Ex parte AU Hotel, Ltd.

• Decision Date: 08 March 1996
• Citation: 677 So.2d 1160
• Parties: Ex parte AU HOTEL, LTD., an Alabama Limited Partnership, and Thelma Dixon, an individual. (Re AU HOTEL, LTD., an Alabama Limited Partnership, and Thelma Dixon, an individual v. James E. MARTIN, etc., et al.). 1941428.
• Court: Alabama Supreme Court

Page 1160

677 So.2d 1160

Ex parte AU HOTEL, LTD., an Alabama Limited Partnership, and Thelma Dixon, an individual (Re AU HOTEL, LTD., an Alabama Limited Partnership, and Thelma Dixon, an individual v. James E. MARTIN, etc., et al.).

1941428.

Supreme Court of Alabama.

March 8, 1996.

Rehearing Denied May 31, 1996.

Robert A. Huffaker and William H. Webster of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for Petitioners.

David R. Boyd and W. Joseph McCorkle, Jr., of Balch & Bingham, Montgomery; and Lee Armstrong, General Counsel, Auburn University, for Respondents.

COOK, Justice.

AU Hotel, Ltd., and Thelma Dixon petition this Court for a writ of mandamus directing the Covington County Circuit Court to vacate an order transferring this action to Lee County. We grant the petition.

This dispute arises out of a series of negotiations and resultant agreements regarding the construction and operation of a conference center and hotel on the campus of Auburn University. The facilities began operating in 1988. AU Hotel, Ltd., operates the hotel under a sublease agreement between it and the Industrial Development Board of the City of Auburn. Auburn University operates the conference center under a sublease agreement with AU Hotel. The latter agreement required Auburn University to "use its best efforts to publicize the availability of the services provided by the hotel" in connection with its "publicizing events to be conducted at the conference center."

On December 1, 1993, AU Hotel and one of its limited partners, Thelma Dixon, a resident of Covington County, sued Auburn University and its former president, James E. Martin, a resident of Morgan County. The complaint, which named Martin in both his official and individual capacities, sought damages from Auburn University for breach of contract, and from Auburn University and Martin for, among other things, fraud and civil conspiracy, based on representations allegedly made to Dixon by Martin in Covington County regarding, among other things, projections of hotel business income. The complaint also sought "rescission of the agreements entered into between the parties" and a judgment requiring Auburn University specifically to perform the agreement to "use its best efforts to publicize the availability of the services provided by the hotel."

On December 30, 1993, the defendants moved to transfer the action to Lee County, the situs of Auburn University's principal place of business, on the ground that (1) venue was "improper" in Covington County, and, alternatively, that (2) a transfer would facilitate "the convenience of parties and witnesses," Ala.Code 1975, § 6-3-21.1. The trial court--on the ground that venue was improper in Covington County--granted the defendants' motion. Indeed, the order was "[b]ased solely upon the decision of" this Court in Ex parte Neely, 653 So.2d 945 (Ala.1995). That order is the subject of the mandamus petition before us.

I. Improper Venue

Contending that venue in Covington County was improper, Martin and Auburn University oppose the mandamus petition on both statutory and nonstatutory grounds. The argument based on statute relates to Ala.Code 1975, § 6-3-2(b)(1) (where real estate is the "subject matter"). The other argument is based on a rule set out by this Court. We shall address the arguments in that order.

A. Statutory Ground

Section 6-3-2(b)(1) provides: "In proceedings of an equitable nature against individuals: (1) [a]ll actions where real estate is the subject matter of the action, whether it is the exclusive subject matter of the action or not, must be commenced in the county where the same or a material portion thereof is situated." Martin and Auburn University insist that real estate, namely, the conference center and hotel, is the "subject matter of [this] action." Referring to the contractual history of the development of the hotel and citing the counts of the complaint seeking rescission or, in the alternative, specific performance of the lease, they contend that this action is "much more than simply transitory." Brief and Answer in Response to the Plaintiffs' Petition for Writ of Mandamus, at 16. Consequently, they argue, § 6-3-2(b)(1) requires the prosecution of this action in Lee County--the situs of the conference center and hotel. We disagree with this premise and its conclusion.

"A 'transitory' action is one [that] could have arisen anywhere." Ex parte City of Birmingham, 507 So.2d 471, 473 (Ala.1987). By contrast, an action having real estate as its "subject matter" is an example of a "local action," that is, one that "could only have arisen in the particular locality where it did arise." Id. "[L]ocal actions 'are in the nature of suits in rem ... which are to be prosecuted where the thing on which they are founded is situated.' " Reed v. City National Bank of Selma, 406 So.2d 906, 909 (Ala.1981). This Court stated in Reed:

" 'The test as to whether an action is transitory or local is not, as a general proposition, the subject causing the injury, but the object suffering the injury, or, as the distinction is otherwise stated, it exists in the nature of the subject of the injury and not in the means used or the place at which the cause of action arises.' "

Id. at 906 (emphasis added).

"[F]or venue purposes an action on a lease is one in personam, not in rem, and is transitory and therefore may be brought in any county where other transitory actions could be brought." Ex parte Canady, 563 So.2d 1024, 1026 (Ala.1990). Moreover, "[c]ontract actions are generally considered transitory even where damage to real property is involved." Ex parte Teledyne Exploration, 436 So.2d 880, 882 (Ala.1983) (emphasis added).

A number of these principles are illustrated in Ex parte Diamond, 596 So.2d 423 (Ala.1992). In that case, a general partnership composed of Sam Diamond (a Jefferson County resident) and Jake and Owen Aronov "acquired a leasehold interest in a parcel of land located in Montgomery County." Id. at 424. "In order to finance improvements on the property, the partnership borrowed money from Central Bank of the South ('Central Bank'), executing a note, a leasehold mortgage, and a security agreement to Central Bank...." Id. Subsequently, the partners "executed to Central Bank a continuing guaranty jointly and severally guaranteeing all indebtedness of [the partnership] up to the sum of $563,285.04." Id. Eventually, the Aronovs purchased the note from Central Bank and sued Diamond in Montgomery County, alleging that he owed them "his proportionate share of the remaining principal and interest ... on the note." Id.

Diamond moved to transfer the action to Jefferson County, where he resided. The Aronovs objected to the transfer, contending that the real estate located in Montgomery County was the "subject matter of the action." Id. The trial court denied Diamond's motion; he petitioned this Court for a writ of mandamus directing the court to transfer the action to Jefferson County. Id.

In granting the petition, we explained:

"An allegation that 'one of the parties owns real estate, or has substantial rights in real estate which are dependent upon the settlement of the controversy, is not enough to make real estate the "subject matter" of the suit.' Alabama Youth Services Board v. Ellis, 350 So.2d 405, 408 (Ala.1977). See also Wesson v. Wesson, 514 So.2d 947 (Ala.1987) ('subject matter' was real estate where the nature of the complaint and relief sought involved the determination of the validity of a conveyance of land, which in turn determined title to the property); Clark v. Smith, 191 Ala. 166, 67 So. 1000 (1915) (complaint for partition must be filed in county where part of the land is located).

"In the present case, the complaint did not involve land; the relief sought was monetary compensation arising from a note executed by the partnership in which each partner was a one-third owner. The fact that the note was secured by a mortgage of real property does not turn the cause of action into one of which the 'subject matter' is real estate. The complaint did not involve the determination of the validity of the leasehold interest or the validity of the mortgage of the Montgomery property, nor did it involve any determination of the validity of a conveyance of property or a question involving who owned legal or equitable title to property. There was also no count in the complaint seeking to foreclose the mortgage against Diamond.

"Therefore, the 'subject matter' of the action is not real estate...."

596 So.2d at 425 (emphasis added).

Similarly, this case involves none of the concerns identified in Ex parte Diamond as involving real estate sufficiently to invoke § 6-3-2(b)(1). The complaint cannot be construed as alleging any injury to the real estate. Cf. Reed v. City National Bank of Selma, 406 So.2d 906 (Ala.1981). Indeed, the principles discussed above compel the conclusion that this action is in personam and not in rem. The real estate located in Lee County is not the "subject matter" of this action as contemplated by § 6-3-2(b)(1).

B. Nonstatutory Ground

Martin and Auburn University also oppose the mandamus petition on a nonstatutory rule, namely, that "suits involving public officials are properly maintained in the county of their official residence." Tri-State Corp. v. State, 272 Ala. 41, 46, 128 So.2d 505, 509 (1961). The rule was stated in Tri-State Corp., in which this Court cited decisions of other jurisdictions. See also Hardin v. Fullilove Excavating Co., 353 So.2d 779 (Ala.1977); Alabama Youth Servs. Bd. v. Ellis, 350 So.2d 405 (Ala.1977) ("action against a state agency or a state official in his official capacity [is] to be brought in the county of official residence").

As the trial court noted, the rule was recently applied in Ex parte Neely, 653 So.2d 945 (Ala.1995). Because this case involves an action against Auburn University, a state institution "maintaining its principal...