(Shelby Circuit Court, CV-18-900702)
PETITION FOR WRIT OF MANDAMUS
SHAW,
JUSTICE.
David
McDaniel and Lisa McDaniel, plaintiffs in a civil action
below, petition this Court for a writ of mandamus directing
the Shelby Circuit Court to vacate its order staying the
proceedings against the defendants--Southern Craftsman Custom
Homes, Inc. ("SCCH"); Jeffrey A. Rusert; Larry M.
Curry, Sr.; SouthFirst Bancshares, Inc., d/b/a SouthFirst
Bank ("SouthFirst"); Mari G. Gunnels; and Danny
Keeney--while one of those defendants, Rusert, awaits the
outcome of a federal criminal investigation against him. For
the reasons stated below, we grant the petition and issue the
writ.
Facts
and Procedural History
In
2017, the McDaniels contacted Rusert for the purpose of
entering into an agreement with SCCH to build a house.
According to the McDaniels, Rusert represented himself as the
president of SCCH. At some point, Rusert recommended that the
McDaniels speak with Gunnels, who worked for SouthFirst, to
secure a loan to pay for the construction of the new house.
In November 2017, with Gunnels's assistance, the
McDaniels began the process of applying for a construction
loan with SouthFirst.
On
November 4, 2017, the McDaniels and SCCH entered into a
written agreement for the construction of the house. The
total amount of the construction contract was $585, 000.
Pursuant to the terms of the contract, the McDaniels paid 10
percent of the contract amount--$58, 500--as a down payment.
The McDaniels contend that they made numerous inquiries with
Gunnels concerning the status of the approval of their
construction loan and questioned the delay in the closing of
the loan. According to the McDaniels, Gunnels assured them
that the delay in closing the loan was simply the result of
certain signatories for SouthFirst being out of town that
prevented SouthFirst from executing the appropriate
documents. The McDaniels contend, however, that the delay in
closing the loan was actually attributable to concerns
allegedly raised by Keeney, also a SouthFirst employee,
regarding Rusert's ability to perform the work designated
in the construction contract.
The
delay in closing of the loan allegedly led Rusert to seek
additional funds from the McDaniels to "hold 2017
material prices." In December 2017, the McDaniels paid
Rusert an additional $15, 000 to satisfy that request.
At some
point, the McDaniels learned that another person, Curry, had
signed another copy of the construction contract between SCCH
and the McDaniels to replace the construction contract
previously executed by Rusert. SouthFirst indicated to them
that Curry was the president of SCCH and that he, not Rusert,
held the builder's license for the company. According to
the McDaniels, Rusert's license to perform homebuilding
services had been revoked, and SouthFirst had encountered
prior issues with SCCH and Rusert's defaulting on other
construction projects.
The
loan closing occurred on January 26, 2018. The McDaniels
executed, among other agreements, a written construction-loan
agreement, a promissory note, and a construction-loan
disbursement agreement in the total amount of $589, 500 for
the construction of their house. In conjunction with the
execution of those agreements, the McDaniels executed a
mortgage on the property in favor of SouthFirst. At the loan
closing, Rusert was given a "start-up draw" in the
amount of $29, 843.65. Subsequently, SouthFirst funded three
additional draw requests from Rusert.
On
March 5, 2018, the McDaniels met with Rusert at the property
site to discuss some concerns they had with the ongoing
construction. During that meeting, Rusert provided the
McDaniels with a credit application from a local
building-supply company and asked them to execute it so that,
he said, he could use the McDaniels' credit to purchase
building materials and supplies. The McDaniels contacted that
local building-supply company and learned that it refused to
do business with SCCH, Rusert, and Curry because all three
had purportedly failed to pay significant amounts owed the
company. The McDaniels immediately contacted Gunnels and
placed a "stop-payment" order on the most recent
draw request from SCCH and Rusert. At that point, only the
foundation had been poured.
On July
26, 2018, the McDaniels sued SCCH, Rusert, Curry, SouthFirst,
Gunnels, and Keeney. In their complaint, the McDaniels sought
damages for negligence, suppression, fraudulent
misrepresentation, civil conspiracy, conversion, and the
infliction of emotional distress. The McDaniels further
alleged breach-of-contract claims against SouthFirst, SCCH,
Rusert, and Curry, as well as a claim of breach of fiduciary
duties against SouthFirst. Finally, the McDaniels sought a
judgment against SouthFirst, Gunnels, and Keeney declaring
the loan agreement and mortgage void. At some point,
SouthFirst, Gunnels, and Keeney filed a motion for leave to
file a cross-claim against Rusert, Curry, and SCCH.
On
August 13, 2018, Rusert and SCCH moved to stay the civil
proceedings against them pending the outcome of a federal
criminal investigation against Rusert. See Ex parte
Ebbers, 871 So.2d 776, 787 (Ala. 2003) (noting that
individuals cannot be compelled to testify or to provide
discovery in a civil proceeding while there is a parallel
criminal action pending against them). According to Rusert
and SCCH, Rusert was being investigated by the federal
government for alleged bank fraud and wire fraud. No
documents, affidavits, or other evidence was filed in support
of that motion.
The
McDaniels filed an opposition to the motion to stay and
requested a hearing. On October 17, 2018, Rusert and SCCH
moved for a protective order and a temporary injunction
seeking to prevent any discovery pending resolution of their
motion to stay. Attached to that motion was a copy of a
"target letter"[1] Rusert had received from the United
States Department of Justice ("the USDOJ")
informing him that he was being investigated for bank fraud
and wire fraud. The trial court granted the motion to stay on
October 18, 2018.
The
presumptively reasonable time for the McDaniels to file a
petition for a writ of mandamus challenging the stay is 42
days. See Rule 21(a)(3), Ala. R. App. P., and Ex
parte Meadowbrook Ins. Grp., Inc., 987 So.2d 540, 546
(Ala. 2007) ("[A] petition for a writ of mandamus must
ordinarily be filed within 42 days of the challenged
order."). On November 9, 2018, the McDaniels filed a
motion to lift the stay. The motion was in substance a motion
for the trial court to reconsider its decision; that motion
would not have tolled or extended the time in which to file a
mandamus petition challenging the order granting the stay.
See Ex parte Troutman Sanders, LLP, 866 So.2d 547,
549-50 (Ala. 2003) (holding that a "motion to
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