Ronald L. Cooper v. MTA, Inc. , 166 So. 3d 106 ( 2014 )

Rel: 10/17/2014
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2014-2015
_________________________
1130698
_________________________
Ronald L. Cooper
v.
MTA, Inc.
Appeal from Madison Circuit Court
(CV-12-901460)
MAIN, Justice.
Ronald L. Cooper appeals from a summary judgment in favor
of MTA, Inc. ("MTA"), in MTA's action against Cooper seeking
contribution. We reverse and remand.
1130698
I. Facts and Procedural History
In 1999, Cooper and Robert L. Flowers formed C&F
Enterprises, LLC ("C&F"). C&F owned a parcel of property on
Meridian Street in Huntsville, upon which it built a shopping
center known as College Plaza ("the shopping center").
Subsequently, pursuant to an "Amended and Restated Operating
Agreement" dated November 9, 2000 ("the operating agreement"),
MTA became a member of C&F. The operating agreement provided
that MTA, Flowers, and Cooper each owned a one-third interest
in C&F. Section 16.2 of the operating agreement contains a
first right of refusal pursuant to which, after giving proper
notice, MTA could elect to purchase the shopping center.
On December 27, 2000, C&F borrowed $650,000 from the
Southern Development Council, Inc. ("SDC"), a community-
development program; that debt is memorialized by a promissory
note ("the note"). On the same day, SDC assigned the note to
the Small Business Administration ("the SBA"). Cooper and
Flowers personally guaranteed the indebtedness owed under the
note.
On July 18, 2003, C&F received a foreclosure letter with
respect to the note. On July 24, 2003, counsel for MTA sent
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Cooper a letter informing him of MTA's intent to exercise its
right of first refusal pursuant to section 16 of the operating
agreement.
On October 18, 2012, MTA filed a complaint against Cooper
and Flowers.1 The complaint set forth the following statement
of facts:
"4. On or about December 27, 2000, C&F Enterprises,
LLC ('C&F') executed and delivered to Southern
Development Council, Inc. ('SDC') promissory note
(the 'Note') whereby C&F promised to pay SDC the sum
of $650,000.00, with interest determined on the sale
of the debenture[2], and agreed to pay reasonable
attorney fees for collection. ...
"5. On or about December 27, 2000, [MTA], Cooper,
and Flowers each executed personal guarantees of the
indebtedness owed under the Note.
1
Flowers is not a party to this appeal. The record on
appeal includes what appears to be an affidavit from Flowers,
in which he states, in pertinent part:
"Though I was a member of C&F Enterprise, LLC.
To the best of my knowledge does not exist anymore,
at the request of majority partners, MTA and Ronald
L Cooper. I, Robert L. Flowers, Jr. was removed from
the personal Guarantee of the SBA ... portion of the
loan amount. There is a letter removing me as the
Guarantor, of which they are aware of. I deny owing
any money on this summons of this case."
(Punctuated as in original.)
2
A "debenture" is "[a] debt secured only by the debtor's
earning power, not by a lien on any specific asset." Black's
Law Dictionary 486 (9th ed. 2009).
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"6. As such, [MTA] and [Cooper and Flowers] were
each jointly and severally liable for the
obligations owed pursuant to the Note.
"7. On or about June 26, 2008, SDC filed a lawsuit
against [MTA], C&F, and Cooper, asserting that they
were in breach of the Note and Guarantees in the
amount of $767,523.10.
"8. On or about August 12, 2010, SDC obtained
judgment against [MTA] and C&F in the amount of
$767,523.10. Upon information and belief, Cooper was
never served in the lawsuit.
"9. On or about October 21, 2011, SDC withdrew the
sum of $812,706.00 from monies owed to MTA by the
government through the federal offset program.[3]
This amount satisfied the judgment and interest
thereon.
"10. No contribution to this satisfaction has been
made by [Cooper and Flowers]."
3
The referenced "federal offset program" appears to be the
"Treasury Offset Program," which "is a centralized offset
program, administered by the Bureau of the Fiscal Service's
Debt Management Services (DMS), to collect delinquent debts
owed to federal agencies and states, ... in accordance with 26
U.S.C. § 6402(d) (collection of debts owed to federal
agencies), 31 U.S.C. § 3720A (reduction of tax refund by
amount of the debts), and other applicable laws." On the date
this opinion was released, this information could be found at
http://fiscal.treasury.gov/fsservices/gov/debtColl/dms/top/d
ebt_top.htm; a copy of the Web page containing this definition
is available in the case file of the clerk of the Alabama
Supreme Court. See Ala. R. Evid. Rule 201(b)(2) (noting that
this Court may take judicial notice of facts "capable of
accurate and ready determination by resort to sources whose
accuracy cannot be reasonably questioned").
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The complaint alleged a count of contribution and "demand[ed]
judgment in [MTA's] favor and against Cooper in the amount of
$270,902.00, and Flowers in the amount of $270,902.00." In
the alternative, "[MTA] demand[ed] judgment in its favor and
against Cooper and Flowers for their individual pro rata
contribution shares as determined at trial."
Cooper filed a motion to dismiss; the trial court denied
the motion. Cooper then answered the complaint. Thereafter,
MTA filed a motion for a summary judgment against Cooper and
Flowers. MTA's argument in its motion, in its entirety, is as
follows:
"In Alabama, when a guarantor has paid the debt
of a principal, it is entitled to judgment against
each co-guarantor in the amount of their individual
pro rata shares of the debt. Ala. Code (1975) §
8-3-42(2)(a). The statute specifically states that:
"'Sureties ... are entitled to a summary
judgment against their principal and
between each other, by motion in the
circuit court on three days' notice thereof
... in the following manner ...
"'(2) Between sureties:
"'a. A surety who has
paid the debt of his
principal may recover
of each of his
cosureties their
aliquot proportion of
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the debt, and, if any
of the cosureties are
insolvent, the
proportion of such
insolvent must be
excluded from the
estimate, and judgment
be entered against the
remaining solvent
sureties for their
proportion of the debt
as if such insolvent
were not a cosurety.'
"Id. Although the statute in question sets out
remedies between 'sureties,' it has been clearly
established in Alabama that the terms 'surety' and
'guarantor' are interchangeable in this context.
Specifically, the meaning of 'surety' for the
purpose of Ala. Code [1975,] § 8-3-1 et [seq.,] is
'one who has been forced to pay a debt that was the
primary obligation of another, and which the latter
ought to have paid in exoneration of the former.'
Moody v. Hinton, 603 So. 2d 912 (Ala. 1992) (Shores,
J., dissenting); see also, Bradley v. Bentley, 163
So. 351, 355 (Ala. 1935); City of Birmingham v.
Trammel, 101 So. 2d 259, 260 (Ala. 1958).
"Alabama law specifically provides that this
remedy is to be granted in the form of summary
judgment. Ala. Code [1975,] § 8-3-42. The right to
contribution against co-guarantors is a
well-established, historical principle of Alabama
law. See Dubberly v. Black's Adm'r, 38 Ala. 193
(Ala. 1861); Douglass v. Orman, 119 So. 601 (Ala.
App. 1928); Layne v. Garner, 612 So. 2d 404 (Ala.
1992). This right is absolute absent an agreement
between the parties limiting the right of
contribution between co-guarantors. Ex parte Harris,
837 So. 2d 283, 287 (Ala. 2002). No such agreement
exists in this case. ...
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"The full amount of the debt and interest which
MTA paid in order to satisfy ... C&F's liability to
SDC is $812,706.00. ... As there were three
guarantors to this debt (MTA, Cooper, and Flowers),
the pro rata share of each guarantor is 1/3 of the
total, or $270,902.00. ... For the reasons stated
above, no genuine issue of material fact exists as
to [MTA's] claim for contribution, and [MTA] is
entitled to judgment as a matter of law against
Cooper in the amount of $270,902.00 and Flowers in
the amount of $270,902.00."
MTA supported its summary-judgment motion with, among
other evidence, the affidavit of Robert Chastine, the
president of MTA. In his affidavit, Chastine stated, in
pertinent part, that, "[o]n or about October 21, 2011, [SDC]
withdrew the sum of $812,706.00 from monies owed to MTA by the
government through the federal offset program. This withdrawal
satisfied the judgment, as well as the post-judgment interest
that had accrued between the date of the judgment and the date
of the satisfaction." Chastine also stated that "[n]o
contribution to MTA's satisfaction of C&F's debt to SDC has
been made by Cooper or Flowers, and no agreement exists among
MTA, Cooper, and Flowers limiting the right of contribution
between them."
Cooper filed a response to MTA's summary-judgment motion.
In his response, Cooper argued, in relevant part:
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"MTA correctly acknowledges in its memorandum
that its right to contribution, if any, is not
absolute if there is an agreement between the
parties, limiting the right of contribution between
the co-guarantors. See Ex parte Harris, 837 So. 2d
283, 287 (Ala. 2002). In this case, MTA chose to
exercise its first right of refusal to purchase the
encumbered property, and in doing so, agreed to
assume full responsibility for the repayment of the
SBA loan. ... As such, MTA has effectively waived
its right, if any, to contribution. ..."
Cooper supported his response to MTA's summary-judgment
motion with his own affidavit, in which he stated, in
pertinent part:
"5. On or about December 27, 2000, C&F borrowed
$650,000.00 from [SDC]. That debt is memorialized by
the promissory note ('the Note')....
"6. On December 27, 2000, the SDC assigned the
Note to the Small Business Administration 'SBA.'
"7. Thereafter, C&F received a foreclosure
letter with respect to the SBA loan. The imminent
sale of C&F's assets triggered the first right of
refusal granted to MTA pursuant to Sections 16.1 and
16.2 of the Operating Agreement. ...
"8. On or about July 24, 2003, MTA notified me
that it intended to exercise its first right of
refusal. ... MTA demanded me to immediately
relinquish and transfer to MTA my entire interest in
C&F. ...
"9. On August 1, 2003, I executed an 'Assignment
Of interest in C&F Enterprises, LLC, wherein I sold,
assigned, and transferred to MTA my entire interest
in C&F. ...
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"10. As a result, MTA then assumed full
responsibility of the SBA loan. ...
"11. Notwithstanding the allegations in the
Complaint, I have no knowledge of the factual
circumstances associated with the alleged payment
made, via the federal offset program, to the SBA."
Cooper also supported his response to the summary-
judgment motion with a letter, dated July 24, 2003, that MTA
sent to Cooper, in which MTA stated, in pertinent part:
"As you probably are aware, C&F Enterprises has
received a foreclosure letter with respect to its
SBA loan. This imminent sale of C&F Enterprises'
assets has triggered the right of first refusal
granted to MTA in section 16 of C&F Enterprises'
current Operating Agreement, giving MTA the right to
purchase the College Plaza Shopping Center.
"By this letter MTA is hereby notifying you, as
required by section 16.2 of the Operating Agreement,
of its intent to exercise its right of first
refusal. To this end, MTA expects you to immediately
relinquish and transfer to MTA your entire interest
in C&F Enterprises, MTA will then assume full
responsibility for the repayment of the SBA loan."
Cooper further supported his response to the summary-
judgment motion with a document entitled "Assignment of
Interest in C&F Enterprises, LLC[,] an Alabama Limited
Liability Company." That document, purporting to assign
Cooper's interest in C&F to MTA, signed by Cooper and a
witness, provides:
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"For adequate consideration, the receipt of
which is hereby acknowledged, Ronald L. Cooper
hereby sells, assigns and transfers unto MTA, Inc.,
an Alabama corporation, Ronald L. Cooper's entire
interest in C&F Enterprises, an Alabama limited
liability company, constituting thirty three and
one-third membership units and a thirty three and
one-third percentage interest in C&F Enterprises,
LLC, and the undersigned hereby further irrevocably
constitutes and appoints the [sic] Robert Chastine
to transfer the said interests on the books of the
within-named limited liability company, with full
power of substitution in the premises."
MTA filed a reply to Cooper's response to its summary-
judgment motion, stating, in pertinent part:
"SUPPLEMENTAL FACTS
"1. On or about July 24, 2003, D. Ashley Jones,
counsel for [MTA] and its principal, Robert
Chastine, sent Ronald L. Cooper ('Cooper') a letter
informing him of its intent to exercise its right of
first refusal (the 'Demand Letter'). ...
"2. The Demand Letter stated that 'Time is of the
essence,' and gave Cooper a period of seven days in
which to execute and return a transfer of membership
interest. ...
"3. No response was ever received from Cooper, and
no executed assignment of membership interest was
ever received. ...
"4. In further support of [MTA's] Motion for Summary
Judgment, true and correct copies of the collection
letters from the Department of the Treasury
evidencing the transfers referenced in the Complaint
and Motion for Summary Judgment are attached hereto
as Exhibit '2.'
10
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"SUPPLEMENTAL ARGUMENT
"A few days before the initial hearing on
[MTA's] Motion for Summary Judgment, [Cooper] filed
its response to [MTA's] motion, to which was
attached the Demand Letter, as well as a purported
assignment of Cooper's interest in C&F Enterprises,
LLC ('C&F') to [MTA] (the 'Assignment'). ... The
Assignment was never received -- in fact, no
response to the letter requesting the executed
Assignment was received whatsoever. ...
"Regardless of the receipt of the Assignment,
that document is insufficient to constitute a
transfer of the membership of Ronald L. Cooper to
MTA, Inc. Section 9 of the Operating Agreement of
C&F (the 'Operating Agreement') sets out the method
by which a transfer of membership interest in C&F
may be formalized. ... Section 9.1 of the Operating
Agreement provides that any assignment of membership
interest must be:
"'1. Executed both by the assignor and the
assignee;
"'2. Received by the members;
"'3. Recorded on the books of C&F;
"'4. Approved by prior written consent of
at least 75% of outstanding members; and
"'5. Accompanied by an opinion of counsel
that said assignment will not contravene
applicable law, terminate C&F, or
jeopardize C&F's tax status. ...'
"The Assignment clearly fails to meet these
requirements, as it was not signed by [MTA] ....
Furthermore, the Assignment was never received by
[MTA's] Counsel .... No evidence in support of the
remaining requirements has been submitted by Cooper,
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but the sole fact that [MTA] did not sign the
Assignment is enough to render the Assignment
invalid pursuant to Section 9 of the Operating
Agreement.
"It is also clear that the Assignment is not a
transfer pursuant to the first right of refusal set
out in Section 11 of the Operating Agreement. Such
a transfer would require:
"1. Written notice by the seller (in
this case, Cooper) to the purchaser (in
this case, [MTA]) of the seller's intent to
sell, including the price and terms the
seller is willing to accept; ...
"2. Written acceptance from the
purchaser (MTA) of said notice within 30
days of the seller's notice; ... and
"3. An execution of the purchase
within 75 days of the seller's notice of
intent to sell ....
"No evidence supporting any of these three
requirements has been submitted by Cooper. Finally,
the Court should note that the Demand Letter refers
to a right of first refusal set out in Section 16.2
of the Operating Agreement. ... However, the first
right of refusal set out in Section 16[4] is only a
first right of refusal entitling MTA to purchase a
shopping center owned by C&F, not a right of first
refusal entitling MTA to purchase Cooper's
membership interest. As such, any transfer of
membership interest between the members of C&F would
have to be executed pursuant to section 9[5] or
4
Section 16 of the operating agreement is entitled "First
Right of Refusal as to Shopping Center."
5
Section 9 of the operating agreement is entitled
"Transfer of a Member's Interest."
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section 11[6] of the Operating Agreement. As
described above, the Assignment, even if it was
executed, would not operate as a transfer of
Cooper's membership interest in C&F to [MTA]."
Cooper filed a supplemental response to his original
response to the summary-judgment motion, stating, in pertinent
part:
"1. MTA supplements its summary judgment motion
by arguing that Ashley Jones never received Cooper's
assignment of interest in C&F Enterprises, LLC
('C&F'). In support, MTA attaches the Affidavit of
Ashley Jones who claims that he does not recall ever
receiving the Assignment. Nevertheless, Cooper has
previously stated in his Affidavit that he executed
the assignment of his membership interest in
accordance with MTA's instructions. See paragraph 9
of the Affidavit of Ron Cooper ('Cooper Affidavit')
.... Therefore, an issue of fact exists as to
whether MTA exercised its first right of refusal,
thereby purchasing Cooper's interest in C&F
Enterprises and assuming responsibility of C&F's
debt.
"2. Further discovery is needed to resolve
issues of fact regarding MTA's exercise of its first
right of refusal and Cooper's assignment of his
membership interest. Specifically, Cooper is issuing
subpoenas to take the depositions of: (i) Erskine
Valrie, the former Small Business [Administration]
officer that handled the loan at issue in this case,
(ii) Robert Flowers, the co-defendant who failed to
appear in this case; and (iii) Ashley Jones, MTA's
former transactional attorney. ...
6
Section 11 of the operating agreement is entitled "First
Right of Refusal as to Member Interest."
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"3. MTA further supplements its summary-judgment
motion with attached collection letters from the
Department of Treasury that MTA claims purport to
transfer the funds via the federal offset program to
satisfy the C&F debt at issue in this lawsuit.
However, MTA has failed to produce evidence that the
withdrawals via the federal offset program were used
to satisfy the SBA's loan to C&F Enterprises. ...
While MTA attached collection letters from the
Department of Treasury, those collection letters do
not reference C&F Enterprises in any way. Moreover,
there is no explanation from Robert Chastine, MTA's
corporate representative, authenticating these
facts. As such, the deposition of Robert Chastine is
also needed to develop these factual issues. ...
"4. Finally, MTA's supplemental submission
raises additional factual issues regarding the scope
of the first right of refusal. MTA argues that the
first right of refusal found in Section 16.2 of the
Operating Agreement only entitles MTA to purchase
the shopping center and does not entitle MTA to
purchase Cooper's membership interest. This argument
is inconsistent with MTA's prior position as
articulated by its counsel in his July 24, 2003,
letter. ... Moreover, the SBA loan documents, which
are attached to MTA's Complaint, and the operating
agreement, when read in their entirety, are evidence
that C&F Enterprises was formed to construct and
lease the College Plaza Shopping Center. Therefore,
MTA's last-minute attempt to manipulate the terms of
the Operating Agreement is disingenuous."
After a hearing, the trial court entered an order
granting MTA's summary-judgment motion and stating: "Judgment
is hereby entered in favor of plaintiff MTA, Inc., and against
defendants Ronald Cooper and Robert Flowers in amount of
$270,902.00, plus costs of this action." The trial court's
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order included no specific findings of fact. Cooper filed a
Rule 59(e), Ala. R. Civ. P., motion, arguing, in sum, that,
"[i]n this case, MTA chose to exercise its first right of
refusal to purchase the encumbered property, and in doing so,
agreed to assume full responsibility for the repayment of the
SBA loan." The trial court denied Cooper's postjudgment
motion. Cooper appealed.
II. Standard of Review
"Our standard of review of a summary judgment is
well settled:
"'"The standard of review applicable
to a summary judgment is the same as the
standard for granting the motion...."
McClendon v. Mountain Top Indoor Flea
Market, Inc., 601 So. 2d 957, 958 (Ala.
1992).
"'"A summary judgment is
proper when there is no genuine
issue of material fact and the
moving party is entitled to a
judgment as a matter of law. Rule
56(c)(3), Ala. R. Civ. P. The
burden is on the moving party to
make a prima facie showing that
there is no genuine issue of
material fact and that it is
entitled to a judgment as a
matter of law. In determining
whether the movant has carried
that burden, the court is to view
the evidence in a light most
favorable to the nonmoving party
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and to draw all reasonable
inferences in favor of that
party. To defeat a properly
supported summary judgment
motion, the nonmoving party must
present 'substantial evidence'
creating a genuine issue of
material fact -- '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.' Ala. Code 1975, §
12–21–12; West v. Founders Life
Assurance Co. of Florida, 547 So.
2d 870, 871 (Ala. 1989)."
"'Capital Alliance Ins. Co. v.
Thorough–Clean, Inc., 639 So. 2d 1349, 1350
(Ala. 1994). Questions of law are reviewed
de novo. Alabama Republican Party v.
McGinley, 893 So. 2d 337, 342 (Ala. 2004).'
"Pritchett v. ICN Med. Alliance, Inc., 938 So. 2d
933, 935 (Ala. 2006)."
Smith v. Fisher, 143 So. 3d 110, 122-23 (Ala. 2013).
III. Analysis
We conclude that the trial court erred in granting MTA's
motion for a summary judgment. The legal arguments presented
by the parties and the substantial evidentiary documentation
supporting those arguments7 show that there exist a number of
7
The parties collectively submitted to the trial court no
fewer than seven affidavits, along with numerous other
documentary evidence.
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disputed issues of material fact in this case. The following
constitute some of, but perhaps not all, the disputed issues
of material fact that make a summary judgment inappropriate in
this case:
In his affidavit, Chastine, who, as noted, is the
president of MTA, stated that, "[o]n or about October 21,
2011, [SDC] withdrew the sum of $812,706.00 from monies owed
to MTA by the government through the federal offset program.
This withdrawal satisfied the judgment, as well as the
post-judgment interest that had accrued between the date of
the judgment and the date of the satisfaction." However, in
her affidavit, Deanna Smith, one of Cooper's attorneys, stated
that "MTA has failed to produce evidence that the withdrawals
via the federal offset program were used to satisfy the SBA's
loan to C&F Enterprises. While MTA attached collection letters
from the Department of Treasury, those collection letters do
not reference C&F Enterprises in any way."
In his affidavit, Cooper stated that, "[o]n August 1,
2003, I executed an 'Assignment Of interest in C&F
Enterprises, wherein I sold, assigned, and transferred to MTA
my entire interest in C&F [Enterprises, LLC]." "As a result,
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MTA then assumed full responsibility for the repayment of the
SBA loan." Also, in her affidavit, Dana M. Moore, the
executive director of SDC, stated that she was aware that
"Cooper had executed an assignment transferring his interest
in C&F Enterprises to MTA." However, in his affidavit, D.
Ashley Jones, counsel for MTA and Chastine in July 2003,
stated that he sent a letter to Cooper on July 24, 2003,
"informing him of said pending foreclosure [of C&F
Enterprises, LLC], and instructing him to execute an
assignment of interest to MTA, Inc. within seven days" but
that Jones "never received any communication in return from
... Cooper and never received the executed Assignment of
Interest ...."
Furthermore, there exists an issue of material fact as to
whether Cooper's purported assignment to MTA of his interest
in C&F was an assignment of Cooper's interest in C&F pursuant
to section 11 of the operating agreement; an assignment of
Cooper's interest in the shopping center operated by C&F
pursuant to section 16 of the operating agreement; or an
assignment of Cooper's interests under both sections 11 and 16
of the operating agreement. In its supplement to its summary-
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judgment motion, MTA argued that, "[f]inally, the Court should
note that the Demand Letter refers to a right of first refusal
set out in Section 16.2 of the Operating Agreement. ...
However, the first right of refusal set out in Section 16 is
only a first right of refusal entitling MTA to purchase a
shopping center owned by C&F, not a right of first refusal
entitling MTA to purchase Cooper's membership interest."
However, the affidavit of Jones, then MTA's attorney, does not
distinguish between MTA's purchasing Cooper's interest in C&F
as opposed to or in addition to Cooper's interest in the
shopping center owned by C&F. As noted above, Jones stated
only that he "never received the executed Assignment of
Interest." Furthermore, the purported "Assignment of
Interest" document to which Jones referred is not specific as
to whether Cooper assigned to MTA his interest in C&F as
opposed to or in addition to his interest in the shopping
center.
In sum, it is clear that there exist several issues of
material fact that preclude a summary judgment in this case.
Accordingly, the trial court's summary judgment in favor of
MTA is due to be reversed.
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IV. Conclusion
Because genuine issues of material fact exist in this
case, the trial court erred in granting MTA's motion for a
summary judgment. Therefore, we reverse the trial court's
judgment and remand the cause for further proceedings
consistent with this opinion.
REVERSED AND REMANDED.
Moore, C.J., and Murdock and Bryan, JJ., concur.
Bolin, J., concurs in the result.
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