Declaratory Judgment; Justiciable Controversy

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Ex parte Valley National Bank, [Ms. 1180055, July 12, 2019] __ So. 3d __ (Ala. 2019). The Court (Stewart, J., Parker, C.J., and Bolin and Sellers, JJ., concur; Mitchell, J., concurs in part and dissents in part; Shaw, Bryan, and Mendheim, JJ., concur in part, concur in the result in part, and dissent in part) grants in part and denies in part a petition for a writ of mandamus filed by Valley National Bank, which sought an order directing the Montgomery Circuit Court to dismiss a declaratory-judgment action filed against the bank by Jesse Blount, Wilson Blount, and William Blount. The Blounts' complaint for a declaratory judgment sought a declaration that William's transfer of his interests in a business to a business wholly owned by his sons was not fraudulent as to the bank, that William was not the alter ego of the businesses, that the sale of his interests did not result in a constructive trust in favor of the bank, and that the Blounts had not engaged in a civil conspiracy. The bank responded by filing a motion to dismiss pursuant to Ala. R. Civ. P. 12(b)(1) and (b)(6), asserting the lack of subject-matter jurisdiction and the lack of a justiciable controversy. Separately, the bank filed an action in Jefferson Circuit Court under the Alabama Uniform Fraudulent Transfer Act, § 8-9A-1, et seq., Ala. Code 1975, asserting that William had fraudulently transferred assets and seeking a declaration of the right to pierce the corporate veil of the transferee.

When the Montgomery Circuit Court denied the bank's motion to dismiss, the bank sought a petition for a writ of mandamus contesting the trial court's rulings on jurisdiction and justiciability. The Court granted the petition in part on authority of Ex parte Valloze, 142 So. 3d 504 (Ala. 2013), determining the claims were non-justiciable because "[d]eclaratory-judgment actions are not intended to be a vehicle for potential tort defendants to obtain a declaration of non-liability." Ms. *7 (quoting Valloze, 142 So. 3d at 511). Because the complaint for a declaratory judgment sought a declaration that the asset transfers were not fraudulent as to the bank, it sought a determination of non-liability for alleged torts and was therefore an inappropriate use of declaratory-judgment. Ms. *7-10.

However, to the extent the complaint for declaratory-judgment sought declarations that William was not the alter ego of the transferees, and that the sale of assets did not result in a constructive trust in favor of the bank, those claims were appropriate for resolution in a declaratory-judgment action because they are not tort claims but instead otherwise constitute a bona fide justiciable controversy. Ms. *10-13.

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