E.B. Invs., L.L.C. v. Pavilion Dev., L.L.C.

• Decision Date: 13 May 2016
• Docket Number: 1141259,1141416.
• Citation: 212 So.3d 149
• Parties: E.B. INVESTMENTS, L.L.C. v. PAVILION DEVELOPMENT, L.L.C., et al. Pavilion Development, L.L.C. v. JBJ Partnership et al.
• Court: Alabama Supreme Court

212 So.3d 149

E.B. INVESTMENTS, L.L.C.

v.PAVILION DEVELOPMENT, L.L.C., et al.

Pavilion Development, L.L.C.

v.JBJ Partnership et al.

1141259

1141416.

Supreme Court of Alabama.

May 13, 2016.

E. Ray McKee, Jr., Huntsville, for appellant E.B. Investments, L.L.C.

H. Carey Walker III of Adams & Walker, P.C., Huntsville, for appellee/cross–appellant Pavilion Development, L.L.C.

Robert C. Gammons of Harrison, Gammons & Rawlinson, P.C., Huntsville, for appellees JBJ Partnership, Pace Properties, James Patrick Pace, individually and as personal representative of the estate of James Edgar Pace, and William Byron Pace.

F. Page Gamble, Birmingham, for appellees Atlantis Development Company, Inc., and Javad Ajdarodini.

MAIN, Justice.

E.B. Investments, L.L.C. ("EB Investments"), appeals from an order of the Madison Circuit Court holding that Pavilion Development, L.L.C. ("Pavilion"), was entitled to redeem certain property in Madison County in which EB Investments and other parties held legal interests (appeal no. 1141259). Pavilion filed a separate appeal naming as appellees JBJ Partnership ("JBJ"), Pace Properties ("Pace"), James P. Pace, individually and as personal representative of the estate of James E. Pace, and William Byron Pace and challenging certain aspects of the same order, namely, the amount it must pay to redeem the property (appeal no. 1141416). The appeals were consolidated for the purpose of issuing one opinion. As to EB Investments' appeal, we affirm in part and dismiss the appeal in part. As to Pavilion's appeal, we affirm in part, reverse in part, and remand.

I. Facts and Procedural History

This nearly two-decade-old case is a veteran of numerous appellate campaigns. Pavilion's attempted redemption of the property at issue has given rise to five opinions from this Court. See Ex parte Atlantis Dev. Co., 897 So.2d 1022 (Ala.2004) ; EB Invs., L.L.C. v. Atlantis Dev., Inc., 930 So.2d 502 (Ala.2005) ; Pavilion Dev., L.L.C. v. JBJ P'ship, 979 So.2d 24 (Ala.2007) ( "Pavilion I "); Pavilion Dev., L.L.C. v. JBJ P'ship, 77 So.3d 133 (Ala.2011) ("Pavilion II "); and Pavilion Dev., L.L.C. v. JBJ P'ship, 142 So.3d 535 (Ala.2013) ("Pavilion III "). Although the facts of this redemption case are "immensely complicated," Pavilion III, 142 So.3d at 535, they have been recited by this Court on several occasions:

"This action was initiated on March 21, 1997, when Pavilion, then operating as John Lary, L.L.C., initiated an action to redeem 19 acres of land purchased by JBJ Partnership (‘JBJ’) at a foreclosure sale on March 22, 1996....

"In August 1991, James E. Pace, James P. Pace, and William B. Pace (‘the Pace family’), doing business as Pace Properties (‘Pace’), sold approximately 22 acres of unimproved property in Madison County to Gallop Enterprises, Inc. (‘Gallop’), a development company operated by Richard Tracey. The transaction was financed by Pace and in exchange for the land Gallop gave a promissory note secured by a mortgage on the property to Pace in the principal sum of $1,735,000. Gallop then obtained additional financing from Ben H. Walker, Inc. (‘Walker’), to develop a subdivision on the property, and in return Gallop gave Walker a second mortgage on the property with a principal value of $149,999. Gallop thereafter began developing the planned subdivision; however, after completing the first phase of the project and paying Pace approximately $295,990 obtained from sales of lots in the subdivision, Gallop had exhausted the funds advanced by Walker and could not proceed with the second phase of the subdivision project. Under the threat of foreclosure, Gallop filed a petition for bankruptcy pursuant to Chapter 11 of the Bankruptcy Code.

"In April 1995, under the supervision of the bankruptcy court, the parties reached a settlement agreement wherein Gallop stipulated that it owed $1,439,010 to Pace and $149,999 to Walker. Pace also agreed to loan Gallop up to an additional $200,000 so that Gallop could complete development of the property and could then pay its debts to Walker and Pace with proceeds obtained from selling developed lots in the subdivision. In conjunction with the settlement agreement, Gallop executed 3 new mortgages on the 19 acres left in the development tract, which mortgages had the following priority: 1) a mortgage in favor of Pace securing a $200,000 loan (‘the development mortgage’); 2) a mortgage in favor of Walker securing the $149,999 note; and 3) a mortgage in favor of Pace securing the $1,439,010 loan. The settlement agreement and the new mortgages were all then recorded in the Madison County Probate Judge's Office.

"By December 1995, Gallop was again in default on its obligations, and Pace instituted foreclosure proceedings. On March 22, 1996, the property was sold to JBJ—a new partnership made up of the Pace family—at a foreclosure auction for $100,000. The Pace family thereafter paid off the Walker note and continued developing the property on its own, conveying parcels and interests in the property as follows:

"1) On June 6, 1996, JBJ conveyed a permanent drainage easement over a portion of the property to the City of Huntsville.

"2) On June 10, 1996, JBJ conveyed one lot to Asghar D. Pourhassani.

"3) On September 20, 1996, JBJ conveyed two lots to Atlantis Development Company, Inc. (‘Atlantis'). Atlantis thereafter executed multiple mortgages on that property in favor of Jacobs Bank¹ and JBJ.

"4) On January 16, 1997, JBJ conveyed another lot to Atlantis, which lot Atlantis resold to Fritz and Louise Nelson on that same day.

"On March 1, 1997, Gallop, acting through Tracey, sent a letter to JBJ stating that Gallop intended to exercise its statutory right of redemption, see § 6–5–247 et seq., Ala.Code 1975, and to redeem the 19 acres it had lost in foreclosure. Gallop accordingly requested that JBJ provide it with an itemized statement of the lawful charges it would need to pay to complete the redemption and simultaneously requested that JBJ loan Gallop those funds. On March 9, 1997, Gallop sent similar notices requesting statements of lawful charges to Pourhassani and Atlantis. On March 13, 1997, after JBJ had advised Tracey that it did not recognize his authority to exercise Gallop's right of redemption, Tracey transferred Gallop's right of redemption to Pavilion, a company operated by his former brother-in-law John Lary and then still known as John Lary, L.L.C., in return for $1,000.

"On March 21, 1997, Pavilion initiated this litigation by filing a redemption action in the Madison Circuit Court.² Both before and after filing suit, Pavilion continued to make requests for statements of charges from assorted parties with interests in the property, and some produced the requested statements. Over the following months and years, a host of counterclaims, cross-claims, and separate lawsuits encompassing all manner of contract and tort claims were filed by various parties who had interests in the property or who were otherwise drawn into the dispute. This Court has already considered some of the issues related to those claims beginning with Ex parte Atlantis Development [Co.], [897 So.2d 1022 (Ala.2004),] in which we denied a petition for a writ of mandamus filed by Atlantis in a separate action initiated in February 2003 by JBJ and Pace claiming that Atlantis had defaulted on promissory notes secured by mortgages on the property it had purchased from JBJ. In EB Investments, [L.L.C. v. Atlantis Development, Inc., 930 So.2d 502 (Ala.2005),] we reversed in part a judgment issued in yet another separate action, this one filed in January 2004 by EB Investments (which now owned the mortgages Atlantis had originally executed in favor of Jacobs Bank) seeking to eject Atlantis from the lots Atlantis purchased from JBJ in September 1996. Finally, in August 2007, we decided an appeal in the instant action in which we reversed a summary judgment entered by the trial court in favor of JBJ and against Pavilion, holding that the trial court had erred when it concluded that Tracey lacked the authority to transfer Gallop's right of redemption to Pavilion and holding that Pavilion did in fact hold the right to redeem the 19 acres at issue. See Pavilion [I], 979 So.2d at 37...."

Pavilion II, 77 So.3d at 134–35 (footnotes omitted).

In Pavilion III we summarized the proceedings following our remand in Pavilion I:

"On remand following our decision in Pavilion I, the trial court conducted a four-day bench trial aimed solely at deciding the merits of Pavilion's redemption claim. Upon the conclusion of the trial and subsequent to the parties' posttrial submissions, the trial court entered an amended final judgment that included the following summary of its findings:

" ‘ "In summary, the court finds that [Pavilion] is entitled to redeem the property described in its original complaint. In order to perfect and complete its redemption, Pavilion must deposit into the office of the Clerk of the Circuit Court of Madison County, Alabama, the sum of $3,770,348.90, ^[2] plus all accruing interest and delinquent fees from March 10, 2010, to the date of payment, within 30 days from the date of this judgment. [Pavilion] shall be entitled to a credit against this sum for all monies it placed on deposit with the Clerk of Circuit Court of Madison County following [Pavilion's] filing of this suit, including accrued interest. Upon payment into court of all sums required, each of the current title holders of the property to be redeemed shall deliver to the Clerk of the Circuit Court a deed conveying all of the transferors' right, title and interest in each lot or parcel of property to [Pavilion] and shall be paid by the Clerk all sums due in accordance with this judgment. Specifically, upon redemption as set forth in this order, the Clerk is directed to distribute the funds as follows:

" ‘ "a. $2,804,472 jointly to [the Pace family];

" ‘ "b. $930,001 to [Atlantis];

" ‘ "c. $35,875.99, plus all accruing interest and delinquent fees from March 10, 2010,

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