BANK v. ALGERNON LAND Co.
| Decision Date | 12 April 2011 |
| Docket Number | CIVIL ACTION NO. 10-00172-N |
| Parties | VISION BANK, Plaintiff, v. ALGERNON LAND COMPANY, L.L.C., and JAMES RAYFIELD, JR., Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
OPINION TEXT STARTS HERE
This action is before the Court on cross-motions for summary judgment filed respectively by James Rayfield, Jr., a defendant herein, (docs. 69-70), and by Vision Bank, the plaintiff (docs. 73-75). This action has been referred to the undersigned Magistrate Judge to conduct all proceedings and order the entry of judgment in accordance with 28 U.S.C. § 636(c) and Fed. R.Civ.P. 73 (doc. 22) and pursuant to the consent of the parties (doc. 21). Oral arguments on the cross motions were held before the undersigned on March 31, 2011. Present at the hearing were Allen E. Graham, Esq. and Ashley E. Swink, counsel for Vision Bank; Jule R. Herbert , Jr., counsel for Algernon Land Company, L.L.C. and pro se [with respect to the third party claims asserted against him by Rayfield]; and Jim L. DeBardelaben , counsel for James Rayfield, Jr. Upon consideration of these motions, the parties' respective responses in opposition thereto (docs. 82, 83, 84-85)1, replies (docs. 92, 93), and all other pertinent portions of the record, as well as the arguments of counsel presented on the record at the hearing, the undersigned concludes that plaintiffs motion for summary judgment be GRANTED with leave to prove damages, and that defendant, Rayfield's motion for summary judgment be DENIED.
On April 13, 2010, Vision Bank filed an action against Algernon Land Company, LLC ("Algernon") and James Rayfield, Jr. ("Rayfield"), seeking to collect on a defaulted loan established with the execution of a Multipurpose Note and Security Agreement (the "Note") and guaranteed by Rayfield's execution of a Continuing Guaranty ("Guaranty"). Specifically, Vision Bank alleges that Rayfield signed a Guaranty on a Multipurpose Note and Security Agreement and the loan is in default. Vision Bank alleges that Rayfield is in breach of the contract by failing to pay the defaulted loan which, at the time the Complaint was filed, amounted to " $1,445,544.99 in principle, interest and late fees through April 12, 2010." (Doc. 1 at ¶ 22, emphasis in original). In its Complaint, Vision Bank further states that "[i]nterest accrues at a per diem rate of $599.12." (Id. at ¶ 23). In an affidavit submitted by Vision Bank in support of its motion for summary judgment, Vision Bank now contends:
As of February 11, 2011, the Bank is owed a total of . . . $1,650,793.32. . ., such total consisting of a balance of $1,217,948.71, $424,256.17 in interest, and $8,588.44 in late charges. Interest continues to accrue at a per diem rate of $608.974355.
On May 4, 2010, Rayfield filed an Answer and Counterclaim against Vision Bank and a Third Party Claim against Algernon and Jule R. Herbert ("Herbert"). On May 13, 2010, Algernon filed an Answer to the original Complaint filed by Vision Bank. On June 6, 2010, Herbert/Algernon filed an Answer to Rayfield's Third Party Claim.
On February 10, 2011, Rayfield filed his Motion for summary judgment (doc. 6970) asserting that, because he "was induced into signing a Multipurpose Note and Security Agreement and a Continuing Guaranty based on false and fraudulent representation by Vision and Algernon/Herbert," the Guaranty should be declared void and judgment should be entered in his favor on all claims against him. (Doc. 70 at 14). Rayfield also seeks judgment in his favor on "his claim against Vision and Herbert/Algernon." (Id).
On February 11, 2011, Vision Bank filed its motion for summary judgment (docs. 73-75) asserting that it is "entitled to summary judgment on its Complaint against Algernon and Rayfield, and also on the counterclaims asserted against the Bank by Rayfield in his Second Amended Complaint and Third Party Claim." (Doc. 75 at 2). Vision Bank specifically argues that "Algernon has defaulted under the Note for failure to pay timely, and Rayfield has failed and/or refused to satisfy his obligations now due and owing under the Continuing Guaranty." (Id.) Vision Bank also argues that the contracts at issue are valid and enforceable as to both Algernon and Rayfield and "there is no genuine issue of fact as to the existence of a valid contract binding the parties." (Id. at 8).
Algernon and Herbert filed a response (doc. 83) in opposition to Rayfield's motion for summary judgment on March 3, 2011. However, Algernon has filed no opposition to Vision Bank's motion for summary judgment, and has not sought an extension of time within which to file any such opposition. Algernon, therefore, does not contest the validity of the contract at issue in this litigation or Vision Bank's allegation of default and entitlement to damages and judgment in its favor.
Upon consideration of all the evidence of record, both documentary and testimonial, the undersigned finds that the following facts are either undisputed or uncontroverted by any opposing party:
1. In or around March 2006, James Rayfield, Jr., doing business as, Raywind Construction, entered into an oral agreement to build a custom built home for Jule R. Herbert, Jr. at 27102 Safe Harbor Drive, Orange Beach, Alabama 36561. (Doc. 44 at f 5; Doc. 44-1). The actual listed owner of the property was Algernon Land Company, LLC, which was fully owned by Jule R. Herbert, Jr. (Doc. 44-1).
2. The original cost estimate by Rayfield to construct the Herbert residence on Safe Harbor Drive in Orange Beach, Alabama was $655,829.00 (Doc. 53-1 at 1). After certain additions and changes made by Mr. Herbert, the cost estimate was later revised to $777,823.00 (Doc. 53-1 at 2). Rayfield started construction on the house in April 2006. See Doc. 70-1. A certificate of occupancy was issued on June 22, 2007. (Doc. 53-1 at 4).
3. On June 21, 2007, Rayfield presented Herbert/Algernon an invoice totaling $169,469.36 and, when this invoice was not paid, Rayfield presented Herbert/Algernon on or about July 21, 2007, with an invoice totaling $171,138.57. (Doc. 53-1 at 7-8). By letter dated August 8, 2007 and forwarded to Herbert, Rayfield informed Herbert of his intention of filing a lien against the Safe Harbor house for $171,138.57. (Doc. 53-1 at 5).
4. On August 20, 2007, Rayfield filed a Verified Statement of Lien in the office of the Probate Court of Baldwin County on the Safe Harbor Drive house in the amount of $171,958.57. (Doc. 9-1). By certified letters dated August 20, 2007, notification of the lien was sent to Herbert (doc. 70-3 at 3) and to Vision Bank (doc. 70-3 at 4).
5. On November 21, 2007, Algernon entered into a Multipurpose Note and Security Agreement with the Bank in the original principal amount of One Million, One Hundred Ninety-Seven Thousand Three Hundred Ninety-Eight and 50/100 Dollars ($1,197,398.50) (the "Note") which is identified as Loan Number 300619. (Doc. 1-1)2. Jule R. Herbert, Jr. signed this Note as both the Managing Member of Algernon and, in his individual capacity, as a personal guarantor on the Note. (Id.) The Note itself was set to mature on November 21, 2010. Id. The stated purpose of this loan is to "REFINANCE CONSTRUCTION LOAN." Id.
6. Rayfield is not listed as a "borrower" anywhere on the Note or the Amendment to the Note. (Docs. 1-1 and 1-2). On the last page of the Note, however, Rayfield signed his name in his individual capacity under the section entitled "GUARANTEE." (Doc. 1-1 at 3). In his individual capacity, Rayfield also executed a separate "Continuing Guaranty" in favor of Vision Bank (the "Continuing Guaranty"). (Doc. 1-2).
7. Rayfield argues that the purpose of the November 21, 2007 loan was not to refinance construction loans but was, instead, "a renewal of . . . the new loan [Loan Number xx0187] used to pay off the two construction loans." (Doc. 70 at 8). Rayfield's fraud claim is predicated solely on this alleged misrepresentation.3 Rayfield has simply mischaracterized the documents at issue. The Note for $1,025,000.00 entered into by Algernon on August 23, 2007 and identified as Loan Number xx 0187 was a "renewal" of the two construction loans identified as 95133 and 101311 and thus confirms its stated purpose, namely the "Refinance of construction loans." (Doc. 70-3 at 5-7).4 Rayfield himself contends that "after the $1,025,000.00 term loan was made, the issue of Rayfield's lien came up" (doc. 70 at 7), a lien for unpaid construction costs in the amount of $171, 958.57 (doc. 9-1). Rayfield later confirms that "Herbert/Algernon entered into an Accommodation Mortgage and Security Agreement with Vision Bank for $172,398.50 [doc. 70-3 at 11-17] [and] [a]pparently, this represented the funds required to pay off Rayfield's lien." (Doc. 70 at 7-8).5 It is, therefore, apparent that the November 21, 2007 loan in the amount of $1,197,398.50 is indeed a "renewal" of the August 23, 2007 loan identified as Loan Number xx 0187 for $1,025,000.00 to which has been added the sum of $172,398.50 set forth in the Accommodation Mortgage and Security Agreement and that both represent construction loans given to Algernon for the construction of the Herbert residence on Safe Harbor Drive in Orange Beach, Alabama.6The documents thus confirm that their purpose was indeed to "REFINANCE CONSTRUCTION LOAN." (Docs. 1-1 at 1, 70-3 at 5).
8. Rayfield concedes that, "[o]n November 21, 2007, Rayfield signed a Continuing Guaranty Agreement with Vision Bank, guaranteeing payment of Loan Number xx0619." (Doc. 1-1). Rayfield does not dispute that the Continuing Guaranty Agreement contains the following provision:
3. ABSOLUTE AND CONTINUING NATURE OF GUARANTY. Guarantor's Obligations are absolute and continuing and shall not be affected or impaired if Lender repeatedly and unconditionally amends, renews, extends, compromises, exchanges, fails to exercise, or perfects rights in, impairs or...
To continue reading
Request your trial