Rel: December 15, 2023
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,
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2023-2024
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In re: Omni Healthcare Financial, LLC
(In re: Amy Lee Walker
v.
Eric Irvin Reese and SCP Distributors, LLC)
Appeal from Dale Circuit Court
(CV-22-000004)
BRYAN, Justice.
Omni Healthcare Financial, LLC ("Omni"), appeals from an order
of the Dale Circuit Court holding Omni in contempt of court for failing to
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comply with a nonparty subpoena. For the reasons explained below, we
reverse the contempt order and remand this cause for further
proceedings.
Background
The underlying action in this case involves claims asserted by Amy
Lee Walker against Eric Irvin Reese and SCP Distributors, LLC ("the
defendants"), arising from an automobile collision. Walker commenced
the action in the Montgomery Circuit Court, but the action was later
transferred to the Dale Circuit Court ("the circuit court").
Omni is a North Carolina-based factoring 1 company that purchased
certain accounts receivable from a medical provider who had treated
Walker. The relevant accounts receivable are secured by an interest in
any recovery that Walker obtains from this action against the
defendants. On May 18, 2022, the defendants served a nonparty
subpoena on Omni's registered agent in Alabama, seeking the production
of certain documents. Omni did not respond to the subpoena within the
1"Factoring" is defined as: "The buying of accounts receivable at a
discount. • The price is discounted because the factor (who buys them)
assumes the risk of delay in collection and loss on the accounts
receivable." Black's Law Dictionary 738 (11th ed. 2019).
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initial time allotted, but it later submitted a response providing certain
documents but also asserting certain objections to the subpoena.
On June 22, 2022, the defendants filed a motion asking the circuit
court to hold Omni in contempt of court for failing to comply with the
subpoena or, alternatively, to order Omni to show cause why it should
not be held in contempt. On July 28, 2022, Omni submitted a response
to the defendants' motion. Omni also filed in the circuit court a motion
to quash the subpoena.
The circuit court conducted a hearing regarding the defendants'
contempt motion on August 2, 2022. On August 5, 2022, the circuit court
entered an order granting the defendants' motion to hold Omni in
contempt, ordering Omni to produce the requested documents without
objection, requiring Omni to pay expenses of the defendants, and denying
Omni's motion to quash the subpoena.
Omni filed a motion to alter, amend, or vacate the circuit court's
August 5, 2022, order. Omni's motion was denied by operation of law.
See Rule 59.1, Ala. R. Civ. P. Omni appealed. See Rule 70A(g)(2), Ala.
R. Civ. P. See also Moultrie v. Wall, 143 So. 3d 128, 134 (Ala. 2013)("This
Court has previously reviewed a contempt adjudication by appeal even
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though there had not been a final judgment on the merits in the
underlying proceeding.").
Analysis
On appeal, Omni asserts three primary arguments. However, we
conclude that Omni's first argument is dispositive in this case; therefore,
we do not consider Omni's other two arguments and express no opinion
regarding them. In its first argument, Omni asserts that the circuit court
erred by holding it in contempt because, Omni contends, the subpoena at
issue was invalid. Omni relies primarily on In re National Contract
Poultry Growers' Ass'n, 771 So. 2d 466 (Ala. 2000), in support of its
argument.
In re National Contract Poultry Growers' Ass'n involved a
defendant who had requested that the trial court issue a nonparty
subpoena to the National Contract Poultry Growers' Association ("the
NCPGA"), a corporation whose principal place of business was in
Louisiana. The NCPGA did not respond to the subpoena, and the trial
court eventually held the NCPGA in contempt, ordering it to, among
other things, comply with the subpoena. The NCPGA appealed to this
Court.
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This Court concluded that the trial court had lacked authority to
issue a nonparty subpoena directed to the NCPGA because the requested
documents were located outside of Alabama's boundaries; the Court
stated: "[T]he subpoena had to be issued by a Louisiana court and had to
be served in accordance with Louisiana law." Id. at 469.
The Court explained:
"When one seeks a subpoena to secure the attendance of
a witness, or to procure the production of documents, located
outside the state, a different procedure is warranted.
Although we find no Alabama decision addressing this specific
situation, one commentator has stated the applicable
procedure:
" 'Process beyond the jurisdiction of the
courts to which these rules apply must depend
upon the existence of a rule or statute in the other
state or country which makes available
compulsory process to foreign litigants who desire
to return to their home state for trial with the
fruits of discovery thus obtained. For our rule
extending this courtesy to foreign litigants who
need discovery in Alabama for actions pending
outside of Alabama, see Rule 28(c)[, Ala. R. Civ.
P.,] which makes our Rule 45[, Ala. R. Civ. P.,]
available.'
"1 Champ Lyons, Jr., Alabama Rules of Civil Procedure
Annotated § 45.2 (3d ed. 1996). This procedure accords with
the procedure used in other jurisdictions to secure the
issuance of a subpoena for the attendance of a person, or the
production of documents from a nonparty, located outside the
state's boundaries."
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Id. Thus, the Court held: "NCPGA cannot be held in contempt for failing
to respond to th[e] subpoena. The judgment of the trial court holding
NCPGA in contempt of court is reversed and this cause is remanded." Id.
at 470.
Rule 37(b), Ala. R. Civ. P., provides the procedure for seeking
sanctions for failure to comply with an order compelling discovery. Rule
37(b)(1) states, in pertinent part:
"(1) Sanctions by a Circuit Judge or Court in Place
Where Deposition Is Taken or Production Sought. … [I]f a
person, not a party, fails to permit production of documents …
under Rule 45(a)(3)[, Ala. R. Civ. P.,] after being directed to
do so by a circuit judge or, when production or entry is sought
outside the state, by the court in the place where the
documents … are located, the failure may be considered a
contempt of court."
(Emphasis added.)
In this case, it is undisputed that the documents at issue are located
at Omni's facilities in North Carolina. It is also undisputed that the
defendants have not asked a North Carolina court to direct Omni to
produce the documents. Thus, it is clear that the defendants did not
comply with the requirements of Rule 37(b) in seeking to hold Omni in
contempt of court.
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As Omni points out, in 2011 North Carolina enacted the North
Carolina Uniform Interstate Depositions and Discovery Act ("the
NCUIDDA"), N.C. Gen. Stat., § 1F-1 et seq., which provides a procedure
for addressing foreign discovery requests. Section 1F-3(a) of the
NCUIDDA states, in pertinent part: "To request issuance of a subpoena
under this section, a party must submit a foreign subpoena to a clerk of
court in the county in which discovery is sought to be conducted in this
State." Notably, § 1F-7 of the NCUIDDA provides: "In applying and
construing this Chapter, consideration shall be given to the need to
promote uniformity of the law with respect to its subject matter among
states that have enacted the Uniform Interstate Depositions and
Discovery Act."
In 2012, Alabama enacted the Alabama Uniform Interstate
Depositions and Discovery Act, § 12-21-400, et seq., Ala. Code 1975.
Similar to the NCUIDDA, the Alabama Uniform Interstate Depositions
and Discovery Act provides, in relevant part:
"(a) In applying and construing this uniform act,
consideration shall be given to the need to promote uniformity
of the law with respect to its subject matter among states that
enact it.
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"(b) The privilege extended to persons in other states for
discovery under this article shall only apply if the jurisdiction
where the action is pending has extended a similar privilege
to persons in this state."
§ 12-21-406, Ala. Code 1975.
Thus, the plain language of both North Carolina law and Alabama
law directs courts to consider the need to promote uniformity of the law
with respect to matters involving interstate discovery. Moreover, the
plain language of Alabama law also requires that other states permit
litigants in Alabama to obtain discovery from their residents as a
prerequisite for a similar privilege being applicable regarding discovery
sought from Alabama residents.
Consistent with these notions of comity, Rule 37(b) plainly provides
for the involvement of foreign courts in obtaining from nonparties
documents located entirely within the territories of such courts.
Consequently, the circuit court erred by holding Omni in contempt in this
case. Therefore, we reverse the circuit court's order holding Omni in
contempt of court and remand this cause for further proceedings
consistent with this opinion.
REVERSED AND REMANDED.
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Parker, C.J., and Shaw, Wise, Sellers, Mendheim, Stewart, and
Mitchell, JJ., concur.
Cook, J., concurs specially, with opinion.
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COOK, Justice (concurring specially).
I concur fully with the main opinion's conclusion that the Dale
Circuit Court lacked the authority to hold Omni Healthcare Financial,
LLC, in contempt after it failed to comply with a nonparty subpoena
directing it to produce documents that are located outside Alabama. I
write specially, however, to highlight for the bench and the Bar the
distinction that this Court has previously made between a trial court's
subpoena power and its personal jurisdiction over a nonparty in deciding
whether a trial court has the authority to compel a nonparty to comply
with a subpoena directing it to produce out-of-state documents.
As noted in the main opinion, in In re National Contract Poultry
Growers' Ass'n, 771 So. 2d 466 (Ala. 2000), this Court concluded that the
trial court had lacked authority to compel a nonparty to produce the
documents at issue that were located outside Alabama. In reaching our
conclusion in that case, this Court explained that, even if an Alabama
trial court could exercise personal jurisdiction over a nonparty, this did
not necessarily mean that it had the authority to compel the production
of documents located out of the state because "[t]he underlying concepts
of personal jurisdiction and subpoena power are entirely different." 771
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So. 2d at 469. This Court explained:
"Personal jurisdiction is based on conduct that subjects the
nonresident to the power of the Alabama courts to adjudicate
its rights and obligations in a legal dispute. … By contrast,
the subpoena power of an Alabama court over an individual
or a corporation that is not a party to a lawsuit is based on the
power and authority of the court to compel the attendance of
a person at a deposition or the production of documents by a
person or entity. See Ex parte Leverton, 536 So. 2d 41, 44 (Ala.
1988) (state trial court does not have jurisdiction over a
nonparty, out-of-state witness)."
Id.
Other jurisdictions have likewise recognized this distinction. See,
e.g., Yelp, Inc. v. Hadeed Carpet Cleaning, Inc., 289 Va. 426, 438, 770
S.E.2d 440, 446 (2015) (recognizing that, "[a]lthough the General
Assembly has expressly authorized Virginia courts to exercise personal
jurisdiction over nonresident parties, it has not expressly authorized
Virginia courts to compel nonresident non-parties to produce documents
located outside of Virginia"); Syngenta Crop Prot., Inc. v. Monsanto Co.,
908 So. 2d 121, 128 (Miss. 2005) (concluding that, because personal
jurisdiction and subpoena power are different concepts, Mississippi
courts do not have authority "to compel … nonresident nonparties[] to
produce documents located out of th[e] state" even if the nonparty has a
registered agent present in the state); and Phillips Petroleum Co. v. OKC
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Ltd. P'ship, 634 So. 2d 1186, 1189 (La. 1994) (holding that Louisiana
courts lacked authority to "order a nonresident nonparty witness to
appear and/or produce documents … in Louisiana" when the nonparty
was authorized to do business in Louisiana and maintained an agent for
service of process in Louisiana).
In highlighting this distinction, I hope to provide the bench and the
Bar with some additional clarity as to what authority trial courts have in
Alabama to compel nonresident nonparties to produce documents located
out of the state.
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