Paint Rock Turf, LLC v. First Jackson Bank

• Decision Date: 26 November 2014
• Docket Number: 1130528.,1130480
• Parties: PAINT ROCK TURF, LLC v. FIRST JACKSON BANK et al. First Jackson Bank v. Paint Rock Turf, LLC.
• Court: Alabama Supreme Court

169 So.3d 990

PAINT ROCK TURF, LLC

v.FIRST JACKSON BANK et al.

First Jackson Bank

v.Paint Rock Turf, LLC.

1130480

1130528.

Supreme Court of Alabama.

Nov. 26, 2014.

Algert S. Agricola, Jr., and M. Andrew Donaldson of Ryals, Donaldson & Agricola, P.C., Montgomery, for appellant/cross-appellee Paint Rock Turf, LLC.

James T. Baxter III of Ables, Baxter & Parker, P.C., Huntsville, for appellant/cross-appellee First Jackson Bank.

Stuart M. Maples and M. Rebecca Hill of Maples Law Firm, P.C., Huntsville, for appellees Wayne A. Goodson and Christian Goodson.

Opinion

MOORE, Chief Justice.

Paint Rock Turf, LLC (“Paint Rock”), appeals from a judgment as a matter of law (“JML”) entered by the Madison Circuit Court on its claim for emblements under § 35–9–2, Ala.Code 1975, against First Jackson Bank (“First Jackson”) and Wayne A. Goodson and his wife Christian Goodson.¹ First Jackson cross-appeals from the trial court's denial of its postjudgment motion for a JML on Paint Rock's claim alleging conversion of pallets of sod.

I. Facts and Procedural History

On April 30, 2004, Paint Rock purchased a sod farm and related farm equipment from Eufala Corporation. The sod farm consisted of 1,171 acres of land upon which were grown 580 acres of Bermuda and Zoysia sod grasses. To partially finance the purchase, Paint Rock borrowed $1,706,250 from First Jackson. The loan was secured by a mortgage on the sod farm and a security interest in the equipment used on the farm.

By February 2009, reflecting in part a drop in demand for sod caused by the collapsing market for new homes, Paint Rock had defaulted on the loan. On February 11, 2009, Paint Rock filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Alabama. The filing of the petition operated as an automatic stay of “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” 11 U.S.C. § 362(a)(3). The stay precluded First Jackson from foreclosing on the sod farm or retaking the equipment. The petition was dismissed August 12, 2009. On October 30, 2009, First Jackson published in the Madison County Record the first of three notices of a foreclosure sale on the property scheduled for noon on November 19, 2009. On the morning of November 19, 2009, Paint Rock filed a second bankruptcy petition, which stayed the scheduled November 19 sale, and which was dismissed on December 8, 2009, for failure to file the proper schedules and statements. On December 18, 2009, First Jackson published a notice that the foreclosure sale was rescheduled for December 30, 2009. On December 26, 2009, Paint Rock filed its third bankruptcy petition. Four days later, the bankruptcy court lifted the automatic stay, expressly finding that Paint Rock had misused “the bankruptcy process in an attempt to wrongfully hinder and delay [First Jackson's] efforts to foreclose its mortgage and security agreement.” See Barclays–American/Bus. Credit, Inc. v. Radio WBHP, Inc. (In re Dixie Broad., Inc. ), 871 F.2d 1023, 1026 (11th Cir.1989) (noting that “a petition filed in bad faith ... justifies relief from a stay”).

The same day, December 30, 2009, immediately following the lifting of the stay by the bankruptcy court, First Jackson, as the high bidder, purchased the property at the foreclosure sale. On January 7, 2010, First Jackson sent Paint Rock a letter demanding possession of the sod farm within 10 days. Paint Rock claimed that it did not receive First Jackson's demand-of-possession letter until January 16, 2010. On January 14, 2010, Jimmy Blevins, president of First Jackson, arrived at the sod farm to take possession of the farm and the equipment on behalf of First Jackson. When Blevins arrived at the sod farm, Paint Rock employees were loading harvested sod onto a flatbed tractor-trailer for delivery to a customer. Blevins informed the Paint Rock employees that First Jackson now owned the sod farm, that the employees could not remove the harvested sod, and that the employees would be arrested for trespassing if they returned to the sod farm.

On January 21, 2010, First Jackson filed an ejectment action against Paint Rock. On the same day, Paint Rock by letter demanded access to the sod farm “to recover the emblements in the form of sod which is being grown on the real property recently foreclosed upon....”² Paint Rock also requested the return of its equipment. First Jackson denied Paint Rock's request. Paint Rock, relying on a section of the Alabama Code that permits a tenant at will to harvest its crop,³ counterclaimed for damages for harm suffered as the result of being unable to harvest the sod. As relevant to this appeal, Paint Rock also sought damages for conversion of “plats of sod” contained on the sod farm. On March 4, 2010, First Jackson sold the sod farm to Mrs. Goodson. The deed stated that the sale was subject to any claim Paint Rock may have to the emblements growing on the property. On October 12, 2010, Paint Rock and Gerald T. Jones, Jr., filed a joint third-party complaint against First Jackson and Mr. Goodson.⁴ Paint Rock alleged conversion and detinue, as well as the emblements claim, against Goodson; Jones alleged conversion and detinue against both First Jackson and Goodson. The third-party complaint was later amended to add claims of wantonness and negligence against both First Jackson and the Goodsons.

After the trial court denied motions for a summary judgment filed by First Jackson, Mr. Goodson, and Mrs. Goodson, who had been added as a party, the case proceeded to trial. At the close of Paint Rock and Jones's case, the trial court granted a motion for a JML filed by First Jackson and the Goodsons on Paint Rock's counterclaim for emblements on the ground that Paint Rock was not an at-will tenant as required by § 35–9–2. After Paint Rock withdrew its detinue claims and the trial court granted a JML on the wantonness claims, only the conversion and negligence claims remained for the jury to resolve.

The jury awarded Paint Rock damages against First Jackson, consisting of $18,500 for conversion of a sod cutter and $10,890 for conversion of cut sod that had been loaded on a tractor-trailer when First Jackson took possession of the property on January 14, 2010. The jury also awarded Paint Rock a total of $1,059 against the Goodsons for conversion of business property and equipment. The jury entered verdicts for First Jackson and the Goodsons on Jones's conversion and negligence claims. Paint Rock appealed the JML in favor of the defendants on the emblements claim;⁵ First Jackson cross-appealed the judgment awarding Paint Rock damages for conversion of the cut sod.

II. Standard of Review

In reviewing a JML, “[w]e must decide whether there was substantial evidence, when viewed in the light most favorable to the plaintiff, to warrant a jury determination.” Alabama Power Co. v. Aldridge, 854 So.2d 554, 560 (Ala.2002). “[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.” West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). Questions of law are reviewed de novo. Alabama Republican Party v. McGinley, 893 So.2d 337, 342 (Ala.2004).

III. Analysis

A. Paint Rock's appeal of the denial of its emblements claim (case no. 1130480)

Paint Rock's claim for emblements arises under § 35–9–2 : “The tenant at willis entitled to his emblements, if the crop is sowed before notice to quit by the landlord, or the tenancy otherwise suddenly terminated, as by sale of the estate by the landlord, or by judicial sale, or death of the landlord or tenant.” (Emphasis added.) The purpose of this statute is to protect a farmer from economic harm caused by the sudden termination of a month-to-month tenancy by the landlord between the time a crop is planted and the time the crop is ready for harvest.⁶ So long as the crop was sown “before notice to quit by the landlord,” the tenant at will may still harvest the crop even though the tenancy in the land has ended. Paint Rock's relationship with First Jackson, however, was that of mortgagor to mortgagee, not tenant to landlord.

In Lamar v. Johnson, 16 Ala.App. 648, 81 So. 140 (1919), citing § 4733, Ala.Code 1907, the predecessor statute to § 35–9–2,⁷ the Court of Appeals held that a defaulted mortgagor who was permitted to remain on the land by its mortgagee assumed the status of a tenant at will.

“In the absence of notice to quit possession or other steps by the mortgagee to recover possession, the mortgagor is not a wrongdoer or trespasser, but is a mere tenant at will of the mortgagee, and as such is entitled to claim the fructus industriales or emblements, if the crop is sown before notice to quit by the mortgagee.”

16 Ala.App. at 649, 81 So. at 141. Thus, if, as Paint Rock argues, its continuing occupation of the sod farm after its default in early 2009 was with First Jackson's permission, Paint Rock was potentially entitled to harvest any crop sown between the default on the mortgage and the notice to quit mailed on January 7, 2010. “If the mortgagor is permitted to remain in possession, he is the mere tenant at will of the mortgagee.” Buchmann v. Callahan, 222 Ala. 240, 242, 131 So. 799, 801 (1930). Without such permission, however, “he would be a tenant at sufferance only.” Miller v. Faust, 250 Ala. 545, 548, 35 So.2d 162, 165 (1948).

Paint Rock remained in possession of the sod farm from the default in January 2009 until First Jackson ousted it from the property on January 14, 2010. Whether that possession was “at will” or “at sufferance” controls the resolution of Paint Rock's emblements claim. Critical to this determination is the effect on Paint Rock's at-will-tenancy argument of the automatic stay in the bankruptcy proceeding. Although Paint Rock does not address the effect of the bankruptcy stay in its...