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Ex parte Profit Boost Marketing, Inc.

Supreme Court of Alabama

December 1, 2017

Ex parte Profit Boost Marketing, Inc., d/b/a Hometown Values Coupon Magazine
v.
City of Arab et al. In re: Mike Zak d/b/a Hometown Magazine

         PETITION FOR WRIT OF MANDAMUS Marshall Circuit Court, CV-15-000002

          SHAW, Justice.

         Profit Boost Marketing, Inc., d/b/a Hometown Values Coupon Magazine ("HVCM"), [1] one of the defendants below, petitions this Court for a writ of mandamus directing the Marshall Circuit Court to vacate its order denying HVCM's motion to dismiss the claims filed against it by Mike Zak d/b/a Hometown Magazine ("Zak") and to direct that court to enter an order dismissing Zak's claims against it. We grant the petition and issue the writ.

         Facts and Procedural History

         HVCM is a State of Washington based "print broker ... for direct mail advertising." Richard Hagedorn, doing business as HTV Etowah, LLC, apparently purchased, before the initiation of the underlying litigation, a license from HVCM to use its trademark for publication of a coupon magazine.

         Hometown Magazine is a coupon distributor; Mike Zak is its sole proprietor. Following an initial inquiry initiated by Zak in August 2013, Zak and HVCM entered into a "Print Brokerage Agreement" and related "Licensing Agreement" whereby Zak was to become an exclusive "Area Publisher" of HVCM's coupon magazine in three specified zones within Alabama, namely Madison, Huntsville, and Arab/Guntersville. E-mail communications in the materials before us suggest that Hagedorn was aware of that agreement and that HVCM encouraged coordination and cooperation between Zak and Hagedorn with regard to their "neighboring" markets. On October 11, 2013, Zak obtained from the City of Arab ("the City") a business license to engage in "publishing industries." Zak ultimately published a single issue of a publication entitled Hometown Magazine. Thus, according to HVCM, "[i]nstead of publishing as [HVCM], Zak formed Hometown Magazine and used the [HVCM] trademark when he sold advertising to local business, " i.e., allegedly, "Zak solicited ... Hagedorn's clients as [HVCM], sold them advertising using the [HVCM] trademark ..., and never published a magazine as [HVCM]." This action resulted in a dispute between Zak and Hagedorn.

         On November 12, 2013, Hagedorn sent the Arab Chamber of Commerce ("the Chamber") the following e-mail communication regarding Zak and Hometown Magazine:

"There are 2 men going around Arab purporting to represent [HVCM]. Their names are Dion Hahn and Mike Zak; they are leaving behind this magazine telling merchants this is what they are getting. In fact they are not in anyway affiliated with [HVCM]. They have been delivered cease and desist orders due to copyright and trademark infringements. They are also telling people the method of distribution is direct mail when in fact it was distributed via The Arab Tribune. These people do not hold business licenses and should be reported to the appropriate authorities. I have attached a copy of my magazine. Please forward to all Chamber members."

         The following day, the City posted on Facebook, a social-media Web site, an essentially verbatim copy of Hagedorn's email regarding Mike Zak and Hometown Magazine. In response, Dion Hahn, purportedly an employee of Hometown Magazine, commented on the post, allegedly notifying the City that the information in its post was incorrect and should be promptly removed. The City, however, allegedly declined to remove it; instead, it posted a response indicating that it had "'received [the] information through a mass email sent from the ... Chamber..., which has always been very reliable, " and directed further inquiries to the Chamber.

         On November 19, 2013, counsel purporting to represent both "HTV Etowah, LLC[, Hagedorn's business, ] and [HVCM]" sent written communication addressed to Hahn and Zak alleging that, "[r]ather than contract[ing] to become a distributor of [HVCM's] magazine, [Zak] apparently and allegedly appropriated the name, likeness and attributes of [HVCM], marketed it as [his] own product and sold advertising to customers while representing to them [Zak was HVCM]." The letter further demanded that Zak "immediately cease and desist from any actions which violate [Hagedorn and HVCM's] proprietary ownership rights in [HVCM]" or warned that "appropriate legal action" would follow.[2]

         As a result of the above-described Facebook post, which Zak maintains "was entirely fallacious and possessed absolutely no truth, " Zak allegedly began to receive queries from customers regarding the legality of his activities. Ultimately, according to Zak, his reputation was allegedly so "irreparably tarnished and damaged" that Zak was forced to close his business. On August 22, 2014, Zak sued, in the Cullman Circuit Court, the City, the Chamber, and various fictitiously named defendants.[3] Specifically, Zak sought to recover both compensatory and punitive damages on various theories, including defamation, negligence, and "wantonness/gross negligence."

         On December 3, 2014, Zak issued several sets of discovery requests to the defendants, including interrogatories directed to the Chamber that sought information about any "communications with [HVCM] or ... Hagedorn." On January 12, 2015, Zak amended his complaint to add two additional counts against the City pursuant to 42 U.S.C. § 1983, asserting "civil rights depravation and violation" and also "inadequate training and supervision [and] failure to train." In its October 29, 2015, responses to Zak's discovery requests, as described above, the Chamber produced the November 12, 2013, e-mail from Hagedorn on which the offending post was based and identified Hagedorn as a party having information regarding the underlying events.

         As best we are able to discern based on the limited materials before us, it appears that, following Zak's first amendment to his complaint adding federal claims, the matter was, at the request of the City, first transferred, in January 2015, from the Cullman Circuit Court to the Marshall Circuit Court on the ground that venue in the Cullman Circuit Court was improper and, in February 2015, removed to the United States District Court for the Northern District of Alabama. However, the two federal § 1983 claims were later dismissed by the federal court, and, on July 24, 2015, the matter was remanded to the Marshall Circuit Court.

         On March 1, 2016 -- after the expiration of the two-year limitations period applicable to Zak's claims -- Zak filed a "Second Amended Complaint" that, among other changes, specifically named HVCM and Hagedorn as defendants. Neither HVCM nor Hagedorn was substituted in place of any of the fictitiously named defendants in Zak's original complaint. Zak's second amended complaint asserted against HVCM and Hagedorn his previous tort-based claims for relief and further added counts alleging "tortious interference with business" and civil conspiracy.

         In response, HVCM filed, pursuant to various provisions of Rule 12, Ala. R. Civ. P., a "Motion to Dismiss" all claims against it. Specifically, in its motion and accompanying brief, HVCM disputed the sufficiency of service, challenged the trial court's exercise of personal jurisdiction over it, and maintained that Zak's claims were time-barred. HVCM's motion was supported by, among other exhibits, evidence indicating that Zak was allegedly aware of HVCM's identity at the time he filed his original complaint and certainly before the statute of limitations expired. HVCM further noted that it was added as a new defendant rather than substituted for a previously identified but fictitiously named defendant. HVCM further denied sufficient contacts with Alabama to support personal jurisdiction under Alabama's long-arm rule and included affidavit testimony from HVCM's president aimed at establishing its alleged lack of contacts with Alabama.

         In opposition to HVCM's dismissal request, Zak asserted that HVCM was properly served or that he should be allowed to correct service, that HVCM conducted "substantial business" within Alabama, and that his claims against HVCM were timely either as the result of tolling pursuant to removal of the matter to federal court or because his second amended complaint "relate[d] back" to the filing of his original complaint pursuant to Rules 9(h) and 15(c), Ala. R. Civ. P.

         Thereafter, on September 8, 2016, the trial court denied a motion by HVCM to quash Zak's allegedly ineffective service of process and granted Zak leave to perfect service. On that same date, it denied HVCM's motion to dismiss.

         HVCM later promptly filed, subsequent to Zak's perfection of proper service on HVCM, a motion again seeking dismissal on the grounds that the trial court lacked personal jurisdiction and that Zak's claims were untimely. The trial court denied the motion, and HVCM then filed the instant petition seeking mandamus relief; we subsequently ordered answers and briefs.

         Standard of Review

"'"A writ of mandamus is an extraordinary remedy, and it 'will be issued only when there is: 1) a clear legal right in the petitioner to the order sought; 2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; 3) the lack of another adequate remedy; and 4) properly invoked jurisdiction of the court.'"' Ex parte Monsanto Co., 862 So.2d 595, 604 (Ala. 2003) (quoting Ex parte Butts, 775 So.2d 173, 176 (Ala. 2000), quoting in turn Ex parte United Serv. Stations, Inc., 628 So.2d 501, 503 (Ala. 1993)). ... A petition for a writ of mandamus ... is the proper means to seek review of an order denying a motion to dismiss or for a summary judgment filed by a defendant added after the statute of limitations has run, under Rule 15(c)(3), Ala. R. Civ. P., which governs the relation back of amended complaints when the defendant has received notice of the action so that the defendant will not be prejudiced in maintaining a defense on the merits and the defendant knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the defendant. See, e.g., Ex parte Empire Gas Corp., 559 So.2d 1072 (Ala. 1990) (denying petition for writ of mandamus where parent corporation filed a motion to dismiss judgment creditors' amended complaint in which ...

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