Opinion ID: 1591711
Heading Depth: 2
Heading Rank: 2

Heading: Equitable-Conversion Theory

Text: Next, Steele argues that he is entitled to one-third of ... the insurance proceeds under the theory of equitable conversion, because the LLC interest was effectively destroyed during the time in which Steele's contract for purchase of the interest was executory. Steele's brief, at 52 (emphasis added). We disagree with the application of the doctrine of equitable conversion to the transfer of an interest in a limited liability company. An interest in a limited liability company is personal property. Ala.Code 1975, § 10-12-6 (emphasis added). However, this doctrine of equitable conversion is applicable only when there is a specifically enforceable contract between the parties, and the changes in the rights, duties, powers, and liabilities of the parties that result from the making of the contract are consequences of the equitable right to specific performance, Roberts v. Adams, 47 P.3d 690, 695 (Colo.Ct.App.2001) (emphasis added), in contracts for the sale of real estate. See also Passey v. Great Western Assocs. II, 174 Ariz. 420, 427, 850 P.2d 133, 140 (Ariz.Ct.App.1993) (the doctrine [of equitable conversion] applies only to real estate contracts that are capable of being specifically performed); People v. Alexander, 663 P.2d 1024, 1030 n. 6 (Colo.1983); III American Law of Property § 11.22, at 62-63 (1952). Because this case involves the purported transfer of an interest in personalty, i.e., an interest in Rosenfeld, Steele's equitable-conversion argument has no merit. In an apparent attempt to circumvent the consequences of this rule that the doctrine of equitable conversion applies only to real-estate contracts capable of specific performance, Steele urged the trial court  for the first time in his posttrial motion to alter, amend, or vacate the judgment  to pierce the veil of Rosenfeld, and regard the purported transfer of an interest in Rosenfeld as, in fact, a contract for the sale of real estate. Specifically, Steele argued: The operations of [Rosenfeld] are such as to justify the court's disregard of the entity, piercing the veil and treating Elkins, Glover, and Steele as one-third owners of the [Rosenfeld] building. Thus, Steele would have an executory contract for the purchase of his interest in the building and would be entitled to a 1/3 share of the insurance proceeds under the doctrine of equitable conversion. (Emphasis added.) In its order overruling the posttrial motion, the trial court expressly declined to consider the issue of piercing the corporate veil. It is well settled that a trial court has the discretion to consider a new legal argument in a post-judgment motion, but is not required to do so, and that [w]e will reverse only if the trial court abuses that discretion. Green Tree Acceptance, Inc. v. Blalock, 525 So.2d 1366, 1369-70 (Ala.1988). See also Diamond v. Aronov, 621 So.2d 263, 266-67 (Ala.1993); Blackmon v. King Metals Co., 553 So.2d 105, 106 (Ala.1989); D.J. Sherwood Transp., Inc. v. Road Shows, Inc., 656 So.2d 884, 887 (Ala.Civ.App.1995). The trial court did not exceed its discretion in declining to consider this argument.