Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_08-cv-00731/USCOURTS-alsd-1_08-cv-00731-3/pdf.json

Parties Involved:
CS Assets, LLC
Defendant
First Financial Bank
Petitioner
West Beach, LLC
Movant

Document Text:

1 This action was originally filed in the Circuit Court of Baldwin County, Alabama;

however, defendant properly removed it to federal court on December 22, 2008. Subject matter

jurisdiction rests on 28 U.S.C. § 1332, inasmuch as the parties are of diverse citizenship and the

amount in controversy greatly exceeds the jurisdictional threshold of $75,000.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

FIRST FINANCIAL BANK, )

 ) PUBLISH

Plaintiff, )

 )

v. ) CIVIL ACTION 08-0731-WS-M

 )

CS ASSETS, LLC, )

 )

Defendant. )

ORDER

This matter comes before the Court on the Motion for Summary Judgment of Defendant

(doc. 46) and on the Motion for Summary Judgment by Plaintiff (doc. 51). Both motions have

been extensively briefed and are now ripe for disposition.

I. Nature of the Case.

This dispute involves two lenders who do not see eye to eye as to the redemption of real

property under Alabama law.1 Plaintiff, First Financial Bank (“First Financial”), and defendant,

CS Assets, LLC (“CS Assets”), were both mortgagees for the same five parcels of property

located on Little Lagoon in Gulf Shores, Alabama. When the mortgagor (which is not a party

hereto) defaulted on its loan obligations, CS Assets (the senior mortgagee) foreclosed on those

five parcels, as well as two others. Thereafter, First Financial (a junior mortgagee) invoked the

statutory redemption mechanism prescribed by Alabama Code §§ 6-5-247, et seq. There is no

doubt that First Financial has the right to redeem those five parcels in which it possesses an

interest. Nonetheless, the parties emphatically disagree as to the proper redemption price. 

Having proven unwilling or unable to find common ground on virtually any component of the

redemption price calculations, the parties now call upon the Court to blaze a trail across a

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 1 of 42
2 The Court is mindful of its obligation under Rule 56 to construe the record,

including all evidence and factual inferences, in the light most favorable to the nonmoving party. 

See Skop v. City of Atlanta, GA, 485 F.3d 1130, 1136 (11th Cir. 2007). Thus, with respect to each

motion for summary judgment, the nonmovant’s evidence is taken as true and all justifiable

inferences are drawn in its favor.

3 Parcels A through E were on the north side of West Beach Boulevard, fronting on

Little Lagoon, and were intended to provide the “pad” for the condominium project, while Parcel

F was on the south side of West Beach Boulevard, fronting on the Gulf of Mexico, and was

intended to provide condo owners with private access to the beach and the Gulf. The record

shows that Parcel F is an 0.5 acre lot found at 1601 West Beach Blvd., Gulf Shores, Alabama. 

(Hollon Aff., ¶ 3.)

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foreboding landscape of esoteric legal principles, hoary Alabama precedents, and heretoforeunexplored statutory language to fix the redemption price, all against the backdrop of a complex,

multifaceted commercial transaction. Their cross-motions for summary judgment (with crisscrossing and overlapping legal issues, and arguments that seamlessly bounce back and forth from

the briefing on one motion to that on the other, such that their briefs read like a series of six

briefs on a single motion rather than three briefs on each of two distinct motions) have presented

these issues for resolution at this time.

II. Background.

A. Factual History.2

The facts concerning the underlying loan transactions and foreclosure are critical to

certain of the issues presented on summary judgment. Those facts are somewhat complicated,

but largely uncontested.

Our story begins innocuously enough in November 2004, when a non-party developer

called West Beach, LLC (“West Beach”), sought to build a 90-unit condominium project

fronting on Little Lagoon in Gulf Shores, Alabama, with beach access to the Gulf of Mexico. 

That month, West Beach borrowed $2,000,000 from non-party Heritage Bank (“Heritage”), and

granted Heritage a mortgage on six parcels of property (labeled Parcels A, B, C, D, E and F). 

(Province Dep., at Exhs. 5 & 6.)3 Five months later, in April 2005, West Beach borrowed

$1,000,000 from First Financial and, as security, granted First Financial a mortgage on Parcels

A, B, C, D and E (but, significantly, not Parcel F). (Id. at Exh. 7.)

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4 Although the Loan Agreement and Renewal Promissory Note are both dated April

30, 2007, there is a small discrepancy between the principal amounts identified in those

documents. The Loan Agreement provides that “the principal amount of the Renewal Note shall

be $2,460,777.00.” (Mosher Dep., Exh. 18 at 2.) But the itemized computations in the Loan

Agreement provide for a total principal amount of $2,510,989.00. (Id.) And of course the

Renewal Promissory Note itself recited a principal balance of $2,515,722. (Doc. 48, Exh. H.) 

The parties have neither raised nor explained these discrepancies, and the Court will not

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Unfortunately, West Beach’s business fortunes deteriorated, such that by early 2007 it

was in default of its obligations under both the Heritage loan and the First Financial loan. 

(Freeman Aff., ¶¶ 2, 3; doc. 48, Exh. D.) First Financial directed its counsel to foreclose on the

mortgage on May 31, 2007 unless satisfactory arrangements were reached in the interim. 

(Freeman Aff, ¶ 4.) Meanwhile, Heritage’s successor in interest sold the Heritage loan to CS

Assets on April 12, 2007, and assigned the associated promissory note and mortgage to CS

Assets on April 19, 2007. (Doc. 48, Exhs. E - G.) The Loan Purchase and Sale Agreement

reflects that as of April 16, 2007, the amounts owed by West Beach under the Heritage loan

consisted of the following: “$2,000,000 principal, $105,875 accrued interest, $4,500 appraisal

fee, and approximately $20,000 attorneys fees.” (Doc. 48, Exh. E, at ¶ 6.D.)

In lieu of foreclosing on the Heritage mortgage based on West Beach’s default, CS

Assets extended and modified the loan. On April 30, 2007, West Beach and CS Assets entered

into a Renewal Promissory Note and an Amendment to Mortgage and Security Agreement. 

(Doc. 48, Exhs. H, I.) The Renewal Promissory Note provided that West Beach owed the

principal sum of $2,515,722, with interest accruing at the rate of 12% per annum until paid in

full. (Doc. 48, Exh. H.) A separate Loan Agreement executed by CS Assets and West Beach on

April 30, 2007, explained how the new principal amount had been calculated, as compared to the

original Heritage loan, which had a principal sum of $2,000,000. In particular, the Loan

Agreement reflects the following: (1) as of April 30, 2007, West Beach’s indebtedness under the

Heritage loan was in the “total amount of $2,300,000.00, which amount includes late charges,

fees, expenses and a default rate of interest” (Mosher Dep., Exh. 18, at 1); and (2) the remaining

principal consisted of an interest reserve of $150,943, a “renewal fee” of $75,472, lender’s fees

and expenses of $27,488, and taxes and recording costs of $11,819, less $50,000 in cash to be

paid at closing (id. at 2).4

 In the Amendment to Mortgage and Security Agreement executed in

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 3 of 42
investigate them sua sponte.

5 In fact, the parties disagree as to whether they ever had an agreement on the

priority issue. Review of the correspondence between CS Assets and First Financial, however,

confirms that a meeting of the minds was established, notwithstanding the lack of a separate

written contract. To be sure, the parties’ email exchanges in late May 2007 initially reflect

profound divergence in views as to priority, with First Financial taking the position that the CS

Assets modification of West Beach’s indebtedness from $2,000,000 to $2,515,722 would be

subordinate to First Financial’s interest for any amount over $2,000,000, and CS Assets

responding that the accumulated interest, late charges and fees on the original Heritage loan were

such that the CS Assets loan had priority over the First Financial loan up to the amount of

approximately $2,300,000. (Mosher Dep., Exhs. 11 & 12.) However, a series of emails dated

May 31, 2007 demonstrates that the parties had forged an agreement. In particular, First

Financial “acknowledge[d] that the original $2,000,000.00 has been increased by interest, late

charges and attorney’s fees due on the original $2,000,000.00, and that the original

$2,000,000.00 will continue to accrue interest, possibly late charges and attorney’s fees, all of

which would have priority and be secured.” (Id., Exh. 13.) A short time later, CS Assets replied

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connection with the loan modification, West Beach granted CS Assets a mortgage on a seventh

parcel of land, which has been dubbed in these proceedings the “Metes and Bounds Parcel.” 

That parcel is also located north of West Beach Boulevard and is adjacent to some or all of

Parcels A through E. (Doc. 48, Exh. I.)

While all of this was taking place with the Heritage mortgage, First Financial was not

standing idly by. Rather, First Financial and West Beach negotiated an Accommodation

Agreement in Lieu of Foreclosure, which was finalized on May 30, 2007. (Doc. 48, Exh. J.) 

This Agreement extended the maturity date of the First Financial loan through September 30,

2007, and required West Beach to pay interest, fees, late charges, and an interest reserve in a

total amount exceeding $145,000. In that Agreement, West Beach and First Financial agreed

that the modification executed between CS Assets and West Beach for the Heritage loan “is

subordinate to the mortgage of First Financial ... for any amount in excess of $2,308,119.00, it

being understood that additional amounts may accrue pursuant to the original $2,000,000.00

loan.” (Id., ¶ 3.a.) Of course, CS Assets was not a signatory to the Accommodation Agreement

between West Beach and First Financial, and no formal agreement was executed by First

Financial and CS Assets to pin down the relative priority of the various items rolled into the

original Heritage loan by virtue of the CS Assets / West Beach loan modification.5

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 4 of 42
in concurrence, observing that (1) “the first mortgage cannot exceed the principal, plus all other

amounts properly chargeable under the original note as renewed and extended,” (2) “First

Financial agrees that this amount is the $2,308,119,” (3) “[i]nterest will continue to accrue” on

that amount, and (4) “[t]he additional charges contained in the renewal note that do not arise

under the note would be subordinate to the First Financial mortgage.” (Id., Exh. 14.) First

Financial did not write back to refute any of these points. Given the clarity of the parties’

written communications as to priority, and the lack of any contemporaneous materials to the

contrary, there are no genuine issues of material fact as to whether First Financial and CS Assets

reached agreement as to the priority issues, nor are there fact questions as to the terms of that

agreement.

6 The record establishes that CS Assets obtained the seven West Beach parcels at a

substantial discount from their then-market value. In setting its bid, CS Assets worked from the

assumption that those parcels were valued in toto at $2.4 million as of March 1, 2007. (Mosher

Dep., Exh. 5, at ¶ 12.) As we shall see, however, appraisals as of the date of foreclosure fixed

the value of the seven parcels much higher.

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Unfortunately for all concerned, West Beach proved unable to satisfy even these

reworked financial obligations, and ultimately defaulted on both loans. Pursuant to its position

as senior lender, CS Assets foreclosed on all seven West Beach parcels (including Parcels A

through E, as to which First Financial held a second mortgage, and Parcel F and the Metes and

Bounds Parcel, as to which First Financial held no interest) on November 30, 2007. (Doc. 49,

Exh. M, at ¶ 8.) At auction, the highest and best bid for those seven parcels was CS Assets’

credit bid of $1,600,000. (Doc. 48, Exh. K.)6

 That $1.6 million bid was offset from West

Beach’s total indebtedness to CS Assets, which CS Assets computed at that time as being

$2,682,977.20 (including interest and late charges). (Mosher Dep., Exh. 5, at ¶ 13.) Subtracting

the foreclosure bid from the balance owed yielded a resulting deficiency of $1,082,977.20, as of

November 30, 2007, plus reasonable attorney’s fees. (Id. at ¶¶ 13-14.)

Sometime later, First Financial timely elected to exercise its statutory right of redemption

under Alabama law. Although there were, by all accounts, extensive negotiations between the

parties that nearly produced a mutually acceptable redemption price, they were ultimately

unsuccessful. When the negotiations failed, all potential points of agreement of compromise fell

by the wayside, and this litigation followed.

B. Relevant Procedural History.

On or about November 7, 2008, First Financial filed its Complaint for Redemption of

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7 In connection with this filing, First Financial tendered the full disputed

redemption price by paying those funds into the registry of the Baldwin County Circuit Court. 

Subsequent to removal, those funds were transferred to the registry of this District Court, where

the balance is $3,207,995.65, plus interest accrued since the February 27, 2009 deposit date.

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Real Property against CS Assets in state court.7

 The Complaint specified that First Financial was

seeking to exercise its statutory right of redemption pursuant to Alabama Code §§ 6-5-247 et

seq., as to all seven West Beach parcels (i.e., Parcels A through F, and the Metes and Bounds

Parcel). Following removal to federal court, CS Assets filed a Partial Motion to Dismiss (doc.

5), challenging First Financial’s ability to redeem Parcel F and the Metes and Bounds Parcel, as

to neither of which First Financial professed to be a mortgagee or to hold any legal or equitable

interest. This Court granted the Partial Motion to Dismiss, and dismissed First Financial’s

redemption claims as to Parcel F and the Metes and Bounds Parcel, pursuant to the following

reasoning:

“Given the common-sense notion under Alabama law that ... one cannot redeem

property in which one has no interest, and given that the purposes of the

redemption device would be in no way served by allowing redemption in that

scenario, First Financial has not stated a claim on which relief can be granted

insofar as it seeks redemption of those two parcels. Accordingly, the Motion to

Dismiss (doc. 5) is granted, and plaintiff's claims for redemption of Parcel F and

the Metes and Bounds Parcel are dismissed; provided, however, that by virtue of

having pursued this Motion, CS Assets has waived any right it may have had to

object to this action as an improper piecemeal redemption. In so ruling, the Court

expressly invokes its equitable powers to adjust the rights and equities of the

parties, as conferred by Alabama Code § 6-5-256.”

First Financial Bank v. CS Assets, LLC, 2009 WL 959562, *5 (S.D. Ala. Apr. 7, 2009).

As a result of this ruling, First Financial’s claims for redemption of Parcel F and the

Metes and Bounds Parcel were extinguished. CS Assets has never challenged First Financial’s

right to redeem the other five West Beach parcels. Accordingly, the only remaining question

animating this litigation is the proper redemption price for Parcels A through E. Both parties

have requested that this Court resolve the issue on summary judgment, with First Financial

touting a redemption price of $1,612,695, and CS Assets championing a competing figure of

$3,272,156.40, more than double that proposed by First Financial. The points of disagreement

between the parties embrace almost every conceivable component of the redemption price

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 6 of 42
8 Pleadings filed in the West Beach Action show that West Beach sought to

invalidate the foreclosure sale on a variety of grounds, including without limitation the

following: (1) CS Assets’ conduct amounted to wrongful foreclosure; (2) the $1.6 million

foreclosure price was so low as to shock the conscience, given that the property had been

appraised as high as $8.4 million; and (3) CS Assets breached its fiduciary duties to West Beach

by neither acting in good faith nor adopting all reasonable modes of proceeding in order to

render the sale most beneficial to West Beach. (Doc. 53, Exh. G.) The crux of West Beach’s

counterclaim was that it sought to have the November 2007 foreclosure sale set aside, and to

bring about a re-sale of the property.

9 Even as it recognizes that only $50,000 in reasonable attorney’s fees and

expenses were awarded in the West Beach Action, CS Assets presents evidence in this case that

it actually incurred $78,824.33 in attorney’s fees and expenses. (Doc. 49, Exh. M, at ¶¶ 10-11.)

10 The interest line item was computed at $393.37 per day, on the underlying debt of

$957,191.20, from November 30, 2007 through August 12, 2009. (Id.)

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calculation, with First Financial consistently taking the position that will minimize its financial

obligations to CS Assets, and CS Assets adopting the opposite stance. Nor surprisingly, law and

equity would put the redemption price somewhere between these extremes.

C. The Deficiency Litigation.

This internecine quarrel between First Financial and CS Assets has not taken place in a

vacuum. Contemporaneously with this lawsuit, CS Assets pursued a deficiency action against

West Beach in the U.S. District Court for the Northern District of Alabama, styled CS Assets,

LLC v. West Beach, LLC, et al., CV-07-PT-2254-S (the “West Beach Action”). In that lawsuit,

CS Assets sought a judgment for West Beach’s outstanding indebtedness on the Renewal

Promissory Note executed in April 2007, while West Beach counterclaimed in an attempt to void

the foreclosure sale. (Doc. 49, Exh. M, at ¶ 9.)8

 On August 12, 2009, Senior District Judge

Propst entered a Final Judgment in the West Beach Action granting CS Assets’ motion for

summary judgment, and awarding CS Assets the sum of $1,311,080.60. (Doc. 48, Exh. L.) The

Final Judgment explained that the judgment in CS Assets’ favor included reasonable attorney’s

fees and expenses in the amount of $50,000,9 a late charge penalty of $60,000 (as to which no

interest would be calculated), and $243,889.40 in interest.10 (Id.)

The record reflects that West Beach filed a Notice of Appeal from this Final Judgment on

September 24, 2009. (Doc. 53, Exh. F.) The appeal of the West Beach Action remains pending

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 7 of 42
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before the Eleventh Circuit Court of Appeals at this time.

III. Summary Judgment Standard.

Summary judgment should be granted only if “there is no genuine issue as to any

material fact and ... the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). 

The party seeking summary judgment bears “the initial burden to show the district court, by

reference to materials on file, that there are no genuine issues of material fact that should be

decided at trial.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Once the

moving party has satisfied its responsibility, the burden shifts to the nonmovant to show the

existence of a genuine issue of material fact. Id. “If the nonmoving party fails to make 'a

sufficient showing on an essential element of her case with respect to which she has the burden

of proof,' the moving party is entitled to summary judgment.” Id. (quoting Celotex Corp. v.

Catrett, 477 U.S. 317 (1986)) (footnote omitted). “In reviewing whether the nonmoving party

has met its burden, the court must stop short of weighing the evidence and making credibility

determinations of the truth of the matter. Instead, the evidence of the non-movant is to be

believed, and all justifiable inferences are to be drawn in his favor.” Tipton v. Bergrohr GMBHSiegen, 965 F.2d 994, 999 (11th Cir. 1992) (internal citations and quotations omitted). 

“Summary judgment is justified only for those cases devoid of any need for factual

determinations.” Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir. 1987)

(citation omitted).

“The applicable Rule 56 standard is not affected by the filing of cross-motions for

summary judgment.” Murray v. Holiday Isle, LLC, 620 F. Supp.2d 1302, 1307 (S.D. Ala. 2009)

(citations omitted); see also Godard v. Alabama Pilot, Inc., 485 F. Supp.2d 1284, 1291 (S.D.

Ala. 2007) (same). Indeed, the Eleventh Circuit has explained that “[c]ross-motions for

summary judgment will not, in themselves, warrant the court in granting summary judgment

unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely

disputed.” United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir. 1984) (citation omitted); see

also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983) (“the filing of cross

motions for summary judgment does not necessarily indicate that there is no dispute as to a

material fact, or have the effect of submitting the cause to a plenary determination on the

merits”). Nonetheless, “cross-motions may be probative of the absence of a factual dispute

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11 See also Costa and Head (Birmingham One), Ltd. v. National Bank of Commerce

of Birmingham, 569 So.2d 360, 362 (Ala. 1990) (“The right to redeem after a mortgage

foreclosure is a statutory right.”); Bank Independent v. Jenkins Builders, Inc., 564 So.2d 880,

881 (Ala. 1990) (“The right of redemption is statutory, and it must be exercised in the mode,

manner, and time provided by statute.”); In re McKinney, 174 B.R. 330, 334 (Bankr. S.D. Ala.

1994) (post-foreclosure, “under Alabama law, the only way to redeem the property is through a

cash payment ... under the right of statutory redemption”).

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where they reflect general agreement by the parties as to the dispositive legal theories and

material facts.” Murray, 620 F. Supp.2d at 1307 (citations omitted); see also Godard, 485 F.

Supp.2d at 1291.

IV. Analysis.

A. Structure of Alabama’s Redemption Statute.

At its core, “[r]edemption involves a buying back of the property.” Morgan Plan Co. v.

Bruce, 97 So.2d 805, 808 (Ala. 1957). “After real property is sold at a foreclosure sale to pay

the encumbrances on it, various parties may redeem that property from the purchaser by paying

the appropriate redemption price.” Southeast Enterprises, Inc. v. Byrd, 720 So.2d 873, 874 (Ala.

1998). There is a fundamental disagreement between First Financial and CS Assets as to the

“appropriate redemption price” in this case.

In Alabama, the right of redemption is purely a creature of statute. See, e.g., Federal

Home Loan Mortg. Corp. v. Bates, 644 So.2d 925, 927 (Ala. 1994) (“The right to redeem

property after foreclosure is conferred exclusively by statute.”).11 As a result, the parties’

quarrels concerning the redemption price must be settled by application of the redemption of real

estate provisions found at Title 6, Article 14A of the Code of Alabama. The issues joined on

summary judgment are expressly governed by Alabama Code §§ 6-5-247 et seq., which was

enacted in 1988. Therefore, the most logical starting place for the analysis lies in a review of the

statute itself.

The Eleventh Circuit has summarized Alabama’s redemption statute as follows:

“Alabama law recognizes a statutory right of redemption, which entitles certain persons ... to

obtain title to foreclosed property within one year of the foreclosure sale by tendering the price

paid at the sale plus interest and other lawful charges.” In re Poe, 477 F.3d 1317, 1319 (11th Cir.

2007). There is no dispute that Parcels A through E are subject to redemption under this statute,

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12 In conformity with conventions utilized in the relevant case law, First Financial

will be referred to herein as the “redemptioner” or the “redeeming party,” and CS Assets will be

referred to as the “purchaser” in foreclosure from which redemption is being made.

13 The statute also provides for several other forms of lawful charges, such as

permanent improvements; taxes paid or assessed; insurance premiums paid or owed by the

purchaser; all recorded judgments, recorded mortgages and recorded liens having a higher

priority in existence at the time of sale which are revived by operation of the statute; and

mortgages given by the purchaser on the land to the extent of the purchase price. Ala. Code § 6-

5-253(a)(1)-(5). In summary judgment briefing, CS Assets has expressly disclaimed any intent

to seek inclusion of charges for permanent improvements, insurance premiums, taxes paid or

assessed, interest on these three items, or other valid liens or encumbrances owned by the

purchaser. (Doc. 48, at 13 n.27.) And no higher priority judgments, mortgages or liens (other

than the balance due on the CS Assets loan, which has already been covered by the “balance due

on the debt” category of charges) have been identified. Therefore, none of those categories of

lawful charges prescribed by the Alabama redemption statute need be considered here.

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that First Financial falls within the class of persons entitled to exercise the right of redemption,

and that First Financial timely invoked its right of redemption. Rather, the only point of

contention between the parties is what the proper redemption price for Parcels A through E

should be.

On the subject of redemption price, the Alabama statute delineates specific categories of

lawful charges that the redemptioner must pay.12 The relevant categories for purposes of this

case consist of “the purchase price paid at the sale, with interest at the rate allowed to be charged

on money judgments as set forth in Section 8-8-10 (as it is now or hereinafter may be amended)”

and “any balance due on the debt, with interest as aforesaid thereon to date.” Ala. Code § 6-5-

253(a).13 As we shall see, this deceptively straightforward language conceals a tangled snarl of

complexities that the parties have brought to the fore in their summary judgment motions.

Two other features of the Alabama statute bear mentioning. First, the law makes clear

that “[t]he statutory rights of redemption given or conferred by this article are mere personal

privileges and not property or property rights.” Ala. Code § 6-5-250. Second, the statute

undeniably has an equitable component. Where, as here, the party seeking redemption has paid

into court the full amount of purchase money, lawful charges and interest necessary for

redemption, the court “shall take jurisdiction thereof and settle and adjust all the rights and

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 10 of 42
14 Clearly, then, the statute requires courts in redemption actions to take into account

the equities. In recognition of this fact, both parties appeal to the undersigned’s sense of fairness

in briefing their respective positions. The Court will certainly consider the equities. In doing so,

however, a pair of observations comes to mind. First, given the marked difference between the

dueling redemption prices proposed by the parties and reasonable estimates of market value of

the parcels in question, as well as the divergence between the foreclosure price and each of the

aforementioned figures, it is apparent that both sides will come out ahead, whatever the ultimate

resolution of this case may be. (See doc. 56, at 7-8; doc. 60, at 12.) The “equities” involved here

are not the kind that leave one party penniless and bereft, and other luxuriating in opulence. 

Both parties stand to profit here, with the only question being by how much. This conclusion

leads directly to the Court’s second observation, which is that we are here solely because of both

sides’ inability to work together to divide the pie in a mutually satisfactory manner. There is a

reason why the parties have been relegated to citing ancient Alabama precedents under

predecessor statutory schemes, and there is a reason why many aspects of their dispute have not

been confronted or decided in modern Alabama jurisprudence. The reason is that parties in

redemption disputes typically realize it is in their mutual best interest to reach a satisfactory

compromise on redemption pricing issues. First Financial and CS Assets could have reached

such an outcome here. In fact, record evidence confirms that “[p]rior to suit being filed we got

very close to an agreement but did not ever get an agreed upon price.” (Mosher Dep., at 82.) 

Rather than making further compromises to advance the negotiations from “very close” to “yes,”

the parties elected to go to war, consuming considerable litigant and judicial resources as they

fight tooth and nail about every calculation and parameter of the redemption price, knowing full

well that Alabama law is unsettled (and, indeed, opaque) in many of these respects. It is with

that history in mind that the Court performs its statutory function of adjusting “all the rights and

equities of the parties” pursuant to Alabama’s redemption statute.

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equities of the parties, as provided in this article.” § 6-5-256 (emphasis added).14

B. Inclusion of the Purchase Price Paid at the Sale.

As mentioned supra, one element of the redemption price is “the purchase price paid at

the sale,” meaning the underlying foreclosure. Ala. Code § 6-5-253(a). Everyone agrees that CS

Assets paid $1.6 million at the foreclosure sale in globo for Parcels A through F, plus the Metes

and Bounds Parcel. In a straightforward application of § 6-5-253(a), CS Assets would include

that $1.6 million in the redemption price.

By contrast, First Financial proposes a different calculation framework, excluding the

entire purchase price at foreclosure from the redemption price and substituting in its place the

amount of CS Assets debt secured by the mortgage. (Doc. 52, at 15.) In support of this

methodology, First Financial points to the Alabama Supreme Court’s statement more than a

quarter century ago that “when the mortgagee buys at foreclosure sale, the amount of the debt

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15 This was indeed the situation in Garvich, where the net balance due on the

mortgage was $38,686.82, but the bid price at foreclosure was $45,252.45. Garvich, 435 So.2d

at 31-32. The Garvich opinion specifically noted “the nearly $10,000.00 difference between the

amount secured by the mortgage and the subsequent purchase price.” Id. at 34.

16 To underscore the point that the purchase price is a mandatory component of the

redemption amount, the statute is all-inclusive in its wording, as it reads that “[a]nyone entitled

and desiring to redeem real estate ... must also pay or tender to the purchaser ... the purchase

price paid at the sale.” Id. This language admits of no ambiguity. The purchase price paid in

foreclosure is a cornerstone of the redemption price, and must be paid by “anyone” seeking to

exercise the redemption privilege.

17 First Financial’s sole argument about the purchase price is that it should not be

included at all because it is supplanted by the amount of the mortgage debt for redemption

purposes where (as here) the mortgagee bought in foreclosure. In light of First Financial’s

failure to put forward alternative arguments such as, for example, possible contentions that the

purchase price might be reduced or offset for some reason in the redemption price calculations,

the Court will not take it upon itself to articulate those arguments on plaintiff’s behalf. The

parties have briefed this case extensively on cross-motions for summary judgment, and have

been granted unfettered opportunities to raise whatever arguments they wish. Accordingly, the

Court confines itself to the specific issues and arguments presented in the parties’ respective

-12-

secured by the mortgage is treated as the purchase price rather than the amount bid.” Garvich v.

Associates Financial Services Co. of Alabama, Inc., 435 So.2d 30, 34 (Ala. 1983). However,

Garvich was not setting forth a prophylactic rule applicable in all redemption cases; rather, the

cases on which it relies state the principle as follows: “when the mortgagee ... buys at the

foreclosure sale, the ‘purchase money’ is the amount due on the mortgage debt (if less than that

bid at the sale) and not the sum which was bid.” Durr Drug Co. v. Acree, 2 So.2d 903, 905

(Ala. 1941) (citations omitted and emphasis added).15 That is simply not the case here, as CS

Assets bid $1.6 million on the property while the underlying mortgage debt was (by all accounts)

in excess of $2 million. Moreover, First Financial’s suggestion that the bid price should be

ignored in favor of the mortgage debt amount proceeds in disregard of Alabama’s current

redemption statute, which governs this matter and unquestionably recites as separate lawful

charges “the purchase price paid at the sale” and “any balance due on the debt.” Ala. Code § 6-

5-253(a).16 For both of these reasons, the Court declines First Financial’s invitation to collapse

the foreclosure price and the mortgage debt owed into a single line item for purposes of

computing the redemption price.17

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 12 of 42
summary judgment briefs, and expressly declines to resculpt the terrain sua sponte to frame the

case in terms of issues that might have been raised but were not, or to make adjustments to

categories of lawful charges that the parties never requested in their Rule 56 submissions.

-13-

In light of the foregoing, the Court finds that the redemption price owed to CS Assets

includes the underlying foreclosure price of $1,600,000. That figure will be added to the other

lawful charges in calculating the total redemption price.

C. Calculation of Interest on the Purchase Price.

The Alabama redemption statute requires that the redemption price include interest on the

purchase price paid at the foreclosure sale. Such interest must be calculated “at the rate allowed

to be charged on money judgments as set forth in Section 8-8-10 (as it is now or hereinafter may

be amended).” Ala. Code § 6-5-253(a). The cross-referenced section provides that judgments

for the payment of money in a contract action “bear interest from the day of the cause of action,

at the same rate of interest as stated in said contract,” and that judgments in all other cases “shall

bear interest at the rate of 12 percent per annum.” Ala. Code § 8-8-10. In the redemption

context, the Alabama Supreme Court has explained that “[t]his language provides for application

of the contract rate or, if there is no contract rate, a fixed rate. When used to compute a

redemption price, § 8-8-10 ... prevents windfalls by providing mortgagees only the amount of

interest they contracted for with the mortgagor, not a higher fixed rate.” Southeast Enterprises,

720 So.2d at 877.

CS Assets seeks interest at the statutory default rate of 12% on the entire $1.6 million

purchase price from the date of foreclosure (November 30, 2007) through the present. For its

part, First Financial does not challenge applicability of the 12% interest rate, but it does object to

CS Assets’ proposed time frame. According to First Financial, interest should run only through

the date the Complaint in redemption was filed (November 7, 2008), rather than the date of

judgment in this action. Unfortunately, § 6-5-253(a) is ambiguous on this point, inasmuch as it

does not expressly delineate the date or event terminating accrual of interest.

Under the current redemption statute, there is substantial Alabama appellate authority for

the proposition that, when a redeeming party has tendered funds and otherwise complied with

the statutory requirements, and when a dispute erupts as to the proper redemption price, interest

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 13 of 42
18 CS Assets has made no attempt to distinguish Pankey, but has instead recited a

number of authorities interpreting a predecessor redemption statute with a materially different

interest provision. See Southeast Enterprises, 720 So.2d at 876 (explaining that previous

incarnation of redemption statute was “materially different from § 6-5-253(a)” in that it provided

for one specific interest rate until tender, and another rate of interest for the period thereafter). 

To the extent that CS Assets would rely on Southeast Enterprises, in which the Alabama

Supreme Court was also addressing the current redemption statute, the issue of the interest cutoff

date was not presented; therefore, that decision is unilluminating on this point. See id. at 875-76

(identifying aspects of trial court’s interest ruling presented on appeal, with such issues not

including any challenge to the propriety of awarding interest after the filing of the complaint and

-14-

does not continue to accrue through final adjudication of that dispute. As one Alabama appellate

court put it, “[t]he date of redemption is important for the computation of interest. ... Ordinarily,

if the statutory requirements are met, the date of redemption is deemed to be the day the

complaint to redeem was filed” where “the redeeming party has paid or tendered the amounts

due.” Pankey v. Daugette, 671 So.2d 684, 689 (Ala.Civ.App. 1995). Similarly, in Watts v.

Rudulph Real Estate, Inc., 740 So.2d 1085, 1088 (Ala.Civ.App. 1998), the court found that the

purchaser was entitled to interest only through the date of the purchaser’s refusal of the

redemptioner’s valid attempt at redemption. In so holding, the Watts court explained that “[a]ny

other result would allow a purchaser to profit from his refusal of a valid tender for redemption. 

Rudulph is not entitled to interest on the redemption amount for the time in which this dispute

has been pending.” Watts, 740 So.2d at 1088; see generally Benefield v. Graham, 992 So.2d

717, 724-25 (Ala.Civ.App. 2008) (trial court did not err by failing to require redemptioner to pay

interest to purchaser through date that tendered funds were paid out by circuit clerk, where trial

court reasoned that a purchaser “is not entitled to interest on the redemption amount for the time

during which a dispute has been pending”).

CS Assets does not now suggest (and has never argued) that First Financial failed to

perform the statutory prerequisites for exercise of redemption privilege, that it failed to pay or

tender sufficient funds into the court registry at the inception of this litigation, or that there is not

a bona fide dispute of gargantuan proportions between the parties as to the proper redemption

price under Alabama law. Accordingly, this Court applies the Pankey / Watts / Benefield line of

precedents, not only because they are interpreting the version of the statute that is currently in

effect but also because their conclusions on this point are fair and equitable.18 Interest on the

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 14 of 42
tender of all disputed sums). Finally, the Court notes that the equities favor halting the accrual

of interest as of the date the Complaint was filed. First Financial and CS Assets could not agree

on the redemption price, so First Financial tendered the entire disputed amount (including

amounts claimed by CS Assets that First Financial believed not to be due) into the court registry. 

Since that time, First Financial has not had access to the money and has not been using it, any

more than CS Assets has. To punish First Financial by imposing a statutory interest rate (which

far exceeds the paltry interest rates available to court registry funds in today’s tenuous financial

climate) on disputed funds that it has already tendered during the time period in which this

dispute plays out is neither mandated by the redemption statute nor consistent with the statutory

directive that courts “adjust all the rights and equities of the parties.” Ala. Code § 6-5-256.

19 The calculations are as follows: $1,600,000 times 12% per annum equals

$192,000 in interest per year. The interest accrued for 343 days, or 0.937 years (343/366), and

$192,000 times 0.937 equals $179,934.43.

-15-

$1.6 million purchase price will be awarded at the statutory rate of 12% from the date of the

foreclosure sale (November 30, 2007) through the date of the Complaint’s filing (November 7,

2008), for a total interest figure of $179,934.43.

19

D. Calculation of the Balance Due on the Debt.

The third category of lawful charges at issue is the balance due on the debt. The

redemption statute provides that “[i]f the redemption is made from a person who at the time of

redemption owned the debt for which the property was sold, the redemptioner must also pay any

balance due on the debt, with interest as aforesaid thereon to date.” Ala. Code § 6-5-253

(emphasis added). Plainly, at the time First Financial exercised its privilege of redemption, CS

Assets owned the debt for which the parcels were sold in foreclosure. Therefore, First Financial

is obligated to pay the balance due on the debt, plus interest, antecedent to redemption. This

apparently straightforward process is marred by the parties’ inability to agree on (a) the amount

of unpaid debt at the time of foreclosure, (b) whether that unpaid debt should be reduced by the

value of Parcel F and if so through what methodology, (c) the amount of interest accrued on the

debt, and (d) the late charges and attorney’s fees that should be included in the redemption price. 

Therefore, it is necessary for the Court to review all of these components of the misleadingly

simple statutory categories of “balance due on the debt, with interest as aforesaid” to fix the

redemption price.

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 15 of 42
20 This figure is reached as follows: The Renewal Promissory Note provides that

interest on the unpaid balance shall accrue at 12% per annum, to be computed on the (agreed but

counterfactual) basis of each year containing 360 days. (Doc. 48, Exh. H.) The interest rate

jumps to 15% following a default lasting 10 days, with no reference to a 360-day computation

method, such that the parties would apparently revert to a 365-day computation basis for accrued

interest after a 10-day default. (Id.) The Renewal Note further provides that the entire principal

balance (plus all accrued interest) was due and payable via a single balloon payment on October

19, 2007. (Id.) West Beach paid nothing at the maturity date; therefore, by the express terms of

the Renewal Note, interest accrued at 12% for the 10-day period from October 19, 2007 through

October 28, 2007, for a total of $8,385.74. Then, interest accrued at 15% for the 32-day period

from October 29, 2007 through the foreclosure date of November 30, 2007, which equates to

$33,083.46. Adding these two figures together yields a total interest balance of $41,469.20 as of

November 30, 2007.

-16-

1. Unpaid Debt at the Time of Foreclosure.

As an initial matter, First Financial and CS Assets are at loggerheads about the amount of

the unpaid debt owed by West Beach to CS Assets at the time of foreclosure. CS Assets begins

with the $2,515,722 principal amount identified in the Renewal Promissory Note and

Amendment to Mortgage and Security Agreement documents into which West Beach and CS

Assets entered on April 30, 2007, when the original Heritage loan was modified and extended to

avert impending foreclosure by CS Assets. After tacking on interest payments through the date

of foreclosure in the amount of $41,469.20,20 CS Assets argues that the total balance on West

Beach’s debt to it as of November 30, 2007 was $2,557,191.20 (before backing out the $1.6

million foreclosure price) and that the redemption price must therefore include that amount,

adjusted by the $1.6 million credit bid at foreclosure.

By contrast, First Financial maintains that the redemption price must exclude all new

indebtedness accrued by West Beach to CS Assets pursuant to the CS Assets loan modification

because that additional debt would be junior to the First Financial loan. In other words, First

Financial’s position is that the redemption price should include only the portion of the CS Assets

debt that is senior to the First Financial debt. First Financial therefore advocates use of a priority

analysis, and calculation of the unpaid debt based solely on the original Heritage note, which

consisted of $2 million in principal plus $342,077.56 in accrued interest as of the November 30,

2007 foreclosure date. This approach would exclude all new debt added to West Beach’s

obligations to CS Assets by virtue of the Renewed Promissory Note (which post-dated the First

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 16 of 42
21 Of course, whichever figure is used must be reduced by $1.6 million because the

November 30, 2007 foreclosure sale lowered West Beach’s debt to CS Assets by that amount via

the CS Assets credit bid. Both parties agree with that subtraction; however, they incorporate it

into their respective analyses at different junctures. To facilitate an apples-to-apples

comparison, and to avoid confusion, the $1.6 million adjustment to West Beach’s debt to CS

Assets on account of the foreclosure sale will be performed after determining the total debt

figure immediately prior to the credit bid.

22 This section is reinforced by another provision in the redemption statute that

specifically addresses the subject of priority, indicating that when a “junior mortgagee redeems

under this article, all recorded judgments, recorded mortgages and recorded liens having a

higher recorded priority in existence at the time of the sale are revived ... and such shall

become lawful charges pursuant to Section 6-5-253(a)(4) to be paid off at redemption.” Ala.

Code § 6-5-248(c) (emphasis added). There is no doubt that First Financial is a junior

mortgagee and that all recorded mortgages on the property being redeemed that have a higher

priority than First Financial’s must be included among the lawful charges utilized in computing

the redemption amount. The question is whether any debts beyond those higher priority

mortgages must also be included.

-17-

Financial loan to West Beach and therefore was junior to First Financial’s mortgage). According

to First Financial, then, for purposes of the redemption price analysis, the unpaid debt at the time

of foreclosure should be limited to $2,342,077.56.

Thus, the balance of unpaid debt included in the parties’ proposed redemption prices

differs by more than $200,000 (from CS Assets’ $2,557,191.20 figure to First Financial’s

$2,342,077.56) based on the singular issue of whether concepts of priority and seniority matter

in the redemption framework.21 First Financial proposes a priority framework, but identifies no

authorities to support the propriety of applying priority notions here. First Financial’s position

cannot be reconciled with the statutory language.

To be sure, in setting forth the lawful charges included in the redemption price, the

Alabama statute specifies that “if the redeeming party is a ... junior mortgagee ... then all ...

recorded mortgages ... having a higher priority” are lawful charges. Ala. Code § 6-5-253(a)(4).22

If the statute stopped there, then First Financial might have a point. But the very next sentence

provides that “[i]f the redemption is made from a person who at the time of redemption owned

the debt for which the property was sold, the redemptioner must also pay any balance due on

the debt.” Id. (emphasis added). This language is unambiguous. Reading the two sentences

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 17 of 42
23 Although CS Assets’ briefs cite to this statutory language repeatedly in support of

its position that priority is irrelevant in fixing the redemption price here, First Financial chooses

to sidestep that issue. Nowhere in its summary judgment briefs has First Financial offered any

explanation of § 6-5-253(a)(4) that might support a contrary result. This Court does not have the

luxury of disregarding Alabama’s redemption statute in adjudicating the rights of the parties as

to a redemption process whose existence is wholly created by statute. Nor is it persuasive for

First Financial to bandy about accusations of prejudice, to invoke notions of equity, and to cite

authorities from Alabama and New York for the proposition that a senior mortgagee’s

modification agreement with a mortgagor results in the senior lienor relinquishing priority with

respect to the modified terms. The redemption statute leaves no room to question that the full

amount of the purchaser’s debt (not just the priority portion) must be paid in redemption. The

Court perceives nothing unfair or inequitable about enforcing that provision against First

Financial here, even as to any portion of West Beach’s debt to CS Assets that is subordinate to

the First Financial loan.

24 See generally Southeast Enterprises, 720 So.2d at 879 (Butts, J., concurring in

part) (“the Legislature’s intent has always been for the redeeming party to have to pay the

purchaser at the foreclosure sale only for those valid liens or encumbrances paid or owned by the

purchaser”) (emphasis omitted).

-18-

together, it is clear that (1) a junior mortgagee such as First Financial is on the hook for all

higher priority debt in the redemption process, but (2) if redemption is made from the owner of

the debt, the junior mortgagee must also pay any balance due on the debt. See Southeast

Enterprises, 720 So.2d at 875 (explaining that, in its current form, the redemption statute

“divides encumbrances into two categories: (1) those encumbrances paid or owned by the

purchaser; and (2) all encumbrances of higher priority”). That is exactly the situation here. First

Financial is a junior mortgagee seeking to make redemption from CS Assets, which owns the

debt for which the West Beach parcels were sold. Under a straightforward reading of § 6-5-

253(a)(4), First Financial must pay not only the higher priority debt, but also “any balance due

on the debt” owned by CS Assets, without regard to priority considerations.23

Given this unambiguous statutory guidance, and First Financial’s failure to rebut it or to

explain how § 6-5-253(a)(4) could reasonably be construed to limit the redemption price in this

case to higher priority debt, the entire balance that West Beach owed the purchaser (CS Assets)

as of foreclosure must be paid as part of the redemption price.24 That amount was

$2,557,191.20, less the $1,600,000 in credit for the foreclosure sale, such that West Beach owed

CS Assets the total of $957,191.20. Subject to modifications requested by First Financial and

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 18 of 42
25 Recall that First Financial initially filed this action seeking to redeem all seven

parcels (including the two parcels in which it lacked any legal interest) in order to negate any

objection by CS Assets to an improper partial redemption. But CS Assets balked at First

Financial’s efforts to perform a unified redemption on all seven parcels, citing the

redemptioner’s lack of interest in two of them. Because the rule against piecemeal redemptions

is in place to protect the purchaser (rather than the redemptioner), and because the purchaser in

this case (CS Assets) made an objection that would force First Financial into a piecemeal

redemption, the Court’s dismissal of First Financial’s claims to redeem Parcel F and the Metes

and Bounds Parcel was subject to the express condition that CS Assets was prohibited from then

objecting that First Financial was engaged in an improper piecemeal redemption. Having made

this bed (CS Assets, by objecting to a total redemption, and First Financial, by failing to obtain a

mortgage that was co-extensive with the senior mortgage, in the first place), the parties now

must lie in it, albeit at the price of muddying the waters and complicating the analysis

considerably. The bottom line is that, pursuant to the parties’ actions and this Court’s prior

rulings in this case, the only parcels that First Financial may redeem are Parcels A through E.

-19-

explored infra, that amount is properly included in the redemption price.

2. Whether the Balance Owed is Reduced by the Value of Parcel F.

Without a doubt, the most heated aspect of this dispute concerns the treatment of Parcel F

in calculating the redemption price. Thanks to the strategic decisions of both parties antecedent

to and during this litigation, this case is now postured as one in which CS Assets purchased

seven parcels at a foreclosure sale in a single transaction, but First Financial is exercising its

redemption privilege as to only five of those parcels.25 The other two parcels (Parcel F and the

Metes and Bounds Parcel) on which CS Assets foreclosed are not subject to redemption, and will

be retained by CS Assets regardless of the outcome of this action. This disconnect becomes

critically important because Parcel F, the lone Gulf-front parcel, is by all accounts quite

valuable. First Financial asks to have the redemption price adjusted to account for the fact that

CS Assets is retaining Parcel F; meanwhile, CS Assets insists that no such adjustment should be

made and that First Financial should be required to pay the full purchase price and the full

amount of the debt for all seven parcels (including Parcel F).

a. Partial Redemption Principles under Alabama Law.

To ascertain whether a Parcel F credit is warranted, the Court begins by examining basic

principles of Alabama law on partial redemption. Alabama courts have stated, under both the

current redemption statute and prior iterations, that partial redemptions are generally not

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 19 of 42
26 Notwithstanding all of these authorities, most of which were addressed in the

Order entered on April 7, 2009, CS Assets’ summary judgment brief states that it “firmly

believes that partial redemption is not allowed under Alabama law.” (Doc. 59, at 17.) Both this

Court and the cited Alabama authorities have held otherwise; therefore, this argument will not be

-20-

permitted. Indeed, the Alabama Supreme Court has consistently observed that “[t]he law does

not allow piecemeal redemption, absent an agreement providing for it.” Costa and Head

(Birmingham One), Ltd. v. National Bank of Commerce of Birmingham, 569 So.2d 360, 363

(Ala. 1990); see also Warren v. Ellison, 35 So.2d 166, 168 (Ala. 1948) (“where one seeks to

redeem from a foreclosure where the property has been sold en masse, in the absence of an

agreement between the parties, the foreclosure purchaser who has purchased the entire property

at a single sale cannot be compelled to accept partial payment and release the premises pro

tanto”); Bank of Luverne v. Turk, 133 So. 52, 53 (Ala. 1930) (summarizing earlier Alabama

authorities as requiring redemptioner with interest in only a part of the mortgaged land “to pay

the entire debt and redeem all the land and all interests, including such as he had not previously

acquired”). “The rule requiring payment of the debt in full and forbidding a partial redemption

is for the benefit and protection of the mortgagee. ... A redemptioner cannot compel a partial

redemption over the insistence of the mortgagee that he redeem it all if any.” Cooper v. Peak, 61

So.2d 62, 66 (Ala. 1952) (citations omitted); see also Bank of Luverne, 133 So. at 53 (explaining

that, even though “more equitable rule” would be to require redemptioner seeking to redeem

only that portion of the land in which he had an interest to pay only a portion of the mortgage

debt, this result would not be allowed because it “would have the effect of splitting the

transactions into two parts without the consent of the mortgagee”).

That is not to say, however, that a partial redemption is per se void. To the contrary,

even though it may be objectionable, “a partial redemption is certainly not void.” Garris v. A &

M Forest Consultants, Inc., 534 So.2d 577, 581 (Ala. 1988). If the parties (and especially the

purchaser, for whose protection the rule against piecemeal redemption exists) agree to it, it is

clear that a partial redemption can in fact take place. Indeed, if a purchaser does not insist upon

an entire redemption, then “there can be no reason whatever why redemption in parcels may not

be had, the purchaser being willing.” Francis v. White, 52 So. 349, 350 (Ala. 1910); see also

Costa and Head, 569 So.2d at 363; Warren, 35 So.2d at 168.26

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 20 of 42
credited or considered further on summary judgment.

27 The Order dismissing First Financial’s redemption claims as to Parcel F and the

Metes and Bounds Parcel was quite clear on this point, opining as follows: “Having effectively

waived any right it had to insist that all seven parcels be included in First Financial’s

redemption, CS Assets cannot play a strategic game of ‘gotcha’ by protesting as this action goes

forward that First Financial is engaging in an improper piecemeal redemption action.” (Doc. 25,

at 10-11.)

-21-

b. Having Demanded Partial Redemption, CS Assets Cannot Have

Both Parcel F and Inclusion of the Entire Mortgage Balance in the

Redemption Price.

In sensitivity to the disfavored status of piecemeal redemption, First Financial initially

brought this action seeking a total redemption of all seven parcels. CS Assets could have

assented to the total redemption, in which case there would be no partial redemption and CS

Assets would have exchanged all seven parcels for a redemption payment that included the entire

balance due on the debt for all seven parcels. But CS Assets chose a different path, by objecting

to the redemption of Parcel F and the Metes and Bounds Parcel on the grounds that First

Financial lacked an interest in those parcels. The Court upheld these objections and dismissed

First Financial’s claim for redemption as to Parcel F and the Metes and Bounds Parcel. (See doc.

25.) By confining First Financial’s ability to redeem to Parcels A through E exclusively even

though the underlying foreclosure sale embraced two other parcels, as well, CS Assets

unilaterally split the transaction, creating a partial redemption scenario. Through this conduct,

CS Assets has effectively agreed to the partial redemption of Parcels A through E, and has

waived any objections to same.27 First Financial continued to pursue this litigation after it was

transformed into a partial redemption case, thereby conveying its assent to the partial redemption

demanded by the purchaser. Simply put, then, the parties find themselves in a piecemeal

redemption situation because the senior mortgagee agreed to (and, indeed, insisted on)

redemption of less than all of the foreclosed property, and the junior mortgagee elected to go

forward with redemption despite that restriction.

Of course, to say that the parties agreed to a piecemeal redemption is not to say that they

agreed on a redemption price. Their extensive summary judgment briefing on their crossmotions emphatically demonstrates the contrary. First Financial maintains that because this is

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 21 of 42
28 Two years after Garris, the Alabama Supreme Court again declined to address

“the issue of allowing a mortgagor to redeem a particular portion of mortgaged property when

that mortgagor did not have any interest in the remaining portions of the tract” because that

scenario was not presented. Costa and Head, 569 So.2d at 364.

-22-

only a partial redemption, the total unpaid debt component of the redemption price should be

adjusted to reflect the fact that fewer than all parcels are being redeemed. Meanwhile, CS Assets

contends that no adjustment is appropriate and that First Financial must pay full freight even

though it is receiving just a portion of the foreclosed property. For two distinct reasons, the

Court finds that First Financial has the better argument.

First, although neither side has submitted any Alabama authority delineating the

mechanisms of the partial redemption process under the modern redemption statute, the extant

Alabama caselaw points in favor of apportioning the mortgage balance. Indeed, the Alabama

Supreme Court has recognized, albeit in dicta, that “there may be a legitimate argument that

partial redemption should not have been effected in this case, at least not without proper

allocation of the mortgage balance between the two parcels.” Garris, 534 So.2d at 581

(emphasis added); see also Warren, 35 So.2d at 168 (suggesting that where the parties have

agreed to partial redemption, the foreclosure purchaser can “be compelled to accept partial

payment and release the premises pro tanto”). The partial redemption issue referenced in Garris

had not been preserved for appeal, so it was not definitively decided in that case.28 But Alabama

courts previously indicated that where a partial redemption occurs by consent of the parties, the

redemptioner need not pay the full amount while the purchaser retains a portion of the property. 

See, e.g., Francis, 52 So. at 350 (explaining that if complainant in bill to redeem is interested in

only a portion of the property, and if he pays entire redemption on the full amount, then he “is

entitled to hold the entire estate until he shall be reimbursed what he has paid beyond his just

proportion,” with the alternative being that “redemption in parcels may ... be had, the purchaser

being willing”); Lehman, Durr & Co. v. Moore, 9 So. 590, 592 (Ala. 1891) (observing that,

where redemptioner has a one-half undivided interest in the property, “the purchaser has a right

to insist upon payment of the whole amount bid by him with interest and charges,” but “it would

be an anomaly, which the law does not contemplate and will not tolerate, to require

[redemptioner] to make the purchaser whole in respect of all he has expended ... in consideration

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 22 of 42
29 On summary judgment, CS Assets overlooks these decisions and instead leans on

cases such as Burke v. Brewer, 32 So. 602 (Ala. 1902), and Richardson v. Dunn, 79 Ala. 167

(1885). These decisions are unhelpful because they rely extensively on the language of a

predecessor redemption statute. More fundamentally, both cases are distinguishable. In Burke,

the redemptioner admitted that $6,345 “was the amount of the purchase money which was a

charge upon the land sought to be redeemed.” 32 So. at 602. Here there is no such agreement as

to the amount of purchase money which is a charge on the land sought to be redeemed by First

Financial. In Burke, the redemptioner sought a credit for the $1,600 that the purchaser had

received in reselling one of the parcels after foreclosure even though “the money paid by [the

subsequent purchaser] to [the foreclosure purchaser] was not his, and never could be.” Id. Thus,

the issue in Burke was not allocation of mortgage balance based on valuation at the time of

foreclosure, but rather whether the redemptioner could receive a credit for the spoils of the

foreclosure purchaser’s subsequent sale of part of the property. That is not what First Financial

is requesting here. There is no indication in Burke that the redemptioner was seeking an

allocation of mortgage debt between two parcels to effect a partial redemption. In fact,

Burke was not a case in which the foreclosure purchaser agreed to a partial redemption, or even a

partial redemption case at all, given that one of the foreclosed parcels had already been sold to a

third party and was not subject to redemption. Richardson is similarly divorced from the

circumstances presented here. In Richardson, five parcels were sold at foreclosure, after which

redemption was sought on four of them. The redemptioner followed the statutory procedure of

providing notice and tendering the amount due, yet the foreclosure purchaser refused to accept

tender or convey the property because redemption was sought on only four of the five lots. The

Richardson court rejected the purchaser’s position, noting that “tender made was for the whole

amount bid” on all five parcels. 79 Ala. at 167. The issue of whether the redemption price could

be affected by redemption of only four parcels was not presented in Richardson, and Richardson

did not involve a partial redemption to which the purchaser had assented. As for CS Assets’

citations to authority from other jurisdictions, the Court does not rely on them, given that (i)

Alabama courts have written to the partial redemption issue sufficiently to provide adequate

guidance, and (ii) redemption is a creature of statute, not common law, so what another court in

another state might have said in applying another redemption statute to another fact pattern

provides little utility in construing or applying the Alabama provisions here.

-23-

of the land, and at the same time leave half that consideration in his hands”). Both Francis and

Lehman, along with the dicta in Garris and Warren, support the proposition that if, by agreement

of the parties, redemption is had on only a part of the foreclosed lands, then the redemption price

must reflect a credit to the mortgage balance so that the redemptioner pays only his just share.29

Second, it bears repeating that redemption is an equitable undertaking. The Alabama

legislature hammered this point home in directing courts hearing redemption disputes to “settle

and adjust all the rights and equities of the parties, as provided in this article.” Ala. Code § 6-5-

256; see also Bank of Luverne, 133 So. at 53 (in applying redemption statute in partial

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 23 of 42
30 In a similar vein, the Alabama Supreme Court has explained that “when a court

takes jurisdiction for one purpose, it will extend that jurisdiction so as to do complete justice and

will mold its judgment to adjust the equities of the parties and to meet the necessities of each

situation.” Garris v. Federal Land Bank of Jackson, 584 So.2d 791, 794 (Ala. 1991).

-24-

redemption context, court expressly relied on “our own theories of the equitable principles that

should apply”); Ross v. Rogers, --- So.3d ----, 2009 WL 1643342, *6 (Ala.Civ.App. June 12,

2009) (recognizing that § 6-5-256 requires courts in redemption cases to “balance the equities

between the parties”).30 The approach advocated by CS Assets is simply not equitable. When

First Financial attempted to exercise redemption rights on all seven parcels and to tender the full

balance of the debt, in deference to Alabama’s disfavor of piecemeal redemptions, CS Assets

balked. Because of CS Assets’ objection, this case was transformed into one for partial

redemption. When First Financial proceeded with that partial redemption, CS Assets insisted

that the redemption price must be the same as it would have been if First Financial were

redeeming all seven parcels, with the difference being that CS Assets gets to keep all of the

money as well as two of the parcels. Such an outcome smacks of unfairness and manipulation of

the redemption process in an attempt to extract excess profits.

It strikes this Court that when First Financial pursued redemption as to all seven parcels,

CS Assets had a choice. It could have acquiesced to the complete redemption, and surrendered

all seven parcels to First Financial in exchange for the full mortgage balance and other lawful

charges. Or CS Assets could have exercised its right to insist upon a partial redemption,

allowing First Financial to redeem only the five parcels in which it had an interest in exchange

for some portion of the mortgage balance. Having selected the partial redemption option, CS

Assets is nonetheless demanding the entire financial bounty of a full redemption. To a court in

equity, this approach is unpalatable. CS Assets does not get to have its cake and eat it too. It

cannot protest First Financial’s attempts to bring about a full redemption, and simultaneously

collect the full price it would have received had it acquiesced to a full redemption.

In short, if CS Assets had wanted the full mortgage balance to be included in the

redemption price, it could have received it, provided that it allowed First Financial to redeem all

parcels to which that mortgage balance applied. See Bank of Luverne, 133 So. at 53 (if

redemptioner with interest in only part of the property pays entire mortgage debt, “he is entitled

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 24 of 42
31 In fact, First Financial expressly takes the position that “[t]he value of the Metes

and Bounds Parcel has no part in the redemption process.” (Doc. 52, at 17.) Having so

represented, First Financial cannot be heard to come back later and request a credit for the value

of that parcel. Of course, the undersigned recognizes that First Financial made this statement in

the context of a larger argument that only the original Heritage loan (as to which the Metes and

Bounds Parcel was not security) matters in setting the redemption price, and that the Metes and

Bounds Parcel is therefore irrelevant. But First Financial knew that whether the balance due

would be calculated from the old Heritage loan or the modified CS Assets loan (which did

encumber the Metes and Bounds Parcel) was a subject of profound disagreement between the

parties, and that the Court might side with CS Assets on that point. To hedge its bet, First

Financial could have argued in the alternative that, if the Court used the CS Assets loan rather

than the original Heritage loan in calculating the balance due on the debt, a credit should be

made for the Metes and Bounds Parcel in a specified amount. But First Financial chose not to do

so. The Court will not explore arguments that the parties never made, nor will it look behind

First Financial’s representation that the value of the Metes and Bounds Parcel is irrelevant to the

redemption process. The Court notes, however, that there is record evidence suggesting that the

Metes and Bounds Parcel is “worth nothing” and that “you can’t build on it” because it consists

of landlocked wetlands. (Mosher Dep., at 38-39.) This testimony may shed light on the parties’

lack of attentiveness to this parcel in making their valuation / credit arguments on summary

judgment.

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to step into the shoes of the mortgagee to the extent of thereby acquiring all the security he holds

for the debt”). As a matter of Alabama law and equity, CS Assets, by agreeing to (and indeed

demanding) a partial redemption, cannot compel First Financial to nonetheless pay the full

redemption price for less than all the property. Because CS Assets has postured this action as

one for partial redemption, in which only Parcels A through E will be redeemed, First Financial

is entitled to a credit for the value of the other parcels. The amount of that credit is hotly

disputed, like all other aspects of the redemption price calculation herein, and will therefore

require separate analysis.

c. The Proper Credit for Parcel F in the Redemption Price.

As noted, Parcel F and the Metes and Bounds Parcel are not being redeemed. The parties

argue at length over the proper adjustment to the redemption price that should be made for Parcel

F; however, they are silent as to the Metes and Bounds Parcel. Nowhere in its memoranda does

First Financial request a credit for the Metes and Bounds Parcel, nor do the parties point to any

record evidence concerning the value of that parcel.31 Accordingly, the Court’s inquiry will

focus solely on the credit to be made to the balance of the debt for Parcel F. This question

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 25 of 42
32 The Hollon appraisal cited by First Financial also included market valuations for

the other parcels as of November 30, 2007; however, those valuations differed depending on the

zoning assumptions, given that the zoning for those parcels evidently changed from BTB (tourist

lodging district) to BTB-1 (low density tourist business district) at some point. (Hollon Aff.,

Exh. 1, at 9.) According to Hollon, this zoning adjustment substantially reduced the value of

Parcels A through E (from $5.74 million to $3.6 million) and also affected the value of the Metes

and Bounds Parcel (from $560,000 to $400,000). (Id. at III.) By contrast, the zoning on Parcel F

remained unchanged as R1-B (medium density single family residential district) throughout the

relevant time period, so its value was unaffected by the change in zoning.

33 This appraisal commissioned by CS Assets appears to have valued Parcels A

through E and the Metes and Bounds Parcel, collectively, at $1.5 million as of March 1, 2007. 

(Id.) The March 2007 appraisal reflects a zoning of BTB-1 for those parcels. The record also

shows that CS Assets generated its $1.6 million foreclosure bid for all seven parcels by reference

to that appraisal, as follows: “In CS Assets’ view, $1.6 million, which is two-thirds (66.6%) of

the $2.4 million valuation, was an appropriate bid at the foreclosure sale ....” (Mosher Dep.,

Exh. 5, at ¶ 12.)

34 For example, Matthew Piell (a West Beach principal) opined that the market

value of Parcel F was $1 million as of November 30, 2007. (Piell Aff., ¶ 15.) Rodger Lowery

determined that the retrospective market value of Parcel F was $750,000 as of November 30,

2007, with a “quick sale value” of $487,500. (Doc. 60, Exh. 6, at Exh. A p. vi.) CS Assets

manager John Mosher testified that his opinion of the value of Parcel F was that it was worth

between $600,000 and $650,000 as of his September 2009 deposition. (Mosher Dep., at 38-39.)

-26-

breaks down into a pair of sub-inquiries, to-wit: (a) what was the value of Parcel F on the date of

the foreclosure sale, and (b) how should the value of Parcel F be credited against the outstanding

balance owed (i.e., dollar-for-dollar, proportionate, or some other method). The Court will

address each of these issues in turn.

First Financial offers record evidence establishing the fair market value of Parcel F as

$900,000 on the November 30, 2007 foreclosure date. (Hollon Aff., ¶ 4.)32 First Financial also

points to an appraisal cited by CS Assets in the West Beach Action that likewise fixed the value

of Parcel F at $900,000 as of March 1, 2007. (Mosher Dep., Exh. 5, at Exh. G p. 25.)33 In a

Reply Brief, CS Assets unleashes a flurry of other appraisals fixing the value of Parcel F at

varying amounts at different times. (Doc. 60, at 3-5.)34 In a Reply Brief of its own, however,

First Financial objects to all of those appraisals based on CS Assets’ failure to comply with

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 26 of 42
35 CS Assets never requested leave to be heard in response to these objections;

therefore, the Court does not have the benefit of defendant’s position on those objections. It is

not the place of this Court to step into the shoes of a litigant on summary judgment and to

formulate arguments that, for whatever reason, the party chose not to make. In that regard, the

undersigned expressly “decline[s] to assume the role of counsel and make a new argument for”

the parties. United States v. Docampo, 573 F.3d 1091, 1103 (11th Cir. 2009); see also Lyes v.

City of Riviera Beach, Fla., 126 F.3d 1380, 1388 (11th Cir. 1997) (“[t]here is no burden upon the

district court to distill every potential argument that could be made based upon the materials

before it on summary judgment. Rather, the onus is upon the parties to formulate arguments ....”)

(citation omitted); Pinto v. Universidad De Puerto Rico, 895 F.2d 18, 19 (1st Cir. 1990) (“the

court is under no duty to exercise imagination and conjure what a plaintiff might have alleged,

but did not, and do counsel's work for him or her”); Fisher v. Ciba Specialty Chemicals Corp.,

238 F.R.D. 273, 299 n.57 (S.D. Ala. 2006) (where parties have not articulated a theory for

liability, “the Court will not formulate their arguments for them”).

36 For example, when asked in interrogatories to state its positions or contentions as

to value of each parcel, CS Assets answered, “No contention at this time.” (Doc. 62, Exh. B, at

#4.) When asked to identify persons with knowledge about this matter, CS Assets omitted

Matthew Piel’s name from both its initial disclosures and discovery responses. (Doc. 62, Exh.

A, at #1; doc. 62, Exh. B, at #1.) In his deposition, when asked whether CS Assets had disclosed

any experts or valuations as to Parcel F, Mosher testified, “I’m not aware of any opinion of

experts that have been provided on the gulf front lot. ... I’m not aware of any other disclosure

about the gulf front lot.” (Mosher Dep., at 36.) Mosher answered the same way as to Parcels A

through E, and specifically explained that he “did not want to incur the cost to retain an expert to

appraise each of the parcels.” (Id. at 36-37.) So after telling First Financial that it had no

contentions as to valuation of the specific parcels, after identifying only an expert concerning

valuation of the Metes and Bounds Parcel, and despite not disclosing any other expert reports,

CS Assets on summary judgment flooded the record with appraisals on which it purports to rely

to establish alternative valuations for various parcels. This is improper, and in violation of Rule

26. What’s more, in the face of First Financial’s objection, CS Assets has made no effort to

defend or explain these actions. For all of these reasons, the appraisal and valuation materials

cited by CS Assets on pages 3 and 4 of document 60 will not be considered on summary

judgment.

-27-

applicable disclosure and discovery requirements. (Doc. 61, at 1-3.)35 First Financial shows that

CS Assets never identified the persons who prepared these appraisals as expert witnesses in this

case, never identified certain of them as witnesses at all, stated in interrogatory responses that it

had no contention as to the value of any parcel, and denied having any expert disclosures of

opinions other than those of a Mr. Watson, pertaining solely to the Metes and Bounds Parcel. 

These procedural infirmities are well-documented in the record,36 and have not been rebutted. 

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 27 of 42
37 In one of its briefs, CS Assets poses a series of rhetorical questions about the

proper date of valuation, to-wit: “Why is it appropriate to use the date of foreclosure as the date

for assessment of value? Why not the date the loan was made? Why not today?” (Doc. 60, at

7.) These queries, which CS Assets does not attempt to answer or develop, are not helpful,

particularly where they are not backed by any proposal, argument or reasoning in support of a

specific valuation date. This Court has agreed with First Financial that, as a matter of both law

and equity, a credit should be applied to the redemption price to account for CS Assets’ retention

of Parcel F. The Court understands that CS Assets disagrees with that approach; nonetheless,

now that the Court has adopted it, CS Assets accomplishes nothing by attacking First Financial’s

proposed valuation methodology without offering any alternative. Using the foreclosure date (as

First Financial has) as the operative valuation date for Parcel F is well-grounded in logic; after

all, that is the date on which CS Assets acquired an asset (i.e., Parcel F) which offsets the

balance owed on West Beach’s debt for redemption purposes. Common sense suggests that

Parcel F offset that indebtedness effective the date that CS Assets acquired it, not months or

years before or after, such that the date of acquisition should be used as the operative date for

calculating the credit for that parcel. In the face of that reasonable approach, CS Assets blithely

asserts that other valuation dates are possible, without arguing in favor of any of them or

showing why they might be preferable to the foreclosure date. As stated repeatedly herein, the

Court will not make or develop a party’s arguments for it on summary judgment. Inasmuch as

the November 30, 2007 date appears well-suited as a proper valuation date for purposes of

applying a credit for the value of Parcel F, and inasmuch as CS Assets has presented neither

convincing reasons why that date is not appropriate nor a proffered alternative date that would be

more suitable, valuation will be examined as of the November 2007 foreclosure sale.

-28-

Accordingly, the valuations offered by CS Assets on summary judgment will be excluded

pursuant to Rule 37(c)(1), Fed.R.Civ.P. (where a party fails to disclose or supplement material

required by Rule 26(a) or (e), “the party is not allowed to use that information or witness to

supply evidence on a motion ...” absent showings that have not been made here).

Taking stock of what has been decided so far, the undersigned has found that First

Financial is entitled to a credit for the value of Parcel F against the outstanding balance of the

debt owed, and that the only proper record evidence concerning Parcel F establishes its market

value as $900,000 as of the date of foreclosure.37 The remaining question is how that valuation

should be credited against the balance of the indebtedness. Once again, as in seemingly every

other facet of the redemption process, the parties’ positions rest on opposite ends of the

spectrum. First Financial contends that the West Beach indebtedness should be reduced by the

value of Parcel F on a dollar-for-dollar basis. By contrast, CS Assets’ position is that, if the

purchase price is to be apportioned to account for Parcel F, “the Court should focus on the

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 28 of 42
38 To be sure, CS Assets cites Pitts v. American Freehold Land Mortg. Co. of

London, 47 So. 242 (Ala. 1908), in support of its proposed proportional credit method. But the

proportionality language in Pitts quoted by CS Assets (albeit in truncated and out-of-context

fashion) is expressly confined to attorney’s fees and costs of foreclosure, not adjustment of the

balance on the mortgage debt. See Pitts, 47 So. at 244 (“It should be also ascertained, by

reference, what portion of the attorney’s fee and costs of foreclosure sale should be borne by

[each party] ...; and the portion thereof to be paid by complainants should be in the proportion

that the value of the remainder sought to be redeemed bears to the combined values of the”

property as a whole). Thus, the quoted portion of Pitts says nothing about the proper means of

crediting the value of non-redeemed parcels against the balance due on the debt in a partial

redemption context.

-29-

proportion of the value of the property sought to be redeemed to the value of the unredeemed

property.” (Doc. 59, at 17.)

Unfortunately, neither the redemption statute nor the case authorities identified by the

parties in their extensive summary judgment briefing shed meaningful light on which

methodology is appropriate.38 The Court is left to fall back on the balance of the equities,

pursuant to Alabama Code § 6-5-256. In weighing those equities, it is important to remember

the purpose of this aspect of the redemption exercise. Given the parties’ agreement to a partial

redemption, the task before us is to determine the “balance due on the debt” for the parcels being

redeemed, which balance will then be included in the redemption price pursuant to § 6-5-253. 

As explained in Section IV.D.1., supra, when the foreclosure sale was concluded, West Beach

owed CS Assets a total unpaid balance of $957,191.20, which had been secured by Parcels A

through F and the Metes and Bounds Parcel. That debt did not differentiate or prioritize among

the seven mortgaged parcels, and was not allocated among those parcels in any particular

manner by West Beach or CS Assets. Given this backdrop, to engage in the kind of dollar-fordollar credit that First Financial proposes would be to indulge an inequitable fiction. It’s a

fiction because there is neither evidence nor any reason to believe that West Beach’s unitary

indebtedness to CS Assets elevated Parcel F above any of the other parcels, or that the portion of

that debt allocable to Parcel F was any greater or any lower than Parcel F’s proportional share in

the value of all seven parcels as a whole. It’s inequitable because implementing a dollar-fordollar adjustment for the market value of Parcel F would effectively transform a $957,000

unpaid balance covering seven parcels into a $57,000 debt covering six parcels, with First

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 29 of 42
39 As CS Assets observes, it is hardly a stretch to conceive of circumstances in

which the dollar-for-dollar methodology championed by First Financial would result in the

redeeming party paying nothing for the “balance due on the debt” category of charges mandated

by statute. For an eminently plausible example, suppose the market value of Parcel F was

$1,000,000, rather than $900,000. That figure exceeds the $957,000 balance due on the debt as

of foreclosure. Under First Financial’s proposed framework, not only would the redemptioner

owe CS Assets zero dollars on the balance of the debt, but presumably CS Assets would be

obligated to pay First Financial a rebate for the $43,000 excess of the market value of the parcel

being retained over the balance of the debt owed. Such a result (in which the purchaser at

foreclosure is rebating funds to the redemptioner even as the latter takes title to the purchaser’s

property) would be nonsensical and would violate the clear spirit of the redemption statute, yet it

would be entirely possible (and, indeed, inevitable) under the First Financial dollar-for-dollar

proposal.

40 Once again, the parties’ briefs fall short in advocating any specific proposals for

how to accomplish these calculations. CS Assets urges the Court to use a proportionality

methodology if a credit is to be allowed, but offers no specifics for the implementation of same. 

Meanwhile, First Financial argues against a proportionality methodology, but fails to make any

proposal in the event the Court decides that a proportional approach is appropriate. Thus, both

parties have left the mechanics of the proportional valuation procedure (an issue which is

specifically joined on summary judgment) to the Court’s own devices, without contributing a

single idea for how it should be done. Having squandered their opportunity to make specific

proposals on this point, the parties cannot subsequently be heard to complain that the Court’s

selected methodology is not to their satisfaction.

41 Of course, CS Assets could have argued (but did not) that Hollon’s other

appraisal of $7,200,000 based on the original zoning status of those parcels would be more

appropriate. (Doing so would reduce the proportional value of Parcel F relative to the package

of parcels as a whole, by lowering the fraction from 900,000/4,900,000 to 900,000/7,200,000.) 

However, the unrebutted statements of Hollon are that the new zoning was originally to take

-30-

Financial reaping the benefits in the form of a drastically lower redemption price for Parcels A

through E. It would be unfair to allocate almost all of the balance of the debt to Parcel F and

almost none of it to the other six parcels that likewise secured that debt.39

To alleviate this inequitable fiction, the Court will utilize a proportional-value method of

crediting Parcel F against the balance due on the debt.40 First Financial’s own expert, Michael

Hollon, has offered unrebutted evidence on summary judgment (CS Assets’ appraisal and

valuation evidence having been barred pursuant to Rule 37(c)(1)) that at the time of foreclosure,

the seven parcels as a whole had a market value of $4,900,000 under the revised zoning status,

with Parcel F having a market value of $900,000.41 Thus, the market value of Parcel F

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 30 of 42
effect in July 2005, and that a final deadline of July 18, 2007 was fixed by the Gulf Shores

Planning & Zoning Commission for any permit applications seeking to travel under the old

zoning requirements. (Hollon Aff., Exh. 1, at 5.) In March 2008, an announcement was made

extending that deadline further; however, as of the November 30, 2007 foreclosure date, it is

undisputed that the previous deadline for availing oneself of the old zoning provisions had

expired and that no further extension of the deadline had been announced. Thus, as of

November 30, 2007, all indications were that Parcels A through E and the Metes and Bounds

Parcel were zoned as BTB-1, the more restrictive zoning status than the previous BTB. For that

reason, it is appropriate to use Hollon’s BTB-1 appraisal figure, rather than his BTB valuation,

because that corresponds to the properties’ actual zoning status on that date.

Similarly, to the extent that First Financial might attempt to reduce the denominator of

the fraction from $4.9 million to $2.5 million by relying on the Farmer appraisal included in their

summary judgment exhibits, the Court declines that proposal. By all accounts, Hollon is First

Financial’s expert appraiser. First Financial retained Hollon to perform the retrospective

appraisal in connection with this lawsuit and submitted his results on summary judgment as its

litigation position on valuation. Having done so, First Financial will not be heard to clamor for

the disregard of Hollon’s appraisal values for Parcels A through E and the Metes and Bounds

Parcel, or for the substitution of other values from other appraisers not retained by First Financial

whose results might be more to First Financial’s liking given the manner in which the summary

judgment analysis has evolved. Plaintiff will not be permitted to pick and choose the parts of its

own expert’s testimony it wants to implement, asking the Court to accept some of it and reject

other portions of it, all to maximize plaintiff’s advantage.

-31-

accounted for 18.37% (or 900,000 / 4,900,000) of the market value of the package of seven

parcels at the time of foreclosure. As a matter of equity, the Court will therefore credit 18.37%

of the balance due on the debt against the total redemption price to account for CS Assets’

retention of Parcel F. The arithmetic ($957,121.20 x 0.1837) leads to a credit of $175,823.16. 

When that figure is subtracted from the $957,121.20 balance owed on the debt, the resulting

adjusted balance owed on the debt as of the foreclosure date is $781,298.04. That amount will

be added to the redemption price for the “balance due on the debt” category of charges pursuant

to Alabama Code § 6-5-253.

3. Accrued Interest on the Debt.

The next category of lawful charge prescribed by Alabama’s redemption statute is the

interest accrued on the balance on the debt. In particular, the statute calls for the redemptioner to

“pay any balance due on the debt, with interest as aforesaid thereon to date.” Ala. Code § 6-5-

253 (emphasis added). As before, the parties dispute the period of time during which interest

should run, with CS Assets seeking interest accrual all the way through the present and First

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 31 of 42
42 The statute’s use of the language “interest ... to date” does not alter this

conclusion. The Court construes “to date” as meaning the date of redemption, which Alabama

courts fix as the date on which the complaint to redeem was filed, not the date of entry of final

judgment. See Pankey, 671 So.2d at 689.

43 This calculation was reached as follows: From an adjusted balance due on the

debt of $781,298.04, a 15% interest rate equates to $117,194.71 in interest per year. Interest

accrued for 343 days, or 0.937 years (343/366), from the foreclosure date through the complaint

-32-

Financial maintaining that interest ceased accruing on the date that this redemption action

commenced. The Court has already decided this question in First Financial’s favor in Section

IV.C., supra, and the reasoning set forth there applies with equal force here.42 Accordingly, the

Court finds as a matter of law that interest accrues on the balance due on the debt only from the

November 30, 2007 foreclosure date through the date on which this redemption action was filed

(November 7, 2008).

As for the applicable rate of interest, the redemption statute specifies that interest accrues

“at the rate allowed to be charged on money judgments as set forth in Section 8-8-10.” Ala.

Code § 6-5-253. The cited section in turn provides that money judgments, “if based upon a

contract action, bear interest ... at the same rate of interest as stated in said contract; all other

judgments shall bear interest at the rate of 12 percent per annum.” Ala. Code § 8-8-10. The

Alabama Supreme Court has endorsed the proposition that a rate of interest fixed by contract

takes precedence over the fixed legal rate in the redemption context. See Southeast Enterprises,

720 So.2d at 876-77 (“If a portion of the redemption price is composed of a debt for which the

interest rate is fixed by contract (e.g., a note), the contract rate would apply in lieu of the fixed

legal rate.”). The Renewal Promissory Note executed between West Beach and CS Assets called

for an interest rate of 15% per annum on all balances in default 10 days or more. (Doc. 48, Exh.

H, at 1.) The balance of the debt owed clearly flows from that Renewal Note. Therefore,

interest accrues on the balance owed on the debt for redemption purposes at the contract rate of

15% rather than the fixed statutory rate of 12%. First Financial does not argue otherwise.

Computing interest on the balance due on the debt at the rate of 15% from the date of the

foreclosure sale (November 30, 2007) through the date of commencement of suit (November 7,

2008) yields an interest figure of $109,811.44.

43 That figure will be added to the redemption

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 32 of 42
date, and $117,194.71 times 0.937 equals $109,811.44.

44 There is Alabama authority for the proposition that, where the underlying

mortgage contains an attorney’s fee provision, the purchaser’s reasonable attorney’s fees

incurred in foreclosure are properly added to the redemption price. See Lytle v. Robertson, 170

So. 484 (Ala. 1936). First Financial challenges neither the veracity of this point of law nor CS

Assets’ contention that its mortgage with West Beach contained just such a provision. Indeed,

an attorney’s fee provision is set forth in the Heritage Mortgage and Security Agreement. (See

doc. 48, Exh. B, at § 1.16.)

45 This objection is difficult to comprehend. Nothing in Rule 56 requires a party to

present evidence in the form preferred by opposing counsel. CS Assets has presented the

declaration of its manager that attorney’s fees in the stated sums were incurred. That is

sufficient for summary judgment purposes, and no itemization is necessary for that figure to be

credited. Besides, First Financial had the benefit of a full discovery period in this case to explore

the factual underpinnings of all of the lawful charges sought by CS Assets. If First Financial

now lacks information about itemized attorney’s fees, it can only be because First Financial

either (a) failed to ask appropriate questions in discovery to elicit this information, or (b) failed

to file a motion to compel if its discovery inquiries on this topic went unanswered. Either way,

First Financial has only itself to blame for any lack of specificity in the attorney’s fees data in its

possession at this time, and cannot be heard to complain now of the purported inadequacy of

same.

-33-

price.

4. Attorney’s Fees and Late Charges.

Next, the parties clash over CS Assets’ contention that attorney’s fees and late charges

relating to nonpayment and recovery of the West Beach debt should be incorporated into the

redemption price. The Court will consider each of these items in turn.

a. Attorney’s Fees.

With respect to attorney’s fees, CS Assets seeks to include in the redemption price the

sum of $50,000 in attorney’s fees and expenses it incurred in the foreclosure action and the West

Beach Action in the Northern District of Alabama to obtain a deficiency judgment against West

Beach. First Financial concedes that “the attorney’s fees payable upon redemption are to be

awarded in the Court’s discretion.” (Doc. 52, at 20.) Thus, it is not contested that the West

Beach Action attorney’s fees are a proper element in computing the redemption price here.44

And despite First Financial’s criticism that CS Assets “has provided no satisfactory itemization

of its claim for attorney’s fees” (doc. 52, at 21),45 it has failed to come forward with any evidence

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 33 of 42
46 It bears noting that the Final Judgment entered in the West Beach Action

specifically awarded the sum of “$50,000.00 which the court finds to be reasonable attorneys’

fees and expenses.” (Doc. 48, Exh. L, at ¶ 2.) CS Assets’ position is that it actually incurred

fees and expenses exceeding $78,000 in the foreclosure and deficiency actions, and it submits

record evidence purporting to show same. (Doc. 48, at 19 n.37; doc. 49, Exh. M, at ¶ 10.) 

Nonetheless, CS Assets states that “[i]n deference to said final judgment” entered in the West

Beach Action, it “is revising the amount sought in connection with the redemption by First

Financial to Fifty Thousand Dollars ($50,000.00) in attorney’s fees and expenses.” (Doc. 48, at

19 n.37.) On that basis, the attorney’s fee portion of the redemption price will be capped at

$50,000 in this case.

47 Remarkably, in the same brief in which CS Assets quotes this passage from Pitts

in favor of an apportionment scheme, it states that “Alabama law and equity ... do not allow for

the apportionment of such lawful charges in the case of a partial redemption.” (Doc. 59, at 28.) 

In so arguing, CS Assets contradicts its reliance on Pitts for apportionment just 11 pages earlier

in the same memorandum. In any event, Pitts is both clear and persuasive on this point, and the

Court finds that both Alabama law and equity support apportionment of attorney’s fees in this

case in the manner prescribed by Pitts.

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or argument suggesting that itemization is necessary or that there are genuine issues of material

fact as to the veracity and reasonableness of CS Assets’ accrual of $50,000 in attorney’s fees and

expenses in connection with foreclosure and deficiency proceedings against West Beach.46

Where the parties part company on the attorney’s fee issue is on the question of

apportionment. First Financial wants those fees to be apportioned based on the partial

redemption nature of this case. CS Assets does not. Alabama courts have plainly allowed

apportionment of attorney’s fees and expenses in partial redemption cases. More than a century

ago, the Alabama Supreme Court explained that “[i]t should be also ascertained ... what portion

of the attorney’s fee and costs of foreclosure sale should be borne by the respondent, and what

by the complainants coming to redeem their remainder; and the portion thereof to be paid by

complainants should be in the proportion that the value of the remainder sought to be redeemed

bears to the combined values” of the foreclosed parcels. Pitts v. American Freehold Land

Mortg. Co. of London, 47 So. 242, 244 (Ala. 1908). Both sides have cited Pitts for this very

proposition at various points in their summary judgment briefs. (Doc. 56, at 6; doc. 59, at 17.)47

Accordingly, the Court will follow the Pitts guidance, both as a matter of law and based

on the equities of having First Financial bear responsibility only for that portion of CS Assets’

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 34 of 42
48 The Court recognizes, of course, that First Financial was requesting

apportionment on a different theory than that set forth above. In particular, First Financial

sought to reduce the attorney’s fee charge to $28,098, based on an unexplained calculation “in

proportion to how the original Heritage Bank debt relates to the total debt at issue in the

deficiency case.” (Doc. 52, at 20-21.) In Section IV.D.1., supra, the undersigned specifically

rejected First Financial’s attempts to confine its redemption payment obligations to the original

Heritage debt rather than the full CS Assets debt. In light of that determination, it would be

inappropriate to apportion attorney’s fees or any other lawful charges based on the percentage of

funds sought by CS Assets in the West Beach Action that related to the original Heritage loan

rather than the restructured CS Assets loan. Notwithstanding First Financial’s incorrect

approach to apportionment, it did cite the apportionment language from Pitts; therefore, the

Court construes First Financial’s position as also including a request for apportionment of the

sort conducted in Pitts, which is precisely what has been done supra.

49 As with attorney’s fees, it appears that the Final Judgment in the West

Beach Action discounted the late charges awarded from the figure originally requested by CS

Assets. After all, a straight 5% late charge calculated against the principal of $2,515,722 (the

amount owed under the Renewal Promissory Note at maturity) would yield a figure of $125,786,

yet the late charge awarded in the West Beach Action was less than half of that amount. Be that

as it may, CS Assets in this action requests a late charge of just the $60,000 amount awarded in

the West Beach Action, so the Court will not consider whether a higher amount could have been

included in the redemption price.

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attorney’s fees and expenses relating to the particular parcels it is redeeming. In Section

IV.D.2.c., supra, the Court computed the market value of Parcel F relative to the market value of

all parcels at issue as being 18.37%. As such, the attorney’s fees included in the redemption

price will be reduced by 18.37% to apply the apportionment principles espoused in Pitts. The

arithmetic ($50,000 x 0.8163) yields a lawful charge of $40,815.00 in attorney’s fees, which will

be included in the redemption price.48

b. Late Charges.

As for late charges, the parties’ debate proceeds along largely similar lines to those

addressed in the attorney’s fee context. The Renewal Promissory Note executed by West Beach

and CS Assets contains a provision stating that if principal and interest are not paid at maturity

or at acceleration, West Beach agrees “to pay a late charge equal to 5% of the total debt

(principal plus interest).” (Doc. 48, Exh. H, at 1.) The Final Judgment entered in the West

Beach Action “allowed a reasonable late charge penalty of $60,000.00.” (Doc. 48, Exh. L, at 1

n.1.) CS Assets now seeks inclusion of that $60,000 late charge in the redemption price.49 The

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 35 of 42
50 In debating the late charge line item on summary judgment, CS Assets requests

only the $60,000 referenced in this section. Nonetheless, First Financial uses the late charge

topic as a point of departure for insisting that CS Assets is actually attempting to recover two late

charges, the $60,000 discussed previously “but as well, another late charge equal to $100,825.00

imbedded in its recalculation of the original Heritage Bank debt,” which First Financial decries

as a “doubling up of charges.” (Doc. 52, at 20.) This argument is meritless. In the first place,

this argument should not have been made under the heading of late charges (where CS Assets

seeks only $60,000), but should instead logically have been included in First Financial’s

arguments addressing the balance due on the debt because that “late charge” actually appears in

the “balance due on the debt” category of lawful charges in this case, and has thus already been

awarded. Second, First Financial mis-classifies the $100,825 amount as a double-dipping late

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legal basis for this request is that, under Alabama law, late charges are considered a form of

interest, whose enforceability is “limited only by principles of unconscionability.” Cantrell v.

Walker Builders, Inc., 678 So.2d 169, 173 (Ala.Civ.App. 1996) (recognizing that “late charges

may be treated as provisions for interest upon the underlying obligation” for loans exceeding

$2,000, pursuant to Ala. Code § 8-8-5). There has been, and can reasonably be, no suggestion

that a $60,000 late charge under the CS Assets / West Beach loan agreement (amounting to less

than 2.5% of the principal that West Beach had failed to pay) was unconscionable. Because

interest is properly awarded as a category of lawful charges in the statutory redemption scheme,

and because the late charge in question here is properly viewed as a form of interest, that late

charge may be included in the redemption price.

For its part, First Financial states that “it is agreeable to paying a late charge based on the

$60,000.00 awarded in the deficiency litigation,” subject to the same kind of apportionment it

requested in the attorney’s fees context. (Doc. 52, at 20.) As stated in the attorney’s fee section,

the Court agrees that a Pitts analysis is appropriate, rejects CS Assets’ self-contradictory

contention that apportionment of late charges in the Pitts manner is not permitted under Alabama

law and equity, rejects First Financial’s nebulous request for apportionment based on the relative

fraction of funds sought under the original Heritage loan to those sought under the modified CS

Assets loan, and performs apportionment calculations in precisely the same manner as it did on

the attorney’s fees category. Multiplying the $60,000 late charge by 0.8163 (the share of the late

charge not attributable to Parcel F in this partial redemption case), the Court finds that the late

fee charge properly included in the redemption price equals $48,978.

50

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 36 of 42
charge, when it is properly viewed as “balance due on the debt” pursuant to § 6-5-253. When

CS Assets and West Beach agreed to modification of the underlying Heritage loan, there was an

outstanding late charge of $100,825 due on that loan. (Doc. 59, Exh. 4, at ¶ 14.) As part of the

loan modification process, CS Assets and West Beach agreed to roll that $100,825 into the

principal of the revised loan, such that the $100,825 became subsumed under, and part of, the

$2,515,722 principal amount in the Renewal Promissory Note. (Mosher Dep., Exhs. 12, 13, 15,

16, 18.) Thus, as of the April 30, 2007 execution of the renewal/modification documentation,

the $100,825 was no longer a late charge, but rather was a part of the “balance due on the debt”

which West Beach expressly agreed to have included in the principal. In light of these

circumstances, First Financial’s contention that the $100,825 is a duplicative “late charge” that

should be carved off of the principal balance amount is irreconcilable with the facts. Likewise,

First Financial’s suggestion that the $100,825 should be disallowed on unconscionability

principles is baseless. There is nothing unconscionable about a debtor (West Beach) agreeing

that an admittedly-owed late charge of $100,825 should be rolled into a new modified loan

principal amount, with an additional late charge being imposed if the modified loan is not paid in

a timely fashion. Recall that the loan modification redounded to West Beach’s benefit by

allowing it to avert immediate foreclosure based on a debt that it could not then repay.

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E. Credit for Property Taxes Paid by First Financial.

Having worked through the various statutory components of the redemption price, the

Court’s work is not yet finished. First Financial requests a credit for certain property taxes it

paid on Parcel F and the Metes and Bounds Parcel. In keeping with the parties’ scorched-earth

mantra in this case, CS Assets opposes that request. The Court therefore will intercede on this

aspect of the dispute, as well.

The uncontroverted evidence is that in January 2009 (several months after First Financial

commenced this redemption action but several months before the dismissal of its claims for

redemption of Parcel F and the Metes and Bounds Parcel), First Financial “paid the property

taxes that were due on all parcels described in its complaint.” (Province Aff., ¶ 6.) Such taxes

included the sum of $27,767 in property taxes due for Parcel F and the Metes and Bounds Parcel. 

(Id.) At the time that First Financial paid those taxes, it was in fact seeking redemption of those

parcels. Of course, subsequent events in this litigation extinguished First Financial’s claims for

redemption of Parcel F and the Metes and Bounds Parcel. In light of these events, First

Financial requests a setoff of $27,767 from the redemption price to account for this tax payment,

which worked directly to the benefit of CS Assets by relieving CS Assets of the obligation to pay

2009 taxes for real property it owns.

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 37 of 42
51 Another way of looking at this question is in terms of the mistake exception to the

voluntary payment doctrine. It is clear that “Alabama law recognizes a mistake exception to the

voluntary payment defense” and that “money voluntarily paid under a mistake of fact may be

recovered, even where the party paying had means of ascertaining the real facts.” CIT

Communication, 2009 WL 3517603, at *11 (citations and internal quotation marks and brackets

omitted). Here, the mistake was that First Financial apparently did not know that CS Assets was

going to reject a full redemption of all seven parcels, but was instead going to demand a

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Faced with this facially reasonable request for a minor adjustment of the total redemption

price to account for a payment made by First Financial in good faith that inured wholly to CS

Assets’ benefit, CS Assets nonetheless objects. According to CS Assets, First Financial “acted

as a volunteer” when it paid the taxes, so it is simply out of luck. (Doc. 59, at 28; doc. 60, at 15.) 

CS Assets is correct that Alabama courts have generally declined to order restitution to a party

for a purely voluntary payment. See, e.g., CIT Communication Finance Corp. v. McFadden,

Lyon & Rouse, L.L.C., --- So.3d ----, 2009 WL 3517603, *11 (Ala. Oct. 30, 2009) (“a party who

voluntarily pays sums without objection [with full knowledge of all the facts] cannot

subsequently maintain a ... claim to recover the funds paid absent fraud, duress, [or] extortion”)

(citations omitted). However, CS Assets’ reliance on the voluntary-payment doctrine is

unavailing here. Simply put, it is inaccurate to characterize First Financial as a mere volunteer at

the time it paid the property taxes on Parcel F and the Metes and Bounds Parcel. When First

Financial made those payments, it had active, pending claims for redemption of those two

parcels, such that it was acting to protect a possible interest in them. As explained supra, absent

objection by CS Assets, First Financial could and would have redeemed all seven parcels in

accordance with Alabama’s preference for full redemptions. What’s more, in the course of that

redemption, First Financial would have been legally responsible for paying any taxes on those

parcels. See Ala. Code § 6-5-253(a)(2) (listing “[t]axes paid or assessed” as lawful charges that

must be included in the redemption price, along with interest on same). These circumstances

distinguish this case from the “mere volunteer” scenario that CS Assets invokes. See generally

Sykes v. Sykes, 78 So.2d 273, 280-81 (Ala. 1954) (“The averments of the complaint clearly

indicate that complainant paid out moneys for the benefit and protection of the real estate in the

belief that she was the equitable owner of the property and, therefore, had an interest to protect. 

The contention that the bill shows her to be a mere volunteer is without merit.”).51

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 38 of 42
piecemeal redemption, despite the disfavored status of same. Had CS Assets not made that

election, First Financial would have been on the hook for the property taxes for Parcel F and the

Metes and Bounds Parcel, either upfront or in the form of an add-on to the statutory redemption

price. The Court will not penalize First Financial for attempting to play by the rules

discouraging partial redemptions and for being unable to read CS Assets’ mind as to its desire to

split the transaction into a partial redemption, with all of the attendant complications and

inconveniences.

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More generally, taking a step back from the minutiae of the voluntary payment doctrine,

the Court remains acutely aware of the Alabama legislature’s directive that it “settle and adjust

all the rights and equities of the parties” in redemption. Ala. Code § 6-5-256. First Financial

made a tax payment that relates exclusively to the two parcels not being redeemed in this action. 

Based on subsequent developments, this tax payment redounds wholly and exclusively to the

benefit of CS Assets, by essentially giving it a free ride for 2009 property taxes on the two

foreclosed parcels it is retaining. There is no equity in the contention that First Financial should

be denied a credit for this relatively small line item as to which CS Assets is reaping the full

benefit.

For all of these reasons, the Court will include an offset in the redemption price in the

amount of $27,767 as a credit for the tax payments that First Financial made for CS Assets’

advantage on Parcel F and the Metes and Bounds Parcel.

F. First Financial’s Request for Equitable Lien.

The final issue presented in the parties’ summary judgment briefing is First Financial’s

threadbare, one-paragraph request for imposition of an equitable lien. The West Beach Action

may have proceeded to judgment in the Northern District of Alabama, but it is not yet over. To

the contrary, West Beach has appealed the judgment in that case to the Eleventh Circuit, where it

is arguing, inter alia, that the district court erred in declining to vacate the foreclosure sale. In

light of these circumstances, First Financial reasons that it “runs some risk of being divested of

its redemption title” and requests entry of “an equitable lien in favor of First Financial upon all

present, future or contingent interests of CS Assets in Parcels A through E, along with any

associated indebtedness of West Beach.” (Doc. 52, at 21.) CS Assets opposes the request for an

equitable lien on the grounds that it is unfair and unnecessary, and instead proposes certain other

arrangements that it contends are adequate to protect First Financial. (Doc. 59, at 30.) 

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 39 of 42
52 See also Hill v. Hill, 757 So.2d 468, 472 (Ala.Civ.App. 2000) (“[A]n equitable

lien arises when a person makes improvements on another’s property as a result of fraud, duress,

undue influence, or mistake.”); Jordan v. Mitchell, 705 So.2d 453, 458 (Ala.Civ.App. 1997) (in

describing the “equitable grounds essential to give the ‘equitable lien’ principle a field of

operation ..., mere passive conduct on the part of the party against whose interest the lien is

sought is not sufficient”) (citation omitted).

-40-

Unfortunately, First Financial elected not to respond to CS Assets’ arguments in opposition to

the equitable lien request, so First Financial’s position concerning CS Assets’ arguments against

imposition of an equitable lien here is simply unknown.

The more fundamental defect in First Financial’s request is that it has failed to articulate

an explanation for why any equitable lien, much less one as sweeping as that sought, is necessary

to protect its interests. Alabama courts have imposed equitable liens only in certain narrow

circumstances, none of which appear to be present here. See Prince v. Crow, 589 So.2d 161, 163

(Ala. 1991) (explaining that “imposition of an equitable lien has been limited to three situations

in Alabama,” to-wit: (a) an improver acting under mistaken belief of ownership makes

improvements on the land of another because of fraud, duress, undue influence or mistake; (b)

the true owner of land makes a demand for rents and profits, and the bona fide occupant under a

claim of title receives a set-off for valuable improvements he made to the land; and (c) recovery

for permanent improvements upon suggestion and proof of adverse possession, where true owner

brings action to recover possession of land).52

Furthermore, it cannot come as a surprise to First Financial that it is in precisely the

position it now faces (i.e., one in which a redemption price is being fixed and the redemption

transaction can be concluded, but the underlying issue of the validity of the foreclosure sale has

not been fully and finally adjudicated on appeal). First Financial recognized more than 11

months ago that “[i]f West Beach prevails in its case against CS Assets, both the foreclosure sale

and the redemption by First Financial Bank will be undone.” (Doc. 10, ¶ 1.) Yet rather than

requesting a stay of these proceedings on that basis, First Financial expressed confidence that “if

the foreclosure is set aside after the redemption proceeds have been paid over to CS Assets, First

Financial Bank will be entitled to restitution.” (Id., ¶ 3.) In its summary judgment filings, First

Financial offers no explanation whatsoever why the restitution rights it identified back in

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 40 of 42
53 That amount is calculated as follows: $1,600,000 (purchase price in foreclosure)

plus $179,934.43 (interest on purchase price through commencement of redemption lawsuit) plus

$781,298.04 (adjusted balance due on debt) plus $109,811.44 (interest on adjusted balance of

debt through commencement of redemption lawsuit) plus $40,815.00 (pro tanto share of

reasonable attorney’s fees and expenses accrued in foreclosure and deficiency actions) plus

$48,978.00 (pro tanto share of contractual late charge) minus $27,767.00 (offset for tax

payments by plaintiff on non-redeemed parcels).

54 For any and all disbursements of the funds on deposit, the Clerk of Court will

require payee names, addresses, and Social Security Numbers or Tax Identification Numbers, as

appropriate. Also, the parties are reminded that, in accordance with the fee schedule

promulgated under 28 U.S.C. § 1914, the Clerk of Court will withhold a fee of 10% of the total

interest earned on these funds while they were on deposit in the Bank of America money market

account in connection with this matter.

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January 2009 will be insufficient to safeguard it should the “risk of being divested of its

redemption title” come to fruition in the ongoing appellate proceedings in the West Beach

Action. The Court will not endeavor to fill in these legal and logical gaps for First Financial. 

Accordingly, the undeveloped afterthought request for equitable lien is denied.

V. Conclusion.

For all of the foregoing reasons, it is ordered as follows:

1. The Motion for Summary Judgment of Defendant (doc. 46) and the Motion for

Summary Judgment by Plaintiff (doc. 51) are both granted in part, and denied

in part.

2. The redemption price for Parcels A through E is fixed at $2,733,069.91.

53

3. Plaintiff’s request for imposition of equitable lien is denied.

4. Because the foregoing resolves all triable issues joined in this matter, the Final

Pretrial Conference, and all associated trial and pretrial deadlines, are canceled.

In light of these rulings, however, several questions remain unanswered, including the

following: (a) the form of judgment (if any) that should be entered at this time; (b) whether the

funds on deposit in the Court Registry ($3,207,995.65, plus interest accrued since the February

27, 2009 deposit date) should be disbursed at this time, and if so in what amounts and to whom;54

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 41 of 42
55 Among other things, the Court recognizes that First Financial has suggested that

if the redemption price is not to its liking, it may “seek to dismiss its claim for redemption.” 

(Doc. 61, at 13.) Alabama courts have recognized that a redemptioner does not have to comply

with a judgment fixing the redemption price, but can instead forego making the payment and

forfeit its redemption right. See Rhoden v. Miller, 495 So.2d 54, 58 n.3 (Ala. 1986) (redemption

judgment “merely allows the plaintiff to purchase the property from the defendant within a

specified time at a fixed dollar amount,” such that “[f]ailure to comply with the terms of the

judgment results only in the plaintiff’s losing his right of redemption”).

56 To assuage any concerns relating to the requirement that the parties work together

on this report, no party will be deemed to have waived any objections to this Order by

participating in the above-described process. Therefore, it is not necessary for the parties to lard

the joint report with caveats that they reserve their right to seek other recourse from this Order. 

No waiver of such rights will be construed from their mere compliance with the reporting

requirement.

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and (c) whether there is any reason why final judgment should not be entered at this time.55

Counsel for both parties are ordered to meet and confer in good faith concerning all of these

issues, and to submit a joint report (identifying any areas of disagreement that may exist, and

delineating their respective positions as to those areas) on or before January 27, 2010.

56

DONE and ORDERED this 13th day of January, 2010.

s/ WILLIAM H. STEELE 

UNITED STATES DISTRICT JUDGE

Case 1:08-cv-00731-WS-M Document 70 Filed 01/13/10 Page 42 of 42