Brackett v. Cent. Bank
| Citation | 328 So.3d 873 |
| Decision Date | 11 December 2020 |
| Docket Number | 2190212 |
| Parties | Thomas G. BRACKETT and Lisa M. Brackett v. CENTRAL BANK |
| Court | Alabama Court of Civil Appeals |
James R. Engelthaler of Thigpen, Thigpen, Engelthaler & Scott, Florence, for appellants.
D. Marcel Black and D. Edgar Black of Black & Hughston, PC, Muscle Shoals, for appellee.
This appeal, transferred to this court pursuant to Ala. Code 1975, § 12-2-7(6), concerns a dispute over ownership of real property and two boat slips. On October 19, 2018, Central Bank ("the mortgagee") sued Thomas G. Brackett and Lisa M. Brackett ("the transferees") in the Colbert Circuit Court, seeking, among other things, a judgment declaring that the mortgagee had acquired fee-simple title to certain numbered lots and to two numbered boat slips in a subdivision located in Colbert County that the mortgagee had, it said, acquired via a deed issued following foreclosure of a mortgage given by JCG & Associates, LLC ("the mortgagor"), as to the lots that had been recorded in June 2007; the mortgagee asserted that any interests as to the lots and boat slips the transferees might have acquired were via instruments from the mortgagor recorded in October 2008. After the transferees had moved to dismiss the action, the mortgagee amended its complaint to more specifically designate the real property at issue as a single numbered lot and then filed a motion for a partial summary judgment as to the ownership of that lot; that motion was supported by an affidavit given by its executive vice president. After a hearing, the trial court denied the motion to dismiss and the summary-judgment motion, after which the transferees answered the amended complaint and asserted, among other things, adverse possession, laches, and estoppel as affirmative defenses. The trial court, after an ore tenus proceeding, entered a judgment determining that the mortgagee and not the transferees owned the lot and the boat slips, and that court subsequently denied the transferees' postjudgment motion to alter, amend, or vacate the judgment.
On appeal, the transferees contend that the trial court erred in declaring the mortgagee to be the owner of the lot and the boat slips. Because the trial court conducted a bench trial on the mortgagee's claims, our review is governed by the ore tenus standard of review, under which the trial court's judgment and all implicit necessary supporting findings are presumed correct, whereas that court's conclusions on legal issues carry no such presumption. See Morris Concrete, Inc. v. Warrick, 868 So. 2d 429, 433–34 (Ala. Civ. App. 2003) (quoting earlier cases). Further, this court must "review the evidence in a light most favorable to the prevailing party." Driver v. Hice, 618 So. 2d 129, 131 (Ala. Civ. App. 1993).
The record reflects that, on June 22, 2007, the mortgagor, which is a limited-liability company of which J. Christopher Gibbs was the sole member and president, borrowed $2,500,000 from the mortgagee and, as security for repayment of principal and interest on the note evidencing that debt, conveyed in a mortgage instrument the mortgagor's interests in particular real property in Colbert County, including several numbered land and "marina" lots in a recorded subdivision known as "Eagle Point" and a second nearby 320-acre tract that included the majority of Section 13, Township 2 South, Range 15 West; the second tract included a then unrecorded subdivision alternatively identified as "Eagle Point Two" or "Phase Two." That mortgage instrument was recorded in the real-property records of Colbert County on the same date that it was executed. Donnie Gean, the mortgagee's chief credit officer, testified that, in the ordinary course of business, the mortgagee would execute a limited release of its mortgage as to particular individual lots upon receiving payment therefor; however, if the title history to the property described in the June 2007 mortgage was researched, a prospective purchaser would find the recorded mortgage instrument.
Subsequently, according to Gean's testimony, a second loan was extended by the mortgagee as to which repayment was secured by an interest in certain unsold "boat slips" located at Eagle Point's marina that were owned by Gibbs individually. Unlike the lots and other land secured by the June 2007 real-property mortgage, the unsold boat slips were personal property, and a financing statement was recorded with the Alabama Secretary of State's office on January 24, 2008, evidencing the mortgagee's security interest in the unsold boat slips; the financing statement specifically identified the Eagle Point marina boat slips numbered 9 and 10.
In February 2008, after having been contacted by a real-estate agent, one of the transferees, Thomas Brackett, entered into negotiations regarding a potential purchase of interests in a numbered lot in Eagle Point Two, i.e., Lot 23, as to which the mortgagor's interests had previously been acquired by third parties (Darren Thompson and Jeanni Thompson) and upon which a partially built home had been located; those negotiations also concerned acquisition of unsold numbered boat slips at the Eagle Point marina. On February 28, 2008, Thomas Brackett and the mortgagor entered into an agreement of sale as to boat slip 9 pursuant to which Thomas Brackett paid $4,500 as earnest money, and the mortgagor further provided a "Vital Information Statement" to Thomas Brackett concerning a proposed purchase of the mortgagor's interests in Lot 23. On April 2, 2008, those parties entered into a similar agreement of sale, and Thomas Brackett made a similar earnest-money payment, as to boat slip 10, and Thomas Brackett agreed to purchase the mortgagor's interests in Lot 22, which was adjacent to Lot 23.
Although the agreement of sale as to boat slip 9 had specified a proposed closing date of "on or before June 15, 2008," the record reflects that the transferees actually received their interests in Lot 22, Lot 23, boat slip 9, and boat slip 10 on September 30, 2008. On that date, the following instruments were executed: (a) a warranty deed as to Lot 22 naming the mortgagor as grantor and the transferees as grantees, which was executed by Gibbs as the mortgagor's "Sole Member and Manager"; (b) a warranty deed as to Lot 23 naming Darren Thompson and Jeanni Thompson as grantors and the transferees as grantees; (c) a bill of sale conveying to the transferees "all of [the mortgagor's] right, title and interest" in boat slip 9 "for value received"; and (d) a bill of sale conveying to the transferees "all of [the mortgagor's] right, title and interest" in boat slip 10 "for value received." Although, as previously noted, the boat slips were not actually real property, all of the deeds and bills of sale were recorded in the Colbert County real-property records on October 6, 2008. At trial, Thomas Brackett testified that he had paid Gibbs a total of $364,900 for the lots and the boat slips, having elected not to finance the transaction through a loan from the mortgagee; however, he admitted that he did not order a commitment to ascertain the status of the title to Lot 22, Lot 23, or the boat slips before giving Gibbs those funds. Although the record reflects that the mortgagee expressly released its mortgage interests as to Lot 23, no such express release was undertaken as to Lot 22; moreover, the existence of the mortgage was not disclosed in the warranty deed from the mortgagor to the transferees embracing Lot 22.
In 2010, after the loans extended by the mortgagee to the mortgagor and to Gibbs had become delinquent because of nonpayment, the mortgagee began taking steps to foreclose upon its mortgage as to the lots at Eagle Point and Eagle Point Two that had not previously been released and to seek remedies as to the security interest in the boat slips at Eagle Point Marina. On June 2, 2010, a foreclosure auction was held at the Colbert County courthouse, at which the mortgagee purchased for $2.1 million the mortgaged properties, including the Eagle Point Marina lots and all of Eagle Point Two except for certain lots expressly excluded (e.g., Lot 23); the foreclosure deed was recorded on the same date. The mortgagee also initiated a civil action against Gibbs in the Colbert Circuit Court, case no. CV-10-900089, seeking a judgment under which the mortgagee would take title to the unsold boat slips; in consideration for dismissal of that action, Gibbs executed a deed in November 2010 conveying all of his rights as to boat slip 9 and boat slip 10.
Gean testified that the mortgagee had taken possession of the boat slips, although he admitted that the mortgagee had not "run anybody off" from using them. Gean added that the mortgagee had supplied moneys to construct a gate in front of the Eagle Point Two subdivision and had paid real-estate taxes owed as to Lot 22 (as had the transferees); Gean admitted, however, that the mortgagee had not entered onto Lot 22 and had not physically disturbed the transferees in their use of Lot 22 as a yard space adjacent to the "second home" located on Lot 23 after the foreclosure deed was recorded.
According to Gean's testimony, a series of e-mail communications took place between Gibbs and the mortgagee in July 2010 in which Gibbs, apparently on behalf of the transferees, sought the mortgagee's relinquishment of its interests in Lot 22 and boat slips 9 and 10. In those e-mail exchanges, Gibbs took the position that a sufficient portion of the money owed on the loans made by the mortgagee had been paid so as to warrant the mortgagee's relinquishment of its interests as to that lot and those boat slips -- a position that, as Gean noted at trial, was "a common argument" that borrowers routinely make to the mortgagee.
With respect to the transferees' assertion that they and not the mortgagee are the true owners of Lot 22, we note that "Alabama is a ‘title’ state, i.e., upon the execution of the mortgage legal title passes to the mortgagee,"...
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