SMITH v. SMITH

• Decision Date: 19 June 2009
• Docket Number: 2080387.
• Citation: 43 So.3d 1249
• Parties: Cheryl Hickel SMITH v. Lex Burr SMITH.
• Court: Alabama Supreme Court

43 So.3d 1249

Cheryl Hickel SMITH v. Lex Burr SMITH.

2080387.

Court of Civil Appeals of Alabama.

June 19, 2009.

Certiorari Denied February 12, 2010. Alabama Supreme Court 1081298.^*

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Ritchie Tipton, Tuscaloosa, for appellant.

Thomas W. Powe, Jr., of Ray, Oliver & Ward, L.L.C., Tuscaloosa, for appellee judgment. The trial court permanently enjoined the former wife from selling the marital home in a manner inconsistent with the letter, which granted the former husband a right of first refusal to purchase the marital home for $130,000 in the event the former wife decided to sell it. The former wife filed her notice of appeal to this court on January 27, 2009.

The former wife first argues that the trial court erred in denying her motion to strike the former husband's affidavit testimony filed in support of his motion for a summary judgment. In that affidavit, the former husband attested, in pertinent part:

"During the time that my former wife and I were negotiating a settlement in our original divorce case I did not want to give her the marital residence. The marital residence had belonged to my Mother and was the family home place. However, I also wanted my children to be able to remain in their home. My former wife and I agreed that I would convey the house to her if she would agree that I would have the right of first refusal to purchase the house from her if she decided to sell the house. We agreed that $130,000.00 would be a reasonable purchase price in the event that she decided to sell the house. My former wife wrote a letter confirming our agreement and the letter was filed with the Court along with [the agreement]. I signed a deed that had been prepared by my former wife's attorney and my former wife and I then exchanged all personal property required to be exchanged by the Divorce [Judgment] and the case was concluded until she decided to sell the property to a third party in violation of the [Judgment]."

At the trial-court level, the former wife argued that the former husband's affidavit testimony violates the parol-evidence rule. See Walton v. Beverly Enters.-Alabama, Inc., 4 So.3d 537, 542 (Ala.Civ.App.2008) (quoting Able v. Gunter, 174 Ala. 389, 393, 57 So. 464, 465 (1912)) ("`[P]arol evidence of prior or contemporaneous verbal agreements varying or adding to the written contract is not admissible.'").

The former wife also argues that the trial court erred in not excluding the letter from evidence. The record does not contain a motion denominated as a "motion to strike" the letter, which leads the former husband to argue that the former wife waived any issue on appeal as to the admissibility of the letter. See R.J.L. v. Lee County Dep't of Human Res., 976 So.2d 455 (Ala.Civ.App.2007). However, it is the substance of a motion, and not its denomination by a party, that governs the court's interpretation of that motion. See Evans v. Waddell, 689 So.2d 23, 26 (Ala.1997). The former wife consistently argued in her motions filed with the trial court that the letter should not be considered by the trial court based on the parol-evidence rule. The trial court ruled against the former wife by expressly considering the terms of the letter as part of the parties' settlement agreement. Therefore, we decline to hold that the former wife has waived the issue, and we consider the former wife's argument that the letter is inadmissible under the parol-evidence rule in tandem with her argument that the former husband's affidavit testimony violates the parol-evidence rule.

The former wife argues that the former husband did not reserve any right to the marital home in the four corners of the agreement. The agreement provides that the former wife shall obtain "full legal title" to the marital home and that the former husband shall execute a statutory warranty deed to the former wife. Paragraph 11 of the agreement further provides:

the letter is not inadmissible under the parol-evidence rule because it has been proven to be part of a single, continuous transaction between the parties. Therefore, the trial court did not err in denying the former wife's motion to strike the letter and the former husband's affidavit testimony explaining the origin of the letter and its connection to the agreement.

The former wife does not argue on appeal that she presented any conflicting evidence refuting the origin of the letter or its connection to the agreement. Hence, we must accept the facts as stated in the former husband's affidavit as true. The letter is part of the settlement agreement between the parties.

The former wife next argues that, by executing the statutory warranty deed, the former husband waived his right of first refusal. In Martin v. Martin, 659 So.2d 676 (Ala.Civ.App.1995), the Martins entered into a property settlement pursuant to which Mrs. Martin received the "`sole, exclusive, and absolute possession'" of the marital residence, but the marital residence "`remain[ed] jointly owned by and between the parties.'" 659 So.2d at 677. The property settlement further provided that "`[s]hould [Mrs. Martin] sell the residence or remarry, [Mr. Martin] shall be paid the sum of $7,500.00 for his equity in the residence.'" Id. Not long after the divorce judgment was entered, Mr. Martin executed a quitclaim deed to Mrs. Martin in order to have his name removed from the mortgage on the marital residence so that he could obtain a mortgage on his new home. Id. Mr. Martin did not reserve his equity interest in the marital residence in the quitclaim deed. Id. Mrs. Martin later sold the marital residence and refused to pay Mr. Martin the $7,500. Id. The trial court entered a judgment for Mrs. Martin, and, on appeal, this court affirmed the judgment, holding that Mr. Martin had released his equity interest in the marital residence in the quitclaim deed. 659 So.2d at 677-78.

The former wife argues that, under Martin and the doctrine of merger, the former husband released his right of first refusal by failing to reserve that right in the statutory warranty deed.

"Under the doctrine of `merger,' ordinarily, in the absence of fraud or mistake, when a contract to sell and convey real estate has been consummated by the execution and delivery of a deed, . . . the preliminary contract becomes functus officio, and the deed becomes a sole memorial of the agreement, and upon it the rights of the parties rest; but the doctrine may be inapplicable to cases in which stipulations of the preliminary contract, instead of becoming merged in the deed, are incorporated therein and thus survive to confer independent causes of action, and in such instances the intentions of the parties is of paramount importance."

Russell v. Mullis, 479 So.2d 727, 730 (Ala. 1985) (citing Alger-Sullivan Lumber Co. v. Union Trust Co., 207 Ala. 138, 92 So. 254 (1922), and Roberts v. Peoples Bank & Trust Co., 410 So.2d 393 (Ala.1982)).

The former husband points out that, in the statutory warranty deed, he conveyed all of his interest in the marital home to the former wife "subject to any and all easements, restrictions, covenants, or matters of record." The former husband argues that his right of first refusal is a "restriction" on the former wife's property interest because she cannot sell the marital home without first offering the home for sale to the former husband for $130,000. Thus, the former husband argues, the right of first refusal was not merged into the deed but, instead, was incorporated into it and survived to confer upon him an independent cause of action for its enforcement.

In Starr v. Wilson, 11 So.3d 846 (Ala. Civ.App.2008), this court held that "[a] preemptive right of first refusal . . . is properly viewed as an independent and collateral agreement" that is not merged into a deed. 11 So.3d at 855 (citing Stoneburner v. Fletcher, 408 N.E.2d 545, 549 (Ind.Ct.App.1980) (preemptive right to purchase adjoining lot survived conveyance of principal property); Landa v. Century 21 Simmons & Co., 237 Va. 374, 384, 377 S.E.2d 416, 421 (1989) (right of first refusal as to particular tract in contract to convey other tract "remained executory and survived the deed"); and Winberg v. Cimfel, 248 Neb. 71, 79, 532 N.W.2d 35, 40-41 (1995)). Hence, we need not decide whether the former husband's right of first refusal is a "restriction" within the meaning of the statutory warranty deed. Even if it is not a "restriction," under our holding in Starr, the right of first refusal survived the execution of the statutory warranty deed as an independent and collateral executory contractual right.

For the same reason, we find Martin inapplicable. In Martin, Mr. Martin retained his joint ownership of the marital residence as well as a $7,500 interest in the equity in the marital residence per the terms of the divorce judgment. However, he later quitclaimed all of his interest in the marital residence to Mrs. Martin. As both parties in this case correctly argue, all Mr. Martin's claims to the property merged into the quitclaim deed because they were not independent and collateral rights. Thus, by releasing all of his interest in the marital residence without reserving his equity interest, Mr. Martin necessarily released that interest. Unlike in Martin, the former husband in this case held an independent and collateral right of first refusal that did not merge into the statutory warranty deed. By executing the statutory warranty deed, the former husband did not impliedly sacrifice his right of first refusal.

The former wife last argues that the doctrine of judicial estoppel prevents the former husband from enforcing the right of first refusal. It is undisputed that the former husband did not list the right of first refusal on any of his property schedules when he filed for bankruptcy in 2004. The former husband attested in his affidavit:

"Approximately a year after the divorce...