Title: THOMPSON PROP. v. Birmingham Hide & Tallow
Citation: 897 So. 2d 248
Docket Number: 1021411
State: Alabama
Issuer: Alabama Supreme Court
Date: July 9, 2004

897 So. 2d 248 (2004)
THOMPSON PROPERTIES 119 AA 370, LTD., and Thompson Properties 123 AA 370, Ltd.
v.
BIRMINGHAM HIDE AND TALLOW COMPANY, INC.
1021411.

Supreme Court of Alabama.
July 9, 2004.
Rehearing Denied September 17, 2004.
*250 David B. Anderson, N. Christian Glenos, and Ryan K. Cochran of Walston, Wells, Anderson &amp; Bains, LLP, Birmingham, for appellants.
Eric J. Breithaupt, Richard E. Smith, Deborah Alley Smith, and Jessica K. Stetler of Christian &amp; Small, LLP, Birmingham, for appellee.
HARWOOD, Justice.
On July 9, 1997, Thompson Properties 119 AA 370, Ltd., and Thompson Properties 123 AA 370, Ltd. (hereinafter "the Partnerships"), sued Birmingham Hide and Tallow Company, Inc. (hereinafter "Hide"), and Eastern Valley Trading Company (hereinafter "Eastern"), in the Jefferson Circuit Court. The Partnerships appeal *251 from a judgment in favor of Hide implementing a jury verdict. We affirm.
The Partnerships, as creditors of Eastern's sole shareholder and president, Ronald L. Rockhill, sought to have certain transfers of property set aside pursuant to the Alabama Uniform Fraudulent Transfer Act ("the AUFTA"), Ala.Code 1975, § 8-9A-1 et seq., on the theory that the properties had been transferred fraudulently. The Partnerships sought to obtain a judgment declaring that Eastern was the alter ego of Rockhill, that a conspiracy existed to defraud the Partnerships, as creditors of Rockhill, and that the transfer of certain assets from Eastern to Hide were fraudulent and in violation of the Partnerships' interests as creditors. The Partnerships sought compensatory damages, as measured by the value of the properties Eastern had transferred to Hide, and punitive damages; the Partnerships also sought to have constructive and equitable trusts imposed on their behalf on any property of Eastern that Hide still possessed as a result of Hide's transaction with Eastern and Rockhill.
On August 26, 1997, Hide answered the complaint and asserted as an affirmative defense that it was a bona fide purchaser for value of the property received from Eastern. Because Eastern did not answer the complaint, the trial court, on October 1, 1997, entered a default judgment against it; that judgment stated, in pertinent part:
On October 6, 1999, the Partnerships filed a motion for a summary judgment on their claims against Hide; on October 28, 1999, Hide filed its opposition to the Partnerships' summary-judgment motion, arguing as follows:
On August 29, 2000, Hide amended its answer to add the affirmative defense that the money it gave Rockhill on the sale of the properties was a "gift."
On October 13, 2000, Hide filed what it labeled as a "renewed" motion for a summary judgment, arguing:
On October 17, 2000, the trial court issued an order granting Hide's motion for a summary judgment on all counts asserted against it by the Partnerships, based on Folmar &amp; Associates LLP v. Holberg, 776 So. 2d 112 (Ala.2000), and dismissing the case with prejudice. The Partnerships appealed the summary judgment, and this Court reversed, stating, in pertinent part:
Thompson Props. v. Birmingham Hide &amp; Tallow Co., 839 So. 2d 629, 634 (Ala.2002).
The case was tried before a jury. On January 31, 2003, the jury returned a verdict for Hide; the trial court subsequently entered a judgment on that verdict. The Partnerships filed a postjudgment motion for a judgment as a matter of law ("JML"), and a motion for a new trial. The Partnerships argued that they were entitled to a JML on their claims of fraudulent transfer based on the application of law to the undisputed facts; alternatively, they argued that they were entitled to a new trial because of alleged errors in the jury instructions and alleged juror misconduct. They submitted affidavits of jury members in support of the juror-misconduct claim. Hide filed an opposition to the motions and also moved to strike the affidavits of the jury members. On April 10, the trial court granted Hide's motion to strike the affidavits, and denied both postjudgment motions. It provided the following detailed analysis of its rationale for striking the affidavits:
"(Emphasis added.) 798 So. 2d  at 652-53.
On May 21, 2003, the Partnerships appealed, arguing that the trial court should have granted their summary-judgment motion or their motion for a JML or a new trial, contending as to the motion for a new trial that the jury's finding was contrary to the weight of the evidence based on certain provisions of the AUFTA, that the trial court erred when it denied the Partnerships' request for a more specific jury instruction, that the trial court erred when it failed to instruct the jury on a conspiracy count, and that the verdict was tainted by juror misconduct.
The Partnerships' complaint alleged that Rockhill "entered into a scheme to conceal and/or protect the assets of Rockhill held by [Eastern] from [his] creditors, including the Partnerships." From our review of the record, the facts most favorable to Hide, as we must view them under the applicable standard of review, are as follows: In 1974, Gary Thompson set up numerous limited partnerships; each partnership owned a piece of land and each partnership was named after Thompson. To denote the differences in each limited partnership, Thompson used a three-digit number after the words "Thompson Properties" as an identifier. The Partnerships are two of those entities. Thompson was the general partner of each of the limited partnerships until 1980 when he filed for *256 personal bankruptcy. In 1980, Rockhill, Thompson's cousin, became the general partner of each of the Thompson limited partnerships. In 1988, Rockhill created and incorporated Eastern. Enabled by his status as the general partner of the Thompson limited partnerships, Rockhill diverted approximately $316,000 from one of the partnerships, Thompson Partnerships 122 AA 056 ("TP122"), to Eastern, and he used the money to acquire three parcels of real estate in Eastern's name  a residence located in Shelby County; a condominium in Panama City Beach, Florida; and a vacant lot in Birmingham (collectively "the Property"). In 1989, Rockhill resigned as the general partner of the Thompson limited partnerships.
In 1988, TP122 sued Eastern and Rockhill in the Jefferson Circuit Court; it sought monetary and equitable relief. Thompson Properties 122 AA 056, Ltd. v. Ron Rockhill et al. (CV-88-501-575-JDC). In 1990, the Partnerships sued Rockhill, alleging breach of fiduciary duty and fraud. Because two plaintiffs were involved, a judgment was rendered against Rockhill for $250,359.32 and $177,801.19, respectively.
In 1991, TP122 settled its case with Rockhill. The pertinent terms of the settlement are as follows:
In 1991, Rockhill personally filed a petition in bankruptcy under Chapter 7 of the Bankruptcy Code, seeking to be discharged from all of his debts. Because title to the Property was in Eastern, it was not listed among Rockhill's personal assets, thereby allowing Rockhill's personal schedules of assets and liabilities to show a negative net worth. The Partnerships sought to have their 1990 judgment against Rockhill declared nondischargeable in the bankruptcy proceeding. In 1993, the bankruptcy court entered a judgment declaring that $74,295.32 and $39,465.19, respectively, of the Partnerships' judgment against Rockhill would be deemed nondischargeable. In the same year, in a further attempt to collect their judgments, the Partnerships garnished Rockhill's wages. However, the amounts collected did not cover the interest on the judgment, to say nothing of the principal, the end result being that Rockhill owed the Partnerships more than the original amount of the judgment the Partnerships had recovered.
*257 Rockhill failed to pay the amount due TP122 under the terms of the settlement agreement, and, pursuant to that agreement, TP122 attempted to sell all of the Property in one transaction. In 1993, Don Kilgore offered to purchase the Property for $192,000, and, after negotiation, TP122 accepted an offer of $194,000 for the Property. Because Rockhill had paid $316,000 for the Property, his assessment of the market value of the Property was higher, and he refused to allow Eastern to sign the deeds selling the Property for $194,000. Rockhill then contacted the owners of Hide, a company that primarily dealt in animal hide and tallow but that had also embarked on occasional real-estate ventures, about purchasing the Property. Rockhill informed Hide that because of the settlement with TP122, he had to find a buyer for the Property. Rockhill offered to sell the Property for $200,000. Hide rejected that offer and offered Rockhill $194,000, which Rockhill finally accepted. It is this transfer that is the basis of the Partnerships' action.
On July 6, 1993, an attorney for Hide wrote a letter to counsel for TP122 informing him that Hide would purchase the Property for $194,000. Eastern, through Rockhill, agreed to the sale.[1] Eastern, through Rockhill, executed the deeds to Hide for the Property. Although Rockhill "sold" Hide the residence located in Shelby County, Rockhill and Hide also entered into a lessor/lessee relationship as to that residence  Hide leased the residence to Rockhill for $1,462.50 per month on July 7, 1993. The lease also included the following provisions:
Owen Vickers, a co-owner of Hide, testified that any and all agreements between Hide and Rockhill relating to the terms of the lease were contained in the lease itself. Testimony from Vickers also revealed that Rockhill paid the rent for five months and then continued to live in the residence for an additional 21 months, without paying rent. Vickers testified that Hide allowed Rockhill and his family to remain in the residence for a number of reasons; two of those reasons, Vickers said, were that because of the garnishment of his wages by the Partnerships, Rockhill was not able to pay the rent and that the Rockhills were making improvements to the residence. Vickers also stated that in his experience with real estate, it is easier to sell a "lived-in" residence as opposed to one that has been unoccupied for a significant period.
During 1994 and 1995, Hide sold the various parcels constituting the Property and, by virtue of those sales, received approximately $492,000. According to Vickers's testimony, after the Property was sold, Rockhill asked Vickers for a $40,000 loan because Rockhill was concerned about where he and his family would reside now that the residence had been sold. Vickers stated that he did not think Hide owed Rockhill anything as a result of the sale of the residence because the residence had not been sold within a year of the signing *258 of the lease agreement. Yet, as "standard operating procedure," whenever a request was made for the payment of money from Hide, Vickers discussed the request with Harry Vickers, his uncle and a co-owner of Hide. The nature of that conversation was described at trial as follows:
The check Hide gave to Rockhill was in the amount of $39,650, and, during a pretrial deposition, Vickers characterized the payment as, among other things, an "undocumented interest," which, the Partnerships say, gives the appearance that the check was the product of a secret negotiation between Hide and Rockhill. However, when asked about that check during trial, Vickers responded as follows:
When asked about the check on cross-examination, the following took place:
On redirect examination, the following was revealed:
Regarding Hide's payment to him, Rockhill testified that he thought that the check should have been made out to his wife for maintaining and improving the residence, including landscaping, sodding, and tree removal performed during the years the Rockhills occupied the residence.
This Court's standard for reviewing a ruling on a motion for a JML is well-settled.
*261 Ex parte Alfa Mut. Fire Ins. Co., 742 So. 2d 1237, 1240 (Ala.1999).
Additionally, this Court reviews the grant or denial of a motion for a new trial under the standard set out in Alpine Bay Resorts, Inc. v. Wyatt, 539 So. 2d 160, 162-63, (Ala.1988):
The Partnerships assert that the first reason they are entitled to a JML is that the conveyance of the Property to Hide was conclusively fraudulent as a matter of law under the AUFTA. Section 8-9A-4(a), Ala.Code 1975, a part of the AUFTA, states:
The Partnerships argue that the undisputed evidence conclusively demonstrates that Rockhill fraudulently transferred the Property to Hide. The Partnerships argue that Rockhill, the debtor, possessed an actual intent to defraud them as creditors when he agreed to sell the Property to Hide. Rockhill's actual intent, the Partnerships argue, is evident when his actions are viewed against the "badges of fraud" listed in § 8-9A-4(b), which, the Partnerships say, provides guidance for determining the actual intent to defraud. That section provides:
The Partnerships contend that Rockhill's actions fit those elements of § 8-9A-4(a) and that their claim is therefore strengthened by the indicia of intent in § 8-9A-4(b). The Partnerships also contend that under Alabama common law a conveyance of property coupled with a reservation of interest in the conveyed property is conclusively fraudulent, regardless of intent. The evidence presented does show that Rockhill retained an interest in the conveyed property: he entered into a lessee/lessor relationship with Hide; he had a right of first refusal with respect to the residence for a period and was to receive a commission if the residence was sold within an allotted time. The Partnerships cite a number of cases that, they say, stand for the proposition *262 that reservation of a benefit in conveyed property is conclusively fraudulent. See Sims v. Gaines, 64 Ala. 392 (1879); Morton Hardware Co. v. Barranco, 233 Ala. 346, 172 So. 109, 110-11 (1937); Bryant v. Young, 21 Ala. 264 (1852); Steiner v. Scholze, 114 Ala. 88, 21 So. 428 (1897); Campbell v. Davis, 85 Ala. 56, 4 So. 140 (1888); Hartshorn v. Williams, 31 Ala. 149 (1857); Deposit Bank of Frankfort v. Caffee, 135 Ala. 208, 33 So. 152 (1902); and Williams v. Ellington, 233 Ala. 638, 172 So. 903 (1936).
However, as Hide notes, those cases predate the AUFTA, which has an effective date of January 1, 1990. Hide argues that the enactment of the AUFTA supersedes the common law and that the language of § 8-9A-4(a) indicates that the Partnerships must prove that Rockhill had the intent to defraud before the transfers to Hide can be set aside. Hide also relies on this Court's treatment of a land conveyance in trust in Giles v. Ingrum, 583 So. 2d 1287 (Ala.1991), in which this Court stated that, "under the [AUFTA], evidence of the donor's fraudulent intent or of constructive fraud is required in order to void a trust. Section 8-9A-4." 583 So. 2d  at 1288.[2] Hide analogizes that rationale to the instant case to say that although the Partnerships have stated facts that show Rockhill's conduct matched some of the qualifications listed in § 8-9A-4, Hide has presented evidence to the contrary, and that § 8-9A-4(b) begins by stating that "consideration may be given." (Emphasis added.) This phrasing, argues Hide, indicates that the list of factors in § 8-9A-4(b) is not intended to be exhaustive and that § 8-9A-4(b) does not purport to state that if one or more of the elements are shown, actual intent to defraud must be presumed.
While the Partnerships did present evidence linking Rockhill to certain of the factors in § 8-9A-4(b), that evidence was not undisputed or unexplained. Rockhill remained at the residence not as an owner, but as a lessee. Hence, a jury could view Rockhill's "possession or control" of the residence as only a present possessory interest subject to the terms of the lease, and not an interest that allowed Rockhill to retain any ownership rights. Owen Vickers testified that every oral agreement between Rockhill and Hide concerning Rockhill's lease was reduced to writing, negating the inference that the "transfer was ... concealed." Vickers further testified that there was never any secret deal between Rockhill and Hide resulting in Hide's paying Rockhill any money. Therefore, the Partnerships fail to present undisputed evidence that the transfer of the Property was conclusively fraudulent under § 8-9A-4(a) based on Rockhill's actual intent to defraud the Partnerships.
Alternatively, the Partnerships argue that they are entitled to a JML under § 8-9A-5(a), a part of the AUFTA. That Code section provides:
The Partnerships contend that the undisputed facts of the case satisfy every element of § 8-9A-5(a). Again, however, there is evidence that negates certain of those elements.
*263 Concerning the concept of "reasonably equivalent value," the trial court charged the jury as follows:
(Emphasis supplied.) We note that because the Partnerships did not object to the trial court's charge to the jury regarding the definition of "reasonably equivalent value" in § 8-9A-5(a), that charge is the law of the case. "Unchallenged jury instructions become the law of the case." BIC Corp. v. Bean, 669 So. 2d 840, 844 (Ala.1995).
Evidence was presented to the jury indicating that when Rockhill purchased the Property in 1988, he paid approximately $316,000 for it. In 1993, the Property was sold to Hide for $194,000. Vickers testified that upon his inspection of one of the properties, he found that significant repairs were needed for the Property to be marketable and that there were also unpaid taxes on the Property. Also, Rockhill informed Hide of the TP122 settlement that involved the Property in the possibility of further litigation.
We find it noteworthy that although the Partnerships claim that $194,000 was not a reasonably equivalent value for the Property, that amount was not arbitrarily set by Hide. When Rockhill first approached Hide, he told Owen Vickers that Kilgore, a third party contacted by TP122, initially agreed to purchase the Property for $194,000, and that the only reason the deal was not consummated was because Rockhill was reluctant to accept Kilgore's offer. It was not until Rockhill was unsuccessful in developing a higher offer that he contacted Hide. These were all things considered by Hide when it submitted its offer of $194,000, and were also facts that a reasonably functioning jury could weigh in determining that $194,000 was "in the ballpark or reasonably close to the market value."
The Partnerships ask this Court to overturn the trial court's denial of their motion for a new trial. First, the Partnerships contend that the jury's verdict is plainly against the weight of the evidence. In its brief to this Court, the Partnership contends that a reasonable jury could not have found:
However, because Hide presented evidence to rebut the Partnerships' claim that the transfer was fraudulent, the jury had a foundation for its finding. Owen Vickers testified that based on his research into the worth of the Property and also on the fact that Rockhill had been offered *264 $194,000 for the Property initially, he believed that $194,000 was a reasonably equivalent value for the three properties in 1993. This point has been fully developed in Part I.
Also discussed previously, the badges of fraud the Partnerships claim are indicative of Rockhill's actual intent to defraud were not undisputed or unexplained. Hide presented evidence the jury could use to negate the inference that Rockhill had the actual intent to defraud the Partnerships. Because there was sufficient evidence presented from which the jury could conclude that the amount Hide paid for the Property was a reasonably equivalent value and that Rockhill did not have an actual intent to defraud, the jury's verdict was not plainly against the weight of the evidence, and the trial court's denial of the Partnerships' motion for a new trial was not improper on that basis.
The Partnerships next argue that they are entitled to a new trial because, they say, the jury's verdict was the product of juror misconduct. Before the jurors began their deliberations, the court charged them as follows:
The Partnerships argue, based on affidavits of jurors, that the foreperson, a court reporter by profession, read her notes to the jury during its deliberation in contravention of the trial court's charge. Also, the Partnerships say, when the foreperson read her notes, she effectively and erroneously changed the Partnerships' burden of proof.
We first note that the trial court correctly struck the juror affidavits filed by the Partnerships with their motion for a new trial. This Court has stated:
HealthTrust, Inc. v. Cantrell, 689 So. 2d 822, 828 (Ala.1997) (citations omitted; emphasis added). Rule 606, Ala. R. Evid., states:
The crux of the Partnerships' argument concerning the foreperson's action is that reading notes that were contrary to the actual charge was tantamount to the improper introduction of extraneous facts. This Court dealt with this issue in Sharrief v. Gerlach, 798 So. 2d 646, 652-53 (Ala.2001), stating, in pertinent part:
The rationale from Gerlach is applicable in this case. Assuming that the foreperson was inaccurate in her recollection of the trial court's charge, that charge was given as a part of the trial. The foreperson's notes, a reflection of her recollection of the trial court's charge, were made within the scope of the trial. This is not the case where a dictionary or some other knowledge gained outside the evidentiary scope of the trial was introduced to the jury during its deliberation. See Ex parte Arthur, 835 So. 2d 981 (Ala.2002) (juror brought in a medical textbook to find information on possible causes of migraine headaches), and Dawson v. State, 710 So. 2d 472 (Ala.1997) (juror reported results of an unauthorized visit to the crime scene). Even if the foreperson erroneously stated the trial court's charge, her notes cannot constitute "extraneous evidence." The charge to the jury was an innate part of the trial proceeding, and to the extent some jurors relied on the foreperson's notes instead of their own memory, that process was part of the "debates and discussions" of the jury. Cantrell, 689 So. 2d  at 828. Because we conclude that a juror's reading to other jurors notes taken by him or her during trial does not amount to "extraneous facts," we do not reach the issue whether the Partnerships suffered actual prejudice by the reading of the notes in this case. Thus, the trial court did not err in denying the Partnerships' motion for a new trial based on juror misconduct.
*266 The Partnerships next argue that they are entitled to a new trial because, they argue, the trial court erred in refusing to charge the jury on conspiracy.
Volkswagen of America, Inc. v. Marinelli, 628 So. 2d 378, 384 (Ala.1993) (quoting Alabama Farm Bureau Mut. Ins. Serv., Inc. v. Jericho Plantation, Inc., 481 So. 2d 343, 344 (Ala.1985)). After the charge was given to the jury, the Partnerships objected to the court's failure to give Alabama Pattern Jury Instructions ("APJI") 43.00, 43.01, and 43.02.
Charge 43.00 reads as follows:
Charge 43.01 reads as follows:
Charge 43.02 reads as follows:
Hide argues that the Partnerships failed to provide sufficient evidence showing that Hide defrauded the Partnerships. The Partnerships allege that they presented evidence of an oral agreement between Rockhill and Hide, which they say shows that Rockhill possessed an "undocumented interest" in the Property, the results of which, they allege in their brief to this Court, were as follows:
In regard to allegations 1 through 3, evidence was presented showing that Rockhill never "used" the condominium. Instead, Rockhill's wife made one weekend trip to the condominium, the sole purpose of which was to remove the family's belongings from the condominium. Also, Rockhill paid rent on the residence under the terms of the lease agreement, just not for the entire time he and his family lived in the residence. Vickers testified that there were other reasons Rockhill was allowed to remain in the residence even though he ceased paying rent, none of *267 which had to do with Rockhill's having an "undocumented interest." Finally, Vickers testified that the "calculations of interest and profits" were done only in an effort to show his uncle that Hide did not owe Rockhill any money. Further, we are bound by Rule 45, Ala. R.App. P., which states:
Based on our examination of the case, the omission of the conspiracy charges could not have "injuriously affected substantial rights of the parties." The evidence relied on by the Partnerships relates to the claim that the Property was fraudulently transferred, a claim the jury rejected. There was no evidence presented, nor was it ever pleaded, that Hide itself defrauded the Partnerships. "The essence of the action in civil conspiracy is the wrong committed rather than the conspiracy itself." APJI § 43.00. See also McLemore v. Ford Motor Co., 628 So. 2d 548, 550-51 (Ala.1993):
The next reason the Partnerships argue that they are entitled to a new trial is because, they say, the trial court should have more clearly instructed the jury that there existed alternate theories of recovery, and, because the trial court failed to do so, a verdict for the defense was rendered as a result of juror confusion. The trial court initially charged the jury on every element pertinent to the proceedings. After some deliberation, the jury requested to hear various parts of the charge again and the judge obliged, again discussing the separate claims. In sum, the trial court fully and accurately charged the jury on the two theories of recovery based on the applicable provisions and elements of the AUFTA. The Partnerships' "objection" voiced to the trial court was simply as follows:
This exchange did not properly constitute an objection meeting the requirements of Rule 51, Ala. R. Civ. P.; therefore, even if the trial court erred in the premises, which we do not perceive, any such error was not preserved for this Court's review.
Finally, the Partnerships argue that if this Court were to find that none of the listed alleged errors, taken individually, mandates a new trial, then their cumulative effect necessitates a new trial. While true that the oft-cited case, Bekins Van Lines v. Beal, 418 So. 2d 81 (Ala.1982), allows for this possibility, the record must plainly demonstrate error. After our review of the record and consideration of the errors the Partnerships alleges occurred, we find that the trial court did not exceed its discretion when it denied all of the Partnerships' postjudgment motions and its motion for a new trial. The judgment of the trial court is affirmed.
AFFIRMED.
HOUSTON, BROWN, and STUART, JJ., concur.
JOHNSTONE, J., concurs in the rationale in part and concurs in the result.
JOHNSTONE, Justice (concurring in the rationale in part and concurring in the result).
But for one exception, I concur in the main opinion. The exception is that I respectfully disagree with the main opinion in its rationale that the plaintiff Partnerships did not sufficiently preserve their objection to the refusal of the trial court to supplement its jury instructions by further instructing the jury that the plaintiffs' two theories were in the alternative to each other. The colloquy quoted in the main opinion shows not only that the plaintiffs precisely identified their objection but also that the trial court understood the objection and even made an express adverse ruling. In my opinion, the reason the trial court did not err in refusing the supplemental instruction is that the posture of the case, including the stage of the proceedings, the content of the entirety of the instructions already given, and the content of the request of the jury for further instructions, did not require the further instruction requested by the plaintiffs.
[1]  After Rockhill's agreement, Kilgore, on July 23, 1993, sent TP122 a letter in which he increased his offer to $210,000. The record does not reveal whether this offer was ever communicated to Rockhill.
[2]  Because the conveyances in Giles took place before the enactment of the AUFTA, the Court analyzed the case under now repealed § 8-9-7.