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GHB Construction and Development Co., Inc. v. West Alabama Bank and Trust

Supreme Court of Alabama

March 29, 2019

GHB Construction and Development Company, Inc.
v.
West Alabama Bank and Trust

          Appeal from Walker Circuit Court (CV-17-900006)

         On Application for Rehearing

          SELLERS, Justice.

         This Court's opinion of September 21, 2018, is withdrawn, and the following is substituted therefor.

         GHB Construction and Development Company, Inc. ("GHB"), appeals from an order of the Walker Circuit Court ("the trial court") dismissing GHB's action against West Alabama Bank and Trust ("WABT") seeking a judgment declaring that its materialman's lien against property owned by Penny Guin is superior to WABT's mortgage lien secured by the same property. We affirm.

         Facts and Procedural History

         On April 8, 2015, Guin purchased an unimproved lot of real property located in Walker County. That same day, Guin executed a promissory note in the amount of $410, 870 secured by a future-advance mortgage[1] in favor of WABT on the purchased property and any improvements. WABT did not advance Guin any money on the date the note and mortgage were executed, and there were no prior-existing advances. The promissory note states, in pertinent part, that "[t]he conditions for future advances are at the request of [Guin] and the approval of the loan officer."

         On April 9, 2015, Guin contracted with GHB to construct a house on the property. At some time after the contract was executed, GHB "commenced with the construction of Guin's home on the property and contributed various materials and labor that were used, consumed, and otherwise incorporated into the property." Notably, GHB's complaint does not indicate the specific date on which GHB first delivered materials to the property or commenced construction of the house.

         On April 10, 2015, WABT recorded the mortgage in the Walker Probate Court ("the probate court"). On October 16, 2015, WABT issued the first principal advance under the promissory note in the amount of $105, 000 to Guin.[2]

         GHB's complaint alleges that, in May 2016, it met with WABT and Guin prior to completing construction of the house and presented them "with a description of the items to complete the construction ... and an estimated cost of completion of construction." GHB's complaint further alleges that, following the meeting, it completed construction of the house pursuant to Guin's authorization and, after having completed construction of the house, submitted to Guin its final bill for the work completed. GHB's complaint alleges that Guin failed to pay the final amount owed. On December 20, 2016, GHB filed a "verified statement of lien" in the probate court against Guin's property claiming "to secure an indebtedness in the amount of $106, 556.16, with interest, from August 2, 2016."

         On January 6, 2017, GHB filed its complaint against WABT, Guin, and multiple fictitiously named parties. Most of the claims asserted by GHB in its complaint were asserted against Guin in an effort to collect the outstanding balance of the construction contract. In regard to WABT, GHB sought a judgment declaring that its materialman's lien on Guin's property had priority over WABT's mortgage lien.[3]

         WABT filed a motion to dismiss GHB's claim against it pursuant to Rule 12(b)(6), Ala. R. Civ. P., for failure to state a claim upon which relief can be granted. WABT argued that GHB failed to plead that it delivered materials to the property or began construction on the house before the date WABT's mortgage was recorded in the probate court. Accordingly, WABT argued, GHB's claim was due to be dismissed as a matter of law. WABT asserted that, under Alabama law, a materialman's lien cannot take priority over a mortgage if the mortgage was recorded before the materials were furnished or construction began.

         GHB filed a response to WABT's motion to dismiss, arguing that the priority of WABT's mortgage lien was not established on the date it was recorded because WABT had yet to make any advances on the promissory note. GHB further argued that WABT was not unequivocally bound to make any future advances under the terms of the promissory note. Likewise, GHB argued that WABT's mortgage lien was not secure until WABT made its first advance to Guin; GHB claimed this did not occur until after GHB had delivered materials to the property and had commenced work on the house. Thereafter, WABT and GHB each filed supplemental responses with the trial court.

         On November 8, 2017, the trial court granted WABT's motion and dismissed GHB's claim against WABT. WABT filed a motion requesting that the trial court certify its order as a final judgment under Rule 54(b), Ala. R. Civ. P. GHB filed a motion to alter, amend, or vacate the trial court's order. The trial court denied GHB's motion and certified the order as final. GHB appealed.

         Standard of Review

"'"On appeal, a dismissal is not entitled to a presumption of correctness. The appropriate standard of review under Rule 12(b)(6) 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 her to relief. In making this determination, this Court does not consider whether the plaintiff will ultimately prevail, but only whether she may possibly prevail. We note that a Rule 12(b)(6) dismissal is proper only when it appears beyond ...

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