however, "Paul acknowledged that Nicholes should have duplicate records of all the loan information that was stored on her old computer."

         After Paul's deposition, Stewart and Cargile filed notices of intent to serve subpoenas on Merchants Bank and Nicholes. The proposed subpoenas requested that those nonparties produce "[a]ny and all financial records for Vivian Paul, personally, or [AAS] and from Vivian Paul or [AAS] for the past five (5) years." AAS filed an objection to the proposed subpoenas and a motion for a protective order, seeking to limit production to only those records showing "cash contributions, injections or loans from Vivian Paul to [AAS]." AAS asserted that records relating solely to Paul's personal finances, and not to her transactions with AAS, should not be produced.

         Following a hearing, the trial court denied AAS's requests to limit the scope of the proposed subpoenas, and AAS filed the present petition for a writ of mandamus. AAS asks this Court to direct the trial court to vacate its orders denying AAS's objection to the proposed subpoenas and its motion for a protective order. In support, AAS argues that records relating solely to Paul's personal finances that have no relation to her dealings with AAS are irrelevant and that their production would, without sufficient justification, invade Paul's privacy interests. This Court stayed the trial-court proceedings pending resolution of AAS's petition.[1]

"'Discovery matters are within the trial court's sound discretion, and this Court will not reverse a trial court's ruling on a discovery issue unless the trial court has clearly exceeded its discretion. Home Ins. Co. v. Rice, 585 So.2d 859, 862 (Ala. 1991). Accordingly, mandamus will issue to reverse a trial court's ruling on a discovery issue only (1) where there is a showing that the trial court clearly exceeded its discretion, and (2) where the aggrieved party does not have an adequate remedy by ordinary appeal. The petitioner has an affirmative burden to prove the existence of each of these conditions.'

"Ex parte Ocwen Fed. Bank, FSB, 872 So.2d 810, 813 (Ala. 2003).

"Moreover, this Court will review by mandamus only those discovery matters involving (a) the disregard of a privilege, (b) the ordered production of 'patently irrelevant or duplicative documents, ' (c) orders effectively eviscerating 'a party's entire action or defense, ' and (d) orders denying a party the opportunity to make a record sufficient for appellate review of the discovery issue. 872 So.2d at 813-14."

Ex parte Meadowbrook Ins. Grp., Inc., 987 So.2d 540, 547 (Ala. 2007).

         AAS relies primarily on Ex parte Morris, 530 So.2d 785 (Ala. 1988). In Morris, a medical-malpractice action, the trial court entered an order compelling the plaintiff's expert witnesses to produce their income-tax records for the nine years preceding the trial date, as well as "personal financial records, " which the Court did not describe in detail. Id. at 789. The defendants ...


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