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Huntsville Golf Development, Inc. v. Estate of Brindley

United States District Court, N.D. Alabama, Northeastern Division

September 14, 2017

HUNTSVILLE GOLF DEVELOPMENT, INC., Plaintiff,
v.
ESTATE OF ROBERT BRINDLEY, SR., et al., Defendants.

          MEMORANDUM OPINION

          MADELINE HUGHES HAIKALA UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This case is before the Court on the parties' cross-motions for summary judgment. (Docs. 124, 127). Plaintiff Huntsville Golf Development, Inc. (“HGD”) sued the Estate of Robert Brindley, Sr. (through its executors, Ronald Brindley and Richard White); Whitney Bank; and Jeffrey Brindley, [1] an heir of Robert Brindley, Sr.[2] This lawsuit is an outgrowth of dealings that took place more than twenty years ago between HGD, solely owned by Nelson Chatelain, and the Brindley Construction Company, Inc. (“BCCI”), solely owned by Robert Brindley, Sr. at the time.

         In 1992, Nelson Chatelain and Charlene Chatelain filed for personal bankruptcy. While the bankruptcy proceedings were underway, Mr. Chatelain's company, HGD, won an arbitration award against BCCI. The final order of the bankruptcy court provided that if HGD recovered its judgment against BCCI, then the Chatelains' creditors, including Whitney, could pursue the funds that HGD received by reopening the bankruptcy proceedings. For nearly nineteen years, HGD's efforts to collect the judgment against BCCI were unsuccessful. Finally in 2011, a federal district court pierced the corporate veil so that HGD could proceed against the Estate of Robert Brindley, Sr. to recover the BCCI judgment. HGD and the Brindley Estate settled the matter while the district court decision was on appeal. Whitney then reopened the bankruptcy proceedings and recovered a significant portion of the settlement proceeds that the Brindley Estate had paid to HGD.

         HGD bases its current suit on the circumstances of the settlement between HGD and the Brindley Estate and Whitney's reopening of the Chatelains' bankruptcy proceedings. During the settlement negotiations between HGD and the Brindley Estate, counsel for the Brindley Estate and Jeffrey Brindley contacted counsel for Whitney to make an offer to purchase Whitney's bankruptcy claim against the Chatelains. Discussions among the Brindley Estate, Jeffrey Brindley, and Whitney-which were not disclosed to HGD while HGD and the Brindley Estate negotiated a settlement-yielded a sharing agreement. The sharing agreement provided that the Brindley Estate would pay the attorney's fees for reopening the bankruptcy proceedings against the Chatelains and Whitney would equally divide any recovery through the bankruptcy proceedings with the Brindley Estate. Jeffrey Brindley guaranteed the performance of the Estate.

         HGD contends that the sharing agreement between the Brindley Estate, Jeffrey Brindley, and Whitney violated the settlement agreement between HGD and the Brindley Estate. HGD also asserts claims for fraud and deceit against the Brindley Estate and conspiracy to commit fraud and deceit against Whitney, the Brindley Estate, and Jeffrey Brindley, all based on conduct related to the settlement between HGD and the Brindley Estate. In its counterclaim, the Estate alleges that HGD breached the release provisions of the settlement agreement.

         Pursuant to Federal Rule of Civil Procedure 56, the defendants ask the Court to enter judgment in their favor on HGD's claims. (Doc. 124). HGD asks the Court to enter judgment in its favor on its breach-of-contract claim and on the Estate's counterclaim. (Doc. 127). For the reasons discussed below, the Court will grant the defendants' motion for summary judgment, and the Court will grant HGD's motion for summary judgment on the defendant's counterclaim.

         II. SUMMARY JUDGMENT STANDARD

         “The court shall grant summary judgment 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). To demonstrate that there is a genuine dispute as to a material fact that precludes summary judgment, a party opposing a motion for summary judgment must cite “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.” Fed.R.Civ.P. 56(c)(1)(A). “The court need consider only the cited materials, but it may consider other materials in the record.” Fed.R.Civ.P. 56(c)(3). When considering a summary judgment motion, the Court must view the evidence in the record in the light most favorable to the non-moving party and draw reasonable inferences in favor of the non-moving party. White v. Beltram Edge Tool Supply, Inc., 789 F.3d 1188, 1191 (11th Cir. 2015).

         “In practice, cross motions for summary judgment may be probative of the nonexistence of a factual dispute, but this procedural posture does not automatically empower the court to dispense with the determination [of] whether questions of material fact exist.” Ga. State Conference of the NAACP v. Fayette Cty. Bd. of Comm'rs, 775 F.3d 1336, 1345 (11th Cir. 2015) (quoting Lac Courte Oreilles Band of Lake Superior Chippewa Indians v. Voigt, 700 F.2d 341, 349 (7th Cir. 1983)) (internal quotation marks and brackets omitted). “If both parties proceed on the same legal theory and rely on the same material facts . . . the case is ripe for summary judgment.” Ga. State Conf. of NAACP, 775 F.3d at 1345 (quoting Shook v. United States, 713 F.2d 662, 665 (11th Cir. 1983)) (internal quotation marks omitted).

         III. FACTUAL BACKGROUND

         A. HGD's arbitration award against BCCI

         HGD and BCCI executed various agreements in 1989 and 1990 for construction of a condominium development on a municipal golf course in Huntsville, Alabama. (Doc. 125, p. 6; Doc. 128, pp. 1-2). Nelson Chatelain is the sole shareholder of HGD. (Doc. 125, pp. 4, 6; Doc. 128, p. 2). Robert Brindley, Sr. solely owned BCCI. Dissatisfied with one another's performance under the agreements, the parties entered into an arbitration that resulted in a $376, 316.75 award in favor of HGD. (Doc. 126-1, p. 230); see Huntsville Golf Dev., Inc. v. Brindley Constr. Co., Inc., 2011 WL 3420602, at *2 (M.D. Tenn. Aug. 4, 2011) [hereinafter HGD 1]. HGD filed a complaint in the United States District Court for the Northern District of Alabama to have the arbitration award confirmed, and the Court entered a judgment on the award in December 1992. (Doc. 31 in Case No. 92-cv-02008-ELN).[3] Seeking to have its judgment satisfied by BCCI assets in Tennessee, HGD registered its judgment and “filed applications for writs of execution . . . requesting garnishment or execution in the United States District Court for the Middle District of Tennessee.” HGD 1, 2011 WL 3420602, at *2. The Tennessee district court dismissed the garnishments after a Tennessee bank filed a motion to quash based on its superior interest in BCCI's assets. Id.

         B. The Chatelains' Chapter 11 proceedings

         The Chatelains filed for bankruptcy in the United States Bankruptcy Court for the Northern District of Alabama in May 1992, in part due to losses they sustained in the dealings between HGD and BCCI. (Doc. 126-1, pp. 31, 33; see also Doc. 128, p. 2). Whitney Bank, one of the Chatelains' creditors, asserted an unsecured claim in the bankruptcy proceeding for more than $1, 000, 000 based on a judgment in Louisiana. (Doc. 126-1, p. 177; Doc. 127-17, p. 6; Doc. 126-7, p. 2). BCCI was also a party in interest in the bankruptcy proceeding. (See Doc. 127-3, p. 2; Doc. 128, p. 2). HGD was not a party to the Chatelains' bankruptcy and has never filed for bankruptcy. (See generally Case No. 92-81161-EDB-11).[4]

         In November 1993, the United States Bankruptcy Court for the Northern District of Alabama confirmed the Chatelains' plan of reorganization. (Doc. 127-4, pp. 1-4). The confirmation order included the following provision:

[O]ne of the [Chatelains'] corporations, Huntsville Golf Company, of which they are the sole shareholders, has a judgment against Brindley Construction Company in the approximate amount of $350, 000. It should be noted that the debtor, Nelson Chatelain, has an account receivable against this corporation in the approximate amount of $300, 000. The testimony given at the hearing indicated that this judgment cannot be collected because Brindley Construction Company does not have the funds. It is the opinion of this Court that the debtors should attempt to collect this judgment, and that any funds which are collected shall be subjected to the jurisdiction of this Court and made available for distribution to the unsecured creditors.

(Doc. 127-4, p. 3) (emphasis removed). The Chatelains did not appeal the final order or contest the provision requiring that funds from any future collection of HGD's arbitration award would be used to pay the Chatelains' unsecured bankruptcy creditors. See Huntsville Golf Dev., Inc. v. Whitney Bank, No. 5:13-CV-671, 2014 WL 1117640, at *4 (N.D. Ala. Mar. 19, 2014) [hereinafter HGD 2].

         C. HGD enforces ...


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