McKinney v. McKinney

• Decision Date: 20 January 2012
• Docket Number: 1090904.
• Parties: Ex parte Donna McKINNEY and Marlin McKinney. (In re Gilberto Sanchez v. Donna McKinney and Marlin McKinney).
• Court: Alabama Supreme Court

87 So.3d 502

Ex parte Donna McKINNEY and Marlin McKinney.

(In re Gilberto Sanchez

v.Donna McKinney and Marlin McKinney).

1090904.

Supreme Court of Alabama.

May 27, 2011.

Rehearing Denied Jan. 20, 2012.

Regina Eng, Montgomery, for petitioners.

Jim L. DeBardelaben, Montgomery, for respondent.

PER CURIAM.

Marlin McKinney and Donna McKinney, the defendants below, filed this petition for a writ of mandamus seeking an order directing the Elmore Circuit Court to dismiss the ejectment and unlawful-detainer claims of Gilberto Sanchez, the respondent here and the plaintiff below, and to grant the McKinneys' motion to vacate the trial court's pretrial order on the ground that Sanchez lacked standing. The McKinneys further seek the return of moneys paid by them to Sanchez pursuant to the allegedly void pretrial order. We grant the petition and issue the writ.

Facts and Procedural History

This case arises from a complex factual scenario contrived by the parties in an attempt to circumvent Alabama's homebuilders licensure statute. See§ 34–14A–1 et seq., Ala.Code 1975. According to their petition, on January 15, 2005, the McKinneys entered into an oral contract with Sanchez relating to the purchase by Sanchez of a parcel of real property located in Elmore County. Sanchez, an unlicensed contractor, was to construct a residence on the property for the McKinneys. Also according to the petition, on or around April 21, 2005, Sanchez, the McKinneys' former long-term personal physician, purchased property located in Titus on behalf of the McKinneys, who had selected that particular parcel of property as the site for the planned construction of a primary residence. In October 2005, pending completion of their planned primary residence on the parcel purchased by Sanchez, the McKinneys “took possession” of the property when they moved into a guest house that had been constructed on the property.

On March 1, 2006, the parties entered into a real-estate-sales agreement pursuant to which Sanchez agreed to sell the McKinneys the Titus property for a purchase price of $168,000. The agreement reflected that the McKinneys had previously paid $32,000 of the contract price and that the remaining balance of $136,000 was due at closing, which, the contract specified, was to occur within three weeks of the execution date of the agreement.¹ The transaction was never completed, and the closing never occurred. The McKinneys contend that the planned closing never occurred because, they allege, Sanchez discontinued construction of the residence and has refused to resume construction because he has been unable to obtain a higher purchase price for the property from the McKinneys. They further assert that, as a result of Sanchez's alleged lack of skill and knowledge of homebuilding, “approximately one-half of the main residence had to be demolished and rebuilt by a competent construction company.” (Petition, at p. 3.)

Sanchez's brief in response to the McKinneys' petition does indicate that he purchased the property and that he subsequently entered into a real-estate-sales agreement with the McKinneys pursuant to which the McKinneys would purchase the property from him. Sanchez, however, contends that there is nothing to indicate that the McKinneys ever fulfilled the terms of that agreement. In fact, Sanchez identifies in his brief a second real-estate-sales agreement, which he says the parties executed on June 14, 2006, and which was contingent upon, as was the first agreement, the McKinneys' obtaining the necessary financing to cover the purchase price, which had been raised to $220,000, and upon closing “as soon as possible.” Sanchez maintains that there is also nothing in the materials before us to indicate that the second scheduled closing ever occurred. In fact, he contends that the McKinneys failed to close on either real-estate-sales agreement.

Both sides acknowledge that, in July 2007, Sanchez executed a $268,000 note secured by a mortgage on the property in favor of Regions Bank d/b/a Regions Mortgage (“Regions”). Thereafter, on September 14, 2007, Sanchez and the McKinneys entered in a bond-for-title ² agreement whereby Sanchez once again agreed to sell the property to the McKinneys—this time for a purchase price of $240,000.³ Accordingto Sanchez, at the time of this third agreement, he disclosed to the McKinneys “that the property was or [might] be subject to a mortgage.” (Sanchez's response, at p. 3.) In fact, the bond-for-title agreement specifically provided that the McKinneys, as purchasers, granted Sanchez “the express authority to mortgage, finance, etc. the property subject hereto in any amount not exceeding $300,000.00.” The bond-for-title agreement also stated that it was not to be recorded and that, if a mortgage holder were to become aware of Sanchez's agreement with the McKinneys and, as a result, any mortgage balance was accelerated, the McKinneys would be liable for the outstanding mortgage indebtedness.

With regard to the McKinneys' interest in the property, the bond-for-title agreement states, in part, as follows:

“[The McKinneys] understand[ ] that in the event that [the McKinneys] do [ ] not comply with the provisions in this Bond for Title, [Sanchez] has the option to declare [the McKinneys] in violation of this Bond for Title and, in such case, any right [the McKinneys] may have under this Bond for Title will terminate and end.

“The parties hereto agree and understand that the execution of this agreement and the performance of the provisions herein by the respective parties does not create in the [McKinneys] any legal or beneficial interest in the property and [the McKinneys] shall not have any such interest until a deed is executed by [Sanchez] or [Sanchez's] assigns and is delivered to [the McKinneys].”

The bond-for-title agreement also specifically provides that, if the McKinneys fail to timely pay any of the installment payments due under the bond for title or to comply with any other term of that agreement,

“[Sanchez] shall have the right to annul [the] agreement, and ... the [McKinneys] shall then become the tenant[s] of [Sanchez], and [Sanchez] shall be entitled to the immediate possession of said property described herein, and may take possession thereof, and may eject the [McKinneys] by an action of unlawful detainer or any other legal proceeding, and shall retain all the monies paid under this agreement by the [McKinneys] as rent of the premises....”

On September 1, 2009, Sanchez commenced the underlying action in the Elmore Circuit Court alleging a claim of unlawful detainer and seeking ejectment. In his complaint, Sanchez contended that the McKinneys had defaulted under the payment terms of the bond-for-title agreement; that they were in arrears in the amount of $42,264.72; and that Sanchez had terminated the McKinneys' right to possession by written notice. The McKinneys answered, asserting numerous affirmative defenses and also asserting that Sanchez lacked standing. Additionally, the McKinneys asserted counterclaims alleging breach of contract, unjust enrichment, fraud, negligence or wantonness, breach of fiduciary duty, and abuse of a confidential relationship and seeking specific performance. ⁴

On November 18, 2009, following a hearing regarding Sanchez's emergency motion to determine the McKinneys' right to continuedpossession of the property, the trial court entered an order allowing the McKinneys to remain in possession of the property but ordering that they make the monthly mortgage payments on Sanchez's mortgage in the amount of $2,616.45. Specifically, the trial court ordered that the McKinneys were to make mortgage payments for the following months: November 2009, December 2009, January 2010, and February 2010. The trial court's order scheduled trial for February 18, 2010.

On January 7, 2010, Sanchez's counsel moved that the trial setting be continued, alleging scheduling conflicts and the need for additional discovery/preparation. The trial court rescheduled the trial for April 2010. On March 1, 2010, Sanchez filed a motion seeking to extend the trial court's November 2009 order, in which he asserted that the McKinneys remained in possession of the property and requested that the trial court order the McKinneys to continue making the monthly mortgage payments on the property until the rescheduled trial date in April 2010. In their response, the McKinneys argued, among other things, that “principles of equity” required that Sanchez's request be denied because the trial date was continued at his sole request and because Sanchez was not using the remitted moneys to satisfy the monthly mortgage payments. The McKinneys further argued that the original pretrial order in which they were first ordered to make the mortgage payments was void for want of subject-matter jurisdiction and thus could not be extended.

On March 2, 2010, the trial court entered an order requiring the McKinneys “to continue satisfying the $2,616.45 monthly mortgage payment on the subject property pending further Order of [the] Court.” On that same date, the McKinneys filed their first motion seeking to dismiss Sanchez's action based on a lack of subject-matter jurisdiction. Thereafter, the McKinneys filed both an emergency motion to stay and a separate motion requesting that the trial court vacate its March 2, 2010, order. Specifically, in their motion to vacate, the McKinneys noted that, in his motion seeking a continuance, Sanchez failed to request that the trial court extend its previous pretrial order requiring that the McKinneys make the mortgage payments. The trial court denied the motion to vacate; however, nothing in the materials before us suggests that the trial court ever ruled on the McKinneys' dismissal motion.

On March 30, 2010, the McKinneys filed a second motion requesting that the trial court dismiss Sanchez's ejectment and unlawful-detainer claims. In their renewed motion and accompanying brief,...