Paint Rock Turf, LLC v. First Jackson Bank , 2014 Ala. LEXIS 184 ( 2014 )

REL:11/26/2014
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
____________________
1130480
____________________
Paint Rock Turf, LLC
v.
First Jackson Bank et al.
____________________
1130528
____________________
First Jackson Bank
v.
Paint Rock Turf, LLC
Appeals from Madison Circuit Court
(CV-10-900076)
1130480, 1130528
MOORE, Chief Justice.
Paint Rock Turf, LLC ("Paint Rock"), appeals from a
judgment as a matter of law ("JML") entered by the Madison
Circuit Court on its claim for emblements under § 35-9-2, Ala.
Code 1975, against First Jackson Bank ("First Jackson") and
Wayne A. Goodson and his wife Christian Goodson.1 First
Jackson cross-appeals from the trial court's denial of its
postjudgment motion for a JML on Paint Rock's claim alleging
conversion of pallets of sod.
I. Facts and Procedural History
On April 30, 2004, Paint Rock purchased a sod farm and
related farm equipment from Eufala Corporation. The sod farm
consisted of 1,171 acres of land upon which were grown 580
acres of Bermuda and Zoysia sod grasses. To partially finance
the purchase, Paint Rock borrowed $1,706,250 from First
1
Although Gerald T. Jones, Jr., whose father is the sole
member of Paint Rock, is designated as an appellant on the
notice of appeal and on Paint Rock's briefs, only Paint Rock
asserted an emblements claim in the trial court. Jones did not
appeal the jury verdicts on the claims he brought in the trial
court. Thus, none of his claims are before us on appeal.
Cherry Jones, Gerald's wife and a third-party plaintiff in the
trial court, has not appealed. Functionally, Paint Rock is the
only appellant in case no. 1130480, and we have restyled the
appeal to reflect that.
2
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Jackson. The loan was secured by a mortgage on the sod farm
and a security interest in the equipment used on the farm.
By February 2009, reflecting in part a drop in demand for
sod caused by the collapsing market for new homes, Paint Rock
had defaulted on the loan. On February 11, 2009, Paint Rock
filed a Chapter 11 bankruptcy petition in the United States
Bankruptcy Court for the Northern District of Alabama. The
filing of the petition operated as an automatic stay of "any
act to obtain possession of property of the estate or of
property from the estate or to exercise control over property
of the estate." 11 U.S.C. § 362(a)(3). The stay precluded
First Jackson from foreclosing on the sod farm or retaking the
equipment. The petition was dismissed August 12, 2009. On
October 30, 2009, First Jackson published in the Madison
County Record the first of three notices of a foreclosure sale
on the property scheduled for noon on November 19, 2009. On
the morning of November 19, 2009, Paint Rock filed a second
bankruptcy petition, which stayed the scheduled November 19
sale, and which was dismissed on December 8, 2009, for failure
to file the proper schedules and statements. On December 18,
2009, First Jackson published a notice that the foreclosure
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sale was rescheduled for December 30, 2009. On December 26,
2009, Paint Rock filed its third bankruptcy petition. Four
days later, the bankruptcy court lifted the automatic stay,
expressly finding that Paint Rock had misused "the bankruptcy
process in an attempt to wrongfully hinder and delay [First
Jackson's] efforts to foreclose its mortgage and security
agreement." See Barclays-American Bus. Credit, Inc. v. Radio
WBHP, Inc. (In re Dixie Broad., Inc.), 871 F.2d 1023, 1026
(11th Cir. 1989) (noting that "a petition filed in bad faith
... justifies relief from a stay").
The same day, December 30, 2009, immediately following
the lifting of the stay by the bankruptcy court, First
Jackson, as the high bidder, purchased the property at the
foreclosure sale. On January 7, 2010, First Jackson sent Paint
Rock a letter demanding possession of the sod farm within 10
days. Paint Rock claimed that it did not receive First
Jackson's demand-of-possession letter until January 16, 2010.
On January 14, 2010, Jimmy Blevins, president of First
Jackson, arrived at the sod farm to take possession of the
farm and the equipment on behalf of First Jackson. When
Blevins arrived at the sod farm, Paint Rock employees were
4
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loading harvested sod onto a flatbed tractor-trailer for
delivery to a customer. Blevins informed the Paint Rock
employees that First Jackson now owned the sod farm, that the
employees could not remove the harvested sod, and that the
employees would be arrested for trespassing if they returned
to the sod farm.
On January 21, 2010, First Jackson filed an ejectment
action against Paint Rock. On the same day, Paint Rock by
letter demanded access to the sod farm "to recover the
emblements in the form of sod which is being grown on the real
property recently foreclosed upon ...."2 Paint Rock also
requested the return of its equipment. First Jackson denied
Paint Rock's request. Paint Rock, relying on a section of the
Alabama Code that permits a tenant at will to harvest its
crop,3 counterclaimed for damages for harm suffered as the
result of being unable to harvest the sod. As relevant to this
2
"Emblements" are "[t]he growing crop annually produced
by labor, as opposed to a crop occurring naturally." Black's
Law Dictionary 636 (10th ed. 2014).
3
"The tenant at will is entitled to his emblements, if the
crop is sowed before notice to quit by the landlord, or the
tenancy otherwise suddenly terminated, as by sale of the
estate by the landlord, or by judicial sale, or death of the
landlord or tenant." § 35-9-2, Ala. Code 1975.
5
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appeal, Paint Rock also sought damages for conversion of
"plats of sod" contained on the sod farm. On March 4, 2010,
First Jackson sold the sod farm to Mrs. Goodson. The deed
stated that the sale was subject to any claim Paint Rock may
have to the emblements growing on the property. On October 12,
2010, Paint Rock and Gerald T. Jones, Jr., filed a joint
third-party complaint against First Jackson and Mr. Goodson.4
Paint Rock alleged conversion and detinue, as well as the
emblements claim, against Goodson; Jones alleged conversion
and detinue against both First Jackson and Goodson. The third-
party complaint was later amended to add claims of wantonness
and negligence against both First Jackson and the Goodsons.
After the trial court denied motions for a summary
judgment filed by First Jackson, Mr. Goodson, and Mrs.
Goodson, who had been added as a party, the case proceeded to
trial. At the close of Paint Rock and Jones's case, the trial
court granted a motion for a JML filed by First Jackson and
the Goodsons on Paint Rock's counterclaim for emblements on
4
Mrs. Goodson was not initially named as a third-party
defendant because Paint Rock and Jones mistakenly believed
that Mr. Goodson was the purchaser of the sod farm. In a later
amendment to the third-party complaint, Mrs. Goodson was added
as a third-party defendant and Cherry Jones, wife of Gerald T.
Jones, Jr., was added as a third-party plaintiff.
6
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the ground that Paint Rock was not an at-will tenant as
required by § 35-9-2. After Paint Rock withdrew its detinue
claims and the trial court granted a JML on the wantonness
claims, only the conversion and negligence claims remained for
the jury to resolve.
The jury awarded Paint Rock damages against First
Jackson, consisting of $18,500 for conversion of a sod cutter
and $10,890 for conversion of cut sod that had been loaded on
a tractor-trailer when First Jackson took possession of the
property on January 14, 2010. The jury also awarded Paint Rock
a total of $1,059 against the Goodsons for conversion of
business property and equipment. The jury entered verdicts for
First Jackson and the Goodsons on Jones's conversion and
negligence claims. Paint Rock appealed the JML in favor of the
defendants on the emblements claim;5 First Jackson cross-
appealed the judgment awarding Paint Rock damages for
conversion of the cut sod.
II. Standard of Review
In reviewing a JML, "[w]e must decide whether there was
substantial evidence, when viewed in the light most favorable
5
See supra note 1.
7
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to the plaintiff, to warrant a jury determination." Alabama
Power Co. v. Aldridge, 854 So. 2d 554, 560 (Ala. 2002).
"[S]ubstantial evidence is evidence of such weight and quality
that fair-minded persons in the exercise of impartial judgment
can reasonably infer the existence of the fact sought to be
proved." West v. Founders Life Assurance Co. of Florida, 547
So. 2d 870, 871 (Ala. 1989). Questions of law are reviewed de
novo. Alabama Republican Party v. McGinley, 893 So. 2d 337,
342 (Ala. 2004).
III. Analysis
A. Paint Rock's appeal of the denial of its emblements claim
(case no. 1130480)
Paint Rock's claim for emblements arises under § 35-9-2:
"The tenant at will is entitled to his emblements, if the crop
is sowed before notice to quit by the landlord, or the tenancy
otherwise suddenly terminated, as by sale of the estate by the
landlord, or by judicial sale, or death of the landlord or
tenant." (Emphasis added.) The purpose of this statute is to
protect a farmer from economic harm caused by the sudden
termination of a month-to-month tenancy by the landlord
between the time a crop is planted and the time the crop is
8
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ready for harvest.6 So long as the crop was sown "before
notice to quit by the landlord," the tenant at will may still
harvest the crop even though the tenancy in the land has
ended. Paint Rock's relationship with First Jackson, however,
was that of mortgagor to mortgagee, not tenant to landlord.
In Lamar v. Johnson, 16 Ala. App. 648, 81 So. 140 (1919),
citing § 4733, Ala. Code 1907, the predecessor statute to §
35-9-2,7 the Court of Appeals held that a defaulted mortgagor
who was permitted to remain on the land by its mortgagee
assumed the status of a tenant at will.
"In the absence of notice to quit possession or
other steps by the mortgagee to recover possession,
the mortgagor is not a wrongdoer or trespasser, but
is a mere tenant at will of the mortgagee, and as
such is entitled to claim the fructus industriales
or emblements, if the crop is sown before notice to
quit by the mortgagee."
16 Ala. App. at 649, 81 So. at 141. Thus, if, as Paint Rock
argues, its continuing occupation of the sod farm after its
6
"The purpose of the emblements doctrine is to protect the
interests of farmers to harvest crops on land that they
planted with the expectation that its bounty would be
available to them, but whose possessory rights have failed
through no fault of their own before the time for harvesting."
21A Am. Jur. 2d Crops § 26 (2014).
7
The language of § 4733, Ala. Code 1907, is identical to
that of § 35-9-2, Ala. Code 1975.
9
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default in early 2009 was with First Jackson's permission,
Paint Rock was potentially entitled to harvest any crop sown
between the default on the mortgage and the notice to quit
mailed on January 7, 2010. "If the mortgagor is permitted to
remain in possession, he is the mere tenant at will of the
mortgagee." Buchmann v. Callahan, 222 Ala. 240, 242, 131 So.
799, 801 (1930). Without such permission, however, "he would
be a tenant at sufferance only." Miller v. Faust, 250 Ala.
545, 548, 35 So. 2d 162, 165 (1948).
Paint Rock remained in possession of the sod farm from
the default in January 2009 until First Jackson ousted it from
the property on January 14, 2010. Whether that possession was
"at will" or "at sufferance" controls the resolution of Paint
Rock's emblements claim. Critical to this determination is the
effect on Paint Rock's at-will-tenancy argument of the
automatic stay in the bankruptcy proceeding. Although Paint
Rock does not address the effect of the bankruptcy stay in its
brief, it did make the following argument to the trial court:
"Paint Rock Turf was a debtor in possession in this bankruptcy
proceeding. That means they were there with the permission of
10
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the creditors. So ... that makes them a tenant at will." First
Jackson and the Goodsons disagree.
"The real import of the so-called 'automatic stay'
was that [Paint Rock] (being in default and subject
to foreclosure before it filed bankruptcy) was
certainly not in possession of the real estate with
the consent of [First Jackson], but was being kept
in possession by the force of the Bankruptcy Code."
First Jackson's brief, at 23. "While the automatic stay
provisions of 11 U.S.C. § 362 do prevent creditors from
pursuing collection activity against a debtor (at least until
relief from the automatic stay may be granted), it does not
create an implied consent on the part of the creditor."
Goodsons' brief, at 18.
"[A]s the automatic stay is essentially a court-ordered
injunction, any person or entity who violates the stay may be
found in contempt of court." Carver v. Carver, 954 F.2d 1573,
1578 (11th Cir. 1992). "An individual injured by any willful
violation of a stay ... shall recover actual damages,
including costs and attorneys' fees, and, in appropriate
circumstances, may recover punitive damages." 11 U.S.C. §
362(h). In the face of these sanctions, the notion that First
Jackson "consented" to Paint Rock's continuing occupation of
the sod farm during the bankruptcy proceedings is fanciful.
11
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Submission to force majeure is not the same as consent to its
imposition. Because the automatic stay cannot be construed as
a grant of permission by First Jackson for Paint Rock as a
defaulting debtor in possession to remain on the property,
Paint Rock, while in bankruptcy, was not a tenant at will of
First Jackson, and Lamar is inapplicable. Section 35-9-2,
therefore, created neither a right of ingress for Paint Rock
to harvest its emblements after being ejected from the
property nor a corresponding claim for conversion when it was
denied such access.
The trial court correctly entered a JML for the
defendants on Paint Rock's emblements claim.
B. First Jackson's cross-appeal of the denial of its motion
for a JML to reverse the jury's award of $10,890 for
conversion of pallets of sod (case no. 1130528)
On January 14, 2010, two weeks after the foreclosure sale
and a week after First Jackson sent a notice to quit to Paint
Rock, employees of First Jackson noticed that sod was being
harvested and loaded onto a tractor-trailer on the foreclosed
property. The president of First Jackson, Jimmy Blevins,
ordered the Paint Rock employees off the property and secured
12
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the tractor-trailer containing the cut sod.8 In response to
First Jackson's subsequent action for ejectment, Paint Rock
counterclaimed for the value of "the plats of sod on the real
property at issue." The jury awarded Paint Rock $10,890 in
damages for "conversion of tractor trailer sod."
First Jackson argues that the tractor-trailer sod was its
property by reason of the December 30, 2009, foreclosure.
First Jackson's brief, at 27. Paint Rock responds that the
trial court correctly ruled that First Jackson's motion on
this issue was untimely. Paint Rock's brief, at 13-31. First
Jackson argues in reply that pursuant to Rule 50, Ala. R. Civ.
P., its motion for a JML on the cut-sod claim was timely.
First Jackson's reply brief, at 3-5.
During the discussion on a JML at the close of Paint
Rock's case, the trial court, though equivocating, decided to
let the issue of the conversion of the tractor-trailer sod go
to the jury. First Jackson did not specifically object. Later
that day during the jury-charge conference the trial court
stated that Paint Rock had a claim of "conversion of the
8
Blevins testified that, although he placed a new padlock
on the gate to the farm on January 14, 2010, the lock was
found cut the next day and the tractor-trailer and sod
removed.
13
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tractor-trailer of sod of January 14, 2010." First Jackson did
not object. Following the charge conference, closing argument
occurred but was not completed when the court adjourned for
the day. The next morning, before closing argument resumed,
First Jackson moved to dismiss the claim alleging conversion
of the sod on the truck on the ground that the JML denying
Paint Rock's claim for emblements necessarily meant that after
the foreclosure sale First Jackson owned the sod farm
outright. Paint Rock argued that the motion was untimely
because First Jackson did not raise its objection at the
charge conference and that a change in the court's ruling
would prejudice Paint Rock, who had already delivered its
closing argument.
The trial court denied the motion as untimely. Counsel
for First Jackson stated: "We take exception to the
untimeliness because a motion for a judgment notwithstanding
a verdict is to be made at the conclusion of the evidence and
before the case is submitted to the jury. ... And we fall
within that parameter." The trial court indicated that First
Jackson could submit a postjudgment motion on the issue, if
necessary. Closing argument then resumed, followed by the
14
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court's instructions to the jury, which included a charge on
"conversion of a tractor-trailer load of sod." After the jury
awarded Paint Rock $10,890 for conversion of the cut sod,
First Jackson filed a postjudgment motion renewing its request
for a JML on this issue. The trial court denied the motion.
"Motions for judgment as a matter of law may be made at
any time before submission of the case to the jury." Rule
50(a)(2), Ala. R. Civ. P. First Jackson's motion to dismiss
the sod-on-the-truck claim occurred toward the end of closing
argument and before the jury was charged or had begun to
deliberate. Thus, by the plain language of Rule 50(a)(2), the
motion was timely. To preserve for appellate review an issue
raised by a preverdict JML motion, a party must also renew the
motion after the verdict is rendered. King Mines Resort, Inc.
v. Malachi Mining & Minerals, Inc., 518 So. 2d 714, 716 (Ala.
1987). First Jackson satisfied this requirement.
First Jackson's preverdict JML motion was timely, and the
denial of that motion was properly preserved for review. We
thus address the merits of the motion. Because the trial court
correctly entered a JML on Paint Rock's claim for emblements,
it follows that Paint Rock did not have a property interest in
15
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the sod on the farm after First Jackson's purchase of the
property at the foreclosure sale on December 30, 2013. See §
35-10-1, Ala. Code, 1975 (stating that a conveyance of lands
to a purchaser at a foreclosure sale vests the legal title in
such purchaser). Thus, First Jackson could not be liable on
January 14, 2010, for conversion of what was then its own
property.9
IV. Conclusion
In case no. 1130480, the judgment of the trial court is
affirmed. In case no. 1130528, the judgment of the trial court
is reversed, and the case is remanded to the trial court to
enter judgment in favor of First Jackson.
1130480 -- AFFIRMED.
1130528 -- REVERSED AND REMANDED.
Main, J., concurs.
Murdock, J., concurs specially.
Bolin and Bryan, JJ., concur in the result.
9
Gerald T. Jones, Jr., testified at trial that sod has to
be cut, shipped, and laid the same day for the product to be
marketable. Thus, the sod on the truck on January 14, 2010,
was of necessity harvested after December 30, 2013.
16
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MURDOCK, Justice (concurring specially).
I concur with the main opinion. I write separately to
question whether resolution of the question raised by the
assertion by Paint Rock Turf, LLC, that Paint Rock is entitled
to the sod emblements turns not, at least not per se, on
whether Paint Rock's interest in the land in the context of a
bankruptcy stay should be considered a tenancy at will or a
tenancy at sufferance, but instead on the issue of fault.
First, there is some Alabama authority that the doctrine of
emblements applies both to tenants at will and to tenants at
sufferance. See First Nat'l Bank v. Federal Land Bank of New
Orleans, 225 Ala. 387, 389, 143 So. 567, 568 (1932) (stating
that "after default in the mortgage, the mortgagor became the
tenant at will of, or a tenant at sufferance of, the
mortgagee, one or the other depending upon the facts of the
case, and as such was entitled to the crops"); Bates v. Bank
of Moulton, 226 Ala. 679, 682, 148 So. 150, 153 (1933) (same).
Second, the Court in Gardner v. Lanford, 86 Ala. 508,
510, 5 So. 879, 880 (1889), found a tenant to be entitled to
emblements where "the term of the lessees, contingent from its
inception on the exercise of the statutory privilege of
17
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redemption by the debtor ... was itself uncertain, and, if the
tender and offer to redeem were made in compliance with the
law, was terminated at a time and in a manner which in legal
contemplation was unexpected to the lessor and lessees."
(Emphasis added.) Likewise, in Florala Sawmill Co. v. J.T.
Parrish, 155 Ala. 462, 465, 46 So. 461, 462 (1908), the Court
observed that, "as between landlord and tenant, where the
termination of the tenancy is uncertain, as where the lease is
for life, when the tenancy is brought to an end by the
happening of the uncertain event, the tenant is entitled to
emblements ...." (Emphasis added.) Query whether a
termination of a tenancy due to the fault of the tenant can be
"in legal contemplation ... unexpected" to the tenant and
whether it is this gravamen, i.e., fault, that is dispositive,
rather than the seemingly metaphysical choice, at least in
the present circumstances, between the tenancy-at-will label
and the tenancy-at-sufferance label.
Other authorities consider the issue whether a tenant has
lost possession as a result of his or her fault. As one
treatise explains:
"It is a general rule that if one's estate in
land comes to an end at a time which he could not
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have previously ascertained, without his fault and
without any action on his part to bring about such
a result, he is entitled to take the annual crops
planted by him before the termination of the estate
...."
2 Basil Jones, Tiffany Real Property § 599 (3d ed. 1939)
(emphasis added). See, e.g., 25 C.J.S. Crops § 16 (2012)
(stating that "[t]he purpose of the emblements doctrine is to
protect the interests of farmers to harvest crops on land that
they planted with the expectation that its bounty would be
available to them but whose possessory rights have failed
through no fault of their own before time for harvesting"
(emphasis added)); 141 A.L.R. 1243 (1942) (observing that
"[t]he doctrine or right of emblements entitles one who holds
land for a period subject to termination at a time which he
cannot ascertain beforehand to remove from the land after the
termination of his tenancy the annual crops or emblements
which he has planted thereon prior to such termination, if the
termination is brought about without any fault on his part"
(emphasis added)).
It is undisputed that Paint Rock defaulted on its
mortgage obligation. I therefore agree that it was not
entitled to the sod emblements in question.
19