Limestone Creek Developers, LLC v. Trapp

• Decision Date: 12 October 2012
• Docket Number: 1110838.
• Citation: 107 So.3d 189
• Parties: LIMESTONE CREEK DEVELOPERS, LLC v. Stuart TRAPP et al.
• Court: Alabama Supreme Court

107 So.3d 189

LIMESTONE CREEK DEVELOPERS, LLC
v.
Stuart TRAPP et al.

1110838.

Supreme Court of Alabama.

Aug. 17, 2012.
Rehearing Denied Oct. 12, 2012.

Jeff Johnson, Madison, for appellant.

R. Wayne Wolfe and Marcia St. Louis of Wolfe, Jones, Conchin, Wolfe, Hancock & Daniel, LLC, Huntsville, for appellees.

[107 So.3d 190]

STUART, Justice.

Limestone Creek Developers, LLC (“LCD”), sued Stuart Trapp and two companies in which Trapp had a controlling interest—Kyvest, Ltd., and Redesign, Inc. (these two companies are hereinafter referred to collectively as “the Trapp companies,” while all the defendants are referred to collectively as “the Trapp defendants”)—in the Madison Circuit Court after Trapp was unable or unwilling to close on a contract he had personally entered into agreeing to purchase all the lots in a new subdivision owned by LCD. The trial court entered a summary judgment in favor of the Trapp defendants, and LCD appeals. We affirm.

I.

Sometime in late 2007, Mark Yarbrough and Terry McDonald were contacted by Joe William Hulsey to gauge their interest in purchasing some property that Hulsey's mother, Margaret B. Hulsey, owned in Toney. Joe Hulsey was aware that Yarbrough and McDonald had previous experience related to developing subdivisions, and he believed his mother's property might be suited for such a project. Yarbrough and McDonald had never before personally purchased property and overseen its subsequent development into a subdivision; however, over a period of approximately 20 years they had done extensive site work for Trapp in connection with subdivisions his companies had developed, and they accordingly contacted him to discuss this opportunity. Trapp was in the midst of developing another subdivision, The Landings, less than five miles from Hulsey's property, and, after visiting Mrs. Hulsey's property, he expressed an interest in working with Yarbrough and McDonald to construct houses on the property if they subsequently purchased it. Yarbrough, McDonald, and Trapp thereafter had discussions with a bank official who orally agreed to lend money to fund both Yarbrough and McDonald's initial purchase of Hulsey's property and Trapp's subsequent purchase of lots from them once the initial development of the proposed subdivision was complete.

Mrs. Hulsey thereafter visited The Landings to verify that she was comfortable with the general types of houses Trapp expected to build on the property, and she, Yarbrough and McDonald, and Trapp collectively agreed to certain restrictions and covenants that would govern the property. At some point, Yarbrough and McDonald created the entity known as LCD. On January 9, 2008, Yarbrough and McDonald formally signed a contract with Mrs. Hulsey on behalf of LCD agreeing to purchase approximately 28 acres for $560,000. The contract was contingent on an engineer examining the property and conducting soil tests to confirm that the property was suitable for residential development, and Yarbrough and McDonald thereafter hired Nash Engineering, LLC, to complete those tests. Nash Engineering also drafted an initial layout for the subdivision, dividing the property into 51 lots based on Trapp's request that each lot be approximately 100 feet wide. LCD thereafter closed on the property. LCD engaged in further negotiations with Trapp regarding the property, and Trapp eventually agreed to purchase the 51 lots from LCD for $30,000 each. The $30,000 price was a slight increase from the initial price discussed between the parties of approximately $29,000 because Trapp also wanted LCD to construct a decorative sign for the entrance to the subdivision comparable to the sign outside The Landings. Trapp also created the name for the new subdivision—Heritage Landings.

On March 7, 2008, Trapp signed a contract agreeing to purchase the 51 lots in

[107 So.3d 191]

Heritage Landings from LCD for $30,000 each. Pursuant to the terms of the contract, Trapp agreed to purchase 10 lots once initial development of the subdivision was completed and then to purchase an additional 7 lots within the next 6 months. For all lots other than the first 10, Trapp was obligated to pay the corresponding interest on LCD's bank loan along with the $30,000 lot price.

Following the execution of the contract, LCD commenced site work on the property, such as clearing the land and laying out streets. When it was discovered that 12 of the lots would need engineered septic systems, Trapp paid an engineer to complete the necessary work. On or about June 15, 2009, the initial development of Heritage Landings was completed, and LCD thereafter sought to have Trapp finalize his purchase of lots pursuant to the terms of the contract; however, Trapp would not do so, asserting that he no longer had the ability to finalize the purchase because of prevailing economic conditions that had negatively affected his home-building business.

On June 15, 2010, LCD sued Trapp, asserting fraud and breach-of-contract claims and seeking specific performance of the contract as well as damages, including attorney fees. LCD also sought a judgment from the trial court estopping Trapp from denying the validity of the contract. Trapp filed an answer on August 27, 2010, generally denying the allegations of LCD's complaint. On August 16, 2011, LCD filed an amended complaint, adding the Trapp companies as defendants and asserting an alter ego theory and seeking “to pierce the veil” of the Trapp companies. LCD subsequently filed a motion for a summary judgment. The Trapp defendants filed a response and thereafter filed their own summary-judgment motion, arguing that Trapp's contract with LCD was void...