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-22-4).

• Court: Supreme Court of Alabama
• Decided: December 15, 2023
• Docket: SC-2023-0027
• Status: Published

Opinion

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, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA OCTOBER TERM, 2023-2024 _________________________

SC-2023-0027 _________________________

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 SC-2023-0027

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). 2 SC-2023-0027

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." 5 SC-2023-0027

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.

6 SC-2023-0027

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.

7 SC-2023-0027

"(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.

9 SC-2023-0027

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 11 SC-2023-0027

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.