REL:09/19/2014
Notice: This opinion is subject to formal revision before publication in the advance
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before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
_________________________
1111422
_________________________
Cadence Bank, N.A.
v.
Goodall-Brown Associates, L.P.
_________________________
1111449
_________________________
Sloss Real Estate Group, Inc., et al.
v.
Goodall-Brown Associates, L.P.
_________________________
1111526
_________________________
Ex parte Sloss Real Estate Group, Inc., et al.
PETITION FOR WRIT OF MANDAMUS
(In re: Goodall-Brown Associates, L.P.
v.
Sloss Real Estate Group, Inc., et al.)
_________________________
1121455
_________________________
Second Avenue Holdings, LLC
v.
Goodall-Brown Associates, L.P.
_________________________
1130054
_________________________
Second Avenue Holdings, LLC
v.
Goodall-Brown Associates, L.P.
Appellate proceedings from Jefferson Circuit Court
(CV-12-900435 and CV-10-903160)
SHAW, Justice.
These consolidated appeals and petition for a writ of
mandamus arise out of litigation pending in the Jefferson
Circuit Court stemming from the alleged breach of a lease
2
1111422; 1111449; 1111526; 1121455; 1130054
agreement, which litigation was originally initiated by
Goodall-Brown Associates, L.P. ("Goodall-Brown"), the lessor.
Following the entry of an order compelling the matter to
arbitration, the defendants below, Sloss Real Estate Group,
Inc. ("SREG"), the lessee; Sloss Goodall-Brown, LLC ("Sloss
Goodall"), the assignee of SREG; Cadence Bank, N.A.
("Cadence"), and Second Avenue Holdings, LLC ("Second
Avenue"), the successors in interest to Goodall-Brown's
original mortgage lender; and Leigh Ferguson, Catherine S.
Crenshaw, Jack Peterson, A. Page Sloss, Jr., Ronald J.
Capello, and Vicki H. Bolton (hereinafter collectively
referred to as "the individual defendants"), and Sloss Real
Estate Company ("SREC"), the alleged alter ego of the
individual defendants in conjunction with SREG and Sloss
Goodall (the individual defendants, SREG, SREC, and Sloss
Goodall are sometimes hereinafter collectively referred to as
"the Sloss defendants"), unsuccessfully sought dismissal of
Goodall-Brown's claims based on the trial court's alleged lack
of subject-matter jurisdiction to order the matter to
arbitration because, they argued, Goodall-Brown lacked
standing to assert the claims.
3
1111422; 1111449; 1111526; 1121455; 1130054
In case no. 1111422, Cadence appeals from the trial
court's order effectively compelling it to arbitration. In
case no. 1111449, the Sloss defendants renew their contention
that the trial court lacked the requisite subject-matter
jurisdiction to compel the parties to arbitration.
Alternatively, in case no. 1111526, the Sloss defendants
petition this Court for a writ of mandamus directing the trial
court to void its order compelling the matter to arbitration
and to dismiss the underlying action based on Goodall-Brown's
alleged lack of standing and that court's resulting lack of
subject-matter jurisdiction. In case no. 1121455 and case no.
1130054, Second Avenue appeals from the trial court's denial
of its request to enjoin discovery in the arbitration
proceeding ordered by that court as to Second Avenue, pending
resolution of the above-captioned appeals and petition. At
the request of the parties, we have consolidated these matters
for the purpose of writing one opinion.1 For the reasons
stated below, in case no. 1111422, we affirm; in case no.
1
The final two appeals in these consolidated matters were
submitted for review on April 23, 2014, thus allowing us to
consider all the appeals and the petition for a writ of
mandamus together.
4
1111422; 1111449; 1111526; 1121455; 1130054
1111526, we deny the petition; and we dismiss the appeals in
cases nos. 1111449, 1121455, and 1130054.
Facts and Procedural History
Goodall-Brown is an Alabama limited partnership; it owns
a parcel of real property located in downtown Birmingham,
which is commonly referred to as the "Goodall-Brown Building."
In 2001, Goodall-Brown obtained from a lender called "The
Bank" a $2,975,000 construction loan, evidenced by a note, to
finance planned renovations to the Goodall-Brown Building. In
connection with that loan, Goodall-Brown executed a "Future
Advance Mortgage, Assignment of Rents and Leases and Security
Agreement" assigning to The Bank as security, among other
collateral, the Goodall-Brown Building, all future rents and
revenues from the Goodall-Brown Building, and "all leases,
subleases, and lease guaranties" relating to the Goodall-Brown
Building. The loan documents were executed on Goodall-Brown's
behalf by Roy Thomas Latimer, Jr., the managing member of
Goodall-Brown Management, L.L.C. ("GBM"), an Alabama limited-
liability company that was a general partner in Goodall-Brown.
5
1111422; 1111449; 1111526; 1121455; 1130054
Additionally, Latimer personally guaranteed repayment of the
note.2
In October 2005, SREG entered into a "Master Lease"
agreement ("the lease") with Goodall-Brown pursuant to which
SREG leased from Goodall-Brown space in the Goodall-Brown
Building. The lease specifically provided that future
disputes among the parties would be submitted to arbitration.3
As permitted by the terms of the lease, and with Goodall-
Brown's consent, in December 2005, SREG purported to assign
2
The record reflects that, in addition to Latimer, Adam
S. Cohen and Stacey C. Dulin, the other members of GBM at that
time, were also initially guarantors of the indebtedness;
however, all guarantors excepting Latimer were subsequently
released from their guarantees.
3
The pertinent provision provides, in full:
"13.1.2.2 Arbitration. Any Dispute, which
remains unresolved at the end of [the] thirty (30)
day [informal-negotiation] period [provided for in
section 13.1.2.1 of the lease], shall be submitted
to binding arbitration in accordance with Chapter I,
Title 9 of the United States Code (Federal
Arbitration Act). Arbitration shall be administered
by the American Arbitration Association ('AAA') in
accordance with its Commercial Arbitration Rules as
supplemented by its Supplementary Procedures for
Complex Cases."
Pursuant to a preceding paragraph in the same document, namely
section 13.1.2, the referenced "Dispute[s]" subject to
arbitration include "any and all such disputes of any nature
whatsoever."
6
1111422; 1111449; 1111526; 1121455; 1130054
its rights under the lease to Sloss Goodall,4 which was wholly
owned by SREG.
The Bank's interest in the Goodall-Brown note and
mortgage was later assigned by the Federal Deposit Insurance
Corporation ("the FDIC"), as receiver of and legal successor
to The Bank, to Superior Bank ("Superior"). In 2006, Superior
and SREG entered into a "Subordination, Non-Disturbance and
Attornment Agreement" ("the attornment agreement")5 pursuant
to which they agreed, among other things, that SREG would not
be added as a party to any foreclosure proceedings that
Superior might initiate against Goodall-Brown; that, in the
event Superior should succeed Goodall-Brown as owner of the
Goodall-Brown Building, the lease would remain in effect; and
that Superior was entitled to exercise the same remedies in
relation to a breach as were afforded Goodall-Brown under the
lease.
4
There is some indication in the record that, at the time
of the purported assignment, Sloss Goodall had not yet been
properly organized; in fact, it appears that Sloss Goodall was
not legally formed until December 8, 2009. However, no party
raises any challenge to the validity of the lease assignment
on that ground.
5
This agreement specifically identified Superior as
"mortgagee," SREG as "lessee," and Goodall–Brown as "owner."
7
1111422; 1111449; 1111526; 1121455; 1130054
The record further reflects that, in July 2010, Goodall-
Brown provided notice to Sloss Goodall via certified mail that
it was terminating the lease as a result of the alleged
continuing default of Sloss Goodall.6 In August 2010,
Superior and Goodall-Brown executed an agreement called the
"Eighth Amendment to Loan Documents And Forbearance
Agreement." This agreement, among other things, acknowledged
that there had been a default under the lease.
In September 2010, Goodall-Brown sued SREG and Sloss
Goodall in the trial court asserting various claims and
seeking to terminate the lease and requesting damages related
to Sloss Goodall's alleged breach (case no. CV-10-903160). In
response, both SREG and Sloss Goodall moved to dismiss case
no. CV-10-903160 or to compel arbitration of the claims
asserted therein, pursuant to the lease.
In the interim, Latimer filed for Chapter 11 bankruptcy
protection in January 2011; his case was later converted to a
proceeding under Chapter 7 of the Bankruptcy Code. According
6
Pursuant to the notice, the lease and Sloss Goodall's
tenancy were to terminate 10 days following service of the
notice, which was, according to the record, effected July 21,
2010.
8
1111422; 1111449; 1111526; 1121455; 1130054
to the pleadings from the bankruptcy court, Latimer was
identified in that proceeding as the sole debtor.
In April 2011, the FDIC seized Superior and transferred
its assets to a bank of the same name, i.e., Superior Bank,
N.A. ("Superior II"). After the addition of other parties and
claims in case no. CV-10-903160,7 and upon the agreement of
all parties, the trial court, on June 24, 2011, entered an
order jointly proposed by the parties staying the action as
to certain parties but requiring that the claims between
Goodall-Brown and SREG and Sloss Goodall proceed to
arbitration, where they remain pending. No party appealed
from that order.
In July 2011, Superior II notified Goodall-Brown of
Goodall-Brown's default on the note secured by the Goodall-
Brown Building. Thereafter, as a result of Goodall-Brown's
continued default, Superior II accelerated the indebtedness,
7
Goodall-Brown subsequently amended its original complaint
to add claims against fictitiously named defendants; against
SREC, the incorporating member of Sloss Goodall; and against
the individual defendants. The individual defendants comprise
the membership and/or management of SREG, Sloss Goodall, and
SREC. Goodall-Brown added the additional defendants based on
its belief that SREG both fraudulently formed Sloss Goodall
and induced Goodall-Brown to agree to the assignment of the
lease to what it refers to as a "sham" corporation.
9
1111422; 1111449; 1111526; 1121455; 1130054
undertook efforts to seize rents due from tenants of the
Goodall Brown Building, and initiated foreclosure proceedings
on the Goodall-Brown Building. In October 2011, however,
before completing the scheduled foreclosure, Superior II sold
the note and assigned all of its interest therein to Second
Avenue.8 In November 2011, Superior II entered receivership,
at which time Cadence purchased Superior II from the FDIC, as
its receiver. Superior was thus acquired by and merged with
Cadence.
In December 2011, despite their earlier demands for
arbitration and their agreement to arbitrate, the Sloss
defendants jointly sought the dismissal of case no. CV-10-
903160 based on the trial court's alleged lack of subject-
matter jurisdiction. More specifically, they contended that
8
Second Avenue, according to Goodall-Brown, was organized
in September 2011 by the management and/or members of SREG and
Sloss Goodall, purportedly "as part of an elaborate scheme for
defendants to 'buy' their way out of the fraud they committed
on Goodall[-Brown]" and/or to "obtain the [Goodall-Brown]
building for far less than the option price in the ...
[l]ease." Further, also according to Goodall-Brown, before
forming Second Avenue, SREG and Sloss Goodall purposely
defaulted on the lease payments in order to ensure Goodall-
Brown's resulting default on the note. Goodall-Brown amended
its original complaint in case no. CV-10-903160 to add
additional factual allegations and claims related to the
formation of Second Avenue and the alleged tortious conduct of
the Sloss defendants.
10
1111422; 1111449; 1111526; 1121455; 1130054
Goodall-Brown lacked "standing" to prosecute the litigation
because, they argued, it had assigned away its interest in the
note and the mortgage, including all claims arising under
those documents, to The Bank. At or around that same time,
Goodall-Brown allegedly filed a supplemental demand for
arbitration with the arbitrators seeking to include Cadence
and Second Avenue in the arbitration proceedings ordered by
the trial court in case no. CV-10-903160 in order that
Goodall-Brown might challenge the validity of the underlying
foreclosure.9 The Sloss defendants later added, as additional
support for their contention that the trial court lacked
jurisdiction, the claim that the personal bankruptcy filing of
Latimer, GBM's sole remaining member, resulted in the
9
This attempt to include Cadence in the pending
arbitration proceedings was apparently premised on Goodall-
Brown's belief that Cadence, one of its previous lenders, was,
based on the contents of the loan documents, both a party to
the lease and guilty of tortious conduct in connection with
the administration of Goodall-Brown's mortgage. Goodall-Brown
explains the rationale for this decision as follows:
"Goodall[-Brown] maintained that Cadence and Second
Avenue were subject to the arbitration provision in
the [lease], and addenda thereto, by virtue of being
successors in interest to Superior ... and having
assumed the position of 'Owner' in the [lease] by
virtue of the Attornment Agreement."
Goodall-Brown's brief, at pp. 3-4.
11
1111422; 1111449; 1111526; 1121455; 1130054
dissolution of GBM and that Goodall-Brown's default and the
resulting foreclosure also terminated any standing that
Goodall-Brown previously possessed with regard to claims
stemming from the Goodall-Brown Building, i.e., "the lawsuit
is being prosecuted and managed by a nonexistent former
general partner of [Goodall-Brown] who has no authority to act
on behalf of the entity."10
Also in December 2011, Second Avenue initiated an
adversary proceeding in Latimer's bankruptcy case seeking to
except from Latimer's bankruptcy discharge a debt allegedly
owed by him to Second Avenue in connection with his purported
conversion of rents allegedly due Superior II, from which
Second Avenue obtained its interest in the note.
Second Avenue subsequently foreclosed and ultimately
purchased the Goodall-Brown Building at the foreclosure sale
conducted on January 3, 2012.
In February 2012, Cadence sued Goodall-Brown in the trial
court, seeking declaratory and injunctive relief (case no. CV-
12-900435).11 More specifically, Cadence sought a declaration
10
See § 10A-5-6.06(b)(1), Ala. Code 1975.
11
Cadence subsequently amended its complaint in case no.
CV-12-900435 to add the American Arbitration Association ("the
12
1111422; 1111449; 1111526; 1121455; 1130054
from the trial court that it was not a party to and had not
succeeded to Goodall-Brown's interest under the lease and was
not, therefore, required to submit to arbitration; Cadence
also sought an injunction preventing Goodall-Brown from
proceeding in arbitration against it. At Cadence's request,
and upon the agreement of all parties, the trial court
consolidated Cadence's declaratory-judgment action (case no.
CV-12-900435) with case no. CV-10-903160.
Goodall-Brown later asked that the trial court also order
that the individual defendants named in case no. CV-10-903160
be required to participate in the arbitration proceedings on
the ground, among others, that conspiracy claims and efforts
to pierce the corporate veils of SREG and Sloss Goodall, which
Goodall-Brown was pursuing in arbitration, were necessarily
intertwined with Goodall-Brown's claims against the individual
defendants. In conjunction with that request, and in an
alleged attempt to corral the parties' various claims into a
single forum and to eliminate the potential for inconsistent
results, Goodall-Brown also requested that the bankruptcy
court before which Latimer's bankruptcy was pending stay the
AAA") as a defendant; however, Cadence later stipulated to the
dismissal of the AAA.
13
1111422; 1111449; 1111526; 1121455; 1130054
adversary proceeding initiated against Latimer by Second
Avenue and compel Second Avenue to participate in the
arbitration ordered by the trial court.
Thereafter, upon the motion of Goodall-Brown, the trial
court, in July 2012, denied Cadence's request for injunctive
relief and stayed case no. CV-12-900435 based on its
alternative conclusions that the question of arbitrability was
for the arbitrators to determine, pursuant to the
incorporation into the lease of the Rules of the American
Arbitration Association ("the AAA"), or that Cadence was
subject to the arbitration provision in the lease pursuant to
both the plain language of the mortgage or of the attornment
agreement. More specifically, as to its alternative holding
that Cadence was, in fact, bound to arbitrate, the trial court
held as follows:
"Second, and alternatively, if this Court is the
proper forum to decide questions of arbitrability,
then there is substantial evidence that Cadence is
subject to the terms of the [lease] and the
arbitration agreement set forth within it. The
Federal Arbitration Act establishes that, as a
matter of federal law, any doubts concerning the
scope of arbitrable issues should be resolved in
favor of arbitration. Moses H. Cone Mem'l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
There is undisputed evidence of several lending
documents which tie Cadence to the [lease]. Each
will be discussed in turn.
14
1111422; 1111449; 1111526; 1121455; 1130054
"A. The Mortgage.
"Cadence concedes in paragraph 9 of its
Complaint that the December 31, 2001, Future Advance
Mortgage, Assignment of Rents and Leases and
Security Agreement (the 'Mortgage') included an
absolute and present assignment and transfer of all
rents and leases, including future leases (such as
the [lease]):5
"The operative provisions provide as follows:
"'2.01 Assignment. Borrower, in
consideration of Lender's making the Loan
as aforesaid and for other good and
valuable consideration, ... does hereby
sell, assign and transfer unto the Lender
all leases, subleases and lease guaranties
of or relating to all or part of the
Mortgaged Property, whether now existing or
hereinafter created or arising, including
without limitation those certain leases, if
any, specifically described on an exhibit
to this Mortgage....
"'....
"'2.04 Present Assignment. It is the
intention of the parties that this
assignment of rents and leases shall be a
present assignment....
"'....
"'2.06 Instruction to Lessees. The
Borrower does further specifically
authorize and instruct each and every
present and future lessee, tenant,
sublessee or subtenant of the whole or any
part of the Mortgaged Property to pay all
unpaid rental agreed upon in any lease,
sublease or tenancy to the Lender upon
15
1111422; 1111449; 1111526; 1121455; 1130054
receipt of demand from said Lender to pay
the same.
"'2.07. Default (Assignment). Upon the
occurrence of any Event of Default, as
described in Paragraph 4.01 of this
Mortgage, then, in addition to the right to
demand and collect directly from tenants
rents accruing from leases of the Mortgaged
Property, Lender shall have all rights and
remedies set forth in Article IV or
elsewhere in this Mortgage....
"'....
"'4.03 Right of Lender to Enter and Take
Possession.
"'....
"'(b) (iii) [The Lender has the right to]
manage and operate the Mortgaged Property
(or any portion thereof selected by Lender)
and exercise all the rights and powers of
the Borrower in its name or otherwise, with
respect to the same, including legal
actions for the recovery of rent, legal
dispossessory actions against tenants
holding over and legal actions in distress
of rent, and with full power and authority
to cancel or terminate any lease or
sublease for any cause or on any ground
which would entitle the Borrower to cancel
the same, and to elect to disaffirm any
lease or sublease made subsequent to this
Mortgage or subordinated to the lien
hereof....'
"(Mortgage, Cadence Complaint, Exhibit B, pp. 8-11.)
"Thus, the provisions of the Mortgage grant the
lender ... a present Assignment of rights under
every present and future lease, which must
16
1111422; 1111449; 1111526; 1121455; 1130054
necessarily include the [lease]. Importantly, the
lender's rights under the [lease] are not contingent
upon a default; rather, the Mortgage evidences a
present assignment of rights whereby the lender has
standing immediately as an assignee of any lease.
The Mortgage provides that any assignee of the
mortgage (such as Cadence) is subject to the
Mortgage and related documents, including the
[lease]:6
"'5.01 Binding Effect. Wherever in
this Mortgage one of the parties hereto is
named or referred to, the heirs,
administrators, executors, successors,
assigns, distributes [sic], and legal and
personal representatives of such party
shall be included, and all covenants and
agreements contained in this Mortgage by or
on behalf of the Borrower or by or on
behalf of Lender shall bind and inure to
the benefit of their respective heirs,
administrators, executors, successors,
assigns, distributes [sic], and legal and
personal representatives, whether so
expressed or not.'
"(Mortgage, Cadence Complaint, Exhibit B, p. 14.)
As such, Cadence is an assignee of the Mortgage and
is likewise subject to the [lease].
"B. The Attornment Agreement.
"In paragraph 12 of its Complaint, Cadence
concedes that it entered into a separate Attornment
Agreement with [SREG]:
"'The Borrower, the Tenant and Superior
Bank, a federal savings bank (the 'Former
Bank'), executed a subordination,
non-disturbance and attornment agreement
dated November 20, 2006....'
17
1111422; 1111449; 1111526; 1121455; 1130054
"The Attornment Agreement gave the mortgagee/lender
and the tenants -- [SREG] and [Sloss Goodall] -- a
direct contractual relationship:
"'1. LESSEE TO ATTORN TO MORTGAGE. ...
"'....
"'(b) In the event that the Mortgagee
shall succeed to the interest of Owner
under such Lease, the Lease shall continue
with the same force and effect as if the
Mortgagee, as Lessor, and the Lessee had
entered into a Lease for a term equal to
the then unexpired term of the Lease...,
and the Lessee hereby attorns and agrees to
attorn to the Mortgagee as its Landlord,
such attornment to be effective and self
operative without the execution of any
further instruments on the part of either
of the parties hereto immediately upon the
succession of Mortgagee to the interest of
Owner under the Lease.... The respective
rights and obligations of the Lessee and
the Mortgagee upon such attornment and
their relationship shall be as tenant and
landlord respectively, for the remaining
term of the Lease, including any renewal
periods set forth in said Lease....'
"(Attornment Agreement, Cadence Complaint, Exhibit D,
p. 2.) The Attornment Agreement provides in paragraph
8 that it applies to any successors and assigns
(including Cadence):
"'This Agreement shall bind and inure to
the benefit of the parties hereto, their
successors and assigns. As used herein,
(a) the term "Lessee" shall include any
subtenant, successors and/or assigns of
Lessee named herein; ... (c) the word
"Mortgagee" shall include the Mortgagee
specifically named and any successors and
18
1111422; 1111449; 1111526; 1121455; 1130054
assigns and shall include anyone or any
entity who shall have succeeded to Owner's
interest in the Leased Premises by, through
or under foreclosure of the Mortgage or as
a result of any other means.'
"(Attornment Agreement, Cadence Complaint, Exhibit D,
p. 4.)
"The Attornment Agreement is actually a 3-party
agreement, which links Goodall[-Brown] (the Owner) to
[SREG] (the Tenant) and the lender and its successors
(Cadence):
"'APPROVALS. The Owner has joined in this
Agreement for the purpose of expressing its
consent and agreement to be bound by the
provisions of Paragraph 1(b) and Paragraph
4 hereof.'
"Id.
"C. The Eighth Amendment.
"On August 5, 2010, the lender and Goodall[-
Brown] executed the Eighth Amendment by which the
lender succeeded to the interest of Goodall[-Brown]
under the [lease]. In regard to the Sloss
[defendants'] Default, the Eighth Amendment provides
in paragraph 4 as follows:
"'[The] Sloss [defendants have] ceased
paying rent and [have] requested an
adjustment to the terms of the [lease].
[Goodall-Brown] and [the] Sloss
[defendants] have conducted negotiations on
a modification of the [lease] to resolve
the default by [the] Sloss [defendants],
but no agreement has been reached by the
parties thereto, and the [lease] remains in
default (the "Sloss Default"). The Sloss
Default is an Event of Default under the
Loan Agreement.'
19
1111422; 1111449; 1111526; 1121455; 1130054
"(Eighth Amendment, Cadence Complaint, Exhibit A, p.
3.)
"The language of the Attornment Agreement, when
combined with the Eighth Amendment, establishes that
the lender becomes the 'Landlord' under the [lease]
when 'an Event of Default under the Mortgage, the
Assignment of Rents and Leases or other mortgage loan
documents has occurred.' When [the] Sloss
[defendants] stopped making rent payments in December
of 2009, this was an 'event of default under the Loan
Agreement.' (Promissory Note, Cadence Complaint,
Exhibit A, p. 3, ¶ 6.) Consequently, when the Sloss
[defendants'] Default occurred in December 2009, it
was an 'Event of Default under the Loan Agreement'
that then triggered the operation of the attornment
provision of the Attornment Agreement which, in turn,
made the lender -- now the Landlord -- a direct party
to the [lease]. The [lease] includes an arbitration
agreement, and Cadence is subject to that agreement.
__________________
"5It is undisputed that the [lease] was pledged
as additional security for the loan from Cadence's
predecessor in interest and was added to the loan
documents by the October 31, 2006, Seventh Amendment
to the Loan Documents. (Seventh Amendment, Cadence
Complaint, Exhibit A.)
"6The [lease] provides that it applies to any
successor of the original Landlord, Goodall[-Brown]:
'this Lease shall inure to the benefit of and be
binding upon Landlord and Tenant and their respective
heirs, executors, legal representatives, successors
and assigns....' (See the [lease], Cadence's
Complaint, Exhibit C, pp. 34, ¶ 14.12.)"
(Some emphasis added; footnotes 7 and 8 omitted.) Cadence
appeals from that decision (case no. 1111422).
20
1111422; 1111449; 1111526; 1121455; 1130054
Additionally, by separate orders, the trial court granted
Goodall-Brown's motion seeking to also compel the individual
defendants to arbitration and further concluded that the Sloss
defendants' motions based on the trial court's alleged lack of
subject-matter jurisdiction were "moot" in light of its June
2011 and July 2012 arbitration orders. The Sloss defendants
also appeal (case no. 1111449). In addition, the Sloss
defendants filed the above-described petition for a writ of
mandamus (case no. 1111526) seeking relief from the trial
court's decision; this Court subsequently ordered answers and
briefs to that petition.
Thereafter, Goodall-Brown again amended its complaint to
add to the pending litigation in case no. CV-10-903160 claims
against Second Avenue and Cadence, including, among others,
its "veil-piercing," wrongful-foreclosure, conspiracy, and
fraud-based claims.12 It further filed, in that action, a new
12
According to Goodall-Brown, this amendment added claims
that Goodall-Brown had previously been pursuing solely in
arbitration in an effort to dispel any future argument that
its claims against the added defendants were barred by the
applicable statutes of limitations. See Porter v. Colonial
Life & Accident Ins. Co., 828 So. 2d 907, 908 (Ala. 2002) ("If
a plaintiff's court action be dismissed to enforce an
arbitration agreement, but, through no fault of the
plaintiff's, the arbitration be not concluded or some of the
plaintiff's claims be not arbitrated, a statute of limitations
21
1111422; 1111449; 1111526; 1121455; 1130054
motion to compel SREC to participate in the already pending
arbitration proceedings. Subsequent to its inclusion as a
defendant, Second Avenue, incorporating the prior pleadings of
the other named defendants in this regard, both moved to
dismiss the consolidated litigation on the ground that
Goodall-Brown lacked standing and sought a motion to stay the
pending arbitration proceedings as to Second Avenue.
At the request of SREG and Sloss Goodall in case no.
1111449, this Court entered an order staying the arbitration
proceedings as to those parties pending the outcome of these
appeals and petition; however, by subsequent order clarifying,
at the request of the parties, our stay ruling, this Court
specifically declined to stay proceedings against Second
Avenue on the ground asserted by the parties that Second
Avenue was not a party to the underlying proceeding at the
time the appeals in case no. 1111422 and case no. 1111449 were
filed and was, therefore, not properly before this Court.
In March 2013, the bankruptcy court entered a memorandum
opinion and corresponding order staying Second Avenue's
could bar a refiling of the unarbitrated claims in court.").
It, therefore, requested that the trial court extend its
previous order staying the litigation to include its second
amended complaint.
22
1111422; 1111449; 1111526; 1121455; 1130054
adversary proceeding against Latimer until the conclusion of
the state-court arbitration based on its conclusion that
"Second Avenue is subject to the arbitration provision in the
lease as a result of the automatic assignment of leases
provision in the security agreement."
On September 11, 2013, at the request of Second Avenue,
the trial court entered, in light of the pending appeals
described above, an order preliminarily enjoining the
scheduled arbitration proceeding set for October 28, 2013, and
the collection of prehearing fees associated therewith;
however, the trial court's order permitted the continuation of
"[a]ll other aspects" of the arbitration proceeding, including
discovery in accordance with the schedule previously
established by the AAA. Second Avenue has appealed that order
to this Court (case no. 1121455). Goodall-Brown, however,
sought clarification as to the trial court's September 11
order. More specifically, Goodall-Brown sought an explanation
from the trial court as to whether the injunction with respect
to the fee payment applied solely to fees associated with an
October 28 final hearing and not to fees associated with
prehearing discovery and/or any other aspect of the
proceeding. Following Second Avenue's initial appeal, and
23
1111422; 1111449; 1111526; 1121455; 1130054
Second Avenue's renewed request for injunctive relief, the
trial court purported to enter two subsequent orders amending
its September 11, 2013, order; each amended order reiterated
the trial court's refusal to, as requested by Second Avenue,
enjoin discovery in the arbitration proceedings. In response
to the trial court's amended orders, Second Avenue filed a
second notice of appeal (case no. 1130054). Thereafter, this
Court granted Second Avenue's motion to stay discovery in the
arbitration proceedings.
I. Case No. 1111422
In case no. 1111422, Cadence appeals from the trial
court's orders staying case no. CV-12-900435 and refusing
Cadence's request for injunctive relief to prevent Goodall-
Brown from proceeding against it in arbitration -- thus, in
effect, compelling Cadence to arbitrate.13 Cadence contends
13
Although Goodall-Brown contends that the trial court's
order was not "[a]n order granting or denying a motion to
compel arbitration" from which an appeal will lie pursuant to
Rule 4(d), Ala. R. App. P., we disagree. As Cadence notes,
although styled as a request for injunctive relief, the denial
of Cadence's motion effectively compelled Cadence to
arbitration with the remaining parties. In a sense, Cadence
preempted a motion to compel arbitration by first filing a
declaratory-judgment action seeking to determine whether it
was required to arbitrate. Moreover, as set out above, the
trial court's order concluded, alternatively, that Cadence was
subject to the arbitration provision in the lease. Further, as
24
1111422; 1111449; 1111526; 1121455; 1130054
that the trial court's rulings were in error because, it
maintains, it is not a signatory to any document containing an
agreement to arbitrate and because the assignment pursuant to
which it assumed certain rights under the lease specifically
excluded the corresponding assumption of duties or obligations
enumerated in the lease.
Although the trial court's ruling was not in response to
a formal motion to compel arbitration, see note 13, supra, our
traditional standard of review in such scenarios is
appropriate:
"'[T]he standard of review of a trial court's
ruling on a motion to compel arbitration at the
instance of either party is a de novo determination
of whether the trial judge erred on a factual or
Cadence also argues, even if, as Goodall-Brown contends, the
trial court's order staying case no. CV-12-900435 was
insufficient to sustain the present appeal, its related order
denying Cadence's accompanying request for injunctive relief
is sufficient to support the present appeal under our rules.
See Rule 4(a)(1)(A), Ala. R. App. P. (providing for an appeal
as of right to our appellate courts "from ... any
interlocutory order granting, continuing, modifying, refusing,
or dissolving an injunction"). Finally, even assuming, as
Goodall-Brown argues in response to Cadence's claims in this
regard, that the appropriate vehicle for consideration of
Cadence's arguments is a petition for a writ of mandamus, and
not a direct appeal, it is well established that this Court
possesses the inherent authority to treat Cadence's notice of
appeal as a petition for a writ of mandamus. See, generally,
F.L. Crane & Sons, Inc. v. Malouf Constr. Corp., 953 So. 2d
366, 372 (Ala. 2006).
25
1111422; 1111449; 1111526; 1121455; 1130054
legal issue to the substantial prejudice of the party
seeking review.' Ex parte Roberson, 749 So. 2d 441,
446 (Ala. 1999). Furthermore:
"'A motion to compel arbitration is
analogous to a motion for summary judgment.
TranSouth Fin. Corp. v. Bell, 739 So. 2d
1110, 1114 (Ala. 1999). The party seeking
to compel arbitration has the burden of
proving the existence of a contract calling
for arbitration and proving that that
contract evidences a transaction affecting
interstate commerce. Id. "After a motion
to compel arbitration has been made and
supported, the burden is on the non-movant
to present evidence that the supposed
arbitration agreement is not valid or does
not apply to the dispute in question."'
"Fleetwood Enters., Inc. v. Bruno, 784 So. 2d 277,
280 (Ala. 2000) (quoting Jim Burke Auto., Inc. v.
Beavers, 674 So. 2d 1260, 1265 n. 1 (Ala. 1995)
(emphasis omitted))."
Vann v. First Cmty. Credit Corp., 834 So. 2d 751, 752–53 (Ala.
2002).
Goodall-Brown met its burden of producing a contract
calling for arbitration.14 On appeal, Cadence presents
arguments as to why the arbitration provision allegedly does
14
There appears to be no dispute among the parties that
the contract at issue "'"evidences a transaction affecting
interstate commerce."'" Vann, 834 So. 2d at 753 (quoting
Fleetwood Enters., 784 So. 2d at 280).
26
1111422; 1111449; 1111526; 1121455; 1130054
not apply in its case.15 Specifically, it argues that it did
not "sign" the lease, which contains the arbitration clause.
Cadence also contends that the arbitration provision is narrow
in that it specifically limits the obligation to arbitrate to
"the parties" to the lease, i.e., Goodall-Brown and SREG. See
note 3, supra.
The trial court held that the mortgage "provide[d] that
any assignee of the mortgage (such as Cadence) is subject to
the Mortgage and related documents, including the [lease],"
and thus "Cadence is an assignee of the Mortgage and is
likewise subject to the [lease]."16 Further, the attornment
agreement "gave the mortgagee/lender and the tenants -- [SREG]
and [Sloss Goodall] -- a direct contractual relationship" and
applied "to any successors and assigns (including Cadence)."
Further, the trial court held that the attornment agreement
was "actually a 3-party agreement, which links Goodall[-Brown]
(the Owner) to [SREG] (the Tenant) and the lender and its
15
Cadence makes no contention that the provision itself is
invalid.
16
The trial court stated, as indicated above, that Cadence
conceded in its complaint that the "Future Advance Mortgage,
Assignment of Rents and Leases and Security Agreement"
included an assignment of all rents and leases.
27
1111422; 1111449; 1111526; 1121455; 1130054
successors (Cadence)."17 Additionally, the trial court held
that, under the eighth amendment to the loan documents, the
"lender" succeeded to the interests of Goodall-Brown under the
lease.
When the Sloss defendants defaulted in December 2009, the
trial court held, the "lender" became the landlord under the
lease. At that time, Superior was the "lender" and thus a
direct party to the lease, which contained the arbitration
provision. The mortgage ultimately passed to Superior II,
which retained the status of "lender." Superior II then sold
the note to Second Avenue and later merged with Cadence.
Although Cadence, as it existed before the merger with
Superior II, had never held the mortgage and its related
agreements, Goodall-Brown's claims against Cadence arise out
of the actions of Superior II, which has now merged with
Cadence. Cadence, of course, never "signed" a contract
containing an arbitration agreement; instead, through Superior
II, it bought the note and its attendant rights and
obligations. Superior II is now Cadence; Cadence stands in
the shoes of Superior II. Atlantic Nat'l Trust, LLC v.
17
The final "lender" in this case is Second Avenue.
28
1111422; 1111449; 1111526; 1121455; 1130054
McNamee, 984 So. 2d 375, 378 (Ala. 2007) ("Under Alabama
common law, '[a] valid assignment gives the assignee the same
rights, benefits, and remedies that the assignor possesses,'
such that the assignee 'simply steps into the shoes of the
assignor ....'" (quoting Nissan Motor Acceptance Corp. v.
Ross, 703 So. 2d 324, 326 (Ala. 1997))). Cadence's claim that
it was not a signatory to the lease is without merit.
Cadence also contends that the assignment provision in the
mortgage clearly excepted from assignment any obligations or
duties arising under the lease.18 Specifically, Cadence
contends that section 2.05 of the mortgage recites that
Cadence accepted no "duties" under any lease. That provision
states:
"No Obligation of Lender Under Leases. The Lender
shall not be obligated to perform or discharge, nor
does it hereby undertake to perform or discharge, any
obligation, duty or liability under any leases,
subleases or rental agreements relating to the
Mortgaged Property, and the Borrower shall and does
hereby agree to indemnify and hold the Lender
harmless of and from any and all liability, loss or
damage which it may or might incur under any leases,
subleases or agreements or under or by reason of the
18
This Court presumes, as set out in some of the
authorities Cadence identifies, that this provision was aimed
at avoiding "'mak[ing] [the lender] responsible for fixing
roofs, unclogging drains, and other obligations of
landlords.'" Cadence's reply brief, at p. 20 n.8.
29
1111422; 1111449; 1111526; 1121455; 1130054
assignment thereof and of and from any and all claims
and demands whatsoever which may be asserted against
it by reason of any alleged obligations or
undertakings on its part to perform or discharge any
of the terms, covenants or agreements contained in
said leases, subleases or agreements. ..."
The language of this provision appears to relate to
obligations to perform under any lease the buyer might enter
into, not a disclaimer of any portion of a lease later
assigned to the lender that the lender might characterize as
an obligation or duty. In any event, as Goodall-Brown argues,
the subsequently executed attornment agreement provides that
the lender "agrees to be bound to the Lessee under all of the
terms, covenants and conditions of the Lease...." (Emphasis
added.)
Cadence also argues that because it did not foreclose on
the Goodall-Brown Building, it did not succeed to Goodall-
Brown's interest under the attornment agreement. That
agreement, however, does not limit succession merely to
instances of foreclosure. Instead, it provides that the
lender also could have assumed Goodall-Brown's role as owner
and landlord "under foreclosure of the Mortgage or as a result
of any other means," presumably including Goodall-Brown's
default. As set out in the trial court's order and quoted
30
1111422; 1111449; 1111526; 1121455; 1130054
above, the original assignment executed by Goodall-Brown
specifically provided Cadence's predecessor in interest the
right to assume management and operation of the Goodall-Brown
Building upon Goodall-Brown's default. It is undisputed that
the assignment inured to the benefit of the original lender's
successors and assigns, such as Superior II. Further,
according to the trial court's order, the subsequently
executed lease was specifically incorporated into and made a
part of the mortgage.
The record establishes that, in 2011, Superior II,
Cadence's predecessor, acted on those assigned rights when it
provided notice to Goodall-Brown and to then tenants of the
Goodall-Brown Building of Goodall-Brown's default and of its
intent to exercise its rights under the loan documents to
seize rental payments due Goodall-Brown from tenants pursuant
to extant lease agreements. Thus, as a direct result of
Goodall-Brown's default and triggering of the assignment and
attornment agreement,19 "Cadence [(Superior II)] was the lender
19
According to the definition included in Cadence's brief
and in the trial court's order compelling Cadence to
arbitrate, the term "attorn" is defined as follows: "'To agree
to become tenant to one as owner or landlord of an estate
previously held of another, or to agree to recognize a new
owner of a property or estate and promise payment of rent to
31
1111422; 1111449; 1111526; 1121455; 1130054
and ... the new, temporary landlord." Therefore, as Goodall-
Brown argues, even if the application of the arbitration
provision is limited specifically to parties to the lease,
when Superior II--now Cadence--obtained the defaulted
mortgage, it stepped into the shoes of Goodall-Brown as the
original landlord. Atlantic Nat'l Trust, LLC, supra. The
assignment did, then, despite Cadence's claims to the
contrary, make Cadence, through Superior II, a party to the
lease.20 Therefore, in case no. 1111422, we affirm the trial
court's judgment as to Cadence.
II. Cases No. 1111449 and No. 1111526
In case no. 1111526, the Sloss defendants petition for a
writ of mandamus directing the trial court to dismiss the
underlying litigation in case no. CV-10-903160 based on its
alleged lack of subject-matter jurisdiction. In case no.
him.'" Cadence's brief, at p. 23 n.10 (quoting Black's Law
Dictionary 128 (6th. ed. 1990)).
20
Because of our disposition of this claim, we pretermit
discussion of the remaining issue raised by Cadence on appeal,
namely that the trial court erred in denying Cadence's request
for a permanent injunction barring Goodall-Brown from
proceeding against it in arbitration. See Favorite Market
Store v. Waldrop, 924 So. 2d 719, 723 (Ala. Civ. App. 2005)
(stating that the court would pretermit discussion of further
issues in light of the dispositive nature of another issue).
32
1111422; 1111449; 1111526; 1121455; 1130054
1111449, they seek essentially the same relief in that they
purport to collectively appeal from the trial court's June 24,
2011, order mooting their motions to dismiss.21 See LaConsay
v. Langley, 13 So. 3d 989, 991-92 (Ala. Civ. App. 2009) ("A
ruling that an issue is moot is not an adjudication on the
merits and is not a final judgment on the pending issue."
(citing Ferguson v. Commercial Bank, 578 So. 2d 1234, 1236-37
(Ala. 1991))). Because "[t]he question of subject-matter
jurisdiction is reviewable by a petition for a writ of
mandamus," we dismiss the appeal in case no. 1111449 and
proceed to consideration of the merits of their petition
seeking a writ of mandamus. Ex parte Liberty Nat'l Life Ins.
Co., 888 So. 2d 478, 480 (Ala. 2003). See also Ex parte
Johnson, 993 So. 2d 875, 881 (Ala. 2008) ("Although the normal
21
To the extent that, in that same order, the trial court
also granted Goodall-Brown's motion to compel the individual
defendants to join the previously ordered arbitration, that
order would clearly have supported a challenge on direct
appeal by the individual defendants. See Rule 4(d), Ala. R.
App. P. ("An order granting or denying a motion to compel
arbitration is appealable as a matter of right ....").
However, the Sloss defendants' filings in case no. 1111449
make clear that they are proceeding only with their standing-
based challenge on appeal. The individual defendants make no
argument concerning the actual merits of the trial court's
order compelling them to arbitrate.
33
1111422; 1111449; 1111526; 1121455; 1130054
basis upon which this Court reviews orders granting or denying
arbitration is by way of direct appeal, see Rule 4(d), Ala. R.
App. P., in this proceeding, the homeowners' contention that
the trial court lacks subject-matter jurisdiction is
appropriately reviewed by way of a petition for a writ of
mandamus.").
Standard of Review
"'The writ of mandamus is a drastic and
extraordinary writ, to be "issued only when there is:
1) a clear legal right in the petitioner to the order
sought; 2) an imperative duty upon the respondent to
perform, accompanied by a refusal to do so; 3) the
lack of another adequate remedy; and 4) properly
invoked jurisdiction of the court." Ex parte United
Serv. Stations, Inc., 628 So. 2d 501, 503 (Ala.
1993); see also Ex parte Ziglar, 669 So. 2d 133, 134
(Ala. 1995).' Ex parte Carter, [807 So. 2d 534,] 536
[(Ala. 2001)]."
Ex parte McWilliams, 812 So. 2d 318, 321 (Ala. 2001).
"Mandamus review is available where the petitioner challenges
the subject-matter jurisdiction of the trial court based on
the plaintiff's alleged lack of standing to bring the
lawsuit." Ex parte HealthSouth Corp., 974 So. 2d 288, 292
(Ala. 2007).
Discussion
The Sloss defendants contend in their petition that
Goodall-Brown lacked the requisite "standing" to initiate the
34
1111422; 1111449; 1111526; 1121455; 1130054
underlying litigation in case no. CV-10-903160 in the trial
court, pursuant to which the Sloss defendants were ultimately
ordered to arbitration. See, e.g., State v. Property at 2018
Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999) ("When a
party without standing purports to commence an action, the
trial court acquires no subject-matter jurisdiction."). The
Sloss defendants explain in their petition that they base this
claim on the fact that, before it initiated the underlying
litigation based on the lease transaction, Goodall-Brown
purportedly had assigned away all of its rights and interest
in the lease to a third party –- Goodall-Brown's original
lender, The Bank. Additionally, the Sloss defendants contend
that, as a result of Latimer's personal-bankruptcy filing, GBM
was dissolved and "the [underlying] lawsuit is being
prosecuted and managed by a nonexistent former general partner
without authority to act on behalf of the plaintiff."
Petition, at p. 8. Assuming, without deciding, that the Sloss
defendants' contention is, in fact, a challenge to Goodall-
Brown's "standing" and not a claim that Goodall-Brown is not
the proper party in interest to pursue the claims asserted by
Goodall-Brown in the underlying litigation, see, e.g., Ex
35
1111422; 1111449; 1111526; 1121455; 1130054
parte MERSCORP, Inc., 141 So. 3d 984 (Ala. 2013), both grounds
are, nonetheless, meritless.22
We first address the second of the Sloss defendants'
claims. The Sloss defendants note that pursuant to Goodall-
22
By addressing this argument as presented by the parties,
and assuming, without deciding, that the Sloss defendants'
contention is a challenge to Goodall-Brown's "standing," this
Court is in no way signaling a retreat from our recent caselaw
clearly "reject[ing] the notion that questions ... regarding
the cognizability of the plaintiffs' legal theories, or
claims, are 'standing' issues rather than 'cause of action'
issues." Ex parte MERSCORP, 141 So. 3d at 992. "This Court
has recently noted: '[T]he concept [of standing] appears to
have no necessary role to play in respect to private-law
actions, which, unlike public cases ..., come with established
elements that define an adversarial relationship and
"controversy" sufficient to justify judicial intervention.'"
Poiroux v. Rich, [Ms. 1120734, March 14, 2014] ___ So. 3d ___,
(Ala. 2014) (quoting Ex parte BAC Home Loans Servicing,
LP, [Ms. 1110373, September 13, 2013] ___ So. 3d ___, ___
(Ala. 2013)). Further,
"[i]n private-law actions (e.g., a claim of
negligence ...), if the elements are met, the
plaintiff is entitled to judicial intervention; if
they are not met, then the plaintiff is not entitled
to judicial intervention. Everything necessary to
justify judicial intervention, by definition,
inheres in those elements that we say constitute a
'cause of action' in and by our courts. ... At a
very fundamental level, the concept of standing is
already embodied in the various elements prescribed,
including the common requirement of proof of a
sufficient existing or threatened injury."
Ex parte BAC, ___ So. 3d at ___. See also Wyeth, Inc. v. Blue
Cross & Blue Shield of Alabama, 42 So. 3d 1216, 1220 (Ala.
2010).
36
1111422; 1111449; 1111526; 1121455; 1130054
Brown's partnership agreement, a co-general partner's interest
terminates immediately upon the dissolution of that general
partner. It is, as they argue, undisputed that GBM, which is
owned solely by Latimer, is one of two co-general partners of
Goodall Brown. The Sloss defendants further cite GBM's
operating agreement, which provides that a member's ownership
interest in GBM is terminated upon the filing of a bankruptcy
petition, and the undisputed fact that Latimer, the sole owner
and member of GBM, personally filed for bankruptcy protection.
Thus, they argue that pursuant to the terms of the GBM
operating agreement, Latimer's ownership interest in GBM was
terminated as a result of his bankruptcy filing; that
termination of the membership interest of its sole member
dissolved GBM as a matter of law; and that GBM's dissolution
automatically terminated its partnership interest in Goodall-
Brown.
Contrary to the claims of the Sloss defendants, however,
and as Goodall-Brown argues in opposition, "[s]tanding is
'"'[t]he requisite personal interest that must exist at the
commencement of the litigation.'"'" Cadle Co. v. Shabani, 4
So. 3d 460, 462–63 (Ala. 2008) (emphasis added) (quoting
Pharmacia Corp. v. Suggs, 932 So. 2d 95, 98 (Ala. 2005),
37
1111422; 1111449; 1111526; 1121455; 1130054
quoting in turn In re Allison G., 276 Conn. 146, 156, 883 A.2d
1226, 1231 (2005)). See also Bernals, Inc. v.
Kessler-Greystone, LLC, 70 So. 3d 315, 319 (Ala. 2011). Here,
Latimer's bankruptcy filing may, in fact, have had the effect
of dissolving GBM, as the Sloss defendants claim. Regardless,
however, the filing date of Latimer's bankruptcy did not occur
until after the 2010 filing date of Goodall-Brown's complaint
initiating case no. CV-10-903160. Thus, irrespective of
Latimer's present interest in GBM or GBM's current legal
status, it is undisputed that, at the time of commencement of
the litigation, the alleged event of dissolution on which this
particular claim is based had not yet occurred and, therefore,
had not worked to deprive Goodall-Brown of standing as the
Sloss defendants contend. Moreover, § 10A-9-8.03, Ala. Code
1975, provides, in pertinent part, that "a limited partnership
continues after dissolution ... for the purpose of winding up
its activities," including "prosecut[ing] and defend[ing]
actions and proceedings, whether civil, criminal, or
administrative ... , [and] settl[ing] disputes." There is,
therefore, nothing suggesting that a party without standing
purported to commence or to continue the underlying action.
See Property at 2018 Rainbow Drive, supra.
38
1111422; 1111449; 1111526; 1121455; 1130054
We now turn to the Sloss defendants' claim that Goodall-
Brown's assignment in connection with the construction loan
originally obtained from The Bank constituted a transfer of
all of Goodall-Brown's legally protected rights under the
assigned leases and the mortgage. In support of their
contentions in this regard, the Sloss defendants rely
primarily on Associates of Selma, Inc. v. Whetstone, 628 So.
2d 578 (Ala. 1993). Whetstone involved the appeal of, among
other claims, a deficiency judgment obtained by Whetstone
against the corporate defendant to whom Whetstone had sold a
trailer park. 628 So. 2d at 579. In connection with the
sale, the defendant executed a note to Whetstone for a portion
of the purchase price, which note was secured by a mortgage on
the trailer park. Whetstone later assigned the note to
Peoples Bank and Trust Company of Selma ("Peoples Bank") as
collateral for a mortgage loan Whetstone obtained from Peoples
Bank. The language of the assignment specifically included
the transfer of "'all rights accrued or to accrue to
[Whetstone] under said Mortgage.'" Id. Despite the
assignment, Whetstone continued to collect the defendant's
monthly rental payments, which he then remitted to Peoples
Bank. Id. Thereafter, however, the defendant defaulted and
39
1111422; 1111449; 1111526; 1121455; 1130054
Peoples Bank foreclosed; Whetstone purchased the park at
foreclosure, then successfully sued the defendant in the trial
court to recover the deficiency balance remaining on the
original purchase-money mortgage. Id.
On appeal, this Court considered the following issue:
"[W]hether Whetstone's assigning to [Peoples Bank]
the note and mortgage executed by [the corporate
defendant] to Whetstone operated to cut off
Whetstone's right to sue for a deficiency following
the default by Associates and the resulting
foreclosure and sale by [Peoples Bank]."
Id. We ultimately answered that question in the affirmative
based on the following rationale:
"The language of the assignment executed by
Whetstone to the Bank is that of an unconditional or
unqualified assignment; therefore, '[i]t is a
complete transfer of the whole thing granted or a
completed transfer of the entire interest of
[Whetstone] in the particular subject matter [here,
the note and mortgage executed by Associates].' 6A
C.J.S. Assignments § 2, p. 591 (1975).
"Whetstone's unconditional assignment to the
Bank was an unqualified transfer of Whetstone's
interest in the note and mortgage executed by [the
corporate defendant]; therefore, '[u]nless the
assignment is void or otherwise invalid, [Whetstone
lost] all right to control or enforce' the terms of
the note and mortgage, 'and he has no right except as
he may sue for the benefit of his assignee, to
recover judgment on the claim, or to recover damages
for breach of the contract assigned.' 6A C.J.S.
Assignments § 96, p. 753 (1975)."
328 So. 2d at 579-80 (third emphasis added).
40
1111422; 1111449; 1111526; 1121455; 1130054
In the present case, pursuant to the plain language of the
assignment included in Goodall-Brown's original mortgage, the
parties intended that the assignment be "a present
assignment." Nonetheless, that same agreement indisputably
provided that Goodall-Brown retained the right to collect
rents "so long as there exist[ed] no event of default" on
Goodall-Brown's mortgage obligation. Thus, unlike the facts
in Whetstone, here, despite the assignment, Goodall-Brown
retained, as the original lessor, rights attendant to the
assigned leases if and until it defaulted on the obligation
secured by the leases.23 See Chattanooga Sav. Bank v.
Crawford, 206 Ala. 530, 532, 91 So. 316, 317 (1921) ("A
general statement of the effect of an assignment as collateral
security for a debt, in equity, is that it gives the assignee
only a qualified interest in the assigned chose to the extent
of 'the debt or liability secured, although the assignment is
absolute on its face' ... and, when the debt for which the
23
This fact also distinguishes the present case from
Bernals, on which the Sloss defendants also rely in their
petition. Specifically, in Bernals, we concluded that the
party commencing the litigation, who was not a party to the
lease agreement, lacked standing to sue. 70 So. 3d at 319.
41
1111422; 1111449; 1111526; 1121455; 1130054
collateral is given has been paid, the right to hold and
enforce the same in equity ceases.").
The record suggests that, in or around 2008, the Sloss
defendants reduced their rental payments to less than the
agreed upon amount and that, in or around December 2009, they
halted all lease payments but continued to collect rents from
tenants who occupied the Goodall-Brown Building pursuant to
sublease agreements. According to the petition, Goodall-Brown
did not default until 2011. Petition, at 4.
We have previously observed that the concept of standing
to sue turns upon the demonstration of an injury to a legally
protected right held by the plaintiff:
"Standing requires injury in fact. This Court
stated in State v. Property at 2018 Rainbow Drive,
740 So. 2d 1025 (Ala. 1999):
"'Standing ... turns on "whether the
party has been injured in fact and whether
the injury is to a legally protected
right." Romer v. Board of County Comm'rs
of the County of Pueblo, 956 P.2d 566, 581
(Colo. 1998) (Kourlis, J., dissenting)
(emphasis added [in Property at 2018
Rainbow Drive]). See also NAACP v. Town of
East Haven, 892 F. Supp. 46 (D.Conn.
1995)...."
"'....'
"740 So. 2d at 1027–28.
42
1111422; 1111449; 1111526; 1121455; 1130054
"'If a named plaintiff has not been injured by
the wrong alleged in the complaint, then no case or
controversy is presented and the plaintiff has no
standing to sue either on his own behalf or on behalf
of a class.' Ex parte Prudential Ins. Co. of
America, 721 So. 2d 1135, 1137 (Ala. 1998); see also
Ex parte Blue Cross & Blue Shield of Alabama, 582
So. 2d 469, 474 (Ala. 1991). A party's injury must
be 'tangible,' see Reid v. City of Birmingham, 274
Ala. 629, 639, 150 So. 2d 735, 744 (1963); and a
party must have 'a concrete stake in the outcome of
the court's decision.' Brown Mech. Contractors, Inc.
v. Centennial Ins. Co., 431 So. 2d 932, 937 (Ala.
1983)."
Kid's Care, Inc. v. Alabama Dep't of Human Res., 843 So. 2d
164, 166-67 (Ala. 2002).
Here, whatever other rights and interests were assigned
by Goodall-Brown, it clearly retained the right to collect
rents from its tenants of the Goodall-Brown Building so long
as it remained current on its mortgage obligation. In its
complaint initiating case no. CV-10-903160, Goodall-Brown
alleged that the Sloss defendants "failed to make payments
[they were] contractually obligated [to make] under the terms
of the [l]ease." Similarly, as the petition notes, Goodall-
Brown's amended complaint also includes, among other theories
of recovery, claims based on the Sloss defendants' alleged
failure to make payments under the lease -- payments to which
Goodall-Brown was contractually entitled before its mortgage
43
1111422; 1111449; 1111526; 1121455; 1130054
default –- and also alleges that during the time the Sloss
defendants were not making payments due Goodall-Brown under
the lease, they were converting rent moneys remitted by
subtenants. Thus, Goodall-Brown has clearly alleged a
discernible injury to a legally protected right, namely the
Sloss defendants' purported interference with its right to
collect rent moneys pursuant to tenant lease agreements.24
"A writ of mandamus is a drastic and extraordinary remedy,
and to justify issuance of such a writ there must be a clear
showing of injury to the petitioner." Ex parte Thomas, 628
So. 2d 483, 485 (Ala. 1993) (citing Ex parte J.E.W., 608 So.
2d 728 (Ala. 1992) (emphasis added)). Because we conclude
that there is sufficient evidence establishing Goodall-Brown's
standing to initiate the underlying litigation, we must
necessarily find that the Sloss defendants, the petitioners,
have not made a sufficient showing of a clear legal right to
the relief sought. We, therefore, deny their petition for a
writ of mandamus.
24
Under this same analysis, Goodall-Brown would similarly
be the proper party in interest to pursue the unpaid-rent
claim for the period before Goodall-Brown's mortgage default.
See MERSCORP, Inc., supra. See also Ex parte Simpson, 36 So.
3d 15, 24-25 (Ala. 2009).
44
1111422; 1111449; 1111526; 1121455; 1130054
III. Case No. 1121455 and Case No. 1130054
In case no. 1121455 and case no. 1130054, Second Avenue
appeals from the orders of the trial court staying the pending
arbitration proceedings as to Second Avenue but refusing to
also enjoin the discovery process while these consolidated
appeals remained pending. Based on our resolution of case no.
1111422, above, any challenge to the trial court's refusal to
stay the discovery process in the pending arbitration
proceeding is moot. See Ex parte Connors, 855 So. 2d 486, 488
(Ala. 2003) ("[I]f a case has become moot, or [if a] judgment
would not accomplish an end recognized as sufficient in law,
there is no necessity for the judgment, the court will decline
to consider the merits, and [the court] will dismiss the
case." (emphasis omitted)). See also note 12, supra. We,
therefore, dismiss these two appeals -- case no. 1121455 and
case no. 1130054.
1111422 -- AFFIRMED.
Stuart, Bolin, Parker, Main, Wise, and Bryan, JJ., concur.
Murdock, J., concurs in the result.
Moore, C.J., dissents.
45
1111422; 1111449; 1111526; 1121455; 1130054
1111449 -- APPEAL DISMISSED.
Moore, C.J., and Stuart, Bolin, Parker, Murdock, Wise, and
Bryan, JJ., concur.
Main, J., concurs in the result.
1111526 -- PETITION DENIED.
Moore, C.J., and Stuart, Bolin, Parker, Wise, and Bryan,
JJ., concur.
Murdock and Main, JJ., concur in the result.
1121455 -- APPEAL DISMISSED.
Moore, C.J., and Stuart, Bolin, Parker, Murdock, Main,
Wise, and Bryan, JJ., concur.
1130054 -- APPEAL DISMISSED.
Moore, C.J., and Stuart, Bolin, Parker, Murdock, Main,
Wise, and Bryan, JJ., concur.
46
1111422; 1111449; 1111526; 1121455; 1130054
MURDOCK, Justice (concurring in the result in case no. 1111422
and case no. 1111526).
As a general rule, a court's order denying a motion to
dismiss or a motion for a summary judgment is not reviewable
on appeal by way of a petition for a writ of mandamus.
Ex parte Jackson, 780 So. 2d 681, 684 (Ala. 2000). As the
main opinion notes, among the exceptions to this general rule
are a trial court's order denying a motion to dismiss or a
motion for a summary judgment where the basis for the motion
is a purported lack of standing on the part of the plaintiff,
which, in turn, gives rise to a question of subject-matter
jurisdiction on the part of the trial court. ___ So. 3d at
___ (citing Ex parte Liberty Nat'l Life Ins. Co., 888 So. 2d
478, 480 (Ala. 2003)).
In the present case, the basis for the motion in question
is the allegation by the Sloss defendants25 that, "before it
initiated the underlying litigation based on the lease
transaction, Goodall-Brown [Associates, L.P.,] purportedly had
25
Because of the number of defendants defined in the main
opinion as "the Sloss defendants," I am using that term as
defined in the main opinion.
47
1111422; 1111449; 1111526; 1121455; 1130054
assigned away all of its rights and interest in the lease to
a third party" and/or the fact, as alleged by the Sloss
defendants, that "as a result of [Thomas] Latimer's personal-
bankruptcy filing, [Goodall-Brown Management, L.L.C.,] was
dissolved and 'the [underlying] lawsuit is being prosecuted
and managed by a nonexistent former general partner without
authority to act on behalf of the plaintiff.'" ___ So. 3d at
___. Consistent with the authorities cited in note 22 of the
main opinion, these issues are not, in fact, standing issues
but, instead, are issues that go either to the merits of the
claims asserted by Goodall-Brown Associates (e.g., whether
Goodall-Brown Associates can prove that, notwithstanding its
assignment of certain rights under the lease agreement, it
retained sufficient rights or interest in that agreement to be
able to prove the elements of a breach-of-contract claim (and
the elements of any other claims it may assert related to the
lease agreement) or to the question of who is the real party
in interest in this case. In any event, they are not properly
framed as "standing" issues under this Court's recent
precedents, and I would deny the petition for the writ of
48
1111422; 1111449; 1111526; 1121455; 1130054
mandamus on this basis alone without discussion of the
elements of standing. Therefore, in case no. 1111526 I concur
in the result.
I also concur in the result in case no. 1111422. As the
main opinion observes: "'"[A] valid assignment gives the
assignee the same rights, benefits, and remedies that the
assignor possesses," such that the assignee "simply steps into
the shoes of the assignor ...."'" ___ So. 3d at ___ (quoting
Atlantic Nat'l Trust, LLC v. McNamee, 984 So. 2d 375, 378
(Ala. 2007), quoting in turn Nissan Motor Acceptance Corp. v.
Ross, 703 So. 2d 324, 326 (Ala. 1997)). Here, there was an
assignment of the mortgage from Superior Bank ("Superior I")
to Superior Bank, N.A. ("Superior II"). In addition, however,
it is the fact that there was a merger of Superior II and
Cadence Bank, N.A. ("Cadence"), that ultimately subjects the
resulting entity, which in this case retained the name
"Cadence," to the alleged obligations and liabilities of
Superior II arising from Superior II's actions before that
merger. That is, I find apposite the principle that, "[a]s a
general rule, a corporation formed by consolidation or merger
49
1111422; 1111449; 1111526; 1121455; 1130054
is responsible for the debts and liabilities of the
constituent corporations, whether based on contractual or tort
liability," 19 C.J.S. Corporations § 910 (2007) (footnote
omitted), and that, therefore, "[l]iability may be imposed
upon a successor corporation for the tortious conduct of its
predecessor, if there has been a merger or consolidation," 19
C.J.S. Corporations § 913 (2007) (footnote omitted). This
principle has been codified in the laws of Alabama governing
corporations and, specifically, corporate mergers:
"(a) When a merger takes effect:
"....
"(3) The surviving corporation shall be
responsible and liable for all the liabilities and
obligations of each corporation party to the merger;
and neither the rights of creditors nor any liens
upon the property of any corporation party to the
merger shall be impaired by the merger;
"(4) Any claim existing or action or proceeding
pending by or against any corporation party to the
merger may be prosecuted, or continued, as if the
merger had not taken place, or the surviving
corporation may be substituted in the action or
proceeding for the corporation whose existence ceased
...."
Ala. Code 1975, § 10A-2-11.06.
50
Cadence Bank N.A. v. Goodall-Brown Associates, L.P.
Combined Opinion