United States District Court, M.D. Alabama, Eastern Division
For Arlyn Rice Sibille, Plaintiff: John Thomason Alley, Jr., LEAD ATTORNEY, John T. Alley, Jr., Attorney at Law, Auburn, AL.
For T.K. Davis, III, Patricia Y. Davis, Defendants: Davis Butterfield Whittelsey, Jonathan Keith Corley, LEAD ATTORNEYS, Whittelsey & Whittelsey & Poole P. C., Opelika, AL.
MEMORANDUM OPINION AND ORDER
W. Keith Watkins, CHIEF UNITED STATES DISTRICT JUDGE.
Plaintiff Arlyn Rice Sibille brings this action under the Alabama Uniform Fraudulent Transfer Act, Alabama Code § § 8-9A-1, et seq., and also is defending counterclaims. Before the court is Ms. Sibille's motion for summary judgment (Doc. # 70) on the counterclaims on grounds of collateral estoppel. The Counterclaim Plaintiffs -- T. K. Davis III, Patricia Y. Davis, Century Park, LLC, Donald H. Allen, and Warren A. Stiles -- filed a response in opposition. (Doc. # 78.) After careful consideration of the arguments of counsel, the relevant law, and the evidentiary submissions, the court finds that the motion for summary judgment is due to be granted on the counterclaims of all Defendants, with the exception of Patricia Y. Davis.
I. JURISDICTION AND VENUE
The court exercises subject-matter jurisdiction pursuant to 28 U.S.C. § 1332(a). Personal jurisdiction and venue are uncontested.
II. STANDARD OF REVIEW
To succeed on summary judgment, the movant must demonstrate " 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). The court must view the evidence and the inferences from that evidence in the light most favorable to the nonmovant. Jean-Baptiste v. Gutierrez, 627 F.3d 816, 820 (11th Cir. 2010).
The party moving for summary judgment " always bears the initial responsibility of informing the district court of the basis for its motion." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). This responsibility includes identifying the portions of the record illustrating the absence of a genuine dispute of material fact. Id.; Fed.R.Civ.P. 56(c)(1)(A). Or, the movant can assert, without citing the record, that the nonmoving party " cannot produce admissible evidence to support" a material fact. Fed.R.Civ.P. 56(c)(1)(B). If the movant meets its burden, the burden shifts to the nonmoving party to establish -- with evidence beyond the pleadings -- that a genuine dispute material to each of its claims for relief exists. Celotex, 477 U.S. at 324. A genuine dispute of material fact exists when the nonmoving party produces evidence allowing a reasonable fact finder to return a verdict in its favor. Waddell v. Valley Forge Dental Assocs., 276 F.3d 1275, 1279 (11th Cir. 2001).
The sole question raised by the summary judgment motion is whether a judgment rendered in the Circuit Court of Lee County, Alabama, has collateral estoppel effect on the issue of whether Ms. Sibille's signature on a warranty deed is a forgery, an issue that undisputedly is material to the counterclaims in this case. Resolution of the question of collateral estoppel's effect necessitates a comparison between the state court proceedings and this litigation.
A. The Prior State Court Proceedings
On July 15, 2011, Ms. Sibille brought a breach-of-contract action in the Circuit Court of Lee County, Alabama (the " State Court Action" ), against Century Park and three of its members, Mr. Davis, Mr. Allen, and Dr. Stiles. The controversy arose out of Century Park and its members' purchase of 145 acres in Lee County from Ms. Sibille and her brother, John Rice, in 2001. Ms. Sibille allegedly conveyed by warranty deed her 25% interest in the 145 acres to Century Park in exchange for a promissory note in the amount of $500,000, plus interest. ( See Promissory Note, at 1 (Doc. # 73) (providing that " for value received, the undersigned promise to pay to the order of Arlyn Rice Sibille . . . the principal sum of . . . $500,000," plus interest (emphasis omitted)). Century Park's members, who included Mr. Davis, Mr. Allen, and Dr. Stiles, allegedly signed a guarantee for the note thereby personally guaranteeing the payment of all amounts due under the note. Mr. Davis's spouse, Patricia Y. Davis, who is a party in this case, was not involved in the 2001 transaction.
The promissory note, which was dated January 18, 2001, was due and payable after ten years. At the note's maturity, a principal balance of $300,000, plus interest, remained. In the State Court Action, Ms. Sibille brought breach-of-contract claims, alleging that the defendants had defaulted on the promissory note and guarantee by failing to pay the balance of the note at maturity. See generally Merchants Bank v. Head, ___ So.3d ___, 2014 WL 2242474, at *3 (Ala. 2014) (" A promissory note is a form of contract; therefore, it must be construed under general contract principles." (citation and internal quotation marks omitted)).
The defendants collectively filed an answer in the State Court Action and raised affirmative defenses, including failure of consideration. Subsequently, Mr. Davis amended his answer individually to add additional affirmative defenses, including fraudulent inducement. No defendant pleaded forgery as an affirmative defense.
Ms. Sibille moved for summary judgment on her breach-of-contract claims. ( See Sibille's Mot. Summ. J. (Doc. # 78).) The defendants responded and, for the first time, disputed the authenticity of Ms. Sibille's signature on the warranty deed. (Davis & Century Park's Resp. to Summ. J. Mot. (Doc. # 72-1), at 4 n.4 (noting the " apparent lack of an authentic signature of Sibille on the Warranty Deed" ) at 6 (" It is abundantly clear from a cursory examination of the Warranty Deed and the Affidavit of Sibille attached to her Complaint, that Sibille's signature on the Warranty Deed is not Authentic." ); at 10 (" The Warranty Deed purporting to transfer that interest, on its face, appears to be a forgery." ); see also Davis & Century Park's Resp. to Renewed Summ. J. Mot., at 4 (Doc. # 72-3) (" Sibille's signature on the Warranty Deed is an obvious forgery." ); at 5 (" A cursory examination of the signatures reveals that Sibille's signature on the Warranty Deed is a forgery." ).) To combat the contention of the defendants, Ms. Sibille submitted her own affidavit, attesting that the signature on the warranty deed was hers. (Sibille's Aff. ¶ 4 (Doc. # 72-4).) The parties have not submitted any document evidencing the circuit court's written or oral ruling on Ms. Sibille's summary judgment motions; however, the fact that the case proceeded to trial necessarily reflects the denial of Ms. Sibille's summary judgment motions.
The circuit court presided over a bench trial for two days in October 2013. At the beginning of the trial, Ms. Sibille's counsel moved in limine to exclude any evidence that Ms. Sibille's signature on the warranty deed is a forgery on grounds of statute of limitations, latches, estoppel, and lack of standing. Defense counsel responded that the defendants had raised the issue of the forged deed in the responses to the summary judgment motions, and he (counsel) summarized the pretrial arguments. He argued further that the signature on the warranty deed was " blatantly dissimilar" to the signatures of Ms. Sibille on other documents, such as on a subordination agreement and affidavits Ms. Sibille signed and submitted during the course of the litigation. (Trial Tr., at 9-14.) The circuit court denied the motion in limine, but granted leave to Ms. Sibille's counsel to make objections contemporaneously with the offering of the disputed evidence. During the bench trial, Ms. Sibille's counsel made objections, primarily with respect to the form of questioning about the allegedly forged deed; some of the objections were sustained, and others were overruled. ( See, e.g., Trial Tr., at 63, 68, 71, 77-81, 209.)
Ms. Sibille did not attend the trial and, thus, was not questioned about the authenticity of her signature on the warranty deed. But the defendants offered multiple documents purportedly containing Ms. Sibille's signature for comparison purposes. (Trial Tr., at 129-30, 203, 207.) Those documents included a certified copy of the warranty deed, affidavits, and a subordination agreement. (Trial Tr., at 68, 76-79, 184.) The circuit court admitted them, but with the caveat that at that time, the documents were received, not as proof that the signatures were Ms. Sibille's, but only as proof that the documents contained a notarized signature purporting to be Ms. Sibille's. (Trial Tr., at 78-80, 184.) Additionally, Ms. Sibille's mother testified at trial. Ms. Sibille's mother, who had notarized her daughter's signature on the subordination agreement, equivocated as to whether she independently could identify her daughter's signature. (Trial Tr., at 204, 206, 210-12, 222.)
On November 1, 2013, the circuit court entered judgment in Ms. Sibille's favor upon the promissory note and guarantee, but the judgment does not encompass findings of fact and conclusions of law. ( See Judgment (Ex. 4 to Doc. # 78) (" Upon consideration of the evidence presented, the Court finds that the Defendants are liable to Plaintiff pursuant to the subject Promissory Note and Guaranty." ).) Judgment was entered in the amount of $300,000 in principal and $69,000 in interest, and later was amended to include an award of attorney's fees and costs.
On November 27, 2013, the defendants filed a motion for new trial. They urged a new trial on grounds that there was " new evidence" concerning the forgery of the warranty deed, that by forging the warranty deed, Ms. Sibille " obtained the judgment through fraud, including fraud on the court," and that the forged warranty deed could not supply consideration for the contracts. (Defs.' Mot. for New Trial (Doc. # 72-8).) The defendants further informed the circuit court that they had obtained the services of a handwriting expert to opine on whether Ms. Sibille's signature on the warranty deed was a forgery. They requested the circuit court to reopen the judgment, conduct an evidentiary hearing, and render new findings of fact concerning the possible forgery and fraud. The circuit court denied the motion without reasoning in an Order entered on January 2, 2014.
The defendants appealed the judgment. On November 14, 2014, the Alabama Supreme Court affirmed the judgment with no opinion. ( See Ex. A to Doc. # 80.)
B. This Litigation
On August 8, 2013, during the pendency of the State Court Action, Ms. Sibille filed this lawsuit in diversity against Mr. Davis and his wife, Patricia Y. Davis, pursuant to the Alabama Fraudulent Transfer Act, Alabama Code § § 8-9A-1, et seq. In the Complaint's first rendition, Ms. Sibille alleged that Mr. Davis, by warranty deed recorded on September 27, 2011, had conveyed an undivided one-half interest in one of his real property assets to his wife, Mrs. Davis, as tenants in common. Ms. Sibille contended that Mr. Davis fraudulently conveyed his interest in the property, valued at more than $100,000, to avoid collection on any judgment entered in the State Court Action. Ms. Sibille asked this court to set aside the allegedly fraudulent conveyance.
Since the filing of the Complaint, the claims and parties have expanded as revealed by the governing Second Amended Complaint and the counterclaims. In the Second Amended Complaint, Ms. Sibille reasserts her fraudulent-conveyance claims against Mr. and Mrs. Davis and adds My Heidi, LLC, as an additional defendant. Ms. Sibille alleges that on August 19, 2011 (which was during the pendency of the State Court Action), Mr. Davis created My Heidi, LLC, with one-half of the voting power assigned to his wife, and between September 26, 2011, and October 12, 2012, transferred five parcels of property, collectively valued at more than $1.6 million, to My Heidi, LLC. Ms. Sibille contends that these conveyances to My Heidi, LLC, also were made with the " intent to hinder, delay, or defraud [Ms. Sibille] in her efforts to collect on [the] promissory note and subsequent judgment" in the State Court Action. (2d Am. Compl., at ¶ 41 (Doc. # 55).) Ms. Sibille asks the court to set aside Mr. Davis's conveyances and assignments to Mrs. Davis and My Heidi, LLC.
On August 4, 2014, Defendants filed an answer, denying liability and asserting that " due to the apparent forgery of Sibille's signature on the warranty deed in favor of Century Park, Defendants deny that Century Park conveyed title or clear title to the developed parcels to third-parties." (Answer to 2d Am. Compl., at ¶ 13.) Mr. Davis and Mrs. Davis, but not My Heidi LLC, also filed counterclaims and joined three additional Counterclaim ...