Appeals from Baldwin Circuit Court (CV-16-900541)
BRYAN,
JUSTICE. [1]
In case
no. 1170709, Jere Austill III appeals from a judgment of the
Baldwin Circuit Court ("the trial court")
permitting Tyler Montana Jul Prescott to redeem certain real
property under §§ 40-10-82 and 40-10-83, Ala. Code
1975. Specifically, Austill argues that, through adverse
possession, he had "cut off" Prescott's right
to redeem the property. Because we conclude that, by virtue
of an adverse judgment in an earlier quiet-title action,
Austill is precluded by the doctrine of res judicata from
claiming an interest in the property through the
extinguishment of Prescott's right of redemption, we
affirm the portion of the trial court's judgment that is
challenged in Austill's appeal.
In case
no. 1170730, Prescott cross-appeals from the trial
court's denial of his motion for an award of attorney
fees under the Alabama Litigation Accountability Act
("the ALAA"), § 12-19-270 et seq., Ala. Code
1975, arguing that Austill asserted his argument that he cut
off Prescott's right of judicial redemption without
substantial justification. We conclude that the trial court
did not exceed its discretion in denying Prescott's
motion, and we affirm that portion of the trial court's
judgment.
Background
As
noted above, this case involves Prescott's request to
redeem certain real property located in Baldwin County
("the property") under §§ 40-10-82 and
40-10-83 and whether his right to redeem the property had
been cut off. In First Properties, L.L.C. v.
Bennett, 959 So.2d 653, 654 (Ala. Civ. App. 2006), the
Court of Civil Appeals summarized Alabama's redemption
law:
"Under Alabama law, after a parcel of property has been
sold because of its owner's failure to pay ad valorem
taxes assessed against that property (see §
40-10-1 et seq., Ala. Code 1975), the owner has two methods
of redeeming the property from that sale: 'statutory
redemption' (also known as 'administrative
redemption'), which requires the payment of specified
sums of money to the probate judge of the county in which the
parcel is located (see § 40-10-120 et seq.,
Ala. Code 1975)[2], and 'judicial redemption' under
§§ 40-10-82 and 40-10-83, Ala. Code 1975, which
involves the filing of an original civil action against a
tax-sale purchaser (or the filing of a counterclaim in an
ejectment action brought by that purchaser) and the payment
of specified sums into the court in which that action or
counterclaim is pending. See generally William R.
Justice, 'Redemption of Real Property Following Tax Sales
in Alabama,' 11 Cumb. L. Rev. 331 (1980-81)."
In
2007, JSW Properties, LLC ("JSW"), owned the
property. JSW did not pay the ad valorem taxes associated
with the property, and, in 2008, the property was sold at a
tax sale to Plymouth Park Tax Services, LLC ("Plymouth
Park"). Plymouth Park later transferred its interest in
the property to Propel Financial 1, LLC ("Propel").
Neither Plymouth Park nor Propel paid the required ad valorem
taxes associated with the property for 2011, and in 2012
Austill purchased the property at a tax sale and obtained a
certificate of purchase. See § 40-10-19(a),
Ala. Code 1975 ("As soon after the confirmation of sale
is made as may be practicable, the tax collector must make
out and deliver to each purchaser ... a certificate of
purchase ...."). Later that month, Austill visited the
property and installed a no-trespassing sign and four stakes
with survey flags at the four corners of the property.
See § 40-10-74, Ala. Code 1975 ("Any
purchaser of lands at a tax sale other than the state or
anyone claiming under him shall be entitled to possession of
said lands immediately upon receipt of certificate of sale
from the tax collector ....").
In June
2015, the Baldwin County Probate Judge delivered a tax deed
for the property to Austill. See § 40-10-29,
Ala. Code 1975 ("After the expiration of three years
from the date of the sale of any real estate for taxes, the
judge of probate then in office must execute and deliver to
the purchaser ... a deed to each lot or parcel of real estate
sold to the purchaser ...."). Propel later transferred
its interest in the property to Prescott. Although JSW had
been dissolved, its "successor in interest" also
later conveyed to Prescott JSW's interest in the property
via quitclaim deed. By letter dated December 19, 2015,
Prescott informed Austill of his intent to redeem the
property.
I.
The Quiet-Title Action[3]
On
December 29, 2015, Austill filed a verified complaint
initiating a quiet-title action "to establish the right
and title of [Austill] to [the property] and to clear up all
doubts or disputes concerning the same ...." ("the
quiet-title action"). Among others, Austill named
Prescott as a defendant in the action. Austill sought a
judgment declaring that he possessed "the entire and
undivided fee simple interest in the [property] with no
restrictions thereon."
Among
other things, Austill alleged that, since the 2012 tax sale,
he had been in adverse possession of the property. Austill
stated: "This matter is brought pursuant to ... §
40-10-82." Section 40-10-82 provides:
"No action for the recovery of real estate sold for
the payment of taxes shall lie unless the same is brought
within three years from the date when the purchaser became
entitled to demand a deed therefor; but if the owner of
such real estate was, at the time of such sale, under the age
of 19 years or insane, he or she, his or her heirs, or legal
representatives shall be allowed one year after such
disability is removed to bring an action for the recovery
thereof; but this section shall not apply to any action
brought by the state, to cases in which the owner of the real
estate sold had paid the taxes, for the payment of which such
real estate was sold prior to such sale, or to cases in which
the real estate sold was not, at the time of the assessment
or of the sale, subject to taxation. There shall be no
time limit for recovery of real estate by an owner of land
who has retained possession. If the owner of land seeking to
redeem has retained possession, character of possession need
not be actual and peaceful, but may be constructive and
scrambling and, where there is no real occupancy of land,
constructive possession follows title of the original owner
and may only be cut off by adverse possession of the tax
purchaser for three years after the purchaser is entitled to
possession."
(Emphasis added.)
Acting
pro se, Prescott answered Austill's complaint, quoting
from the first sentence of § 40-10-82 and arguing that
Austill had filed his complaint "prematurely"
because he had not adversely possessed the property for three
years after becoming entitled to demand a tax deed. Prescott
also filed a motion to dismiss Austill's complaint, which
elaborated on his answer, citing as support Southside
Community Development Corp. v. White, 10 So.3d 990 (Ala.
2008), and McGuire v. Rogers, 794 So.2d 1131 (Ala.
Civ. App. 2000). In McGuire, 794 So.2d at 1136, the
Court of Civil Appeals quoted from its decision in Ervin
v. Amerigas Propane, Inc., 674 So.2d 543, 544 (Ala. Civ.
App. 1995), which, in turn, quoted from this Court's
decision in Gulf Land Co. v. Buzzelli, 501 So.2d
1211, 1213 (Ala. 1987).
In
Buzzelli, this Court stated:
"We have stated many times that the purpose of §
40-10-83[4] is to preserve the right of redemption
without a time limit, if the owner of the land seeking to
redeem has retained possession. This possession may be
constructive or scrambling, and, where there is no real
occupancy of the land, constructive possession follows the
title of the original owner and can only be cut off by the
adverse possession of the tax purchaser. Stallworth v.
First Nat. Bank of Mobile, 432 So.2d 1222 (Ala. 1983);
Hand v. Stanard, 392 So.2d 1157 (Ala. 1980);
O'Connor v. Rabren, 373 So.2d 302 (Ala. 1979).
"Code 1975, § 40-10-82, does establish a 'short
statute of limitations' for tax deed cases. This section
states that the redemption action must be filed within
three years from the date when the purchaser became entitled
to demand a deed for the property. We have held that this
statute does not begin to run until the purchaser is in
adverse possession of the land and has become entitled to
demand a deed to the land. Williams v. Mobile Oil
Exploration, 457 So.2d 962 (Ala. 1984). In order for the
short period of § 40-10-82 to bar redemption under
§ 40-10-83, the tax purchaser must prove continuous
adverse possession for three years after he is entitled
to demand a tax deed. Stallworth, 432 So.2d at
1224."
501 So.2d at 1213 (emphasis added). Austill filed a response
to Prescott's motion to dismiss, challenging, among other
things, the legal basis for Prescott's motion to dismiss
and citing in support of his argument, in addition to other
cases, Southside; Reese v. Robinson, 523
So.2d 398 (Ala. 1988); Buzzelli; O'Connor v.
Rabren, 373 So.2d 302 (Ala. 1979); and McGuire.
The trial court denied Prescott's motion to dismiss.
With
the assistance of counsel, Prescott later filed a
"renewed motion to dismiss," pursuant to Rule
12(b)(6), Ala. R. Civ. P., and an accompanying
"brief," arguing, among other things:
"In order to quiet title to real property under a tax
deed, [Austill] must show that no party has the right to
redeem the property from the tax sale. In order to foreclose
all redemptive rights, the holder of a tax deed must prove
that it adversely possessed the property for a period of
three years after becoming entitled to demand a tax
deed. ... Buzzelli, 501 So.2d [at] 1213 ....
[Austill] has been in possession for four years, but only one
of those years came after [Austill] became entitled to demand
a tax deed, and this is why the case should be dismissed. Our
State's laws regarding a party's rights under a tax
deed might be confusing, but they are well settled and the
rule that applies in this case is clear."
(Emphasis original.) In support of his argument, Prescott
cited, among other cases, Reese; Buzzelli;
Karagan v. Bryant, 516 So.2d 599 (Ala. 1987); and
Hand v. Stanard, 392 So.2d 1157 (Ala. 1980).
Austill
filed a response to Prescott's renewed motion to dismiss,
in which he argued, among other things:
"The Supreme Court has applied the rule in
[Buzzelli] to require the purchaser of a tax deed to
show that they have maintained continuous adverse possession
of the tax-sale property for three years to defeat a right of
redemption under [§] 40-10-82 without regard to
possession by the redemptioner. Southside,
supra ....
"[Austill, ] in the case at hand before this Court[, ]
would allege that he has met the requirements of
Southside, supra, in that he has maintained
continuous adverse possession of the tax-sale property since
on or about the date of purchase ...."
The
trial court conducted a hearing on Prescott's renewed
motion to dismiss. On March 21, 2016, the trial court entered
an order stating: "Based on the authority of Gulf
Land v. Buzzelli, 501 So.2d 1211 (Ala. 1987), and
subsequent case authority cited in [Prescott]'s brief,
[the] motion to dismiss pursuant to Rule 12(b), filed by
[Prescott] is hereby granted."
Austill
appealed to this Court. This Court transferred the appeal to
the Court of Civil Appeals, pursuant to § 12-2-7(6),
Ala. Code 1975. For the first time in his reply brief,
[5]Austill argued that the addition of the
last two sentences of § 40-10-82 by amendment effective
September 1, 2009, altered the statute of limitations for
judicially redeeming property.
Specifically,
Austill argued that the 2009 amendment to § 40-10-82
provides that the three-year statute of limitations for
bringing a judicial-redemption claim begins running when the
tax-sale purchaser is in adverse possession of the property
and becomes entitled to possession of the property,
as opposed to when the tax-sale purchaser becomes entitled to
a tax deed. Because § 40-10-74 provides that a
tax-sale purchaser becomes entitled to possession of the
property "immediately upon receipt of a certificate of
sale from the tax collector," Austill argued, the 2009
amendment to § 40-10-82 allows a tax-sale purchaser to
"cut[] off" the original owner's right of
judicial redemption after three years of adverse possession,
starting from the point at which the tax-sale purchaser
begins adversely possessing the property after obtaining a
certificate of sale. Austill asserted: "In other words,
by the time the tax deed is issued, both administrative and
judicial redemption rights have been lost ...." Although
the version of § 40-10-82 as amended in 2009 was in
effect throughout the entirety of the quiet-title action and
was argued and applied by the parties and the trial court,
Austill did not assert an argument based on the language
reflected in the 2009 amendment to § 40-10-82 until he
filed his reply brief in the Court of Civil Appeals.
Austill's reply brief also included citations to, among
other cases, Southside, Reese,
Buzzelli, Karagan, and McGuire.
On
January 6, 2017, the Court of Civil Appeals unanimously
affirmed the trial court's judgment, without an opinion,
citing, among other cases, Southside,
Reese, and Buzzelli. Austill filed an
application for rehearing, which the Court of Civil Appeals
denied. With the assistance of new counsel, Austill then
petitioned this Court for a writ of certiorari, pursuant to
Rule 39(a)(1)(C), Ala. R. App. P., in which he asked this
Court to consider the effect of the 2009 amendment to §
40-10-82 as a purportedly material question of first
impression requiring a decision from this
Court.[6] This Court denied Austill's petition
on April 14, 2017, without an opinion.
II.
The Redemption Action
In May
2016, shortly before Austill filed a notice of appeal from
the trial court's judgment in the quiet-title action,
Prescott initiated a separate judicial-redemption action
("the redemption action") in the trial court and,
in his complaint, expressed his intent to pay into the trial
court the funds required to redeem the property under §
40-10-83. On June 21, 2016, the attorney who represented
Austill in the trial court and in the Court of Civil Appeals
in the quiet-title action filed a motion to stay proceedings
in the redemption action pending a disposition of
Austill's appeal in the quiet-title action. Prescott
filed a response to Austill's motion, agreeing that the
disposition of Austill's appeal in the quiet-title action
would affect the outcome of the redemption action and
consenting to a stay of proceedings in the redemption action.
The trial court entered an order granting Austill's
motion.
After
this Court denied Austill's petition for a writ of
certiorari in the quiet-title action, Austill, with the
assistance of his new counsel, filed an answer in the
redemption action on April 18, 2017. Among other things,
Austill again argued, as he had in the quiet-title action,
that he had extinguished Prescott's right of redemption
by adversely possessing the property. This time, however, he
asserted his argument regarding the effects of the 2009
amendment to § 40-10-82 that he had raised for the first
time in his reply brief to the Court of Civil Appeals in the
quiet-title action and again in his petition asking this
Court for certiorari review of the Court of Civil
Appeals' decision.
Prescott
moved for a summary judgment, again asserting, among other
things, that he should be allowed to redeem the property,
citing as support many of the cases he had cited in the
quiet-title action. The trial court denied Prescott's
summary-judgment motion. Prescott then filed a "renewed
motion for summary judgment" and attached the record
from the quiet-title action and the parties' appellate
briefs to his motion, asserting, among other things, that,
based on the doctrines of res judicata and collateral
estoppel, the trial court's judgment in the quiet-title
action barred Austill from arguing that he had extinguished
Prescott's right of judicial redemption through adverse
possession.
The
trial court denied Prescott's renewed summary-judgment
motion and set the case for trial. During the ensuing bench
trial, Prescott moved for an award of attorney fees under the
ALAA, arguing that, because the trial court had dismissed
Austill's complaint in the quiet-title action, the
arguments asserted by Austill in the redemption action were
groundless in fact and in law.
On
March 20, 2018, the trial court entered a judgment
determining, among other things, that Prescott was entitled
to redeem the property and that Austill had "not taken
sufficient action to extinguish or foreclose [Prescott]'s
redemptive rights." The trial court also denied
Prescott's request for an award of attorney fees under
the ALAA. Austill appealed; Prescott cross-appealed,
challenging the denial of his request for attorney fees.
Analysis
On
appeal, Austill argues that the trial court erred by allowing
Prescott to redeem the property because, Austill asserts, the
language added to § 40-10-82 by the 2009 amendment,
specifically the last sentence of § 40-10-82, permitted
Austill to cut off Prescott's right of judicial
redemption by adversely possessing the property for three
years following the 2012 tax sale. In response, Prescott
argues, among other things, that Austill is barred by the
doctrines of res judicata and collateral estoppel from
raising that argument because, Prescott asserts,
Austill's claim that he has extinguished Prescott's
right of redemption through adverse possession was already
decided against Austill in the quiet-title action. Prescott
states: "By the time this lawsuit is concluded, Prescott
will have litigated the exact same issue, through appeal,
twice." Prescott's brief, at 26-27. Although the
portion of the trial court's judgment permitting Prescott
to redeem the property addressed the merits of Austill's
argument regarding the 2009 amendment to §
40-10-82[7] and was not based on the doctrines of res
judicata or collateral estoppel, Prescott argues that we
should affirm the trial court's judgment based on those
doctrines. Prescott contends in his cross-appeal that
Austill's argument is groundless in fact and in law and,
therefore, that the portion of the trial court's judgment
denying his request for an award of attorney fees under the
ALAA should be reversed.
I.
Austill's Appeal (no. 1170709)
We
first address Prescott's argument that the doctrine of
res judicata procedurally bars Austill from asserting the
argument raised in his appeal, i.e., that the
language added to § 40-10-82 by the 2009 amendment
permitted him to extinguish Prescott's right of
redemption under the facts of this case. In Lee L. Saad
Construction Co. v. DPF Architects, P.C., 851
So.2d 507, 516-17 (Ala. 2002), this Court explained:
"Res judicata and collateral estoppel are two closely
related, judicially created doctrines that preclude the
relitigation of matters that have been previously adjudicated
or, in the case of res judicata, that could have been
adjudicated in a prior action.
"'The doctrine of res judicata, while actually
embodying two basic concepts, usually refers to what
commentators label "claim preclusion," while
collateral estoppel ... refers to "issue
preclusion," which is a subset of the broader res
judicata doctrine.'
"Little v. Pizza Wagon, Inc., 432 So.2d 1269,
1272 (Ala. 1983)(Jones, J., concurring specially). See
also McNeely v. Spry Funeral Home of Athens, Inc., 724
So.2d 534, 537 n.1 (Ala. Civ. App. 1998). In Hughes v.
Martin, 533 So.2d 188 (Ala. 1988), this Court explained
the rationale behind the doctrine of res judicata:
"'Res judicata is a broad, judicially developed
doctrine, which rests upon the ground that public policy, and
the interest of the litigants alike, mandate that there be an
end to litigation; that those who have contested an issue
shall be bound by the ruling of the court; and that issues
once tried shall be considered forever settled between those
same parties and their privies.'
"533 So.2d at 190. The elements of res judicata are
"'(1) a prior judgment on the merits, (2) rendered
by a court of competent jurisdiction, (3) with substantial
identity of the parties, and (4) with the same cause of
action presented in both actions.'
"Equity Res. Mgmt., Inc. v. Vinson, 723 So.2d
634, 636 (Ala. 1998). 'If those four elements are
present, then any claim that was, or that could have been,
adjudicated in the prior action is barred from further
litigation.' 723 So.2d at 636. Res judicata, therefore,
bars a party from asserting in a subsequent action a claim
that it has already had an opportunity to litigate in a
previous action."
Austill
agrees with Prescott that elements (2) and (3) of the
doctrine of res judicata are satisfied in this case.
Regarding element (1), a prior judgment on the merits,
Austill briefly discusses two decisions from this Court. One
of those decisions, he says, supports a conclusion that the
trial court's judgment in the quiet-title action
dismissing that action under Rule 12(b)(6) did not constitute
a judgment on the merits.
Austill
first acknowledges that this Court's decision in
Sprinkle v. Edwards, 848 So.2d 217, 219 (Ala. 2002),
noted:
"The United States Supreme Court has stated that
'[t]he dismissal for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6) is a
"judgment on the merits"' for res judicata
purposes. Federated Dep't Stores, Inc. v.
Moitie, 452 U.S. 394, 399 n.3, 101 S.Ct. 2424, 69
L.Ed.2d 103 (1981)(citing Angel v. Bullington, 330
U.S. 183, 190, 67 S.Ct. 657, 91 L.Ed. 832 (1947), and
Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed.
939 (1946)). Thus, a dismissal for failure to state a claim
pursuant to Federal Rule 12(b)(6) is generally
preclusive."
(Emphasis added.) Austill then apparently argues that
Sprinkle does not stand for the proposition that a
judgment granting a motion to dismiss filed pursuant to Rule
12(b)(6) of the Alabama Rules of Civil Procedure constitutes
a judgment on the merits for res judicata purposes.
In
support of his argument, Austill cites Ex parte
Scannelly, 74 So.3d 432, 438 (Ala. 2011), in which
this Court stated:
"'The Rule 12(b)(6) motion ... must be distinguished
from a motion for summary judgment under Rule 56, which goes
to the merits of the claim -- indeed, to its very existence
-- and is designed to test whether there is a genuine issue
of material fact. The Rule 12(b)(6) motion ... only tests
whether the claim has been adequately stated in the
complaint. Thus, ... on a motion under Rule 12(b)(6), the
[trial] court's inquiry essentially is limited to the
content of the complaint; a motion for summary judgment, on
the other hand, often involves the use of pleadings,
depositions, answers to interrogatories, and affidavits.'
"5B Charles Alan Wright & Arthur C. Miller,
Federal Practice and Procedure § 1356, at
372-75 (3d ed. 2004)(footnote omitted)."
(Emphasis omitted.) Austill asserts that Scannelly
is "the better case ..., which clearly says that a
12(b)(6) motion does not have preclusive effect."
Austill's reply brief, at 21.
Scannelly,
however, did not hold that a dismissal under Rule 12(b)(6) is
not a judgment on the merits for res judicata purposes.
Scannelly involved a plaintiff's purported
unilateral dismissal, pursuant to Rule 41(a)(1), Ala. R. Civ.
P., of a complaint she had filed in the circuit court. The
circuit court later reinstated the plaintiff's action
after noting that, before the plaintiff submitted her notice
of dismissal, the defendant had filed a motion to dismiss
pursuant to Rule 12(b)(6) based on, among other things, the
doctrine of res judicata. The circuit court concluded that
the defendant's motion to dismiss amounted to a motion
for a summary judgment, the filing of which prevented the
plaintiff from thereafter unilaterally dismissing her
complaint. The plaintiff petitioned this Court "for a
writ of mandamus directing the [circuit court] to vacate all
orders entered after [the plaintiff] filed a notice of
dismissal pursuant to Rule 41(a) ... and for a writ of
prohibition restraining that court from future attempts to
exercise jurisdiction over [the plaintiff]'s case."
Scannelly, 74 So.3d at 433.
We
denied the plaintiff's petition. In so doing, we
discussed the distinction between a motion to dismiss filed
pursuant to Rule 12(b)(6) and a summary-judgment motion, as
is demonstrated by the portion of the opinion Austill cites
in support of his argument. We also noted that the doctrine
of res judicata is more commonly raised in the
summary-judgment context, as opposed to the motion-to-dismiss
context. We held:
"Thus, despite [the defendant]'s assertions that his
motion was a Rule 12(b)(6) motion to dismiss, a review of the
substance of the motion shows that it was, in part,
a motion seeking a summary judgment based on the affirmative
defense of res judicata. Because at the time [the plaintiff]
filed her notice of dismissal pursuant to Rule 41(a)(1), [the
defendant] had moved for a summary judgment, [the plaintiff]
was deprived of the unqualified right to voluntarily dismiss
her complaint pursuant to Rule 41."
Scannelly, 74 So.3d at 439. Therefore, contrary to
Austill's assertions, Scannelly did not hold
that a trial court's order granting a motion to dismiss
filed pursuant to Rule 12(b)(6) does not constitute a
judgment on the merits for the purposes of the doctrine of
res judicata; indeed, that issue was not even presented or
addressed in Scannelly. Scannelly's
holding, therefore, is of no assistance to Austill.
We
conclude that the trial court's judgment granting the
renewed motion to dismiss Prescott filed pursuant to Rule
12(b)(6) in the quiet-title action constituted a judgment on
the merits of the quiet-title action. In his complaint in the
quiet-title action, Austill sought a judgment declaring that,
pursuant to § 40-10-82, he possessed "the entire
and undivided fee simple interest in the [property] with no
restrictions thereon." Prescott's answer and
subsequent motions to dismiss in the quiet-title action
generally denied Austill's claim to title through adverse
possession under § 40-10-82 and, therefore, properly
placed Austill's title to the property in issue in the
quiet-title action. See Ally Windsor Howell,
Tilley's Alabama Equity § 13:9 (5th ed.
2012)(citing Barry v. Thomas, 273 Ala. 527, 142
So.2d 918 (1962)); and Rushton v. McLaughlin, 213
Ala. 380, 382, 104 So. 824, 825 (1925).
The
trial court's judgment in the quiet-title action was
expressly "[b]ased on the authority of ...
Buzzelli ..., and subsequent case authority cited in
[Prescott]'s brief," which, Prescott had argued,
defeated Austill's claim to title to the property through
adverse possession as a matter of law. Therefore, the trial
court's judgment in the quiet-title action conclusively
resolved the claim to title to the property that Austill had
asserted therein. See Alabama Power Co. v.
Laney, 428 So.2d 21, 23 (Ala. 1983)("The quiet
title action is designed to 'clear up all doubts or
disputes concerning [the land].' Anderson v.
Moorer, 372 F.2d 747 (5th Cir. 1967)."); and
United States v. Perry, 473 F.2d 643, 646 (5th Cir.
1973)("[I]t is clear that quiet title actions are
intended to be as final and reliable as possible.").
Thus, the trial court's judgment in the quiet-title
action addressed the merits of the basis upon which
Austill's complaint requested relief.
Moreover,
we note that the trial court's judgment in the
quiet-title action did not specify whether the dismissal was
with or without prejudice. Rule 41(b), Ala. R. Civ. P.,
discusses the effect of involuntary dismissals and states, in
relevant part:
"Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision and any
dismissal not provided for in this rule, other than a
dismissal for lack of jurisdiction, for improper venue, or
for failure to join a party under Rule 19, operates as an
adjudication upon the merits."
(Emphasis added.) The Court of Civil Appeals has interpreted
the foregoing language to "necessarily include
dismissals under Rule 12(b)(6)." Havis v. Marshall
Cty., 802 So.2d 1101, 1103 n.2 (Ala. Civ. App. 2001).
In
Baker v. City of Guntersville, 600 So.2d 280, 282
(Ala. Civ. App. 1992), the Court of Civil Appeals reasoned
that, for the purposes of applying the doctrine of res
judicata, "[a] dismissal for failure to state a claim,
as well as a dismissal with prejudice and a dismissal on the
grounds that the facts and law show no right to relief, is a
dismissal on the merits." See also Smith v. Union
Bank & Trust Co., 653 So.2d 933, 935 (Ala.
1995)("If an action is dismissed 'without
prejudice,' there is no adjudication on the merits of the
case; the judgment does not bar another lawsuit on the same
cause of action unless the words are qualified as to certain
claims. In that circumstance, the dismissal would prevent
relitigation of the claims not dismissed without prejudice,
i.e., the claims dismissed with prejudice. See 50
C.J.S. Judgments § 635 (1947)."); and
Calhoun v. Pennsylvania Nat'l Mut. Cas. Ins.
Co., 676 So.2d 1332, 1334 (Ala. Civ. App. 1996)("A
dismissal of an action with prejudice constitutes an
adjudication on the merits that bars any subsequent
litigation.").
This
Court has also noted that a judgment of dismissal can have
preclusive effect. In Hester v. City of Birmingham,
402 So.2d 930 (Ala. 1981), multiple plaintiffs sued the City
of Birmingham in the Jefferson Circuit Court. The circuit
court dismissed the action. The plaintiffs later initiated
another action using a substantially similar complaint. The
City of Birmingham moved to dismiss the second action based
on the doctrine of res judicata, and the circuit court
granted the motion to dismiss.
In
affirming the circuit court's judgment, this Court
reasoned:
"Res judicata clearly bars this action, which involves
identical facts, identical parties, identical subject matter,
and resulted in a judgment on the merits. As the Court
recently said in McGruder v. B & L Construction Co.,
Inc., 331 So.2d 257 (Ala. 1976):
"'It has long been the policy in the courts of
Alabama to provide a claimant a day in court, but he will not
be allowed to continue to relitigate his claim. The
underlying principle of res judicata or estoppel by judgment
is based upon public policy and necessity, because it is to
the interest of the state that there should be an end to
litigation, and that the individual should not be vexed twice
for the same cause. Savage v. Savage, 246 Ala. 389,
20 So.2d 784');">20 So.2d 784 [(1945)].
"'The doctrine of res judicata rests upon the
primary principle that matters once adjudicated are settled
and determined. Irwin v. Alabama Fuel & Iron
Co., 215 Ala. 328, 110 So. 566');">110 So. 566 [(1926)]; Suggs v.
Alabama Power Co., 271 Ala. 168, 123 So.2d 4');">123 So.2d 4 [(1960)].
Those cases are also authority for the rule that to sustain a
plea of res judicata or judgment by estoppel, the parties
must be the same, the subject matter the same, the point must
be directly in question, and the judgment must be rendered on
that point.
"'All of these elements were present in the first
case, McGruder [v. B & L Construction Co.], 293
Ala. 354, 303 So.2d 103');">303 So.2d 103 [(1974)]. Appellant has had her day
in court and the same issues were adjudicated, settled and
determined, and this is dispositive of this case. We note
that our cases also state that a judgment in a former action
between the same parties is not only conclusive of the
questions actually litigated, but [also of those] which could
have been litigated in the former suit. Reid v. Singer
Sewing Machine Co., 218 Ala. 498, 119 So. 229');">119 So. 229 [(1928)];
Hathcock v. Mitchell, 277 Ala. 586, 173 So.2d 576');">173 So.2d 576
[(1965)].'
"331 So.2d at 259." Hester, 402 So.2d at
931; see also First State Bank of Altoona v.
Bass, 418 So.2d 865, 866 (Ala. 1982)(applying the
holding of Hester in determining that a dismissal
based on the doctrine of sovereign immunity constituted a
judgment on the merits for the purposes of the doctrine of
res judicata); and Parmater v. Amcord, Inc., 699
So.2d 1238, 1241 (Ala. 1997)("[T]his Court has also held
that a dismissal with prejudice is an adjudication on the
merits. ... The dismissal with prejudice concluded the rights
of the parties, terminated the right of action, and precluded
subsequent litigation of the same cause of action.").
In
light of the foregoing, we view the trial court's
dismissal of Austill's complaint in the quiet-title
action as a dismissal with prejudice. As such, the trial
court's judgment of dismissal constituted a judgment on
the merits of the quiet-title action for res judicata
purposes. Therefore, we conclude that element (1) of res
judicata is satisfied in this case.
Austill
also argues that Prescott fails to satisfy element (4),
i.e., the requirement that "the same cause of
action [be] presented in both actions," Lee L.
Saad, 851 So.2d 507 at 517. Austill argues:
"In this case, Austill 1) did not bring the same claim,
and 2) could not have feasibly brought the same [claim] of
judicial redemption. Austill could not have possibly brought
[a] judicial[-]redemption [claim] since he had no standing to
redeem the property he never owned and thus never lost to a
tax sale."
Austill's
reply brief, at 22. But Prescott did not argue that Austill
was precluded from claiming title to the property through
judicial redemption. Indeed, as Austill points out, the
record is devoid of any evidence in either the quiet-title
action or the redemption action indicating that Austill
possesses a right of judicial redemption.
Instead,
Prescott argues that Austill is precluded from asserting the
claim to title upon which Austill actually relies,
i.e., an extinguishment of Prescott's right of
redemption through Austill's adverse possession of the
property. In other words, Prescott argues that, by asserting
his argument that he has extinguished Prescott's right of
redemption in the redemption action, Austill is attempting to
relitigate the same dispute that was resolved in the
quiet-title action. In Old Republic Insurance Co. v.
Lanier, 790 So.2d 922, 928-29 (Ala. 2000), this Court
noted the following regarding the "cause-of-action"
element of res judicata:
"In Alabama '[i]t is well-settled that "the
principal test for comparing causes of action [for the
application of res judicata] is whether the
primary right and duty or wrong are the same in each
action."' Wesch v. Folsom, 6 F.3d 1465,
1471 (11th Cir. 1993)(emphasis added), cert. denied sub
nom. Sinkfield v. Wesch, 510 U.S. 1046, 114 S.Ct. 696,
126 L.Ed.2d 663 (1994). 'Res judicata applies not only to
the exact legal theories advanced in the prior case,
but to all legal theories and claims arising out of
the same nucleus of operative facts.' Id.
(emphasis added). 'The question is whether the same
evidence substantially supports both actions. ... It is
considered the same cause of action when the same evidence is
applicable in both actions.' Hughes v. Martin,
533 So.2d 188, 191 (Ala. 1988). As it is sometimes stated,
'"[w]here two successive suits seek recovery for the
same injury, a judgment on the merits operates as a bar to
the later suit, even though a different legal theory of
recovery is advanced in the second suit."'
Silcox v. United Trucking Serv., Inc., 687 F.2d 848,
852 (6th Cir. 1982); Harrington v. Vandalia-Butler Bd. of
Educ., 649 F.2d 434, 437 (6th Cir. 1981); see also
Kale v. Combined Ins. Co. of America, 924 F.2d 1161,
1166 (1st Cir.), cert. denied, 502 U.S. 816, 112
S.Ct. 69, 116 L.Ed.2d 44 (1991)."[8]
A
review of the record on appeal clearly demonstrates that the
disputes between the parties presented in the redemption
action and the quiet-title action are based on the same
nucleus of operative facts. As noted above, while
Austill's appeal was pending in the quiet-title action,
he moved for a stay of proceedings in the redemption action,
which Prescott agreed was warranted. In his motion, Austill
asserted:
"[Austill] would allege that, given the fact that this
pending cause of action, as well as the previous case upon
appeal, involve the same subject real property, issues
and parties, that the Court cannot adjudicate this
pending cause of action until such a time as the Court
of Civil Appeals enters its decision on [Austill]'s
appeal.
"... [S]ince the issues upon appeal will determine
whether or not [Austill] does, in fact, have the legal right
to demand qui[et] title to the subject real property, as well
as determine [Prescott]'s legal standing to demand
judicial redemption, [Prescott]'s rights in this
pending cause of action to a possible judicial
redemption of the subject real property cannot be determined
or ascertained until such a time as [Austill]'s legal
rights to the subject real property are finally adjudicated
by the Court of Civil Appeals."
(Emphasis added.)
Moreover,
we note that Austill does not argue on appeal that the
doctrine of res judicata, or claim preclusion, is
inapplicable because the disputes between the parties
presented in the quiet-title action and the redemption action
were based on a different set of facts. In the portion of his
reply brief addressing Prescott's argument based on the
doctrine of collateral estoppel, Austill does argue that the
evidence necessary to support a claim based on his
interpretation of the language reflected in the 2009
amendment to § 40-10-82 is different than the evidence
necessary to support a claim under the first sentence of
§ 40-10-82. Put another way, Austill argues that the
"theory of [his] defense [in the redemption
action] is different than the allegations made in the
[quiet-title action]; Austill presents [in the redemption
action] completely different arguments than those presented
in [the] quiet[-]title [action]." Austill's reply
brief, at 7 (emphasis added). He also states:
"[A]lthough Austill believes that he has used a new
theory of denying redemption, he obviously admits that
he denied [Prescott's right of] redemption [in both
actions]." Austill's reply brief, at 19 (emphasis
added).
As
noted above, "'[r]es judicata applies not only to
the exact legal theories advanced in the prior case,
but to all legal theories and claims
arising out of the same nucleus of operative facts.'
Wesch v. Folsom, 6 F.3d 1465, 1471 (11th Cir.
1993)(emphasis added)." Lanier, 790 So.2d at
928. Both the quiet-title action and the redemption action
dealt with the legal significance of the same nucleus of
operative facts, i.e., Austill's purchase of the
property at a tax sale, his subsequent possession of the
property for a particular number of years, his acquisition of
a tax deed, and Prescott's acquisition of the interests
of the property's former owners.[9]
In
other words, as to the quiet-title action and the redemption
action "'the primary right and duty or
wrong are the same in each action.'"
Lanier, 790 So.2d at 928 (quoting Wesch, 6
F.3d at 1471). As the foregoing summary of the procedural
histories of the quiet-title action and the redemption action
demonstrates, the dispute between Austill and Prescott has
not changed from the quiet-title action to the redemption
action. In the redemption action, each party relies, in large
part, upon the same authority in support of his respective
position regarding whether Austill had extinguished
Prescott's right of redemption as he did in the
quiet-title action. Among other cases, the parties still cite
Southside, Reese, Buzzelli,
Karagan, Hand, O'Connor, and
McGuire in their appellate briefs. The only material
element that differs between the actions is Austill's
relatively newfound argument regarding the effect of the
language added to § 40-10-82 by the 2009 amendment.
In his
reply brief, Austill spends several pages arguing that he
could not have properly raised the significance of the 2009
amendment to § 40-10-82 in the quiet-title action. As
noted above, however, Austill did, in fact, raise that
argument in the quiet-title action, albeit perhaps too late.
In this appeal, Austill argues that the 2009 amendment to
§ 40-10-82, specifically the last sentence,
"means that a tax purchaser may cut off the original
owner's redemptive rights three years after the tax
investor's possession of the property. ... Since ...
ยง 40-10-74 gives a tax investor the right to possess the
property as soon as the tax lien is purchased, the
legislature intended the tax investor to be able to cut off
...