Lend Lease Asset Management, L.P. v. Cobra Security, Inc.,
| Docket Number: | 2004-CA-01485-SCT Linked Case(s): 2004-CA-01485-SCT |
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| Oral Argument: | 07-20-2005 | |
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| Supreme Court: | Opinion Link Opinion Date: 10-13-2005 Opinion Author: Dickinson, J. Holding: Affirmed in part; Reversed and Rendered in part |
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| Additional Case Information: |
Topic: Receivership - Wrongful attachment claim - Damage claim - Section 63-21-15 - Attorney’s fees Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Carlson and Randolph, JJ., Concur. Easley, J., Non Participating Judge(s): Diaz and Graves, JJ., Dissenting Author : Easley, J., Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 10-11-2004 Appealed from: Lafayette County Chancery Court Judge: Edwin Hayes Roberts, Jr. Disposition: The chancellor subsequently entered the judgment against both Aegis and the Receiver. Case Number: 2003-153 |
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| Party Name: | Attorney Name: | |||
| Appellant: | LEND LEASE ASSET MANAGEMENT, L.P.,
AUTHORIZED SERVICER FOR LASALLE BANK
NATIONAL ASSOCIATION, AS TRUSTEE FOR
CHASE COMMERCIAL MORTGAGE, AND THE
RECEIVER, MARILYN GOOLSBY |
JOHN H. FREELAND, MICHAEL REED MARTZ |
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| Appellee: | COBRA SECURITY, INC., AND WAYNE MILLS | RALPH STEWART GUERNSEY, DAVID G. HILL |
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| Topic: | Receivership - Wrongful attachment claim - Damage claim - Section 63-21-15 - Attorney’s fees |
| Summary of the Facts: | Aegis Oxford owned property known as The Oxford Mall. Unable to pay its outstanding $6.5 million debt which was secured by virtually all of its property including rents and accounts receivable, Aegis tendered a deed in lieu of foreclosure to Lend Lease Asset Management, LP, described by the parties as the “authorized servicer for LaSalle Bank National Association, a national banking association, as trustee for the registered holders of Chase Commercial Securities Corporation.” After refusing to accept the deed in lieu of foreclosure, Lend Lease petitioned the chancery court for the appointment of a receiver “for Aegis Oxford, L.L.C.” Aegis filed a Consent to Appointment of Receiver for “the Oxford Mall.” The chancellor appointed the previous Mall manager, Marilyn Goolsby, as receiver. During the course of the receivership, Goolsby collected the rents from Mall tenants and paid certain debts. On advice of counsel, however, she refused to pay amounts due to Cobra Security, Inc. for services rendered prior to the establishment of the receivership. A notice of foreclosure of the Mall property was published, setting the sale date. The day before the foreclosure was to take place, one of Aegis’ unsecured creditors Cobra Security, Inc., filed a lawsuit against numerous parties including Aegis and the Receiver. Cobra persuaded the chancellor to enter an ex parte order attaching the Oxford Mall. Cobra also filed a lis pendens notice of the litigation. Upon the parties’ agreement, the chancellor set aside the attachment and lis pendens and the Mall property was foreclosed. The foreclosure sale resulted in a $2,649,704.49 deficiency which was further secured by a perfected security interest in substantially all of the assets of the Mall, including rents and accounts receivable due from tenants. The Receiver responded to Cobra’s complaint with an answer and a counterclaim. The Receiver amended its previously filed motion for summary judgment to assert that, since the receivership did not even have sufficient funds to satisfy the secured creditors, the claims of unsecured creditors such as Cobra were moot. The matter proceeded to trial. Following Cobra’s case-in-chief, Aegis confessed judgment in the amount of $20,076.63. The chancellor deferred his ruling as to all other defendants. The chancellor issued a Judgment and Order of the Court finding that Cobra had a valid judgment against the Receiver as well as Aegis in the amount of $20,076.63. The chancellor further held that since Cobra was a judgment creditor, it had a higher priority than other creditors to a Toyota Tacoma Truck. Therefore Cobra’s proposed execution on the vehicle was allowed, and its value would reduce the $20,076.63 judgment. The chancellor further held that Lend Lease was not due damages because the statute under which they were claimed was inapplicable and because the parties waived any claim for damages by entering into the Agreed Order which set aside the attachment and allowed the foreclosure. The chancellor held that both the receivership and foreclosure sale were valid, but that Chase’s $2,649,704.49 deficiency resulting from the foreclosure was unsecured debt with no priority over any other debt. The chancellor subsequently entered the judgment against both Aegis and the Receiver. The Receiver appeals. |
| Summary of Opinion Analysis: | Issue 1: Wrongful attachment claim The Receiver argues that Cobra should be held liable for obtaining an ex parte order attaching the Mall and stopping the foreclosure. Any damage accruing from the attachment of the Mall and delay of the foreclosure accrue to the benefit of Aegis’s secured creditor, Chase. Therefore, there is no harm visited upon the Receiver as a result of the delay in foreclosure. Issue 2: Damage claim The Receiver argues that Cobra had no right to any pre-receivership income of Aegis Oxford because the same fell under the perfected security interest of Chase, who had both a deed of trust covering the property and a perfected security interest covering all other property of Aegis Oxford. However, the question is not whether Cobra had a claim against the rents but whether Cobra may recover from the Receiver for refusing to pay Cobra’s pre-receivership invoices. The record is void of any evidence which arguably established that failure to pay Cobra’s past-due bill would result in lack of maintenance or waste of the mall property. Cobra argues that the Receiver had a duty to pay its prereceivership invoices and the Receiver’s breach of that duty supported the Chancellor’s judgement. The duties of the Receiver in this case were to preserve and protect the property, including rents collected; to make such payments as were authorized by the chancellor and as were necessary to protect the property from waste; and to make payments for services contracted for by the Receiver. The record in this case is void of any evidence that these duties were breached. Cobra’s claim for pre-receivership services must be pursued against Aegis, the entity contracting therefor. After the chancellor entered the judgment in favor of Cobra and against Aegis, Cobra executed on a 2003 Toyota Tacoma truck owned by Aegis. The execution on the truck in partial satisfaction of the judgment was proper under section 63-21-15. When Cobra obtained its judgment against Aegis, it became a judgment creditor with a priority claim over other creditors to the truck. Issue 3: Attorney’s fees The Receiver argues that the chancellor erred in awarding $12,652.22 in attorney’s fees that Cobra claimed to have incurred in collecting $2,865 for services prior to the receivership. Even if the Receiver did agree to continue under the same contractual relationship Cobra had with Aegis, the effect of the agreement would be prospective only and the Receiver could be held responsible only for failure to pay amounts coming due after ratification. Thus, the chancellor erred in awarding attorney’s fees and expenses to Cobra for its efforts in collecting debt incurred prior to the establishment of the Receivership. |
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