Limestone Creek Developers, LLC v. Stuart Trapp et al.
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Limestone Creek Developers, LLC ("LCD"), sued Stuart Trapp and two companies in which Trapp had a controlling interest (Kyvest, Ltd., and Redesign, Inc.) after Trapp was unable or unwilling to close on a contract he had personally entered into agreeing to purchase all the lots in a new subdivision owned by LCD. The trial court entered a summary judgment in favor of the Trapp defendants, and LCD appealed. While expressing no opinion with regard to whether that contract violated state law, the Supreme Court nevertheless held that the contract in question was void because it violated section 1.2.3 of the MCSR. Accordingly, the trial court correctly entered a summary judgment in favor of the Trapp defendants on LCD's breach-of-contract claim, as well as LCD's other claims, which were dependent on that contract. The judgment of the trial court was affirmed.
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REL: 08/17/2012 Notice: T h i s o p i n i o n i s s u b j e c t t o f o r m a l r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , A l a b a m a A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ( ( 3 3 4 ) 2 2 9 ¬ 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA SPECIAL TERM, 2012 1110838 Limestone Creek Developers, LLC v. S t u a r t Trapp e t a l . Appeal from Madison C i r c u i t Court (CV-10-900) STUART, Justice. Limestone Trapp Creek Developers, L L C ("LCD"), a n d two c o m p a n i e s i n w h i c h interest companies Kyvest, Trapp had a L t d . , and Redesign, are hereinafter referred sued Stuart controlling I n c . ( t h e s e two to collectively as "the 1110838 Trapp companies," w h i l e collectively as "the a l l the Trapp defendants defendants") C i r c u i t C o u r t a f t e r T r a p p was unable are referred i n the to Madison o r u n w i l l i n g t o c l o s e on a c o n t r a c t he had p e r s o n a l l y e n t e r e d i n t o a g r e e i n g t o p u r c h a s e all the court lots i n a new entered defendants, a and s u b d i v i s i o n owned b y summary LCD judgment appeals. We in LCD. favor of The trial the Trapp affirm. I. Sometime i n l a t e 2007, Mark Y a r b r o u g h and T e r r y M c D o n a l d were c o n t a c t e d by Joe W i l l i a m H u l s e y t o gauge t h e i r i n p u r c h a s i n g some p r o p e r t y t h a t H u l s e y ' s Hulsey, and owned i n Toney. M c D o n a l d had subdivisions, previous a project. personally subsequent was experience m o t h e r , M a r g a r e t B. aware t h a t Y a r b r o u g h related to developing and he b e l i e v e d h i s m o t h e r ' s p r o p e r t y m i g h t s u i t e d f o r such before Joe H u l s e y interest Y a r b r o u g h and M c D o n a l d had purchased development p e r i o d of a p p r o x i m a t e l y into property a and subdivision; never overseen however, be its over 20 y e a r s t h e y had done e x t e n s i v e a site work f o r T r a p p i n c o n n e c t i o n w i t h s u b d i v i s i o n s h i s c o m p a n i e s had this developed, and opportunity. t h e y a c c o r d i n g l y c o n t a c t e d him Trapp was in 2 the midst of to discuss developing 1110838 another s u b d i v i s i o n , The L a n d i n g s , l e s s t h a n f i v e m i l e s f r o m H u l s e y ' s p r o p e r t y , and, a f t e r v i s i t i n g Mrs. H u l s e y ' s p r o p e r t y , he expressed McDonald to subsequently thereafter agreed an interest construct purchased i n working houses it. had d i s c u s s i o n s on Yarbrough property McDonald, a bank o f f i c i a l t o l e n d money t o f u n d b o t h initial the Yarbrough, with with Yarbrough i f they and who Mrs. that Trapp and Hulsey she was visited comfortable with McDonald, and of the complete. thereafter expected t o b u i l d orally subsequent p u r c h a s e o f l o t s f r o m them once t h e i n i t i a l d e v e l o p m e n t s u b d i v i s i o n was Trapp and McDonald's purchase o f H u l s e y ' s p r o p e r t y and Trapp's proposed and The L a n d i n g s to verify the general types of houses on t h e p r o p e r t y , a n d s h e , Y a r b r o u g h Trapp collectively agreed to certain r e s t r i c t i o n s and covenants t h a t would govern t h e p r o p e r t y . A t some p o i n t , Y a r b r o u g h a n d M c D o n a l d c r e a t e d t h e e n t i t y known as LCD. On January 9, 2008, Yarbrough and McDonald formally s i g n e d a c o n t r a c t w i t h M r s . H u l s e y on b e h a l f o f LCD a g r e e i n g t o p u r c h a s e a p p r o x i m a t e l y 28 a c r e s f o r $560,000. was c o n t i n g e n t on conducting soil an e n g i n e e r tests to examining confirm 3 that The c o n t r a c t t h e p r o p e r t y and the property was 1110838 suitable for residential development, and Yarbrough M c D o n a l d t h e r e a f t e r h i r e d Nash E n g i n e e r i n g , LLC, those t e s t s . for on to complete Nash E n g i n e e r i n g a l s o d r a f t e d an i n i t i a l layout t h e s u b d i v i s i o n , d i v i d i n g t h e p r o p e r t y i n t o 51 l o t s Trapp's wide. LCD further request that each l o t be Trapp regarding LCD the initial a $30,000 p r i c e was price approximately construct The discussed $29,000 because decorative subdivision comparable Trapp created also between also for the the sign outside name for the engaged i n f r o m LCD f o r increase the sign to the a slight Trapp feet t h e p r o p e r t y , and T r a p p e v e n t u a l l y a g r e e d t o p u r c h a s e t h e 51 l o t s $30,000 e a c h . based a p p r o x i m a t e l y 100 t h e r e a f t e r c l o s e d on t h e p r o p e r t y . negotiations with and parties wanted LCD entrance new The to from of to the Landings. subdivision Heritage Landings. On March 7, 2008, Trapp signed a contract agreeing to p u r c h a s e t h e 51 l o t s i n H e r i t a g e L a n d i n g s f r o m LCD f o r $30,000 each. P u r s u a n t t o the terms of the c o n t r a c t , Trapp a g r e e d t o p u r c h a s e 10 l o t s once i n i t i a l development of the subdivision was c o m p l e t e d and t h e n t o p u r c h a s e an a d d i t i o n a l 7 l o t s the next 6 months. For a l l lots 4 other than the within first 10, 1110838 T r a p p was o b l i g a t e d t o p a y t h e c o r r e s p o n d i n g i n t e r e s t on LCD's bank l o a n a l o n g w i t h t h e $30,000 l o t p r i c e . Following site work laying lots on the execution the property, out s t r e e t s . would need of the c o n t r a c t , such When i t was as the initial completed, and LCD his the ability paid economic finalize conditions the Heritage Landings purchase was finalize contract; longer because t h a t had n e g a t i v e l y of affected home-building business. On June 15, 2010, breach-of-contract LCD sued Trapp, c l a i m s and s e e k i n g asserting fraud sought a judgment from the t r i a l from d e n y i n g the v a l i d i t y and s p e c i f i c performance of t h e c o n t r a c t as w e l l as damages, i n c l u d i n g a t t o r n e y f e e s . also an On o r a b o u t June 15, p u r s u a n t t o the terms of the to and 12 o f t h e T r a p p w o u l d n o t do s o , a s s e r t i n g t h a t he no prevailing his of land Trapp t h e r e a f t e r s o u g h t t o have T r a p p purchase of l o t s however, had development that systems, e n g i n e e r t o c o m p l e t e t h e n e c e s s a r y work. 2009, commenced c l e a r i n g the discovered engineered septic LCD court of the c o n t r a c t . estopping Trapp LCD Trapp filed an answer on A u g u s t 27, 2010, g e n e r a l l y d e n y i n g t h e a l l e g a t i o n s o f LCD's c o m p l a i n t . On A u g u s t 16, 2011, LCD 5 f i l e d an amended 1110838 complaint, adding the a s s e r t i n g an a l t e r ego of the Trapp t h e o r y and s e e k i n g Trapp companies. a summary j u d g m e n t . thereafter filed companies The their LCD as defendants "to p i e r c e the subsequently f i l e d and veil" a motion f o r Trapp d e f e n d a n t s f i l e d a response own summary-judgment m o t i o n , t h a t T r a p p ' s c o n t r a c t w i t h LCD was arguing v o i d because i t purported t o s e l l l o t s i n a new s u b d i v i s i o n before the county i s s u e d permit the in to develop 11-24-2(a), A l a . control Code 1975, of various Subdivision Regulations December 27, holding that 11-24-2(a) court entered other d e p e n d e n t on motion the and d e f e n d a n t s on LCD's part s t a t u t e s , § 11-24-1 e t violation On subdivision, to a the seq., provisions 2011, the summary trial alter, the void. judgment and § subdivisionand Madison which, the in trial c o n t r a c t , w h i c h was amend, o r vacate 6 entered in County favor claim, as void. the order § the trial the of court an Trapp v i o l a t e d Accordingly, LCD's b r e a c h - o f - c o n t r a c t the of Code 1975, court b e t w e e n LCD therefore claims, county Ala. in violation the ("MCSR"). contract was of and Trapp w e l l as held, on were a l l LCD's s u b s e q u e n t j u d g m e n t was denied, 1110838 and, on M a r c h 29, 2012, LCD f i l e d i t s n o t i c e o f a p p e a l t o t h i s Court. II. LCD argues that the t r i a l court erred i n entering summary j u d g m e n t i n f a v o r o f t h e T r a p p d e f e n d a n t s . this a We r e v i e w argument p u r s u a n t t o t h e f o l l o w i n g s t a n d a r d : " T h i s C o u r t ' s r e v i e w o f a summary j u d g m e n t i s de novo. W i l l i a m s v. S t a t e Farm Mut. A u t o . I n s . Co., 886 So. 2d 72, 74 ( A l a . 2 0 0 3 ) . We a p p l y t h e same s t a n d a r d o f r e v i e w as t h e t r i a l court applied. S p e c i f i c a l l y , we must d e t e r m i n e w h e t h e r t h e movant has made a p r i m a f a c i e s h o w i n g t h a t no g e n u i n e i s s u e of m a t e r i a l f a c t e x i s t s a n d t h a t t h e movant i s e n t i t l e d t o a j u d g m e n t as a m a t t e r o f l a w . R u l e 5 6 ( c ) , A l a . R. C i v . P.; B l u e C r o s s & B l u e S h i e l d o f A l a b a m a v. H o d u r s k i , 899 So. 2d 949, 952-53 ( A l a . 2004). I n m a k i n g s u c h a d e t e r m i n a t i o n , we must r e v i e w t h e e v i d e n c e i n t h e l i g h t most f a v o r a b l e t o t h e nonmovant. W i l s o n v. Brown, 496 So. 2d 756, 758 (Ala. 1986). Once t h e movant makes a p r i m a f a c i e s h o w i n g t h a t t h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t , t h e b u r d e n t h e n s h i f t s t o t h e nonmovant t o produce ' s u b s t a n t i a l e v i d e n c e ' as t o t h e e x i s t e n c e of a genuine i s s u e o f m a t e r i a l f a c t . B a s s v. S o u t h T r u s t Bank o f B a l d w i n C o u n t y , 538 So. 2d 794, 797-98 ( A l a . 1 9 8 9 ) ; A l a . Code 1975, § 12-21-12." Dow v. A l a b a m a (Ala. Democratic P a r t y , 897 So. 2d 1035, 1038-39 2004). III. The gravamen o f LCD's argument on a p p e a l i s that i t s c o n t r a c t w i t h T r a p p d i d n o t v i o l a t e § 1 1 - 2 4 - 2 ( a ) o r t h e MCSR 7 1110838 and t h a t the trial c o n t r a c t v o i d and Trapp court accordingly e r r e d by declaring that e n t e r i n g a summary j u d g m e n t i n f a v o r o f defendants. Section 11-24-2(a) states, in the relevant part: " I t s h a l l be t h e d u t y o f t h e owner and d e v e l o p e r o f e a c h s u b d i v i s i o n t o have a l l c o n s t r u c t i o n c o m p l e t e d in conformity with this c h a p t e r and, p r i o r to b e g i n n i n g any c o n s t r u c t i o n o r d e v e l o p m e n t , t o s u b m i t the proposed p l a t to the county commission f o r a p p r o v a l and o b t a i n a p e r m i t t o d e v e l o p as r e q u i r e d in this section. The p e r m i t t o d e v e l o p s h a l l be o b t a i n e d before the a c t u a l s a l e , o f f e r i n g f o r s a l e , t r a n s f e r , o r l e a s e o f any l o t s f r o m t h e s u b d i v i s i o n o r a d d i t i o n t o t h e p u b l i c , i t must i n c l u d e a p l a n t o d e l i v e r u t i l i t i e s i n c l u d i n g w a t e r , and s h a l l o n l y be i s s u e d upon a p p r o v a l o f t h e p r o p o s e d p l a t by the county commission." (Emphasis added.) not violate § LCD 11-24-2(a) because, "the p u b l i c " as "the p u b l i c " i s not whom the owner defined intended and/or engaged i n a j o i n t v e n t u r e ; generally LCD argues, t h a t term i s used i n the t h a t the term i s not with argues t h a t i t s c o n t r a c t w i t h Trapp d i d refers to the Trapp statute. i n § 11-24-2(a), The not term LCD argues t o encompass a b u s i n e s s partner developer r a t h e r , LCD ultimate of a and is subdivision argues, "the purchaser of a i n i t i a l development of the s u b d i v i s i o n i s complete. d e f e n d a n t s , h o w e v e r , u r g e us t o a p p l y 8 is public" lot The once Trapp a broader d e f i n i t i o n of 1110838 the term "the p u b l i c " Ultimately, term to include, essentially, however, i t i s u n n e c e s s a r y " t h e p u b l i c " because, anyone. f o r us t o d e f i n e t h e regardless o f t h e d e f i n i t i o n we a s c r i b e t o t h e t e r m , t h e c o n t r a c t b e t w e e n LCD a n d T r a p p n o n e t h e l e s s be v o i d b e c a u s e would i t v i o l a t e s a p r o h i b i t i o n i n the MCSR. The county s u b d i v i s i o n - c o n t r o l adoption of a d d i t i o n a l regulations g o v e r n i n g t h e manner i n w h i c h developed statutes by t h e d i f f e r e n t c o u n t i e s subdivisions i n their jurisdiction. each county i n the state a r e approved and See, e.g., § 1 1 - 2 4 - 1 ( c ) , A l a . Code 1975 ("The c o u n t y c o m m i s s i o n of contemplate the may o r l i k e g o v e r n i n g body establish a board of d e v e l o p e r s t o make s u g g e s t i o n s t o t h e c o m m i s s i o n r e g a r d i n g t h e development advise and d i v i s i o n o f s u b d i v i s i o n s . t h e commission on t h e c o n t e n t s The b o a r d may of the regulations, r e v i s i o n s t h a t n e e d t o be made t o t h e r e g u l a t i o n s , a n d a s s i s t i n r e s o l v i n g d i s p u t e s between t h e commission and d e v e l o p e r s . ) ; § 11-24-2(b), A l a . Code 1975 ("No p r o p o s e d plat shall be approved o r d i s a p p r o v e d by t h e county commission w i t h o u t f i r s t b e i n g r e v i e w e d by t h e county e n g i n e e r o r h i s o r h e r d e s i g n e e . Following the review, the county 9 engineer or h i s or her 1110838 designee s h a l l c e r t i f y t o t h e commission whether t h e proposed plat meets t h e c o u n t y ' s meets the regulations, commission."); commission license i t shall inspector Madison a complete I f the proposed be approved plat by the a n d § 1 1 - 2 4 - 3 ( c ) , A l a . Code 1975 ("The c o u n t y may e m p l o y i n s p e c t o r s not v i o l a t e d LCD regulations. t o see t h a t a n d may r e q u e s t t h e c o u n t y i t s r u l e s and r e g u l a t i o n s a r e " ) . County has i n f a c t e n a c t e d such r e g u l a t i o n s and c o p y o f t h e MCSR was s u b m i t t e d i n t o t h e r e c o r d b y along 11-24-2(a), with § i t s summary-judgment 4.3 o f t h e MCSR provides motion. that Like § a permit to d e v e l o p a s u b d i v i s i o n may be o b t a i n e d a f t e r a p r o p o s e d p l a t i s s u b m i t t e d t o a n d a p p r o v e d b y t h e c o u n t y ; § 4.3 f u r t h e r d e t a i l s the procedure f o r seeking approval of that proposed plat. However, u n l i k e § 1 1 - 2 4 - 2 ( a ) , t h e MCSR p r o h i b i t t h e o f f e r i n g , sale, t r a n s f e r , or lease of lots proposed subdivision plat t o t h e p u b l i c even a f t e r t h e i s approved; such activity p r o h i b i t e d u n t i l a f i n a l p l a t i s s u b m i t t e d and approved the owner o r d e v e l o p e r d e c i d e s t o p r o c e e d w i t h subdivision. See § 4.1 o f t h e MCSR is once the proposed (providing that no l o t s h a l l "be o f f e r e d f o r s a l e , s o l d , t r a n s f e r r e d o r l e a s e d t o t h e 10 1110838 p u b l i c u n t i l t h e f i n a l p l a t has been s u b m i t t e d t o and a p p r o v e d by t h e c o m m i s s i o n a n d t h e f i n a l p l a t h a s b e e n r e c o r d e d i n t h e office of the probate judge"); and § (describing the procedure for submitting of t h e f i n a l Aside of t h e MCSR and g e t t i n g approval plat). from t h i s distinction, however, another p r o h i b i t i o n that i s a p p l i c a b l e 1.2.3 4.4 o f t h e MCSR t h e MCSR i n t h i s case. contain Section provides: "Prior to the actual sale, o f f e r i n g f o r sale, t r a n s f e r o r l e a s e o f any l o t s as d e f i n e d h e r e i n f o r the purpose o f c r e a t i n g , e s t a b l i s h i n g o r m o d i f y i n g a subdivision as d e f i n e d herein, a n y owner o r d e v e l o p e r o f a s u b d i v i s i o n ... w h i c h l i e s w i t h i n t h e s u b d i v i s i o n j u r i s d i c t i o n o f t h e county s h a l l submit t h e p r o p o s e d p l a t o f t h e p r o p o s e d s u b d i v i s i o n ... t o the commission and o b t a i n f o r [ s i c ] a p p r o v a l o f t h e proposed p l a t i n accordance w i t h the procedures p r e s c r i b e d b y [§ 11-24-1 e t s e q . , A l a . Code 1975,] as amended, a n d s e t o u t i n t h e s e r e g u l a t i o n s . " Thus, this subdivision regulation to submit requires an owner and g a i n or developer approval of a of a proposed s u b d i v i s i o n p l a t b e f o r e t h e s a l e o r o f f e r i n g f o r s a l e o f any lots a " f o r the purpose of c r e a t i n g , subdivision." those sales Notably, there e s t a b l i s h i n g or modifying i s no l a n g u a g e b a r r i n g o r o f f e r i n g s made t o " t h e 11 public." only 1110838 It that has been Trapp i s not part essentially Heritage a a partner Landings. member LCD's p o s i t i o n t h r o u g h o u t of of this "the p u b l i c " i n a joint litigation because venture created he was t o develop R e g a r d l e s s o f w h e t h e r we a g r e e t h a t he i s "the p u b l i c , " LCD cannot, i n light ofi t s p o s i t i o n , maintain t h a t i t s a t t e m p t t o s e l l h i m l o t s was done for other any purpose modifying public" the "creating, establishing or a s u b d i v i s i o n , " a n d w h e t h e r he was a member o f " t h e i s immaterial contract Trapp than LCD e n t e r e d before approved, to that inquiry. that into required the proposed contract Accordingly, plat because LCD t o s e l l lots to f o r Heritage was i n v i o l a t i o n Landings was o f § 1.2.3 o f t h e MCSR. The summary j u d g m e n t i n f a v o r o f t h e T r a p p d e f e n d a n t s was t h e r e f o r e proper because the j u d i c i a l to enforce So. i l l e g a l contracts. 2d 390, 393 ( A l a . 2000) s y s t e m may n o t be u s e d See, e . g . , Ex p a r t e W.D.J., 785 ("Moreover, t h i s cannot maintain a cause Court has h e l d that '[a] p e r s o n of action i f ,i n order t o e s t a b l i s h i t , he must r e l y i n w h o l e o r i n p a r t on an i l l e g a l o r i m m o r a l a c t o r t r a n s a c t i o n t o w h i c h he i s a p a r t y . ' H i n k l e v. R a i l w a y E x p r e s s A g e n c y , 242 A l a . 374, 378, 6 So. 2d 12 1110838 417, 421 621 So. ( A l a . 1993), t h i s Court s t a t e d t h a t the purpose of 2d 953 (1942). I n Oden v. P e p s i C o l a B o t t l i n g Co., the H i n k l e r u l e i s t o e n s u r e t h a t ' " t h o s e who or criminal branch of code government."' omitted)). See LLC, 3d 47 shall So. also 267, not receive 621 So. 271 aid 2d K i l g o r e Dev., t r a n s g r e s s the moral from v. (emphasis 955 Inc. judicial " at the ( A l a . C i v . App. Woodland Place, 2011)(holding that s u b d i v i s i o n - c o n t r o l s t a t u t e s were i m p l e m e n t e d t o p r o t e c t public, not to r a i s e revenue, and that contracts the violating those s t a t u t e s are a c c o r d i n g l y v o i d ) . I n d e e d , t h e p o l i c y b e h i n d t h i s p r i n c i p l e has t o be of such importance t h a t c o n t r a c t s l a w w i l l n o t be e n f o r c e d case, the affirmative Resort, ... defaulting party defense of I n c . , 521 So. i n A l a b a m a and e v e n i f , as has illegality. 2d 24, a few failed 26 other b e e n deemed found to v i o l a t e the been a l l e g e d i n t h i s to properly Brown v. ( A l a . 1988) plead Mountain the Lakes ("'"It i s the r u l e j u r i s d i c t i o n s t o not e n f o r c e c o n t r a c t i n v i o l a t i o n o f t h e l a w and t o deny t h e p l a i n t i f f a the r i g h t t o r e c o v e r upon a t r a n s a c t i o n c o n t r a r y t o p u b l i c p o l i c y , even i f the specially i n v a l i d i t y of the pleaded and is c o n t r a c t o r t r a n s a c t i o n be developed 13 by the not defendant's 1110838 evidence."'" (quoting National Middlebrooks, 27 A l a . App. 247, 249, 170 So. 84, 86 quoting i n turn Shearin 92, 93 Life v. P i z i t z , & Accident I n s . Co. v. (1936), 208 A l a . 244, 246, 94 So. (1922))). IV. LCD s u e d t h e T r a p p d e f e n d a n t s a f t e r T r a p p f a i l e d t o c l o s e on the purchase developing, and of lots in a new subdivision as r e q u i r e d b y t h e c o n t r a c t Trapp. favor o f 51 The t r i a l the court Trapp was entered i n t o b y LCD a summary entered defendants LCD judgment i n after holding that LCD's c o n t r a c t w i t h T r a p p was v o i d b e c a u s e i t v i o l a t e d § 1 1 - 2 4 - 2 ( a ) . While expressing no opinion with regard t o whether that c o n t r a c t v i o l a t e d § 1 1 - 2 4 - 2 ( a ) , we n e v e r t h e l e s s hold that the contract o f t h e MCSR. was v o i d b e c a u s e Accordingly, judgment the t r i a l in favor breach-of-contract were d e p e n d e n t court i t violated court of § 1.2.3 correctly the Trapp entered defendants a on summary LCD's c l a i m , as w e l l as LCD's o t h e r c l a i m s , w h i c h on t h a t i s accordingly contract. The j u d g m e n t o f t h e t r i a l affirmed. AFFIRMED. Malone, C . J . , and P a r k e r , Shaw, a n d W i s e , J J . , c o n c u r . 14
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