The 242-acre Magnolia Springs agricultural property at the center of a five-year-long legal case involving some of Baldwin County’s most prominent property developers is pending a court-ordered sale, but the parties continue to litigate terms of the deal.
Initially eyed as the future site of Baldwin County Sewer Service (BCSS) sewage treatment plant, Lagniappe has previously reported how BCSS managing partner Clarence Burke secured an alleged 50 percent investment for the $4.88 million purchase price from former South Alabama Sewer Service owner Phillip Bass in 2005, with a promise of a return on his investment, plus $300,000, after the plant was permitted.
Nearly a decade later, with the treatment plant never constructed nor permitted, Bass approached Burke to recoup his $2.44 million investment. It was only afterward, a subsequent lawsuit claimed, Bass realized he paid the full purchase price for the property, while Burke and other named codefendants created a “straw company” to conceal the purchase from the seller. The lawsuit further claimed the defendants only invested $700,000 themselves, to buy the assignment of a purchase contract from two other men who were pursuing the property separately.
After years of presiding over the resulting fraud case in Baldwin County Circuit Court, Judge Joseph Norton found in favor of the defendants in late 2018, the week before it was scheduled for a jury trial. In 2019, Norton recused himself from the case as it proceeded to a sale-for-division claim, citing a conflict of interest between himself and developer Albert “Trae” Corte.
Corte is a former business partner with Burke and other defendants in the case and at the time of Norton’s recusal, was listed as an employee of Norton’s wife, Laura, at Wise Living Real Estate. Wise Living co-owner Sandy Wise was also listed as the chairman of Norton’s political campaign in 2017 while BCSS provides sewer service to The Verandas subdivision outside of Fairhope, a joint investment between Wise Living and Corte.
The month before his recusal, the plaintiffs filed a complaint against Norton to the Judicial Inquiry Commission (JIC) and afterward, the case was transferred to Judge Clark Stankoski. In April, using comparable sales that included property at The Verandas, Stankoski set the market price of the 242 acres in Magnolia Springs at $1,432,000.
Later, the plaintiffs attempted to stay the proceedings pending “the investigation and final report/findings” of the JIC complaint, but Stankoski denied the motion. Separate Alabama State Bar complaints have been filed against defense attorneys in the case, including Bert Taylor who represents BCSS, Larry Sutley who represents Burke, and Daniel Blackburn who represents Alabama Capital LLC, a prominent hard money lender owned by the DeLaney family.
According to the original complaint, David DeLaney and Alabama Capital provided the $700,000 mortgage for the assignment, and he was also aware of the creation of the straw company and the $2.44 million purchase price. An affidavit later filed on appeal revealed David DeLaney owned an equal interest in BCSS with Burke, while a smaller interest was owned by two other companies. In a brief phone conversation after Lagniappe’s initial report, DeLaney claimed he wasn’t involved with the property’s closing, but he believed Burke did indeed defraud Bass.
“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,” Delaney said. “And that’s what I call it and that’s what I said, that I didn’t know anything about it until the lawsuit started. Because I never saw the closing.”
Currently, Chapman Holdings LLC has an offer on the table to purchase the 242 acres for $1,360,000.
On May 11, defendant Alabama Capital notified the court it was not opposed to the sale of the property as long as it receives “not less than $680,000” in proceeds, which represents its alleged “one-half undivided fractional interest.” But the plaintiffs argued they were entitled to 100 percent of the proceeds, “because they paid 100 percent of the purchase price of the property.”
In response, both Alabama Capital and Burke argued Bass’ claims are barred “by the law of this case.”
The sale is also complicated by an existing agricultural lease on the property, where farmer James Lipscomb & Sons, Inc. expects to harvest crops already planted there sometime next summer. On behalf of Burke, attorney Larry Sutley argued if the sale does not recognize the lease, Burke could be subject to a lawsuit and damages of $300,000 for lost income.
A proposed order suggests that court-appointed real estate agent Bo Blackwell negotiate the terms of the agricultural lease with the purchaser and “once the subject property is closed and the transfer of property completed, the court shall schedule and conduct a trial to determine the actual disbursement of the remaining net proceeds to the parties.”
Bass invested with the promise of a $300,000 kicker, but in the end may lose more than $1.7 million.
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