AAR’s Legal Team reviews the opinions of several appellate courts on an ongoing basis to bring you updates from the judicial bench which impact the real estate industry. Read the most recent Judicial Update below.

Ownership Questions and Probate Courts

The Alabama Supreme Court recently considered a case between two brothers regarding their deceased father’s estate, Skidmore v Skidmore. As the probate court worked to settle the father’s estate, a dispute arose between the brothers regarding the ownership status of a commercial property. The property was purchased by the father, one brother, and that brother’s then-wife, approximately 20 years before the father’s death. The brother and wife later divorced, and the ex-wife relinquished her portion of the property as part of the divorce decree. All three owners signed a deed conveying ownership to the father and brother as joint tenants with rights of survivorship. However, the deed was not recorded until several years after the father’s death.

Because of the long period between the deed’s conveyance and it being recorded, the validity of the deed was called into question. One brother asked the probate court to render a decision regarding the deed’s validity, while the other brother contended that the matter should instead be heard by the Circuit Court. The probate court deemed the deed invalid. As a result, the probate court determined that the father owned the property in question as tenants in common with one of the brothers and that brother’s ex-wife. The probate court distributed the estate’s assets accordingly.

The other brother appealed the case to the Alabama Supreme Court, which reversed the probate court’s decision regarding the validity of the deed. The Court reasoned that the probate court lacked jurisdiction to answer questions regarding a deed’s validity, and that instead that question should have been left to the Circuit Court. Since the probate court’s determination was made without jurisdiction, it was invalid. 

Agreements Outside of the Purchase Agreement

The Alabama Supreme Court also considered a case involving an alleged builder’s warranty, A&W Contractors, LLC v Colbert. The case was based upon the sale of a property by A&W to a couple, the Colberts. After acceptance of a Purchase Agreement, upon inspection, issues with the property’s electrical and plumbing systems were discovered. The parties agreed that A&W would repair all issues related to these systems and repairs were conducted. However, the Colberts nonetheless felt uncomfortable with the sale and when they completed their final walk-through, they expressed that they would like to cancel the contract. According to the Colberts, A&W’s real estate agent texted them stating that A&W would offer a 3-month builder’s warranty over the electrical and plumbing systems. After the Colberts moved in, they experienced significant issues with the systems which required $90,000 in repairs. The Colberts sued, claiming (among other things) breach of contract.

Upon appeal, one of the primary issues was whether the 3-month builder’s warranty existed and if so, whether A&W breached it. The Alabama Supreme Court remanded the issue back to the Circuit Court, meaning the case will be back in the Circuit Court for further determination. This will result in additional attorney’s fees and time spent in court for the parties. The case highlights the importance of ensuring that all negotiations between parties to a Purchase Agreement be reduced to writing within the contract. As seen here, failure to do so could lead to significant legal issues for the consumer.

Cooperation with Legal Proceedings

Mobile Investments, LLC and the Broadway Group, LLC v. Corporate Pharmacy Services, Inc. is a recent Alabama Supreme Court case that makes clear that a person cannot choose to ignore legal proceedings without facing consequences. The case dealt with an option to purchase that was included in a lease agreement. During the discovery process, the plaintiffs attempted to depose a witness who was associated with the defendants. However, that witness refused to appear for a deposition, canceling the deposition on several occasions due to scheduling conflicts. The court then became involved, entering an order that the witness was required to appear for a deposition. Nonetheless, the witness never appeared. As a result, the court entered a default judgment against the defendants. The defendants then appealed, arguing that they were unaware they had to appear and unaware of the consequences of failure to appear. The Alabama Supreme Court was not compelled by this argument – the defendants were represented by an attorney and the court entered a valid order requiring the witness’ appearance. The Alabama Supreme Court affirmed the default judgment – meaning the case is over, and the defendants will not have any further opportunity to defend their position.

Frivolous Appeals

The Alabama Supreme Court also considered a matter related to proper use of the courts and their appellate process, Powers and Powers v Chadwell Homes, LLC. In 2009, the Powerses purchased a home by executing a conventional loan for $129,900. However, the Powerses defaulted on the loan, paying only a total of $400 toward it. In 2019, Chadwell filed a request for a foreclosure of the property and ejectment of the Powerses. Chadwell prevailed in that action, with the court finding that everything about Chadwell’s request – including the procedure under which it was made – were valid. Nonetheless, the Powerses filed multiple appeals and refused to vacate the property. The Circuit Court once again entered an order against them, this time allowing their removal from the premises by the sheriff. The Powerses appealed that order to the Alabama Supreme Court. Not only did the Alabama Supreme Court affirm the Circuit Court’s decision, but since the appeal was considered frivolous, the court ordered that the Powerses pay over $7,000 in Chadwell’s attorney fees.

Proper Venue 

The Alabama Supreme Court also issued an opinion regarding the proper place to file a lawsuit when real property is the subject matter of the suit. The case, Ex parte E3 Pest Control, was filed after homeowners discovered termite damage in a home that was under contract for termite inspection and treatment. Although the home was located in Baldwin County, the homeowners filed the case in Mobile County, where the pest control company was headquartered. The pest control company argued that the case should be moved to Baldwin County, where the home was located, while the homeowners argued that Mobile County was the proper venue because Alabama law required the case to be filed in the county where the company was located. The Circuit Court agreed with the homeowners and kept the case in Mobile County. However, the Alabama Supreme Court disagreed and clarified: when real property is the subject matter of a case, the case should be filed in the county where the real property is located.