Red Mountain Diagnostics, LLC, Donald R. Simmons, and William T. DeVos v. Robert A. Black, individually and on behalf of Molecular Diagnostics Laboratory, LLC (Appeal from Jefferson Circuit Court: CV-21-902086).

Rel: September 20, 2024

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
SPECIAL TERM, 2024

_________________________

SC-2024-0128
_________________________

Red Mountain Diagnostics, LLC, Donald R. Simmons, and
William T. DeVos

v.

Robert A. Black, individually and on behalf of Molecular
Diagnostics Laboratory, LLC

Appeal from Jefferson Circuit Court
(CV-21-902086)

STEWART, Justice.

The proceedings underlying this appeal involve numerous parties

and claims. The appellants are Donald R. Simmons, William T. DeVos,
SC-2024-0128

and Red Mountain Diagnostics, LLC ("Red Mountain"), an Alabama

limited-liability company of which Simmons and DeVos are the members

(Red Mountain, Simmons, and DeVos are referred to collectively as "the

Red Mountain parties"). The appellees are Robert A. Black and Molecular

Diagnostics Laboratory, LLC ("MDL"), a foreign limited-liability

company formed under the laws of Arizona of which Black and Robert

Strange are the members (MDL, Black, and Strange are referred to

collectively as "the MDL parties"). Black is also the sole member of Prolab

Consulting, LLC ("Prolab"). Strange and Prolab are parties in the

underlying proceedings but are not parties to this appeal.

In July 2019, Red Mountain and MDL entered into an agreement

that provided for the division of revenues after expenses ("the joint

venture") in relation to rendering medical-laboratory testing services.

The joint venture ended on April 30, 2021, and, afterward, the parties

accused one another of diverting revenues from the joint venture. In July

2021, Strange, individually and on behalf of MDL, sued Black and Prolab

in the Jefferson Circuit Court, seeking damages, injunctive relief, and the

judicial dissolution of MDL. Strange alleged that Black had diverted

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funds from MDL and Red Mountain, and he sought a preliminary

injunction enjoining Black from continuing to divert funds from MDL.

In August 2021, Black filed an answer to Strange's complaint and,

individually and on behalf of MDL, asserted counterclaims against

Strange and third-party claims against the Red Mountain parties. The

Red Mountain parties responded and asserted counterclaims against

Black and MDL and cross-claims against Prolab.

In April 2022, Black, individually and on behalf of MDL, filed a

motion for a preliminary injunction requiring Strange and the Red

Mountain parties to deposit with the circuit-court clerk "all funds derived

from the operation" of the joint venture. Black alleged that the other

parties had conspired to deprive him of funds to which he was entitled,

that they had refused to disclose the amount of funds they possessed, and

that he was "fearful that the funds are subject to being disposed of

pending the resolution of this cause."

On July 26, 2022, based on an agreement between Strange and

Black, the circuit court entered a preliminary injunction requiring Black

and Strange to deposit a total of $1,026,836.64 with the circuit-court

clerk; Black was ordered to deposit $925,471.26 and Strange was ordered

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to deposit $101,365.38. Upon receipt of the funds, Strange's motion for a

preliminary injunction was dismissed.

In January 2023, Black, individually and on behalf of MDL, filed,

pursuant to Rule 65, Ala. R. Civ. P., an amended motion for a preliminary

injunction requiring, among other things, the Red Mountain parties to

deposit with the circuit-court clerk "all funds derived from the operation"

of the joint venture. In the motion, Black and MDL asserted that, despite

repeated requests, the Red Mountain parties had refused to disclose the

amount of funds in their possession collected on behalf of the joint

venture and that, as a result, "MDL is fearful that the funds are subject

to being disposed of or attached by other parties or authorities pending

the resolution of this cause."

In February 2024, the Red Mountain parties filed a response to the

amended motion in which they asserted, among other things, that,

although Black and MDL had styled the motion as having been filed

pursuant to Rule 65, the motion actually sought a prejudgment seizure

of property pursuant to Rule 64, Ala. R. Civ. P., and that Black and MDL

had not satisfied the requirements of Rule 64. The Red Mountain parties

argued that Black and MDL had not shown any possessory or ownership

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interest in the funds they were seeking, which were contained in Red

Mountain's operating account, and that allowing the extraordinary

remedy of prejudgment seizure of Red Mountain's operating funds "could

cause [Red Mountain] to cease operations, force [it] to terminate its

employees, breach its contract with Brookwood Hospital, and otherwise

cause damage to [Red Mountain] and its members." The Red Mountain

parties further argued that, even if the motion was correctly filed under

Rule 65, Black and MDL had failed to allege sufficient information to

meet the required elements for injunctive relief. The Red Mountain

parties asserted that, if the circuit court imposed an injunction, it should

require an injunction bond of no less than $3,000,000.

On February 20, 2024, the circuit court adopted and entered Black

and MDL's proposed order granting Black and MDL their requested

injunctive relief and finding, in pertinent part:

"8. The Joint Venture operated very profitably and
generated revenue amounting to millions of dollars.

"9. [Red Mountain Diagnostics, LLC ('RMD, LLC'),] and
MDL both collected revenue related to the operation of the
Joint Venture. There is a dispute among the parties as to the
proper percentage of division of the profits for the 1st year of
operation, but the parties concede that the split of profits after
the 1st year was to be 50% to RMD, LLC and 50% to MDL for

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the work performed until the termination of the Joint Venture
on April 30, 2021.

"….

"12. RMD, LLC, Simmons, and DeVos are currently in
possession of or have access to substantial funds which were
generated by the Joint Venture operations. The Regions Bank
business checking account statement in the name of RMD,
LLC (the account in which Joint Venture revenue was
deposited), for the month ending April 30, 2021, reflected an
ending balance of $2,268,113.26.[1]

"13. Despite repeated requests from MDL, Strange, and
Black, RMD, LLC, Simmons and DeVos have refused to
disclose the present total amount of funds collected on behalf
of the Joint Venture, and, further, have refused to pay said
funds into Court as MDL has done.

"14. RMD, LLC is currently using the funds contained
in the aforementioned Regions Bank account for current
operating expenses of RMD, LLC for purposes other than the
Joint Venture and is apparently co-mingling funds belonging
to the Joint Venture with revenue being currently generated
by RMD, LLC in connection with other endeavors.

"15. Both MDL and RMD, LLC, and their members,
have included a demand for an accounting in their respective
pleadings in connection with the business dealings among the
parties.

"16. Based on the Agreement between RMD, LLC and
MDL, at least one-half (50%) of the net profit generated by the
Joint Venture and contained in the aforementioned Regions
Bank Account currently already belongs to MDL.

1Notably, the circuit court referenced an account balance from
almost three years before the date the preliminary injunction was issued.
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FINDINGS BY THE COURT

"17. The Court finds that MDL has met the required
elements entitling it to injunctive relief, to wit:

"(1) Without the entry of the requested
injunction, MDL will suffer irreparable injury.
MDL's profits contained in the RMD Regions
account is being used by RMD, LLC for its current
business operations unrelated to the Joint
Venture. Moreover, RMD, LLC is co-mingling
MDL's money with funds ostensibly being
generated by RMD, LLC's current operations
which are unrelated to the Joint Venture. The
Court finds that money currently owned by MDL
may be depleted by the time an accounting is
completed. MDL should not be required to finance
RMD, LLC's current operations which are
unrelated to the Joint Venture.

"(2) MDL has no adequate remedy at law. All
parties have demanded an accounting in this
cause. The co-mingling of RMD, LLC funds and
depletion of Joint Venture funds by RMD, LLC
pendente lite will surely cause accounting chaos
and operate to thwart MDL's right to a full and
proper accounting, which may result in guesswork
as to an accurate monetary judgment.

"(3) MDL has at least a reasonable chance of
success on the ultimate merits in this cause. RMD,
LLC is holding money which is subject to division
between RMD, LLC and MDL. MDL's claim for the
recovery of its share of Joint Venture profits has a
likelihood of success.

"(4) That the hardship imposed on RMD,
LLC by the injunction would not unreasonably
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outweigh the benefit accruing to MDL. The
granting of injunctive relief to MDL only results in
the protection of its portion of Joint Venture
profits which will still be subject to claims for set-
off. RMD, LLC still retains in its possession funds
which approximate its entitlement for profits, also
subject to set off.

"18. RMD, LLC, DeVos, and Simmons had the
opportunity to be heard and were provided the opportunity to
file opposing affidavits objecting to MDL's sworn Petition and
the granting of MDL's requested relief; they elected to do
neither.

"19. That the sum of $2,268,113.26 on deposit in the
checking account in the name of RMD, LLC at Regions Bank
on April 30, 2021, belongs to the Joint Venture and is subject
to division between RMD, LLC and MDL under the Joint
Venture Agreement between the parties.

CONCLUSION

"Based upon the foregoing, it is the opinion of the Court
that the following relief is due to be granted. It is therefore
ORDERED that:

"1. DeVos, Simmons, and RMD, LLC shall forthwith
deposit the sum of $1,026,836.64 with the Clerk of this Court,
said sum to remain on deposit with the Clerk until further
orders of the Court.

"2. DeVos, Simmons, and RMD, LLC shall maintain the
sum of $1,241,276.62 in the checking account in the name of
RMD, LLC at Regions Bank, and shall not access or use these
funds in any manner until further orders of the Court.

"3. DeVos, Simmons, and RMD, LLC are being allowed
to maintain under their control more than their share of
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profits from the Joint Venture contained in the Joint Venture
account as of April 30, 2021, pendente lite. Additionally, the
remaining portion of Joint Venture profits in the Regions
account will be on deposit with the Clerk of this Court when
said parties comply with this Order. Lastly, MDL has already
deposited the sum of $1,026,836.64 with the Clerk of this
Court in this cause. Therefore, the injunctive relief granted
herein shall become effective when MDL files, as security for
costs and damages, pursuant to the requirement contained
within Rule 65(c), Ala. R. Civ. P., its written approval that the
sum of $25,000.00 may be earmarked as such security from
the money it has already deposited with the Clerk." 2

The Red Mountain parties appealed the preliminary injunction

and, shortly thereafter, filed in the circuit court a motion to stay the

injunction pending the outcome of the appeal. Black and MDL filed a

response in opposition to the request for a stay. On July 17, 2024, the Red

Mountain parties filed a motion in this Court seeking a stay of the

injunction pending the outcome of the appeal, asserting that, despite the

passage of four months, the circuit court had not ruled on their motion

for a stay and that Black and MDL had filed a contempt motion seeking

to enforce the injunction. Black and MDL filed a response in this Court,

opposing the request for a stay.

2On February 27, 2024, Black and MDL filed, in writing, their
approval to earmark those funds as security for the issuance of the
preliminary injunction.
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Standard of Review

When this Court considers a trial court's entry of a preliminary

injunction, we review de novo the trial court's resolution of questions of

law based on undisputed facts, but we review the decision to enter the

preliminary injunction under the excess-of-discretion standard. City of

Helena v. Pelham Bd. of Educ., 375 So. 3d 750, 752 (Ala. 2022). As part

of our review, we must consider whether the trial court's decision to issue

the preliminary injunction is supported by evidence in the record. Id.

A party seeking a preliminary injunction must produce evidence

sufficient to demonstrate all four of the following prerequisites:

"(1) the party would suffer irreparable harm without the
injunction, (2) the party has no adequate remedy at law, (3)
the party has at least a reasonable chance of success on the
ultimate merits of the case, and (4) the hardship that the
injunction will impose on the opposing party will not
unreasonably outweigh the benefit accruing to the party
seeking the injunction."

Id. (citing Holiday Isle, LLC v. Adkins, 12 So. 3d 1173, 1176 (Ala. 2008)).

"If the party seeking the injunction fails to establish each of these

prerequisites, then a preliminary injunction should not be entered. If the

trial court enters a preliminary injunction when these prerequisites have

not been met, the trial court's order must be dissolved and the case

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remanded." Blount Recycling, LLC v. City of Cullman, 884 So. 2d 850,

853 (Ala. 2003).

Discussion

The Red Mountain parties argue that Black and MDL did not

present evidence satisfying any of the prerequisites for a preliminary

injunction. First, they argue that Black and MDL did not establish that

they would suffer immediate or irreparable harm without the issuance of

a preliminary injunction and that they offered only bare speculation,

unsupported by any factual allegations, that the funds in Red Mountain's

operating account may be depleted without the requested injunction. The

Red Mountain parties also argue that the potential alleged harm -- the

depletion of funds allegedly owed to Black and MDL -- could be remedied

through an award of money damages and that, as a result, injunctive

relief is improper. 3

3The Red Mountain parties also argue on appeal, as they did in the

circuit court, that Black and MDL actually sought a prejudgment seizure
of property, a process governed by Rule 64, Ala. R. Civ. P., and that they
did not comply with the requirements of that rule. Black and MDL argue
that, if this Court determines that they were required to proceed under
Rule 64, the injunction should be upheld based on judicial economy
because, they assert, they can prevail under Rule 64. However, because
the circuit court entered the injunction order under the auspice of Rule
65, we will consider the circuit court's order under that framework.
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Whether a party has demonstrated the necessity of an injunction to

prevent imminent, irreparable harm and the absence of an adequate

legal remedy are interrelated considerations. See Ex parte B2K Sys.,

LLC, 162 So. 3d 896, 904 (Ala. 2014)("Our cases hold that a preliminary

injunction should be issued only when the party seeking the injunction

can demonstrate that, without the injunction, he or she would suffer

irreparable injury for which there is no adequate remedy at law.").

" 'Irreparable injury' is an injury that is not redressable in a court of law

through an award of money damages." Perley v. Tapscan, Inc., 646 So. 2d

585, 587 (Ala. 1994)(citing Triple J Cattle, Inc. v. Chambers, 551 So. 2d

280 (Ala. 1989)). "[W]hen a plaintiff alleges a purely monetary loss and

seeks only to recover monetary damages to redress that loss, the alleged

injury is reparable." Slamen v. Slamen, 254 So. 3d 172, 177 (Ala.

2017)(plurality opinion). See also Ormco Corp. v. Johns, 869 So. 2d 1109,

1113 (Ala. 2003) (quoting Martin v. City of Linden, 667 So. 2d 732, 736

(Ala. 1995)) (explaining that injunctive relief is unavailable to prevent

possible injuries; " 'the injury must be imminent and irreparable in a

court at law' "). "A plaintiff that can recover damages has an adequate

remedy at law and is not entitled to an injunction." SouthTrust Bank of

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Alabama, N.A. v. Webb-Stiles Co., 931 So. 2d 706, 709 (Ala. 2005)(citing

Benetton Servs. Corp. v. Benedot, Inc., 551 So. 2d 295, 299 (Ala. 1989)).

Black and MDL acknowledge this Court's precedent establishing

the necessity of imminent, irreparable harm as one factor required for

injunctive relief, and they concede that injunctive relief is not available

to a party seeking to recover monetary damages because that party has

an adequate remedy at law. They argue, however, that injunctive relief

is available to preserve and secure assets before the entry of a final

judgment, and they rely on Lisenby v. Simms, 688 So. 2d 864, 868 (Ala.

Civ. App. 1997), which they assert is factually congruous to this case.

Lisenby involved an action by a deceased mother's estate against

one of the mother's daughters to recover money belonging to the estate.

The evidence in that case established that, shortly before her mother's

death, Julia Lisenby had transferred her mother's $81,000 certificate of

deposit to herself pursuant to a power of attorney. The trial court

determined that Lisenby's actions were not authorized by the power of

attorney under which Lisenby had acted and that the funds belonged to

the mother's estate. The trial court also specifically found that Lisenby

had been using, and would continue using, the funds for her personal

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living expenses; that she had no employment, income, or assets; that,

without an injunction, the remaining balance of $69,107.21 would be

dissipated; and that the estate would be unable to recover those funds

through an action against Lisenby. Id. at 866.

Likening Lisenby to this case, Black and MDL base their claim of

imminent, irreparable harm on their assertion that the Red Mountain

parties have "openly" admitted to commingling and disposing of joint-

venture funds to operate Red Mountain and have "brazenly" refused to

stop spending the funds.4 Black and MDL further assert that they have

no adequate remedy at law because the Red Mountain parties may

continue to deplete the funds in Red Mountain's operating account and,

as the circuit court found, the commingling and depletion of funds " 'will

surely cause accounting chaos and operate to thwart [their] right to a full

and proper accounting which may result in guesswork as to an accurate

monetary judgment.' " Black and MDL's brief at 22 (quoting the circuit

court's injunction order).

4Black and MDL do not point this Court to the portion of the record

supporting their assertions that the Red Mountain parties have admitted
to commingling or disposing of joint-venture funds, and, despite a
thorough review of the record, we have not located such admissions.
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Lisenby does not support Black and MDL's argument, and it is

distinguishable from the situation in this case because the trial court in

Lisenby held an ore tenus hearing and decided the merits of the pertinent

issue before entering an injunction. In this case, in support of their

request for injunctive relief, Black and MDL submitted a verified motion

containing a general allegation that the Red Mountain parties either

possessed, had taken, or had access to "substantial funds which were

generated by the Joint Venture operations and other business

transactions among the parties." Although Black and MDL alleged that

the Red Mountain parties had refused to disclose the amount of funds in

Red Mountain's operating account, Black and MDL did not submit any

evidence indicating what amount of funds they claimed had been

generated by the joint venture or the amount of funds to which they

claimed to be entitled. Black and MDL's bare allegations in their verified

motion do not establish any entitlement to the funds in Red Mountain's

operating account, nor do they establish that the Red Mountain parties

possessed, had disposed of, or intended to dispose of funds belonging to

the joint venture or to Black and MDL. They further rely on the Red

Mountain parties' contention that requiring them to deposit the funds

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with the circuit clerk could cause the end of their business as "very

strongly indicat[ing]" that the Red Mountain parties are using the joint-

venture funds and do not have other funds to satisfy a judgment. As this

Court has explained, a "plaintiff's mere allegation that, without the

issuance of an injunction, a defendant might be unable to satisfy a

potential judgment does not convert the plaintiff's reparable injury into

an irreparable one that justifies injunctive relief." Slamen, 254 So. 3d at

177.

There is no evidence supporting the conclusions that Black and

MDL will suffer imminent, irreparable harm without an injunction or

that any harm that could occur cannot be remedied by a judgment

awarding damages to Black and MDL in the event they present evidence

supporting their claims.5 Accordingly, because Black and MDL failed to

establish at least two of the four prerequisites for injunctive relief, the

preliminary injunction is due to be dissolved. See Blount Recycling, 884

So. 2d at 853.

5We pretermit discussion of the two remaining elements; however,

we note that, by failing to present evidence supporting the foregoing
elements, Black and MDL have, likewise, failed to establish a reasonable
chance of success on the merits.
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Conclusion

Because the Red Mountain parties have demonstrated that the

preliminary injunction is due to be dissolved, we reverse the circuit

court's order entering the preliminary injunction, and, based on that

holding, the Red Mountain parties' motion to stay the injunction and

their challenge to the sufficiency of the injunction bond are moot. 6 See Ex

parte Cooper, [Ms. SC-2023-0056, Aug. 25, 2023] ___ So. 3d ___, ___ (Ala.

2023)(explaining that a request to increase an inadequate preliminary

injunction bond "can be entertained only while the injunction is still in

place; once the injunction is determined to be unwarranted, any request

to increase the bond is moot").

REVERSED AND REMANDED.

Parker, C.J., and Wise, Sellers, and Cook, JJ., concur.

6The Red Mountain parties also challenged the $25,000 injunction

bond as inadequate and requested that this Court increase the bond to
$3,000,000 if the injunction was not dissolved. See DeVos v. Cunningham
Grp., LLC, 297 So. 3d 1176, 1186 (Ala. 2019)(holding a $25,000 injunction
bond to be inadequate in light of the evidence of the potential losses
caused by an injunction against DeVos and Simmons -- who are also
parties to this case).
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