Rel: December 19, 2025
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA OCTOBER TERM, 2025-2026
_________________________
SC-2025-0014 _________________________
Miguel A. Laborde and Himelda Johanna Cruz-Candelo
v.
Citizens Bank, N.A.
Appeal from Madison Circuit Court (CV-23-900301)
COOK, Justice.1
1This case was originally assigned to another Justice on this Court.
It was reassigned to Justice Cook on August 22, 2025. SC-2025-0014
In 2015, Miguel A. Laborde took out a loan to finance the purchase
of a home for him and his wife, Himelda Johanna Cruz-Candelo. In turn,
they granted a mortgage on the property to secure the loan. The subject
loan was guaranteed and insured by the United States through the
Housing Loan Program of the Department of Veterans Affairs ("the VA"),
which is designed to help veterans secure home ownership while
minimizing the risk of foreclosure. Because Laborde was a veteran, he
qualified for this loan program.
In 2022, after encountering difficulty making their monthly
payments, they defaulted on the loan. As a result, Citizens Bank, N.A.
("the Bank"), began foreclosure proceedings. Laborde and Cruz-Candelo
sought to stave off those proceedings by offering to bring the loan current
before the sale, which they believed was their right under the mortgage
contract.
Despite their efforts to do so, Laborde and Cruz-Candelo say the
Bank refused to let them get current on the loan and sold the property to
third-party purchasers. Moreover, Laborde and Cruz-Candelo argue that
the amount received by the Bank at foreclosure was more than was owed
on their loan and yet the Bank has failed to pay this surplus to them.
2 SC-2025-0014
The third-party purchasers filed an ejectment action against them
in the Madison Circuit Court. Laborde and Cruz-Candelo defended
against that action and brought claims of their own against both the
Bank and the third-party purchasers. The trial court, however, entered
a judgment that, among other things, dismissed all of Laborde and Cruz-
Candelo's claims against them.
Laborde and Cruz-Candelo now appeal that judgment to this Court.
Laborde and Cruz-Candelo's claim against the third-party purchasers
has now been settled. They repurchased their house from the third-party
purchasers by paying even more than the foreclosure price. While the
ejectment is therefore no longer the subject of this appeal, the
reinstatement of their claims against the Bank remains at issue.
They ask this Court to reinstate four of the five claims they brought
against the Bank. The trial court erred in dismissing three of them. For
the reasons stated below, we affirm in part, reverse in part, and remand.
Facts and Procedural History
I. The Subject Loan
Laborde and Cruz-Candelo purchased a residential property
located on Heritage Mill Drive in Madison on November 19, 2015.
3 SC-2025-0014
Laborde obtained a loan in the amount of $416,150 from North Alabama
Mortgage, Inc., to finance the purchase of the house.
As stated previously, the subject loan was guaranteed and insured
by the United States through the Housing Loan Program of the VA. The
loan was issued subject to the terms, conditions, and restrictions set by
the Secretary of Veterans Affairs, including those set forth in 38 U.S.C. §
3703 and the corresponding federal regulations.
Those statutes and regulations require lenders and their agents to
conduct meaningful preforeclosure-default servicing in an effort to avoid
foreclosure. Consistent with those requirements, the mortgage and the
promissory note expressly obligate the lender to engage in such servicing.
In addition, the mortgage contract contains a provision that refers to the
governing VA regulations, providing that any inconsistent loan terms are
automatically "conform[ed]" to the applicable VA regulations.2
2Specifically, the mortgage contract includes the following provision:
"Department of Veterans Affairs regulations at 38 C.F.R. 36.4337 provide as follows:
" 'Regulations issued under 38 U.S.C. Chapter 37 and in effect on the date of any loan which is submitted and accepted or approved for a 4 SC-2025-0014
The day Laborde obtained the subject loan, Laborde and Cruz-
Candelo executed a promissory note in favor of North Alabama Mortgage
for the loan amount. To secure the note, Laborde and Cruz-Candelo
granted a mortgage on the property, naming North Alabama Mortgage
as the lender and Mortgage Electronic Registration Systems, Inc.
("MERS"), as the mortgagee and nominee for the lender. Again, on the
same date, North Alabama Mortgage executed an allonge endorsing the
note to Franklin American Mortgage. Laborde alleges that, at some point
thereafter, the Bank took over the servicing of their loan: collecting
payments from them, sending them to the lender, and handling
administrative aspects of the loan.
II. Laborde's Struggle to Make Payments on the Subject Loan and the Underlying Foreclosure Sale
In 2021, Laborde's employment situation changed dramatically. He
had been involved in work connected with government contracting, but
when the United States abruptly withdrew from Afghanistan in 2021,
guaranty or for insurance thereunder, shall govern the rights, duties, and liabilities of the parties to such loan and any provisions of the loan instruments inconsistent with such regulations are hereby amended and supplemented to conform thereto .' " 5 SC-2025-0014
many of those contracts fell through. This created financial instability,
and by 2022 Laborde was having difficulty making his monthly mortgage
payments.
In response to Laborde's failure to pay, the Bank accelerated the
note and set a foreclosure sale for February 21, 2023. Laborde claims
that, more than five days before the foreclosure sale, he contacted the
Bank to reinstate the mortgage. According to Laborde, he spoke with a
Bank employee, who informed him that to bring the loan current he
would be required to pay $31,252.32 in arrearages, $2,022.78 in
miscellaneous fees, and $5,175.53 in late fees, totaling approximately
$38,450. He asserts that he was prepared to wire this amount
immediately and tender full payment. However, the Bank allegedly
refused to accept the funds directly. Instead, the Bank employee
instructed Laborde to contact the foreclosure law firm handling the
matter -- Rubin Lublin, LLC.
Laborde maintains that he promptly called Rubin Lublin, left a
detailed voicemail explaining that he wished to pay the full
reinstatement amount immediately, and requested wiring instructions.
He also submitted a written inquiry through the firm's website asking
6 SC-2025-0014
for someone to contact him so that the payment could be completed.
Laborde contends that he never received a return call or response from
the law firm and that no wiring instructions were ever provided. He
asserts that the Bank, despite knowing of his willingness to cure the
default in full, refused to accept payment and pressed forward with
foreclosure.
The foreclosure sale was conducted on February 21, 2023. At the
sale, the property was purchased by third parties for $480,000, an
amount that Laborde and Cruz-Candelo allege was substantially less
than its fair market value, which, he claims, an appraisal showed was
closer to $625,000. Laborde and Cruz-Candelo state they were both out
of the country at the time of the foreclosure sale and that they did not
receive adequate notice to vacate the premises or to preserve and exercise
their statutory right of redemption. On March 6, 2023, a foreclosure deed
was executed to the purchasers.
III. The Underlying Ejectment Action and Laborde and Cruz- Candelo's Claims
Following the foreclosure sale, the third-party purchasers filed an
action seeking to eject Laborde and Cruz-Candelo from the house.
Laborde and Cruz-Candelo responded by raising affirmative defenses to 7 SC-2025-0014
the allegations in the complaint and bringing a counterclaim against the
third-party purchasers. They also brought in the Bank as a third-party
defendant to the action and alleged four claims against it as well.
First, Laborde and Cruz-Candelo alleged that the Bank breached
the duty of good faith and fair dealing. They claimed that the Bank
breached those duties by refusing their timely effort to reinstate and by
proceeding with foreclosure despite Laborde's readiness to cure the
default. They further alleged that conducting a foreclosure sale under
those circumstances, and at a price substantially below market value,
was unconscionable and inconsistent with good faith and fair dealing.
Next, Laborde and Cruz-Candelo alleged a breach-of-contract claim
against the Bank. According to them, the Bank did not comply with the
notice provision of the mortgage contract, which was a condition
precedent to foreclosure. They further alleged that the Bank did not
comply with the regulations applicable to VA-guaranteed loans and that
those failures deprived the Bank of any contractual or legal authority to
conduct the foreclosure sale. They finally alleged that the Bank likewise
failed to honor Laborde's right under the mortgage contract to reinstate
the mortgage before acceleration and sale.
8 SC-2025-0014
Laborde and Cruz-Candelo further asserted a claim of wrongful
foreclosure. They alleged that the Bank's foreclosure proceedings were
negligent, wanton, or intentional and that the power of sale was exercised
for a purpose other than securing the debt owed. They also argued that
the Bank was not the party to whom the debt was owed at the time of
sale.
Laborde and Cruz-Candelo also sought to redeem the property from
the third-party purchasers. They argued that they did not receive proper
notice and that their right to redeem should be upheld.
Finally, Laborde and Cruz-Candelo requested declaratory relief,
asking the trial court to declare that the Bank lacked the right to
foreclose and that the foreclosure was therefore invalid.
IV. The Bank and the Third-Party Purchasers' Motions to Dismiss and the Trial Court's Judgment
On March 21, 2024, the trial court dismissed all claims against both
the Bank and the third-party purchasers. One week later, Laborde and
Cruz-Candelo amended their claims pursuant to Rule 78, Ala. R. Civ. P.,
which permits amendment as of right within 10 days of an order granting
a motion to dismiss.
In their amended pleading, Laborde and Cruz-Candelo pleaded 9 SC-2025-0014
some more specific factual allegations in a few places and added a claim
of unjust enrichment against the Bank. The five original claims remained
the same.
On October 3, 2024, the trial court entered a summary judgment
for the third-party purchasers on their ejectment claim and dismissed all
of Laborde and Cruz-Candelo's claims against both parties, pursuant to
Rule 12(b)(6), Ala. R. Civ. P. Laborde and Cruz-Candelo thereafter filed
two separate motions to alter, amend, or vacate the judgment dismissing
their claims against the third-party purchasers and the Bank,
respectively. The trial court denied both motions.
Laborde and Cruz-Candelo appealed to this Court. While the appeal
was pending, they reached a pro tanto settlement with the third-party
purchasers to repurchase their house for $625,000. They then jointly
moved to dismiss the appeal as to those purchasers, and this Court
granted that motion. Thus, only the dismissal of Laborde and Cruz-
Candelo's claims against the Bank remains at issue in this appeal.
Standard of Review
"On appeal, a dismissal is not entitled to a presumption of correctness. The appropriate standard of review under Rule 12(b)(6)[, Ala. R. Civ. P.,] is whether, when the allegations of the complaint are viewed most strongly in the pleader's favor, 10 SC-2025-0014
it appears that the pleader could prove any set of circumstances that would entitle her to relief. In making this determination, this Court does not consider whether the plaintiff will ultimately prevail, but only whether she may possibly prevail. We note that a Rule 12(b)(6) dismissal is proper only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief."
Nance v. Matthews, 622 So. 2d 297, 299 (Ala. 1993) (internal citations
omitted).
Discussion
Laborde and Cruz-Candelo insist that the trial court erred in
dismissing four of the five claims that they brought against the Bank.3
With one exception, we agree.
I. Breach of Duty of Good Faith and Fair Dealing
Laborde and Cruz-Candelo assert that the Bank breached an
implied covenant of good faith and fair dealing, and they brought this
claim as an independent cause of action. In their view, the Bank's conduct
violated its duty not to interfere with their ability to receive the benefits
3Laborde and Cruz-Candelo do not argue that they should have their declaratory-judgment claim reinstated, so we do not consider that claim. See Ex parte Professional Bus. Owners Ass'n Workers' Comp. Fund, 867 So. 2d 1099, 1101 (Ala. 2003) ("The failure to raise an issue on appeal is the equivalent of waiving the issue."). 11 SC-2025-0014
of the mortgage.
Alabama law does not recognize an independent claim for a breach
of this type. Although Alabama law recognizes an " ' " implied covenant of
good faith and fair dealing," ' " meaning that " ' " neither party shall do
anything which will have the effect of destroying or injuring the rights of
the other party to receive the fruits of the contract," ' " Lloyd Noland
Found., Inc. v. City of Fairfield Healthcare Auth., 837 So. 2d 253, 267
(Ala. 2002) (quoting Sellers v. Head, 261 Ala. 212, 217, 73 So. 2d 747, 751
(1954)), our Court has made clear that this duty is not itself actionable.
Specifically, we have explained that "a duty of good faith in connection
with a contract is directive, not remedial, and that therefore an action
will not lie for breach of such a duty." Tanner v. Church's Fried Chicken,
Inc., 582 So. 2d 449, 452 (Ala. 1991) (citing Government St. Lumber Co.
v. AmSouth Bank, 553 So. 2d 68 (Ala. 1989)).
Laborde and Cruz-Candelo effectively concede this point in their
opening brief. They acknowledge that "the obligation [of good faith and
fair dealing] is actionable when the breach of that duty can be tied to the
performance of a specific term of the contract." Laborde and Cruz-
Candelo's brief at 27. The case they cite for that proposition, Lake
12 SC-2025-0014
Martin/Alabama Power Licensee Ass'n v. Alabama Power Co., 601 So. 2d
942, 945 (Ala. 1992), underscores that "[t]his Court has explicitly held
that there is no good faith contractual cause of action." Accordingly,
Laborde and Cruz-Candelo cannot recover for a breach of that duty
standing alone. Because Alabama law forecloses such an independent
cause of action, the trial court correctly dismissed this claim.
II. Breach of Contract
Laborde and Cruz-Candelo assert, among other things, that the
Bank frustrated their right to reinstate the mortgage.4 According to
them, they could have reinstated the mortgage five days before the
foreclosure sale under Paragraph 18 of the mortgage contract, which they
attempted to do, but the Bank deliberately kept them from paying the
funds to bring the loan current.
To prevail on a breach-of-contract claim, a plaintiff must prove " '(1)
4Laborde and Cruz-Candelo also allege that the Bank ignored the
incorporated federal regulations that would have allowed them to cure any time before the foreclosure sale and that the Bank failed to give proper notice of the foreclosure sale. Because we hold that the allegations that the Bank breached Paragraph 18 of the mortgage are sufficient to state the claim, we need not reach the question whether Laborde and Cruz-Candelo can sufficiently state a claim for money damages under the other theories they allege. 13 SC-2025-0014
a valid contract binding the parties; (2) the plaintiffs' performance under
the contract; (3) the defendant's nonperformance; and (4) resulting
damages.' " Shaffer v. Regions Fin. Corp., 29 So. 3d 872, 880 (Ala. 2009)
(quoting Reynolds Metals Co. v. Hill, 825 So. 2d 100, 105 (Ala. 2002)). For
the second element, a plaintiff can show either that he " 'has performed,
or that he is ready, willing, and able to perform under the contract.' "
Beauchamp v. Coastal Boat Storage, LLC, 4 So. 3d 443, 450 (Ala. 2008)
(quoting Winkleblack v. Murphy, 811 So. 2d 521, 529 (Ala. 2001)).
Paragraph 18 of the mortgage provides for terms under which the
borrower can reinstate the mortgage after acceleration. It states, in
relevant part: "If Borrower meets certain conditions, Borrower shall have
the right to have enforcement of this Security Instrument discontinued
at any time prior to the earliest of: (a) five days before sale of the Property
pursuant to any power of sale contained in this Security Instrument …."
Laborde and Cruz-Candelo specifically alleged that "[m]ore than 5
days prior to the foreclosure sale," Laborde "contacted [the Bank] to
reinstate by paying [the Bank] all sums due to cure the default …."
Further, Laborde and Cruz-Candelo alleged that a Bank employee told
Laborde how much money would be required to reinstate the mortgage
14 SC-2025-0014
but that he was unable to perform.
But nonperformance is no defense, because they alleged that the
Bank "refused to allow [Laborde] to wire the funds to [it]" and that the
law firm to which he was referred "failed and refused to communicate
with him at all regarding the reinstatement." In other words, Laborde
was "ready, willing, and able to perform" but was prevented from doing
so. Moreover, "[a] party to a contract who has caused a failure of
performance by the other party cannot take advantage of that failure."
Big Thicket Broad. Co. of Alabama v. Santos, 594 So. 2d 1241, 1244 (Ala.
Civ. App. 1991) (citing Dixson v. C. & G. Excavating, Inc., 364 So. 2d 1160
(Ala. 1978)).
For its part, the Bank does not dispute any of Laborde and Cruz-
Candelo's allegations. Indeed, its response brief on appeal ignores them
altogether. Instead, the Bank doubles down on the "first breach" doctrine,
arguing that, because Laborde and Cruz-Candelo failed to make their
required mortgage payments, they cannot maintain a breach-of-contract
action against the Bank. In the Bank's view, their prior default forecloses
any possible set of facts that could support such a claim.
The Bank primarily relies on two cases. In the first case, the United
15 SC-2025-0014
States District Court for the Northern District of Alabama entered a
summary judgment in favor of the mortgagee when it found that the
mortgagor had "failed to make payments for three years" and had "not
performed under the contract." Embry v. Carrington Mortg. Servs., LLC,
No. 1:22-CV-7-CLM, June 13, 2023 (N.D. Ala. 2023) (not reported in
Federal Supplement), aff'd in pertinent part and vacated in part on other
grounds, No. 24-13352, Nov. 6, 2025 (11th Cir. 2025) (not reported in
Federal Reporter). Notwithstanding that this Court is not bound to follow
the federal district court's interpretation of Alabama law, this case is not
dispositive. There, Embry brought an action against Carrington for
"failing to comply with … application of payment and notice
requirements." Id. Carrington was not accused of breaching a cure
provision like the one at issue in this case.
Next, in Tidmore v. Citizens Bank & Trust, 250 So. 3d 577, 590
(Ala. Civ. App. 2017), the Court of Civil Appeals found that "Tidmore did
not perform under [the mortgage] contract [because] he tendered many
late or incomplete payments, and he then defaulted on the loan outright."
Again, Tidmore did not assert breach of a cure provision, but breach of
notice requirements. Id. at 582. The Bank's reliance on both of these cases
16 SC-2025-0014
is misplaced. They do not sweep so broadly as to prohibit any breach-of-
contract action when a mortgagor fails to make payments on a loan and
certainly not in the case where the breach claimed involves a
contractually considered cure provision.
Rather, under Alabama law, when interpreting contracts, " ' " we
must examine the [text] as a whole and, if possible, give effect to each
section." ' " Davis v. City of Montevallo, 380 So. 3d 382, 389 (Ala. 2023)
(quoting City of Pinson v. Utilities Bd. of Oneonta, 986 So. 2d 367, 371
(Ala. 2007), quoting in turn Ex parte Exxon Mobil Corp., 926 So. 2d 303,
309 (Ala. 2005)); see also Antonin Scalia & Bryan A. Garner, Reading
Law: The Interpretation of Legal Texts § 24, at 167 (2012) ("Context is a
primary determinant of meaning. A legal instrument typically contains
many interrelated parts that make up the whole. The entirety of the
document thus provides the context for each of its parts.").
The Bank contends that Laborde and Cruz-Candelo cannot invoke
the protections of a contract they themselves first breached. But the
parties plainly contemplated that very possibility -- a missed mortgage
payment -- and addressed it expressly in the text of the contract in
Paragraph 18. The inclusion of a cure provision was not gratuitous; it
17 SC-2025-0014
was a deliberate allocation of risk, ensuring that the mortgagor retained
a contractual right to remedy default before facing foreclosure.
Paragraph 18 exists to operate precisely when the mortgagor fails
to make timely payments. To hold that a mortgagor forfeits the right to
cure by virtue of the very default that triggers it would render the clause
meaningless. The Bank's interpretation would mean that such provisions
could never be enforced in the exact circumstance they were designed to
govern. That outcome would discourage fair dealing in mortgage
transactions altogether.
It is no consolation, as the Bank argues, that its breach can be
raised as a defense in an ejectment action. Some lender obligations may
be foreclosed by a borrower's default, but the cure provision is not one of
them. It is an independently enforceable promise that takes effect after
default, and its breach remains actionable. To hold otherwise would
nullify the very protection the provision was designed to provide.
As we have stated, each provision of a contract must be given effect,
if possible. A mortgagee who disregards an express right to cure breaches
an independent, bargained-for obligation. The Bank's position, taken to
its logical conclusion, would substantially weaken the borrower's
18 SC-2025-0014
contractual protections and risk reducing the lender's own obligations to
mere formalities. 5
Accordingly, because Laborde and Cruz-Candelo have adequately
pleaded a viable breach-of-contract claim -- and because their failure to
make timely payments does not, as a matter of law, preclude them from
pursuing that claim -- we hold that the trial court erred in dismissing it.
III. Wrongful Foreclosure
Laborde and Cruz-Candelo alleged in their amended pleading that
"the foreclosure proceeding by the Bank was negligent, wanton or
intentional" and that the "power of sale was exercised for a purpose other
than to secure the debt." The Bank purportedly "relied on the assignment
from MERS, as nominee for North Alabama Mortgage, Inc. to assert it
was the Lender and had the right to foreclose on the mortgage." That
5While this Court has not spoken to how the "first breach" doctrine
would specifically apply in relation to a cure provision such as the one at issue here, we find the Eleventh Circuit Court of Appeals' interpretation of Georgia's "first breach" doctrine persuasive. That court has noted: "[The mortgagee] … argues that any breach of contract action … would be barred under the first breach doctrine …. [T]aken to its logical conclusion, such a rule would prohibit any mortgagor from ever enforcing any contract terms governing acceleration and foreclosure, as these terms by definition come into play following a breach." Bates v. JPMorgan Chase Bank, NA, 768 F.3d 1126, 1130 n.3 (11th Cir. 2014). 19 SC-2025-0014
assignment, incorporated into the amended pleading by reference, was
an assignment of the mortgage. 6
Laborde and Cruz-Candelo maintain that they had the contractual
right to cure the default before the foreclosure sale. They recount that,
when Laborde called the Bank, he was told to pay more than $38,000 in
fees in addition to the remaining loan balance. Although they believed
the fees to be overinflated, Laborde and Cruz-Candelo asserted that they
were "prepared to wire all the funds demanded directly to [the Bank]."
According to their allegations, the Bank frustrated their performance by
refusing to accept the tender.
A wrongful-foreclosure claim arises when " 'a mortgagee uses the
power of sale given under a mortgage for a purpose other than to secure
the debt owed by the mortgagor.' " Jackson v. Wells Fargo Bank, N.A., 90
6In certain circumstances, this Court is permitted to treat documents attached to the pleadings as part of the pleadings without converting a motion to dismiss into a motion for a summary judgment. See Rule 10(c), Ala. R. Civ. P. ("A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes."). For instance, those circumstances include when there are " ' authenticated documents ... attached to the motion to dismiss' " that are " ' " ' " referred to in the complaint and [are] central to the plaintiff[s'] claim[s]." ' " ' " Sumter Cnty. Bd. of Educ. v. University of W. Alabama, 349 So. 3d 1264, 1266 (Ala. 2021) (quoting Newson v. Protective Indus. Ins. Co. of Alabama, 890 So. 2d 81, 86 (Ala. 2003)) (other citations omitted). 20 SC-2025-0014
So. 3d 168, 171 (Ala. 2012) (quoting Reeves Cedarhurst Dev. Corp. v.
First Am. Fed. Sav. & Loan Ass'n, 607 So. 2d 180, 182 (Ala. 1992))
(emphasis added). Improper purposes include using the power of sale to
sell for " ' " any ill motive, to effect means and purposes of his own, or to
serve the purposes of other individuals," ' " Paint Rock Props. v.
Shewmake, 393 So. 2d 982, 983-84 (Ala. 1981) (citations omitted). Those
kinds of motivations constitute " ' " fraud in the exercise of the power." ' "
Id. (citations omitted).
On appeal, Laborde and Cruz-Candelo cite Harris v. Deutsche Bank
National Trust Co., 141 So. 3d 482, 491 (Ala. 2013), in which this Court
reinforced that a trustee must have "received an assignment of the note"
for it to "execute the power of sale in its own name." See also Coleman v.
BAC Servicing, 104 So. 3d 195, 205 (Ala. Civ. App. 2012) (" ' " The note is
the cow and the mortgage the tail. The cow can survive without a tail,
but the tail cannot survive without the cow." ' " ) (quoting Restatement
(Third) of Property: Mortgages § 5.4, Reporter's Note -- Introduction, cmt.
a at 386 (Am. L. Inst. 1997)). The Court found "that on the state of the
current record there is a genuine issue of material fact as to whether the
trustee received [that] assignment." Harris, 141 So. 3d at 491.
21 SC-2025-0014
However, as the Bank points out, under those facts, the Harris
Court affirmed a summary judgment for the mortgagee on the
mortgagor's wrongful-foreclosure claim. Id. The Court reiterated that a
wrongful-foreclosure action lies only when the mortgagee exercises the
power of sale for a purpose other than collecting the debt and recognized
that the Harrises did not "allege that the power of sale was exercised for
any purpose 'other than to secure the debt owed by them.' " Id.
But Harris was decided at the summary-judgment stage, where the
mortgagor must produce evidence of such an improper purpose. At the
pleading stage, the bar is lower: allegations that the mortgagee lacked
authority to foreclose, coupled with general assertions that the sale was
conducted for an improper purpose, are sufficient to state a claim.
Although Harris indicates that an improper "purpose" (that is, a state of
mind) is a requirement for a wrongful-foreclosure claim, the motion-to-
dismiss stage is different from the summary-judgment stage. Under Rule
9(b), Ala. R. Civ. P., a "condition of [the] mind" such as purpose "may be
averred generally" at the pleading stage.
Thus, while Harris supports the entry of a summary judgment for
a mortgagee when the record contains no evidence of improper purpose
22 SC-2025-0014
and the mortgagor did not allege an improper purpose, it does not
preclude a mortgagor from proceeding past the pleading stage when they
specifically allege, as Laborde and Cruz-Candelo did, that the "power of
sale was exercised for a purpose other than to secure the debt." The trial
court was incorrect to dismiss this claim.
IV. Unjust Enrichment
Laborde and Cruz-Candelo's final claim of unjust enrichment, in
addition to incorporating the rest of the statements in their amended
pleading, stated that "Defendant has been unjustly enriched as a result
of its actions." They alleged that the property sold for $480,000 -- more
than their original purchase price of $416,150.
Alabama law recognizes unjust enrichment as " ' an old equitable
remedy permitting the court in equity and good conscience to disallow
one to be unjustly enriched at the expense of another.' " Avis Rent A Car
Sys., Inc. v. Heilman, 876 So. 2d 1111, 1123 (Ala. 2003) (citation and
emphasis omitted). " 'To prevail on a claim of unjust enrichment under
Alabama law, a plaintiff must show that: (1) the defendant knowingly
accepted and retained a benefit, (2) provided by another, (3) who has a
reasonable expectation of compensation.' " Matador Holdings, Inc. v.
23 SC-2025-0014
HoPo Realty Invs., L.L.C., 77 So. 3d 139, 145 (Ala. 2011) (plurality
opinion) (quoting Portofino Seaport Vill., LLC v. Welch, 4 So. 3d 1095,
1098 (Ala. 2008)).
Taken together, Laborde and Cruz-Candelo's allegations permit a
reasonable inference that the Bank may have received and retained more
than it was entitled to under the mortgage. At this stage, however, the
Court's task is not to weigh evidence but to assess the sufficiency of the
pleadings. Under Alabama's liberal notice-pleading standard, dismissal
is proper only when there exists no set of facts under which the plaintiff
could prevail. Nance, 622 So. 2d at 299.7 Accepting Laborde and Cruz-
Candelo's allegations as true and drawing all reasonable inferences in
their favor, the Court cannot conclude as a matter of law that recovery
7The Bank argues that Laborde and Cruz-Candelo cannot bring an
unjust-enrichment claim because parties cannot bring such a quasi- contract claim when there is an express contract between the parties. The Bank correctly states the law. See Kennedy v. Polar-BEK & Baker Wildwood P'ship, 682 So. 2d 443, 447 (Ala. 1996) ("[U]nder Alabama law, claims of both an express and an implied contract on the same subject matter are generally incompatible."). Laborde and Cruz-Candelo respond by explaining that they have pleaded in the alternative and have also alleged that the Bank does not own the note (that is, that there is no contract between these parties). Because, in this case, "the existence of an express contract … [is] disputed," they can pursue, at the pleading stage, both claims for a surplus. Id. 24 SC-2025-0014
for unjust enrichment is foreclosed. Thus, the trial court erred in
dismissing this claim.
Conclusion
The trial court correctly dismissed Laborde and Cruz-Candelo's
claim of breach of the duty of good faith and fair dealing. However,
because they sufficiently alleged facts supporting their other three
claims, the trial court erred in dismissing those claims. We therefore
affirm the dismissal of the first claim, reverse the dismissal of the other
three claims, and remand the case for further proceedings consistent with
this opinion.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.
Stewart, C.J., and Shaw, McCool, and Parker, JJ., concur.
Bryan, J., concurs in the result.
Wise, J., concurs in part and dissents in part, with opinion, which
Sellers and Mendheim, JJ., join.
25 SC-2025-0014
WISE, Justice (concurring in part and dissenting in part).
I concur to affirm the trial court's dismissal of Miguel A. Laborde
and Himelda Johanna Cruz-Candelo's claim of breach of the duty of good
faith and fair dealing. However, I dissent as to the majority's decision to
reverse the trial court's dismissal of Laborde and Cruz-Candelo's claims
of breach of contract, wrongful foreclosure, and unjust enrichment.
Sellers and Mendheim, JJ., concur.