Holman v. Childersburg Bancorporation, Inc.

• Citation: 852 So.2d 691
• Parties: Danita Kim HOLMAN and D. Mark Holman v. CHILDERSBURG BANCORPORATION, INC., et al.
• Decision Date: 06 December 2002
• Court: Supreme Court of Alabama

852 So.2d 691

Danita Kim HOLMAN and D. Mark Holman v. CHILDERSBURG BANCORPORATION, INC., et al.

1011756.

Supreme Court of Alabama.

December 6, 2002.

Phillip A. Gibson, Huntsville, for appellants.

Bruce F. Rogers and James W. Davis of Bainbridge, Mims, Rogers & Smith, L.L.P., Birmingham, for appellee Childersburg Bancorporation, Inc.

Richard F. Ogle and Robert B. Stewart of Ogle, Liles & Upshaw, L.L.P., Birmingham; and B. Clark Carpenter, Jr, of Wooten, Thornton, Carpenter, O'Brien, Lazenby & Lawrence, Talladega, for appellee First Bank of Childersburg.

Gerald L. Miller of Redden, Mills & Clark, Birmingham, for appellee Byron Louie Henry.

WOODALL, Justice.

Danita Kim Holman and her husband, D. Mark Holman, appeal from a summary judgment in favor of First Bank of Childersburg ("the Bank"), Childersburg Bancorporation, Inc. ("the Corporation"), and Byron Louie Henry, an officer of the Bank at the time of the underlying transaction, in the Holmans' action alleging breach of an agreement to release a tract of land from a mortgage lien. We affirm.

Events material to this dispute began in 1995, when the Holmans borrowed $275,000 from the Bank in connection with the purchase of approximately 16 acres of real property. The loan was secured by a mortgage on that property. Subsequently, the original 16-acre tract was subdivided into three tracts—tract I, tract II, and tract III. The Holmans allege in their complaint that in 1997 they and Henry reached an oral agreement regarding the disposition of some of the property. Under the alleged agreement, the Holmans would sell tract I. The parties agree that a portion of the sale proceeds were to be paid to the Bank to satisfy the mortgage on tract I. The Holmans allege that the Bank also agreed—in exchange for $175,000 of the purchase price of tract I—to execute an instrument releasing tract II from the mortgage lien, to enable the Holmans to obtain a construction loan to build a residence on tract II "when the time came that [the Holmans] wanted to build the house."

In May 1997, tract I was sold, and the Holmans paid the Bank $175,000. On May 7, 1997, the Bank executed a "Partial Release," releasing tract I from the mortgage lien. Subsequently, the Holmans began constructing a house on tract II. However, title searches conducted on or about July 2, 1998, December 11, 1998, and July 25, 2000, revealed to the Holmans that, as of the last date, no mortgage release had been recorded as to tract II. The Holmans allege that, as of December 11, 2000, the date the Holmans filed this action, the defendants were disclaiming any knowledge of an oral agreement to release tract II from the mortgage lien.

On December 11, 2000, the Holmans sued Henry and the Corporation. Their complaint, as eventually amended to include the Bank (the Corporation, the Bank, and Henry are hereinafter referred to collectively as "the defendants"), contained counts alleging (1) breach of a contract to release tract II from the mortgage lien, (2) negligence/wantonness, (3) fraudulent misrepresentation, (4) fraudulent suppression, (5) slander of title, and (6) civil conspiracy. A seventh count, added by amendment, was against the Corporation and the Bank for negligent hiring, training, and supervision of Henry. The complaint alleged that the property had been devalued and depreciated by the acts of the defendants. The complaint sought compensatory and punitive damages.

The defendants answered the last amended complaint, asserting affirmative defenses, including the Statute of Frauds. The Bank counterclaimed against the Holmans for amounts allegedly due on their notes with the Bank. Subsequently, the defendants moved for a summary judgment. On November 2, 2001, the trial court entered a summary judgment for the defendants on various grounds. More specifically, it concluded that the breach-of-contract claims were barred by the Statute of Frauds and that the tort claims were barred by the applicable statutes of limitations. On May 7, 2002, the trial court, on the Bank's motion, dismissed the Bank's counterclaims against the Holmans.

From that judgment, which constituted the final disposition of all the claims asserted in this action, the Holmans appealed. On appeal, the Holmans argue, among other things, that the trial court erred in holding (1) that the Statute of Frauds barred the breach-of-contract claims, and (2) that the statutes of limitations barred the tort claims.

I. Breach-of-Contract Claims

The Holmans set forth their breach-of-contract claims in the following terms:

"22. After Plaintiffs and defendants... entered into the agreements set forth above, [regarding the sale of tract I, and the payment of $175,000 of the purchase price in exchange for the Bank's agreement to release tract II], Plaintiffs placed ... tract One on the market for sale. After [tract I] sold, Plaintiffs and said defendants negotiated and agreed on a release price for both parcels, with the understanding that no further consideration would be required from Plaintiffs to release Tract Two from the Mortgage. This agreement was made so that Plaintiffs could obtain a construction loan and begin construction of their new residence.

"....

"... Pursuant to the agreement, the parties negotiated a release price including the amount necessary to release Tract One from the Mortgage as well as the release of Tract Two without any further consideration. Plaintiffs paid said defendants the sum of .... $175,000.00 ... from the sale proceeds resulting from the sale of Tract One.

"....

"26. Pursuant to the agreement entered into by the parties, and at defendants' request, [a] partial Mortgage [release was] sent to the Bank in regard to... Tract Two. Said partial Mortgage [release was] either signed but not recorded, lost, misplaced, or willfully disregarded; but in any event, [was] never recorded in the Probate Office of Madison County, Alabama.

"27. As a result of the aforesaid actions, defendants ... breached the agreement entered into between the parties by failing or refusing to release ... Tract Two from the Mortgage.

"....

"29. As a direct consequence of defendants'... breach of the aforesaid agreements, Plaintiffs, DANITA KIM HOLMAN and D. MARK HOLMAN, are greatly restricted in the free enjoyment, use and disposition of their property; the property has been greatly devalued and depreciated; Plaintiffs have been unable to refinance the property without being forced to pay the unreasonable, arbitrary and capricious amount demanded by said defendants; [and] Plaintiffs have been exposed to liability to other parties now holding Mortgages against the property....

"WHEREFORE, Plaintiffs demand judgment against each of the defendants.... jointly and severally, in a sum to be determined by a jury, which will fairly and adequately compensate Plaintiffs for their injuries and damages sustained...."

(Emphasis added.) The defendants contend that the Statute of Frauds bars these claims. Alabama's Statute of Frauds provides, in pertinent part:

"In the following cases, every agreement is void unless such agreement or some note or memorandum thereof expressing the consideration is in writing and subscribed by the party to be charged therewith or some other person by him thereunto lawfully authorized in writing:

"....

"(5) Every contract for the sale of lands, tenements or hereditaments, or of any interest therein, ... unless the purchase money, or a portion thereof is paid and the purchaser is put in possession of the land by the seller...."

Ala.Code 1975, § 8-9-2(5). This section "requires that all contracts for the sale of real property be in writing and be signed by the party against whom the contract is asserted. The writing must also contain a recital of the consideration supporting the contract." Pickard v. Turner, 592 So.2d 1016, 1020 (Ala.1992). "[I]t is clear that an agreement to release lands from the effect of a mortgage is an agreement for the transfer of real property and thus falls within the Statute of Frauds." Casey v. Travelers Ins. Co., 585 So.2d 1361, 1363 (Ala.1991).

The Holmans do not dispute that the alleged agreement is subject to the Statute of Frauds. They contend, however, that they have sufficiently established that a release, or a commemorative writing, exists.

A. Evidence of an Agreement

In this connection, the Holmans submitted the affidavit of Dennis Abbott, their former legal counsel. Abbott stated, in pertinent part:

"On or about August 29, 1997, I was contacted by the [Holmans] to close a construction loan on [tract II]. I was told by the [Holmans] that there was no payoff amount for this tract and that they had previously entered into an agreement with [the Bank] to the effect that if they sold [tract I] and their personal residence and paid [the Bank] certain agreed upon amounts, the Bank would, in turn, release [tract II], with no additional consideration so that the [Holmans] could obtain a construction loan. On or about August 29,1997, I contacted Louie Henry to confirm the payoff amount and/or release agreement. Mr. Henry informed me that the Bank had, in fact, agreed to release [tract II] with no additional consideration. He acknowledged to me that he was aware that the Holmans were going to build a house on that tract and that the Bank had entered into an agreement several months prior thereto that it would release [tract II] for no additional consideration conditioned on the sale of [tract I] and the payment of $175,000.00 to the Bank.... I informed Mr. Henry that a title search revealed that [tract II] had not been released. He advised me to prepare a partial mortgage release and send it to him and that he would execute it and file it of record. Based on these representations, I closed the construction loan on the property and mailed the partial mortgage release to Mr. Henry.

"On or about July 2, 1998, I was again contacted by the [Holmans] to close a second mortgage on [tract II] to

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