CMC Props., LLC v. Emerald Falls, LLC (Ex parte Found. Bank)

• Decision Date: 27 September 2013
• Docket Number: 1120920.
• Citation: 146 So.3d 1
• Parties: Ex parte FOUNDATION BANK. (In re CMC Properties, LLC v. Emerald Falls, LLC, et al.)
• Court: Alabama Supreme Court

146 So.3d 1

Ex parte FOUNDATION BANK.(In re CMC Properties, LLC

v.Emerald Falls, LLC, et al.)

1120920.

Supreme Court of Alabama.

Sept. 27, 2013.

R. Cliff Mendheim of Prim & Mendheim, LLC, Dothan, for petitioner.

Chip Cleveland of Cleveland & Riddle, Attorneys at Law, LLC, Prattville, for respondent.

Opinion

BOLIN, Justice.

Foundation Bank (“the Bank”) petitions this Court for a writ of mandamus compelling Autauga County Circuit Judge Sibley Reynolds to vacate his order staying the Bank's attempted redemption in the probate court of certain property pursuant to Ala.Code 1975, § 40–10–120 et seq. We grant the petition and issue the writ.

I. Facts and Procedural History

The property at issue consists of two parcels of contiguous property located in Autauga County, which includes equipment for outdoor entertainment opportunities for the community. The property is identified as Parcel I: 19–06–23–2–003–003.000 and Parcel II: 19–06–23–2–003–004.000 (hereinafter referred to collectively as “the property”). Emerald Falls, LLC, and its only member, Alice L. Smith (hereinafter referred to collectively as “Emerald Falls”), owned the property originally.

On May 18, 2010, Rob Riddle purchased the property at a tax sale as a result of Emerald Falls' failure to pay the ad valorem taxes on the property. Riddle allegedly purchased insurance on the property and made certain improvements to the property. On January 1, 2011, Riddle executed a document, assigning his interest in the property to CMC Properties, LLC (“CMC”); the assignment was not recorded until February 11, 2011.

On January 17, 2011, Riddle sent written notification to Working Capital No. 1, LLC (“Working Capital”), the mortgagee of the property, advising Working Capital that he had purchased the property belonging to Emerald Falls at the 2010 tax sale.

On January 19, 2011, Riddle filed in the circuit court a complaint against Emerald Falls pursuant to § 40–10–74, Ala.Code 1975,¹ alleging that Emerald Falls had abandoned the property and that Riddle was entitled to immediate possession of the property. Riddle also sought a judgment declaring his rights and/or interests in the property.

On May 27, 2011, the circuit court entered a consent order, in which Emerald Falls and Riddle acknowledged that Riddle had purchased the property subject to the redemption rights of Emerald Falls, that Riddle had made improvements to the property, and that Riddle was entitled to be reimbursed for those improvements. The consent order stated that should Emerald Falls attempt to redeem the property, the matter would be placed on the active trial docket by way of motion from either party to address the amount of taxes owed, reimbursement for improvements, and the accrual of statutory interest.

On January 30, 2013, Riddle sent written notification to the Bank, advising the Bank that he had purchased the property belonging to Emerald Falls at the 2010 tax sale. Riddle sent this notification to the Bank after discovering that Working Capital had assigned its mortgage on the property to the Bank as additional security for a line of credit held by the Bank. As previously noted, Riddle assigned his interest in the property to CMC on January 1, 2011; the assignment was recorded on February 11, 2011. We hereinafter refer to Riddle and CMC collectively as CMC.²

On March 2, 2013, an attorney representing both the Bank and Working Capital (hereinafter referred to collectively as “the Bank”) gave written notice to CMC of its intent to redeem the property. The attorney requested that CMC, pursuant to § 40–10–122, Ala.Code 1975, identify “any and all amounts that [CMC] claim are either ‘permanent improvements' or ‘preservation improvements' as defined [§ 40–10–122(d) ].” A dispute arose between CMC and the Bank regarding the amount of moneys CMC claimed it had expended on the property. The Bank and CMC thereafter appointed individual referees pursuant to § 40–10–122(d), which provides that if the proposed redemptioner does not agree with the value of the improvements stated by the purchaser, the proposed redemptioner “shall appoint a referee to ascertain the value of such permanent or preservation improvements as applicable.”

On March 31, 2013, the Bank notified the probate court in writing that it was electing to exercise its statutory right of redemption pursuant to § 40–10–120 et seq., Ala.Code 1975.³ The Bank further requested that the probate court provide it with the amount of money to be deposited for the redemption pursuant to § 40–10–122(a), which, according to the probate court, was $32,249.96—representing the amount for which the property was sold, with interest.

On April 1, 2013, CMC moved the circuit court to enter a stay prohibiting the probate court from accepting any redemption moneys from the Bank pending a hearing in the circuit court regarding the redemption amount. In its motion to stay, CMC specifically stated that a resolution had not been reached between CMC and the Bank regarding the amount necessary to redeem the property and that the parties had appointed referees as required. CMC also stated in its motion that “it has come to the attention of [CMC] that [the Bank is] still in contact with [the probate court] in hopes to back door the redemption process and thus pay monies directly to the Probate Office so a Certificate of Redemption can be obtained ... for the property.” On April 1, 2013, the circuit court entered an order, which stated: “Redemption issue stayed, pending hearings as set.”

On April 2, 2013, the Bank attempted to redeem the property by depositing with the probate court $32,249.96. The probate court entered an order, denying the Bank's attempted redemption. Specifically, the probate court stated that the Bank was authorized as the mortgagee of the property to redeem the property and “[b]ut for the order

entered by [the circuit court], this court would have accepted the redemption amount being paid by [the Bank]....”

On April 9, 2013, the Bank filed this petition for a writ of mandamus, compelling the circuit court to vacate its April 1, 2013, order staying the “redemption issue” pending hearings in the circuit court. In its petition, the Bank argues that the circuit court lacked subject-matter jurisdiction to prohibit it from exercising its statutory right of redemption in the probate court pursuant to Ala.Code 1975, § 40–10–122. As an additional ground for the issuance of the writ, the Bank argues that a party desiring to redeem property is neither required to pay a tax-sale purchaser amounts owed under § 40–10–122(b) and/or (c), Ala.Code 1975, prior to redeeming the property pursuant to subsection (a) of that Code section, nor is a proposed redemptioner required to resolve a dispute regarding any disputed amounts owed under § 40–10–122(b) and/or (c) prior to redeeming property pursuant to subsection (a).

II. Standard of Review

“ ‘The question of subject-matter jurisdiction is reviewable by a petition for a writ of mandamus.’ Ex parte Liberty Nat'l Life Ins. Co., 888 So.2d 478, 480 (Ala.2003). However, ‘[f]or the writ of mandamus to issue “ ‘[t]he right sought to be enforced by mandamus must be clear and certain with no reasonable basis for controversy about the right to relief.’ ” ' Ex parte Vance, 900 So.2d 394, 398–99 (Ala.2004).”

Ex parte Tuscaloosa County Special Tax Bd., 963 So.2d 610, 611–12 (Ala.2007).

III. Ala.Code 1975, § 40–10–122 and § 40–10–127

Section 40–10–122, Ala.Code 1975, governs the manner of statutory redemption when land is sold at a tax sale to a party other than the State. At all times pertinent to this action § 40–10–122 provided:

“(a) In order to obtain the redemption of land from tax sales where the same has been sold to one other than the state, the party desiring to make such redemption shall deposit with the judge of probate of the county in which the land is situated the amount of money for which the lands were sold, with interest payable at the rate of 12 percent per annum from date of sale, and, on the portion of any excess bid that is less than or equal to 15 percent of the market value as established by the county board of equalization, together with the amount of all taxes which have been paid by the purchaser, which fact shall be ascertained by consulting the records in the office of the tax collector, or other tax collecting official, with interest on said payment at 12 percent per annum. If any taxes on said land have been assessed to the purchaser and have not been paid, and if said taxes are due which may be ascertained by consulting the tax collector or other tax collecting official of the county, the probate judge shall also require the party desiring to redeem said land to pay the tax collector or other tax collecting official the taxes due on said lands which have not been paid by the purchaser before he or she is entitled to redeem the same....

“(b) With respect to property located within an urban renewal or urban redevelopment project area designated pursuant to Chapters 2 or 3 of Title 24, the proposed redemptioner must pay to the purchaser or his or her transferee, in addition to any other requirements set forth in this section, the amounts set forth below:

“(1) All insurance premiums paid or owed by the purchaser for casualty loss coverage on insurable structures with interest on said payments at 12 percent per annum.

“(2) The value of all permanent improvements made on the property determined in accordance with this section with interest on said value at 12 percent per annum.

“(c) With respect to property which contains a residential structure at the time of the sale regardless of its location, the proposed redemptioner must pay to the purchaser or his or her transferee, in addition to any other requirements set forth in this section, the amounts set forth below:

“(1) All insurance premiums paid or owed by the purchaser for casualty loss coverage on the residential structure with interest on the payments at 12 percent per annum.

“(2

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