United States District Court, N.D. Alabama, Southern Division
ROBERT L. WIGGINS, JR., et al., Plaintiffs,
FDIC, as Receiver of Superior Bank, et al., Defendants.
MEMORANDUM OPINION AND ORDER REGARDING CADENCE
BANK’S MOTION FOR SUMMARY JUDGMENT
G. CORNELIUS U.S. MAGISTRATE JUDGE.
case is before the court on defendant Cadence Bank’s
(“Cadence”) motion for summary judgment as to
Plaintiffs’ claim of tortious interference with a
protected business relationship. (Doc. 243). Cadence moves
this court to enter an order dismissing this last remaining
claim against it pursuant to Rule 56 of the Federal Rules
of Civil Procedure. (Id.). The motion is fully
briefed and ripe for review. (Docs. 243, 268, 284). After
careful consideration of the parties’ briefing and for
the reasons discussed below, the court finds Cadence’s
motion for summary judgment is due to be granted.
STANDARD OF REVIEW
Rule 56(c) of the Federal Rules of Civil Procedure,
summary judgment is proper “if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986). The party asking for summary judgment always
bears the initial responsibility of informing the court of
the basis for its motion and identifying those portions of
the pleadings or filings which it believes demonstrate the
absence of a genuine issue of material fact. Id. at
323. Once the moving party has met its burden, Rule 56(e)
requires the non-moving party to go beyond the pleadings and
by his own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing there is a genuine issue for trial. See Id
. at 324.
substantive law identifies which facts are material and which
are irrelevant. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). All reasonable doubts about the
facts and all justifiable inferences are resolved in favor of
the non-movant. See Fitzpatrick v. City of Atlanta,
2 F.3d 1112, 1115 (11th Cir. 1993). A dispute is genuine
“if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.”
Anderson, 477 U.S. at 248. If the evidence is merely
colorable, or is not significantly probative, summary
judgment may be granted. See id. at 249.
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
action arises from a long series of loans and real estate
transactions between the parties. To summarize, these are the
essential facts: Plaintiffs, Robert L. Wiggins, Jr.
(“Wiggins”), and Wolf Pup, LLC (“Wolf
Pup”), (collectively, “Plaintiffs”),
financed the purchase and construction of a real estate
development in Baldwin County, Alabama through a loan with
Superior Bank (“Superior”). Plaintiffs then sold
the property to defendant Character Counts, LLC
(“CCLLC”), a single asset entity owned primarily
by defendant Frank P. Ellis, IV (“Ellis”).
Plaintiffs allowed CCLLC to purchase the property by assuming
their loan with Superior. Superior later sold the loan to
Ellis, who financed his purchase of the loan with a personal
loan from Superior. In connection with selling the original
loan to Ellis, Superior paid down the outstanding balance on
the loan by seizing money from accounts funded by Wiggins and
Wolf Pup. Superior Bank failed, and defendant Federal Deposit
Insurance Corporation (“FDIC”) was named as its
receiver. After Superior failed, Cadence acquired
Ellis’s personal loan from Superior, and Cadence
eventually reached a settlement agreement with Ellis
regarding payment of his personal loan. Eventually, Ellis
foreclosed on the original loan and sold the property to
defendant Trinity Retreat, LLC (“Trinity
Retreat”), a single asset entity owned by Ellis’s
wife, defendant Mihyon Ellis (“Mihyon”). Trinity
Retreat financed its purchase of the property with a loan
from defendant Bryant Bank (“Bryant”).
Wolf Pup’s Loan from Superior Bank in 2005
is a member of Wolf Pup, a limited liability company
organized under the laws of the State of Alabama. (Doc. 94 at
¶ 1; Doc. 112 at 3). Wolf Pup owned a 62-unit real
estate development named Wolf Bay Landings located in Baldwin
County, Alabama (the “Property”), which was
financed through a loan with Superior Bank. (Id.).
Wolf Pup’s loan with Superior involved several
Wolf Pup borrowed $6 million from Superior in September 2005
to purchase the land for the development. (Doc. 90-5 at 1).
In connection with this loan, Wolf Pup executed two
promissory notes in September 2005, one note in the amount of
$4.5 million and a second note in the amount of $1.5 million.
(Doc. 90-5 at 1). Both promissory notes were secured by a
Future Advance Mortgage, Assignment of Rents and Leases and
Security Agreement dated September 30, 2005, which was
recorded in the Probate Court of Baldwin County on October
10, 2005, as Instrument Number 928514 (the
“Mortgage”). (Doc. 106 at 89-107). The Mortgage
explicitly states it secures the entire $6 million loan, as
evidenced by the two promissory notes in the amount of $4.5
million and $1.5 million. (Doc. 106 at 90). Additionally, the
loan was also secured by a continuing guaranty from Wiggins.
(Doc. 90-5 at 1). Finally, the terms of the Mortgage provide
that the Mortgage is not satisfied until Wolf Pup’s
entire indebtedness is paid. (See Doc. 106 at 92).
three months later, Wolf Pup borrowed an additional $11.5
million from Superior Bank to construct a condominium
development on the land, which brought Wolf Pup’s
entire indebtedness to approximately $17.5 million. (Doc. 94
at ¶ 1; Doc. 90-5 at 1). Wolf Pup’s loan with
Superior Bank, including both the original $6 million
borrowed in September 2005 and the additional $11.5 million
borrowed in December 2005, is referred to as “the
connection with the additional amount borrowed, Wolf Pup
executed a $15.9 million promissory note dated December 22,
2005, which amended, restated, and replaced the $4.5 million
note. (Doc. 90-5 at 1). Further, the Mortgage was amended to
account for and secure the additional loan amount, and Wolf
Pup executed a first amendment to the Future Advance
Mortgage, Assignment of Rents and Leases and Security
Agreement on December 22, 2005 (the “First
Amendment”). (See id.; Doc. 121-2). The First
Amendment was recorded on January 20, 2006, in the Probate
Court of Baldwin County as Instrument Number 950888. (Doc.
121-2 at 5). The First Amendment states Wolf Pup and Superior
“intend for the Mortgage to secure, in addition to the
$1.5 [million] Note, the Restated [$15.9 million] Note. . .
.” (Id. at 2). The recorded amendment then
explicitly states again “[i]t is the intent hereof that
the Mortgage shall secure both the Restated [$15.9 million]
Note and the $1.5 [million] Note.” (Id. at 3).
Finally, the First Amendment provides that “[e]xcept as
modified herein, all other terms and conditions of the
Mortgage shall remain in full force and effect.” (Doc.
121-2 at 3).
CCLLC’s Purchase of the Property and Assumption of the
2007, Wolf Pup sold the Property to CCLLC, an entity owned by
Ellis and Joseph Scott Raley (“Raley”). (Doc. 94
at ¶ 2; Doc. 90-2). Wolf Pup allowed Ellis and CCLLC to
finance the purchase of the Property by assuming the Loan.
(Doc. 94 at ¶ 2; Doc. 90-5). In connection with the sale
of the Property, Wolf Pup, CCLLC, and Superior Bank executed
a Loan Assumption and Modification Agreement (the
“Modification Agreement”), which was dated
October 5, 2007. (Doc. 94 at ¶ 3; Doc. 90-5).
the terms of the Modification Agreement, CCLLC obtained title
to the Property, subject to the Mortgage, and CCLLC agreed to
be bound by and perform all of the obligations of the
Borrower under the loan documents. (Doc. 90-5 at 2-3). Ellis
was added as a guarantor when CCLLC assumed the Loan, but
Wiggins remained a guarantor of the Loan. (Id. at
4-5, 17-18). Additionally, even though CCLLC assumed the
Loan, Wolf Pup remained liable under the promissory notes and
loan documents. (Id. at ¶ 5(c)).
Modification Agreement recognized that CCLLC delivered a
promissory note to Wolf Pup to finance the sale of the
Property (the “Purchase Note”) but stated the
Purchase Note was not secured by any interest in the
Property. (Id. at ¶ 5(g)). In addition, the
agreement provided that nothing contained in it or done
pursuant to it “shall affect or be construed to affect
the encumbrance of, or warranty of title in, or conveyance
effected by, the Mortgage, or priority thereof over other
liens . . . .” (Id. at ¶ 1).
Modification Agreement required Wolf Pup to establish an
interest reserve account at Superior in an amount not less
than $560, 000 (the “Interest Reserve Account”)
and gave Superior the right to debit the Account to make
monthly interest payments on the Loan. (Id. at 6).
The Modification Agreement also required that a $1.5 million
certificate of deposit funded by Wiggins (the “Wiggins
CD”) would continue to secure the Loan. (Id.).
Under the agreement, Superior had the right to apply funds
from the Wiggins CD towards the Loan in the event of a
default that had not been cured within thirty days after
notice of the default to CCLLC and Wolf Pup. (Id.).
Raley, and Wolf Pup also entered into a membership interest
pledge agreement (the “Pledge Agreement”) in
connection with CCLLC’s purchase of the Property and
assumption of the Loan. (Doc. 90-2 at 1). In the Pledge
Agreement, Ellis and Raley pledged their 100% membership
interest in CCLLC to Wolf Pup as security for their
obligations under the loan documents, and Ellis granted Wolf
Pup a security interest in the membership interest in CCLLC.
(Id. at ¶ 1). The Pledge Agreement provided
that Ellis and Raley “shall be deemed to have executed
a due and timely proxy in favor of [Wolf Pup] to be effective
upon any [default by Ellis, Raley, or CCLLC under the Pledge
Agreement or loan documents].” (Id. at ¶
3). Also under the Pledge Agreement, Wolf Pup “shall
have all rights and remedies of a secured party under the
[UCC] . . . [and] additionally shall have the express right
to sell the [membership interest in CCLLC], or any part
thereof, and the express right to sell any condominium units
at Wolf Bay Landing Condominiums owned by CCLLC.”
(Id. at ¶ 6). Wolf Pup filed a UCC Financing
Statement with the Alabama Secretary of State on October 25,
2007, reflecting Ellis’s pledge of his membership
interest in CCLLC to Wolf Pup. (Id. at 6).
Ellis, CCLLC, and Wolf Pup executed a repayment agreement
dated October 5, 2007, in connection with CCLLC’s
purchase of the Property and assumption of the Loan. (Doc.
90-3). Under the terms of this agreement, Ellis and CCLLC
agreed to immediately repay Wolf Pup for any portion of the
Interest Reserve Account or the Wiggins CD drawn upon by
Superior and applied to the indebtedness under the Loan.
(Id. at ¶¶ 2-3).
Ellis’s Purchase of the Loan in 2010
CCLLC assumed the Loan, Superior and CCLLC extended the
Loan’s maturity date on several occasions. (Doc. 94 at
¶ 17). Then, on December 23, 2010, Superior sold the
Loan to Ellis and assigned the loan documents, including the
Mortgage and First Amendment, to Ellis without notifying Wolf
Pup or Wiggins. (Id. at ¶ 18; Doc. 106 at
127-141). Ellis financed his purchase of the Loan with a
personal loan from Superior in his individual name (the
“Ellis Loan”). (Doc. 94 at ¶¶ 18 &
21). As part of Ellis’s purchase of the Loan, Superior
seized the funds from the Interest Reserve Account and ...