FSRJ Properties, LLC v. Walker
195 So. 3d 970
Ala. Civ. App.2015Background
- In June 2007 Sanford (individually and as president of Sanford Investments) executed two $250,000 notes and mortgages in favor of Walker, who recorded the mortgages. Sanford defaulted by December 2007.
- On March 17, 2008 Sanford Investments conveyed the St. Clair property to FSRJ by warranty deed stating the property was free of encumbrances; that deed was recorded March 21, 2008.
- Walker notified Sanford of intent to foreclose, properly conducted foreclosure sales, bought both properties, recorded foreclosure deeds, and leased the St. Clair property to a tenant.
- More than five years after Walker’s foreclosure purchase of the St. Clair property, Sanford, Sanford Investments, and FSRJ sued (Dec. 31, 2013) seeking to void Walker’s foreclosure deed and a declaration of parties’ rights and rents collected.
- Walker moved to dismiss and then for summary judgment, arguing that the claim to set aside the foreclosure was time-barred (two-year limitations), res judicata, and lack of capacity; the trial court granted summary judgment for Walker on statute-of-limitations grounds and denied FSRJ’s cross-motion.
- On appeal the court affirmed that the claim to set aside the foreclosure sale was barred by a two-year limitations rule but reversed as to FSRJ’s separate claim seeking a declaratory judgment regarding title/possession (subject to a 10-year limitations period for actions to recover or possess land) and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (FSRJ) | Defendant's Argument (Walker) | Held |
|---|---|---|---|
| Whether FSRJ’s request to "void the foreclosure deed" is time-barred | The claim is a declaratory action about competing deeds and not an attempt to set aside the foreclosure sale; therefore the 10‑year statute for recovery/possession of land applies | The action seeks to set aside the foreclosure sale and is governed by the two‑year limitations rule from Kelley Realty | Court: Claim to set aside the foreclosure sale is governed by the two‑year rule and is time‑barred; summary judgment upheld on that claim |
| Whether FSRJ’s claim for a declaration of parties’ rights to the St. Clair property is time-barred | The declaratory/title action is governed by the 10‑year limitations period for actions to recover/possess land | Argued only generally; trial court applied two‑year rule | Court: The 10‑year statute (§6‑2‑33(2)) governs the declaratory/possession claim; trial court erred to dismiss that claim on a two‑year theory; reversed and remanded |
| Whether res judicata bars FSRJ’s declaratory claim (based on 2009 Talladega litigation) | Not applicable — prior litigation concerned different property and FSRJ was not a party | Walker argued the prior judgment precluded relitigation | Court: Res judicata does not apply because the prior suit involved a different parcel and different parties/claims |
| Whether FSRJ had capacity/standing to sue | FSRJ asserted it held the warranty deed and thus a legal interest sufficient to bring suit | Walker argued FSRJ lacked capacity/standing | Court: FSRJ has sufficient capacity/standing to pursue the declaratory/title claim; not barred at pleadings stage |
Key Cases Cited
- Potter v. First Real Estate Co., 844 So.2d 540 (Ala. 2002) (standard of review for summary judgment)
- Mt. Carmel Estates, Inc. v. Regions Bank, 853 So.2d 160 (Ala. 2002) (summary-judgment review discussion)
- Kelley Realty Co. v. McDavid, 100 So. 872 (Ala. 1924) (equitable claim to set aside defective foreclosure sale is subject to a two‑year limitations rule)
- Williams v. Kitchens, 74 So.2d 457 (Ala. 1954) (distinguishing suits to recover/possess land — ten‑year limitations — from suits merely to establish title)
- Trauner v. Lowrey, 369 So.2d 531 (Ala. 1979) (execution of a mortgage transfers legal title to mortgagee; mortgagor retains equity of redemption which may be conveyed)