Case Title: Matador Holdings, Inc. v. HoPo Realty Investments, LLC

Citation: 

Docket Number: 1091700

State: alabama

Court: Alabama Supreme Court

Date: 2011-08-05T00:00:00Z

Document:
REL: 08/05/2011
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
SPECIAL TERM, 2011
_________________________
1091700
_________________________
Matador Holdings, Inc., d/b/a Davis-Dyar Supply Company
v.
HoPo Realty Investments, L.L.C.
_________________________
1091790
_________________________
HoPo Realty Investments, L.L.C.
v.
Matador Holdings, Inc., d/b/a Davis-Dyar Supply Company
Appeals from Lee Circuit Court
(CV-09-900166)
1091700; 1091790
Matador's claims against Stratford and HoPo's cross-
1
claims against Stratford were resolved before trial, and
consent judgments were entered as to those claims.  Nothing in
this opinion impacts those consent judgments. 
The lease was scheduled to begin on December 15, 2008,
2
and end on December 31, 2013.
2
MAIN, Justice.
Matador Holdings, Inc., d/b/a Davis-Dyar Supply Company
("Matador"), and HoPo Realty Investments, L.L.C. ("HoPo"),
have filed separate appeals challenging elements of an order
entered by the Lee Circuit Court in a proceeding involving
commercial property owned by Matador.  Matador, which is in
the business of selling building materials, sued HoPo and
HoPo's lessee, Stratford Plastic Components of Alabama
("Stratford"), seeking payment for materials and services
Matador provided Stratford at commercial property owned by
HoPo.   The issues at trial and to be resolved on appeal
1
center around a materialman's lien and a claim of unjust
enrichment.  We consolidated the appeals for the purpose of
writing one opinion.
Factual Background and Procedural History
On or about December 12, 2008, Stratford entered into an
agreement to lease a commercial structure from HoPo.   The
2
1091700; 1091790
3
structure had previously been used as a warehouse, but
Stratford intended to use it as an extruded-plastics
manufacturing facility.  The lease agreement provided that
Stratford was to "use the premises for manufacturing, storage,
and distribution of plastic components, and for no other use."
The lease agreement provided for tenant alterations and
improvements to the property, as follows:
"No alterations or improvements will be made by
[Stratford] without [HoPo's] prior written consent.
Such consent will not be unreasonably withheld.
"If [HoPo] consents, [Stratford] has the right to
perform alterations and improvements anytime during
the term of this lease.
"But, in all cases, [HoPo] will not consent to such
installation, alterations, or improvements until the
following conditions have been met before work
begins:
"[Stratford] submits plans to [HoPo] bearing a
licensed architect's or engineer's stamp.
"The construction must be performed by contractors
suitable to [HoPo].  All contractors must have local
business licenses, and provide to [HoPo's agent]
proof of liability, and workman's compensation
insurance coverage.
"All work will be done in a good and workmanlike
manner and in compliance with any applicable
governmental rules and regulations and the cost
thereof will be paid by [Stratford] in cash or in
equivalent, so that the leased premises will at all
times be free of liens for labor and materials
supplied or claimed to have been supplied to the
1091700; 1091790
4
leased premises.  Any alterations and improvements
other than trade fixtures will immediately become
the property of [HoPo], subject only to the use of
same by [Stratford] during the term of this lease.
"Trade fixtures are the personal property of
[Stratford]. [Stratford] may remove trade fixtures
when 
[Stratford] 
vacates 
the 
premises. 
 
If
[Stratford] does not remove trade fixtures upon
vacating the premises, then [HoPo], at [its] sole
discretion, may have the fixtures removed on behalf
of [Stratford].  In all cases, [Stratford] will bear
the full cost, including labor and materials, of
removing trade fixtures and repairing any damage
caused by such removal."
The lease agreement further provided:
"Nothing contained in this lease will authorize
[Stratford] to do any act which may create or be the
foundation 
for 
any 
lien, 
mortgage 
or 
other
encumbrance upon the reversion or other estate of
[HoPo], or of any interest of [HoPo] in the leased
premises 
or 
upon 
in 
[sic] 
the 
building 
or
improvements thereof; it being agreed that should
[Stratford] 
cause 
any 
alterations, 
changes,
additions, improvements or repairs to be made to the
leased premises, or cause materials to be furnished
or labor to be performed therein or thereon, neither
[HoPo] nor the leased premises will, under any
circumstances, be liable for the payment of any
expense incurred or for the value of any work done
or material furnished to the leased premises or any
part thereof.  [Stratford] will upon request deliver
such documents as may be required by [HoPo] in order
to effectuate the lien protection required by this
paragraph; all such alterations, changes, additions,
improvements and repairs and materials and all labor
will be at [Stratford's] expense and [Stratford]
will 
be 
solely 
and 
wholly 
responsible 
to
contractors, laborers and materialmen furnishing
labor and material to said premises and building or
any part thereof.  If, because of any act or
1091700; 1091790
The 
lease 
agreement 
contained 
a 
"Captions" 
section, 
which
3
provides that "[t]he paragraph captions contained herein are
for convenience only and do not define, limit or construe the
contents of such paragraphs and are in no way to be construed
as a part of this lease."  The text in the above-quoted hold-
harmless paragraphs clearly included situations involving
additions or improvements.  Thus, although the above-quoted
hold-harmless paragraphs were included in the section of the
lease agreement captioned "Maintenance and Repair of the
Leased Premises," their placement there does not impact our
review of the language in those paragraphs.
5
omission of [Stratford], any mechanic's or other
lien or order for the payment of money will be filed
against the leased premises or any building or
improvement thereon, or against [HoPo] (whether or
not such lien or order is valid or enforceable as
such).
"[Stratford] will, at [Stratford's] own cost and
expense, within fifteen (15) days after the date of
filing thereof, cause the same to be canceled and
discharged of record, or furnish [HoPo] with a
surety bond issued by a surety company reasonably
satisfactory to [HoPo], protecting [HoPo] from any
loss because of nonpayment of such lien and further
will indemnify and save harmless [HoPo] from and
against any and all costs, expenses, claims, losses
or damages, including reasonable counsel fees,
resulting thereupon or by reason thereof."   
3
The lease agreement contained provisions allowing for HoPo
and/or its agents to enter the property during the term of the
lease for matters such as inspections or making repairs or
additions or alterations to the property.
Stratford had applied for and been given a line of credit
with Matador in September 2008.  After taking possession of
1091700; 1091790
6
the leased property, Stratford ordered from Matador materials
to be used to convert the leased property to a facility
suitable for Stratford's production needs.  The materials and
interest/finance charges incurred pursuant to the credit
agreement totaled $59,057.62.  Stratford apparently converted
the leased property to a manufacturing facility but vacated
the property before the lease term expired without paying
Matador for the materials.
Howard Porter testified that he was a member of HoPo and
also of Porter Properties, LLC, which was the rental agent for
the leased property.  Porter stated that the lease was an "as-
is" lease and that Stratford did not request that HoPo make
any changes to the building for it to enter into the lease
agreement.  Porter testified that the property manager went to
the property during the term of the lease to attempt to
collect the rent payment and that Stratford was behind on its
rent "pretty much from the beginning."  Porter also testified
that the leasing agent likely went to the property a few times
but that he was not certain because that individual left
Porter 
Properties' 
employment 
shortly 
after 
the 
lease
agreement was signed.
1091700; 1091790
7
Porter testified that Tracey Davis Allen, the owner of
Matador, contacted him by telephone and informed him that
Stratford had not paid for materials Matador had supplied to
convert the leased property to a production facility.  Porter
stated that after receiving the telephone call from Allen, "we
notified [Stratford] that [it] needed to clean that up under
the terms of the lease." 
Porter further testified that he had no knowledge before
the lease agreement was signed that Matador was going to
supply materials to the leased property.  He stated that, even
though it was not unusual to receive notice from a supplier
that work was being performed on a leased property or that
materials were being supplied to that property, they did not
receive any such notice from Matador in this case.  Porter
further stated that Stratford did provide a "rough layout of
the office [partition], office area that was being added" but
that he did not believe that any blueprints for electrical
installations or any plans bearing the stamp of a licensed
architect or engineer were ever provided to HoPo.  Porter
testified that Stratford did not seek approval from HoPo to
allow Matador to perform any work or to supply materials.
Porter claimed that the only knowledge he had that Matador had
1091700; 1091790
8
provided any materials to Stratford at the leased property was
the telephone call from Allen and a lien subsequently filed by
Matador.  Porter stated that he never agreed to pay for any
materials supplied to Stratford and that when the topic was
brought up by Allen he told her that payment for the materials
was between her and Stratford.
Porter further testified that he told either Allen or an
independent contractor who performed the work converting the
leased property that Matador was welcome to retrieve any of
the materials it had supplied, provided that it caused no
damage to the structure of the building in retrieving the
materials.  He reiterated that position at trial.
According to Porter, the property has been shown to
several prospective tenants since Stratford's departure, but
the property had not been leased.  He stated that some of the
alterations that were performed could be viewed as beneficial
to some potential tenants but detrimental to other potential
tenants.  Further, Porter testified that substantial work
would have to be performed to prepare the property before
another tenant could move in because of the condition of
various piping, conduits, etc., that remained after Stratford
vacated the premises.
1091700; 1091790
9
Allen testified that she was the owner of Matador.  She
stated that all the materials ordered by Stratford either were
delivered from Matador's facility to the leased property by
one of Matador's delivery trucks or were shipped directly from
a supplier/manufacturer to the leased property.
According to Allen, she telephoned Porter around the same
time Matador was filing a materialman's lien on the building
in March 2009 for the materials Matador had supplied.  She
stated that Porter informed her that Stratford had not
defaulted on its rent to HoPo at that point.  Allen testified
that Porter told her she should seek legal counsel.  Allen
further testified that she told Porter that HoPo would likely
be brought into the matter and that she already had an
attorney and was proceeding with the legal process.
Allen informed the trial court that Matador's invoices
spanned the period from approximately November 2008 to March
2009 and that, at the time she spoke with Porter and filed the
lien, Matador had provided all the materials for which it now
seeks compensation.  According to Allen, Matador sells new
building materials and does not have any market for or use for
used building materials.  Matador presented unpaid invoices
1091700; 1091790
10
totaling $47,915.24 for materials provided to Stratford for
converting the leased property.
George Dyar testified that he was a former owner of
Matador and that he continued to assist the company on an as-
needed basis.  Dyar testified that he visited the premises
before Stratford moved in, and he discussed the types of
upgrades in lighting, electrical, heating and cooling, piping,
etc., that needed to be performed to convert the building from
a warehouse facility to a production facility.
Dyar testified that the upgrades in lighting would be
beneficial to a tenant other than Stratford.  He further
testified that the piping for compressed air systems and the
added electrical work would be beneficial for many other
potential production tenants but would not be beneficial to
potential warehouse tenants.  Dyar testified that he believed
the piping system could be removed without damaging the
building and that, although other materials Matador had
supplied could be removed without damaging the building, they
were of no use to Matador once they were removed.
Mike Carter testified that he was employed by Porter
Properties and that he was the property manager for the leased
1091700; 1091790
11
property.  He testified as to his efforts to lease the
property after Stratford's departure.  
All the testimony at trial indicated that nobody from
Matador had informed anyone at HoPo that Matador would be
supplying materials for Stratford to use in converting the
leased property.  By all accounts, it appears that the first
knowledge HoPo had that Matador had supplied any materials to
Stratford was in March 2009, when Allen telephoned Porter and
the materialman's lien was filed.
After hearing testimony and accepting evidence and briefs
from Matador and HoPo, the trial court entered an order
resolving the claims between Matador and HoPo, as follows:
"IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that
Matador's judgment against the Stratford Defendants
previously entered by the Court is SECURED by a lien
arising under § 35-11-212, Ala. Code (1975), which
attaches to the goods and materials furnished by
Matador to Stratford and incorporated into the
Warehouse, but only to the extent that such goods
and materials can be identified and removed from the
Warehouse without damage to the Warehouse or the
real property on which it is situated.  HoPo shall
permit Matador to enter the Warehouse after notice
to HoPo for the purpose of removing such goods and
materials, which Matador may then sell in the manner
provided for by law.
"IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that
Matador's judgment against the Stratford Defendants
previously entered by the Court is also SECURED by
a lien which attaches to the unexpired term of the
1091700; 1091790
Consent judgments were also entered against Stratford in
4
the amount of $68,934.24 for Matador and $790,043.16 for HoPo
(see supra note 1). Those amounts included principal and
attorney fees, as well as compensatory damages and/or
interest.
12
Lease between HoPo and [Stratford], and which may be
executed upon only in the manner specified, and in
accordance with the procedures set forth, in § 35-
11-212, Ala. Code (1975).
"IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that,
except as specifically allowed and declared in this
Judgment, the lien claimed by Matador in its
Verified Statement of Lien recorded at Misc. Book
1289, at Page 45, in the Office of the Judge of
Probate for Lee County, Alabama, is null and void,
and does not attach to any other real or personal
property, or any interest therein.
"IT IS FURTHER HEREBY ORDERED, ADJUDGED, AND DECREED
that Matador's claim of unjust enrichment against
HoPo is due to be and the same is hereby DENIED."4
(capitalization in original.)
Matador filed a postjudgment motion to vacate or amend
the judgment, and HoPo filed a response.  Matador's post-
judgment motion was deemed denied pursuant to Rule 59.1,
Ala.R.Civ.P., after 90 days.  These appeals followed.
Standard of Review
"Because the trial court heard ore tenus
evidence during the bench trial, the ore tenus
standard of review applies.  Our ore tenus standard
of review is well settled.  '"When a judge in a
nonjury case hears oral testimony, a judgment based
on findings of fact based on that testimony will be
1091700; 1091790
13
presumed correct and will not be disturbed on appeal
except for a plain and palpable error."'  Smith v.
Muchia, 854 So. 2d 85, 92 (Ala. 2003) (quoting
Allstate Ins. Co. v. Skelton, 675 So. 2d 377, 379
(Ala. 1996)).
"'"The ore tenus rule is grounded upon the
principle that when the trial court hears
oral testimony it has an opportunity to
evaluate the demeanor and credibility of
witnesses."  Hall v. Mazzone, 486 So. 2d
408, 410 (Ala. 1986).  The rule applies to
"disputed issues of fact," whether the
dispute 
is 
based 
entirely 
upon 
oral
testimony or upon a combination of oral
testimony and documentary evidence.  Born
v. Clark, 662 So. 2d 669, 672 (Ala. 1995).
The 
ore 
tenus 
standard 
of 
review,
succinctly stated, is as follows:
"'"[W]here the evidence has been
[presented] 
ore 
tenus, 
a
presumption 
of 
correctness
attends 
the 
trial 
court's
conclusion on issues of fact, and
this Court will not disturb the
trial court's conclusion unless
it 
is 
clearly 
erroneous 
and
against the great weight of the
evidence, but will affirm the
judgment if, under any reasonable
aspect, 
it 
is 
supported 
by
credible evidence."'
"Reed v. Board of Trs. for Alabama State Univ., 778
So. 2d 791, 795 (Ala. 2000) (quoting Raidt v. Crane,
342 So. 2d 358, 360 (Ala. 1977)).  However, 'that
presumption [of correctness] has no application when
the trial court is shown to have improperly applied
the law to the facts.'  Ex parte Board of Zoning
Adjustment of Mobile, 636 So. 2d 415, 417 (Ala.
1994)."
1091700; 1091790
14
Kennedy v. Boles Invs., Inc., 53 So. 3d 60, 67-68 (Ala. 2010).
Unjust-Enrichment Claim (Case no. 1091700) 
Matador argues that the trial court erred in denying its
claim that it was entitled to recover from HoPo under the
theory of unjust enrichment.  HoPo argues that the facts do
not establish the elements of an unjust-enrichment claim.
"To prevail on a claim of unjust enrichment under
Alabama law, a plaintiff must show that: (1) the
defendant knowingly accepted and retained a benefit,
(2) provided by another, (3) who has a reasonable
expectation of compensation.  See American Family
Care, Inc. v. Fox, 642 So. 2d 486, 488 (Ala. Civ.
App. 1994)."
Portofino Seaport Vill., LLC v. Welch, 4 So. 3d 1095, 1098
(Ala. 2008).
"'One is unjustly enriched if his retention of a
benefit would be unjust.'  Jordan v. Mitchell, 705
So. 
2d 
453, 
458 
(Ala.Civ.App. 
1997) 
(citing
Restatement of Restitution: Quasi Contracts and
Constructive Trusts, § 1, Comment c. (1937)). The
Jordan court continued:
"'Retention of a benefit is unjust if (1)
the donor of the benefit ... acted under a
mistake of fact or in misreliance on a
right or duty, or (2) the recipient of the
benefit ... engaged in some unconscionable
conduct, such as fraud, coercion, or abuse
of a confidential relationship. In the
absence of mistake or misreliance by the
donor or wrongful conduct by the recipient,
the recipient may have been enriched, but
he is not deemed to have been unjustly
enriched.'
1091700; 1091790
15
"705 So. 2d at 458."
Welch v. Montgomery Eye Physicians, P.C., 891 So. 2d 837, 843
(Ala. 2004).
There was no evidence indicating that Matador made a
mistake of fact in providing the materials to the project, nor
is there any evidence indicating that HoPo purported to accept
any responsibility or liability for those materials to induce
Matador to provide the materials to Stratford.  To the
contrary, it is clear from the record that HoPo was not aware
that Matador had supplied the materials until after Matador
had fulfilled all Stratford's orders and the conversion of the
facility was completed.  Further, the testimony indicated that
although some of the improvements may be beneficial to another
prospective tenant, some of the improvements would be suitable
only for production tenants and even then only to a portion of
that type of tenant.  Finally, HoPo has offered to allow
Matador to remove from the leased property any materials it
supplied that could be removed without damage to the building.
In short, there was conflicting evidence as to whether HoPo
knowingly obtained the benefit or whether it is insisting on
retaining that benefit.  There is, however, evidence to
1091700; 1091790
16
support the trial court's judgment;  therefore, the trial
court's judgment is affirmed.
Materialman's Lien (Case no. 1091790)
HoPo argues that the trial court erred in enforcing
Matador's materialman's lien on the leased property because,
it says, Stratford violated terms of the lease agreement
concerning the procedures for improving or altering the
property and thereby caused the lien to arise.
Matador argues that it is clear from the terms of the
lease agreement that HoPo was aware that Stratford was going
to be converting the building from a warehouse facility to a
production facility.  Matador also avers that Stratford
provided HoPo with a blueprint or floorplan of the proposed
construction at the time Stratford entered into the lease
agreement.  Matador further asserts that HoPo had actual
knowledge of the improvements because employees or agents of
HoPo went to the premises on multiple occasions to collect
rent.
Section 35-11-212, Ala. Code 1975, provides for liens
against leased lands, as follows:
"(a) When the building or improvement is erected
under or by virtue of any contract with a lessee in
possession, and the erection thereof is not in
violation of the terms or conditions of the lease,
the 
lien 
shall 
attach 
to 
such 
building 
or
1091700; 1091790
17
improvement, and to the unexpired term of the lease,
and the holder of the lien shall have the right to
avoid a forfeiture of the lease by paying rent to
the lessor, as it becomes due and payable, or by the
performance of any other act or duty to which the
lessee may be bound; and if the lien is enforced by
a sale of the building or improvement, the purchaser
may, at his election, become entitled to the
possession of the demised premises, and to remain
therein for the unexpired term, by paying rent to
the lessor, or performing any other act or duty to
which the lessee was bound, as if he were the
assignee of the lease; or he may, within 60 days
after the sale, remove such building or improvement
from the premises; and if he elects to take
possession 
and 
to 
remain 
therein 
until 
the
expiration of the term of the lease, he may, within
a reasonable time after the expiration of the term,
remove such building or improvement from the
premises. If, before a sale, the holder of the lien
has made any payments of rent, or other pecuniary
compensation to the lessor, which ought to have been
paid by the lessee, he shall be reimbursed for such
payments from the proceeds of the sale.
"(b) When a lien attaches under subsection (a),
the lessor, at any time before a sale of the
property, shall have a right to discharge the same,
by paying to the holder the amount secured thereby,
including costs and all moneys he may have paid to
the lessor to prevent a forfeiture of the lease,
and, after a sale, he shall have the right to
prevent the removal of the building or improvement
from the premises by paying to the purchaser the
value of such building or improvement; and upon such
payment, either to the holder of the lien or to the
purchaser, such building or improvement shall become
the property of the lessor."
(Emphasis added.)
It is clear that HoPo was aware that some construction on
the building would be required to make the building suitable
1091700; 1091790
We need not resolve the factual dispute regarding whether
5
Stratford had also breached the terms of its lease regarding
its monetary obligations to HoPo at the time the materials
were supplied by Matador. 
18
for Stratford's needs.  The undisputed evidence indicated that
Stratford provided a "floor plan" of its intended additions to
the office-space portion of the building.  However, the
evidence is equally undisputed that many terms of the lease
agreement, 
e.g., 
requiring 
plans 
bearing 
a 
licensed
architect's or engineer's stamp, proof of licenses and
insurance from the contractors performing the work, and
payment by Stratford for the materials and construction in
cash or the equivalent to avoid any liens, were not
fulfilled.   Thus, because Stratford violated the terms of its
5
lease in the manner in which it obtained the additions to the
leased premises, we cannot hold that Matador's lien against
HoPo's property is proper.  Thus, the trial court erred in
upholding the lien in this regard.
Conclusion
We affirm the trial court's denial of Matador's unjust-
enrichment claim against HoPo in case no. 1091700.  We hold
that the trial court should have found the materialman's lien
filed by Matador pursuant to § 35-11-212, Ala. Code 1975,
unenforceable.  Therefore, in case no. 1091790 we reverse the
1091700; 1091790
19
trial court's order insofar as it enforces any portion of the
lien against HoPo's property or the improvements to that
property, and we remand the case for that court to enter an
order declaring that lien void.
1091700 -- AFFIRMED.
1091790 -- REVERSED AND REMANDED WITH DIRECTIONS.
Woodall, Bolin, and Shaw, JJ., concur.  
Murdock, J., concurs in the result.