Town of Gurley v. M & N Materials, Inc.

• Decision Date: 21 December 2012
• Docket Number: 1110507,1110439
• Court: Alabama Supreme Court
• Parties: Town of Gurley v. M & N Materials, Inc. M & N Materials, Inc. v. Stan Simpson, individually and as mayor of the Town of Gurley, and Town of Gurley

Town of Gurley

v.M & N Materials, Inc.

M & N Materials, Inc.

v.Stan Simpson, individually and as mayor of the Town of Gurley, and Town of Gurley

1110439

1110507

SUPREME COURT OF ALABAMA

OCTOBER TERM, 2012-2013

Dated: December 21, 2012

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter.Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

Appeals from Madison Circuit Court

(CV-05-731)

PARKER, Justice.

In case no. 1110439, the Town of Gurley("the Town") appeals the trial court's judgment in favor of M & N Materials, Inc.("M & N"), on M & N's inverse-condemnation claim against the Town.We reverse the trial court's judgment and render a judgment for the Town.In case no. 1110507, M & N cross-appeals the trial court's judgment in favor of the Town and Stan Simpson on other claims.We affirm.

I.Facts and Procedural History

This is not the first time these parties have been before this Court.In Ex parte Simpson, 36 So. 3d 15(Ala.2009)("Simpson I"), this Court considered petitions for the writ of mandamus filed by the parties based on the same facts that create the basis for the present appeals.We set forth the following pertinent facts in Simpson I:

"M & N was formed in 2 003.At that time, M & N acquired 160 acres of mountain property to be used as a rock quarry in an unincorporated area of Madison County.By June 2004, it had purchased approximately 109 additional acres in the unincorporated area for use in connection with the quarry.For convenience, we will refer to the 269 acres as 'the property.'The property was located approximately one mile from the residence of Stan Simpson.

"In July 2003, more than a year before his election as mayor of the Town, Simpson became the chairperson of a group of residents of the Town known as the Citizens for a Better Gurley ('the CBG').Between July 2003 and November 23, 2004, the CBG actively opposed the operation of a rock quarry on the M & N property.On July 17, 2003, the Town council adopted Resolutionno. 216, which stated, in pertinent part:

"'WHEREAS, the Town Council of the Town of Gurley has obtained information from the Alabama Department of Environmental Management that a corporation by the name of M & N, Incorporated, has applied for a permit to operate a rock quarry near the corporate limits of the Town of Gurley, and

"'WHEREAS, the Town Council has serious concerns regarding the effects such a rock quarry would have on (1) air quality, (2) damage from blasting to homes and businesses, (3) large volumes of traffic on Gurley Pike(the main service road for Madison County Elementary School), (4) damage to existing streets by heavy trucks and (5) damage to the Town's water storage tank located on Gurley Pike,

"'NOW, THEREFORE, be it resolved that the Town of Gurley opposes the location of a rock quarry near the corporate limits of the Town.'

"Simpson spoke often at Town council meetings in opposition to the quarry.Also, the CBG contacted State Senator Lowell Barron and State Representative Albert Hall to enlist their aid in opposing the quarry.Simpson and Representative Hall collaborated on House Bill 170, a bill that Representative Hall introduced in the Alabama Legislature during the2004 legislative session.The bill, which became law on February 26, 2004, seeActNo. 2004-19, Ala. Acts 2004, authorized the Town to annex M & N's property on the basis of a majority vote of the Town's residents in a special annexation referendum.According to Simpson, the purpose of the annexation was to give the Town control over the use of the property.The referendum was conducted on April 13, 2004, and the annexation proposal passed by 191 votes to 23 votes.

"On April 21, 2004, M & N applied to the Town for a business license.The application was denied.On May 4, 2004, the Town imposed 'an immediate moratorium on the acceptance of applications for use permits, building permits, right-of-way permits, zoning classification, variances, special exceptions or business licenses relating to' the property.[¹]

"In approximately April 2004, Simpson began a campaign for the office of mayor of Gurley.During his campaign, he pledged to 'fight against the rock quarry.'He was elected on August 24, 2004, and assumed the duties of the office on October 4, 2004, serving as, among other things, a voting member of the Town council.

"Meanwhile, on July 12, 2004, M & N entered into an agreement with Vulcan Lands, Inc.('Vulcan Lands'), whereby Vulcan Lands acquired an option to purchase the property for $3.75 million.The option was to expire on November 15, 2004.Vulcan Lands failed to exercise its option, according to M & N,because of M & N's failure to acquire a business license from the Town.Nevertheless, on November 23, 2004, M & N sold the property to Vulcan Lands.

"On that day, M & N executed two documents relating to the disposition of the property.One document was a general warranty deed by which M & N sold the property to Vulcan Lands for an undisclosed amount.In an interrogatory answer, M & N stated: 'Vulcan backed out [of the option price] because of no City of Gurley[business] license.This reason [is the] sole reason [that was] quoted from ... Vulcan ... as to why Vulcan would not close.'The warranty deed contained no reservations of rights or ownership.

"That same day, M & N entered into a royalty agreement ('the agreement') with 'Vulcan Construction Materials LP, a Delaware Limited Partnership, by and through its Southern & Gulf Coast Division'('Vulcan Materials').The agreement provided, in pertinent part:

"'WHEREAS, contemporaneously with the execution and delivery of this Agreement, Vulcan [Materials](or its affiliates) and

[M & N] are executing other agreements whereby, among other understandings,

[Vulcan Lands] will acquire title to approximatelv 269 acres of real property near [the Town] in Madison County, Alabama, heretofore owned by [M & N]("the Property");

'"WHEREAS, Vulcan [Materials] is engaged in the business of mining, crushing, producing, distributing, transporting, and marketing of crushed stone products used in the construction industry ("Quarrying Operations");'"WHEREAS, Vulcan [Materials] intends to enter into a lease arrangement with Vulcan [Landsl that will allow Vulcan [Materials] to conduct Quarrying Operations on the Property; and

'"WHEREAS, the parties desire to set forth their understanding concerning payment of royalties to [M & N] and other terms related to the sale by Vulcan [Materials] of crushed stone construction aggregates ("Stone") recovered from the Property.

'"NOW, THEREFORE, for and in consideration of the mutual execution of this Agreement and the covenants and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto do agree as follows

"(Emphasis added.)

"Under the agreement, Vulcan Materials was to pay M & N 'earned royalties, ' which were 'equivalent to 5% of the Average Annual Sales Price ... of Stone quarried, sold and removed from the Property (the "Earned Royalty(ies)") during each Contract Year of the Term.'The agreement provided for a 'minimum royalty payment' in the following terms:

'"If the total of all Earned Royalties payable by Vulcan [Materials] by the end of a Contract Year is less than Fifty Thousand Dollars ($50,000)(the "Minimum"), Vulcan [Materials] shall pay [M & N] an additional royalty payment equivalent to the difference between the Earned Royalties with respect to that Contract year and $50,000, which amount is hereinafterreferenced as the "Earned Royalty Shortfall."'

"According to M & N, the consideration for the sale of the property was actually $1 million, plus the royalty payments and obligations due under the agreement.

"The agreement also stated that Vulcan Materials had "no obligation to mine':

"'[M & N] acknowledges that Vulcan [Materials] shall have the right, but not the obligation, to conduct Quarrying Operations on the Property ... during the Term, it being agreed that the payment of the Earned Royalty Shortfall ... and consideration paid by Vulcan [Materials] at the time of conveyance of the Property is made in lieu of any such obligation.'

"(Emphasis added.)

"Finally, the agreement provided that Vulcan Materials would be 'relieved from the obligation to make any payments to [M & N]' if prevented 'by operation of law' from 'conducting Quarrying Operations on the Property. ' In particular, it stated: 'Vulcan [Materials'] obligations to perform ... shall be suspended during the period it is so prevented from conducting Quarrying Operations.Vulcan[Materials], in its sole discretion, shall determine what action (if any) shall be undertaken to litigate, oppose or otherwise challenge an event constituting Operation of Law.'(Emphasis added.)'Operation of law' included condemnation, the exercise of the right of eminent domain, and zoning or such other land-use restrictions.In that connection, the agreement further provided:

"'In the event of a Taking of the Property [M & N] hereby assigns toVulcan [Materials] its claim, interest, or right (if any) in any award that may be made in such proceeding.Further, [M & Ml agrees that Vulcan [Materials! shall have the sole right and obligation to seek compensation and retain damages caused by the Taking.'

"(Emphasis added.)

"On January 18, 2005, Vulcan Materials applied to the Town for a license to operate the business of 'Quarrying and Processing Construction Aggregates' on the property.That same night, the Town council adopted Ordinanceno. 2004-284, which designated the property as an agricultural zone.Simpson, as mayor, subsequently sent Vulcan Materials a letter denying the application, statrng, in

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