Willadean Walden & Crooked Creek Properties Inc. v. ES Capital, LLC

• Decision Date: 20 May 2011
• Docket Number: 1091474,1100386
• Parties: Willadean Walden and Crooked Creek Properties, Inc. v. ES Capital, LLC; Richard Ensley; and the George Ellis Hutchinson, Jr., Present Interest Trust No. 1 Ex parte Richard Ensley PETITION FOR WRIT OF MANDAMUS In re: Richard Ensley v. Danya Park Garden Apartments, Inc., et al.
• Court: Alabama Supreme Court

Willadean Walden and Crooked Creek Properties, Inc. v. ES Capital, LLC; Richard Ensley; and the George Ellis Hutchinson, Jr., Present Interest Trust No. 1

Ex parte Richard Ensley

PETITION FOR WRIT OF MANDAMUS

In re: Richard Ensley v. Danya Park Garden Apartments, Inc., et al.

1091474

1100386

SUPREME COURT OF ALABAMA

Dated: May 20, 2011

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.

OCTOBER TERM, 2010-2011

Appeal from Autauga Circuit Court

(CV-10-900098)

(Montgomery Circuit Court, CV-10-538)

SHAW, Justice.

This appeal and petition for a writ of mandamus concern long-running litigation involving, in part, a dispute over whether certain property located in Autauga County can be applied to satisfy a judgment. In case no. 1091474, Willadean Walden and Crooked Creek Properties, Inc., appeal from an injunction issued by the Autauga Circuit Court restraining them from entering upon or asserting ownership or control over the property. In case no. 1100386, Richard Ensley petitions for a writ of mandamus directing the Montgomery Circuit Court to vacate an order entered by that court on December 21, 2010, and to transfer the underlying action to the Autauga Circuit Court. We have consolidated the appeal and the petition for the writ of mandamus for the purpose of writing one opinion.

Facts and Procedural History

The parties to the above-captioned actions are no strangers to this Court, and the facts giving rise to the present underlying actions are well established:

"When this action began, Walden, a high-school graduate, was an 83-year-old widow. Hugh Smith, a lawyer, was her business associate. On January 24, 1991, Walden lent Smith $50,000. To secure the debt, property held by the Smith Children Trust was transferred to Walden by warranty deed. ... After Smith defaulted on the loan in 1993, Walden conducted a title search.... Fearing that there was

no equity in the property, Walden confronted Smith and demanded that he provide her with other collateral. Smith gave Walden a written promise to pay her $50,000 when he sold [Danya Park Garden Apartments,] an apartment building located in Prattville, Alabama."

Ex parte Walden, 785 So. 2d 335, 336 (Ala. 2000).As a result of the foregoing transaction, Smith and others ultimately initiated litigation against Walden in the Montgomery Circuit Court (case no. CV-95-1093), seeking a judgment declaring the ownership of certain property. Walden filed several counterclaims against Smith, seeking damages for default on a promissory note, breach of a joint-venture agreement, and fraudulent suppression. Because a detailed summary of the background of these disputes was provided in Walden v. Hutchinson, 987 So. 2d 1109 (Ala. 2007), from which we quote extensively below, we use the terms defined therein as defined terms in this opinion.

"While case no. CV-95-1093 was pending, Smith, an attorney representing Auburn Medical Center, Inc. ('AMC'), became indebted to [George] Hutchinson in the amount of $310,000 in connection with theconstruction of a hospital in Auburn. On October 21, 1998, Smith, as president of [Hugh V. Smith Enterprises ('the Enterprises')], gave Hutchinson a quitclaim deed to the [Danya Park Garden] apartments. In conjunction with the quitclaim deed, Hutchinson and Smith, individually and as president of the Enterprises, executed agreements purporting to show that Hutchinson was to hold the deed as collateral for Smith's debt to Hutchinson and that the deed was to be recorded only upon Smith's death or in the event he defaulted on the indebtedness.

"Subsequently, Walden obtained a favorable judgment for $187,166 in case no. CV-95-1093 on her counterclaims against Smith alleging breach of a promissory note and breach of a joint-venture agreement, but she suffered an adverse summary judgment on her fraudulent-suppression counterclaim. She appealed from the summary judgment, and the Court of Civil Appeals affirmed, without an opinion. Walden v. Smith Children Trust, 781 So. 2d 1029 (Ala. Civ. App. 1999) (table). This Court reversed the judgment of the Court of Civil Appeals and remanded the case for further proceedings on the fraudulent-suppression counterclaim. Ex parte Walden, 785 So. 2d [335,] at 339 [(Ala. 2000)].

"Meanwhile, on August 20, 1999, Hutchinson created the [George Ellis] Hutchinson[, Jr., Present Interest] trust [No. 1] for the benefit of his son, George Ellis Hutchinson, Jr. On August 26, 1999, Hutchinson executed a document purporting to 'give[] and transfer [ ]' to the Hutchinson trust '[a]ll monies advanced to AMC or its lawyers or funds used for any purpose for AMC and provided by George E. Hutchinson.' ...

"By April 2000, Walden's judgment against Smith in case no. CV-95-1093 remained unsatisfied. Consequently, on or about April 12, 2000, Walden filed an 'application pursuant to Rule 70, Alabama Rules of Civil Procedure[,] for a judgment directing [Smith] to transfer stock [in the Enterprises] to[Walden], or, in the alternative, for an order divesting title to the stock in [Smith] and vesting title to the stock in [Walden].' The application quoted extensively from Smith's deposition testimony taken on February 3, 1997, in which Smith admitted that he was the 'sole owner of all the stock in [the Enterprises],' of which the apartments were the sole asset. On or about August 11, 2000, the Montgomery Circuit Court entered the following order:

" ' . . . . .

"'... Willadean Walden is vested with and is the owner of all of the common stock in [the Enterprises] and [Smith] shall forthwith deliver and turn over to [Walden] all of the books and records of said corporation.'

"Subsequently, [Annee Caspari, the executrix of the estate of Hugh V. Smith,] sought to intervene in case no. CV-95-1093. According to Walden, Caspari's first motion to intervene was denied on November 2, 2000, and a second motion was filed approximately a year later. The disposition of Caspari's second motion is unclear. However, from an order entered by the Montgomery Circuit Court on June 5, 2002, it is clear that Caspari 'appeared in court' as trustee of the 'Hugh V. Smith, Jr., Children's Trust' ('the Children's Trust'), contending that the Enterprises stock was, in fact, owned -- not by Smith -- but by the Children's Trust, of which she was trustee....

" '. . . ."

"In short, the June 5, 2002, judgment set aside the August 11, 2000, judgment, which had purported to award Walden ownership of both the stock of the Enterprises and the apartments and, instead, awarded her a lien on the stock and the apartments in the amount sufficient to satisfy her judgment against Smith. Walden appealed from the June 5, 2002,judgment, challenging the jurisdiction of the Montgomery Circuit Court to set aside its August 11, 2000, judgment. On March 7, 2003, the Court of Civil Appeals affirmed the June 5, 2002, judgment, without an opinion. Walden v. Smith, 883 So. 2d 743 (Ala. Civ. App. 2003) (table). Walden sought certiorari review of that decision in this Court. Meanwhile, in March 2003, on remand from this Court, Walden obtained a judgment on a jury verdict against Smith on her fraudulent-suppression claim for $70,450. Walden sought the opportunity--through an appeal from that judgment, as well as through her petition for a writ of certiorari to the Court of Civil Appeals--to challenge in this Court the jurisdiction of the Montgomery Circuit Court to vacate its August 11, 2000, judgment. On April 16, 2004, this Court affirmed the March 2003 judgment, Walden v. Smith, 891 So. 2d 837 (Ala. 2004), and denied Walden's certiorari petition. Ex parte Walden (No. 1021373), 916 So. 2d 632 (Ala. 2004) (table).

"On June 25, 2003, R. Wayne Sandlin and Richard Ensley were, as Hutchinson had originally been, unsecured creditors of Smith's. On that date, while Walden's appellate proceedings were pending in this Court, Sandlin and Ensley met and discussed ways to secure their accounts of approximately $147,000 and $127,000, respectively. At the time of the meeting, Sandlin and Ensley had actual knowledge of the litigation involving the stock in Enterprises and the apartments.

"In order to secure their accounts, Sandlin, Richard Ensley, and Patricia Ensley formed ES [Capital, LLC ('ES')]. ES then 'loaned' the Enterprises $580,000. According to the 'loan agreement,' which was executed by Sandlin, as manager of ES, and by Caspari, as president of the Enterprises at that time, the loan proceeds were to be distributed among various persons and entities, none of which was Walden. ... In return for the loan, ES received from the Enterprises a promissory note and a 'first mortgage' on the apartments. Theseinstruments were signed on July 29, 2003, and the mortgage was recorded on August 4, 2003.

"Smith died on June 18, 2004, and, on August 16, 2004, Hutchinson recorded his quitclaim deed. On October 12, 2004, Walden, whose judgment in the underlying case still remained unsatisfied, sought relief in case no. CV-95-1093, alleging that the June 5, 2002, judgment setting aside the August 11, 2000, judgment had been procured by a fraud on the court. According to Walden, Caspari's attorneys, 'as officers of the court, assured the court that Ms. Caspari would refinance the apartment complex, and [that] she would loan Mr. Smith sufficient funds to pay Mrs. Walden's judgments.' Walden alleged that ES was formed as a 'mere sham' in order to 'simulate a mortgage on the apartment complex,' with the purpose of 'hindering, delaying, or preventing Mrs. Walden from collecting her judgments.' She averred that the Enterprises mortgaged the apartments 'in defiance of the court's orders of ... August [11], 2000, and June

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