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Aliant Bank v. Four Star Investments, Inc.

Supreme Court of Alabama

August 25, 2017

Aliant Bank, a Division of USAmeribank
v.
Four Star Investments, Inc., et al. Aliant Bank, a Division of USAmeribank
v.
Wrathell, Hunt & Associates, LLC, and Pfil Hunt Aliant Bank, a Division of USAmeribank
v.
Engineers of the South, LLC, and Tim Harbison

         Appeals from St. Clair Circuit Court (CV-12-900044)

          STUART, CHIEF JUSTICE.

         Aliant Bank, a division of USAmeribank ("Aliant"), sued various individuals and business entities involved in a failed effort to develop the Twelve Oaks subdivision in Odenville, alleging that, as a result of those defendants' conspiracy and wrongful actions, Aliant's security interest in the property upon which the Twelve Oaks subdivision was to be built had been rendered worthless. The St. Clair Circuit Court ultimately entered a number of orders either dismissing Aliant's claims or entering a summary judgment in favor of the various defendants. Aliant has filed three appeals; we affirm in part and reverse in part in appeals no. 1150822 and no. 1150823 and affirm in appeal no. 1150824.

         I.

         On August 15, 2007, Aliant closed a $2.3 million loan ("the Aliant loan") with Four Star Investments, Inc., a corporation that owned 197 acres of land in Odenville that Four Star Investments' president, Bobby R. Smith, Jr. ("Smith"), planned to develop into a subdivision to be known as Twelve Oaks. The proceeds of the Aliant loan were used both to pay off a previous loan on the Twelve Oaks property and to finance construction of the infrastructure for the subdivision. The Aliant loan was secured by a first-priority mortgage on the Twelve Oaks property and was also personally guaranteed by Smith, a contractor who had experience developing several other subdivisions in the St. Clair County area. Another company owned and operated by Smith, Twelve Oaks Properties, Inc., thereafter operated as the entity developing Twelve Oaks.

         During this same time frame, Smith was also seeking additional financing from other sources for the development of Twelve Oaks. He eventually came into contact with Pfil Hunt, a Mobile-based investment banker with experience setting up public-private partnerships between municipalities and developers. Hunt advised Smith that one option was to create, pursuant to the Alabama Improvement District Act, § 11-99A-1 et seq., Ala. Code 1975, a type of public corporation known as an "improvement district" for which bonds could be issued and sold, thus providing immediate revenue for the construction of improvements benefiting the Twelve Oaks property. Those bonds would later be repaid by the end purchasers of the developed lots, who would be responsible for paying an annual assessment that ran with the property until the bonds were repaid. Smith ultimately elected to pursue that route, and throughout the fall of 2007 he worked with Hunt and Hunt's management company Wrathell, Hunt & Associates, LLC ("WHA"), to complete the planning of Twelve Oaks and to prepare a petition requesting that the Odenville town council formally create an improvement district that encompassed the Twelve Oaks property. As part of that process, Hunt directed Smith to Tim Harbison, an engineer with the engineering firm Engineers of the South, LLC ("EOS"), who, in November 2007, created an engineer's report detailing the feasibility of the planned Twelve Oaks subdivision. That report, based on figures provided by Smith, stated that it would cost $5, 618, 000 to complete the Twelve Oaks infrastructure, including roads, sidewalks, signage, street lighting, landscaping and irrigation, earthwork and a series of lakes, water and sewage systems, a clubhouse and a swimming pool, park areas, and walking trails.

         Smith thereafter petitioned the Odenville town council to create the planned improvement district, and, on January 14, 2008, the Odenville town council adopted a resolution granting the petition and creating the Twelve Oaks Improvement District ("the District"). The District's board of directors consisted of Smith; Smith's brother Billy Smith, who was the partner with Smith in B&B Construction, Inc., a construction company that had worked on the Twelve Oaks property; and Fran Mize, a real-estate broker and another business partner of Smith's responsible for marketing Twelve Oaks (hereinafter referred to collectively as "the Board members"). The District subsequently hired WHA to manage the District and EOS as the official engineer for the District, and they thereafter worked toward preparing a bond issue and finding a buyer for the to-be-issued bonds. Ultimately, Allstate Insurance Company ("Allstate") agreed to purchase $4, 395, 000 worth of bonds issued by the District.

         In April 2008, the District petitioned the Odenville town council to adopt a resolution approving the assessments that would be used to secure and pay the bonds to be issued by the District. In support of that petition, the District submitted the engineer's report prepared by Harbison and a methodology report prepared by WHA, which concluded that the $4, 395, 000 face value of the bonds would require a special assessment of $12, 557.14 to be levied upon each of the 350 lots planned for Twelve Oaks, which assessment WHA recommended be payable at the rate of $1, 318.67 per year for a 10-year period. The methodology report noted that the $4, 395, 000 bond issue would raise only $2, 959, 821 that would be available for the development of Twelve Oaks, because $993, 870 of the bond proceeds would be set aside for capitalized interest and a debt-service reserve fund and the remainder of the bond proceeds would be paid out as costs and fees associated with the issuance of the bonds, which would be underwritten by another firm affiliated with Hunt -- Gardnyr Michael Capital. The methodology report also noted that an additional $2, 658, 179 would still be needed to finish the estimated $5, 618, 000 of infrastructure improvements needed to complete Twelve Oaks; however, the methodology report did not indicate where those funds would come from. The Odenville town council thereafter adopted a resolution setting the assessments at the requested level, and the District then adopted its own resolution authorizing the issuance of the bonds.

         On June 6, 2008, the District filed a bond-validation petition in the St. Clair Circuit Court pursuant to § 11-81-221, Ala. Code, which "allows a public corporation to 'determine its authority to issue ... obligations and the legality of all proceedings had or taken in connection therewith, ' and 'the validity of the tax or other revenues or means provided for the payment thereof.'" Houston Cty. Econ. Dev. Auth. v. State, 168 So.3d 4, 21 (Ala. 2014) (quoting § 11-81-221). On July 2, 2008, the trial court entered a final judgment confirming the validity and enforceability of the bonds and the assessments securing them. No appeal was filed, and it was thus established that the bonds and the assessments providing for their payment could "never be called in question in any court in this state." § 11-81-224, Ala. Code 1975.

         On July 14, 2008, Smith met with Doug Williamson, the Aliant officer responsible for the Aliant loan, and informed him that the bonds were ready to be issued but that the District could not proceed until Aliant executed a "mortgagee special assessment acknowledgment" that would subordinate Aliant's interest in the Twelve Oaks property to the interests of the bondholders; Aliant alleges that this was the first time it was informed that it would be asked to subordinate its interest in the Twelve Oaks property. Williamson alleges that Smith and the District's attorney made various representations to him during that meeting and over the course of the next several days regarding the viability of Twelve Oaks and the controls that would be placed upon the use of the bond proceeds and that, based upon those and other representations made by Smith, as well as upon written representations made in the engineer's report prepared by Harbison and other materials prepared by WHA, he agreed to execute the mortgagee-special-assessment acknowledgment on behalf of Aliant, doing so on July 24, 2008.

         On July 31, 2008, the bonds were issued, and the bond proceeds were split into a series of trust accounts maintained by U.S. Bank, N.A., which, pursuant to the District's agreement with Allstate, had been selected to serve as trustee of those accounts. Pursuant to the terms of the trust indenture, the District could access the $2, 959, 821 available for the construction of improvements only upon filing a request for reimbursement and providing appropriate documentation describing the work that had been completed and the costs that had been incurred; such requests then had to be signed and approved by both a District board member and Harbison or another EOS engineer. Unbeknownst to Aliant, however, Odenville had, on November 26, 2007 -- before the District had even been officially created -- adopted a resolution authorizing Twelve Oaks Properties, Inc., to be reimbursed from the future bond proceeds for improvements made to the Twelve Oaks property before the bonds were issued. In accordance with that resolution, Smith filed a request for reimbursement on behalf of Twelve Oaks Properties on August 8, 2008 -- eight days after the bonds were issued -- seeking $1, 181, 962 from the bond proceeds for work completed before the bonds were issued. Smith approved the request on behalf of the District, and, after Harbison approved the request as District engineer, the requested payment was made. On September 10, 2008, Smith submitted another request for reimbursement seeking $541, 866, of which $306, 951 was for work performed before the bonds were issued. That request was also approved by Harbison, and the bond proceeds were disbursed as requested.

         In the following months, virtually all the remaining bond proceeds were paid out, and by March 2010 only $9, 500 remained. Aliant alleges that little progress was made at Twelve Oaks during this time. The trust accounts holding reserves were exhausted by late 2010 as well, and eventually neither the District nor Smith and his affiliated companies were able to make future payments on the bonds when they became due. In early 2011, Four Star Investments defaulted on the Aliant loan, and, on May 2, 2011, Aliant sued Four Star Investments and Smith alleging that they had breached the terms of their loan and guarantee agreements. On September 26, 2011, the trial court entered a $2, 241, 288 judgment in favor of Aliant in that action (hereinafter referred to as "the default action").

         Aliant thereafter began conducting postjudgment discovery seeking to learn more about the assets of Four Star Investments and Smith. During that process, Aliant learned more details regarding the creation of the District, the development of Twelve Oaks, and how the bond proceeds had been used. On March 30, 2012, Aliant, based on the information it had discovered, filed another lawsuit asserting various claims related to the development of Twelve Oaks. As eventually amended, Aliant's final complaint asserted nine counts against various individuals and entities. Those defendants can be categorized as follows: (1) "The Twelve Oaks defendants, " including Four Star Investments, Twelve Oaks Properties, the District, Smith, Billy Smith, Mize, and B&B Construction; (2) Hunt and his management company WHA; (3) "the EOS defendants, " including Harbison and his engineering firm EOS; and (4) Allstate and U.S. Bank.[1] The gravamen of Aliant's claims is that those defendants combined to commit a number of wrongful acts that siphoned all equity from the Twelve Oaks development and that, while the defendants had individually profited from those acts, Aliant had been injured inasmuch as its security interest in the Twelve Oaks property had been rendered worthless because the property was now encumbered by assessments that had a total value in excess of the market value of the Twelve Oaks property.

         The defendants eventually all moved the trial court either to dismiss the claims asserted against them or to enter summary judgments in their favor. Through a number of orders entered between April 2015 and April 2016, the trial court dismissed some of the claims asserted by Aliant against Smith, Four Star Investments, Allstate, and U.S. Bank and entered summary judgments in favor of the defendants on all the remaining claims. Aliant subsequently filed four appeals with this Court: appeal no. 1150637 (challenging the judgments entered in favor of Allstate and U.S. Bank); appeal no. 1150822 (challenging the judgments entered in favor of the Twelve Oaks defendants); appeal no. 1150823 (challenging the judgments entered in favor of Hunt and WHA); and appeal no. 1150824 (challenging the judgment entered in favor of the EOS defendants). We consolidated the four appeals for the purpose of writing one opinion; however, the parties to appeal no. 1150637 subsequently settled their dispute, and that appeal has since been dismissed.

         II.

         The trial court disposed of each claim asserted by Aliant in this case either by dismissing the claim or by entering a summary judgment in favor of the defendant against which the claim was asserted; Aliant argues that the trial court erred in both respects. With regard to those claims that were dismissed, this Court has stated:

"The appropriate standard of review of a trial court's [ruling on] a motion to dismiss is whether 'when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle [the pleader] to relief.' Nance v. Matthews, 622 So.2d 297, 299 (Ala. 1993); Raley v. Citibanc of Alabama/Andalusia, 474 So.2d 640, 641 (Ala. 1985). This Court does not consider whether the plaintiff will ultimately prevail, but only whether the plaintiff may possibly prevail. Nance, 622 So.2d at 299. A 'dismissal is proper only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief.' Nance, 622 So.2d at 299; Garrett v. Hadden, 495 So.2d 616, 617 (Ala. 1986); Hill v. Kraft, Inc., 496 So.2d 768, 769 (Ala. 1986)."

Lyons v. River Road Constr., Inc., 858 So.2d 257, 260 (Ala. 2003). We review the summary judgments entered by the trial court under the following standard:

"This Court's review of a summary judgment is de novo. Williams v. State Farm Mut. Auto. Ins. Co., 886 So.2d 72, 74 (Ala. 2003). We apply the same standard of review as the trial court applied. Specifically, we must determine whether the movant has made a prima facie showing that no genuine issue of material fact exists and that the movant is entitled to a judgment as a matter of law. Rule 56(c), Ala. R. Civ. P.; Blue Cross & Blue Shield of Alabama v. Hodurski, 899 So.2d 949, 952-53 (Ala. 2004). In making such a determination, we must review the evidence in the light most favorable to the nonmovant. Wilson v. Brown, 496 So.2d 756, 758 (Ala. 1986). Once the movant makes a prima facie showing that there is no genuine issue of material fact, the burden then shifts to the nonmovant to produce 'substantial evidence' as to the existence of a genuine issue of material fact. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala. 1989); Ala. Code 1975, § 12-21-12."

Dow v. Alabama Democratic Party, 897 So.2d 1035, 1038-39 (Ala. 2004).

         III.

         Aliant's final amended complaint asserted nine counts, with each count including claims against multiple defendants. However, we note that Aliant has not, in its briefs to this Court, addressed the trial court's disposition of the first three asserted counts -- labeled "judicial foreclosure, " "declaratory judgment and bill to quiet title, " and "unjust enrichment" -- and Aliant has accordingly waived any argument that the trial court acted in error in its disposition of those counts. See Bogle v. Scheer, 512 So.2d 1336, 1337 (Ala. 1987) ("The plaintiff filed a five-count complaint .... [O]n appeal he has argued only that a summary judgment was not proper on the conspiracy count (count four). Because issues not argued in brief are waived, ... our review is limited to whether the summary judgment was proper on the conspiracy count.").[2] We consider the rest of the counts asserted by Aliant in the order in which they were presented.

         Count four of Aliant's final amended complaint asserts negligence and breach-of-fiduciary-duty claims against WHA and the individual Board members -- Smith, Mize and Billy Smith. "The elements of a negligence claim are a duty, a breach of that duty, causation, and damage." Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So.2d 665, 679 (Ala. 2001) (citing AALAR, Ltd. v. Francis, 716 So.2d 1141, 1144 (Ala. 1998)). Similarly, the elements of a breach-of-fiduciary-duty claim are the existence of a fiduciary duty, a breach of that duty, and damage suffered as a result of that breach. Regions Bank v. Lowrey, 101 So.3d 210, 219 (Ala. 2012). Aliant alleges in its complaint that WHA and the Board members had a duty to responsibly manage and oversee the District and that Aliant was damaged after they

"breached their duties by, among other things, failing to exercise their independent professional judgment and analysis related to the feasibility of the [bond] issue, by failing to properly supervise and monitor the spending of the [bonds] on the premises, by failing to assure that the requisitions were proper and for work actually performed, by failing to properly monitor and supervise the construction of the promised improvements, by mismanaging the funds [so] that only a small portion of the promised improvements were completed, and by otherwise failing to carry out the responsibilities of their job."

         The determination whether a duty exists is generally a question of law for the court to decide. Ex parte BASF Constr. Chems., LLC, 153 So.3d 793, 801-02 (Ala. 2013). With regard to Aliant's claims against the Board members, like the board of directors governing any corporate body the Board members had the duty to act with care and the duty to act with loyalty. See Massey v. Disc Mfg., Inc., 601 So.2d 449, 456 (Ala. 1992) ("The corporate fiduciary duty is divided into two parts: (1) a duty of care; and (2) a duty of loyalty."). Although the board of directors of a typical for-profit corporation owe those duties to the corporation and its shareholders, see, e.g., Jones v. Ellis, 551 So.2d 396, 401 (Ala. 1989), the District is a public corporation with no shareholders. However, just as a for-profit corporation exists primarily to maximize profit for the benefit of its shareholders, the District exists primarily to benefit those owning property within its boundaries; accordingly, the Board members owe their duties to owners of property within the District. Inasmuch as Alabama is a "title theory" state, Aliant, which at all relevant times held a mortgage on the Twelve Oaks property, must be included among those to whom the Board members owed a duty of care and a duty of loyalty. See Maiden v. Federal Nat'l Mortg. Ass'n, 69 So.3d 860, 865 (Ala. Civ. App. 2011) ("Alabama is a 'title theory' state; thus, when a person mortgages real property, the mortgagee obtains legal title to the real property ....").

         Having held that the Board members did owe certain duties to Aliant, we also hold that Aliant met its burden of putting forth substantial evidence establishing that a genuine issue of material fact exists with regard to the other elements of its negligence and breach-of-fiduciary-duty claims against the Board members. The affidavit of Aliant's expert Marcus A. Watson in particular described the problematic nature of the actions taken by the Board members, especially in light of the fact that they were all related parties inasmuch as they shared business interests in various entities involved in the development of Twelve Oaks.

         In their combined brief to this Court, the Twelve Oaks defendants do not argue that Aliant failed to submit substantial evidence establishing its negligence and breach-of-fiduciary-duty claims against the Board members. Rather, they argue that all the Twelve Oaks defendants were entitled to a summary judgment on all the claims asserted against them by Aliant on the basis of several affirmative defenses, specifically, immunity, res judicata and collateral estoppel, and the statute of limitations. In its order entering a summary judgment in favor of the Twelve Oaks defendants, the trial court in fact agreed that all the claims asserted by Aliant were barred by the doctrines of res judicata or collateral estoppel and by the statute of limitations. The trial court also cited those affirmative defenses when entering summary judgments in favor of the other defendants on the claims asserted in Aliant's final amended complaint. For the reasons that follow, we disagree that all of Aliant's claims are barred by the doctrines of res judicata and collateral estoppel and by the statute of limitations; the defendants' general arguments in this regard are without merit. Nevertheless, there are specific facts relevant to some of the claims asserted against individual defendants such that those claims are barred by principles of immunity or the appropriate statute of limitations. Those exceptions are discussed in subsequent sections of this opinion; no affirmative defenses bar the negligence and breach-of-fiduciary duty claims asserted against the Board members, however, and our analysis of the general immunity, res judicata/collateral-estoppel, and statute-of-limitations arguments they make is equally applicable to the similar arguments made by the other defendants.

         The Board members first argue that they are entitled to immunity based on the Alabama Improvement District Act, which provides, in part:

"Districts, the members of the board, its officers, and agents shall have the same immunity from liability as a municipality and its officers. No civil action shall be brought or maintained against the district or any director thereof for or on account of the negligence of a district or director or its or his or her agents, servants, or employees in or about the construction, acquisition, installation, maintenance, operation, superintendence, or management of any facility or other improvement owned, controlled, maintained, or managed by the district."

§ 11-99A-7, Ala. Code 1975. Emphasizing the second sentence in this section, the Board members argue that no action in negligence can be brought against them based on their actions related to managing and operating the District. They further argue that § 11-47-190, Ala. Code 1975, which sets forth the immunity that applies to municipalities and their officers, operates to bar any action against them based on intentional torts as well; § 11-47-190 provides, in pertinent part:

"No city or town shall be liable for damages for injury done to or wrong suffered by any person or corporation, unless such injury or wrong was done or suffered through the neglect, carelessness, or unskillfulness of some agent, officer, or employee of the municipality engaged in work therefor and while acting in the line of his or her duty ... and whenever the city or town shall be made liable for damages by reason of the unauthorized or wrongful acts or negligence, carelessness, or unskillfulness of any person or corporation, then such person or corporation shall be liable to an action on the same account by the party so injured."

         We disagree that these two statutes apply in this case to bar the claims asserted by Aliant in count four of its final amended complaint. Section 11-99A-7 is clear that the legislature intended an improvement district and its board members to have "the same immunity from liability as a municipality and its officers, " and § 11-47-190 provides that a municipality can be sued for the negligent acts of its agents and that, if a municipality is the subject of a lawsuit as a result of the negligence of an agent, "then such person ... shall be liable to an action on the same account by the party so injured." See, e.g., Morrow v. Caldwell, 153 So.3d 764 (Ala. 2014) (recognizing that under § 11-47-190 a municipality can be sued based upon the negligence of its agent, while the agent can be sued in his or her individual capacity for both negligent and intentional acts). Reading these two statutes together, the sentence in § 11-99A-7 indicating that no claim can be pursued against a director of an improvement district "for or on account of the negligence of a district or director or its or his or her agents, servants, or employees" must operate only to bar a negligence claim from being asserted against a director based upon the negligence of some other party -- not the director's own negligence. This is consistent with how immunity is applied to cases involving municipal employees. See, e.g., Newton v. Town of Columbia, 695 So.2d 1213, 1218 (Ala. Civ. App. 1997) ("[A] municipality's chief executive is not vicariously liable for the misconduct of his or her subordinates."). In this case, the Board members are being sued based on their own alleged wrongdoing, not the actions of each other or some other agents. Accordingly, § 11-99A-7 does not bar the negligence and breach-of-fiduciary duty claims asserted by Aliant against the Board members.

         We next consider the Board members' argument that they are entitled to a summary judgment based on the doctrines of collateral estoppel and res judicata. The trial court agreed, stating in its order granting their motion for a summary judgment:

"On May 2, 2011, Aliant filed suit previously in this court against codefendants [Smith] and Four Star [Investments] about the same loan they now complain about. On October 13, 2011, the court entered a judgment against Four Star [Investments] and [Smith] in the amount of $2, 241, 287.75 as a consequence of their default under the loan transactions. This order represents a final, binding adjudication of Aliant's claims concerning the loan on the Twelve Oaks property. Indeed, this court has previously held Aliant was estopped from bringing tort claims against [Smith].
"Collateral estoppel applies when '(1) an issue in a prior action was identical to the issue litigated in the present action; (2) the issue was actually litigated in the prior action; (3) resolution of the issue was necessary to the prior judgment; and (4) the same parties are involved in the two actions.' Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So.2d 507, 520 (Ala. 2002). Here, (1) Aliant is suing over the very same issue -- [the Aliant loan]; (2) the loan was previously litigated to a final judgment; (3) resolution of the loan was necessary for the prior judgment; and (4) Aliant, Four Star [Investments], and [Smith] were all parties to both cases. Aliant is the same party seeking to relitigate the same loan. See Whisman v. Alabama Power Co., 512 So.2d 78, 82 (Ala. 1987) ('The party identity criterion does not require complete identity, but only that the party against whom res judicata is asserted was either a party or in privity with a party to the prior action ....'). Because the elements of collateral estoppel have been met, Aliant is estopped from prosecuting this suit over the very same loan.
"Aliant's claims are precluded in this case. Aliant has already brought suit on this very same loan and obtained a judgment. Because Aliant seeks to relitigate the same issues as those in [the prior action], its claims are barred.
"'If a claim, which arises out of a single wrongful act or dispute, is brought to a final conclusion on the merits, then all other claims arising out of that same wrongful act or dispute are barred, even if those claims are based on different legal theories or seek a different form of damages, unless the evidence necessary to establish the elements of the alternative theories varies materially from the evidence necessary for a recovery in the first action.'
"Equity Resources Mgmt., Inc. v. Vinson, 723 So.2d 634, 638 (Ala. 1998).
"The prior judgment is res judicata. See Martin v. Cash Express, Inc., 60 So.3d 236, 241 (Ala. 2010) ('[A] judgment or decree by consent is as conclusive between them and their privies as if the suit had been an adversary one and rendered after a trial on the facts.'); see Whisman v. Alabama Power Co., 512 So.2d 78, 82 (Ala. 1987) ('The issue has been litigated and, if the defense is asserted, the prior litigation will preclude this issue from being relitigated.'). Since Aliant has already litigated its claim on the loan at issue and obtained a judgment, it cannot now relitigate the issue under a different theory."

         This Court has explained that "[r]es judicata and collateral estoppel are two closely related, judicially created doctrines that preclude the relitigation of matters that have been previously adjudicated or, in the case of res judicata, that could have been adjudicated in a prior action." Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So.2d 507, 516 (Ala. 2002). Essentially, the doctrine of collateral estoppel operates to bar the relitigation of issues actually litigated in a previous action, while the doctrine of res judicata bars the litigation of claims that were or could have been litigated in a previous action. Lee L. Saad, 851 So.2d at 516-17. Aliant argues that neither doctrine has application here because, it says, the default action was limited to determining whether Four Star Investments had breached an agreement to repay a promissory note secured by a mortgage on the Twelve Oaks property and whether Smith had breached an accompanying agreement personally guaranteeing Four Star Investments' debt. Thus, Aliant argues, collateral estoppel does not apply because, it says, the issues surrounding the claims raised in the instant action -- such as whether the Board members breached any duties they owed Aliant and whether any of the defendants made misrepresentations to Aliant -- were not litigated in the previous action, and, Aliant argues, res judicata does not apply because, it says, the claims asserted in the instant action were not and could not have been asserted in the previous action. We agree.

         With regard to collateral estoppel, the trial court and the Board members broadly identify the issue litigated in a prior action and the issue Aliant allegedly now seeks to relitigate as being the Aliant loan. However, although the Aliant loan is certainly a relevant part of both actions, it is not itself an "issue" that may be the subject of collateral estoppel. As explained in Lee L. Saad, collateral estoppel operates to prevent the relitigation of factual issues that have already been decided in a prior action. 851 So.2d at 519. Thus, factual issues relating to the Aliant loan that were decided in the default action -- such as whether Four Star Investments had executed a valid promissory note with Aliant, whether Smith had personally guaranteed Four Star Investments' debt, and whether those agreements were breached -- cannot be relitigated in the instant or any other action; collateral estoppel precludes it. However, the factual issues that must be resolved to decide the negligence, fraud, and other claims now asserted by Aliant against the Board members and other defendants in the instant action -- such as whether any duties were breached and whether any misrepresentations were made -- were undisputedly not considered in the default action; those issues simply were not relevant to whether Four Star Investments and Smith breached their loan and guarantee agreements. Inasmuch as the doctrine of collateral estoppel bars the relitigation only of "issues actually decided in a former action, " it is without effect in this case. Leverette v. Leverette, 479 So.2d 1229, 1237 (Ala. 1985) (emphasis added).

         We next turn to the Board members' argument that Aliant's claims against them are barred by the doctrine of res judicata. In essence, even though we have concluded that the factual issues relevant to Aliant's present claims were not actually decided in the default action, we must still determine whether Aliant could have asserted its present claims in the default action, thus putting those factual issues before the court at that time. See Dairyland Ins. Co. v. Jackson, 566 So.2d 723, 725 (Ala. 1990) (explaining that res judicata will bar further litigation of "any claim that was or could have been adjudicated in the prior action"). The Board members argue that the doctrine of res judicata bars Aliant's present claims "because the matters in the [instant] action involve the same wrongful act and dispute (i.e., nonpayment of the [Aliant] loan) as was at issue in the first action. This is true regardless of what name or title that Aliant may use to describe its claims." The Twelve Oaks defendants' brief, pp. 30-31. Aliant, however, argues that the default action was essentially just a simple breach-of-contract case involving one wrongful act -- the failure to pay moneys owed by contract -- while the instant action encompasses entirely different claims based on other wrongs, such as the breaching of duties and the making of misrepresentations. Moreover, Aliant argues, it could not have asserted its present claims in the default action because, it alleges, it did not discover the facts supporting the present claims until after the default action was resolved.

         The elements of res judicata are (1) a prior judgment on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial identity of the parties, and (4) with the same cause of action presented in both suits. Equity Res. Mgmt., Inc. v. Vinson, 723 So.2d 634, 636 (Ala. 1998) The only element now disputed by the parties is the fourth -- whether the cause of action in the instant case is the same as the cause of action in the default action. This Court has explained the factors relevant to making that determination:

"The determination of whether the cause of action is the same in two separate suits depends on whether the issues in the two actions are the same and whether the same evidence would support a recovery for the plaintiff in both suits. Dominex, Inc. v. Key, 456 So.2d 1047, 1054 (Ala. 1984). Stated differently, the fourth element is met when the issues involved in the earlier suit comprehended all that is involved in the issues of the later suit. Adams v. Powell, 225 Ala. 300, 142 So. 537 (1932)."

Dairyland Ins., 566 So.2d at 726. See also Chapman Nursing Home, Inc. v. McDonald, 985 So.2d 914, 921 (Ala. 2007) (explaining that res judicata applies to all legal theories and claims arising out of the same nucleus of operative facts and that two causes of action are the same for res judicata purposes when the same evidence is applicable in both actions).

         In considering those factors, we cannot agree with the trial court that the claims now asserted by Aliant are essentially the same as the claim asserted by Aliant in the default action. The evidence that Aliant presented in the default action indicated that Four Star Investments and Smith executed and subsequently breached agreements with Aliant and supported a recovery for Aliant on the breach-of-contract claims asserted in the default action. However, that evidence would not support and is not needed to prove Aliant's present claims of negligence, breach of fiduciary duties, fraud, conspiracy, and wantonness. Those claims are based on separate and distinct actions, not directly related to the Aliant loan, that were allegedly taken by the Board members and other defendants, and separate evidence is needed to establish those claims. For example, with regard to the negligence and breach-of-fiduciary-duty claims asserted against the Board members, that evidence would include evidence of the actions the Board members took in their official capacities and whether those actions were sufficient to fulfill the duties they owed Aliant. Accordingly, the doctrine of res judicata does not bar Aliant from asserting its present claims.

         Our conclusion that the doctrines of res judicata and collateral estoppel do not apply in this case is supported by this Court's decision in Benetton S.p.A. v. Benedot, Inc., 642 So.2d 394 (Ala. 1994), a similar case in which it was alleged that a previous action between parties in which a judgment was entered on a debt operated as res judicata to bar a subsequent action between the same parties. Benetton involved a dispute between the Italian clothing manufacturer Benetton and its United States subsidiary and sales representatives (hereinafter referred to collectively as "Benetton"), on the one hand, and Al-Ben, Inc., an Alabama company that had contracted with Benetton to operate certain Benetton stores in Alabama, on the other hand. 642 So.2d at 396. Al-Ben had had a tumultuous relationship with Benetton from the beginning, alleging that Benetton failed to complete its obligations so that the stores could open when originally planned and that Benetton constantly sent it unordered and unwanted merchandise that had to be sold for a loss. Ultimately Al-Ben sued Benetton asserting claims of fraud, conspiracy, and breach of contract.

         Benetton separately sued the owners of Al-Ben in federal district court, alleging that the owners had personally guaranteed debt Al-Ben had incurred for merchandise received from Benetton, and Benetton ultimately obtained a judgment in its favor on this claim. 642 So.2d at 397. Al-Ben thereafter was awarded $1, 500, 000 in the state-court action, and Benetton appealed that judgment to this Court, arguing that Al-Ben's fraud, conspiracy, and breach-of-contract claims should have been barred by the doctrines of res judicata and/or collateral estoppel based on the earlier judgment entered by the federal district court. 642 So.2d at 398-99. In rejecting Benetton's res judicata argument, this Court applied the "same-evidence" test discussed supra, stating:

"We cannot say that the same cause of action is present in both actions. [Al-Ben's owners'] liability, through personal guarantees, for Al-Ben's debt based on unpaid invoices does not involve the issues of fraud, conspiracy, and breach of contract. The first action does not involve the issues raised in the second action, and the same evidence would not support a recovery for the plaintiffs in both actions. Therefore, the doctrine of res judicata does not bar Al-Ben's action against Benetton based on fraud, conspiracy, and breach of contract."

Benetton, 642 So.2d at 400. The Benetton Court also declined to apply the doctrine of collateral estoppel, noting that the federal district court had not decided any factual issues relevant to the state-court action because the federal district court had entered a judgment representing only the amount Al-Ben's owners conceded they owed; the federal district court had made no judgment on debt attributable to merchandise Al-Ben's owners claimed they had not wanted or ordered. Id.

         Applying Benetton to the facts of this case, we note that Four Star Investments' and Smith's liability for the Aliant loan did not involve issues of negligence, breach of fiduciary duties, fraud, conspiracy, and wantonness. The default action did not involve the issues raised in the instant action, and the same evidence would not support a recovery for Aliant in both actions. Accordingly, the doctrine of res judicata does not bar the instant action. Moreover, because the Board members and other defendants have not identified any issue that was actually litigated in the default action that Aliant is seeking to relitigate in this action, the doctrine of collateral estoppel is inapplicable as well.

         Finally, the Board members also argue that Aliant's negligence and breach-of-fiduciary-duty claims against them are barred by the applicable statute of limitations. The trial court held, and the Board members argue, that Aliant suffered injury (1) when it closed the Aliant loan in August 2007; (2) when it agreed to subordinate its security interest in the Twelve Oaks property in July 2008; and (3) when the bond proceeds were disbursed to Smith, his companies, and others beginning in 2008. Accordingly, they argue, Aliant's tort claims accrued, at the latest, in 2008, and the applicable two-year statute of limitations, see § 6-2-38(l), Ala. Code 1975, bars the claims now asserted inasmuch as Aliant did not initiate this action until March 2012. They further argue that Aliant was aware, at the time the bonds were issued, of the general process by which the bond proceeds would be disbursed and that Aliant knew that it could inspect the Twelve Oaks property to view construction progress at any time but apparently failed to do so; accordingly, they argue, Aliant should have been aware of its potential claims within that two-year period and it cannot rely on the discovery rule of § 6-2-3, Ala. Code 1975. See generally DGB, LLC v. Hinds, 55 So.3d 218, 224 (Ala. 2010) (explaining that, pursuant to § 6-2-3, if a potential tort claim has been fraudulently concealed, the two-year statute of limitations generally applicable to such a claim will be tolled until the plaintiff discovers the fraud).

         Aliant disputes the trial court's conclusion and the Board members' argument that it suffered injury in 2008 and that the statute of limitations began to run at that time. Aliant argues that, although much of the malfeasance allegedly committed by the various defendants occurred during that time, Aliant remained unaware of that fact for several years, and it suffered no legal injury until early 2011, when Four Star Investments defaulted on the Aliant loan. Aliant accordingly argues that § 6-2-3 applies and that its March 2012 complaint was timely.

         In support of its argument, Aliant relies heavily upon Bryant Bank v. Talmage Kirkland & Co., 155 So.3d 231 (Ala. 2014), which it alleges mirrors this case. In that case, a bank relied upon an appraisal conducted in December 2007 valuing a property at $1, 700, 000 to issue a commercial mortgage loan that same month. 155 So.3d at 233. After the borrower defaulted in October 2008, the bank ordered a new appraisal of the property from a different company, which concluded that the property was worth only $205, 000. In July 2010, the bank sued the appraisers, alleging negligent misrepresentation and breach of contract. The appraisers thereafter successfully moved the trial court to enter a summary judgment in their favor on the negligent-misrepresentation claim, and the bank appealed that judgment to this Court. On appeal, the appraisers argued that the bank's claim accrued in December 2007 when the loan was made and that the bank's July 2010 complaint was accordingly filed outside the two-year limitations period. 155 So.3d at 238. The bank, however, argued that the claim did not accrue until "it incurred damage as a result of [the borrower's] default on the loan." 155 So.3d at 237. This Court ultimately declined to affirm the summary judgment on the basis of the appraisers' statute-of-limitations argument, explaining:

"No evidence was presented indicating that [the bank] had actual knowledge -- for more than two years before commencing this action -- that the appraisal was conducted in a negligent manner. Accordingly, [the bank's] negligent-misrepresentation claim accrued when a reasonable person would have discovered the fraud -- a question within the purview of the jury. Because a genuine issue of material fact exists as to when [the bank] discovered facts that would have caused a reasonable person to inquire and led to the discovery of the fraud giving rise to [the bank's] negligent-misrepresentation claim, the defendants were not entitled to a summary judgment on the basis that the statute of limitations had run on its negligent-misrepresentation claim. ..."

Bryant Bank, 155 So.3d at 238.

         There is likewise no evidence in this case establishing that Aliant had actual knowledge of the facts that form the basis of its claims at the time they were occurring. The Board members and other defendants argue that Aliant should have taken steps to discover those facts based on the lack of progress Aliant alleges it saw at Twelve Oaks during the time the bond proceeds were being depleted; however, Williamson gave sworn testimony indicating that he concluded, based on the lack of construction activity he witnessed, that development had been temporarily put on hold during this time and that the bond proceeds were accordingly not being disbursed. Williamson further explained that Aliant had no role in the disbursement of the bond proceeds, which were held by U.S. Bank, as trustee, and were disbursed after requests for reimbursement were approved by EOS and the District, and that Aliant received no invoices and had no right to access the relevant bank records. Under these facts, the question of when Aliant's tort claims accrued is a question for the jury; a court cannot properly decide as a matter of law when a reasonable person should have discovered that claims had been fraudulently concealed unless the evidence is undisputed. See Bryant, 155 So.3d at 237 (explaining that the issue of when a reasonable person would have discovered fraud is generally a question of fact for the jury that can be decided as a matter of law only when the facts are undisputed and the evidence supports but one conclusion). The summary judgment entered by the trial court in favor of the Board members on Aliant's negligence and breach-of-fiduciary-duty claims cannot be affirmed on statute-of-limitations grounds and is due to be reversed.

         Count four of Aliant's complaint also asserts negligence and breach-of-fiduciary-duty claims against WHA. Aliant maintains that, like the Board members, WHA had a duty to responsibly manage and oversee the District and that it breached that duty in several respects noted above in the discussion of the similar claim made against the Board members. WHA argues that it had no fiduciary relationship ...


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