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Riverbend Association, Inc. v. Riverbend, LLC

Alabama Court of Civil Appeals

July 24, 2015

The Riverbend Association, Inc.
v.
Riverbend, LLC, and River Bend Marina, LLC

Appeal from Marshall Circuit Court CV-12-900071

ON APPLICATION FOR REHEARING

THOMAS, Judge.

The opinion of April 10, 2015, is withdrawn, and the following is substituted therefor.

In 1974, Anne Homes, Inc., constructed a condominium development. As part of its development of the project, Anne Homes constructed a sewage-treatment plant on land adjacent to the condominium development. The sewage-treatment plant was intended to serve the condominium development.

In November 1974, Anne Homes entered into what was entitled a lease ("the 1974 agreement") with The Riverbend Association, Inc. ("RAI"), an association composed of the owners of the units in the condominium development, and Riverbend Marina Company, Inc. ("the marina"). The 1974 agreement was for a five-year term, with nine automatic-renewal terms of five years each; however, RAI and the marina could elect not to renew the 1974 agreement. The 1974 agreement granted possession of the sewage-treatment plant to RAI and the marina. RAI and the marina were required to perform all maintenance on the sewage-treatment plant. RAI and the marina were each responsible for one-half of the monthly rental payment under the 1974 agreement, and, initially, they were to divide the expenses of the operation of the sewage-treatment plant on a percentage basis, with the marina being responsible for 10% of the expenses of operating the sewage-treatment plant and RAI being responsible for the remaining 90%.

In 1981, Anne Homes defaulted on the mortgage secured by the property upon which the sewage-treatment plant was located. The Peoples National Bank of Huntsville ("the bank") foreclosed on the mortgage and purchased the property at the foreclosure sale. When the bank took possession of the property, the sewage-treatment plant was in need of significant repairs, which the bank made. After the foreclosure, the marina was no longer an extant entity, and the bank and RAI entered into what was labeled as an amendment to the 1974 agreement ("the 1981 amendment") . The 1981 amendment, however, specified that the 1974 agreement had not actually been a lease but had instead been a license agreement permitting RAI and the marina to use the sewage-treatment plant.[1] The 1981 amendment clarified that the bank and RAI were entering into a license agreement, and it deleted or modified certain provisions of the 1974 agreement, including deleting the provision requiring rent payments and replacing the provision governing the division of the expenses of operating the sewage-treatment plant. The 1981 amendment required that the bank pay 10% of the expenses of operating the sewage-treatment plant and that RAI pay 90%. The provision governing the division of the expenses further stated:

"If, at any time in the future additional sewer line taps are made into the [sewage-treatment plant], the parties agree that thereafter all expenses of the operation of the [sewage-treatment plant] shall be apportioned on a pro rata basis among the users based on the number of units using the treatment facility system. The Bank, its successors and assigns, shall remain in full control and possession of the [sewage-treatment plant] at all times and shall have the right, at any time, and from time to time, to allow additional sewage taps into the [sewage-treatment plant], provided, however, that in no event shall the Bank, its successors or assigns, allow any taps which would result in exceeding the [sewage-treatment plant's] capacity."

Also in 1981, the bank sold the sewage-treatment plant to River Bend, Ltd. The deed from the bank to River Bend, Ltd., specifically references the 1974 agreement and the 1981 amendment. In addition, the bank and River Bend, Ltd., executed a document entitled "Assignment of Interests and Assumptions of Obligations Agreement" ("the assignment agreement"). Under the assignment agreement, among other things, River Bend, Ltd., assumed the obligations of the bank under the 1974 agreement and the 1981 amendment. River Bend, Ltd., operated the sewage-treatment plant from mid-1981 to October 2010. During that time, River Bend, Ltd., billed RAI for, and RAI paid, 90% of the expenses associated with the operation of the sewage-treatment plant.

In October 2010, River Bend, Ltd., conveyed the sewage-treatment plant to Riverbend, LLC. The deed from River Bend, Ltd., to Riverbend, LLC, did not contain any reference to the 1974 agreement, the 1981 amendment, or the assignment agreement. Riverbend, LLC, or River Bend Marina, LLC (hereinafter referred to collectively as "Riverbend"), [2] continued the billing practices instituted by River Bend, Ltd., and billed RAI for 90% of the expenses associated with the operation of the sewage-treatment plant. In 2011, however, RAI determined that, because additional sewer taps had been added, RAI was no longer responsible for 90% of the expenses associated with the operation of the sewage-treatment plant. Based on the increased number of users, RAI calculated its pro rata share of the expenses associated with the operation of the sewage-treatment plant to be approximately 72%, and RAI began paying Riverbend that reduced amount in June 2011. Riverbend objected to RAI's unilateral reduction of the payments, and Riverbend threatened to terminate sewer service to the condominium development.

In March 2012, RAI sued Riverbend and fictitiously named parties, seeking a judgment declaring that Riverbend was bound by the terms and conditions of the 1974 agreement and the 1981 amendment. RAI also sought an accounting, an injunction to prevent Riverbend from terminating sewer service to the condominium development, and damages for breach of contract, which damages it claimed had resulted from Riverbend's billing RAI more than the amount required by the 1981 amendment.[3]Riverbend filed an answer, which it later amended to add counterclaims seeking a judgment declaring that Riverbend was not bound by the terms of the 1974 agreement and the 1981 amendment, that Riverbend was entitled to change the billing plan for its services to a per-user billing plan based on consumption, and that Riverbend was entitled to include in its billing a profit margin. Riverbend also sought damages for breach of contract or unjust enrichment based on RAI's failure to pay in full the amount Riverbend had billed RAI.

RAI moved for a partial summary judgment. In its motion, RAI requested that the trial court determine that it had an irrevocable license to use the sewage-treatment plant and that Riverbend was bound by the terms of the 1974 agreement and the 1981 amendment. Riverbend opposed RAI's motion and filed a cross-motion for a summary judgment, in which it argued that it was not bound by either the 1974 agreement or the 1981 amendment and that Riverbend was entitled to charge RAI reasonable fees for the sewer service Riverbend provided. Riverbend specifically sought a judgment in its favor determining that Riverbend had acquired title to the sewage-treatment plant free from the obligations imposed by the 1974 agreement and the 1981 amendment, that Riverbend could include a profit margin in its billing for sewer services, that Riverbend could change its billing practice to bill users individually, and that RAI owed Riverbend the remaining balance between the amount RAI paid and the amount it had been billed for the sewer services provided between June 2011 and the date of the judgment.

The trial court entered a summary-judgment order deciding the issues in favor of Riverbend on November 13, 2013. In its November 2013 order, the trial court did not determine the character of the 1974 agreement or the 1981 amendment. The trial court further determined that Riverbend was not bound by the 1974 agreement or the 1981 amendment, but, the trial court concluded, if Riverbend were bound by those agreements, the agreements had not been breached. The trial court further concluded that neither the 1974 agreement nor the 1981 amendment prohibited Riverbend from charging reasonable rates for sewer service, from including within its charges an amount sufficient to create a reasonable profit, or from changing its billing system to a per-user, metered billing system. Based on its conclusions, the trial court ordered that RAI pay $24, 404.41 in past-due sewer-service charges and permitted Riverbend to submit a supplemental affidavit of additional past-due sewer-service charges within 30 days.[4]

Riverbend submitted a supplemental affidavit indicating that RAI owed an additional $4, 873.63 in past-due sewer-service charges. RAI filed a "postjudgment" motion on December 13, 2013. The trial court amended its judgment on January 21, 2014, to require RAI to pay the additional past-due sewer-service charges. RAI's premature postjudgment motion quickened when the judgment was made final by the trial court's entry of the January 21, 2014, order amending its judgment to include the additional amount owed by RAI. See New Addition Club, Inc. v. Vaughn, 903 So.2d 68, 72 (Ala. 2004) ("We hold that if a party moves for a judgment as a matter of law or, in the alternative, for a new trial before the court has entered judgment, the motion shall be treated as having been filed after the entry of the judgment and on the day thereof."); see also Richardson v. Integrity Bible Church, Inc., 897 So.2d 345, 347 (Ala. Civ. App. 2004) (explaining that "a premature postjudgment motion that, if it had been directed to a final judgment, would toll the time for filing a notice of appeal from a final judgment ... 'quickens' on the day that the final judgment is entered") . The motion was then denied by operation of law on April 21, 2014. RAI timely filed its notice of appeal to this court on April 16, 2014. Pursuant to Rule 4(a)(5), Ala. R. App. P., we held RAI ' s appeal in abeyance until the denial of RAI's postjudgment motion by operation of law.

We review a summary judgment de novo; we apply the same standard as was applied in the trial court. A motion for a summary judgment is to be granted when no genuine issue of material fact exists and the moving party is entitled to a judgment as a matter of law. Rule 56(c)(3), Ala. R. Civ. P. A party moving for a summary judgment must make a prima facie showing "that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law." Rule 56(c)(3); see Lee v. City of Gadsden, 592 So.2d 1036, 1038 (Ala. 1992) . If the movant meets this burden, "the burden then shifts to the nonmovant to rebut the movant's prima facie showing by 'substantial evidence.'" Lee, 592 So.2d at 1038. "[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably ...


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