Bon Harbor Llc v. Bank

• Decision Date: 30 June 2010
• Docket Number: 1090302.
• Parties: BON HARBOR, LLC, and Michael F. Hindsv.UNITED BANK et al.
• Court: Alabama Supreme Court

53 So.3d 82

BON HARBOR, LLC, and Michael F. Hinds

v.UNITED BANK et al.

1090302.

Supreme Court of Alabama.

June 30, 2010.

H. William Wasden, Edward G. Bowron, and D. Charles Holtz of Burr & Forman LLP, Mobile, for appellants.Edward A. Dean, Christopher I. Gruenewald, and Andrew W. Martin, Jr., of Armbrecht Jackson LLP, Mobile, for appellees.LYONS, Justice.

Bon Harbor, LLC (“Bon Harbor”), and Michael F. Hinds appeal from a judgment entered against them and in favor of United Bank and its employees Russell K. Banks, Frank Meigs, and Jamie Lipham. We affirm.

Procedural History

On April 5, 2007, United Bank sued Bon Harbor, Hinds, David P. Herrick, Bradley P. Katz, and C. Gibson Vance seeking recovery of more than $7,500,000 owed to United Bank by Bon Harbor on a promissory note and an amended promissory note. The notes were secured by a mortgage, evidenced by a mortgage agreement, and were guaranteed by Hinds, Herrick, Katz, and Vance (collectively “the guarantors”). On June 15, 2007, United Bank amended its complaint to seek a reformation of the promissory notes and mortgage or, alternatively, a declaration that the documents were valid; a judgment on the promissory notes and guaranties; foreclosure of the mortgage or, alternatively, the imposition of a purchase-money mortgage, equitable mortgage, or resulting trust in the real property Bon Harbor had purchased with the proceeds of the loan; and the imposition of a constructive trust on the funds loaned to Bon Harbor by United Bank.

On July 13, 2007, Bon Harbor and the guarantors asserted counterclaims against United Bank and third-party claims against United Bank employees Banks, Meigs, and Lipham (collectively “the third-party defendants”). The complaint stated claims of “breach of duty,” fraud, suppression, and a claim for a declaratory judgment “setting forth the rights of the parties” with respect to the promissory notes and guaranties.

United Bank subsequently moved for a summary judgment on its claims against Bon Harbor and the guarantors. It expressly requested a judgment declaring that the original and the amended promissory notes were valid and binding on Bon Harbor and that the mortgage agreement was valid and binding on Bon Harbor; an order foreclosing that mortgage or imposing an equitable mortgage on the property Bon Harbor had purchased with the loan proceeds; and a judgment in favor of United Bank and against Bon Harbor and the guarantors. Bon Harbor and the guarantors responded, and, on March 20, 2008, the trial court entered an order stating simply that the motion for a summary judgment was granted.

Bon Harbor and the guarantors filed a notice of appeal with this Court on the same day the trial court entered its summary judgment. That appeal was assigned case no. 1070902. Five days later, while case no. 1070902 was pending before this Court, the trial court entered an order assessing damages against Bon Harbor and the guarantors on the March 20, 2008, judgment. Bon Harbor and the guarantors filed a notice of appeal to this Court from the trial court's March 25, 2008, order. That appeal was assigned case no. 1070994.

In Bon Harbor, LLC v. United Bank, 20 So.3d 1263 (Ala.2009), this Court decided both appeals. This Court determined that the March 20, 2008, judgment was not final because it did not dispose of all claims against all parties to the action. 20 So.3d at 1265–66 (citing Dickerson v. Alabama State Univ., 852 So.2d 704, 705 (Ala.2002)). As a result, this Court lacked subject-matter jurisdiction to consider case no. 1070902. Because the March 25, 2008, order was entered while case no. 1070902 was pending before this Court, the trial court lacked subject-matter jurisdiction over the action at the time it entered the order. As a result, the March 25, 2008, order was void and would not support an appeal. 20 So.3d at 1266 (citing Gallagher Bassett Servs., Inc. v. Phillips, 991 So.2d 697, 701 (Ala.2008)). Accordingly, this Court dismissed the appeals in both case no. 1070902 and case no. 1070994.

After dismissal of the appeals, United Bank and the third-party defendants moved for a summary judgment, this time on the counterclaims and third-party claims asserted against them by Bon Harbor and the guarantors. Before the trial court ruled on this motion, Herrick, Katz, Vance, United Bank, and the third-party defendants settled their claims against each other, and the trial court dismissed the claims pending as to those parties. Accordingly, the only claims that remained pending before the trial court were United Bank's claims against Bon Harbor and Hinds, and Bon Harbor and Hind's counterclaims against United Bank and their third-party claims against the third-party defendants.

On August 31, 2009, Bon Harbor and Hinds moved the trial court to vacate its March 20, 2008, summary judgment for United Bank based on allegedly newly discovered evidence. Bon Harbor and Hinds also filed two motions for a summary judgment in their favor on United Bank's claims against them, stating different grounds in each motion and supporting each motion with affidavits from Hinds. ¹ United Bank responded to Bon Harbor and Hinds's motions and moved to strike Hinds's affidavits on several grounds.

On October 8, 2009, the trial court entered a judgment for United Bank and the third-party defendants and against Bon Harbor and Hinds.² The trial court's judgment, in relevant part, stated as follows:

“The Court having granted United Bank's Motion for Summary Judgment on March 20, 2008, enters final judgment in favor of United Bank and against [Bon Harbor and Hinds] jointly and severally, in the amount of $8,350,050.02, consisting of principal, accrued interest and late fees calculated as of March 20, 2008, with interest thereafter accumulating at a daily rate of $1626.00. It is further

“Ordered, adjudged and decreed that United Bank is entitled to foreclose on the property described in the mortgage dated July 8, 2005, and recorded as Instrument No. 914161 of the Baldwin County, Alabama, Probate records and to apply the proceeds of the foreclosure sale to the indebtedness of [Bon Harbor and Hinds] to United Bank.”

The trial court then 1) granted United Bank and the third-party defendants' motion for a summary judgment as to Bon Harbor and Hinds's counterclaims and third-party claims; 2) denied Bon Harbor and Hinds's motion to vacate the March 20, 2008, judgment; 3) denied as untimely and moot Bon Harbor's and Hinds's motions for a summary judgment; and 4) granted United Bank and the third-party defendants' motion to strike Hinds's affidavits.

Bon Harbor and Hinds subsequently moved the trial court to amend its October 8, 2009, judgment under Rule 59(e), Ala. R. Civ. P., asking the trial court to reword its judgment to show that it had considered the allegedly newly discovered evidence submitted by Bon Harbor and Hinds. The trial court denied that motion; Bon Harbor and Hinds appealed.

Factual Background

The evidence presented to the trial court before it entered its March 20, 2008, summary judgment shows the following facts. Bon Harbor is a limited liability company owned by Decatur, LLC (“Decatur”), Gulf Stream Properties, Inc. (“Gulf Stream”), and DGB, LLC (“DGB”). Decatur is owned by Hinds; Gulf Stream is owned by Paul Kirkland; and DGB is owned by Herrick, Katz, and Vance. Bon Harbor's amended articles of organization name Hinds and Kirkland as managers and state: “Both [Hinds] and [Kirkland] acting in unison shall have the authority to bind [Bon Harbor]. No other individuals or entities shall have any authority to bind [Bon Harbor] without the written approval of all members and general managers.” Bon Harbor's operating agreement also names Hinds and Kirkland as general managers. Paragraph 9(a) of the operating agreement provides: “It shall require the signatures of both general managers to bind [Bon Harbor] as it relates to any action taken by [Bon Harbor] or any transaction entered into by [Bon Harbor].” Paragraph 9(d) states: “The general managers alone shall be responsible for the management of [Bon Harbor's] business, with all rights and powers generally conferred by law....”

In 2005, Bon Harbor purchased real property in Baldwin County (“the property”) for approximately $10,000,000. To fund $7,500,000 of the purchase price, Bon Harbor negotiated a loan from United Bank. On July 8, 2005, Hinds and Kirkland signed a promissory note evidencing the loan. The note identified United Bank as the lender and Bon Harbor as the borrower. It provided for a variable interest rate. The note stated that the loan was advanced for the purpose of purchasing commercial property and was paid as a single advance on July 8, 2005. The note stated that it was secured by a mortgage on the property and by the personal guaranties of Hinds, Herrick, Katz, and Vance. Hinds signed the July 8, 2005, note under the following signature line: “Bon Harbor, LLC by Decatur, LLC by Michael F. Hinds: Managing Member.” Kirkland signed the note under the following signature line: “Bon Harbor LLC by Gulf Stream Properties, Inc. by Paul Kirkland: President.”

On July 8, 2005, Hinds and Kirkland also signed a mortgage agreement securing the loan. That agreement identified Bon Harbor as mortgagor and United Bank as mortgagee. It provided United Bank a security interest in the property of $7,500,000. Hinds signed the mortgage agreement for Bon Harbor under the following signature line: “Decatur LLC by Michael F. Hinds: Managing Member.” Kirkland signed the mortgage agreement for Bon Harbor under the following signature line: “Gulf Stream Properties, Inc. by Paul Kirkland, President.” The mortgage agreement included a notarized certification that Hinds and Kirkland signed the mortgage agreement as managing members of Bon Harbor. The mortgage was recorded on August 11, 2005.

On the same day, using the same signature lines, Hinds and Kirkland signed a certificate of authority identifying...