Wausau Development Corporation ("WDC") appeals a judgment entered by the Lamar Circuit Court ("the circuit court") in favor of Natural Gas & Oil, Inc. ("NGO"). We reverse the circuit court's judgment.
Facts and Procedural History
On March 19, 2012, NGO filed a complaint seeking a judgment determining the validity of certain oil and gas leases held by WDC to particular wells located in Lamar County ("the wells"). NGO alleged that WDC was a Mississippi corporation with a principal office located in Mississippi and that WDC was not authorized to conduct business in Alabama because WDC was not registered as a foreign entity as required by § 10A-1-7.01, Ala.Code 1975.
On April 30, 2012, WDC filed a motion for a more definite statement pursuant to Rule 12(e), Ala. R. Civ. P, and a motion to dismiss for failure to join an indispensable party pursuant to Rule 12(b)(7), Ala. R. Civ. P. On May 31, 2012, the circuit court held a hearing on WDC's motions. On June 4, 2012, the circuit court issued an order noting that WDC's motion for a more definite statement had been withdrawn and an order denying WDC's motion to dismiss.
On June 19, 2012, WDC filed an answer and counterclaims against NGO. WDC admitted that it was a Mississippi corporation and that it was not authorized to conduct business in Alabama. However, WDC denied NGO's allegation that WDC did not possess valid leases to the wells and that NGO did hold valid leases to the wells. WDC also expressly reserved the right to amend its answer and to raise additional defenses as discovery proceeded. WDC also asserted three counterclaims against NGO: breach of contract, slander of title, and unjust enrichment.
On July 10, 2012, NGO filed a motion to dismiss the counterclaims for failure to state a claim upon which relief could be granted pursuant to Rule 12(b)(6), Ala. R. Civ. P; the circuit court denied the motion on the same day.
On July 16, 2012, NGO filed a motion for a judgment on the pleadings as to the three counterclaims asserted by WDC. On August 6, 2012, WDC filed a response to NGO's motion, requesting that NGO's motion be struck pursuant to Rule 12(g), Ala. R. Civ. P., as attempting to assert arguments not made in the original Rule 12 motion. On August 10, 2012, the circuit court held a hearing on NGO's motion for a judgment on the pleadings.
On September 17, 2012, the circuit court entered an order, which states, in pertinent part:
(Capitalization in original.) The circuit court's order also determined that the leases obtained by WDC to the wells were void, divested WDC of any and all interest in the leases, and declared NGO's leases to be valid and current.
The circuit court's judgment in favor of NGO relied upon Alabama's "door-closing" statute, § 10A-2-15.02(a), Ala.Code 1975, which states:
The door-closing statute is a capacity defense that must be raised by a party that has been sued by a foreign corporation that has not registered with the State of Alabama pursuant to § 10A-1-7.01. See Penick v. Most Worshipful Prince Hall Grand Lodge F & A M of Alabama, Inc., 46 So.3d 416, 425 (Ala.2010) ("A foreign corporation's failure to obtain authorization to do business in Alabama is a capacity defense and does not per se implicate standing and subject-matter jurisdiction."). However, the capacity defense afforded defendants by the door-closing statute is not applicable to actions by foreign entities that involve interstate commerce "because `businesses engaged in interstate commerce are protected by the commerce clause in the United States Constitution, U.S. Const., Art. I, § 8, cl. 3, and are therefore immune from the effects of the "door closing" statutes.'" TradeWinds Envtl. Restoration, Inc. v. Brown Bros. Constr., L.L.C., 999 So.2d 875, 879 (Ala. 2008) (quoting Stewart Mach. & Eng'g Co. v. Checkers Drive In Rests. of North America, Inc., 575 So.2d 1072, 1074 (Ala. 1991)).
On October 15, 2012, WDC filed a postjudgment motion pursuant to Rule 59(e), Ala. R. Civ. P., to alter, amend, or vacate the circuit court's September 17, 2012, judgment. Consistent with this Court's holding in Stewart and TradeWinds, WDC argued, among other things, that the circuit court's judgment violated the Commerce Clause of the United States Constitution because this case involves "an article of commerce which is wholly interstate in nature." On January 14, 2013, WDC's postjudgment motion was denied by operation of law pursuant to Rule 59.1, Ala. R. Civ. P. WDC appeals.
Standard of Review
Medlock v. Safeway Ins. Co. of Alabama, 15 So.3d 501, 507 (Ala.2009) (quoting Universal Underwriters Ins. Co. v. Thompson, 776 So.2d 81, 82-83 (Ala.2000)). Here, no evidence was presented to the circuit court. Therefore, this Court conducts a de novo review, looking only to the pleadings to determine whether the circuit court erred in entering a judgment in favor of NGO.
WDC argues that the circuit court exceeded its discretion by granting NGO's motion for a judgment on the pleadings because, it says, the undisputed facts in the pleadings do not support the circuit court's judgment as a matter of law. We agree.
The circuit court based its judgment on the door-closing statute because WDC was not authorized to conduct business in Alabama. In its October 15, 2012, postjudgment motion, WDC argued that the circuit court's judgment was in contravention of the Commerce Clause of the United States Constitution because WDC's business activities in Alabama involved interstate commerce. In TradeWinds, supra, this Court explained the interstate-commerce exception to the door-closing statute:
999 So.2d at 878-79. WDC's postjudgment motion was denied by operation of law pursuant to Rule 59.1, Ala. R. Civ. P.; therefore, its argument regarding the Commerce Clause exception to § 10A-2-15.02(a) was not considered by the circuit court. Barter v. Burton Garland Revocable Trust, 124 So.3d 152, 156 (Ala.Civ.App. 2013) ("In the present case, the trial court permitted the postjudgment motion to be denied by operation of law, which indicates that the trial court did not consider the... arguments [contained in the postjudgment motion]. See, generally, Espinoza v. Rudolph, 46 So.3d 403, 416 (Ala. 2010) (indicating that an appellate court will not presume that a trial court considered the merits of an untimely asserted legal argument absent an indication that it did so).").
NGO argues on appeal that WDC "waived the affirmative defense of [the] interstate commerce exception" to
Rule 9(a), Ala. R. Civ. P., requires a party desiring to challenge another party's capacity to sue or be sued to do so through specific negative averment, as follows:
(Emphasis added.) Under Rule 9(a), it was not necessary for WDC to aver its capacity to bring the counterclaims against NGO. Rather, NGO, as the party desiring to raise WDC's capacity as an issue, should have pleaded WDC's lack of capacity as an affirmative defense to WDC's counterclaims by making a specific negative averment as to WDC's capacity, while including "supporting particulars," such as WDC's failure to obtain authorization to conduct business in Alabama. See Rule 8(c), Ala R. Civ. P. ("In pleading to a preceding pleading, a party shall set forth affirmatively ... any ... matter constituting an avoidance or affirmative defense."); Rikard v. Lile, 622 So.2d 413, 414 (Ala.Civ. App.1993) ("The lack of capacity to sue is an affirmative defense which must be specifically pled."). In the present case, NGO failed to challenge WDC's capacity to assert its counterclaims in a way that was consistent with the Alabama Rules of Civil
Although NGO alleges in its complaint and in its motion for a judgment on the pleadings that WDC is not authorized to conduct business in Alabama, NGO never made a "specific negative averment" regarding WDC's capacity to bring its counterclaims as required by Rule 9(a). Rather, in its motion for a judgment on the pleadings, NGO merely noted that WDC admitted in its answer that WDC was not authorized to conduct business in Alabama and addressed the merits of WDC's counterclaims. Likewise, during the hearing on NGO's motion, NGO did not argue that WDC lacked capacity to bring its counterclaims, nor did NGO mention the fact that WDC was not authorized to conduct business in Alabama; as in its motion, the only arguments made by NGO during the hearing related to the merits of WDC's counterclaims. The issue of WDC's capacity under the door-closing statute was raised for the first time by the circuit court when it became the basis of the circuit court's judgment against WDC.
A circuit court exceeds its discretion when it disposes of a matter based upon an affirmative defense that was not raised by the parties. In Waite v. Waite, 959 So.2d 610, 612-13 (Ala.2006), this Court quoted from the Court of Civil Appeals' opinion in Waite v. Waite, 891 So.2d 341, 343-44 (Ala.Civ.App.2004), in which that court addressed an issue similar to the one before us today:
As in Waite, the circuit court in the present case entered a judgment in favor of NGO based upon an affirmative defense that the court asserted sua sponte on behalf of NGO. In doing so, the circuit court exceeded its discretion and denied WDC an opportunity to raise the interstate-commerce exception
Based on the foregoing, we reverse the circuit court's judgment and remand the case for further proceedings.
REVERSED AND REMANDED.
MOORE, C.J., and STUART, SHAW, and WISE, JJ., concur.