Loxley South, LLC v. Western Express, Inc. et al

Filing 98

ORDER granting 69 Western's Motion for Summary Judgment on Loxley South's claims of breach of contract, declaratory relief and specific performance; granting 74 Loxley South's Motion for Partial Summary Judgment on Western's claim of fraud; finding as moot 92 Motion to Strike ; finding as moot 94 Motion to Strike. Oral argument is set 5/26/11 at 10:00 am in Courtroom 5A on the issue that Western seeks to recover all sums paid for the property, paid to prepare to construct the road and transfer property back to Loxley South. Signed by Judge Kristi K. DuBose on 5/10/2011. (srr)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
LOXLEY SOUTH, L.L.C.,
Plaintiff / Counter Defendant,
v.
WESTERN EXPRESS, INC.
Defendant / Counter Claimant.

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CIVIL ACTION 10-0024-KD-N

ORDER
This action is before the Court on cross-motions for summary judgment. Specifically, the
motion for summary judgment filed by defendant Western Express, Inc. (Western), brief in
support, suggested determinations of undisputed facts and conclusions of law (docs. 69-71), the
response and exhibits filed by plaintiff Loxley South, LLC (Loxley South) (docs. 86, 87) and
Western’s reply (doc. 91); and Loxley South’s motion for partial summary judgment, brief in
support, suggested determinations of undisputed facts and conclusions of law, and evidentiary
submissions (docs. 74-80), the response and exhibits filed by Western (doc. 89) and Loxley
South’s reply (doc. 90).1
Upon consideration and for the reasons set forth herein, Western’s motion for summary
judgment on Loxley South’s claims of breach of contract, declaratory relief, and specific
performance is GRANTED and Loxley South’s motion for partial summary judgment is
DENIED, in part.
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Western has filed a motion to strike portions of the affidavit of J. Gaines Betbeze and
Donald W. Rowe (docs. 92, 94). The Court has not relied upon the portions of the affidavits
which Western moves to strike in reaching its decision. Therefore, the motions to strike are
MOOT.

I. Procedural background
In December 2009, Loxley South filed suit for specific performance, declaratory and
injunctive relief and breach of contract against Western, Wayne M. Wise, Donna Wise, and JP
Morgan Chase Bank, NA. Loxley South seeks specific performance to enforce the terms of an
Agreement of Sale for property between Western and Loxley South whereby, as part of the
consideration for the sale, Western was to construct a road across its property to give Loxley
South road and utility access to its property. Alternatively, Loxley South seeks money damages
for breach of the Agreement and declaratory relief in the form of a declaration and order that a
public street or roadway be dedicated across Western’s property (doc. 1, p. 7-19, complaint and
exhibits).
Defendants removed the action to this Court on basis of diversity jurisdiction (doc. 1,
notice of removal and attachments). 28 U.S.C. § 1332; 28 U.S.C. § 1441. The Wises and JP
Morgan have been dismissed from this action (docs. 37, 39).
After removal, and after the Wises and JP Morgan were dismissed, Western filed its first
amended answer and counterclaim against Loxley South (doc. 51, p. 7-9). In Count One,
Western seeks compensatory, consequential, and punitive damages for fraud by Loxley South.
In Count Two, Western seeks to rescind the Agreement, recover all sums paid for the property
and paid for its efforts to construct the road, and transfer the property back to Loxley South. In
Count Three, Western claims that Loxley South has been unjustly enriched by the sale and seeks
equitable relief of returning the property to Loxley and Loxley reimbursing Western for the sums
paid. Western also asserted various defenses as to why it should not be held liable for failing to
construct the improvements, including an assertion that the Agreement was abandoned when
Loxley South agreed to transfer title to the Property to the Wises instead of Western.

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II. Findings of fact
In 2006, primarily in November 2006, Loxley South, through its manager J. Gaines
Betbeze, and Western through its attorney Isham B. Bradley, negotiated the purchase of fifty
(50) acres of undeveloped real property (the Property) (doc. 75, p. 9-12, doc. 80, p. 2-3, doc. 70,
p. 4). On December 12, 2006, an Agreement of Sale (the Agreement) was signed by Loxley
South as seller and Western as purchaser. (doc. 1, p. 15-16). The Property was situated in
Baldwin County, Alabama, and within the zoning and planning jurisdiction of the Town of
Loxley (doc. 70, p. 1-4).
Attached to the Agreement as Exhibit A was a copy of an unrecorded subdivision plat
which divided the Property into seventeen (17) lots (doc. 1, p. 17). On this copy, the parties
identified the Property by superimposing an outline and designating “Phase I” and “Phase II”
(doc. 1, p. 17).2 In addition, two roads within the Property were drawn on the plat: Business
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The attachment to the Agreement appears to be a copy of the Master Plan Sketch of
Loxley I-10 Business Park East but without the box which identifies the project, the engineer,
etc. (compare doc. 1, p. 17, with doc. 76-3, p. 10, Master Plan Sketch).
Originally the property purchased in 1979 consisted of 155 acres (doc. 71, p. 76). Then
the subdivision began. First, Loxley Business Park East Unit One was platted with four (4) lots
adjoining Highway 49 and then Unit One was re-subdivided. These two subdivision plats were
approved and are recorded (doc. 71, p. 3, 157-158, Slide 2223-B, 2235-A). This property is not
part of this litigation.
A third subdivision plat was made. A Master Plan Sketch of Loxley Business Park East
was presented to the Loxley Planning Commission for its approval. This Sketch platted the
units, numbered lots, and the part reserved for future development. The Master Plan Sketch was
approved by the Loxley Planning Commission but not recorded (doc. 71, p. 3, 172). On this
Sketch, Unit Two is the same property as the parties’ “Phase I” and Unit Three is the same
property as “Phase II”.
A fourth subdivision plat was made. This subdivision platted Loxley I-10 Business Park
East Unit Two which consisted of an undeveloped thirty-eight (38) acres divided into twelve (12)
lots. This plat was preliminarily approved by the Loxley Planning Commission but was not
recorded (doc. 71, p. 160). This property is the same property as the parties’ “Phase I”.
(Continued)
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Park Drive and Commercial Park Drive. The plat also identified a ninety-one (91) acre parcel
contiguous to the east of the Property. These undeveloped ninety-one (91) acres, which Loxley
South owned, were shown on the plat divided into twenty (20) lots (doc. 1, p. 17).
The Property was ultimately not titled to Western when the purchase took place. Prior to
closing, Western’s representative, Bradley, notified the closing agent and Loxley South’s
manager, Betbeze, that the Property would be purchased in the name of Wayne and Donna Wise
(doc. 70, p. 7; doc. 76-3, p. 7, Betbeze Affidavit; doc. 77-10, certified copy of deed). Wayne M.
Wise is an officer, director, shareholder or employee of Western (doc. 51, p. 4, first amended
answer and counterclaim). The Wises each owned a forty-five (45%) interest in Western (doc.
76-2, p. 48, Bradley deposition). The Wises had not signed the Agreement (doc. 76-1, p. 2). The
Agreement was signed by Bradley, as Western’s attorney (doc. 76-1, p. 2).
The sale closed and the Wises took title in their individual capacity (doc. 77-9, Settlement
Statement; doc. 77-10, deed dated December 27, 2006 ). Wayne Wise borrowed money from
Western to purchase the property and executed a note to repay Western (doc. 78-4). The Wises
intended to build a truck terminal on the Property and lease the terminal to Western (doc. 71, p.
9). On March 15, 2008, the Wises transferred the real property to Western (doc. 78-6, certified
copy of deed). The Wises are no longer parties to this action.3

The fifth subdivision of the property occurred when all the property except Unit One as
re-subdivided, was deeded from H-R Joint Venture to Loxley South, LLC by metes and bounds
description of “Parcel 1” and “Parcel 2” (doc. 71, p. 82).
Ultimately, “Parcel 1” was sold to the Wises and “Parcel 2” retained by Loxley South.
3

The Wises were dismissed from this action because the complaint failed to state a
claim against them since they were not a party to the Agreement upon which Loxley South based
its claims and because they no longer owned the Property at issue having transferred it to
Western (doc. 37).
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In Paragraph five of the Agreement, as part of the consideration for the sale, Western
agreed to make certain improvements to the Property, as follows:
5. Purchaser covenants and agrees to construct Phase I and Phase II within six (6)
months from date of closing, and further covenants and agrees that Business Park
Drive, as shown on Exhibit “A”, shall be constructed and the road and all utilities
shall be stubbed out at the East Line of Phase II, and thereby be available to
Seller for future development of the lands adjoining to the East. This provision
shall survive the closing.
(doc. 1, p. 15).
These improvements would provide access and utilities from Highway 49 to the eastern
boundary of the Property (Id., p. 17). This provision was important to Loxley South because
Loxley South owned the landlocked parcel consisting of ninety-one (91) acres to the east of the
Property (Id).4 Western has not fulfilled its promise to build the road and stub out the utilities as
designated on the plat.
After the sale, Bradley began the ground work for construction of the improvements
including Business Park Drive with utilities and Western’s truck terminal (doc. 76-2, p. 67-70,
Bradley deposition). Bradley hired Donald W. Rowe, the same engineer who had performed
engineering work on the Property for Loxley South (Id. p. 64). Bradley also talked with
representatives of the Town of Loxley and its Planning Commission and attended meetings, and
hired a wetlands consultant who had also previously worked for Loxley South (Id. p. 61-62).
Bradley acted on “behalf of the Wises individually and Western Express as far as its interest as a
tenant.” (Id., p. 66). However, ultimately, Business Park Drive was not built (Id., p. 86).
III. Conclusions of law
A. Summary judgment standard
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In the initial disclosures, Loxley South estimated the cost of road construction as
$1,081,803.46 (doc. 71, Exhibit K).

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Summary judgment should be granted “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R.
Civ. P. 56(a). If a party asserts “that a fact cannot be or is genuinely disputed”, the party must
(A) cit[e] to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations,
stipulations (including those made for purposes of the motion only), admissions,
interrogatory answers, or other materials; or
(B) show[] that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to
support the fact.
Fed. R. Civ. P. 56(c)(1)(A)(B).
Summary judgment should be granted only “if the pleadings, the discovery and
disclosure materials on file, and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(c)(2). The party seeking summary judgment bears “the initial burden to show the district
court, by reference to materials on file, that there are no genuine issues of material fact that
should be decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). The
Eleventh Circuit has stated:
When the moving party has the burden of proof at trial, that party must show
affirmatively the absence of a genuine issue of material fact: it “must support its
motion with credible evidence ... that would entitle it to a directed verdict if not
controverted at trial.” In other words, the moving party must show that, on all the
essential elements of its case on which it bears the burden of proof at trial, no
reasonable jury could find for the nonmoving party.
United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir.1991) (en banc)
(quoting Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548 (1986)).
Once the moving party has satisfied its responsibility, the burden shifts to the nonmovant
to show the existence of a genuine issue of material fact. Id. “If the nonmoving party fails to
make ‘a sufficient showing on an essential element of her case with respect to which she has the
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burden of proof, ‘the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp.
v. Catrett, 477 U.S. at 323, 106 S. Ct. at 2552 (footnote omitted)). “In reviewing whether the
nonmoving party has met its burden, the court must stop short of weighing the evidence and
making credibility determination of the truth of the matter. Instead, the evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.” Tipton v.
Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir.1992) (internal citations and quotations
omitted). However, the mere existence of any factual dispute will not automatically necessitate
denial of a motion for summary judgment; rather, only factual disputes that are material preclude
entry of summary judgment. Lofton v. Secretary of Dept. of Children and Family Services, 358
F.3d 804, 809 (11th Cir.2004).
IV. Analysis
A. Loxley South’s Claims
On motion for summary judgment, Western argues several reasons why the Agreement is
not enforceable, including the defense of abandonment and that the contract provision to build
the road is too vague to support specific enforcement. A review of the facts and case law leads
to the conclusion that Western is unlikely to prevail on its defenses save one: The Agreement is
void and therefore, Loxley South cannot prevail on its claim for declaratory relief, breach of
contract or specific performance as to paragraph five of the Agreement. Specifically, the
Agreement was void ab initio due to the fact that the objective of the Agreement violated
Alabama law and the Town of Loxley Subdivision Regulations. The Code of Alabama § 11-5233 provides as follows:
Whoever, being the owner or agent of the owner of any land located within a
subdivision, transfers or sells or agrees to sell or negotiates to sell any land by
reference to or exhibition of or by other use of a plat of a subdivision before such
plat has been approved by the planning commission and recorded or filed in the
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office of the appropriate county probate office shall forfeit and pay a penalty of
$100.00 for each lot or parcel so transferred or sold or agreed or negotiated to be
sold, and the description of such lot or parcel by metes and bounds in the
instrument of transfer or other document used in the process of selling or
transferring shall not exempt the transaction from such penalties or from the
remedies provided in this section.
The municipal corporation may enjoin such transfer or sale or agreement by a
civil action for injunction brought in any court of competent jurisdiction or may
recover the same penalty provided in this section by a civil action in any court of
competent jurisdiction.
Ala. Code § 11-52-33. There is no dispute that Loxley South as owner of the Property, in
agreeing to sell the Property to Western, made “reference to . . . a plat of a subdivision” that was
not filed in the “appropriate county probate office” as required by Ala. Code § 11-52-33.
Similarly, the Town of Loxley, Alabama Subdivision Regulation 3.0(B) provides in relevant part
that,
[n]o owner or agent of the owner, of any parcel of land located in a proposed
subdivision, shall transfer to sell any such parcel before a final plat of such
subdivision has been approved in accordance with the provisions of these
Regulations by the Planning Commission5 and filed with the Judge of Probate,
Baldwin County. . . .
(doc. 77-2, p. 8)
As explained in Kilgore Development, Inc. v. Woodland Place, LLC., 47 So. 3d 267,
271(Ala. Civ. App. 2009), “a contract obtained in violation of the subdivision control statutes is
void.” Loxley South’s attempt to factually distinguish its situation from Kilgore is unpersuasive;
the law clearly requires that the subdivision plat be approved and filed with the appropriate
probate court. Thus, even if the Court was convinced that the plat had been properly approved,

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The Subdivision Regulations for the Town of Loxley require that improvements shown
on the plat must be completed, approved by the Building Official, submitted and approved by the
Planning Commission and the Town Council before filing with the Probate Judge as the official
plat (doc. 76-12, Loxley Subdivision Regulations, at § 3.2 E).

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there is no dispute that the plat was not filed.
Loxley South also argues that they were exempt from Regulation 3.0(B) based on the
language of Town of Loxley Subdivision Regulation 4.4. Regulation 4.4 exempts certain
transactions from the Town’s subdivision regulations including the “division of land into parcels
greater than five (5) acres where no street construction is involved.” Loxley South professes not
to understand what is meant by “where no street construction is involved” and points out that the
transaction at issue must have passed muster under the regulations because the Town of Loxley
was willing to approve a subsequent plat submitted by the Wises. This argument is also
unpersuasive. The phrase “where no street construction is involved” is not ambiguous.
Moreover, as clearly demonstrated by this dispute, as well as the plat of the subdivision, street
construction was clearly contemplated, i.e., “street construction is involved”. Also, the Town of
Loxley’s subsequent approval of an amended plat in no way provides an endorsement or
ratification of the legality of the previous transaction.
As explained in Kilgore, “[i]t has long been the law in Alabama that when a contract is
made in violation of a statute, that contract is generally void and unenforceable” and that “a
contract obtained in violation of the subdivision control statutes is void.” Kilgore, at 270-271
(citations omitted). Accordingly, the Agreement is unenforceable and Loxley South’s claims for
breach of contract, declaratory relief, or specific performance fail.
B. Western’s Counterclaims6
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Western has abandoned its claim for unjust enrichment. Western did not move for summary
judgment on its counterclaim for unjust enrichment (docs. 69, 71), nor did it respond to Loxley
South’s motion in that regard. See Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599
(11th Cir. 1995) (“[G]rounds alleged in the complaint but not relied upon in summary judgment
are deemed abandoned.”).

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Western has asserted a fraud claim based on alleged misrepresentations by Loxley South.
Because the Agreement is void, Western has failed to show any other reliance to its detriment on
the alleged false statements made by Loxley South. Accordingly, summary judgment is
GRANTED in favor of Loxley South on this claim.
Because the Agreement is void, Western seeks to 1) recover all sums paid for the
Property; 2) recover all sums paid to prepare to construct the road, and 3) transfer the Property
back to Loxley South. The Court will hold oral argument on this issue on Thursday, May 26,
2011, 10:00 a.m. in Courtroom 5 A of the United States Courthouse, 113 St. Joseph St., Mobile,
Alabama, 36602.
V. Conclusion
Upon consideration of the evidence and for the reasons set forth herein, Western’s motion
for summary judgment on Loxley South’s claims of breach of contract, declaratory relief, and
specific performance is GRANTED. Also, Loxley South’s motion for summary judgment on
Western’s claim of fraud is GRANTED.
Judgment shall be entered by separate document as provided in Rule 58 of the Federal
Rules of Civil Procedure after the Court determines what, if any, relief is available.
DONE and ORDERED this 10th day of May, 2011.

s / Kristi K DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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