REL:10/03/2003AMERICANREDCROSSV.ASD

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) 242-4621), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

ASD Specialty Health Care, Inc., an incorporated division of Amerisource Bergen Corp. d/b/a Oncology Supply; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc.

PER CURIAM.

The United States District Court for the Southern District of Alabama has certified the following question to this Court pursuant to Rule 18, Ala.R.App.P.: "Whether the [Alabama Uniform Fraudulent] Transfer Act, Ala. Code [1975,] §§ 8-9A-1 et seq., includes blood products, as provided for in Ala. Code [1975,] § 7-2-314(4). The phrasing used in this certified question should not restrict the Supreme Court's consideration of the problem posed by this case."

To assist this Court in its determination, the district court provided the following summary of the pertinent facts of the controversy, as well as a concise explanation of the arguments presented by the parties:

"Plaintiff Red Cross alleges that, during 1999, it entered into an arrangement with an individual named Peter Woolley and a company with which he was affiliated, LA Pharmaceutical, to sell blood products to LA Pharmaceutical, LLC ('LA Pharmaceutical'). Plaintiff further alleges that LA Pharmaceutical, through one of its principals, Peter Woolley, then transferred the blood products to certain of the defendants in violation of the AUFTA [Alabama Uniform Fraudulent Transfer Act]. (A default judgment has previously been entered against LA Pharmaceutical and Peter Woolley, neither of which are defendants in this current action.)

"The defendants [ASD Specialty Health Care, Inc.; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc.] deny any liability under the AUFTA. The defendants have also asserted that the AUFTA has no application in this case because the blood products in question are considered, for all purposes, to be a 'service' under Ala. Code [1975,] § 7-2-314(4) and, therefore, not 'property' under the AUFTA. All parties agree that the blood products in question are governed by § 7-2-314(4). Plaintiff asserts that the AUFTA is applicable because the definition of 'property' under the AUFTA includes the blood products in question; however, defendants assert that the AUFTA is not applicable because the definition of 'property' under the AUFTA does not include services."

After conducting the appropriate hearings, the magistrate judge, drawing an analogy between goodwill and services, concluded that the Alabama Uniform Fraudulent Transfer Act, Ala. Code 1975, § 8-9A-1 et seq. ("the AUFTA") did apply to the instant transaction. The district court judge, in its order adopting the magistrate judge's recommendation, similarly concluded that the distribution of blood products in the transaction at issue constituted "an intangible asset" and met "the broad definition of property under the AUFTA." Although we employ a slightly different rationale, we nevertheless reach the same conclusion with respect to the question presented; consequently, we answer the certified question in the affirmative.

The purpose of the AUFTA is to prohibit the fraudulent transfer of property by a debtor "who intends to defraud creditors by placing assets beyond their reach." Thompson Props. v. Birmingham Hide & Tallow Co., 839 So. 2d 629, 632 (Ala. 2002). Thus, the AUFTA defines "transfer" broadly, noting that it includes "[e]very mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, and includes payment of money ...." Ala. Code 1975, § 8-9A-1(13). The AUFTA defines an "asset" as "[p]roperty of a debtor ...." Ala. Code 1975, § 8-9A-1(2).

"Property" is broadly defined in the AUFTA to encompass "real and personal property, whether tangible or intangible, and any interest in property whether legal or equitable and includes anything that may be the subject of ownership." Ala. Code 1975, § 8-9A-1(11). If not apparent from the language of the statute itself, the Alabama Comment to § 8-9A-1 of the AUFTA notes the expansive definition of "property," which it says was specifically designed "to give the term 'property' a broad meaning ...."

Thus, it would appear that blood products qualify as "property" under the AUFTA. However, ASD Specialty Health Care, Inc., an incorporated division of Amerisource Bergen Corp. d/b/a Oncology Supply; Midwest Drug Supply, LLC; and Raymar Worldwide Sales, Inc. (hereinafter referred to collectively as "the defendants"), argue that the AUFTA has no application in this case because, they say, the blood products in question are considered "for all purposes" to be a "service" under Ala. Code 1975, § 7-2-314(4), a part of Alabama's Uniform Commercial Code; therefore, they argue, those blood products are not "property" under the AUFTA. We disagree.

When a court construes a statute, "[w]ords used in [the] statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says." IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So. 2d 344, 346 (Ala. 1992). With this standard in mind, we review the text of § 7-2-314(4), which provides:

"(4) Procuring, furnishing, donating, processing, distributing, or using human whole blood, plasma, blood products, blood derivatives, and other human tissues such as corneas, bones or organs for the purpose of injecting, transfusing, or transplanting any of them in the human body is declared for all purposes to be the rendition of a service by every person participating therein and whether any remuneration is paid therefor is declared not to be a sale of such whole blood, plasma, blood products, blood derivatives, or other human tissues."

Here, the plain reading of § 7-2-314(4) indicates that it is the "[p]rocuring, furnishing, donating, processing, distributing, or using ... blood products" that is "declared for all purposes to be the rendition of a service." In other words, the act of procuring and furnishing the blood products -- not the blood products themselves -- is the service. See State v. Community Blood & Plasma Servs., Inc., 48 Ala. App. 658, 661, 267 So. 2d 176, 179 (1972)(in holding that processing blood products was not a sale subject to taxation, court stated that "the activity of 'procuring, furnishing, donating, processing, distributing, or using human whole blood, plasma, blood products, etc.', is to be a service by every person participating therein").

Thus, those "furnishing," "distributing," or "procuring" blood products provide a service, and that service does not constitute a sale. ⁽¹⁾

However, § 7-2-314(4), which declares the "procuring, furnishing, donating, processing, distributing, or using" of blood products to be a service, does not, in any sense, address the chattel nature of the underlying blood products. Although the distinction between "furnishing," "distributing," or "procuring" blood products and the underlying blood products themselves is perhaps subtle, that distinction is all important. Because § 7-2-314(4) does not exclude, as the defendants suggest, blood products from the application of the AUFTA and because blood products "may be the subject of ownership," they are "property" for purposes of the AUFTA.

CERTIFIED QUESTION ANSWERED.

See, Brown, Johnstone, Harwood, Woodall, and Stuart, JJ., concur.

Houston and Lyons, JJ., dissent.

HOUSTON, Justice (dissenting).

I concur with Justice Lyons's dissent. The answer to the certified question is that the definition of "property" under the AUFTA does not include blood products, as provided in Ala. Code 1975, § 7-2-314(4).

LYONS, Justice (dissenting).

The AUFTA condemns the act of "disposing of or parting with an asset" for fraudulent purposes. Ala. Code 1975, § 8-9A-1(13) (emphasis added). I cannot focus exclusively on the nature of the blood product, apart from the acts of "procuring, furnishing, donating, processing, [or] distributing" as used in § 7-2-314(4) in light of the AUFTA's applicability to the acts of "disposing of or parting with" those products. Section 7-2-314(4) provides that distributing blood is a service for all purposes. I therefore cannot answer the question presented in the affirmative.

1. ⁰Conversely, the Alabama Legislature has defined certain services to constitute a sale: "[T]he serving for value of food or drink to be consumed either on the premises or elsewhere is a sale." Ala. Code 1975, § 7-2-314(1).