Ross v. Rosen–rager

• Decision Date: 24 November 2010
• Docket Number: 1080721.
• Citation: 67 So.3d 29
• Parties: Howard ROSSv.Shauli ROSEN–RAGER and Rene Rosen–Rager.
• Court: Alabama Supreme Court

67 So.3d 29

Howard ROSS
v.
Shauli ROSEN–RAGER and Rene Rosen–Rager.

1080721.

Supreme Court of Alabama.

Aug. 27, 2010.As Modified on Denial of Rehearing Nov. 24, 2010.

[67 So.3d 31]

William E. Shreve, Jr., of Lyons, Pipes & Cook, P.C., Mobile; and Patrick Jones, Huntsville, for appellant.Richard L. Morris of Sirote & Permutt, P.C., Huntsville, for appellees.WOODALL, Justice.

Howard Ross appeals from a partial summary judgment awarding Shauli Rosen–Rager and Rene Rosen–Rager $13,343.47 in compensatory damages and from a judgment entered on a jury verdict awarding the Rosen–Ragers $350,000 in punitive damages in the Rosen–Ragers' action against Ross and others alleging,

[67 So.3d 32]

among other things, trespass and ejectment. We affirm in part and affirm conditionally in part.I. Factual and Procedural Background

On May 9, 2003, property owned by Margie Campbell in Huntsville was sold by the tax collector of Madison County for the collection of ad valorem taxes, which remained delinquent from the previous year. Ross, the winning bidder, paid $750 for the property, for which he received a “certificate of land sold for taxes.” Ross purchased insurance on the property, paying a total of $1,178 in premiums. He also made improvements totaling $1,195.

At the time Ross purchased the property, there was a mortgage on the property held by Mortgage Electronic Registration Systems, Inc. (“MERS”). Campbell defaulted on the debt secured by the mortgage, and, on July 3, 2003, MERS purchased the property at a foreclosure sale, for which it received a foreclosure deed. On September 28, 2004, MERS paid into the Madison County Probate Court $1,612.93 to redeem the property, pursuant to Ala.Code 1975, § 40–10–120 et seq. The payment included Ross's original tax-purchase price of $750, plus subsequent taxes paid by Ross, and interest calculated at 12%. In return, the probate court issued MERS a “certificate of redemption,” pursuant to Ala.Code 1975, § 40–10–127. MERS's payment did not include any amount for the insurance Ross had purchased or for the improvements he had made to the property.

The certificate of redemption was duly recorded in the probate office, and, for all that appears, Ross was provided with notice of the issuance of the certificate of redemption as required by Ala.Code 1975, § 40–10–128, which provides:

“If the lands redeemed were bid in by any person other than the state, the redemption money must be deposited by the judge of probate in the county treasury and there kept separate and apart from the general funds of the county, and the judge of probate shall notify the purchaser of such deposit by mailing notice to the residence or place of business of such purchaser, or to such address as the purchaser may furnish the judge of probate at the time he secures his certificate of purchase; and, upon the demand of the purchaser, his legal representative or assignee and the surrender of the certificate of purchase, the judge of probate must give him an order on the treasury for the same.”

(Emphasis added.)

Ross does not assert that he was not notified of the issuance of the certificate of redemption. In fact, on December 22, 2004, Ross caused to be recorded a “verified statement of a lien” on the property for “materials, repair, and improvements to the dwelling for the title holder of the property,” namely, MERS. Ross declined to collect the $1,612.93 that MERS had paid into the probate court.

On February 7, 2005, Ross leased the property to Ron Fletcher, who went into possession. On May 13, 2005, MERS, incorrectly believing Campbell was residing on the property, filed in the Madison Circuit Court a “complaint for ejectment” against Campbell. MERS v. Campbell, CV–05–917. As soon as MERS learned the identity of Ross's tenant, it amended its complaint to add Fletcher as a defendant. Still later, on December 9, 2005, MERS again amended its complaint to add Ross as a defendant.

Meanwhile, on November 5, 2005, Ross sued Fletcher in the Madison District Court for unlawful detainer. Ross v. Fletcher, DV–05–2689. On December 14, 2005, the district court dismissed the action, stating: “[Ross] does not own clear

[67 So.3d 33]

title to the property that is the subject of this law suit, and therefore, has no standing to bring this action.” ¹

MERS was unable to effect service of process on Ross. Its unserved civil summons was returned with the notation: “Avoiding Service.” In February 2006, however, Ross and MERS exchanged correspondence regarding payment for the insurance and improvements and about the ongoing litigation. For example, on February 4, 2006, Ross addressed the following letter to MERS's attorney:

“Re: Redemption of ---- S. Westdale Court, Huntsville Alabama 35805

“Tenants have informed me that you plan to redeem the above reference[d] property. If so, the following is a statement of additional lawful charges that must be paid to me under the provisions of Code of Alabama § 40–10–122(b)–(e) in order to effect the redemption:

+---------------------------------------------------+
                ¦ ¦“1. Paint Interior ¦$ 700.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“2. Carpet 2 bedrooms ¦$ 165.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“3. Dishwasher Repair ¦$ 30.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“4. Remove Trash and Clean ¦$ 150.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“5. Clean and mow yard ¦$ 50.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“6. Section and remove fallen tree ¦$ 100.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“7. State Farm Insurance ¦$1,178.00 ¦
                +--+-------------------------------------+----------¦
                ¦ ¦ ¦ ¦
                +--+-------------------------------------+----------¦
                ¦ ¦“TOTAL ¦$2,373.00”¦
                +---------------------------------------------------+
                

On February 13, 2006, MERS's attorney sent Ross the following response:

“Thank you for your letter of February 4, 2006. As I'm sure you are aware, the court set this for a hearing February 24, 2006, and, reviewing your itemization costs, in light of § 40–10–122, it would appear that the reasonable and necessary expenses would be limited to $1,195. If you are willing to accept this without a hearing, we will notify the court that the case can be settled without a hearing. Please advise me if this will be acceptable.”

(Emphasis added.)

Ross's response to that information was another letter to MERS's counsel on April 28, 2006. That letter stated:

“This letter is to notify you that you have yet to complete the redemption of the above referenced property. I have not received payment in the amount of two thousand three hundred and seventy three dollars ($2,373.00) for preservation improvements which I have made, and my rights to the property have not been terminated.”

(Emphasis added.)

Meanwhile, on March 14, 2006, the trial court in CV–05–917 entered a summary judgment in favor of MERS, thereby ejecting Ross from the property. The same day, the court issued a “writ of possession” in favor of MERS and against Ross, Campbell, and Fletcher. On July 24, 2006, MERS sent Ross a letter apprising him of, among other things, the fact that the court had given it the right to take possession of the property. Two days later, on July 26, 2006, MERS executed a “special warranty deed” conveying the property to the Rosen–Ragers.

On August 1, 2006, the Rosen–Ragers entered into an agreement with RPM Realty, Inc. (“RPM”), whereby RPM agreed to manage the property for the Rosen–Ragers to produce rental income. RPM contracted with other entities, including Carpet Crafters, Inc., to clean the residence and to install new carpet. While RPM was thus engaged, Ross leased the property to Charles Hurt and Sharon Baxter. When Carpet Crafters arrived to install the carpet, its workers discovered Hurt and Baxter in the residence. Carpet

[67 So.3d 34]

Crafters immediately notified RPM, which dispatched its manager Suzanne Tomlinson to investigate. An altercation ensued, prompting an appearance by the Huntsville Police Department, with Baxter defending her right to possession as Ross's tenant.

Subsequently, Tomlinson posted on the property a notice of termination of a possessory interest and a “notice to vacate” on September 19, 2006, and October 5, 2006, respectively, which Hurt and Baxter ignored. During this time, according to Baxter, Ross told Baxter simply “to disregard papers that anybody was bringing [her].”

On October 24, 2006, the Rosen–Ragers sued Hurt, Baxter, and Ross in the Madison Circuit Court.² The complaint alleged, among other things, that Ross had trespassed on the property by “wantonly inducing” Hurt and Baxter to “enter into possession of the property” under “circumstances of insult and contumely.” It alleged that the defendants had “maliciously, willfully, oppressively, and/or wantonly interfered with the Rosen–Ragers' exclusive possession of the property.” The complaint also contained a claim of intentional interference with business or contractual relations and a claim for ejectment, by which the Rosen–Ragers sought a judgment ordering the defendants “to vacate the property.” In April 2007, the circuit court entered a default judgment against Hurt and Baxter for $13,402.52 in compensatory damages and $26,805.04 in punitive damages. This appeal involves no issue as to the correctness of that judgment.

On October 29, 2007, the Rosen–Ragers moved for a partial summary judgment against Ross on the issues of liability and compensatory damages. Ross filed a cross-motion for a partial summary judgment, contending that MERS's purported redemption did not comply with § 40–10–122 and was therefore legally ineffective to divest Ross of his possessory interest in the property. On December 19, 2007, the circuit court entered a partial summary judgment in favor of the Rosen–Ragers on their claims, including (1) trespass, (2) wantonness, (3) interference with business or...