Am. Nat. Red Cross v. Asd Spec. Healthcare

888 So. 2d 464, 2003 WL 22272856
CourtSupreme Court of Alabama
DecidedMarch 19, 2004
Docket1020446
StatusPublished
Cited by6 cases

This text of 888 So. 2d 464 (Am. Nat. Red Cross v. Asd Spec. Healthcare) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Am. Nat. Red Cross v. Asd Spec. Healthcare, 888 So. 2d 464, 2003 WL 22272856 (Ala. 2004).

Opinion

888 So.2d 464 (2004)

AMERICAN NATIONAL RED CROSS
v.
ASD SPECIALTY HEALTHCARE, INC., an incorporated division of Amerisource Bergen Corp. d/b/a Oncology Supply; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc.

1020446.

Supreme Court of Alabama.

October 3, 2003.
Opinion Overruling Rehearing March 19, 2004.

Dennis D. Murrell and Amy E. Shoemaker of Middleton Reutlinger, Louisville, Kentucky; and Benjamin M. Bowden, P.C., Andalusia, for plaintiff.

Sandy G. Robinson and Ian D. Rosenthal of Cabaniss, Johnston, Gardner, Dumas & O'Neal, Mobile, for respondent ASD Specialty Healthcare, Inc.

PER CURIAM.

The United States District Court for the Southern District of Alabama has certified the following question to this Court pursuant to Rule 18, Ala.R.App.P.: "Whether the [Alabama Uniform Fraudulent] Transfer Act, Ala.Code [1975,] §§ 8-9A-1 et seq., includes blood products, as provided for in Ala.Code [1975,] § 7-2-314(4). The phrasing used in this certified question should not restrict the Supreme Court's consideration of the problem posed by this case."

To assist this Court in its determination, the district court provided the following *465 summary of the pertinent facts of the controversy, as well as a concise explanation of the arguments presented by the parties:

"Plaintiff Red Cross alleges that, during 1999, it entered into an arrangement with an individual named Peter Woolley and a company with which he was affiliated, LA Pharmaceutical, to sell blood products to LA Pharmaceutical, LLC (`LA Pharmaceutical'). Plaintiff further alleges that LA Pharmaceutical, through one of its principals, Peter Woolley, then transferred the blood products to certain of the defendants in violation of the AUFTA [Alabama Uniform Fraudulent Transfer Act]. (A default judgment has previously been entered against LA Pharmaceutical and Peter Woolley, neither of which are defendants in this current action.)
"The defendants [ASD Specialty Healthcare, Inc.; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc.] deny any liability under the AUFTA. The defendants have also asserted that the AUFTA has no application in this case because the blood products in question are considered, for all purposes, to be a `service' under Ala.Code [1975,] § 7-2-314(4) and, therefore, not `property' under the AUFTA. All parties agree that the blood products in question are governed by § 7-2-314(4). Plaintiff asserts that the AUFTA is applicable because the definition of `property' under the AUFTA includes the blood products in question; however, defendants assert that the AUFTA is not applicable because the definition of `property' under the AUFTA does not include services."

After conducting the appropriate hearings, the magistrate judge, drawing an analogy between goodwill and services, concluded that the Alabama Uniform Fraudulent Transfer Act, Ala.Code 1975, § 8-9A-1 et seq. ("the AUFTA") did apply to the instant transaction. The district court judge, in its order adopting the magistrate judge's recommendation, similarly concluded that the distribution of blood products in the transaction at issue constituted "an intangible asset" and met "the broad definition of property under the AUFTA." Although we employ a slightly different rationale, we nevertheless reach the same conclusion with respect to the question presented; consequently, we answer the certified question in the affirmative.

The purpose of the AUFTA is to prohibit the fraudulent transfer of property by a debtor "who intends to defraud creditors by placing assets beyond their reach." Thompson Props. v. Birmingham Hide & Tallow Co., 839 So.2d 629, 632 (Ala.2002). Thus, the AUFTA defines "transfer" broadly, noting that it includes "[e]very mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money...." Ala.Code 1975, § 8-9A-1(13). The AUFTA defines an "asset" as "[p]roperty of a debtor...." Ala.Code 1975, § 8-9A-1(2).

"Property" is broadly defined in the AUFTA to encompass "real and personal property, whether tangible or intangible, and any interest in property whether legal or equitable and includes anything that may be the subject of ownership." Ala.Code 1975, § 8-9A-1(11). If not apparent from the language of the statute itself, the Alabama Comment to § 8-9A-1 of the AUFTA notes the expansive definition of "property," which it says was specifically designed "to give the term `property' a broad meaning...."

Thus, it would appear that blood products qualify as "property" under the AUFTA. However, ASD Specialty Healthcare, Inc., an incorporated division *466 of Amerisource Bergen Corp. d/b/a Oncology Supply; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc. (hereinafter referred to collectively as "the defendants"), argue that the AUFTA has no application in this case because, they say, the blood products in question are considered "for all purposes" to be a "service" under Ala.Code 1975, § 7-2-314(4), a part of Alabama's Uniform Commercial Code; therefore, they argue, those blood products are not "property" under the AUFTA. We disagree.

When a court construes a statute, "[w]ords used in [the] statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says." IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So.2d 344, 346 (Ala.1992). With this standard in mind, we review the text of § 7-2-314(4), which provides:

"(4) Procuring, furnishing, donating, processing, distributing, or using human whole blood, plasma, blood products, blood derivatives, and other human tissues such as corneas, bones or organs for the purpose of injecting, transfusing, or transplanting any of them in the human body is declared for all purposes to be the rendition of a service by every person participating therein and whether any remuneration is paid therefor is declared not to be a sale of such whole blood, plasma, blood products, blood derivatives, or other human tissues."

Here, the plain reading of § 7-2-314(4) indicates that it is the "[p]rocuring, furnishing, donating, processing, distributing, or using ... blood products" that is "declared for all purposes to be the rendition of a service." In other words, the act of procuring and furnishing the blood products — not the blood products themselves — is the service. See State v. Community Blood & Plasma Serv., Inc., 48 Ala.App. 658, 661, 267 So.2d 176, 179 (1972)(in holding that processing blood products was not a sale subject to taxation, court stated that "the activity of `procuring, furnishing, donating, processing, distributing, or using human whole blood, plasma, blood products, etc.', is to be a service by every person participating therein").

Thus, those "furnishing," "distributing," or "procuring" blood products provide a service, and that service does not constitute a sale.[1] However, § 7-2-314(4), which declares the "procuring, furnishing, donating, processing, distributing, or using" of blood products to be a service, does not, in any sense, address the chattel nature of the underlying blood products. Although the distinction between "furnishing," "distributing," or "procuring" blood products and the underlying blood products themselves is perhaps subtle, that distinction is all important.

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888 So. 2d 464, 2003 WL 22272856, Counsel Stack Legal Research, https://law.counselstack.com/opinion/am-nat-red-cross-v-asd-spec-healthcare-ala-2004.