SE Prop. Holdings, LLC v. Rookery
| Decision Date | 04 January 2013 |
| Docket Number | CIVIL ACTION 11-0629-WS-B |
| Parties | SE PROPERTY HOLDINGS, LLC, Plaintiff, v. THE ROOKERY III, A CONDOMINIUM, OWNERS' ASSOCIATION, INC., et al., Defendants. THE ROOKERY III, A CONDOMINIUM, OWNERS' ASSOCIATION, INC., et al., Counterclaim/Third-Party Plaintiffs, v. SE PROPERTY HOLDINGS, LLC and VISION BANK, Counterclaim/Third-Party Defendants. |
| Court | U.S. District Court — Southern District of Alabama |
This matter comes before the Court on a quartet of overlapping summary judgment motions, to-wit: SE Property Holdings, LLC's Motion for Summary Judgment (doc. 26); Motion for Summary Judgment by Marion Cooper (doc. 29); Motion for Summary Judgment by the Rookery III, A Condominium, Owners' Association on the Complaint (doc. 32); and the Association's Motion for Summary Judgment on its Counterclaim/Third-Party Complaint (doc. 35). The Motions have been briefed and are ripe for disposition.1
Although this lawsuit has a plethora of moving parts, the parties' dispute at its core is quite simple. A lender, Vision Bank ("Vision"), foreclosed on a condominium developer's mortgage and acquired certain property from a condominium development called "The Rookery III." Vision promptly conveyed that property to an affiliated entity, SE Property Holdings, LLC ("SPH"). Subsequently, a dispute emerged between SPH and the condominium owners' association, called The Rookery III, a Condominium Owners' Association, Inc. (the "Association"). Flashpoints of disagreement included SPH's liability (if any) for monthly condo assessment fees and SPH's rights (if any) to access the Association's books and records, to call for Association meetings, and so on. The dispute escalated when the Association's agent, Marion Cooper ("Cooper," not to be confused with nonparty Joe Cooper, who was the Association's corporate representative in this litigation), signed liens that were filed in probate court against SPH's property for the unpaid assessments.
The ultimate, unfortunate result of these circumstances (and the parties' inability or unwillingness to forge a reasonable compromise) was that everybody sued everybody else in federal court.2 In particular, SPH filed suit against the Association and Cooper seeking (in Count One) declaratory and injunctive relief on a host of subjects, including the units on which the Association can assess common expenses, SPH's rights to select the Association's directors and to access its books and records, the validity of the Association's assessments and liens against SPH's property, and the Association's obligation to render an accounting of its finances. In Count Two, SPH sued Cooper directly for damages under Alabama Code § 10A-1-3.32, for denying SPH access to the Association's books and records. And in Count Three, SPH brought aslander of title claim against the Association and Cooper under Alabama law, alleging that the defendants had refused or failed to release or cancel the liens on SPH's property, all to SPH's detriment. (See doc. 1.)
The Association and Cooper responded in kind, unleashing a volley of counterclaims against SPH and third-party claims against Vision. (See doc. 5.) In particular, the Association brought a claim for open account, alleging that Vision owed it $226,800 in unpaid monthly assessments for the development's units (Count One); another claim for open account, alleging that SPH owed it $162,000 in unpaid monthly assessments for those same units (Count Two); a claim against Vision and SPH for open account, claiming that Vision's or SPH's "agent or employee turned on the water at the Project without authority" and that they are therefore "indebted to the Association for the unpaid water bill" (doc. 5, at 17) (Count Three); and a statutory claim against Vision and SPH for enforcement of liens pursuant to Alabama Code § 35-8A-316 (Count Four). Also, Cooper sued SPH under the "Alabama Litigation Accountability Act and Rule 11," insisting that SPH's claims against her were brought in bad faith and without substantial justification, entitling her to recover monetary sanctions, attorney's fees, and expenses (Count Five).
True to form, everybody has now moved for summary judgment against everybody else via overlapping and often redundant Rule 56 filings, placing the merits of this action before the undersigned for review and (to the extent appropriate) resolution under Rule 56 of the Federal Rules of Civil Procedure.
The parties' summary judgment filings are noteworthy for the dearth of factual disputes identified as to material matters. With few (if any) exceptions, the material facts are uncontested and undisputed, to the point where it is fair to question why the parties did not streamline matters by submitting their legal arguments on stipulated facts.3
The summary judgment record reveals the following: Back in 2007, Vision lent money to a developer to build a condominium project known as The Rookery III (the "Project") in Gulf Shores, Alabama. To secure the loans, the developer provided two mortgages to Vision covering the property where the Project was to be built. On December 31, 2007, the developer filed in Baldwin County Probate Court certain governing documents for the Project, including Articles of Incorporation for the Association, a Declaration of Condominium, Association Bylaws, and a proposed Site Plan. (Doc. 27, Exhs. A-D.) The Site Plan depicts 88 planned units in buildings of either duplex or single-family residence construction, all with the prominent legend "Need Not be Built." (Doc. 27, Exh. D.) And the Declaration specifies that "[t]he maximum number of condominium units which shall comprise The Rookery III, a Condominium, is eighty eight," to be built in phases of 10 units each, subject to a prominent disclaimer that each phase "NEED NOT BE BUILT." (Doc. 27, Exh. C, Art. 4.)
As of June 9, 2008, the developer filed an Updated Site Plan reflecting that some 23 units had been constructed, including the units numbered 4001, 4002, 4008, 4009, 4010, 4013, 4014, 4015, 5006, 6002, 6004, 6005, 6006, 6008, 6012, 6017, 6019, 6022, 6023, 6025, 6032, 6035, and 7002. (Doc. 27, Exh. E.) Two additional units (numbered 7014 and 7024) were partially built, but not completed. In the summer of 2008, the developer successfully sold seven completed units, including those numbered 4001, 4008, 5006, 6002, 6005, 6017, and 7002 (collectively, "the 7 Sold Units"). Vision released the 7 Sold Units from its mortgages; however, it retained mortgages on the remainder of the Project, including the other 16 units that had been built but not sold (collectively, "the 16 Other Units"), two partially completed units (the "2 Incomplete Units") and what would have been the remaining 63 units (collectively, "the 63 Unbuilt Units") had the full 88-unit Project been constructed as planned. As their moniker implies, the 63 Unbuilt Units were never constructed, by the developer or anyone else. Even today, the 63 Unbuilt Units consist of nothing more than unimproved, bare land.4
Unfortunately for all concerned, the developer defaulted on its loan obligations, prompting Vision to initiate legal proceedings in state court in August 2009 in an effort to recover the unpaid loan balances. (Burnett Aff. (doc. 38, Exh. 2), ¶ 7.) By mid-2010, the developer notified owners of units that it was abandoning the Project altogether because of financial difficulties. (J. Cooper Aff. (doc. 38, Exh. 3), ¶ 6.) Some time later, Vision initiated foreclosure proceedings, and conducted a foreclosure sale on the Project on June 30, 2011. (Harmon Decl. (doc. 27, Exh. F), ¶ 2.)5 At that sale, Vision bought the entire property of the Project, save for the 7 Sold Units (as to which it had previously released its mortgage), for the sum of $1.391 million. (Id. & Exh. 1.) Thus, as of July 1, 2011, the Project's owners consisted of the purchasers of the 7 Sold Units (who owned their individual units) and Vision (which owned everything else, including the 16 Other Units, the 2 Incomplete Units and the 63 Unbuilt Units). Vision held this property for just a few days, before conveying it to SPH via Quitclaim Deed for slightly over $1.3 million on July 12, 2011. (Harmon Decl., ¶ 3 & Exh. 2.)6
SPH undertook efforts to sell the property, and successfully sold each of the 16 Other Units, plus the 2 Incomplete Units, in the time period of February - June 2012, while this litigation was ongoing. (Harmon Decl., ¶ 5; doc. 38, Exh. 6.) Because SPH and the Association continue to quarrel over unpaid assessments (as discussed in detail infra), SPH reduced the amount each buyer of the 16 Other Units paid at closing by the amount the Association claimed was owed in back assessments for that unit. (Harmon Decl., ¶ 5 & Exh. 5.) Also, at each of those closings, SPH obtained from the purchaser an "Irrevocable Proxy." (Harmon Decl., ¶ 6.) Each proxy states that the purchaser is granting SPH "an irrevocable proxy and right to vote ... as a member of the [Association] and as the owner of the Unit ... for a period of one (1) year commencing on the date hereof." (Id. at Exh. 6.)
In addition to selling the 16 Other Units and the 2 Incomplete Units, SPH has attempted to sell all of its remaining property at the Project, including specifically the 63 Unbuilt Units (which, again, consist of nothing but bare land). (Id., ¶ 7.) For reasons not disclosed in the record, SPH has not yet sold the land. (Id.)
In February 2007, the Association's Board of Directors prepared a "First Year's Projected Operating Budget," calling for monthly maintenance fees of $400 per unit. After the developer sold the 7 Sold Units in the summer of 2008, the Board reduced the monthly assessment to $375 per unit. (Id., ¶ 4.)7 As of the summer...
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