United States District Court, M.D. Alabama, Northern Division
MEMORANDUM OPINION AND ORDER
L. BRASHER UNITED STATES DISTRICT JUDGE
litigation is about whether a bank has a mortgage on
undeveloped property or on a shopping center. It comes to the
Court after the Bankruptcy Court entered Proposed Findings of
Fact and Conclusions of Law to resolve an adversary
proceeding between, on one side, Plaintiffs McIntyre Land
Company and Servisfirst Bank and, on the other side,
Defendants Branch Banking and Trust Company, Inc., and the
Bankruptcy Estates of McIntyre Building Company Inc. and
Innes T. McIntyre. After extensive briefing and an
evidentiary hearing, the Bankruptcy Court recommended that
this Court: (1) deny Plaintiffs' claims, including its
claims quiet title and for fraud and (2) declare that Branch
Banking and Trust Company, Inc., has a valid mortgage lien on
the shopping center and no mortgage lien on the undeveloped
property. See Doc. 1-6.
sides disagree with aspects of the Bankruptcy Court's
order. Plaintiffs argue that the Bankruptcy Court (1) did not
have subject matter jurisdiction over the dispute (2) should
have abstained from adjudicating the dispute and (3) was
wrong on the merits. Defendants agree with the Bankruptcy
Court's bottom-line conclusions on jurisdiction,
abstention, and the merits. But they argue that this matter
is a “core proceeding” such that the Bankruptcy
Court should have entered a final order instead of proposed
findings of fact and conclusions of law. See 28
U.S.C. § 157(b)(2)(B).
reviewed the record and applicable law de novo and with the
benefit of oral argument, this Court agrees with the
Bankruptcy Court's bottom-line conclusions. Accordingly,
to the extent the litigation is a “noncore”
proceeding or a “core” proceeding subject to de
novo review, the Court adopts the Bankruptcy Court's
Proposed Findings of Fact and Conclusions of Law as modified
by this opinion. In the alternative, if the matter were a
“core” proceeding, then it would properly be
reviewed on appeal to this Court under 28 U.S.C. § 158,
and the Court would affirm the Bankruptcy Court's
decision. Either way, the Plaintiffs' objections to the
Bankruptcy Court's decision are overruled, and the
Bankruptcy Court's decision is adopted as modified by
Court adopts the Bankruptcy Court's factual findings to
which no party objected. The most salient of those facts are
McIntyre (“Innes”) was in the construction and
real estate development business. Innes was the sole owner of
Mclntyre Building Co., Inc. (“Building”).
Innes' wife owned McIntyre Land Co., Inc.
(“Land”). Innes was the President of both
Bank (“Colonial”) loaned $3.1 million to
Building, which was secured by the Prattville Square Shopping
Center, which is owned by Land.
Bank (“ServisFirst”) loaned money to Land, and
that loan was also secured by a mortgage on the same shopping
no business sense for a loan to Building to be secured by
property owned by Land. Recognizing as much in 2006, Innes
asked Colonial whether it would substitute as collateral a
165-acre parcel of unimproved land owned by Building for the
Prattville Shopping Center owned by Land. Presumably, Innis
made this request as President of both companies. A
representative of Colonial wrote Innes the following letter:
This is to advise that Colonial Bank (Colonial) has agreed to
release the Prattville Square Shopping Center as collateral
on the referenced loan and replace it with 140 acres of land
in Prattville. This is subject to a new appraisal being
ordered to confirm that the proper loan to value on the
property will be maintained. By signing this letter you agree
to pay for the appraisal on the 140 acres.
Bill R. Renfroe Vice President
BY: Innes McIntyre
parties agree, and the Bankruptcy Court found, that the
letter proposed to substitute the 165 acres of undeveloped
property at issue in this case, even though it erroneously
referred to the real estate as 140 acres.
parties meant to complete this “collateral swap”
agreement. But the parties never completed the deal. The
undeveloped land was appraised, but Innis never signed the
letter as the President of either Building or Land. Colonial
and Land never executed a release of the mortgage on the
Prattville Square Shopping Center. Colonial never recorded a
mortgage on the unimproved property owned by Building.
Accordingly, public records continued to reflect a Colonial
mortgage on Land's Prattville Square Shopping Center and
no Colonial mortgage on Building's 165 acres.
December 2008, Colonial and Building renewed the original
$3.1 million loan in a document that states the loan remained
secured by Land's Prattville Square Shopping Center.
2009, Colonial went broke and was taken over by the Federal
Deposit Insurance Corporation.
Banking and Trust Company (“BB&T”) purchased
Colonial's relevant assets from the FDIC and is the
successor in interest to the Colonial loan.
2010, Innes and Building both filed for bankruptcy. Land and
Innes' wife remained solvent.
Building filed for bankruptcy, it listed BB&T as having a
mortgage lien on the 165 acres of unimproved land.
filed an adversary proceeding in Building's bankruptcy,
which asserted claims against Building, Innes, and BB&T.
The complaint (which was later amended) alleged that BB&T
(as Colonial) had promised that it would release Land's
Prattville Shopping Center. The complaint asked the
Bankruptcy Court to order the parties to complete the
collateral swap agreement, that is, to order Building to
execute a mortgage on the 165 acres that Building owned and
to compel BB&T to execute a release of the mortgage on
the shopping center that Land owned.
filing a proposed amended complaint to add additional
parties, drop Building as a defendant, and modify its
theories of relief, Land moved to dismiss its own action.
filed an answer and counterclaim in which it sought a
declaration that it had a valid lien on Land's Shopping
Center or, in the alternative, a valid lien on
Building's165 acres. BB&T also opposed Land's
motion to dismiss.
Bankruptcy Court granted Land's motion to dismiss because
it concluded that the dispute did not involve property of the
bankruptcy estate. But the very next day the Bankruptcy Court
issued an order stating that it may have made an error
because it had overlooked BB&T's answer and
counterclaim. BB&T also filed a motion for relief from
judgment, arguing that the Bankruptcy Court had erred.
the Bankruptcy Court was trying to determine whether it had
erred in dismissing Land's adversary proceeding, Land
filed a new complaint in state court that made essentially
the same allegations it had made in its proposed amended
complaint in the bankruptcy. The state-court complaint did
not list Innes or Building in the caption as parties. The
complaint did, however, include this allegation in paragraph
In 2006, Codefendants McIntyre Building Company and Innes
McIntyre as well as [Land] entered into an agreement with
BB&T. That agreement required BB&T to release its
mortgage on Prattville Square Shopping Center and, in turn,
McIntyre Building agreed to encumber a 165 acre parcel of