SE Prop. Holdings, LLC v. Bama Bayou, LLC
| Decision Date | 31 December 2020 |
| Docket Number | 1190205, 1190251 |
| Parties | SE PROPERTY HOLDINGS, LLC, successor by merger to Vision Bank v. BAMA BAYOU, LLC, f/k/a Riverwalk, LLC, et al. FNB Bank v. Marine Park, LLC, et al. |
| Court | Alabama Supreme Court |
Russel Myles, J. Stephen Harvey, and James Blair Newman, Jr., of McDowell Knight Roedder & Sledge, LLC, Mobile, for appellant SE Property Holdings, LLC, successor by merger to Vision Bank.
Edward A. Dean and Julia James Shreve of Armbrecht Jackson LLP, Mobile, for appellant FNB Bank.
Samuel G. McKerall, Gulf Shores, for appellees.
SE Property Holdings, LLC ("SEPH"), the successor by merger to Vision Bank, and FNB Bank ("FNB") separately appeal from the Mobile Circuit Court's judgments on their breach-of-contract claims against Bama Bayou, LLC, formerly known as Riverwalk, LLC ("Bama Bayou"), and Marine Park, LLC ("Marine Park"),1 and the individuals and entities guaranteeing Bama Bayou's and Marine Park's contract obligations, challenging the trial court's damages awards. See Ex parte Weyerhaeuser Co., 702 So. 2d 1227, 1228 (Ala. 1996) ().
Bama Bayou and Marine Park were the developers of a planned mixed-use development in Orange Beach consisting of a marine park, residential condominiums, retail shops, hotels, and commercial entertainment venues. Marine Park specifically intended to develop a special-use facility for the exhibition of marine animals. Vision Bank made four loans to Bama Bayou and Marine Park related to the development project:
(1) The "West loan" is a loan in the amount of $6,000,000 made on March 24, 2005, evidenced by a promissory note and a loan agreement and secured by a mortgage and security agreement encumbering real property referred to by the parties as the "West parcel";
(2) The "East loan" is a loan in the amount of $5,000,000 made on June 12, 2006, evidenced by a promissory note and a loan agreement and secured by a mortgage and security agreement encumbering real property referred to by the parties as the "East parcel";
(3) The "North loan" is a loan in the amount of $5,000,000 made on September 27, 2007, evidenced by a promissory note and a loan agreement and secured by a mortgage and security agreement encumbering real property referred to by the parties as the "North parcel"; and
(4) The "Marine Park loan" is a loan in the amount of $5,000,000 made on March 2, 2007, evidenced by a promissory note and a loan agreement and secured by a mortgage and security agreement encumbering real property referred to by the parties as the "Marine Park parcel." The Marine Park loan was fully funded by FNB pursuant to a participation agreement with Vision Bank.2 The participation agreement provided that the Marine Park parcel would be owned by FNB in the event it was acquired by foreclosure.
The promissory notes executed in relation to each of the loans made to Bama Bayou and Marine Park required Bama Bayou and Marine Park to pay to Vision Bank the principal amount of the loans plus interest as calculated in the manner provided in the promissory notes. The promissory notes also provided that Bama Bayou and Marine Park were obligated to pay reasonable attorney's fees and costs incurred by Vision Bank in collecting on the promissory notes in the event of a default. The promissory notes stated that they were being guaranteed by certain guarantors and that the indebtedness described in the notes was secured by the mortgages and security agreements executed in conjunction with the promissory notes.
The mortgages and security agreements executed by the parties also required Bama Bayou and Marine Park to pay to Vision Bank the principal amount of the loans, plus interest, and all reasonable attorney's fees and costs incurred by Vision Bank in the event of the foreclosure of any of the mortgages. The mortgages also provided that Bama Bayou and Marine Park were responsible for the payment of all property-preservation costs, including taxes, insurance premiums, the costs of maintenance and repairs, the costs of security and protection, liens, utility charges, and assessments. In the event of a default by Bama Bayou and Marine Park, the mortgages allowed Vision Bank to pay the property-preservation costs and to obtain reimbursement of those costs from Bama Bayou and Marine Park, plus interest at a rate of 10%.
Section 2.14 of the mortgages provides the following remedy in case of a wrongful foreclosure:
(Emphasis added.) Section 2.15 of the mortgages provides:
Each of the four loans to Bama Bayou and Marine Park were guaranteed by a number of individuals and entities that were investors in the project. Pursuant to the guaranty agreements, the guarantors, among other things, waived any rights they had regarding the collateral, i.e., the West parcel, the East parcel, the North parcel, and the Marine Park parcel; waived any defenses Bama Bayou and Marine Park may have had; and agreed to be unconditionally liable for the debts until they were paid in full. The guaranty agreements provide, in part:
Bama Bayou and Marine Park were having financial problems with regard to the project by August 2007. The maturity dates of the promissory notes were extended several times to give Bama Bayou and Marine Park time to secure other financing. The notes finally matured in late 2008, and Vision Bank refused to further extend their maturity dates. Vision Bank demanded payment at that time, and Bama Bayou, Marine Park, and the guarantors failed and/or refused to pay the indebtedness owed on the loans. On March 20, 2009, Vision Bank conducted a public auction to separately foreclose the mortgages on the West parcel, the East parcel, the North parcel, and the Marine Park parcel. There were no bids submitted at the public auction. Thus, Vision Bank purchased the properties through the following individual credit bids:
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