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Westford Asset Management, LLC v. Batson & Brown, Inc

Court of Appeals of Mississippi

April 21, 2015

WESTFORD ASSET MANAGEMENT, LLC, ADAMS INTERNATIONAL TRADING, LTD AND JEFFERSON HOLDINGS INTERNATIONAL, INC. APPELLANTS
v.
BATSON & BROWN, INC. APPELLEE

DATE OF JUDGMENT: 01/29/2013

JACKSON COUNTY CIRCUIT COURT TRIAL JUDGE: HON. DALE HARKEY.

ATTORNEYS FOR APPELLANTS: ROBERT THOMAS SCHWARTZ JEFFREY MONROE WILLIAMS W. WAYNE DRINKWATER JR. MARGARET OERTLING CUPPLES JEFFREY WARD BERTUCCI SIMON TURNER BAILEY.

ATTORNEY FOR APPELLEE: A. MALCOLM N. MURPHY.

BEFORE IRVING, P.J., ROBERTS AND MAXWELL, JJ.

ROBERTS, J.

¶1. This case involves a priority dispute among creditors regarding property in Jackson, County, Mississippi. Westford Asset Management LLC loaned money to real-estate developers. After the developers defaulted on their loan, Batson & Brown, an engineering firm, filed a lien against the property. However, Batson & Brown later released its lien so Westford could conduct a foreclosure sale. Batson & Brown and Westford both agreed that the foreclosure sale would not affect their respective priority rights.

¶2. Westford bought the property at the foreclosure sale. The Jackson County Circuit Court found that Westford's bid was commercially reasonable, and all of the loan proceeds went into the project. However, the circuit court also found that Westford purchased the property subject to Batson & Brown's lien. The circuit court also ordered Westford to pay Batson & Brown's attorney's fees. Westford appeals. We find the circuit court erred when it held that Westford acquired the property subject to Batson & Brown's lien. It follows that we find that the circuit court erred when it ordered Westford to pay Batson & Brown's attorney's fees. Accordingly, we reverse the circuit court's judgment and render a judgment in favor of Westford.

FACTS AND PROCEDURAL HISTORY

¶3. In August 2004, Ocean Golf Investors LLC and Pine Island Inc. began a real-estate development called the Bayou Grand Project (the project). It involved merging several smaller parcels into a single master development for the construction of homes, condominiums, resort hotels, and a golf course. Ocean Golf hired TDX Construction Corporation as the construction manager. TDX was also responsible for approving payment of contractors' invoices. Batson & Brown was hired to provide engineering services.

¶4. Ocean Golf obtained financing through Westford Asset Management.[1] There were six loan transactions over the course of thirty months. All of the loans were secured by the same deed of trust. A substantial portion of the funds went toward administrative fees, expenses, and prepaid interest.

¶5. The first loan transaction was in June 2005. The proceeds of that loan paid a prior loan from another lender, provided Ocean Golf with money for site development and planning costs, and accounted for various fees, expenses, and prepaid interest associated with the transaction. Similar transactions occurred between July 2006 and December 2007. In total, Westford loaned Ocean Golf approximately thirty-seven million dollars. Batson & Brown never recorded a construction lien or filed a lis pendens notice at any time during the loan transactions.

¶6. Before the sixth loan transaction, Ocean Golf defaulted on its obligations to Westford. Around the same time, Ocean Golf failed to pay contractors and consultants for their work on the project. Even so, Ocean Golf persuaded them to keep working. For several months, Ocean Golf told the contractors and consultants that Ocean Golf would obtain additional financing through another company, so Ocean Golf would be able to pay its debts. That never happened. Ocean Golf defaulted after the sixth loan transaction, so Westford was entitled to foreclose. In February 2008, Batson & Brown filed a notice of construction lien for approximately $222, 000.

ΒΆ7. In March 2008, TDX sued Ocean Golf and Westford. TDX sought to enforce its lien. Later, TDX amended its complaint and added Batson & Brown as defendants. A flurry of responsive pleadings resulted in a priority dispute over the property. Westford asserted that it had priority, and it sought a ...


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