Tucker v. Richard M. Scrushy Charitable Foundation, Inc
Annotate this Case
Justia Opinion Summary
Want to stay in the know about new opinions from the Supreme Court of Alabama?
Sign up for free summaries delivered directly to your inbox. Learn More ›
You already receive new opinion summaries from Supreme Court of Alabama. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here.
Plaintiffs Wade Tucker, the Wendell H. Cook, Sr. Testamentary Trust, and HealthSouth Corporation appealed a circuit court's partial summary judgment in favor of the Richard M. Scrushy Charitable Foundation. In 2009, the court entered a judgment against the Scrushy Foundation in favor of Plaintiffs for approximately $2.7 billion. As part of their efforts to collect on the judgment, Plaintiffs issued a process of garnishment to the Foundation. The Foundation responded to the garnishment by denying that it had possession or control of any belongings to Mr. Scrushy. Plaintiffs then contested the Foundation's response alleging, among other things, that Mr. Scrushy "dominated and controlled" the Foundation such that it was his alter ego. The Foundation did not respond to Plaintiffs' garnishment contest, but moved for summary judgment a few months later on all of Plaintiffs' claims. The Foundation maintained that Plaintiffs' actions were time barred. The Foundation’s motion did not address Plaintiffs' garnishment contest. Ultimately, the circuit court entered a summary judgment in favor of the Foundation concerning Plaintiffs’ clams brought under the Alabama Uniform Fraudulent Transfer Act (AUFTA), finding that Plaintiffs' claims under the statute were time-barred. With regard to the garnishment contest, the court entered summary judgment again, holding that Plaintiffs' claims arose from transfers Mr. Scrushy made to the Foundation rather than upon the Judgment. Upon review, the Supreme Court concluded the circuit court exceeded its discretion by conducting a hearing on the Foundation's request for a summary judgment in Plaintiffs' garnishment contest on less than ten days' notice in violation of the rules of procedure and over Plaintiffs' objections. Accordingly, the Court reversed the Circuit Court's summary judgment "insofar as it considered the Plaintiffs' garnishment contest," and remanded the case for further proceedings.
Download PDF
Rel: 04/06/2012 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) 229-0649), 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, 2011-2012 _________________________ 1100736 _________________________ Wade Tucker et al. v. Richard M. Scrushy Charitable Foundation, Inc. Appeal from Jefferson Circuit Court (CV-02-5212) PARKER, Justice. Wade Tucker, the Wendell H. Cook, Sr. Testamentary Trust, and HealthSouth Corporation (hereinafter collectively referred to as "the plaintiffs") appeal from the circuit court's partial summary judgment in favor of the Richard M. Scrushy 1100736 Charitable Foundation, Inc. ("the Foundation"). We reverse and remand. Facts and Procedural History The circuit court set forth the relevant facts and the procedural history in its order granting the Foundation's summary-judgment motion: "This matter is now before the Court on the Richard M. Scrushy Charitable Foundation (the 'Foundation')'s Motion for Partial Summary Judgment. The Court heard oral argument from the parties on July 20, 2010 and on December 2, 2010. ".... "1. On June 18, 2009, this Court entered a judgment against Richard M. Scrushy ('Scrushy') in favor of Plaintiffs for roughly $2,876,103,000 (the 'Judgment') in Tucker, et al. v. Scrushy, et al., CV-02-5212 (the 'Tucker Action'). "2. On October 16, 2009, as part of their efforts to collect on the Judgment, the Plaintiffs issued a process of garnishment to the Foundation in the Tucker Action. A garnishment is a process to execute on 'money or effects' of a judgment debtor 'in the possession or under the control of a third person.' See Alabama Code [1975,] § 6-6-370. On January 22, 2010, the Foundation filed a sworn answer to the Plaintiffs' garnishment denying that it 'has possession or control of any belongings' of Scrushy. "3. On February 19, 2010, Plaintiffs filed a 'Verified Contest of Garnishment Answer of Richard M. Scrushy Charitable Foundation, Inc.,' pursuant to Alabama Code [1975,] § 6-6-458 (the 'Garnishment 2 1100736 Contest'). As grounds for the Garnishment Contest, Plaintiffs alleged, among other things, that 'Scrushy has dominated and controlled the Garnishee [Foundation] such that it is the mere alter ego of Scrushy.' Thus, according to Plaintiffs, the approximately $3 million in assets held by the Foundation are, by operation of law, assets that belong to Scrushy and subject to the payment of Plaintiffs' Judgment. The Foundation did not file a response to the Plaintiffs' Garnishment Contest. "4. In addition to their efforts to execute on the Judgment in the Tucker Action, on July 2, 2009, Plaintiffs filed a separate action, Tucker, et al. v. Scrushy, et al., CV-09-901245,1 against the Foundation and others, under the Alabama Uniform Fraudulent Transfer Act, ('AUFTA'), Ala. Code [1975, §] 8-9A-1 et seq. (the 'AUFTA Action'). On December 28, 2009, Plaintiffs amended their complaint in the AUFTA Action to assert claims against the Foundation for violation of the AUFTA (Count One), Unjust Enrichment (Count Two), Civil Conspiracy (Count Three) and Aiding and Abetting (Count Four). Plaintiffs allege that: (1) Scrushy fraudulently transferred millions of dollars to the Foundation to avoid payment to Scrushy's creditors, including Plaintiffs; (2) the Foundation was unjustly enriched by transfers from Scrushy to the detriment of Scrushy's creditors; (3) the Foundation participated in a conspiracy with Scrushy and others to fraudulently transfer property of Scrushy to the detriment of Scrushy's creditors, including Plaintiffs; and (4) the Foundation aided and abetted Scrushy to commit fraudulent transfers. Plaintiffs' complaint in the AUFTA Action does not assert an alter ego claim against the Foundation. "5. On May 6, 2010, the Foundation moved for partial summary judgment on all of Plaintiffs' claims in the AUFTA Action. In its motion for partial summary judgment, the Foundation asserts that Plaintiffs' claims against the Foundation in 3 1100736 the AUFTA Action are time barred. The Foundation's motion also asserts that Alabama law does not recognize a private cause of action for aiding and abetting. The Foundation's motion for summary judgment is not directed to and does not address Plaintiffs' Garnishment Contest. "6. On June 24, 2010, the Plaintiffs filed an Opposition to the Foundation's motion for partial summary judgment. On August 16, 2010, the Plaintiffs submitted additional evidence in support of their Opposition. In those submissions, Plaintiffs argued, among other things, that the motion was premature and that Plaintiffs should have an opportunity to engage in additional discovery. On October 1, 2010, this Court entered an Order giving Plaintiffs through October 29, 2010, to take five additional depositions bearing on issues of fact. Subsequently, this Court extended the October 29, 2010, deadline to November 12, 2010. The Court established November 19, 2010 as the deadline for submitting any additional briefs relating to the Foundation's motion for partial summary judgment. "7. On November 19, 2010, after conducting the permitted additional discovery, Plaintiffs submitted a filing entitled 'Supplement in Response to Foundation's Motion for Partial Summary Judgment and Plaintiffs' Request for a Trial Setting.' In this filing, the Plaintiffs (i) acknowledge that Plaintiffs' claims against the Foundation in the AUFTA Action are time barred because Scrushy's transfers to the Foundation all occurred prior to July 2, 2003, and (ii) request a trial setting for Plaintiffs' Garnishment Contest pursuant to Alabama Code [1975,] § 6-6-458 on grounds that Plaintiffs' motion for partial summary judgment is not directed to and does not resolve their Garnishment Contest. Plaintiffs' submissions include deposition testimony and documentary evidence which, they contend, support the averments of their Garnishment Contest, 4 1100736 including their claim that the Foundation is the mere alter ego and instrumentality of Scrushy. "[8]. On December 1, 2010, the Foundation filed a 'Reply to Plaintiff's Supplement in Response to Foundation's Motion for Partial Summary Judgment and Plaintiff's Request for a Trial Setting.' In this filing, the Foundation asserts that Plaintiffs are not entitled to a trial of their Garnishment Contest as a matter of law and that summary judgment should also be granted in favor of the Foundation in the Garnishment Contest for various reasons. "[9]. On December 2, 2010, the Court heard final oral arguments of the parties, including Plaintiffs' objection that the arguments raised by the Foundation in its December 1, 2010 Reply directed to the Garnishment Contest do not comply with the requirements of Rule 56[, Ala. R. Civ. P.,] governing motions for summary judgment. In deciding the Foundation's motion for partial summary judgment, this Court has considered the parties' arguments and written submissions as well as the documentary evidence and affidavits submitted by the parties. _______________ "1Although that action was initially pending before Judge Michael Graffeo, it was subsequently transferred and consolidated with Tucker v. Scrushy, CV-02-5212." The circuit court entered a summary judgment in favor of the Foundation concerning the plaintiffs' claims brought under the Alabama Uniform Fraudulent Transfer Act, § 8-9A-1 et seq., Ala. Code 1975 ("the AUFTA"), determining that the plaintiffs' AUFTA claims were time-barred; the plaintiffs agreed that 5 1100736 their AUFTA claims were time-barred. Concerning the plaintiffs' garnishment contest filed pursuant to § 6-6-370 et seq., Ala. Code 1975 ("the garnishment statutes"), the circuit court entered a summary judgment against the plaintiffs and in favor of the Foundation, stating as follows: "With regard to the Plaintiffs' Verified Contest of Garnishment Answer of Richard M. Scrushy Charitable Foundation, Inc., the Court likewise finds that the Foundation is entitled to final summary judgment on that claim. The Court finds that the Plaintiffs' garnishment claim against the Foundation arises out of and is predicated upon the transfers which Scrushy made to the Foundation on or before October 10, 2002, rather than upon the Judgment. Accordingly, because Plaintiffs' fraudulent transfer claims against the Foundation under the AUFTA are time-barred, the process of garnishment issued to the Foundation is also time-barred. Thus, even if the Foundation is the mere alter ego and instrumentality of Scrushy as argued by Plaintiffs, Plaintiffs' claims in the Garnishment Contest are nonetheless time barred since they arise out of and are predicated upon Scrushy's transfers to the Foundation which are time-barred." The plaintiffs appealed. Discussion Initially, we note that the plaintiffs do not appeal the summary judgment in favor plaintiffs' AUFTA claims. of the Foundation as to the Thus, the only issue before this Court is whether the circuit court's summary judgment in favor 6 1100736 of the Foundation in the plaintiffs' garnishment contest was in error. The plaintiffs argue that the circuit court exceeded its discretion by conducting Foundation's a hearing on summary-judgment motion that that part of the concerned the plaintiffs' garnishment contest on less than 10 days' notice as required by Rule 56(c)(2), Ala. R. Civ. P. We agree. Rule 56(c)(2) provides: "(2) Time. The motion for summary judgment, with all supporting materials, including any briefs, shall be served at least ten (10) days before the time fixed for the hearing, except that a court may conduct a hearing on less than ten (10) days' notice with the consent of the parties concerned. Subject to subparagraph (f) of this rule, any statement or affidavit in opposition shall be served at least two (2) days prior to the hearing." In this case, as set forth above, the Foundation did not file its request for a summary judgment as to the plaintiffs' garnishment contest until December 1, 2010, the day before the already scheduled December 2, 2010, hearing on the Foundation's motion filed on May 6, 2010, seeking a summary judgment on Foundation. hearing the the plaintiffs' AUFTA claims against the It is undisputed that at the December 2, 2010, circuit court heard 7 oral argument on the 1100736 Foundation's request for a summary judgment in the plaintiffs' garnishment contest; the circuit court noted in its judgment that it "heard final oral arguments of the parties, including Plaintiffs' objection that the arguments raised by the Foundation in its December 1, 2010, Reply directed to the Garnishment Contest do not comply with the requirements of Rule 56[, Ala. R. Civ. P.,] governing motions for summary judgment." By the plain language of the rule, compliance with the notice provision in Rule 56(c) may be excused with the consent of the parties. In this case, nothing in the record indicates that the plaintiffs consented to the Foundation's request for a summary judgment on the plaintiffs' garnishment contest being heard on less than 10 days' notice. In fact, as indicated in the circuit court's judgment, the plaintiffs objected, based consideration at on Rule the 56, December to 2, the 2010, circuit hearing court's of the Foundation's request for a summary judgment in the plaintiffs' garnishment contest. Therefore, the plaintiffs did not waive their right under Rule 56(c)(2) to insist on 10 days' notice of the hearing. 8 1100736 Additionally, we note that "the requirements of Rule 56(c) are afforded procedural a wide in range nature, of and the trial court discretion in applying is them." Middaugh v. City of Montgomery, 621 So. 2d 275, 279 (Ala. 1993). Further, noncompliance with the 10-day-notice requirement does not constitute reversible error absent a showing of actual prejudice. Hilliard v. Southtrust Bank of Alabama, N.A., 581 So. 2d 826, 828 (Ala. 1991). In the instant case, prejudice to the plaintiffs was inevitable. Under Rule 56(c)(2), which requires that "any statement or affidavit in opposition shall be served at least two (2) days prior to the hearing," the plaintiffs did not even have an opportunity to respond to the Foundation's request for a summary judgment in their garnishment contest because the Foundation's request was filed only one day before the hearing at which that request was contested. Therefore, having been deprived of the opportunity to respond to the Foundation's summary-judgment request as to the plaintiffs' garnishment contest, the plaintiffs were necessarily prejudiced by the failure of the circuit court to comply with Rule 56(c)(2). 9 1100736 The Foundation argues that "[a]lthough the [circuit] court held a summary judgment hearing on December 2, 2010, the [circuit] court did not actually enter its Memorandum Opinion and Order until February 7, 2011 ...." brief, at p. 54. The Foundation's Thus, the Foundation argues, the plaintiffs "suffered no prejudice because they had ample opportunity to file supplemental briefs and chose not to do so." Id. The Foundation appears to argue that the plaintiffs could have avoided being prejudiced and could have corrected the circuit court's error in considering the Foundation's summary-judgment request at the December 2, 2010, hearing by voluntarily filing an opposition to the Foundation's summary-judgment motion following the hearing and before the circuit court entered the summary judgment. However, the Foundation provides no legal support for its argument, and nothing in Rule 56 allows a party to file an untimely opposition to a summary-judgment motion. The Foundation's argument is not well taken. Conclusion Because the circuit court exceeded its discretion by conducting a hearing on the Foundation's request for a summary judgment in the plaintiffs' garnishment contest on less than 10 1100736 10 days' notice in violation of Rule 56(c)(2) and over the objections of the plaintiffs, we reverse the circuit court's summary judgment insofar as it considered the plaintiffs' garnishment contest, and we remand the cause for further proceedings. We instruct the circuit court to reissue a notice of hearing date in compliance with Rule 56(c)(2) and to consider all evidentiary materials timely filed by both sets of parties in anticipation of that hearing date.1 REVERSED AND REMANDED WITH INSTRUCTIONS. Malone, C.J., and Stuart, Shaw, and Wise, JJ., concur. 1 We note that the plaintiffs also argue that the circuit court's summary judgment in their garnishment contest was in error because, the plaintiffs argue, their garnishment contest was not time-barred. However, our decision reversing the circuit court's summary judgment in that regard based on our holding that the circuit court exceeded its discretion by conducting a hearing on the Foundation's summary-judgment request in the garnishment contest on less than 10 days' notice pretermits discussion of this issue. 11
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
