RRE Crestwood Holdings, LLC v. CV Apartments, LLC et al

Filing 29

MEMORANDUM OPINION. Signed by Judge Abdul K Kallon on 07/26/12. (CVA)

FILED
2012 Jul-26 PM 03:09
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
RRE CRESTWOOD
HOLDINGS, LLC,
Plaintiff,
vs.
CV APARTMENTS, LLC &
PHILIP M. MULKEY,
Defendants.

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Civil Action Number
2:11-cv-01466-AKK

MEMORANDUM OPINION
Plaintiff RRE Crestwood Holding, LLC1 (“Plaintiff”) brings this civil action
against Philip M. Mulkey (“Mulkey”) alleging breach of contract, money had and
received, and unjust enrichment. Doc. 1. Plaintiff filed a Motion for Summary
Judgment, doc. 15, which is fully briefed, docs. 16, 19, & 22, and is due to be
GRANTED.
I. SUMMARY JUDGMENT STANDARD OF REVIEW
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary
judgment is proper “if the movant shows that there is no genuine dispute as to any

1

On March 23, 2012, SJM Investments, LLC was substituted as a party-in-interest for
RRE Crestwood Holdings, LLC.
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material fact and the movant is entitled to judgment as a matter of law.” To
support a summary judgment motion, the parties must cite to “particular parts of
materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations, admissions, interrogatory
answers, or other materials.” Fed. R. Civ. P. 56(c). Moreover, “Rule 56(c)
mandates the entry of summary judgment, after adequate time for discovery and
upon motion, against a party who fails to make a showing sufficient to establish
the existence of an element essential to that party’s case, and on which that party
will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). The moving party bears the initial burden of proving the absence of a
genuine issue of material fact. Id. at 323. The burden then shifts to the
nonmoving party, who is required to “go beyond the pleadings” to establish that
there is a “genuine issue for trial.” Id. at 324 (citation and internal quotation
marks omitted). A dispute about a material fact is genuine “if the evidence is such
that a reasonable jury could return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must construe the
evidence and all reasonable inferences arising from it in the light most favorable to
the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970);
see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the
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non-moving party’s favor). However, “mere conclusions and unsupported factual
allegations are legally insufficient to defeat a summary judgment motion.” Ellis v.
England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald
Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover,
“[a] mere ‘scintilla’ of evidence supporting the opposing party’s position will not
suffice; there must be enough of a showing that the jury could reasonably find for
that party.” Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing
Anderson, 477 U.S. at 252).
II. FACTUAL BACKGROUND2
A.

Loan and Loan Documents
On November 30, 2007, Capmark Bank (“Capmark”), a Utah bank, loaned

$11,000,000.00 (the “Loan”) to CV Apartments, LLC (“CV Apartments”), doc.
17-1 at 2, 16, in exchange for two Promissory Notes in the amounts of
$6,825,000.00, id. at 134, and $4,175,000.00 (collectively, the “Loan
Agreement”), id. at 137. The Loan had a maturity date of December 1, 2010, at
which point Capmark had the right to demand the remaining payments. Id. at 4-5.
Mulkey guaranteed the Loan by executing three guarantees: a Full Payment and

2

When evaluating the motion for summary judgment, the court resolves all factual
disputes in Plaintiff’s favor “when sufficient, competent evidence . . . supports Plaintiff’s version
of the disputed facts.” See Pace v. Capobianco, 283 F.3d 1275, 1276 (11th Cir. 2002).
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Performance Guaranty (“Payment Guaranty”), an Exceptions to Nonrecourse
Liability Guaranty (“Exceptions Guaranty”), and a Completion and Lien-Free
Performance Guaranty (“Completion Guaranty”), (collectively, “Guaranty
Agreements”). Id. at 140-159, doc. 19-2 at 1-9.
The Loan Agreement required CV Apartments to deposit a certain amount,
described as a Performance Deficiency Satisfaction Amount, into a specified
deposit account if CV Apartments failed to make timely payments and achieve a
specific debt service coverage ratio on the 20th, 24th, 30th, and 36th payment due
dates. Doc. 17-1 at 20. If CV Apartments failed to comply with the Performance
Deficiency Satisfaction Amount obligation, the Loan Agreement triggered a
default and became a full-recourse loan to the extent of the Performance
Deficiency Satisfaction Amount. Id. at 72-73. Under the Guaranty Agreements,
Mulkey “irrevocably and unconditionally guarantee[d] to [Capmark] the prompt
payment when due, whether at stated maturity, by acceleration or otherwise, of all
obligations and liabilities of [CV Apartments] under the Loan Agreement and
other Loan Documents . . . .” Id. at 140-41. In addition to jointly and severally
guaranteeing all obligations of CV Apartments to the extent of the Performance
Deficiency Satisfaction Amount, Mulkey also personally guaranteed CV
Apartments’ continuing obligations under the Payment Guaranty, subject to a limit
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of $159,175.00, plus any costs Capmark incurred for collection, including
reasonable attorney fees, court fees, and court costs. Id. at 142. Mulkey’s
personal liability guarantee remains in “full force and effect and will be discharged
only if and when the Loan has been paid in full and all obligations under the Loan
Agreement and other Loan Documents have been fully performed . . . .” Id. at
141.
B.

Default
On December 6, 2010, five days after the maturity date, Capmark demanded

immediate payment “for all amount due and owing under the Loan Documents,
including principle, accrued and accruing interest . . ., late charges, fees and costs
of collection.”3 Id. at 6, 160-63. When CV Apartments failed to pay, Capmark
assigned its rights, title, and interests to Plaintiff RRE on December 21, 2010. Id.
at 6, 164-68. The next day, Plaintiff notified CV Apartments of the assignment
and demanded immediate payment. Id. at 172-76. On March 2, 2011, Plaintiff
exercised its rights and remedies under the Loan Agreement by conducting a
“power of sale foreclosure of the mortgage securing the Loan,” which raised

3

Mulkey contends that the Capmark “froze[]” the Loan in June 2009 “although CV
Apartments had made all required payments under the Loan as they became due . . . . As a result,
CV Apartments was prevented from finishing 52 condominium units, which would have cost a
total of approximately $550,000-650,000 to complete.” Doc. 19 at 3; doc. 19-1 at 3.
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$6,250,000.00. Id. at 7, 177-79. Although the foreclosure sale resulted in a
deficiency of $4,654,461.00, in its final demand letter on March 30, 2011, Plaintiff
sought from CV Apartments the lesser Performance Deficiency Satisfaction
Amount of $3,257,106.00 instead. Id. at 179. Additionally, Plaintiff sent Mulkey
a demand for a total recourse amount of $3,416,281.00, i.e., the Performance
Deficiency Satisfaction Amount and the $159,175.00 due under the Payment
Guaranty. Id. Further, Plaintiff informed Mulkey that the amount would increase
to account for collection costs, including attorney’s fees, if he failed to pay. Id.
Despite the final demand letter, both CV Apartments and Mulkey failed to
pay the amount due under the Loan and Guaranty Agreements. As a result, on
May 2, 2011, Plaintiff sued CV Apartments and Mulkey for breach of contract
(Count I), money had and received (Count II), and unjust enrichment (Count III).
Doc. 1. When CV Apartments failed to answer or otherwise respond, Plaintiff
moved for entry of default, doc. 8, which the Clerk of Court entered pursuant to
Federal Rule of Civil Procedure 55(a) on June 17, 2011. Doc. 11. Plaintiff also
moved under Rule 55(b) for a default judgment in the amount of $3,257,106.00,
and for post-judgment interest to continue to accrue until satisfaction of the
judgment, doc. 9 at 2, which the court granted on August 15, 2011, doc. 14.
Additionally, the court found “that CV Apartments breached its obligations under
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the Loan Agreement by failing to meet the Performance Criteria and failing to
deposit the Performance Deficiency Satisfaction Amounts owed under the Loan
Agreement . . . . [and that Plaintiff] has suffered damages in excess of
$3,257,106.00, plus interest, which CV Apartments is obligated to pay under the
terms of the Loan Agreement . . . .” Doc. 14 at 6. Thereafter, Plaintiff litigated its
case against Mulkey and, on December 7, 2011, moved for summary judgment.
Doc. 15. Plaintiff asserted it had incurred $45,404.78 in attorneys’ fees and
expenses and that as of November 29, 2011, the “amount owing under the Loan
Documents for which Mulkey is personally liable under the terms of the Guaranty
Agreements is $3,416,281.00.” Doc. 17-1 at 9. As a result, Plaintiff asked this
court to enter a judgment against Mulkey for $3,461,685.78, plus post-judgment
interest. Doc. 16 at 18-19. Plaintiff subsequently assigned its interest in the loan
documents and the judgment to SMJ Investments, LLC. Doc. 24.
III. ANALYSIS
Plaintiff contends that it is entitled to summary judgment “on its claims
against Mulkey for the amounts which he guaranteed under the Loan Documents,
as well as claims for attorney’s fees.” Doc. 16 at 11. Moreover, Plaintiff contends
that “[n]o genuine issue of material fact exists regarding Mulkey’s failure to repay
the amounts for which he is liable (specifically, the Final Performance Deficiency
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Satisfaction Amount and the Payment Guaranty Amount, plus costs) . . . . ” Id. at
11-12. For the reasons stated below, Plaintiff’s motion is due to be GRANTED.
A. Breach of Contract
Under Alabama law, “[e]very suit on a guaranty agreement requires proof of
the existence of the guaranty contract, default on the underlying contract by the
debtor, and nonpayment of the amount from the guarantor under the terms of the
guaranty. However, to recover under a conditional guaranty or continuing
guaranty, an additional element, notice to the guarantor of the debtor’s default,
must be proved.” Sharer v. Bend Millwork Sys., Inc., 600 So. 2d 223, 225-26
(Ala. 1992) (quoting Delro Indus., Inc. v. Evans, 514 So. 2d 976 (Ala. 1987)).
Moreover, “a guarantor is bound only to the extent and in the manner stated in the
contract of guaranty.” Pate v. Merchants Nat’l Bank of Mobile, 428 So. 2d 37, 39
(Ala. 1983) (quoting Furst v. Shows, 215 Ala. 133, 137 (1926)). When there is a
dispute about the terms of the guaranty, “it is generally recognized that the rules
governing the interpretation and construction of contracts are applicable in
resolving a question as to the interpretation or construction of a guaranty
contract.” Layne v. Garner, 612 So. 2d 404, 407 (Ala. 1992) (quoting Pate, 428
So. 2d at 39). Therefore, “when the terms of a [guaranty agreement] are
unambiguous, the construction of the contract and its legal effect become a
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question of law for the court.” Layne, 612 So. 2d at 407 (quoting Dill v. Blakeney,
568 So. 2d 774, 777 (Ala. 1990)). Additionally, “[w]hether a [guaranty
agreement] is ambiguous is a question of law for the court.” Id. (quoting Dill, 568
So. 2d at 778).
Mulkey admits he “signed three guaranty agreements at the time the Loan
was executed – ‘Guaranty (Full Payment and Performance),’ ‘Guaranty
(Exceptions to Non-Recourse Liability)’ and ‘Guaranty (Completion and Lien
Free Performance).’” Doc. 19-1 at 2; doc. 17-2 at 5. Moreover, it is undisputed
that CV Apartments defaulted on the Loan, that this court entered a default
judgment against CV Apartments on August 15, 2011, for $3,257,106.00, doc. 14
at 6, and that Mulkey has not fulfilled his obligations under the Guaranty
Agreements or that the foreclosure sale resulted in a $4,654,461.00 deficiency,
doc. 17-1 at 179. Therefore, the only issue for this court to resolve is whether
Mulkey is correct that the terms of the Guaranty Agreements are ambiguous
because “each Guaranty agreement represents the entire agreement between
[Plaintiff] and Mulkey and fail[s] to incorporate the others by reference, thereby
necessarily creating contradictory and dramatically different obligations.” Doc. 19
at 7.
The merger clauses in question state
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[t]his Guaranty is the entire agreement between the parties hereto
with respect to the subject matter hereof, and supersedes and replaces
all prior discussions, representations, communications and
agreements (oral or written). This Guaranty shall not be modified,
supplemented, or terminated, nor any provision hereof waived, except
by a written instrument signed by the party against whom
enforcement thereof is sought, and then only to the extent expressly
set forth in such writing.
Doc. 17 at 147, 157; doc. 19-2 at 7. Based on this identical language in the three
guarantees, Mulkey argues that two of the agreements merged into one of the other
guarantees. Thus, Mulkey asserts that “without further discovery and depositions,
the parties cannot determine which guaranty represents the ‘final and complete’
agreement among Plaintiff . . . and Mulkey as they were all signed on the same
date with no reference to the exact time of signing. Enforcing all three without
knowledge of exact time of execution would violate the purpose of the merger
clause contained in each of the Guaranty Agreements.” Doc. 19 at 9.
To support his argument, Mulkey relies on two cases – (1) Ex parte Palm
Harbor Homes, Inc., which provides that when “a contract contains . . . a merger
clause, the agreement is deemed to be ‘integrated,’ such that evidence of prior or
contemporaneous agreements shall not be admitted to contradict the terms of the
agreement.” 798 So. 2d 656, 660 (Ala. 2001) (quoting Johnson Enters. of
Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1309 (11th Cir. 1998)); and

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(2) Belmont Homes, Inc. v. Law, 841 So. 2d 237, 240 (Ala. 2002) (“[w]hen a
contract is integrated, ‘no extrinsic evidence of prior or contemporaneous
agreements will be admissible to change, alter, or contradict the contractual
writing.’ The merger rule applies as well to prior or contemporaneous writings as
to oral agreements.’”) (internal citations omitted). However, Mulkey’s reliance on
these two cases is misplaced because both involve a single obligation and, in that
respect, “[a] merger clause operates only to establish that a written agreement is a
completely integrated document, into which all prior and contemporaneous
negotiations are merged.” Belmont Homes, 841 So. 2d at 240 (emphasis in
original). Thus, when “two agreements cover the same subject matter and include
inconsistent terms, the later agreement supersedes the earlier agreement.”
Cavalier Mfg., Inc. v. Clarke, 862 So. 2d 634, 641 (Ala. 2003) (emphasis added).
In contrast, here, there are three different obligations and each guaranty relates to a
different obligation – i.e., the first to full payment and performance, doc. 17-1 at
140, the second to exceptions to nonrecourse liability, id. at 150, and the third to
completion and lien-free performance, doc. 19-2 at 1. Because the Guarantee
Agreements cover different obligations, the merger doctrine is inapplicable and
the merger clauses here do not make the Guaranty Agreements ambiguous.
Consequently, the Agreements are enforceable according to their terms and, as a
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result, Mulkey is obligated to pay $3,257,106.00 for the Performance Deficiency
Satisfaction Amount, $159,175.00 pursuant to the Payment Guaranty, and costs
including attorney’s fees. Doc. 17-1 at 179. Accordingly, Plaintiff’s motion for
summary judgment on the breach of contract claim is GRANTED.
B. Money Had and Received and Unjust Enrichment
In Counts II and III, Plaintiff pleads money had and received and unjust
enrichment claims respectively. Doc. 1 at 9-10. “The essence of the theories of
unjust enrichment or money had and received is that a plaintiff can prove facts
showing that defendant holds money which, in equity and good conscience,
belongs to plaintiff or holds money which was improperly paid to defendant
because of mistake or fraud.” Hancock-Hazlett General Const. Co., Inc. v. Trane
Co., 499 So. 2d 1385, 1387 (Ala. 1986) (emphasis in original). As stated
previously, it is undisputed that Mulkey guaranteed the loan. Doc. 17-1 at 137,
140-159. Moreover, it is also undisputed that CV Apartments defaulted, doc. 14,
and that Mulkey has failed to pay the amounts he guaranteed, doc. 17-1 at 160;
doc. 17-2 at 8. Thus, Mulkey is holding money that Plaintiff is entitled to and, as
such, Plaintiff is equitably entitled to recover the amounts Mulkey guaranteed.
Accordingly, Plaintiff’s motion for summary judgment on Counts II and III is
GRANTED.
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C. Plaintiff is Entitled to an Award of Attorneys’ Fees and Costs
Plaintiff seeks also to recover attorneys’ fees and costs from Mulkey. Doc.
16 at 16. “In Alabama, attorneys’ fees are recoverable only where authorized by
statute, when provided [for] in a contract, or by special equity, such as in a
proceeding where the efforts of an attorney create a fund out of which fees may be
made.” James v. James, 768 So. 2d 356, 360 (Ala. 2000); see also Knight v.
Hired Hand Green, Inc., 775 So. 2d 218, 222 (Ala. Civ. App. 2009) (finding that
plaintiff was “entitled to an award of interest on the past-due balance and an
attorney fee for collection of that balance, pursuant to the clear terms of the
contract.”). To make the initial determination of reasonable attorneys’ fees, “the
court must rely on the lodestar method, in which the ‘attorney’s fee is properly
calculated by multiplying the number of hours reasonably expended on the
litigation times a reasonable rate.’” Johnson v. U.S. Mortg. Co., 991 F. Supp.
1302, 1307-08 (M.D. Ala. 1997). “A reasonable hourly rate is the prevailing
market rate in the relevant legal community for similar services by lawyers of
reasonably comparable skills, experience, and reputation.” Id. at 1308 (quoting
Norman v. Hous. Auth. of City of Montgomery, 836 F.2d 1292, 1299 (11th Cir.
1988)).
Turning to the facts here, Mulkey does not challenge that he guaranteed to
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pay attorney fees;4 instead, he contends only that “Plaintiff’s claim for attorneys
fees should be denied in that it has failed to submit sufficient evidentiary materials
in support of the request.” Doc. 19 at 9. The court disagrees. To support its
demand, Plaintiff provided the affidavit of Jason Woodard, a lawyer with the law
firm of Burr & Forman, LLP, stating that, as of December 7, 2011, Burr & Forman
has charged Plaintiff $44,432.50 in legal fees and $972.285 in expenses. Doc. 173 at 2-3. Mr. Woodard attests that Burr & Forman has approximately 154 hours in
the case for various tasks, including drafting the Complaint and filing motions for
entry of default, default judgment, and for summary judgment. Because the court
finds that the total hours worked are reasonable in light of the pleadings Plaintiff
filed and that the hourly rates are consistent with the rates for similar work in the
prevailing legal market, the court awards Plaintiff attorneys’ fees and costs in the
amount of $45,404.78, through December 7, 2011. The court ORDERS Plaintiff
to submit by 5 p.m. on July 27, 2012, the updated time and billing entries for any
legal fees and expenses it has occurred since December 7, 2011. Mulkey’s

4

The Guaranty Agreements state that Mulkey “agrees to pay, on written demand by
[Plaintiff], all costs incurred by Lender in collecting any amount payable under this Guaranty or
enforcing or protecting its rights under the Guaranty . . . . Such fees and expenses include, . . .
reasonable fees for attorneys, paralegals and other hired processionals . . . .” Doc. 17-1 at 142.
5

The expenses include photocopying, filing fees, long distance telephone charges,
mileage, fees for title work, publication fees, and postage. Doc. 17-3 at 2-3.
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objections to the updated time and billing entries, if any, are due by 5 p.m. on July
30, 2012.
D. Mulkey’s Affirmative Defenses Do Not Create Questions of Fact
Finally, Mulkey opposes summary judgment on the basis that his
affirmative defenses (alleged failure to mitigate, cooperate, and offer a reasonable
bid price at foreclosure) create questions of fact. Doc. 19 at 5. The court
addresses each defense below.
1. Mitigation of Damages and Failure of Cooperation Defenses
Mulkey contends that Capmark failed to mitigate its damages and cooperate
because “CV Apartments had made all required payments under the Loan as they
became due and all of the pre-approved loan proceeds had not been released. As a
result, CV Apartments was prevented from finishing 52 condominium units, which
would have only cost an additional $550,000-650,000 to complete . . . . The
project would have been much more valuable and could have saved CV
Apartments, and more importantly, Plaintiff significant sums of money if
completed.” Doc. 19 at 6 (emphasis in original). Moreover, Mulkey contends that
even though there “had been no payment default, Capmark refused to fund a
$675,000 draw for work and labor performed on the project . . . . Because of

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Plaintiff’s refusal to continue to fund draws and improperly freezing the Loan
proceeds, Plaintiff’s damages significantly increased.” Id.
First, as a threshold matter, the court notes that the concept that “‘one who
asserts the existence of a fact material to an issue in a case assumes the burden of
proof’ extends to affirmative defenses.” Thorsteinsson v. M/V Drangur, 891 F.2d
1547, 1550-51 (11th Cir. 1990). In that regard, while Mulkey makes many
allegations about how Capmark purportedly failed to mitigate its damages and
cooperate by refusing to release money when no default had purportedly occurred,
Mulkey failed to provide any supporting documents for his assertions. The court
refuses to deny summary judgment based solely on unsubstantiated allegations.
Second, the failure to mitigate and cooperate defenses fail also because they
have no basis in fact. For example, contrary to Mulkey’s contention that Capmark
stopped funding the loan even though CV Apartments never defaulted, on August
15, 2011, the court entered a default judgment finding that on “February 16, 2009,
April 28, 2010, and June 17, 2010, Capmark notified CV Apartments of the
Performance Deficiency Satisfaction Amounts due under the Loan Agreement,
demanded immediate deposit, and when CV Apartments failed to comply, invoked
the default provision.” Doc. 14 at 4. Critically, the Loan Agreement provided that
in the event of default, Capmark may, at its option, initiate proceedings for the
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complete or partial foreclosure of the property and may sell the property as an
entirety or in parcels or units. Doc. 17-1 at 69. Moreover, the Loan Agreement
provided that Capmark “shall have no obligation to advance any Note B Advance
at any time during which an Event of Default exits . . . .” Doc. 17-1 at 19.
Consequently, Mulkey’s contentions that Capmark failed to mitigate its damages
and cooperate when it refused to release loan proceeds overlooks the basic fact
that CV Apartments defaulted on the loan as early as February 2009.
Significantly, as Mulkey acknowledges, Capmark waited four months to “freeze”
the loan after the default. Doc. 14 at 4; doc. 19-1 at 3. This four month period
belies Mulkey’s contention that Capmark failed to mitigate or cooperate.
Furthermore, the rule of mitigation does not apply “where the injured party,
in an effort to minimize the loss, would be required to incur considerable personal
risk or expense with but a slight chance of an alternative recovery.” Avco Fin.
Servs., Inc. v. Ramsey, 631 So. 2d 940, 943 (Ala. 1994). Indeed, it is unreasonable
to expect Capmark to continue to disburse funds after CV Apartments failed to
make its obligated payments and still owed $10,904.461.15 on the loan. Finally,
Plaintiff’s decision to exercise its rights under the Loan Agreement by conducting
a foreclosure sale, which raised $6,250,000.00, doc. 14 at 5; doc. 17-1 at 7, shows
also that Plaintiff attempted to mitigate its damages prior to initiating a lawsuit.
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Thus, Capmark and Plaintiff properly mitigated their damages and cooperated and
Mulkey’s contentions to the contrary fail as a matter of law.
2. The Low Foreclosure Bid Defense
Mulkey asserts next that summary judgment is not warranted because “the
foreclosure bid price of the property in question was so low as to shock the
conscience.” Doc. 19 at 6. To support this contention, Mulkey states that the
$6,250,000 bid was only 62.5% of what the “total value of the property could have
been if the Lender had made available the funds to complete the remaining units
and those units were leased at the same percentage as the other 218 units.” Doc.
19 at 6. Again, Mulkey fails to present evidence to support his contention and, as
such, failed to meet his burden. See Thorsteinsson, 891 F.2d at 1550-51.
Moreover, Mulkey’s calculation is based on his subjective view of what the value
of the property “could have been,” rather than on the actual value of the unfinished
units. Put differently, Mulkey’s subjective valuation ignores the reality that
bidders typically factor into their bid price the existing state of a project and the
additional amount they believe will be necessary to complete the project. In other
words, the bid price Plaintiff accepted may well have been the actual value of the
unfinished project. Furthermore, as stated previously, the contention that Plaintiff
failed to factor in what the value “could have been” overlooks that a lender has no
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obligation to continue to fund a project when the borrower is in default. See Avco
Fin. Servs., Inc., 631 So. 2d at 943.
In the final analysis, Mulkey’s opinion about what the value “could have
been” is insufficient to prove that “the amount paid by [Plaintiff] was less than fair
market value. Furthermore, even if a reasonable inference could be drawn from
[Mulkey’s assertions] that the amount paid by [Plaintiff] . . . was less than [the]
fair market value, [the court can] not conclude that the amount paid was so
inadequate as to raise a presumption of fraud, unfairness, or culpable
mismanagement.” Breen v. Baldwin Cnty Fed. Sav. Bank, 567 So. 2d 1329, 1333
(Ala. 1990). Indeed, as the Alabama Supreme Court has stated, “in general a price
less than one-third of the value of the land will be regarded as grossly inadequate,
but, of course, there is no definite rule . . . .” Hayden v. Smith, 113 So. 293, 295
(Ala. 1927). Moreover, when
the lender acquired the property for 20%, 30%, or 66% of its fair
market value, depending on the appraisal used . . . . the choice of
percentage is not as determinative in the end as the observation that
no misconduct tainted the auction. [Thus,] [t]he pleadings in the
district court created no genuine issue as to the propriety of the sale or
the adequacy of the notice. . . . In the absence of any issue of
impropriety, this sale must stand. The trial court did not err in
concluding the sale price did not shock the judicial conscience.
CS Assets, LLC v. West Beach, LLC, 370 F. App’x 45, 46 (11th Cir. 2010).
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Ultimately, Mulkey raises no issue of impropriety that casts doubt on the bid
process. Absent any misconduct, as a matter of law, a bid price at 66% of
Mulkey’s valuation figure belies Mulkey’s contention that the “bid price . . . was
so low as to shock the conscience.” Doc. 19 at 6; see also Breen, 567 So. 2d at
1333; CS Assets, 370 F. App’x at 46. Accordingly, Mulkey’s low foreclosure bid
affirmative defense also fails as a matter of law.
E. Defendant Had Ample Opportunity to Complete Discovery
Finally, Mulkey contends that the court should deny summary judgment
because “although initial disclosures and written discovery requests to Mulkey
have been completed, Mulkey has not yet submitted written discovery to Plaintiff
as the discovery deadline does not expire until January 31, 2012.” Doc. 19 at 10.
In other words, Mulkey wants the court to grant him more time to conduct
discovery. The court declines to do so because at the time Plaintiff filed its
motion, Mulkey had not requested any discovery from Plaintiff or scheduled any
depositions, even though the period for discovery commenced on June 17, 2011.
Moreover, Mulkey responded to the motion for summary judgment on December
28, 2011, one month before the discovery deadline. The court finds it difficult to
believe that Mulkey intended to conduct his entire discovery in the last month of
the discovery period. The court believes, instead, that Mulkey concluded that he
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needed no discovery in this case since he does not dispute that he signed the
Guaranty Agreements. Alternatively, even if the court is incorrect, the court
declines to extend the discovery period because Mulkey had ample time to
complete discovery or move for an extension, and nothing precluded Mulkey from
conducting discovery in the month remaining after he filed his response and
subsequently supplementing his opposition to include any pertinent information he
discerned in discovery. In the final analysis, Mulkey’s failure to conduct any
discovery is not a proper basis for this court to deny Plaintiff’s motion, especially
since the basic facts here – CV Apartments’ default, Mulkey’s guarantees, and
Mulkey’s failure to satisfy his obligations – are not in dispute.
IV. CONCLUSION
Based on the record before it, there are no genuine issues of disputed fact.
Therefore, Plaintiff’s motion for summary judgment is due to be GRANTED. The
court will issue a separate order granting the motion and dismissing this case.
DONE this 26th day of July, 2012.
________________________________
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE

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