Aliant Bank v. Four Star Invs., Inc.

Summary

The Alabama Supreme Court reviews Aliant Bank’s claims arising from the failed development of the Twelve Oaks subdivision and the issuance and use of improvement-district bonds. The Court addresses negligence, breach of fiduciary duty, immunity, res judicata, collateral estoppel, and statute-of-limitations issues, holding that the claims against the improvement-district board members were not generally barred by those defenses. The court affirmed in part and reversed in part in appeals nos. 1150822 and 1150823, and affirmed in appeal no. 1150824.

Holdings

1. The board members were not entitled to summary judgment based on the Alabama Improvement District Act's immunity provision, res judicata, collateral estoppel, or the statute of limitations. As directors of the public improvement district, they owed duties of care and loyalty to owners of property within the district, including Aliant as mortgagee under Alabama's title theory, and Aliant presented substantial evidence creating genuine issues of material fact.
2. WHA owed Aliant neither a fiduciary duty nor a general duty of care, and summary judgment for WHA on the negligence and breach-of-fiduciary-duty claims was proper.
3. All claims against Engineers of the South and Tim Harbison were barred by the two-year statute of limitations because Aliant possessed facts by March 2012 that should have led a reasonably diligent person to discover the alleged engineering misconduct, but did not add the EOS defendants until October 2014.
4. Aliant's fraud claims against Four Star Investments, Twelve Oaks Properties, and B & B Construction failed because Aliant did not know of or rely on the alleged misrepresentations in the invoices. The claims against B & B Construction were independently untimely.
5. Aliant presented sufficient evidence to avoid summary judgment on fraudulent-misrepresentation and fraudulent-suppression claims against Bobby Smith and Twelve Oaks Properties.
6. Hunt and WHA owed Aliant no duty to disclose the intended use of the bond proceeds, so summary judgment on the suppression claims against them was proper.
7. The conspiracy claims against Smith, Twelve Oaks Properties, Four Star Investments, Mize, Billy Smith, Hunt, and WHA could not be summarily rejected merely because some alleged conspirators were not independently liable for the underlying fraud. A valid underlying cause of action against at least one conspirator is sufficient.
8. The Twelve Oaks Improvement District was immune from Aliant's fraud, conspiracy, and wantonness claims because the Alabama Improvement District Act gives it the same immunity as a municipality, and Alabama municipal immunity bars intentional torts and wanton misconduct.
9. The judgment on the wantonness claims against Smith, Mize, Billy Smith, and Twelve Oaks Properties was affirmed because Aliant waived the issue by failing to brief or support it. The judgment for WHA was affirmed because WHA owed Aliant no duty and did not approve bond disbursements.
10. Aliant was not an intended third-party beneficiary of the completion agreement or management agreement and therefore could not sue Twelve Oaks Properties or WHA for breach of those contracts.

Questions Presented

1. Whether Aliant's negligence and breach-of-fiduciary-duty claims against the improvement-district board members were barred by statutory immunity, res judicata, collateral estoppel, or the statute of limitations.
2. Whether Wrathell, Hunt & Associates, LLC owed Aliant a duty of care or fiduciary duty despite having no relationship or contractual privity with Aliant.
3. Whether claims against the EOS defendants were barred by the two-year statute of limitations applicable to claims against engineers.
4. Whether fraud claims based on allegedly false reimbursement invoices failed for lack of reliance and whether related claims against B & B Construction were untimely.
5. Whether the improvement district was immune from fraud, conspiracy, and wantonness claims.
6. Whether Aliant presented sufficient evidence of fraudulent misrepresentation and fraudulent suppression against Smith and Twelve Oaks Properties.
7. Whether conspiracy claims could proceed against alleged conspirators who were not themselves liable for the underlying fraud.
8. Whether Aliant was an intended third-party beneficiary of agreements between the improvement district and Twelve Oaks Properties or WHA.

Disposition

other