SE PROPERTY HOLDINGS, LLC, Plaintiff, v. THE ROOKERY III, A CONDOMINIUM, OWNERS’ ASSOCIATION, INC., et al., Defendants. THE ROOKERY III, A CONDOMINIUM, OWNERS’ ASSOCIATION, INC., et al., Counterclaim/Third-Party Plaintiffs, v. SE PROPERTY HOLDINGS, LLC and VISION BANK, Counterclaim/Third-Party Defendants.
CIVIL ACTION 11-0629-WS-B
IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION
January 3, 2013
This matter comes before the Court on a quartet of overlapping summary judgment motions, to-wit: SE Property Holdings, LLC’s Motion for Summary Judgment (doc. 26); Motion for Summary Judgment by Marion Cooper (doc. 29); Motion for Summary Judgment by the Rookery III, A Condominium, Owners’ Association on the Complaint (doc. 32); and the Association’s Motion for Summary Judgment on its Counterclaim/Third-Party Complaint (doc. 35). The Motions have been briefed and are ripe for disposition.1
Although this lawsuit has a plethora of moving parts, the parties’ dispute at its core is quite simple. A lender, Vision Bank (“Vision”), foreclosed on a condominium developer’s mortgage and acquired certain property from a condominium development called “The Rookery III.” Vision promptly conveyed that property to an affiliated entity, SE Property Holdings, LLC (“SPH”). Subsequently, a dispute emerged between SPH and the condominium owners’ association, called The Rookery III, a Condominium Owners’ Association, Inc. (the “Association”). Flashpoints of disagreement included SPH’s liability (if any) for monthly condo assessment fees and SPH’s rights (if any) to access the Association’s books and records, to call for Association meetings, and so on. The dispute escalated when the Association’s agent, Marion Cooper (“Cooper,” not to be confused with nonparty Joe Cooper, who was the Association’s corporate representative in this litigation), signed liens that were filed in probate court against SPH’s property for the unpaid assessments.
The ultimate, unfortunate result of these circumstances (and the parties’ inability or unwillingness to forge a reasonable compromise) was that everybody sued everybody else in federal court.2 In particular, SPH filed suit against the Association and Cooper seeking (in Count One) declaratory and injunctive relief on a host of subjects, including the units on which the Association can assess common expenses, SPH’s rights to select the Association’s directors and to access its books and records, the validity of the Association’s assessments and liens against SPH’s property, and the Association’s obligation to render an accounting of its finances. In Count Two, SPH sued Cooper directly for damages under
The Association and Cooper responded in kind, unleashing a volley of counterclaims against SPH and third-party claims against Vision. (See doc. 5.) In particular, the Association brought a claim for open account, alleging that Vision owed it $226,800 in unpaid monthly assessments for the development’s units (Count One); another claim for open account, alleging that SPH owed it $162,000 in unpaid monthly assessments for those same units (Count Two); a claim against Vision and SPH for open account, claiming that Vision’s or SPH’s “agent or employee turned on the water at the Project without authority” and that they are therefore “indebted to the Association for the unpaid water bill” (doc. 5, at 17) (Count Three); and a statutory claim against Vision and SPH for enforcement of liens pursuant to
True to form, everybody has now moved for summary judgment against everybody else via overlapping and often redundant Rule 56 filings, placing the merits of this action before the undersigned for review and (to the extent appropriate) resolution under
II. Factual Background.
The parties’ summary judgment filings are noteworthy for the dearth of factual disputes identified as to material matters. With few (if any) exceptions, the material facts are uncontested and undisputed, to the point where it is fair to question why the parties did not streamline matters by submitting their legal arguments on stipulated facts.3
The summary judgment record reveals the following: Back in 2007, Vision lent money to a developer to build a condominium project known as The Rookery III (the “Project”) in Gulf Shores, Alabama. To secure the loans, the developer provided two mortgages to Vision covering the property where the Project was to be built. On December 31, 2007, the developer filed in Baldwin County Probate Court certain governing documents for the Project, including Articles of Incorporation for the Association, a Declaration of Condominium, Association Bylaws, and a proposed Site Plan. (Doc. 27, Exhs. A-D.) The Site Plan depicts 88 planned units in buildings of either duplex or single-family residence construction, all with the prominent legend “Need Not be Built.” (Doc. 27, Exh. D.) And the Declaration specifies that “[t]he maximum number of condominium units which shall comprise The Rookery III, a Condominium, is eighty eight,” to be built in phases of 10 units each, subject to a prominent disclaimer that each phase “NEED NOT BE BUILT.” (Doc. 27, Exh. C, Art. 4.)
As of June 9, 2008, the developer filed an Updated Site Plan reflecting that some 23 units had been constructed, including the units numbered 4001, 4002, 4008, 4009, 4010, 4013, 4014, 4015, 5006, 6002, 6004, 6005, 6006, 6008, 6012, 6017, 6019, 6022, 6023, 6025, 6032, 6035, and 7002. (Doc. 27, Exh. E.) Two additional units (numbered 7014 and 7024) were partially built, but not completed. In the summer of 2008, the developer successfully sold seven completed units, including those numbered 4001, 4008, 5006, 6002, 6005, 6017, and 7002 (collectively, “the 7 Sold Units”). Vision released the 7 Sold Units from its mortgages; however, it retained mortgages on the remainder of the Project, including the other 16 units that had been built but not sold (collectively, “the 16 Other Units”), two partially completed units (the “2 Incomplete Units”) and what would have been the remaining 63 units (collectively, “the 63 Unbuilt Units”) had the full 88-unit Project been constructed as planned. As their moniker implies, the 63 Unbuilt Units were never constructed, by the developer or anyone else. Even today, the 63 Unbuilt Units consist of nothing more than unimproved, bare land.4
not been paid and for which units, and so on. While these discrepancies may be distracting, they are not material to the issues presented on summary judgment. The tripartite categorization of the units that SPH came to own in July 2011 (consisting of the 16 Other Units, the 2 Incomplete Units, and the 63 Unbuilt Units) appears to be the most accurate rendering of facts in the record. The Court therefore adopts that formulation, and will not squander resources revisiting whether, for example, there are 63 or 65 or 66 unbuilt units, each time the parties’ briefs or witness statements waver on the point.
In addition to selling the 16 Other Units and the 2 Incomplete Units, SPH has attempted to sell all of its remaining property at the Project, including specifically the 63 Unbuilt Units (which, again, consist of nothing but bare land). (Id., ¶ 7.) For reasons not disclosed in the record, SPH has not yet sold the land. (Id.)
B. The Association and the Monthly Assessments.
In February 2007, the Association’s Board of Directors prepared a “First Year’s Projected Operating Budget,” calling for monthly maintenance fees of $400 per unit. (Burnett Aff., ¶¶ 2-3 & Exh. A.) After the developer sold the 7 Sold Units in the summer of 2008, the Board reduced the monthly assessment to $375 per unit. (Id., ¶ 4.)7 As of the summer of 2010, however, the original Board abandoned the Project, leaving the owners of the 7 Sold Units to their own devices to convene a new Association Board of Directors, which they did. (Id., ¶ 6; J. Cooper Aff. (doc. 38, Exh. 3), ¶ 6.)
summary judgment briefing that “Vision Bank has merged with and into SPH so that SPH is the surviving corporation. … As a result, SPH is obligated and liable for all of Vision’s obligations to the Association.” (Doc. 33, at 12.)
On October 4, 2010, the owners of the 7 Sold Units (calling themselves “The 7 Owners of Units in Rookery III,” rather than the Association) wrote a letter to Vision describing their financial difficulties following the developer’s abandonment of the Project. (J. Cooper Aff., ¶ 9 & Exh. E.) Citing no legal or contractual authority, the letter set forth the position of “The 7 Owners” as follows: “We feel it is time for the Bank to pay monthly association dues … for the units that have been completed.” (Id., Exh. E.) The October 4 letter did not purport to ask Vision to pay dues for the 63 Unbuilt Units. Moreover, the October 4 letter did not identify what the monthly assessment figure was, or how much “The 7 Owners” wanted Vision to pay. Certainly, nothing in the October 4 letter stated or implied that “The 7 Owners” believed that delinquent assessment charges were due and owing by Vision at that time; rather, the tone of the letter is reasonably clear that “The 7 Owners” were requesting only that bank contribute prospective assessments for the 16 Other Units. On October 13, 2010, Vision responded with a letter of its own, notifying the owners that “[w]e have referred this matter to our legal council [sic] for review” and that counsel may or may not choose to respond to the request that Vision pay monthly assessments. (Id., Exh. F.) Vision sent no other response to the October 4 letter. More importantly, Vision did not accede to the request or begin paying assessments on the 16 Other Units or anything else. (J. Cooper Aff., ¶¶ 9-10.)
The Association did not follow up on its October 4, 2010 request for an entire year. The record reveals a dearth of activity as to Association matters during that time. There is no evidence, for example, that the Association conducted regular meetings during the October 2010 – October 2011 time frame. There is no evidence that the Association invited Vision (or SPH) to attend meetings or even notified them when such meetings were scheduled (if indeed such meetings ever took place).
This period of relative tranquility was shattered in October 2011, as both sides retained counsel and engaged in a rapidly escalating exchange of correspondence that fanned faint embers of discontent into a blazing conflagration in a matter of days. On October 4, 2011, the Association’s counsel sent a letter to Vision, stating that “the Association hereby makes demand on Vision Bank to remit the sum of $328,000 for unpaid monthly fees and/or assessments related to the condo units set forth on Exhibit A.” (J. Cooper Aff., ¶ 11 & Exh. G.) The referenced Exhibit A detailed the Association’s calculations as follows: For each of approximately 82 units (including the 16 Other Units, the 2 Incomplete Units and the 63 Unbuilt Units), the Association claimed that Vision owed $400 monthly assessments for a 10-month period from January through October 2011.8 The October 2011 letter threatened that unless Vision paid the full amount with six days, “the Association will be filing liens against each unit” for the alleged unpaid assessments. (Id.) Vision did not pay.
On October 21, 2011, the Association followed up with another letter to Vision (as well as to SPH and Vision’s parent company) reiterating the demand for payment, accusing Vision of “again hiding its head in the sand regarding its obligations,” and confirming that the Association had “filed liens against each of the lots owned by Vision in The Rookery III.” (J. Cooper Aff., ¶ 12 & Exh. I.) It was true. On October 14, 2011, Cooper (owner of one of the 7 Sold Units) signed liens as “agent” of the Association, which liens were filed in Baldwin County Probate Court later that day. (M. Cooper Aff. (doc. 38, Exh. 4), ¶ 7.) The liens consisted of 81 substantively identical “Verified Statements of Lien,” each specifying that the Association was claiming a lien on a particular unit “to secure an indebtedness of $4,000 with interest and reasonable attorney’s fees” for “delinquent assessments.” (Harmon Aff., ¶ 4 & Exh. 3; M. Cooper Aff., ¶ 7.) Cooper was chosen to sign the liens on the Association’s behalf “primarily for logistical reasons, because [she] happened to be in Gulf Shores at that time.” (M. Cooper Aff., ¶ 7.) The liens covered each of the 16 Other Units, the 2 Incomplete Units, and the 63 Unbuilt Units.
The Association responded to both the October 21 and October 24 letters via correspondence of its own dated October 27, 2011. (J. Cooper Aff., ¶ 15 & Exh. L.) That letter accused Vision of “irresponsible lending practices,” contended that Vision had delayed foreclosure on the Project for two years after the developer’s default for the purpose of avoiding liability for assessments and “put[ting] the entire cost of this situation on the backs of the seven (7) owners,” and ratcheted up the rhetoric by asserting that SPH was “play[ing] legal games regarding who has what rights under what agreements.” (Id.) Not surprisingly, the October 27 letter was not well received by SPH. On November 1, 2011, SPH’s counsel sent another letter to the Association’s counsel, reiterating the bank’s legal position, demanding cancellation of the existing liens against SPH’s property, calling for immediate access to the Association’s books
There was some follow-up email correspondence between counsel concerning the exchange of books and records. (J. Cooper Aff., ¶ 17 & Exh. N.) Unfortunately, it was much too little, much too late. The Association allowed the November 3 deadline to expire without any serious effort at compliance with SPH’s demands.10 Cooler heads did not prevail, and SPH filed suit on November 4, 2011 against the Association and Cooper.
Interestingly, on November 23, 2011, some 19 days after suit was filed, the Association’s attorney executed a “Release of Recorded Lien” as to all 81 parcels at The Rookery III owned by SPH. The Baldwin County Probate Court recorded that release effective December 10, 2011. (M. Cooper Aff., ¶ 10 & Exh. A.)11 This apparent olive branch did not result in the modification, redaction or dismissal of any of SPH’s claims against the Association or Cooper. Moreover, post-filing demands by Cooper’s counsel that SPH withdraw its claims against her (M. Cooper Aff., ¶ 12 & Exh. B) fell on deaf ears, resulting in the proliferation (rather than the narrowing) of litigation as Cooper lodged counterclaims of her own against SPH.
Summary judgment should be granted only “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Both sides have moved for summary judgment on all or substantially all of the claims, counterclaims and third-party claims interposed herein. The law is clear that “[t]he applicable Rule 56 standard is not affected by the filing of cross-motions for summary judgment.” Page v. Winn-Dixie Montgomery, Inc., 702 F. Supp. 2d 1334, 1345 (S.D. Ala. 2010) (citations omitted); see also Murray v. Holiday Isle, LLC, 620 F. Supp. 2d 1302, 1307 (S.D. Ala. 2009) (same). The Eleventh Circuit has explained that “[c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.” United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir. 1984) (citation omitted); see also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983) (“the filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits”). Nonetheless, “cross-motions may be probative of the absence of a factual dispute where they reflect general agreement by the
IV. Analysis.
Given the breadth and volume of the causes of action joined in this case, the Court will proceed on a claim-by-claim basis. The logical starting point is to address the parties’ competing claims concerning unpaid monthly assessments, after which the Court will move on to examine the other facets of SPH’s claims for declaratory and injunctive relief, the claims brought by and against Marion Cooper, SPH’s claim for slander of title, and finally the Association’s claims for an unpaid water bill and enforcement of liens.
A. The Dueling Claims Regarding Unpaid Assessments.
1. The Parties’ Respective Positions Concerning Assessments.
Although this case embraces a variety of topics, the centerpiece of the parties’ dispute is and has always been whether SPH must pay monthly assessments to the Association for any unit or portion of The Rookery III property. Nor is this a mere trifling disagreement. By the Association’s reckoning, SPH is responsible for more than $500,000 in delinquent assessments spanning more than 80 units for a period including the first six months of 2011, as well as unpaid assessments for the 63 Unbuilt Units from July 2011 through the present.12 By SPH’s calculations, however, it is responsible for exactly $0 in assessments. That chasm is the animating force of this litigation, with the other ancillary issues amounting to little more than collateral skirmishes.
In Count One of the Complaint, SPH requests a declaration that the assessments imposed by the Association on SPH’s property at The Rookery III are “invalid” and that SPH has no obligation to pay them. (Doc. 1, at 7.) In its slander of title claim (to be discussed separately infra), SPH also seeks to recover $58,800 in assessments paid to the Association at the closing of SPH’s sales of the 16 Other Units. (Doc. 27, at 14.) For its part, the Association seeks damages from Vision on an “open account” theory for the six months preceding foreclosure and for one
Before tackling these questions, it is helpful to summarize the relevant record facts. As of July 2010, the Association conducted a meeting and set monthly assessments at $400 per unit for owners of the 7 Sold Units. In July 2011, following a Vision foreclosure sale and subsequent conveyance, SPH became the owner of all other property at The Rookery III, including the 16 Other Units, the 2 Incomplete Units, and the 63 Unbuilt Units. Neither Vision nor SPH paid monthly assessments on any of these units in connection with the foreclosure sale or the subsequent conveyance to SPH, and SPH did not volunteer such assessments thereafter. The Association does not appear to have held meetings in 2011 or to have provided notice to Vision or SPH of any such meetings; moreover, the Association does not appear to have taken any affirmative steps to review or fix monthly assessments during 2011 or to apprise unit owners (including Vision or SPH) of any such developments. In the spring of 2012, SPH successfully sold 18 Units, consisting of the 16 Other Units and the 2 Incomplete Units. In connection with these sales transactions, SPH reduced the purchase price at closing by a total of $58,800 for the 16 Other Units to account for the Association’s demands for unpaid assessments. (Harmon Decl., ¶ 5.) Those withheld assessments were paid to the Association. (No assessments were held back for the 2 Incomplete Units.)
2. Whether All Assessments Imposed by the Association are Invalid.
As an initial proposition, SPH contends that, as a matter of law, it owes no monthly assessments to the Association for any of its property because the Association failed to comply with applicable requirements for “notice, meeting, voting, and record keeping,” which it contends are necessary conditions precedent for the Association “to validly assess common expenses against any Units.” (Doc. 27, at 8.) SPH argues that the Alabama Uniform Condominium Act, as well as The Rookery III’s Declaration and Association Bylaws, impose
The Association counters that these shortcomings do not invalidate the $400 monthly assessments, based on Paragraph 46 of the Bylaws. That paragraph provides, in relevant part, as follows:
“Annual assessments against the condominium unit owners for their respective shares of the items of the budget shall be made for the calendar year annually in advance at the annual meeting to be held on the second Saturday in December of the year preceding the year for which the assessments are made. Such assessments shall be payable in equal installments, commencing on the first day of each month of the year for which the assessments are made. If an annual assessment is not made as required, an assessment shall be presumed to have been made in the amount of the last prior assessment.”
(Doc. 27, Exh. C, ¶ 46 (emphasis added). The Association’s point is that the Association’s acting Board of Directors (i.e., the owners of the 7 Sold Units) unanimously agreed in July 2010 to fix assessments at $400 per month, just as had been done by the original Board of Directors back in 2007.13 That monthly assessment being properly in place, the Association reasons, it remained applicable in 2011 and 2012 despite the Association’s failure to conduct an annual meeting, approve a budget, and the like during those years.
In response, SPH balks that the Association did not comply strictly with the Bylaws as to the July 2010 meeting because the notice was not in the correct form, the timing of the notice was inadequate, there was no detailed budget for the following year, and the Board did not provide notice 14 days in advance that ratification of a budget was to be considered at that
SPH identifies no aspect of the Alabama Uniform Condominium Act, the Bylaws or Declaration, or Alabama case law that demands strict compliance with all notice and budgeting procedures, and invalidates assessments imposed by the Association in the absence of same (even if all unit owners contemporaneously voted on and agreed with that assessment plan).15
There is a more fundamental problem with SPH’s argument. The logical consequence of SPH’s position (i.e., that all assessments imposed on unit owners at The Rookery III since 2007 are void) is that all unit owners would be entitled to return of their assessment payments because all assessments were invalid. The Association would have no means of paying its bills and presumably the entire enterprise would go up in smoke. A condominium association’s bylaws are not a suicide pact,16 and this Court declines to construe them as such, particularly given the stated Alabama legislative concern that “[t]he economic viability of condominium associations is a major concern of the drafters of the present act.”
Based on the foregoing, the undersigned concludes that the $400 monthly assessment to which all unit owners agreed as of July 2010 was in fact a proper, valid assessment under applicable law and condominium documents. That being the case, the Association’s failure to make annual assessments after that date in accordance with the Bylaws is not fatal, but is instead saved by Paragraph 46’s express allowance that “[i]f an annual assessment is not made as required, an assessment shall be presumed to have been made in the amount of the last prior assessment.” (Doc. 27, Exh. C, ¶ 46.) Thus, there is a presumed valid $400/month assessment for each unit at The Rookery III, and the SPH’s contention that no valid assessments exist must fail.17
3. Whether Assessments Concerning the 63 Unbuilt Units are Invalid.
The determination that the $400 monthly assessments are generally valid still leaves the question of defining the portions of The Rookery III on which assessments are properly charged. The parties’ disagreement on this point is sharp. For its part, the Association insists that SPH must pay assessments for the 63 Unbuilt Units for the entire time period at issue; meanwhile, SPH is adamant that no such assessments are due because those “units” do not exist and consist of nothing but vacant land.
The starting point of the analysis is the Alabama Uniform Condominium Act, which draws no distinction between built and unbuilt units. As a general matter, the Act dictates that “all common expenses must be assessed against all the units.”
The Declaration defines “unit” as “[a] physical portion of the condominium designated for separate ownership or occupancy, the boundaries of which are described herein.” (Doc. 27, Exh. B, at Art. 1, ¶ 2(w).) With respect to boundaries, the Declaration explains that “[t]he boundaries of each unit are hereby designated as the innermost plane of the interior finished surfaces of the unit’s walls, floors and ceilings.” (Doc. 27, Exh. B, at Art. 5, ¶ 6.) SPH persuasively argues that, as to the 63 Unbuilt Units, there are no “innermost planes of the interior finished surfaces of the unit’s walls, floors and ceilings,” because those units have never been
Moreover, there is persuasive support in the case law for SPH’s interpretation of the Declaration as overriding the statute’s failure to exclude unbuilt units from the definition of “units.” See Aluminum Industries Corp. v. Camelot Trails Condominium Corp., 535 N.W.2d 74, 79-80 (Wis. App. 1995) (although statutory definition of “unit” encompasses property on which there is no constructed unit, declarations established that “units” are distinct from the land itself
In so concluding, the Court has carefully weighed the Association’s counterarguments. For example, the Association relies on Mountain View Condominiums Homeowners Ass’n Inc. v. Scott, 883 P.2d 453 (Ariz.App. Div. 2 1994). That case appears distinguishable insofar as (i) it was predicated on a particular feature of Arizona law that “condominium ownership consists of individual ownership of a horizontal layer of cubic content space” (which the Association does
The second point is actually a corollary of the first. If the Court were to adopt the Association‘s view that monthly assessments of $400 were due on all of the 63 Unbuilt Units at all times, the result would be a vast windfall to the Association, as collections would outstrip common expenses by an enormous margin. From January to December 2011, the Association‘s total expenses were $31,960.96, and it collected dues of $33,345.00, resulting in net ordinary income of $1,384.04. (J. Cooper Dep., at Exh. 8.) The Association would have this Court order SPH to pay $400 per month per unit for each of the 63 Unbuilt Units, which would amount to a total sum of $302,400 for the year 2011 alone. Such an assessment would be vastly disproportionate to the Association‘s common expenses; indeed, not a penny of those assessment funds would actually defray common expenses, which had already been paid in full from other assessments. This levy would therefore be patently improper and impermissible under the Act and the Declaration. See
That verbiage suggests that the Declaration intended for a unit to count as a unit only once it had been built; otherwise, there would have been no need to include “comprise or will comprise” language because the 88 units would always comprise the project.
For all of the foregoing reasons, the Court finds that there is no genuine dispute of material fact and that SPH is not obligated to pay assessments to the Association for any of the 63 Unbuilt Units because those unconstructed units do not constitute “units” on which assessments may be imposed.26
In the wide-ranging claim for declaratory and injunctive relief presented in Count One of the Complaint, SPH not only seeks adjudication of its rights and obligations to pay assessments (as addressed supra), but also requests that the Court declare (i) that SPH is entitled to call a special meeting of the Association, (ii) that SPH is entitled to cast votes to remove directors and elect new directors at Association meetings, and (iii) that SPH is entitled to immediate and complete access to the Association‘s books and records. (Doc. 1, at 7.)27 Both sides have moved for summary judgment on each of these claims.
With regard to whether SPH is entitled to call a special meeting, remove/elect directors, and so on, the Association‘s threshold argument is that this issue is moot because “SPH no longer owns any completed units.” (Doc. 33, at 22 n.2.) It is true enough that SPH does not own any units that are part of the Association. After all, SPH sold the 16 Other Units and the 2 Incomplete Units, and the Court has already held that the 63 Unbuilt Units are not “units” for Association purposes. However, when SPH sold each of the 16 Other Units in the first months of 2012, it obtained an “Irrevocable Proxy” from the purchaser. (Harmon Decl., ¶ 6.) These 16 proxies state that the unit purchaser grants and assigns SPH “an irrevocable proxy and right to vote ... as a member of the [Association] and as the owner of the Unit, on all matters coming
the time of closing of those two units, as happened for the closing of the 16 Other Units; or (ii) how it could be entitled to damages from SPH for assessments that have gone unpaid by the owners of the 2 Incomplete Units. At any rate, there is no evidence whatsoever in the record that the 2 Incomplete Units were at any time sufficiently advanced in their construction that they might be deemed “units” within the meaning of the Act, the Declaration and the Bylaws. Therefore, the portion of the Association‘s damages claim seeking to hold SPH/Vision responsible for unpaid assessments for the 2 Incomplete Units is properly dismissed.
The Association fires back that the proxies are invalid under the Bylaws, which specify that a proxy “shall be valid only for the particular meeting designated in the proxy” and “shall be revocable at any time at the pleasure of the person executing it.” (Doc. 27, Exh. C., at § 13.) The proxies obtained by SPH do not designate a particular meeting and are irrevocable on their face;28 therefore, the Association argues, they are invalid and unenforceable. In response, SPH insists that the Bylaws must be cast aside on this point because they are “in conflict with the Articles of Incorporation, the Declaration and the Uniform Condominium Act.” (Doc. 44, at 1.) SPH‘s premise is that, in the event of a conflict, the Act, Declaration, and Articles prevail over the Bylaws. Generally speaking, that is a correct statement of law. See
In light of the foregoing, the Court concludes that the “Irrevocable Proxies” on which SPH relies as its legal basis for seeking to call a special meeting and exercising voting rights are invalid under the Bylaws because they do not designate a particular meeting and are irrevocable. The Court further concludes that the applicable provisions of the Bylaws are enforceable and do not conflict with the Alabama Uniform Condominium Act or other governing documents for The Rookery III. Because SPH‘s request for an injunction or declaration allowing it to call a special meeting and vote on the Association‘s directors hinges on the validity of the Irrevocable Proxies, and because those proxies are improper and invalid under the applicable Bylaws, the Court will enter summary judgment in the Association‘s favor on this cause of action.30
With respect to SPH‘s request for declaratory relief that it is entitled to “full access to all books and records of the Association” (doc. 1, at 7), this claim for relief is moot. It is undisputed that SPH has been granted full access to the Association‘s books and records during discovery in this litigation. Moreover, it does not appear that there is any current, live dispute between SPH and the Association as to whether SPH may examine the Association‘s books and records. Accordingly, even if this claim were not moot, the Court would exercise its discretion
C. SPH‘s Claim Against Cooper for Denial of Access.
In Count Two of the Complaint, SPH brings a statutory claim against Cooper, personally, for denying SPH access to the Association‘s books and records.32 SPH alleges that “Cooper has denied SPH access to the Association‘s books and records without justification” and that she is therefore liable in damages under
Cooper‘s argument for why SPH cannot prevail on this claim is as simple as it is compelling. Her position – and the uncontroverted evidence of record – is that the Association‘s books and records were never in her custody or control. (M. Cooper Aff., ¶¶ 5, 10.) As a result, Cooper was in no position to grant or deny SPH access to documents that she did not have and that she did not control. SPH has come forward with no evidence that Cooper did possess
D. SPH‘s Slander of Title Claim.
Recall that in Count Three of its Complaint, SPH asserted claims under Alabama law for slander of title against the Association and Cooper. This cause of action was predicated on the defendants’ “filing of ... assessments and liens against SPH‘s 16 completed ‘Units’ and other property within the Project,” which activity SPH says had the effect of “clouding, disparaging and slandering the title to SPH‘s property in the Project,” such that “SPH cannot sell any of such property while the assessments/liens exist in said public records.” (Doc. 1, ¶ 22.) Although the briefing on this claim is cursory at best and the claim itself appears to have been little more than an afterthought, both sides have moved for summary judgment on it, so the Court will proceed to examine SPH‘s slander-of-title cause of action.
Under Alabama law, a cause of action for slander of title consists of the following elements: “(1) Ownership of the property by plaintiff; (2) falsity of the words published; (3) malice of defendant in publishing the false statements; (4) publication to some person other than the owner; (5) the publication must be in disparagement of plaintiff‘s property or the title thereof; and (6) that special damages were the proximate result of such publication (setting them out in detail).” Folmar v. Empire Fire and Marine Ins. Co., 856 So.2d 807, 809 (Ala. 2003) (citations omitted); see also Dabbs v. Four Tees, Inc., 36 So.3d 542, 558 (Ala.Civ.App. 2008) (same). On this record, SPH cannot satisfy all of these elements with respect to Count Three.33
owing to the Association.” (M. Cooper Aff., Exh. A.) If that statement (which was published in Baldwin County Probate Court records) was false and malicious, and caused special damage to SPH, then SPH could maintain a slander-of-title claim against the Association, notwithstanding the nominal release of the liens.
For all of the foregoing reasons, the Association and Cooper‘s Motions for Summary Judgment will be granted as to Count Three of the Complaint, and SPH‘s claim against them for slander of title will be dismissed.
E. Claim Brought by Marion Cooper.
In addition to the claims that SPH brought against Cooper in its original Complaint (all of which have been addressed and resolved supra), Cooper leveled a claim of her own against SPH, pursuant to the “Alabama Litigation Accountability Act and Rule 11.” (Doc. 5, at 18.) Her stated grounds for asserting such a cause of action are that SPH refused to dismiss its claims against her for denial of access and slander of title and that SPH “should be liable to Cooper for
Insofar as it purports to be a claim brought under Rule 11 of the Federal Rules of Civil Procedure, Cooper‘s counterclaim is procedurally improper. The appropriate vehicle for raising a Rule 11 issue is a motion, not a counterclaim. See, e.g., Hooker v. Dallas Independent School Dist., 2010 WL 4025877, *10 (N.D. Tex. Oct. 13, 2010) (denying leave to file counterclaim because “Rule 11 does not create a cause of action that may be presented by counterclaim“); Wapato Heritigate, LLC v. Evans, 2008 WL 4148871, *1 (E.D. Wash. Aug. 29, 2008) (dismissing defendant‘s Rule 11 counterclaim as “procedurally improper“); Collins v. Allen, 2005 WL 1073369, *2 (S.D. Ohio Mar. 16, 2005) (explaining “clear state of the law that a violation of Rule 11 does not constitute a separate cause of action“); Lenoir v. Tannehill, 660 F. Supp. 42, 44 (S.D. Miss. 1986) (“It appears clearly beyond question that Rule 11 by its express terms only permits an attorney procedurally to raise a claim for sanctions through a motion.“). Accordingly, SPH‘s Motion for Summary Judgment is granted insofar as it relates to the Rule 11 portion of Cooper‘s counterclaim.
Under the Alabama Litigation Accountability Act,
As discussed supra, the Court has already found that Cooper is entitled to summary judgment on the claims SPH asserted against her. However, that determination is not dispositive of the analytically distinct question of whether Cooper may recover her attorney‘s fees under ALAA. The phrase “without substantial justification” is not a fancy synonym for “unsuccessful;” rather, much more is required to prevail under the ALAA. See generally Morrow v. Gibson, 827 So.2d 756, 763-64 (Ala. 2002) (“Morrow must have been more than ‘simply legally incorrect’ to justify an award of attorney fees pursuant to the ALAA. The legal
Recall that SPH‘s claims against Cooper were that she had wrongfully denied SPH access to the Association‘s books and records (Count Two) and that she had slandered SPH‘s title to the property by filing the liens (Count Three). As to Count Two, SPH alleged in the Complaint that, “[o]n information and belief, Cooper is handling and/or is in possession of some or all of the books and records of the Association” and was holding herself out as an agent or governing person of the Association. (Doc. 1, ¶ 18.) As to Count Three, SPH alleged that Cooper‘s statements in liens she executed as agent of the Association slandered SPH‘s title to the property, giving rise to personal liability as a matter of Alabama statute.
Cooper argues that Count Three was brought against her “without substantial justification” because she “was acting in a representative capacity when she signed the liens.” (Doc. 41, at 12; see also doc. 30, at 29.)36 As a matter of well-settled Alabama law, however, torts committed by a person in her representative capacity in no way insulate her from personal liability. See, e.g., Ex parte McInnis, 820 So.2d 795, 798-99 (Ala. 2001) (“A corporate agent who personally participates, albeit in his or her capacity as such agent, in a tort is personally liable for the tort.“); Ex parte Charles Bell Pontiac-Buick-Cadillac-GMC, Inc., 496 So.2d 774, 775 (Ala. 1986) (“In Alabama, the general rule is that officers or employees of a corporation are liable for torts in which they have personally participated, irrespective of whether they were acting in a corporate capacity.“); Prince Hotel, S.A. v. Blake Marine Group, 2012 WL 4711897, *5 (S.D. Ala. Oct. 2, 2012) (“If Zatezalo committed that tort, it makes no difference whether he did so in a representative capacity or not. Either way, he would remain liable for his own tortious conduct.“). Nor is Cooper correct that “the alleged basis for SPH‘s slander of title claim was eliminated when the liens were released” (doc, 41, at 12). As previously discussed, by
With regard to access to books and records, Cooper weakly protests that she “never refused SPH‘s demand for access to the books and records.” (Doc. 30, at 29.) Let us review the record facts: On November 1, 2011, SPH‘s counsel sent a letter to the Association‘s counsel, with a copy to Cooper individually, demanding access to the Association‘s books and records and fixing a response deadline of November 3, 2011. (J. Cooper Aff., at Exh. M.) SPH explained in the November 1 letter that it was making this demand directly of Cooper because she had held herself out as an “agent” of the Association in executing the liens, and the applicable Alabama statute imposes personal liability on an entity‘s agent who refuses access to books and records.37 For aught the record shows, Cooper made no response prior to the November 3 deadline. She did not promptly notify SPH that she lacked custody or control of the books and records. She did not specify that she was not the Association‘s “agent” with respect to its books and records. She did not notify SPH that she and/or the Association would make those books and records available for inspection in a reasonably prompt manner. Instead, Cooper did nothing, which could reasonably have been perceived by SPH as a denial of access. Under the circumstances, it cannot fairly be said that SPH‘s assertion of a statutory claim against Cooper
The bottom line is that, while SPH‘s claims against Cooper were ultimately deemed not to have merit, they were not so lacking in factual or legal justification as to warrant the imposition of liability on SPH under the ALAA (or the imposition of sanctions against SPH under Rule 11). SPH‘s acts of asserting colorable claims against Cooper and refusing to withdraw them on opposing counsel‘s ipse dixit were not unreasonable, and do not warrant imposition of sanctions or shifting of fees on these legal theories. Summary judgment is properly entered in SPH‘s favor on Cooper‘s counterclaim.
F. The Association‘s Claims for the Water Bill and Enforcement of Liens.
Finally, the Court pauses briefly to address two throw-in claims asserted by the Association against SPH. As Count Three of its Counterclaims against SPH and its Third-Party Claims against Vision, the Association has sued them both for “open account” on the theory that “Vision‘s and/or SPH‘s agent or employee turned on the water at the Project without authority. As a result, Vision and/or SPH are indebted to the Association for the unpaid water bill.” (Doc. 5, ¶ 15.) Briefing reveals that “[t]he Association is not moving for summary judgment on that claim.” (Doc. 36, at 12 n.3.) However, SPH is. And SPH has submitted record evidence showing that “[a]t no time did an agent or employee of Vision or SPH turn water on at the
The last loose end is Count Four of the Counterclaims/Third-Party Claims, in which the Association seeks enforcement of liens on SPH‘s property (described in the pleading as “the 81 units“) for unpaid assessments pursuant to
V. Conclusion.
For all of the foregoing reasons, it is ordered as follows:
- SE Property Holdings, LLC‘s Motion for Summary Judgment (doc. 26); Marion Cooper‘s Motion for Summary Judgment (doc. 29); the Association‘s Motion for
Summary Judgment as to SE Property‘s Complaint (doc. 32) are all granted in part, and denied in part, and the Association‘s Motion for Summary Judgment as to its Counterclaims/Third Party Claims (doc. 35) is denied; - The Court finds and declares that neither SPH nor Vision presently owes unpaid assessments to the Association for any units at The Rookery III, and thereby grants SPH relief on that portion of its claim for declaratory and injunctive relief asserted in Count One of the Complaint;
- The Court finds and declares that SPH‘s request for a declaration that it is entitled to access to the Association‘s books and records is moot, and thereby grants the Association relief under Rule 56 on that portion of SPH‘s claim for declaratory and injunctive relief asserted in Count One of the Complaint;
- All other claims, counterclaims and third-party claims asserted by any party herein are dismissed with prejudice; and
- This Order resolving all claims and causes of action joined herein, the Clerk of Court is directed to close this file for statistical and administrative purposes.
DONE and ORDERED this 3rd day of January, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE