Meigs v. Estate of Mobley

• Decision Date: 21 June 2013
• Docket Number: 2111143.
• Citation: 134 So.3d 878
• Parties: Luvena K. MEIGS v. The ESTATE OF Madge B. MOBLEY, deceased.
• Court: Alabama Court of Civil Appeals

134 So.3d 878

Luvena K. MEIGS

v.The ESTATE OF Madge B. MOBLEY, deceased.

2111143.

Court of Civil Appeals of Alabama.

June 21, 2013.

A. Evans Crowe, Mobile, for appellant.

Jeffry A. Head, Mobile, for appellee.

THOMPSON, Presiding Judge.

Luvena K. Meigs appeals from the judgment entered by the Mobile Circuit Court (“the trial court”) in favor of the estate of Madge B. Mobley, deceased (“the estate”), determining that Meigs owed the estate $30,203. The dispute in this case involves an oral loan agreement between an elderly family member, Mobley, and her granddaughter-in-law, Meigs.

In May 2010, the estate filed a complaint against Meigs in the trial court alleging, among other things, that on May 4, 2004, Mobley loaned Meigs $50,000 and Meigs promised to pay Mobley $750 per month until the principal amount, plus interest, was paid in full. The estate sought payment of the alleged debt based on claims of breach of contract, “account stated,” and “money lent.” Meigs answered, denying the material allegations in the complaint and raising numerous affirmative defenses. Meigs later filed additional pleadings and motions acknowledging the existence of the debt but maintaining that Mobley had made the loan to Allure Studio, Inc., an Alabama corporation of which Meigs is the sole shareholder, and not to Meigs in her individual capacity.¹

On April 4, 2012, the trial court held a hearing at which it received conflicting ore tenus and documentary evidence; a copy of the transcript of that hearing is included in the record on appeal. Both parties filed post-hearing briefs. On May 29, 2012, the trial court entered a judgment in favor of the estate in the amount of $30,203.

On June 27, 2012, Meigs filed a motion titled “motion for a new trial or to alter, amend, or vacate.” On July 13, 2012, the trial court held a hearing on Meigs's postjudgment motion; the record on appeal does not include a copy of the transcript of that hearing. On July 17, 2012, the estate filed a response to Meigs's postjudgment motion. On July 18, 2012, Meigs filed another motion titled “supplemental motion to alter, amend, or vacate.” On July 20, 2012, Meigs filed a letter brief. On July 25, 2012, the trial court entered an order denying Meigs's “motion to vacate or modify.” Meigs timely appealed on August 28, 2012.

The evidence presented at the April 4, 2012, hearing reveals the following facts. Mobley died on June 17, 2007, at the age of 87. At the time Mobley died, she lived in Franklin, North Carolina. At the time of her death, Mobley was Meigs's grandmother-in-law. Meigs was married to Mobley's grandson, James Meigs, from 1991 until they divorced in February 2009.

Mobley was survived by her twin daughters, Dale Cobb and Gale Meigs; at the time of the hearing, they were 73 years old. Dale is the personal representative of the estate. Gale is James's mother.

During their marriage and at the time of the hearing, Meigs and James lived in the Mobile area. Gale and Dale previously lived in the Mobile area, but at some point before 2004 they moved to North Carolina. At the time Mobley died, both Gale and Dale lived in North Carolina. At the time of the hearing, at least Dale continued to live there.

Meigs is a licensed manicurist. In early 2004, Meigs was working and “renting space” at a salon in the Mobile area. Also, in early 2004, the salon owners lost their salon space and decided to close, so Meigs decided to open her own salon. Meigs found a salon nearby where the salon owner, who wanted to retire, was looking for someone to assume the lease for her salon space. Apparently, Meigs reached an agreement with that salon owner to take over the lease of her salon space. Meigs decided to name her salon “Allure Studio.”

Meigs discussed her desire to open her own salon with James. Meigs contacted the Mobile Area Chamber of Commerce, and the Chamber helped her develop a business plan. The cover page for the business plan, dated March 22, 2004, reads “Allure Studio” and “Owner: Luvena Meigs.” The business plan estimated start-up costs of $65,595.94. The Chamber also set up appointments with three banks in Mobile for Meigs to apply for a loan for the start-up costs. Meigs applied for a loan with all three banks, but by approximately mid to late April 2004 all of them had denied Meigs's request for a loan.

Meigs and James discussed other options, and the evidence indicates that in late April 2004 James, and possibly Meigs, discussed with Gale the possibility of Mobley's loaning Meigs the money. Although the evidence as to that initial conversation is conflicting, the initial conversation occurred between either Gale and James or Gale, James, and Meigs. Gale testified that if James and Meigs had wanted money from Mobley, “they would come through me.” Within a few days of that initial conversation, Gale told Meigs that she had talked to Mobley and that Dale and Mobley “were going to the bank to see what they could do.” Shortly thereafter, Gale told Meigs that Mobley could loan $50,000. At that time, Mobley was 84 years old.

Mobley intended to obtain the money for the loan from Macon Bank in North Carolina by placing an “equity line of credit deed of trust” on her home. On April 30, 2004, Mobley established the equity line in the amount of $50,000 at Macon Bank. On May 5, 2004, the deed reflecting the equity line was filed in the Register of Deeds in Macon County, North Carolina. All documentation regarding the establishment of the equity line bears Mobley's signature.

It is undisputed that Mobley loaned Meigs the money by oral agreement. Although the estate and Meigs dispute whether Mobley made the loan to Meigs in her individual capacity or to Allure Studio, Inc., the following facts regarding the loan are undisputed. Payments were due each month in the amount of $750 until the loan amount, plus interest, was paid in full. The interest rate would mirror the interest rate on Mobley's equity loan at Macon Bank—i.e., it would be a variable interest rate of prime plus 1%, with a floor of 5%.

On April 26, 2004, Meigs opened a bank account for Allure Studio at Regions Bank in Mobile; the owner of that account was listed as “Luvena Kay Meigs dba Allure Studio Inc.” However, the business name on the checks for that account has always been “Allure Studio, Inc.” On April 27, 2004, Meigs deposited a $3,000 check from Mobley into the Allure Studio bank account. The record does not contain a copy of that check, and the record is silent as to whether Mobley made that check payable to Meigs or to Allure Studio. On April 29, 2004, Meigs, via a check from the Allure Studio bank account, made a payment in the approximate amount of $1,800 to the property manager for her salon space. Meigs testified that she had needed the loan proceeds “quickly” to make that payment.

On May 5, 2004, Mobley wired $46,838 from Macon Bank in North Carolina to the Allure Studio bank account at Regions Bank in Mobile. The outgoing wire-transferreceipt reflects the originator as “Madge B. Mobley” and the name on the beneficiary account as “Luvena K. Meigs”; the beneficiary-account number matches the Allure Studio bank account. The outgoing wire-transfer receipt bears Mobley's signature. The incoming wire-transfer receipt reflects the sender as “Madge B. Mobley” and the name on the beneficiary account as “Luvena Kay Meigs”; the beneficiary-account number matches the Allure Studio bank account. At the top of the incoming wire-transfer receipt, the name “Luvena Kay Meigs dba Allure Studio Inc.” appears.

Two days later, on May 7, 2004, Allure Studio, Inc., filed articles of incorporation in the Mobile Probate Court. The record does not contain any other documentation regarding the incorporation of Allure Studio, Inc. The articles of incorporation identify Meigs and James as directors of the corporation and Meigs as incorporator.

All of the $50,000 loan proceeds were used for start-up costs for Allure Studio.² All payments on the loan have been made on checks from the Allure Studio bank account bearing the business name “Allure Studio, Inc.” on the face of the checks.

To pay the debt, Meigs agreed to deposit $750 per month into Gale's account at Regions Bank, and Gale in turn would use those funds to make monthly payments to Macon Bank on Mobley's equity loan. We note that the first five payments were paid directly to Macon Bank and the sixth payment was paid to Dale, but, thereafter, the payments were made to Gale in the manner described above. Gale provided Meigs with copies of the Macon Bank statements verifying that the funds she received from the payments to her from Meigs were used to pay down Mobley's equity loan.

In December 2004, less than eight months after the loan was made, Meigs and James filed for Chapter 13 bankruptcy; they were discharged from bankruptcy more than six years later, in April 2012. There is no evidence indicating that Mobley had had any knowledge that Meigs and James had filed for Chapter 13 bankruptcy. The evidence was unclear, at best, as to whether and when Gale and/or Dale, obtained knowledge of the bankruptcy filing.

Meigs and James did not list the loan at issue as a personal debt in their bankruptcy filings. Nonetheless, James testified at the hearing in this case that he considered the loan to be a “loan to help start the business,” “a loan to us to help start the business.” He then clarified that he considered the loan to have been made to Meigs in her individual capacity.

Dale and Gale also testified that Mobley had made the loan to Meigs and not to Allure Studio, Inc. Dale testified that Mobley had told her that she had made the loan to Meigs in her individual capacity. Gale testified the Mobley had made the loan to Meigs in her individual capacity and that, at the time the loan was made, Mobley did not know of any corporation that Meigs had intended to form.

Meigs, on the other hand, testified that the loan was made to “Allure Studio, Inc.”...