Title: Corner Stone Funeral Chapel, Inc. v. MVMG, LLC

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: 12/5/14
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
____________________
1130604
____________________
Corner Stone Funeral Chapel, Inc.
v.
MVMG, LLC
Appeal from DeKalb Circuit Court
(CV-09-900101)
BRYAN, Justice.
Corner Stone Funeral Chapel, Inc. ("Corner Stone"),
appeals from a judgment ordering a receiver to transfer the
assets of a cemetery business to MVMG, LLC, a competitor of
Corner Stone's.  We affirm.
1130604
Mountain View Memory Gardens & Mausoleum, Inc. ("the
corporation"), owned a cemetery in Rainsville known as
Mountain View Memory Gardens and Mausoleum ("the cemetery"). 
The corporation sold "preneed contracts" to people 
planning 
to
be interred at the cemetery or planning to have loved ones
interred there.  A purchaser of a preneed contract pays for
funeral merchandise, funeral services, cemetery merchandise,
or cemetery services that will be provided upon a person's
death.  § 27–17A–2(57), Ala. Code 1975.  Preneed contracts in
Alabama are regulated by the Preneed Funeral and Cemetery Act,
§ 27-17A-1 et seq., Ala. Code 1975 ("the Preneed Act"), which
was enacted in 2002.  
Jeanette Mince was the sole owner and officer of the
corporation, and she apparently ran the corporation and the
cemetery.  Mince died in 2008, leaving the corporation to her
two daughters.  However, her daughters were not interested in
operating the corporation, and they expressed an intention to
disclaim any interest in it.  After Mince's death, the
corporation failed to renew its certificate permitting it to
sell preneed contracts under the Preneed Act.  In 2009, the
Alabama 
Department 
of 
Insurance 
("the 
Department")
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investigated 
the 
corporation's 
records 
and 
discovered 
that 
the
corporation was in poor shape.  The Department found that the
corporation had underfunded certain trust funds required 
to 
be
established by the Preneed Act, that the corporation was
insolvent, that the corporation had ceased doing 
business, and
that the cemetery had effectively been abandoned.  The
Department found that the continued control of the cemetery by
the corporation would be hazardous to preneed-contract
purchasers and beneficiaries in particular and to the people
of Alabama in general.
Based on the Department's findings, Jim Ridling, in his
official capacity as the commissioner of the 
Department, 
filed
a complaint against the corporation, seeking preliminary and
permanent injunctions.  Relying on provisions in the Preneed
Act, Ridling asked the trial court to enjoin the corporation
from conducting business or disposing of its assets.  At the
time of the trial, those assets consisted of the cemetery, a
mausoleum at the cemetery, some property next to the cemetery,
a building and storage structure at the cemetery, and less
than $26,000 in cash.  Ridling also asked the trial court to
appoint a receiver to take control of the corporation and 
3
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eventually to liquidate and dissolve the corporation, subject
to the trial court's supervision.   
1
In June 2009, the trial court entered a preliminary
injunction, essentially enjoining the corporation from
operating; the order also appointed Denise Azar, an employee
with the Department, as receiver for the corporation.  The
trial court directed Azar to take possession of the
corporation's assets and to attempt to liquidate those 
assets,
subject to the trial court's approval.  The trial court also
authorized Azar to enter into agreements for the management
and maintenance of the cemetery until the cemetery could be
sold or otherwise liquidated.  Shortly after she was appointed
receiver, Azar arranged for Rainsville Funeral Home, Inc., a
local funeral business, to mow, trim, and clean the cemetery;
to locate grave spaces; to open and close graves for burials
at the cemetery; and to place markers and monuments during the
Ridling acted under § 27-17A-17(b), Ala. Code 1975, a
1
part of the Preneed Act.  That section provides: 
"The commissioner may apply for an order directing
the 
commissioner 
to 
liquidate 
a 
[preneed]
certificate holder ... when, in the commissioner's
opinion, the continued operation of the certificate
holder would be hazardous either to purchasers,
beneficiaries, or to the people of this state."
4
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receivership period.  Rainsville Funeral Home has performed
those services since sometime in 2009.
During the receivership period, the mausoleum located at
the cemetery continued to fall into disrepair.  The roof was
rotten and leaking, and parts of the mausoleum's interior had
been badly damaged by leaking water, including the ceiling,
flooring, and furniture. Vandals had broken into the 
mausoleum
and further damaged it.  Elsewhere in the cemetery, graves had
been driven over and there was some other evidence indicating
that the cemetery was in a generally run-down condition.  In
response, individuals owning plots and vaults in the cemetery
formed the MVMG Mausoleum Association ("the Association")
during the receivership period to preserve the cemetery.  The
Association collected donations from the community and, with
Azar's permission, made substantial repairs to the mausoleum. 
The Association eventually intervened in the underlying case. 
Azar unsuccessfully attempted to find a buyer for the
cemetery, and she eventually concluded that the cemetery was 
unmarketable.  Azar recommended that the cemetery and the
corporation's other assets be transferred to an entity that
would both operate the cemetery and honor, either in whole or
5
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in part, the corporation's approximately 1,155 outstanding
preneed contracts.  The extent of outstanding services and
merchandise purchased in those preneed contracts is unknown;
typically a preneed contract covers only a portion of the
services and merchandise available.  Two entities presented
proposals to Azar seeking the transfer of the assets, of which
the cemetery is the main asset: Corner Stone and MVMG, LLC
("the LLC"); both of those entities were allowed to intervene
below. 
The LLC was formed in 2011 by Keary Chandler, the owner
of Rainsville Funeral Home, which, as noted, provided
maintenance and services at the cemetery during the
receivership period.  At times, the trial court treated the
LLC as synonymous with Rainsville Funeral Home and Chandler,
which appears to be a useful observation for purposes of this
Court's review.  The differences between the two proposals was
fleshed out at trial and will be discussed in more detail
below.  One primary difference is that Corner Stone, unlike
the LLC, agreed to provide, at no extra cost, markers and
monuments that had already been purchased in outstanding
preneed contracts.  Azar recommended that the trial court
6
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accept Corner Stone's proposal.  Following an ore tenus trial
on the issue held in 2013, the trial court disagreed with Azar
and decided to accept the LLC's proposal.  Thus, the trial
court entered a permanent injunction that, among 
other 
things,
ordered Azar to transfer the corporation's assets to the LLC. 
The trial court's order did not completely dispose of the
case; the order noted that the trial court would schedule a
final hearing to resolve issues concerning any claims of
creditors against the corporation and any other pending
issues.  Corner Stone subsequently moved the trial court to
certify its order transferring the assets to the LLC as a
final judgment under Rule 54(b), Ala. R. Civ. P.  The trial
court certified the order as final under Rule 54(b), and
Corner Stone appealed.  
2
The parties disagree as to the proper standard of review. 
The trial court received ore tenus evidence at trial.  The LLC
Corner Stone filed an appellant's brief and reply brief,
2
and the LLC filed an appellee's brief.  Ridling filed a brief
ostensibly as an appellee, but that brief urges this Court to
reverse the trial court's judgment.  In substance, Ridling's
brief is an appellant's brief, but Ridling never filed a
notice of appeal, and Corner Stone's notice of appeal lists
only Corner Stone as an appellant.  Thus, in fact there
appears to be only one appellant (Corner Stone) and one
appellee (the LLC).
7
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argues that the ore tenus standard of review applies;
conversely, Corner Stone argues that the evidence before the
trial court was undisputed and that therefore our review is de
novo.  
The ore tenus standard applies.  Corner Stone's assertion
that the evidence is undisputed is contradicted by the record. 
As noted, one difference between the two proposals is that
Corner Stone, unlike the LLC, agreed to provide, at no extra
cost, markers and monuments (collectively "markers") that had
already been purchased in outstanding preneed contracts. 
William Dalton, Corner Stone's owner, estimated at trial that
assuming liability for the markers would cost Corner Stone
about $60,000.  However, Chandler, the owner of the LLC and of
Rainsville Funeral Home, estimated that providing the markers
would cost Corner Stone "more like $150,000."  Chandler also
questioned the economic feasibility of Corner Stone's
proposal; when asked about the LLC's proposal, Chandler
indicated that to "do otherwise," i.e., to provide the markers
as Corner Stone proposed, would be unwise and economically
unfeasible.  However, Dalton obviously did not think that
Corner Stone's proposal was unfeasible.  It is unclear how
8
1130604
many markers had already been paid for in the outstanding
preneed contracts.  Both Dalton and Chandler could only
estimate the total cost of the markers –– however many there
are –– and they disagreed on the economic feasibility of
providing the markers at no cost to the preneed-contract
holders.  Of course, evidence pertaining to the markers is
relevant in evaluating the two proposals.  The evidence
regarding the markers was disputed, thus defeating Corner
Stone's argument that the ore tenus standard does not apply
because, it says, the evidence is undisputed.  
"[A] judgment based on findings of fact based on [ore
tenus] testimony will be presumed correct and will not be
disturbed on appeal except for a plain and palpable error." 
Allstate Ins. Co. v. Skelton,  675 So. 2d 377, 379 (Ala.
1996).  Further, "[w]here the evidence is presented to the
trial court ore tenus, ... the trial court determines the
weight and credibility of the testimony."  Wheeler v.
Marvin's, Inc., 593 So. 2d 61, 63 (Ala. 1991).   
Further, in attempting to convince this Court to review
the judgment de novo, Corner Stone ignores the fact that the
trial court's decision involved a matter within its
9
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discretion.    At its heart, this appeal concerns the trial
3
court's handling of a receivership, which is an equitable
remedy.  "A receiver is an impartial officer of the court" who
is "appointed to collect and preserve property and at the
direction of the court to dispose of it and its proceeds." 
Ally Windsor Howell, Tilley's Alabama Equity § 31:1(a) (5th
ed. 2012). Generally, "[t]he court has the discretion in
receivership proceedings to do what is best for all
concerned."  65 Am. Jur. 2d Receivers § 135 (2011).  This
Court has stated that a trial court may order the sale of
properties possessed by its receiver "when, in the exercise of
judicial discretion, such sale is deemed to the best interest
of those concerned."  Darley v. Alabama Pub. Utils. Co., 236
Ala. 463, 465, 183 So. 447, 448 (1938).  Although this case
concerns the transfer of assets instead of a sale (the
cemetery was determined to be unmarketable), the same general
principle 
regarding 
receiverships 
applies: 
the 
trial 
court 
has
the discretion to do what is in the best interest of those
In its initial brief, Corner Stone mentions in the
3
"facts" section that it argued to the trial court that the
court had exceeded its discretion in transferring the assets
to the LLC.  That appears to be the only reference in Corner
Stone's briefs to the trial court's exercise of its
discretion.
10
1130604
concerned.  See also Seiple v. Mitchell, 239 Ala. 533, 535,
195 So. 865, 865 (1940) (stating, regarding the compensation
given to the receiver by the court, that that was a matter
"primarily within the sound discretion of the court having the
custody and control of the receivership, having regard to all
the relevant circumstances").  Here, those concerned with the
fate of the cemetery include not only the preneed-contract
holders, but also the general public, especially the local
community.  Note that § 27-17A-17(b), Ala. Code 1975, allows
the commissioner of the Department to seek liquidation of a
cemetery business when its continued operation would be
hazardous 
either 
to 
preneed-contract 
"purchasers 
[or]
beneficiaries, or to the people of this state."
In this case, the trial court was free to manage the
receivership within its discretion.  Our review of the trial
court's judgment is limited to determining whether the trial
court exceeded that discretion.  
"'A court exceeds its discretion when its ruling is
based on an erroneous conclusion of law or when it
has 
acted 
arbitrarily 
without 
employing
conscientious judgment, has exceeded the bounds of
reason in view of all circumstances, or has so far
ignored recognized principles of law or practice as
to cause substantial injustice.'" 
 
11
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Wright Therapy Equip., LLC v. Blue Cross & Blue Shield of
Alabama, 991 So. 2d 701, 705 (Ala. 2008) (quoting Edwards v.
Allied Home Mortg. Capital Corp., 962 So. 2d 194, 213 (Ala.
2007)). The discretion afforded the trial court is only
strengthened by the ore tenus presumption in this case.  Given
our deferential review, this is a straightforward appeal in
which the judgment is due to be affirmed.
Certainly there is evidence supporting both Corner
Stone's and the LLC's proposal.  For instance, on the Corner
Stone side, Azar (the receiver) concluded that Corner Stone
had the better proposal, and she recommended that the trial
court accept it over the LLC's proposal.  Azar based her
opinion on the fact that Corner Stone, unlike the LLC, agreed
to provide any markers that had already been purchased in
outstanding preneed contracts at no additional cost to the
preneed-contract holders.  Azar concluded that this fact made
Corner Stone's proposal a better deal for 
the 
preneed-contract
holders, and that settled the issue for her.  At trial Azar
testified that, besides the marker issue, there were no other
differences between the proposals.  However, the evidence
12
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indicates otherwise, and that fact may have undermined the
strength of Azar's opinion in the view of the trial court. 
Chandler highlighted other differences between the
proposals, one of which involves the endowment-care trust 
fund
and the use of remaining funds held by the corporation –– less
than $26,000.  The Preneed Act requires each cemetery business
to maintain an endowment-care trust fund to provide for the
endowment care of the cemetery it operates, i.e., the
maintenance and any repairs.  § 27-17A-47 and § 27-17A-2(27),
Ala. Code 1975.  Regarding the endowment-care trust fund, the
Preneed Act, at the relevant time, provided that "[t]he amount
of each bond shall be a minimum of ... $25,000."  § 27-17A-47
(as it read before a 2014 amendment).  Chandler testified
that, if the LLC were awarded the assets of the corporation,
the LLC would place $25,000 of the remaining funds immediately
into the endowment-care trust fund.  Conversely, Dalton
testified that, if Corner Stone were awarded the assets,
Corner Stone would place $8,971.52 of the remaining funds into
the endowment-care trust fund and then deposit a minimum of
$5,000 per year until the balance reached $25,000. 
13
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Chandler's plan to fully fund the endowment-care trust
fund immediately was cited as a factor weighing in the LLC's
favor by Janice Gilbert, one of the Association members who
testified at trial.  Gilbert holds a preneed contract, and her
late husband is buried in the cemetery.  Gilbert testified
that she wants Chandler and the LLC to take control of the
cemetery.  She testified that Chandler had taken care of her
husband's funeral; that she trusted Chandler's family
(Rainsville Funeral Home is family-run); and that Rainsville 
Funeral Home is more conveniently located than Corner Stone's
funeral home, which is located in Ider.
Gilbert and others discussed the need for financial
stability in the future operation of the cemetery.  Gilbert
noted that Mince, the corporation's previous owner, had
experienced financial difficulties and had had trouble
providing markers that had already been purchased in preneed
contracts.  Regarding her own experiences, Gilbert testified
that she could not get the marker for her late husband's grave
site that they had purchased in a preneed contract and that
she  eventually had to buy a cheaper one instead.  Based on
Mince's track record, Gilbert was doubtful that Corner Stone
14
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would be able to absorb the cost of providing the markers
purchased in the outstanding preneed contracts.  As noted,
Chandler opined that Corner Stone's plan to provide the
markers at no cost to the preneed-contract holders was not
economically feasible.  The trial court was free to find
Chandler's testimony more credible than Dalton's on this
issue.  Deborah Thomas, the president of the Association,
testified about the substantial repairs the Association made
to the mausoleum after the corporation became insolvent and
the mausoleum was allowed to fall into disrepair.  She said
that, before the Association made the repairs, the condition
of the mausoleum had become an embarrassment to the community. 
See, e.g., Editorial, "Fixing a Disgrace," Times-Journal (Ft.
Payne), June 5, 2013 (describing the situation at the cemetery
as a "disgrace" and an "embarrassing problem"). Both she and
Hubert Tumlin, the treasurer of the Association, testified
that they did not want to go through such an ordeal again. 
Concern in the community about future financial stability for
the cemetery was a key issue expressed at trial; the trial
court, in evaluating this concern, was free to place more
15
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weight on evidence, such as Chandler's testimony, questioning
the economic feasibility of Corner Stone's proposal.
Other evidence supports the trial court's decision as
well.  At the time of the trial, Chandler had approximately 17
years' experience operating the cemetery in Rainsville and
approximately 34 years' experience in the funeral-home
business.  Dalton, although quite experienced, seems to have
less experience.  At trial, he testified that Corner Stone 
acquired its first cemetery about 4 or 5 years ago and had
since acquired 2 more cemeteries; he also stated that he had
served as a trustee and taken care of a couple of private
cemeteries for the last 10 to 12 years.  Although Dalton did
not state how long he had been in the funeral-home business,
he did state that Corner Stone's funeral-home business had
existed for about 15 years.  Chandler noted that his funeral
home is located closer than is Corner Stone's funeral home to
the cemetery (both Chandler's funeral home and the cemetery
are in Rainsville).  Chandler already has experience working
at the cemetery.  Pursuant to the agreement with Azar, during
the receivership period, which began in 2009, Chandler's
funeral home has been opening and closing graves and
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maintaining the cemetery grounds.  Chandler testified that he
plans to have someone live in the house at the cemetery,
which, he said, would deter vandalism (which has been a
problem) and make maintaining the cemetery easier.  Corner
Stone did not make a similar offer.  Chandler's experience in
the community, the location of his funeral home, his recent
dealings at the cemetery, and his plan to have someone live at
the cemetery are factors supporting the trial court's
decision.  Although the LLC did not offer as much as Corner
Stone in providing the markers already purchased in
outstanding preneed contracts, Chandler did testify that the
LLC would provide markers to preneed-contract holders at
wholesale cost, diminishing the strength of the major selling
point for Corner Stone.  
We cannot say that the trial court exceeded its
discretion in ordering the transfer of the corporation's
assets to the LLC.  Thus, we affirm.
AFFIRMED.
Moore, C.J., and Parker, Shaw, Main, and Wise, JJ.,
concur.
Murdock, J., concurs specially.
Stuart and Bolin, JJ., dissent.
17
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MURDOCK, Justice (concurring specially).
I agree with the main opinion.  I write separately to
take further note of certain aspects of the evidence and the
issues in this case.  
As the main opinion observes, the asserted superiority of
the offer of Corner Stone Funeral Chapel, Inc. ("Corner
Stone"), was based on Corner Stone's plan to absorb the cost
of all grave markers already purchased by holders of
outstanding preneed contracts.  This plan was in turn based on
the ore tenus testimony of Corner Stone's owner, William
Dalton -- indeed, his opinion testimony -- that included an
"estimate" by him that only 30% of the preneed contracts
Corner Stone would assume as part of the assets of Mountain
View Gardens & Mausoleum, Inc., would include grave markers.
On the basis of this opinion and estimate, Dalton's testimony
was that Corner Stone could afford to provide the markers at
a cost of $60,000. 
First, the trial court was free to observe Dalton in his
ore tenus testimony and to find him not to be a credible
witness.  On this basis alone, I do not believe that we can
consider the evidence supporting Corner Stone's offer to be
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"undisputed." The trial court thus could have found Corner
Stone's plan to pay for all markers to be unreliable, and, as
an appellate court, we are not in a position to second-guess
the trial court's assessment of Dalton's testimony in this
regard.  
Aside from the possible credibility or weight concerns
the trial court might have applied to Dalton's testimony, the
main opinion notes that his testimony was directly disputed by
other ore tenus testimony.  In addition to the evidence noted
in the main opinion, Keary Chandler, the owner of Rainsville
Funeral Home and of MVMG, LLC ("the LLC"), testified that the
number of markers that might have to be paid for was unknown
and variable.  In fact, Chandler estimated that the cost of
the markers might be $150,000, as opposed to the $60,000
Dalton estimated.  The trial court could have found the LLC's
approach to the issue of the markers, and, by implication, the
management of the contracts in general, to be more fiscally
sound, and Corner Stone's proposed approach not to be
credible.  Janice Gilbert, a member of the MVMG Mausoleum
Association, 
also 
questioned 
whether 
Corner 
Stone 
could 
afford
to provide the markers it was promising to provide (suggesting
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that the cost of the markers might have been what led the
prior owner into insolvency in the first place).  
Given the ore tenus standard of review applicable in this
case, this Court can overturn the trial court's decision as to
which company would better serve the interests of the preneed-
contract holders in the long run only if it can determine as
a matter of law that the seemingly more favorable proposal by
Corner Stone was fiscally sound and based on reliable
estimates.  The testimony in favor of Corner Stone as to these
questions was received by the trial court ore tenus and, thus,
was subject to credibility and weight determinations by the
judge and also was disputed by other ore tenus testimony.  I
therefore believe that we must affirm the trial court's
judgment as to which company was likely to provide more
beneficial and dependable service to the preneed-contract
holders.
20
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STUART, Justice (dissenting).
The majority opinion affirms the judgment of the DeKalb
Circuit Court declaring Mountain View Memory Gardens &
Mausoleum, Inc. ("the corporation"), to be insolvent and
ordering its liquidation and the transfer of its assets to
MVMG, LLC ("the LLC"), subject to certain conditions set forth
in the trial court's order.  However, because the corporation
was certified by the Alabama Department of Insurance ("the
Department") as a seller of preneed contracts pursuant to the
Alabama Preneed Funeral and Cemetery Act, § 27-17A-1 et seq.,
Ala. Code 1975 ("the Preneed Act"), the trial court, in
liquidating the corporation, was required to maximize
financial value for those individuals holding outstanding
preneed contracts.  It is undisputed that Corner Stone Funeral
Chapel, Inc. ("Corner Stone"), had submitted an offer to take
over the operations of the corporation that would provide more
financial value to those preneed-contract holders than the
offer submitted by the LLC; accordingly, the trial court
exceeded its discretion in transferring the corporation's
assets to the LLC.  I must therefore dissent.
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In deciding whether the trial court should have accepted
the proposal of the LLC or the proposal of Corner Stone, it
must first be determined what criteria the trial court should
have employed in evaluating the competing proposals.  The LLC
premises its argument on the assumption that the superior
proposal is the proposal "better calculated and more likely to
serve the interests of the stakeholders in [the cemetery]." 
The LLC's brief, p. 9.  Accordingly, it summarizes its
argument as follows:
"The evidence showed that Corner Stone's offer
provided less security and certainty for the future
maintenance of the Mountain View [Memory Gardens]
cemetery.  The evidence further showed that Corner
Stone's offer to provide grave markers at no further
cost to holders of existing preneed contracts
calling for the same was ill conceived and not
economically feasible.  There was introduced more
than sufficient evidence from which the trial court
rightly concluded that [the] LLC's offer was much
less likely than Corner Stone's to result in the
Mountain View [Memory Gardens] cemetery operation
again falling into economic ruin, disrepair, and
receivership, thus better serving the paramount
interest of the cemetery stakeholders."
The LLC's brief, pp. 9-10.  Thus, it is apparent that the LLC
considers the "cemetery stakeholders" to be a broad group of
people, including those with friends and family already
interred or buried there and those people with plans to have
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themselves –– or friends or family –– buried or interred there
at some point in the future, regardless of whether that burial
or internment is the subject of an existing preneed contract. 
The LLC argues that these stakeholders will be better served
under its proposal because that proposal, the LLC claims, is
better for the long-term economic health and viability of the
cemetery.
In 
contrast, 
Corner 
Stone 
and 
Jim 
Ridling, 
the
commissioner of the Department, argue that the superior
proposal is the proposal that better serves a much more narrow
class of stakeholders –– those who have purchased or who stand
to benefit from outstanding preneed contracts sold by the
corporation before it became insolvent.   They argue that the
4
legislature's purpose in enacting the Preneed Act is evident
from the language of the Act –– to provide a mechanism for
protecting the investments of those Alabamians who choose to
purchase 
preneed 
contracts. 
 
The 
various 
statutes 
constituting
the Preneed Act, such as § 27-17A-10, Ala. Code 1975
(requiring sellers of preneed contracts to be certified), §
Commissioner Ridling filed a brief on appeal; however,
4
he is not named as an appellee on the notice of appeal.  See
supra note 2.
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27-17A-13, Ala. Code 1975 (requiring such sellers to place a
portion of the funds received from the sale of a preneed
contract into trust), and § 27-17A-15, Ala. Code 1975
(authorizing the Department to examine the business of such
sellers as often as is deemed necessary), Corner Stone and
Commissioner Ridling argue, are all designed with that purpose
in mind.  I agree.
In a liquidation proceeding conducted pursuant to the
Preneed Act, it is not the duty of a court, when considering
multiple proposals to take over the operations of an insolvent
seller of preneed contracts, to decide simply which proposal
is better for a community or which proposal will result in a
"better" run cemetery according to some undefined criteria. 
Rather, it is the duty of the court in such a situation to
take the action that will better achieve the purpose of the
Preneed Act –– to protect the financial interests of holders
and beneficiaries of preneed contracts.  That this is the
purpose of the Preneed Act is manifested by the fact that it
is the Department that supervises the liquidation of any
certified seller of preneed contracts and that, pursuant to §
27-17A-17, Ala. Code 1975, it does so subject to § 27-32-1 et
24
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seq., 
Ala. 
Code 
1975, 
which 
chapter 
governs 
the
rehabilitation, reorganization, conservation, 
and liquidation
of an insolvent insurance business.  Sections 
27-32-37 
through
27-32-41 of that chapter establish that, in the liquidation
process, policyholders are preferred creditors and receive
first priority during liquidation, subject to limited
exceptions not applicable here.  In the context of this case
–– the liquidation of a certified seller of preneed contracts
–– those individuals who have purchased preneed contracts are
analogous to insurance policyholders inasmuch as they have
purchased a contract, or "policy," providing for a future
benefit.  Accordingly, they are given preferred status, and
the object of the liquidation process is to make them whole
above any other interested party or claimant.  For that
reason, a trial court overseeing the liquidation process of a
certified seller of preneed contracts should make its
decisions based on how to best preserve value for those
holders of preneed contracts.  Protecting their investments
is, after all, the reason the Preneed Act was enacted, and the
relevant statutes should be "liberally construed" to achieve
that goal.  § 27-32-2, Ala. Code 1975.
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However, although the relevant statutes are unambiguous,
the majority opinion instead adopts the viewpoint that the
trial court is empowered to simply decide what "is in the best
interest of those concerned" and considers all "those
concerned" to include "the general public [and] 
especially 
the
local community." ___ So. 3d at ___.  Although this broad
class of people no doubt includes citizens who are "concerned"
about the cemetery in the general sense that they take pride
in the success and appearance of their community, their level
of "concern" is insufficient from a legal perspective –– the
Preneed Act, read in conjunction with the statutes governing
insolvent insurance businesses, clearly indicates that the
only "concern" that matters in a liquidation proceeding of a
corporation such as the one here is the financial concern of
those who hold preneed contracts.  The majority opinion
supports its rationale that the trial court was authorized to
consider community sentiment in making its decision by citing
§ 27-17A-17(b), Ala. Code 1975, which allows the commissioner
of the Department to seek liquidation of a certified seller of
preneed contracts when the seller's continued operation would
be hazardous to purchasers or beneficiaries of preneed
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contracts, "or to the people of this state."  However, § 27-
17A-17(b) only sets forth the circumstances in which
liquidation is authorized; it does not bear on how that
liquidation should be accomplished or what factors should
govern the liquidation process.  Section 27-17A-17(a), Ala.
Code 1975, does address that issue and provides that such a
liquidation should be conducted under the supervision of the
commissioner of the Department "who shall have all powers with
respect thereto granted to the commissioner under Chapter 32
with respect to the liquidation of insurance companies."  As
already explained supra, it is evident from § 27-32-1 et seq.
that policyholders, or preneed-contract holders in this
context, are a preferred class, and a trial court should make
its decisions during the liquidation process based on how to
best preserve value for that preferred class –– not based on
the desires of individuals who have no legally recognizable
interest in the proceedings.
In this case, it is undisputed that the proposal put
forth by Corner Stone promises more value to those holding
outstanding preneed contracts sold by the corporation 
than the
proposal submitted by the LLC.  Denise Azar, the Department
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employee responsible for the cemetery while it was under the
Department's control, stated as much in her testimony and
stated that, for that reason, the Department endorsed Corner
Stone's proposal.  Corner Stone's owner, William Dalton, also
testified 
that 
Corner 
Stone's 
proposal 
was 
worth 
approximately
$60,000 more to those holders of preneed contracts than the
LLC's proposal.  Even the LLC's sole member, Keary Chandler,
when asked, willingly agreed that Corner Stone's proposal
offered more benefits, and he in fact estimated those benefits
to be worth far more than $60,000:
"Q.
Well, what would be your estimate that it would
cost him –– or cost you had you included that
in your offer –– to furnish these markers?
"A.
I'd say more like $150,000.
"Q.
Okay.  So, in your judgment then, the offer
that he's made would benefit the contract
holders –– assuming he carries those contracts
out and does [what] he says he'll do –– would
be valued at $150,000 more than what yours
would be?
"A.
Yes."
The greater value 
of 
Corner Stone's proposal being established
without dispute, it was due to be accepted.  Any community
sentiment in favor of keeping Mountain View Memory Gardens
under the more "local" control of Rainsville Funeral Home,
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which Chandler owns and operates, or any belief that
Rainsville Funeral Home was in some way entitled to Mountain
View Memory Gardens because it has been maintaining it under
contract with the receiver since this process began is
irrelevant.   The object of the applicable statutes is to make
5
sure that those who purchased preneed contracts from the
corporation receive what they purchased, and it is undisputed
that Corner Stone's proposal is preferable in that regard.  
We further note that although the record contains much
speculation and insinuation that it will be impossible for
Corner Stone to actually deliver what it promises in its
proposal, there is no credible evidence that would indicate
that.  See Heisz v. Galt Indus., Inc., 93 So. 3d 918, 931
(Ala. 2012) (stating that "speculation is an insufficient
basis upon which to support a judgment").  The competent
It bears noting that the interests of those in the
5
Rainsville community desiring to keep Mountain View Memory
Gardens under local management are not necessarily aligned
with those holding preneed contracts purchased from the
corporation.  That is, those Rainsville residents with future
cemetery business might prefer to take care of it in
Rainsville rather 
than make the approximately 17-mile drive to
Corner Stone's offices in Ider; however, the holder of a
preneed contract who stands to save $600 or more that he or
she would otherwise have to spend on a grave marker that had
already been paid for once would presumably be less hesitant
to make that drive.  
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evidence in the record indicates that Corner Stone has
successfully operated a funeral home since 1998 and has since
grown its business to include three cemeteries.  Moreover,
Corner Stone has previously purchased a cemetery out of a
Department-supervised 
receivership 
in 
what 
Dalton 
described 
as
a "[v]ery similar situation," and its performance with regard
to that cemetery has apparently been of sufficient quality
that the Department, which examines, audits, and receives
annual reports from certificate holders, is recommending
Corner Stone to take over another insolvent cemetery and its
preneed contracts.  
In fact, the trial court itself recognized the absence of
any evidence that would indicate Corner Stone could not
provide the benefits promised in its proposal, stating that
"no evidence is presented that Mr. Dalton, himself, couldn't
follow through.  Now Ms. Mince couldn't follow through,
clearly, or we wouldn't be here.  But what evidence is there
that Mr. Dalton can't follow through?"  Once the speculation
is properly discarded, there is none.  Indeed, it appears from
the record that Corner Stone could have the financial assets
of Wal-Mart Stores, Inc., and General Motors Company combined
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–– the majority has not and cannot point to any evidence in
the record that would indicate otherwise.  The only testimony
questioning Corner Stone's financial capability comes from a
competitor and an individual who admittedly favors that
competitor; however, that testimony has no factual basis and
is accordingly nothing more than speculation.  Ex parte Nathan
Rodgers Constr., Inc., 1 So. 3d 46, 52 (Ala. 2008). 
Unfortunately, the majority has now elevated that speculation
to the realm of competent evidence, notwithstanding this
Court's longstanding precedent indicating that speculation is
not evidence that can support a judgment.  See, e.g., Heisz,
93 So. 3d at 931 (stating that "speculation is an insufficient
basis upon which to support a judgment").  
Moreover, the fact that we are reviewing the trial
court's judgment under the ore tenus rule, as opposed to
reviewing it de novo, should have no effect on the ultimate
outcome.  A judgment entered based on ore tenus testimony must
still be supported by credible evidence, Joseph v. MTS Inv.
Corp., 964 So. 2d 642, 646 (Ala. 2006), and statements that
reflect speculation and lack of personal knowledge do not
constitute credible evidence.  Ex parte Professional Bus.
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Owners Ass'n Workers' Comp. Fund, 867 So. 2d 1099, 1101-1102
(Ala. 2003).  There is no evidence in the record indicating
that the proposal made by the LLC will provide more financial
benefits to the remaining preneed-contract holders than the
proposal made by Corner Stone, nor is there any evidence –– as
opposed to speculation –– in the record indicating that Corner
Stone lacks the capability to fulfill the terms of its
proposal.  To the contrary, it is undisputed that the proposal
made by Corner Stone offers greater value to preneed-contract
holders, and those parties with some actual knowledge of
Corner Stone's finances –– Dalton and the Department –– are
satisfied that Corner Stone has the wherewithal to fulfill the
terms of its proposal.  It is accordingly clear that the goals
and intents of the Preneed Act and relevant liquidation
statutes will be more fully realized by the acceptance of the
Corner Stone proposal.  By affirming the judgment of the trial
court in favor of the LLC, this Court is not deferring to the
trial court's evaluation of the witnesses and evidence but is
instead yielding to speculation.  Beck v. Beck, 142 So. 3d
685, 695 (Ala. Civ. App. 2013).  Accordingly, I must dissent. 
I would reverse the trial court's order and remand the cause
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for the entry of a liquidation order directing the Department
to transfer the corporation's assets to Corner Stone.
Bolin, J., concurs.
33