Kellis v. Estate of Schnatz

• Decision Date: 27 February 2009
• Docket Number: 2070565.
• Citation: 17 So.3d 676
• Parties: Jerry C. KELLIS v. ESTATE OF Betty K. SCHNATZ and Petie Schnatz, executor of the estate of Betty K. Schnatz. Estate of Betty K. Schnatz and Petie Schnatz, executor of the estate of Betty K. Schnatz v. Jerry C. Kellis.
• Court: Alabama Court of Civil Appeals

17 So.3d 676

Jerry C. KELLIS v. ESTATE OF Betty K. SCHNATZ and Petie Schnatz, executor of the estate of Betty K. Schnatz.

Estate of Betty K. Schnatz and Petie Schnatz, executor of the estate of Betty K. Schnatz v. Jerry C. Kellis.

2070565.

Court of Civil Appeals of Alabama.

February 27, 2009.

Joshua P. Myrick of Stankowski, L.L.P., Fairhope, for appellant/cross-appellee Jerry C. Kellis.

Mary E. Murchison and James Parrish Coleman of Murchison & Howard, L.L.C., Foley, for appellees/cross-appellants Estate of Betty K. Schnatz and Petie Schnatz, executor of the estate of Betty K. Schnatz.

MOORE, Judge.

This is the second time these parties have appeared before this court. See Kellis v. Estate of Schnatz, 983 So.2d 408 (Ala.Civ.App.2007). In Kellis, this court affirmed that portion of a judgment entered by the Baldwin Circuit Court ("the trial court") declaring void a purported real-property sales agreement between Betty K. Schnatz and Jerry C. Kellis ("Kellis") and his wife, Mary Kellis, 983 So.2d at 412-13; however, the court reversed that portion of the judgment denying Kellis any compensation for improvements made to the real property by Kellis in reliance on the sales agreement. 983 So.2d at 413-14. The court remanded the case to the trial court with instructions to "balance the equities" in accordance with Culbreath v. Parker, 717 So.2d 430 (Ala. Civ.App.1998), to determine, as a matter of equity, the amount, if any, the estate of Betty Schnatz owed Kellis. 983 So.2d at 414.

On remand, the trial court conducted another hearing. At that hearing, Kellis testified that he had paid approximately $13,500 to Betty Schnatz in monthly payments for the property; that he had paid approximately $130 per year for three years for property taxes; and that he had paid $2,733 for insurance premiums to cover the old house and the mobile home located on the property.¹ Kellis further testified that he had spent $5,520 making various improvements to the old house and $170-$175 adding a handicap ramp to the mobile home and $600 repairing the central air-conditioning unit in that mobile home. Kellis also introduced evidence indicating that he had spent $8,200 removing debris and fallen trees from the property following Hurricane Ivan, which made landfall in Alabama in September 2004.

According to Kellis, a fire caused by lightning on April 6, 2005, totally destroyed the house and damaged the mobile home. Kellis testified that he received $25,000 in insurance proceeds for the damage to the house and that he received $3,700 or $3,800 in insurance proceeds for the damage to the mobile home. Kellis also testified that, following the fire, he had spent $21,500 removing asbestos from the old house and $5,075 repairing and cleaning the mobile home.

Petie Schnatz, executor of Betty Schnatz's estate, testified that the house was not habitable at the time of the trial and that the reasonable rental value of the house before Kellis's improvements was approximately $100 per month. Petie also testified that the reasonable rental value of the mobile home was $600 per month. Kellis testified that he had rented the house to a man named Wayne, who had stayed in the house for four or five months. According to Kellis, Wayne had agreed to pay $300 per month in rent or to perform services for Kellis, including repairs to the house, in lieu of rent. Kellis stated that Wayne had assisted him with repair work and painting and that he did not recall ever having collected any rent from Wayne. Kellis also testified that he had rented the mobile home on two separate occasions, the first time to a couple for four months for $600 a month and the second time for two months for $600 a month. Kellis testified that his mother-in-law moved into the mobile home at some point in 2006 and that she lived there until January 2008, rent free.

Following the hearing, the trial court entered a judgment on February 6, 2008, stating:

"The court having heard the testimony and considered the evidence offered and admitted and having considered and followed the Court of Civil Appeals' instructions on remand to balance the equities, this court is of the opinion that Jerry C. Kellis is owed no compensation for any improvements made to the property in question or for any other expenditures by Kellis for or about the property. This court has taken into consideration the down payment and monthly payments made by Kellis on the property, the expenditures for improvement to the property, and the evidence presented by Kellis for the clean-up of the property after the hurricane and fire, also any taxes and insurance paid by Kellis. This court has balanced the above with the insurance proceeds received by Kellis, and the amount of rents received by Kellis, and the rental value of the property until January 2008, when Kellis finally moved his mother out of the trailer and off the property."

Kellis filed his notice of appeal to this court on March 18, 2008. On April 4, 2008, the estate and Petie Schnatz, as executor of the estate (hereinafter collectively referred to as "the estate"), filed a cross-appeal. This court transferred the appeal and the cross-appeal to the Alabama Supreme Court for lack of subject-matter jurisdiction on September 8, 2008; that court then transferred the appeal to this court, pursuant to Ala.Code 1975, § 12-2-7.

Issues

On appeal, Kellis argues that the trial court erred in several respects, which are more fully explained hereinafter, in determining that he was not entitled to any recovery. In its cross-appeal, the estate argues primarily that the trial court erred in failing to award it compensation for rent and waste during Kellis's use of the property.

Standard of Review

We outlined the appropriate standard of review in Kellis:

"`When ore tenus evidence is presented, a presumption of correctness exists as to the trial court's findings on issues of fact; its judgment based on these findings of fact will not be disturbed unless it is clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. J & M Bail Bonding Co. v. Hayes, 748 So.2d 198 (Ala.1999); Gaston v. Ames, 514 So.2d 877 (Ala.1987). When the trial court in a nonjury case enters a judgment without making specific findings of fact, the appellate court `will assume that the trial judge made those findings necessary to support the judgment.' Transamerica Commercial Fin. Corp. v. AmSouth Bank, 608 So.2d 375, 378 (Ala.1992). Moreover, `[u]nder the ore tenus rule, the trial court's judgment and all implicit findings necessary to support it carry a presumption of correctness.' Transamerica, 608 So.2d at 378. However, when the trial court improperly applies the law to [the] facts, no presumption of correctness exists as to the trial court's judgment. Allstate Ins. Co. v. Skelton, 675 So.2d 377 (Ala. 1996); Marvin's, Inc. v. Robertson, 608 So.2d 391 (Ala.1992); Gaston, 514 So.2d at 878; Smith v. Style Advertising, Inc., 470 So.2d 1194 (Ala.1985); League v. McDonald, 355 So.2d 695 (Ala.1978). `Questions of law are not subject to the ore tenus standard of review.' Reed v. Board of Trustees for Alabama State Univ., 778 So.2d 791, 793 n. 2 (Ala.2000). A trial court's conclusions on legal issues carry no presumption of correctness on appeal. Ex parte Cash, 624 So.2d 576, 577 (Ala.1993). This court reviews the application of law to facts de novo. Allstate, 675 So.2d at 379 ('[W]here the facts before the trial court are essentially undisputed and the controversy involves questions of law for the court to consider, the [trial] court's judgment carries no presumption of correctness.')."'

"[Farmers Insurance Co. v. Price-Williams Assocs., Inc.,] 873 So.2d [252] at 254-55 [(Ala.Civ.App.2003)] (quoting City of Prattville v. Post, 831 So.2d 622, 627-28 (Ala.Civ.App.2002))."

983 So.2d at 412.

Discussion

As noted above, in Kellis, this court affirmed that portion of the trial court's judgment rescinding the sales agreement between Betty Schnatz and the Kellises. In cases in which an agreement regarding the transfer of real property is rescinded, equity requires that the parties thereto be returned to the status quo ante, as if the agreement had not existed. See Clark v. Wilson, 380 So.2d 810, 812 (Ala. 1980). Normally, upon rescission of the agreement, the vendor must tender to the purchaser the amount given in consideration. Craig v. Craig, 372 So.2d 16, 21 (Ala.1979). However, reimbursement is ordinarily offset by the value of the use of the land that the purchaser enjoyed before the rescission of the agreement. Id.

As his first point of error, Kellis argues that the value of his use of the property should be measured by the actual rents he received and not by the reasonable rental value of the property. Kellis points out that in Kellis, this court mentioned that it could not determine the amount of the rent Kellis had actually received. 983 So.2d at 413. From that statement, Kellis contends that this court must have intended for the trial court, on remand, to determine that amount and use that amount in calculating any offset against the consideration paid. However, Kellis overlooks our specific remand instructions to the trial court, in which the court stated:

"We conclude that a balance of the equities, as contemplated by Culbreath [v. Parker, 717 So.2d 430 (Ala.Civ.App. 1998)], is necessary in the present case. The amount expended for improvements to the property by Kellis, the amount of insurance received by Kellis and the amount of the insurance proceeds Kellis retained after necessary cleanup and repairs on the property, the amount of consideration and taxes payed by Kellis for the subject property, and the rental value of the property during Kellis's use thereof should each be considered in balancing the equities in this case."

983 So.2d at 414. Those instructions indicate that the trial court was to use the rental value of the property during...