Opinion
CASE NO. 2:09-CV-1104-WKW [WO].
September 10, 2010
ORDER
Before the court are three motions to dismiss: one filed by Defendant Donald Hutchinson (Doc. # 20), as amended (Doc. # 35); one filed by Defendant David A. McDowell ("McDowell") (Doc. # 24); and one filed by Defendants Donald Hutchison and George Hutchison, in which they adopt the arguments made by Mr. McDowell (Doc. # 26), as amended (Doc. # 30). Plaintiff Crooked Creek Properties, Inc. ("Crooked Creek"), opposes the motions (Doc. # 29), and Mr. McDowell filed a reply (Doc. # 31). Because this action is barred by res judicata, the motions are due to be granted and this action dismissed with prejudice.
The motions have been evaluated in light of Rule 12(b)(6)'s standard. See Fed.R.Civ.P. 12(b)(6); see generally Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (discussing the Rule 12(b)(6) standard). There is no need to convert the motions to ones for summary judgment, as suggested by Mr. McDowell (Doc. # 34, at 2), for substantially the same reasons discussed by this court in Crooked Creek Props, Inc. v. Ensley, No. 2:08cv1002-WKW, 2009 WL 3644835 at *8 n. 16 (M.D. Ala. Oct. 28, 2009) (order granting motions to dismiss).
This lawsuit is but one more chapter arising from protracted and serial litigation in the circuit courts of Montgomery and Autauga counties concerning disputed ownership of Danya Park Apartments in Autauga County. The court has extensive knowledge of the procedural and factual underpinnings of this long-running state court litigation because this action is the second one Crooked Creek has filed in this court. See Crooked Creek Props., Inc. v. Ensley, No. 2:08cv1002-WKW, 2009 WL 3644835 (M.D. Ala. Oct. 28, 2009) ("Crooked Creek I") (order granting motions to dismiss), aff'd, No. 09-15988, 2010 WL 2136027 (11th Cir. May 29, 2010). Although the defendants named in this lawsuit are different from those in Crooked Creek I, both Crooked Creek I and this suit are the product of Crooked Creek's frustration with the results of the Autauga County Suit judgment. The defendants in Crooked Creek I will be referred to as the Ensley defendants.
Judicial notice is taken of the proceedings in Crooked Creek I and certain pleadings filed in the state court for the limited purpose of determining the applicability of res judicata. See ITT Rayonier Inc. v. United States, 651 F.2d 343, 345 n. 2 (5th Cir. 1981) ("A court may . . . take judicial notice of its own records."); see also Fed.R.Evid. 201. Certified copies of the relevant state court pleadings were submitted in Crooked Creek I.
The procedural history and factual background of the Montgomery County and Autauga County suits are set out in more detail in the October 28, 2009 order entered in Crooked Creek I and will not be repeated here except as necessary. Briefly, Crooked Creek insists that, as a result of prior judgments its predecessor-in-interest (Willadean Walden) obtained in the Montgomery County Suit, it is the owner of all of the common stock in a corporation that has as its sole asset Danya Park Apartments. Ms. Walden later learned, however, that a quitclaim deed and a separate mortgage on Danya Park Apartments had been recorded in the Autauga County Probate Court. The mortgage had been recorded by the Ensley defendants, and the quitclaim deed by George Hutchison. As to the quitclaim deed, George Hutchison claimed that in 1998, he was given a quitclaim deed to Danya Park Apartments from the prior owner, and that in 1999, he transferred the quitclaim deed to a trust that he created for the benefit of his son (the "George Hutchison Jr. Trust"). Hence, Ms. Walden commenced proceedings in the Autauga County Circuit Court to remove these clouds on her title.
All references to the Autauga County Suit and the Montgomery County Suit are to the state court proceedings. Gatewood Walden, Esq., who is counsel of record in this action, represented Crooked Creek in Crooked Creek I. He also is the son of Willadean Walden, and represented her in the Autauga County Suit.
This is one of several rulings in the Montgomery County Suit. Initially, the Montgomery County Circuit Court entered a judgment in 2000 vesting Ms. Walden with ownership of all of the common stock in the corporation that owned Danya Park Apartments. In 2002, however, the Montgomery County Circuit Court vacated that judgment and instead awarded Ms. Walden a lien on the common stock. That judgment was affirmed by the Alabama Court of Civil Appeals in 2003, and the Supreme Court of Alabama denied Ms. Walden's certiorari petition in April 2004. Thereafter, also in 2004, the parties to the Montgomery County Suit consented to the entry of judgment, vacating the 2002 judgment and reinstating the 2000 judgment that Ms. Walden owned the common stock in the corporation which owned Danya Park Apartments. According to Crooked Creek, after the entry of the 2004 judgment, Ms. Walden "was the [undisputed] lawful equitable owner of Danya Park Apartments." (Pl. Resp. 5 (Doc. # 29).)
It is notable also that on May 17, 2010, which was after this lawsuit was filed, the Montgomery County Circuit Court entered an order, declaring the validity of its prior judgments entered in 2000 and 2004 and reasserting that Ms. Walden is the "equitable owner of Danya Park Apartments." Walden v. Smith, No. CV-95-1093 (Montgomery County, Ala., Circuit Court, May 17, 2010) (Ex. to Doc. # 33). The May 17, 2010 order has spawned yet more litigation in the Autauga County Circuit Court, with that court entering an order granting a preliminary injunction in favor of the George Hutchison Jr. Trust and two of the Ensley defendants. The order enjoins Ms. Walden and Crooked Creek from "faxing, mailing delivering by hand or serving a copy of the Order of the Circuit Court of Montgomery County dated May 17, 2010 upon the Sheriff of Autauga County or in any way attempting to interfere with the ownership or management of Danya Park . . . Apartments." E.S. Capital, LLC. v. Walden, No. CV-10-900098 (Autauga County, Ala. Circuit Court, June 11, 2010 (Ex. to Doc. # 34)). It also enjoins them "from entering upon or having anyone enter upon the property of Danya Park Apartments to assert any ownership of the Apartments or attempt to exercise any control over the Apartments," except that the order "is not intended to disallow the defendants any rights of redemption from the . . . foreclosure to which they might be entitled under Alabama law." Id.
In 2006, the Autauga County Circuit Court disagreed with Ms. Walden's claim to ownership of Danya Park Apartments, finding that the 2002 judgment in the Montgomery County Suit giving Ms. Walden only a lien was the "`law of the case.'" Crooked Creek I, 2009 WL 3644835, at *4 (quoting Autauga County Suit, Summ. J. Op. 5, dated Dec. 2006). The Autauga County Circuit Court judgment awarded the Ensley defendants a first mortgage on Danya Park Apartments superior to Ms. Walden's lien, and rendered enforceable and valid a management agreement governing the Ensley defendants' operation of Danya Park Apartments and the collection of rent. The Autauga County Circuit Court also found that the quitclaim deed was in fact an equitable mortgage and amounted to a secondary lien ("equitable second mortgage") subject only to the Ensley defendants' first mortgage lien. The Supreme Court of Alabama agreed insofar as it held that the George Hutchison Jr. Trust had a valid secondary lien on Danya Park Apartments. It held, however, that George Hutchison was judicially estopped (for reasons not pertinent to the present analysis) from claiming any interest in the quitclaim mortgage on Danya Park Apartments. Walden v. Hutchinson, 987 So. 2d 1109, 1117-19 (Ala. 2007). Hence, as a result of the Autauga County Suit judgment, Crooked Creek's interest in Danya Park Apartments was subordinate to both the Ensley defendants' first mortgage lien and the George Hutchison Jr. Trust's equitable second mortgage.
The judgment rendered as a result of the Autuaga County Suit was the catalyst for Crooked Creek I, which was filed in this court by Crooked Creek, as the successor-in-interest to Ms. Walden's ownership interest in Danya Park Apartments. The Ensley defendants and their attorney were among the defendants. In Crooked Creek I, the Ensley defendants argued that, under the doctrine of res judicata, the Autauga County Suit judgment foreclosed Crooked Creek from reigniting the ownership dispute over Danya Park Apartments in federal court. The facts and causes of action in Crooked Creek I all pertained to the validity of the Ensley defendants' first mortgage and the management agreement. Applying Alabama res judicata principles, this court found that the Autauga County Suit judgment was a prior judgment on the merits, rendered by a court of competent jurisdiction, and that it involved the same subject matter and the same parties (or their privies) as were then before it. The Eleventh Circuit affirmed the judgment. See Crooked Creek Props., Inc. v. Ensley, No. 09-15988, 2010 WL 2136027 (11th Cir. May 29, 2010).
Crooked Creek alleges that "it acquired fee simple title to Danya Park Apartments . . . from [Ms.] Walden." (Compl. ¶ 8; see also Compl. ¶¶ 17, 86.)
George Hutchison, Donald Hutchison and Mr. McDowell were not named in Crooked Creek I.
Undeterred, in this lawsuit, Crooked Creek sues (1) George Hutchison, (2) Donald Hutchison, individually and in his capacity as the trustee of the George Hutchison Jr. Trust, and (3) Mr. McDowell, George Hutchison's attorney. The first twenty-eight pages of the Complaint recite the history of the Montgomery County Suit and the Autauga County Suit. The claims in the present action allegedly arose in the "aftermath of the state court litigation" (Compl. 28), when George Hutchison, represented by Mr. McDowell, initiated foreclosure proceedings on the equitable second mortgage on Danya Park Apartments held by the George Hutchison Jr. Trust. George Hutchison allegedly did so without giving actual notice to Crooked Creek as the "fee simple" owner of Danya Park Apartments, and notwithstanding that the George Hutchison Jr. Trust had not "acquired any proprietary interest in Danya Park Apartments." (Compl. ¶¶ 8, 17, 86, 111.) Crooked Creek avers that the "underlying purported quitclaim deed" transferred from George Hutchison to the George Hutchison Jr. Trust is void for a number of reasons previously litigated in the Autauga County Suit and also because the Autauga County Suit judgment giving the George Hutchison Jr. Trust an equitable second mortgage on Danya Park Apartments is void. And, if the Autauga County Suit judgment that validates the George Hutchison Jr. Trust's equitable second mortgage "is itself invalid," then the "mortgage foreclosure sale is invalid and is due to be set aside." (Pl. Resp. 42-43 (Doc. # 29); see also Compl. ¶ 17.)
By these arguments, Crooked Creek clings to the Montgomery County Circuit Court judgments giving it, in effect, ownership of Danya Park Apartments. As Crooked Creek admits, "at the heart of this complaint is Crooked Creek's belief and contention that the judgments of the Montgomery [County] Circuit Court are valid, while the judgments of the Autauga [County] Circuit Court and the state appellate court are . . . void." (Compl. ¶ 14; see also Compl. ¶ 3 (As a result of the 2004 "unappealed, unreversed, consent judgment Mrs. Walden became . . . the equitable owner of Danya Park Apartments."); Pl. Resp. 41.)
Crooked Creek brings claims to set aside the foreclosure sale (Count One), for conspiracy to wrongfully foreclose on its property (Count Two), for intentional interference with Crooked Creek's business relations with Danya Park Apartments' tenants (Count Three), for cancellation of the quitclaim deed (Count Four), for damages flowing from the wrongful foreclosure (Count Five), and for conspiracy to obtain unjust enrichment (Count Six).
Defendants argue that the doctrine of res judicata again precludes Crooked Creek from litigating the matters decided adversely to its predecessor-in-interest (Ms. Walden) in the Autauga County Suit. Alabama's law on res judicata applies. See Crooked Creek I, 2009 WL 3644835, at *7-8. "The elements of res judicata, or claim preclusion, are (1) a prior judgment on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the parties, and (4) with the same cause of action presented in both suits." Dairyland Ins. Co. v. Jackson, 566 So. 2d 723, 725 (Ala. 1990). "If those four elements are present, then any claim that was, or that could have been, adjudicated in the prior action is barred from further litigation." Chapman Nursing Home, Inc. v. McDonald, 985 So. 2d 914, 919 (Ala. 2007).
The doctrine of res judicata clearly bars Crooked Creek's action for substantially the same reasons espoused in Crooked Creek I. That reasoning is incorporated here so as to avoid needless repetition. See Crooked Creek I, 2009 WL 3644835, at *7-21. The reasoning will be summarized.
First, the Autauga County Suit resulted in a valid, final judgment on the merits. The judgment gave the George Hutchison Jr. Trust an equitable second mortgage on Danya Park Apartments.
Second, Alabama's courts are courts of competent jurisdiction. Nonetheless, Crooked Creek spends much of its brief arguing that the Autauga County Suit judgment is void for lack of subject matter jurisdiction and is based upon a misunderstanding of procedural and substantive rules of law; hence, Crooked Creek contends that the jurisdiction of the Autauga County Circuit Court (and of the reviewing appellate courts) was not competent. In fact, the sole argument against the application of the doctrine of res judicata urged by Crooked Creek is that the doctrine is "inapplicable to void judgments." (Pl. Resp. 38-40.) This argument was, however, considered and rejected in Crooked Creek I, and on appeal. See Crooked Creek, 2010 WL 2136027, at *2 (explaining that the action to quiet title in the Autauga County Suit gave the circuit court jurisdiction to establish title and that, "even if it were true that the Autauga Court erred" in its analysis, under Alabama law, "`the simple fact that a court has erroneously applied the law does not render its judgment void.'" (quoting Neal v. Neal, 856 So. 2d 766, 781 (Ala. 2002)); see also Crooked Creek I, 2009 WL 3644835, at *10 (distinguishing between a "void judgment" and an "erroneous judgment" and discussing the Autauga County Circuit Court's jurisdiction). For the same reasons, the argument is again rejected here.
Third, Alabama's law on privity, for purposes of res judicata, is elaborated upon in Crooked Creek I. See 2009 WL 3644835, at *13-18. Based upon application of those principles here, Crooked Creek and Defendants in this action were parties or privies in the Autauga County Suit. Crooked Creek has not argued to the contrary.
Fourth, in this action and in the Autauga County Suit, the primary right asserted by Crooked Creek and Ms. Walden is the alleged right to unencumbered ownership of Danya Park Apartments, while the primary wrong centers on Defendants' interference with that ownership. The interference in this case, as in the Autauga County Suit, includes the quitclaim deed ( i.e., the equitable second mortgage) on Danya Park Apartments, and the principal contention is that the quitclaim deed is void. ( Compare Autauga County Suit, Compl. ¶ 24 ("Hutchison's quitclaim deed is absolutely void."), with Compl. ¶ 6 (enumerating six reasons why the quitclaim deed is void).) Parallel relief also is sought. In this case, "Crooked Creek . . . seeks to cancel defendants' unlawful and illegal `equitable mortgage' or to have it declared inoperative and void." (Compl. ¶ 6.) Similarly, the Autauga County Suit complaint sought a judgment declaring that Ms. Walden "ha[d] the entire undivided fee simple interest in and to [Danya Park Apartments] with no restrictions thereon." (Autauga County Suit Compl. 20.) While Crooked Creek crafts some of its legal theories differently in this lawsuit (focusing on an alleged wrongful foreclosure), it merely is attempting to do indirectly what it cannot do directly — attack the validity and enforceability of the quitclaim deed held by the George Hutchison Jr. Trust. Both lawsuits concern the same subject matter ( i.e., ownership control of Danya Park Apartments), and revolve around the same nucleus of operative facts. For these reasons, the causes of action are the same for res judicata purposes.
Accordingly, all of the res judicata elements under Alabama law are satisfied, and Crooked Creek is precluded from relitigating the claims it has brought in this suit. Defendants' arguments for dismissal on the merits, therefore, need not be addressed, although they are persuasive.
For the foregoing reasons, it is ORDERED that Defendants' motions to dismiss (Docs. # 20, 24, 26, 30, 35) are GRANTED, and that this action is DISMISSED with prejudice, as barred by the doctrine of res judicata.
All remaining motions are DENIED as moot.
An appropriate judgment will be entered.
DONE this 10th day of September, 2010.
A copy of this checklist is available at the website for the USCA, 11th Circuit at www.ca11.uscourts.gov Effective on April 9, 2006, the new fee to file an appeal will increase from $255.00 to $455.00.
CIVIL APPEALS JURISDICTION CHECKLIST
1. Appealable Orders : Appeals from final orders pursuant to 28 U.S.C. § 1291: 28 U.S.C. § 158Pitney Bowes, Inc. v. Mestre 701 F.2d 1 365 1 28 U.S.C. § 636 In cases involving multiple parties or multiple claims, 54Williams v. Bishop 732 F.2d 885 885-86 Budinich v. Becton Dickinson Co. 108 S.Ct. 1717 1721-22 100 L.Ed.2d 178LaChance v. Duffy's Draft House, Inc. 146 F.3d 832 837 Appeals pursuant to 28 U.S.C. § 1292(a): Appeals pursuant to 28 U.S.C. § 1292(b) and Fed.R.App.P. 5: 28 U.S.C. § 1292 Appeals pursuant to judicially created exceptions to the finality rule: Cohen v. Beneficial Indus. Loan Corp. 337 U.S. 541 546 93 L.Ed. 1528Atlantic Fed. Sav. Loan Ass'n v. Blythe Eastman Paine Webber, Inc. Gillespie v. United States Steel Corp. 379 U.S. 148 157 85 S.Ct. 308 312 13 L.Ed.2d 199 2. Time for Filing : Rinaldo v. Corbett 256 F.3d 1276 1278 4 Fed.R.App.P. 4(a)(1): 3 THE NOTICE MUST BE RECEIVED AND FILED IN THE DISTRICT COURT NO LATER THAN THE LAST DAY OF THE APPEAL PERIOD — no additional days are provided for mailing. Fed.R.App.P. 4(a)(3): Fed.R.App.P. 4(a)(4): Fed.R.App.P. 4(a)(5) and 4(a)(6): Fed.R.App.P. 4(c): 28 U.S.C. § 1746 3. Format of the notice of appeal : See also 3pro se 4. Effect of a notice of appeal : 4
Courts of Appeals have jurisdiction conferred and strictly limited by statute: (a) Only final orders and judgments of district courts, or final orders of bankruptcy courts which have been appealed to and fully resolved by a district court under , generally are appealable. A final decision is one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." , , 368 (11th Ci r. 1 983). A magistrate judge's report and recommendation is not final and appealable until judgment thereon is entered by a district court judge. (c). (b) a judgment as to fewer than all parties or all claims is not a final, appealable decision unless the district court has certified the judgment for immediate review under Fed.R.Civ.P. (b). , , (11th Cir. 1984). A judg ment which resolves all issues except matters, such as attorneys' fees and costs, that are collateral to the merits, is immediately appealable. , 486 U.S. 196, 201, , , (1988); , , (11th Cir. 1998). (c) Appeals are permitted from orders "granting, continuing, modifying, refusing or dissolving injunctions or refusing to dissolve or modify injunctions . . ." and from "[i]nterlocutory decrees . . . determining the rights and liabilities of parties to admiralty cases in which appeals from final decrees are allowed." Interlocutory appeals from orders denying temporary restraining orders are not permitted. (d) The certification specified in (b) must be obtained before a petition for permission to appeal is filed in the Court of Appeals. The district court's denial of a motion for certification is not itself appealable. (e) Limited exceptions are discussed in cases including, but not limited to: , , , 69S.Ct. 1221, 1225-26, (1949); , 890 F.2d 371, 376 (11th Cir. 1989); , , , , , (1964). Rev.: 4/04 The timely filing of a notice of appeal is mandatory and jurisdictional. , , (11th Cir. 2001). In civil cases, Fed.R.App.P. (a) and (c) set the following time limits: (a) A notice of appeal in compliance with the requirements set forth in Fed.R.App.P. must be filed in the district court within 30 days after the entry of the order or judgment appealed from. However, if the United States or an officer or agency thereof is a party, the notice of appeal must be filed in the district court within 60 days after such entry. Special filing provisions for inmates are discussed below. (b) "If one party timely files a notice of appeal, any other party may file a notice of appeal within 14 days after the date when the first notice was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period ends later." (c) If any party makes a timely motion in the district court under the Federal Rules of Civil Procedure of a type specified in this rule, the time for appeal for all parties runs from the date of entry of the order disposing of the last such timely filed motion. (d) Under certain limited circumstances, the district court may extend the time to file a notice of appeal. Under Rule 4(a)(5), the time may be extended if a motion for an extension is filed within 30 days after expiration of the time otherwise provided to file a notice of appeal, upon a showing of excusable neglect or good cause. Under Rule 4(a)(6), the time may be extended if the district court finds upon motion that a party did not timely receive notice of the entry of the judgment or order, and that no party would be prejudiced by an extension. (e) If an inmate confined to an institution files a notice of appeal in either a civil case or a criminal case, the notice of appeal is timely if it is deposited in the institution's internal mail system on or before the last day for filing. Timely filing may be shown by a declaration in compliance with or a notarized statement, either of which must set forth the date of deposit and state that first-class postage has been prepaid. Form 1, Appendix of Forms to the Federal Rules of Appellate Procedure, is a suitable format. Fed.R.App.P. (c). A notice of appeal must be signed by the appellant. A district court loses jurisdiction (authority) to act after the filing of a timely notice of appeal, except for actions in aid of appellate jurisdiction or to rule on a timely motion of the type specified in Fed.R.App.P. (a)(4).