Rel: October 16, 2026
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, 2026-2027
SC-2026-0017
COR3 Capital, LLC
v.
GRO Marketing, LLC
Appeal from Tuscaloosa Circuit Court
(CV-25-900404)
PARKER, Justice.
This appeal arises from a contract dispute between a propertymanagement company, COR3 Capital, LLC, and its marketing firm, GRO
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Marketing, LLC. On appeal, COR3 challenges both a default judgment
the circuit court entered against it and an order to pay GRO Marketing's
attorney's fees. Because COR3 failed to sufficiently establish that it
possesses a meritorious defense to GRO Marketing's claims, we affirm
the default judgment. But we reverse the attorney-fee order because the
circuit court failed to apply the so-called Peebles factors for evaluating
the reasonableness of an attorney-fee award. See Peebles v. Miley, 429
So. 2d 439 (Ala. 1983). To this limited extent, we remand the case with
instructions that the circuit court evaluate the attorney-fee issue after
applying the Peebles factors.
I.
In 2023, GRO Marketing entered into a contract to provide
marketing services (like apartment listings) for various residential rental
properties in Texas. At the time, COR3 owned those properties, but
another company, Asset Living, was managing them and signed the
marketing contract. COR3 took over property-management duties for the
properties sometime in 2024.
After GRO Marketing failed to get paid for its services, it sued
COR3 on the theory that COR3 had entered into a contract with GRO
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Marketing, that COR3 had breached the contract by not paying for the
services, and that COR3 had been unjustly enriched by accepting GRO
Marketing's services without paying for them. Specifically, GRO
Marketing alleged, COR3 was a beneficiary of its contract with Asset
Living because COR3 had owned the properties at that time. GRO
Marketing further alleged that COR3 had assumed responsibility for the
contract when it took over management of the properties from Asset
Living in 2024. Attached to the complaint were several emails from
COR3's property manager acknowledging that COR3 owed outstanding
balances and discussing how it might pay them.
After COR3 failed to answer the complaint, the circuit court entered
a default judgment in GRO Marketing's favor. In doing so, the circuit
court awarded GRO Marketing damages and ordered COR3 to pay GRO
Marketing's attorney's fees. The circuit court explained that GRO
Marketing had "a 20% contingency contract with its counsel … which is
reasonable considering the nature of the case at hand."
About four months after being served with the summons and
complaint, COR3 made its first appearance when it moved to set aside
the default judgment and to quash service. See Ala. R. Civ. P. 55(e), 59(e).
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COR3 argued that service had not been perfected and that the judgment
was due to be set aside pursuant to the factors set forth in Kirtland v.
Fort Morgan Authority Sewer Service, Inc., 524 So. 2d 600, 603 (Ala.
1988), for determining when to excuse a party's default. COR3 also moved
to set aside the award of attorney's fees. In support, COR3 attached an
affidavit signed by its property manager.
To the extent that COR3 properly filed those motions under the
relevant court rules, see Ala. R. Civ. P. 55(e), 59(e), the passage of time
meant that they were eventually denied by operation of law. See Ala. R.
Civ. P. 59.1. On that basis, COR3 timely appealed.
II.
On appeal, COR3 argues that the circuit court abused its discretion
in refusing to set aside the default judgment because, it says, all three of
the Kirtland factors weighed in favor of setting aside the judgment.1
1COR3 also presented a separate argument alleging that the
judgment was void because of a failure of service. While COR3's motion
did not explicitly invoke Rule 60, Ala. R. Civ. P., such a motion must be
construed as a motion under Rule 60(b)(4). See Ali v. Williamson, 308 So.
3d 898 (Ala. 2019). "The 90-day period provided in Rule 59.1 applies only
to motions filed under Rules 50, 52, 55, and 59, Ala. R. Civ. P.; it does not apply to Rule 60(b) motions to set aside a judgment." Womble v. Moore,
370 So. 3d 817, 819 (Ala. 2022). Because Rule 60(b) motions are not
denied by operation of law, COR3's motion to set aside the judgment as
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COR3 also argues that the circuit court abused its discretion in the
amount of attorney's fees awarded, failing to fully consider the Peebles
factors in its assessment of appropriate fees.
A.
COR3 is not entitled to relief on the default-judgment issue. A
court's decision on a motion to set aside a default judgment is ordinarily
reviewed for abuse of discretion. Kirtland, 524 So. 2d at 603. But a denial
by operation of law under Rule 59.1 does not receive the same degree of
deference because it is not the product of reasoned decision making. See
Hilyer v. Fortier, 176 So. 3d 809, 812 (Ala. 2015). Even reviewing this
issue from scratch, however, we perceive no error in refusing to set aside
the default judgment.
This result flows from application of the Kirtland factors. Those
factors recognize that, while our goal is to decide cases on the merits
whenever practicable, courts must also enforce litigation deadlines.
Ultimately, there must be some limit to courts' willingness to look past a
void for failure of service is still pending before the circuit court. It is important to note that, should COR3 establish a lack of service, it is not
required to allege a meritorious defense to have the judgment set aside.
See Ex parte McCrory & Williams, Inc., 155 So. 3d 1018, 1020 (Ala. Civ.
App. 2014).
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failure to appear and defend against a complaint. See Kirtland, 524 So.
2d at 604-05. To strike the right balance in any one case, the Kirtland
factors require courts to examine whether the defendant has a
"meritorious defense"; whether setting aside the default judgment would
"unfairly prejudice[]" the plaintiff; and whether the default judgment was
a result of the defendant's own "culpable" conduct. Id. at 605. But the
first factor -- whether the defendant has a meritorious defense -- is
essentially a threshold factor, the first among equals. See Hilyer, 176 So.
3d at 814-15. To establish it, a movant must present specific allegations
and actual evidence demonstrating at least a "plausible" but "complete"
defense. Kirtland, 524 So. 2d at 606. "[B]are legal conclusions without
factual support" will not suffice. Id.
COR3's presentation to the circuit court consisted of "bare legal
conclusions without factual support." Id. In its motion, COR3 asserted
nine defenses. But it presented each defense in conclusory fashion
without including legal grounds that directly supported its position. The
property manager's supporting affidavit, moreover, simply restates the
conclusory allegations set forth in the motion. For those reasons alone,
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the circuit court justifiably could have refused even to apply the Kirtland
factors. See Carroll v. Williams, 6 So.3d 463, 468 (Ala. 2008).
Additionally, COR3 did not submit sufficient facts and evidence to
support its defenses. Although COR3 accompanied its motion with the
property manager's affidavit, the allegations in the affidavit were either
factually irrelevant or directly refuted by the emails from the same
property manager that were attached to the complaint. For example,
COR3 asserts that it never assumed responsibility for the contract. But
the property manager's emails directly contradict that assertion,
expressly conveying COR3's intent to pay the outstanding balance on the
contract. COR3 did not challenge the authenticity of those emails or
attempt to explain this inconsistency. See Kirtland, 524 So. 2d at 606
(requiring that the meritorious defense be supported by a credible factual
basis).
COR3 also asserted numerous other defenses -- that it never
conducted business in Alabama; that it owes no money for services from
GRO Marketing; that it has never been an intended or actual beneficiary
of GRO Marketing and Asset Living's contract; that it has not failed to
satisfy a contractual obligations to GRO Marketing and thus has not been
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unjustly enriched; that it never entered into a contractual agreement
with GRO Marketing; and that it did not receive any services through
any contract from GRO Marketing. But each of those defenses are
irrelevant if COR3 assumed responsibility for the contract as evidenced
in its property manager's emails.
Without allegations to support a "plausible defense," we cannot
conclude that COR3 met its initial burden under the Kirtland factors. We
thus cannot conclude that the circuit court's failure to consider the
Kirtland factors was reversible error.
B.
COR3 next argues that the circuit court abused its discretion in
determining the amount of attorney's fees awarded. In particular, it
argues there was insufficient evidence to support the award amount and
that the circuit court based its decision solely on the fact that GRO
Marketing had entered into a 20% contingency-fee agreement with its
counsel. On this issue, we agree with COR3.
"The determination of whether an attorney fee is reasonable is
within the sound discretion of the trial court and its determination on
such an issue will not be disturbed on appeal unless in awarding the fee
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the trial court exceeded that discretion." Pharmacia Corp. v. McGowan,
915 So. 2d 549, 552 (Ala. 2004). In Peebles v. Miley, 429 So. 2d 439 (Ala.
1983), this Court determined that, in awarding attorney's fees, a trial
court must consider 12 factors designed to determine the reasonableness
of an attorney-fee request:
" '(1) the nature and subject matter of the employment; (2) the
learning, skill, and labor requisite to its proper discharge; (3)
the time consumed; (4) the professional experience and
reputation of the attorney; (5) the weight of the attorney's
responsibility; (6) the measure of success achieved; (7) the
reasonable expenses incurred by the attorney; (8) whether the
fee is fixed or contingent; (9) the nature and length of a
professional relationship; (10) the fee customarily charged in
the locality for similar legal services; (11) the likelihood that
a particular employment may preclude other employment;
and (12) the time limitations imposed by the client or by the
circumstances.' "
Carver v. Foster, 928 So. 2d 1017, 1025 (Ala. 2005) (quoting Irons v. Le
Sueur, 487 So. 2d 1352, 1359 (Ala. 1986)).
Here, the circuit court based the amount of the attorney-fee award
on the 20% contingency-fee agreement alone, reasoning that the
agreement was "reasonabl[e]" given the nature of the case. But the
problem for GRO Marketing is that it presented no evidence as to the
time its counsel actually spent on the case. "Because 'it is generally
recognized that the first yardstick that is used by the trial judges [in
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evaluating a request for attorney fees] is the time consumed,' … a
petitioner must include some accounting of the time consumed on the
matter with an application for attorney fees." CBS Holdings, LLC v.
Hexagon US Fed., Inc., ___ So. 3d ___, ___ (Ala. 2025) (quoting Peebles,
439 So. 2d at 141). This principle applies even when "the basis for the
attorney fees is [not] premised on the time consumed." Id. Although the
value and agreed-upon percentage of the claim are relevant to
determining the reasonableness of the fees, there must be evidence of the
time expended on the case and "[t]he fee must bear a reasonable
relationship to the time expended on the case." Carver, 928 So. 2d at
1026-27.
Without evidence of the time spent by GRO Marketing's counsel on
the case, there was insufficient evidence from which the circuit court
could have properly determined the reasonableness of the fee award. We
therefore reverse the circuit court's attorney-fee order and remand this
case to allow the circuit court to make a finding as to all 12 Peebles
factors. See CBS Holdings, ___ So. 3d at ___. In conducting this review,
the circuit court may consider any information or evidence (including new
evidence) helpful in determining the reasonableness of the attorney's
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fees, and it must enter an order based on that evidence explaining how it
assessed all 12 Peebles factors. See id.
AFFIRMED IN PART; REVERSED IN PART; REMANDED WITH
INSTRUCTIONS.
Stewart, C.J., and Wise, Sellers, and Cook, JJ., concur.
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