Judge cites wife’s coworker in recusing from 5-year-old fraud case (updated)

Judge Joseph Norton, who has presided over a fraud case implicating two principals of Baldwin County Sewer Service (BCSS) since it was filed in February 2014, recused himself from the case at one of the final hearings last week, citing a conflict of interest.

As Lagniappe first reported in August, the case of Bass Enterprises LLC vs. Clarence Burke et al. claimed plaintiff Phillip Bass, the former owner of South Alabama Sewer Service, was lured to invest in a 50/50 land deal with BCSS owners Clarence Burke and David DeLaney in 2004, only to discover years later that he paid 100 percent of the price of the property. Burke and DeLaney also controlled an LLC named Pennstar that was used in the deal with Bass.

The sale involved the creation of a “straw company” using the name of Wayne Hopper, a former college roommate of former Baldwin County Commissioner Tucker Dorsey. Dorsey worked for Burke at the time and the creation of the straw company predates his election to public office. Hopper was indemnified and paid $1,000 for his participation.

Further discovery indicated Bass believed the total price for the property to be roughly $4.8 million, when it was, in fact, purchased through the straw company for just $2.4 million. A falsified HUD-1 settlement statement was also created to make it look like more was paid for the property than actually was, according to court documents.

According to depositions from the case, Burke originally sought Bass’ investment in an effort to build a new sewer plant on the 242-acre Magnolia Springs property.

Determining certain mortgages related to the purchase were valid and the plaintiff failed to present “a genuine issue of material fact,” Norton issued a summary judgment in favor of the defendants in September 2017, the week before a jury trial was scheduled to begin. Bass appealed the case to the Alabama Supreme Court, which affirmed the ruling in 2018 without writing an opinion.

Most recently, Norton was presiding over the disposition of the final complaint of the lawsuit, the equitable sale of the property for division. In August, Norton determined each party owns a half-interest, and ordered the property be appraised and each party deliver sealed bids to his courtroom on Oct. 22.

It was there last week that Norton noted a potential conflict, after appraiser Joe Courtney of Courtney & Morris included a comparable sale — one of six — from an unnamed developer who “works with [Norton’s] wife in her real estate business.”

“After the parties did not agree to fully waive any potential conflict that may arise with the Court as a result of the information used by Mr. Courtney in his appraisal, the Court recused from hearing the Plaintiff’s sale for division claim and at the Plaintiff’s request, set aside its Aug. 27, 2019 order.”

As Lagniappe further reported in September, Norton’s wife, Laura, is listed as part-owner of Wise Living Real Estate on the company’s website, along with broker and part-owner Sandy Wise. Wise Living was formed in December 2017, roughly 16 months after developer Albert “Trae” Corte organized The Verandas LLC along with Bruce Bigler.

The Verandas is a new multi-phase, custom-home subdivision currently under development on the intersection of State Route 104 and Lawrence Road in Fairhope.

Baldwin County Sewer Service will be providing sewer for The Verandas, while Wise Living is marketing it. Corte, who is also presented as an employee of Wise Living on its website, was named in a previous Lagniappe report regarding his business relationship with both Burke and the DeLaneys over their development of the Bellaton subdivision on State Route 181, just a few miles north.

Requests for the appraisal report and a transcript of the hearing are pending, so it is not known whether Norton cited Corte as the developer necessitating his recusal. Further, despite the potential conflict now, Wise Living was incorporated after Norton dismissed the Bass case, and it is unknown whether a conflict existed throughout the course of the case. Norton has not responded to requests for comment.

UPDATE: Lagniappe obtained the appraisal report after the initial publication of this article and indeed, property purchased by Trae Corte as part of The Verandas was used as a comparable sale. Read the appraisal report here.

In September, Norton recused from a separate, year-old fraud case in which his former law partner, Brian Britt, was representing the defendant. Norton’s Statements of Economic Interest on file with the Alabama Ethics Commission reported income from referral fees earned from Britt’s firm ranging from $10,000 to $50,000 between 2014 and 2016, and escalating to between $50,000 and $150,000 in 2017 and 2018, meaning he could have been paid anywhere between $130,000 and $450,000.

Britt later explained the payments “were from matters that were referred to another firm during the time of [their] partnership … so he’s entitled to his share of those fees.” Neither Britt nor Norton have detailed which case or cases were referred, or which firm handled the referrals, despite requests.

For his part, David DeLaney, a frequent business partner with Burke at BCSS and in various other land development and real estate ventures, distanced himself from the Bass case.

In an August phone call, DeLaney told Lagniappe that while it appears Burke did indeed misrepresent the sale price of the proposed sewer plant property on settlement statements provided to Bass, “I just had nothing to do with the closing.”

Asked about handwritten notes about the closing generated by DeLaney and submitted to the court as part of the discovery process, DeLaney explained: “When I knew the transaction was going to happen was that Clarence Burke was paying less than $4.4 million for the property, and I did know he was selling a half-interest for about $2.2 million to Bass. And that’s not the first time he’s done that. He buys land and sells the half-interest to other people, including us sometimes, for more than he pays for it, and that’s exactly what he did. I did know that. But I never knew about the closing. The closing statement was $4.4 million, which was not correct and I never knew anything about that until the lawsuit.”

Asked to speculate about why the closing statements were incorrect, DeLaney said: “In my opinion, Bass wanted to be sure that Clarence paid as much half-interest as he did and Clarence wasn’t doing that, but he had the closing statement done wrong so he would lie to Bass about it. And that’s what I call it and that’s what I said, but I didn’t know anything about it until the lawsuit started.”

Documents regarding this case and other related stories are compiled online at lagniappemobile.com/series/bcss.