Jeffrey Kolessar of BFAL Associates, LLC, as court-appointed receiver v. SJP Investment Partners, LLC, and Wells Fargo Bank, N.A., as trustee for the benefit of the holders of Benchmark 2019-B13 Mortgage Trust Commercial Mortgage Pass-Through Certificates Series, 2019-B13

Rel: October 24, 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-2024-0492
_________________________

Jeffrey Kolessar of BFAL Associates, LLC, as court-appointed
receiver

v.

SJP Investment Partners, LLC, and Wells Fargo Bank, N.A., as
trustee for the benefit of the holders of Benchmark 2019-B13
Mortgage Trust Commercial Mortgage Pass-Through
Certificates, Series 2019-B13

Appeal from Jefferson Circuit Court
(CV-23-903546)

MENDHEIM, Justice. 1

1This case was originally assigned to another Justice on this Court;

it was reassigned to Justice Mendheim on September 17, 2025.
SC-2024-0492

Jeffrey Kolessar, in his capacity as a court-appointed receiver

appeals from an interlocutory order in the nature of an injunction that

was entered against him by the Jefferson Circuit Court ("the circuit

court") regarding relief requested by SJP Investment Partners, LLC

("SJP"), a Georgia limited-liability company. We reverse and remand.

SJP owns real and personal property operated as the Hotel Indigo

on 20th Street South in Birmingham ("the Hotel").2 In August 2019, SJP

obtained a $10,710,000 loan ("the loan") from DBR Investments Co., Ltd.,

as is reflected in various loan documents ("the loan documents"). The

loan subsequently was assigned to Wells Fargo Bank, N.A. ("Wells

Fargo"), as trustee for the benefit of the holders of Benchmark 2019-B13

Mortgage Trust Commercial Mortgage Pass-Through Certificates, Series

2019-B13.

The loan was secured by a mortgage ("the mortgage") on the real

property that was owned by SJP on 20th Street South, by an "Assignment

of Leases and Rents" ("the assignment of leases and rents"), and by

2The Hotel Indigo is a franchise.

2
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personal property used in the operation of the Hotel. 3 The loan

documents, as amended, also provided for the establishment and

maintenance of reserve funds for the making of required repairs, parking

acquisition, and other matters ("the reserve funds"). 4 The reserve funds

were to be disbursed to SJP upon the satisfaction of certain conditions

but also were pledged, along with certain cash-management accounts in

which revenue from the Hotel was deposited ("the cash-management

accounts), as additional security for the loan.

In October 2023, Wells Fargo filed in the circuit court a verified

complaint against SJP. Attached to the complaint were numerous

exhibits, including the mortgage, the assignment of leases and rents, and

other allegedly pertinent loan documents. Wells Fargo alleged that SJP

had mismanaged the Hotel and had defaulted on SJP's loan obligations

3According to the loan documents, the sole member of SJP was
BHM Capital Partners, LLC, whose members were two irrevocable
trusts. Monica Patel was the trustee of one of those trusts, and Sonial
Patel was the trustee of the other trust. Monica and Sonial, individually,
were guarantors of the loan to SJP. See Wells Fargo Bank, N.A. v. Patel,
24 Civ. 1162 (KPF) (S.D.N.Y.) (order dated Mar. 18, 2025). In Patel,
Wells Fargo is attempting to recover against Monica and Sonial for
alleged breaches of their respective guaranty agreements.

4The loan documents had been amended after a default by SJP.

3
SC-2024-0492

under the amended loan documents. Regarding the issue of

mismanagement, Wells Fargo alleged that, as a result of SJP's actions,

the Hotel was not generating sufficient revenue to pay both SJP's debt

obligations to Wells Fargo and the operating expenses for the Hotel.

Wells Fargo further alleged that SJP had threatened to close the Hotel;

that Wells Fargo was not obligated to allow or make disbursements from

the reserve funds or the cash-management accounts while a default

existed under the loan documents; and that Wells Fargo was not willing

to authorize disbursements for the Hotel's operating expenses unless a

receiver was appointed.

Wells Fargo alleged that, based on SJP's purported default, "the full

amount due under the Loan ha[d] been accelerated and [was] due and

owing."5 Wells Fargo requested an order "divest[ing] [SJP] of control of

[the Hotel] and plac[ing] same under the management of a Receiver to

manage and operate [the Hotel] and ensure the prompt payment of

operating expenses." Also, Wells Fargo requested the entry of a

"judgment entitling [Wells Fargo] to take and have all rents, revenues,

5Correspondence in the record on appeal supports the allegation

that Wells Fargo had accelerated SJP's debt obligation under the loan.
4
SC-2024-0492

income, issues and profits derived from [the Hotel] as well as all costs

and fees to which it [was] entitled" under the loan documents and

applicable law.

Two days after filing its verified complaint, Wells Fargo filed an

emergency motion requesting the appointment of a receiver "pursuant to

Ala. Code [1975,] § 6-6-620 and the common law of Alabama." 6 The

emergency motion was based on allegations substantially similar to those

in Wells Fargo's verified complaint and adopted the verified complaint by

reference. Wells Fargo requested that Jeffrey Kolessar ("Kolessar"), of

BFAL Associates, LLC, be appointed as receiver.

SJP filed an answer denying the material allegations of the

complaint and a counterclaim against Wells Fargo, which included

claims of breach of contract and fraud, among other claims. SJP also filed

an emergency motion requesting the entry of a temporary restraining

order and a preliminary injunction against Wells Fargo or, in the

alternative, the appointment of a special master.

6The Alabama Uniform Commercial Real Estate Receivership Act,

Ala. Code 1975, § 6-6-780 et seq., is inapplicable to the receivership in
this case. See Ala. Code 1975, § 6-6-807 (providing that that act "does
not apply to a receivership for which the receiver was appointed before
January 1, 2025").
5
SC-2024-0492

The circuit court held a hearing on the respective emergency

motions. On October 27, 2023, the circuit court entered an order that

denied SJP's emergency motion and granted Wells Fargo's emergency

motion. The October 2023 order stated that Wells Fargo had proven that

a default existed under the loan documents and appointed Kolessar to

serve as receiver for the Hotel, specifically referencing a section of the

mortgage that provided that, while any event of default existed, Wells

Fargo could "apply for the appointment of a receiver … of [the Hotel],

without notice and without regard for the adequacy of the security for the

Debt and without regard for the solvency of [SJP], [or] any guarantor or

indemnitor with respect to the Loan."

The October 2023 order included, in pertinent part, the following

factual determinations:

"The Hotel's expenses each month to operate include the
mortgage payment to Wells Fargo Bank, payroll, franchise
fees, utilities, vendor expenses and other expenses. [SJP]
claims that Three Hundred Forty-One Thousand Thirty-Six
Dollars and Eighty-Nine Cents [$341,036.89] of Hotel
Expenses are due and owing.

"Most immediately, the Hotel's employees need
payment of two [2] payrolls; the Hotel's Franchisor, IHG, is
owed funds; Alabama Department of Revenue is owed sales
taxes and lodging taxes; and the Hotel received a cut-off notice
from Birmingham Water Works for its failure to pay. It is
6
SC-2024-0492

undisputed that Wells Fargo Bank has refused to release any
of the Lockbox funds[, the cash-management accounts from
the Hotel's operations,] to pay any of these expenses."

The October 2023 order directed Kolessar

"to manage, operate and preserve all of the property, real,
personal and mixed, associated with or related to the
operation of [the Hotel] and to exercise all rights regarding
management of [the Hotel] including but not limited to …
[SJP's] rights to acquire additional collateral derived from
[the loan documents] …, or any other rights of [SJP] related
to operation of the Hotel, together with all the rents,
revenues, income and profits from [the Hotel].

"… [Kolessar] shall immediately enter upon, receive
and take complete possession and control of [the Hotel] and
all documents, books, records, papers, accounts and other
property relating thereto; … manage and operate [the Hotel];
… preserve and maintain [the Hotel]; … collect the rents and
proceeds of [the Hotel] and all income and profits derived
therefrom; … pay the mortgage payment to [Wells Fargo],
payroll, franchise fees, utilities, vendor expenses and other
expenses; … exercise all rights of [SJP] in and to [the Hotel],
including, but not limited to adhering to contractual
obligations of [SJP] or Court Orders; and … take all other
actions of a receiver as set forth in the Loan Documents, as
allowed by law, or as ordered by this Court."

The October 2023 order further stated

"that any individual or entity receiving a copy of this Order is
hereby ENJOINED and RESTRAINED from discontinuing
service to [Kolessar] or the Hotel based upon the nonpayment
of such taxes, assessments, goods or services, and/or utilities
provided prior to the date of this Order and from attempting
to collect taxes, assessments, invoices and utility charges from
[Kolessar] … for any payment obligations whatsoever that
7
SC-2024-0492

arose prior to the date of this Order. Each utility company or
entity providing service to the Hotel shall transfer any
deposits which it holds to the exclusive control of [Kolessar]
and shall be prohibited from demanding [Kolessar] deposit
additional funds in advance to maintain or secure such
service, or interrupt service due to pre-Receivership
liabilities."

(Capitalization in original; emphasis added.) The October 2023 order

continued:

"IT IS FURTHER ORDERED that money coming into
the possession of [Kolessar] and not expended for any of the
purposes authorized herein, shall be held by [Kolessar],
subject to such Orders as this Court may hereafter issue.

"….

"IT IS FURTHER ORDERED that [SJP] shall cooperate
with [Kolessar] in the performance of [his] obligations as
RECEIVER and not interfere with or hinder, in any way
whatsoever, [Kolessar] in the performance of [his] duties
herein described and in the performance of any duties
incident thereto."

(Capitalization in original.)

After the entry of the October 2023 order, Kolessar and SJP each

filed a contempt motion; Wells Fargo joined Kolessar's contempt motion.

Kolessar's contempt motion alleged that SJP had instructed certain

vendors "to file encumbrances against the Receivership Estate" and had

attempted to "impair [Kolessar's] ability to protect and administer the

8
SC-2024-0492

Receivership Estate." SJP's contempt motion alleged, in part, that

Kolessar had failed to pay expenses for the Hotel as required by the

October 2023 order and, in pertinent part, requested that the October

2023 order be amended. Specifically, SJP requested that the October

2023 order be amended to "clarify that [Kolessar] must pay expenses

incurred prior to the Receivership, and require [Kolessar] to provide

[SJP] with access to all of the records and financial information regarding

[the Hotel] upon [his] receipt and access of such information."

On March 14, 2024, the circuit court held a hearing on the contempt

motions. Kolessar had independent counsel at the hearing and was

treated as a party during that hearing. During the March 2024 hearing,

the parties discussed, among other matters, issues regarding the

submission of invoices to Kolessar and his closing on a pending parking-

area acquisition. During the discussions, SJP's counsel alleged that

Kolessar had not paid approximately $236,000 in accounts payable, but

Kolessar's counsel noted that simply because Kolessar was in receipt of

an invoice did not mean it should be paid and that "part of [Kolessar's]

obligation in the business judgment world is to make sure that invoice is

proper" and "working through that with the vendor." SJP's counsel then

9
SC-2024-0492

stated that that SJP and Kolessar "ought to be able to work together to

figure out a way … to make sure … no expense[s] are missed that impact

the property," and Kolessar's counsel responded by stating that he

already had requested from SJP "all documents, all invoices, [and] all

accounts" and that SJP had been ordered by the circuit court to provide

those to Kolessar. SJP's counsel responded, alleging that Kolessar had

prevented SJP from accessing information about the operation of the

Hotel and stating: "[L]et's have transparency on both sides. If we've got

a problem, work it out amongst ourselves or come to Your Honor and say,

'We've got a problem and here's what it is. We need some help fixing it.' "

Kolessar's counsel subsequently stated that, if SJP needed information,

it should send a request list and that Kolessar would work with SJP's

counsel, adding: "If we disagree …, then either [SJP's counsel] or

[Kolessar] can bring that to the Court to be resolved."

Wells Fargo's counsel suggested that "there might be some benefit

to our proposing an amendment to the [October 2023 order] that would

clarify a few things," such as making the order "a little more detailed

about what [Kolessar's] duties are versus what [SJP] should stay out of

and, you know, things of that nature." The circuit court then stated:

10
SC-2024-0492

"Well, we do have a Motion to Amend the Receivership Order, so it seems

like both parties or all parties think that it should be amended. So if the

parties can't work together, … this Court has no problem amending the

order." The circuit court then admonished SJP's counsel to make sure

that SJP was providing "notices of invoices and bills" to Kolessar and was

not instructing vendors to file liens against the Hotel. The circuit court

stated to Kolessar's counsel that

"we need to make certain that the expenses of the hotel [are]
taken care of. I know no one here wants this operation to fail.
There's money out there to take care of the expenses, let's get
them paid.

"Let's get this parking lot situation behind us and so
these people can get their hotel back and making money. So
let's get this done as quickly as we can.

"….

"And so we want to make sure the expenses of the hotel
[are] taken care of so that this hotel can continue to receive
guests to stay in those rooms and continue to pay the
employees that are working there."

The circuit court further stated that it could not determine what

was "going on behind the scenes" as to the unpaid invoices, which

included expenses incurred both before and after the entry of the October

2023 order, adding:

11
SC-2024-0492

"I do agree that maybe the Order appointing [Kolessar] should
be amended so that everyone is clear what each party's role is
here. And so what the Court will do at this time in regards to
a contempt order, this Court is not going to enter a contempt
order at this time.

"The Court will allow the parties to get together in
making amendments to the Order appointing [Kolessar], and
once an amended order is entered, after that if there [is] any
interference from any party or something that should be
taking place that is not taking place regarding any parties,
then the Court will take care of that at the appropriate time.

"….

" And I know [counsel for SJP], you filed a Motion for
Order to Show Cause against [Kolessar] and [Wells Fargo] as
well. And so again, at this time, the Court will not enter an
order holding [Wells Fargo] or [Kolessar] in contempt;
however, the Court will entertain this amended motion or
amended order once that is received, and we will deal with
that."

In wrapping up SJP's arguments at the March 2024 hearing,

counsel for SJP then discussed the matters that it had requested the

circuit court address and referenced the paragraph in SJP's contempt

motion that had requested that Kolessar be ordered to pay all

outstanding expenses of the Hotel, including pre-receivership claims, i.e.,

expenses incurred before the entry of the October 2023 order. After

further discussion, the circuit court stated that SJP's requested matters

would be addressed in its order and that
12
SC-2024-0492

"it's already been addressed in regards to the expenses of the
Hotel; that will be addressed. But again, as your Motion to
Amend Receivership Order has counsel, opposing counsel has
stated some amendments to the order is needed. So the Court
will direct you all to meet and try and work together to amend
the order however you see fit. And, [counsel for SJP], that's
your opportunity at that time to address those concerns you
have.

"Again, if you all cannot come to an agreement, you can
file something with the Court and we will set it for a hearing
and we'll address that."

Counsel for Kolessar thereafter expressed thanks to the circuit court for

allowing the parties time to work on an amendment and noted that he

was concerned about the part of SJP's request "where it says including

expenses incurred prior to the Receivership order, … Your Honor, but

we'll work with that with [counsel for SJP]." The circuit court then

responded, "Okay."

On May 14, 2024, the circuit court entered an order regarding the

parties' respective contempt motions. The circuit court specifically

determined that SJP had instructed certain named vendors to file liens

"due to non-payment of [their respective] invoices." The circuit court also

determined that Kolessar had "received notice of … invoices and failed to

pay said invoices and/or make arrangements to have said invoices paid."

The circuit court did not find any party in contempt, but, as to Kolessar,
13
SC-2024-0492

the May 2024 order stated that SJP's "motion" was granted in part and

that, "[a]s directed in the [October 2023 order], [Kolessar] shall pay

vendor expenses and other expenses of the Hotel, as well as adher[e] to

contractual obligations of [SJP]." However, the May 2024 order also

stated that SJP's "MOTION is hereby DENIED as to amending the

Receivership Order." (Capitalization in original.)

On May 24, 2024, Wells Fargo filed a "Motion to Amend Order

Appointing Receiver," referencing the circuit court's statements at the

March 2024 hearing about entertaining amendments to the October 2023

order. Kolessar subsequently joined Wells Fargo's motion to amend. In

the motion to amend, Wells Fargo alleged that the parties had conferred

but had been unable to reach agreement about an amendment. Wells

Fargo requested that the circuit court adopt a proposed amended order

that Wells Fargo had attached to its motion. That proposed amended

order included, in part, the following:

"IT IS FURTHER ORDERED that notwithstanding
anything to the contrary contained in this Order, neither
[Kolessar] … nor the Receivership Estate … are or shall be
liable for the payment of taxes of any kind, and/or any
assessments, goods or services provided to [SJP] or [the
Hotel], expenses incurred and/or utility charges prior to the
appointment of [Kolessar]. It is within [Kolessar's] sole and
absolute discretion to determine which expenses incurred
14
SC-2024-0492

prior to the [Kolessar's] taking control of the Receivership
Estate …, if any, were incurred in the normal and ordinary
course of business and the payment of which is necessary and
critical to the ongoing operation of [the Hotel] or Receivership
Estate.

"….

"IT IS FURTHER ORDERED that, unless [SJP] and
[Kolessar] otherwise agree in writing, [SJP] and any property
management company engaged by [SJP] (as appropriate) will
be solely and exclusively responsible for (a) any claims or
liabilities that arose prior to the appointment of [Kolessar]
that are in any way related to an employee's employment with
or separation from [SJP] or any management company
engaged by [SJP], including any compensation, benefits,
accrued vacation, payroll taxes, workers compensation
insurance, severance liabilities, contractual obligations,
benefit plans, and (b) any other liabilities existing prior to the
appointment of [Kolessar]."

(Capitalization in original.)

Also on May 24, 2024, Wells Fargo filed a "Motion for Clarification

of Order," which Kolessar subsequently joined. That motion requested

clarification of certain provisions of the May 2024 order, specifically that

the circuit court clarify the May 2024 order by expressly stating that

Kolessar was not required to pay

"expenses incurred by [SJP] prior to the appointment of
[Kolessar]. Specifically, [Kolessar] has only two sources of
funds with which to operate [the Hotel] that comprises the
bulk of the Receivership Estate (1) current hotel revenues;
and (2) advancements that [Wells Fargo] may provide in
15
SC-2024-0492

[Wells Fargo's] discretion. The current hotel revenues are
committed to the current expenses. Thus, to require
[Kolessar] to fund expenses incurred by [SJP] prior to the
creation of the Receivership, such as bills from unsecured
service or supply vendors, would improperly elevate those
unsecured creditors' priority to receive the profits (if any) from
[the Hotel] over that of [Wells Fargo], which is a first-priority
secured party and Mortgagee."

The motion further alleged that elevating the debts owed to such

unsecured creditors was "contrary to the Mortgage, and inequitable."

On May 29, 2024, SJP filed a motion in opposition to Wells Fargo's

motion to amend, and SJP proposed its own amendment, though SJP

alleged that it was "content with" the May 2024 order. SJP proposed that

the circuit court enter an amended order containing

"appropriate changes to meet the Court's concerns expressed
at the hearing, including, for instance, requiring [Kolessar] to
provide [SJP] with information about the operations and
financing of [the Hotel], requiring [Kolessar] to do what it has
already been ordered to do (close on the sale of the parking
lot), and protect [the Hotel] for its ultimate return to SJP, its
owner."

On June 6, 2024, SJP filed a motion to compel Kolessar "to pay the

reasonable and normal expenses of [the Hotel] that [had been] incurred

prior to the entry of [the October 2023 order]." SJP further alleged that

Kolessar had mismanaged the Hotel, causing a significant reduction in

revenue, and that such would continue "absent proper action." Attached
16
SC-2024-0492

as an exhibit to SJP's motion to compel was an aging report (by

claimants, dates, and amounts) identifying purported unpaid expenses

that the Hotel had incurred both before and after Kolessar's appointment

and that totaled $1,159,437.24.

Wells Fargo filed a response opposing SJP's motion to compel,

referencing and incorporating its motion for clarification. Kolessar

likewise filed a response opposing SJP's motion and adopted and

incorporated the arguments made by Wells Fargo. Wells Fargo and

Kolessar denied that Kolessar had mismanaged the Hotel. They

contended that the Hotel revenues were insufficient to pay all Hotel

expenses, that requiring payment of "all pre-receivership expenses

would, in effect, require [Wells Fargo] to disburse funds to pay such

expenses," and that any such payments would improperly prioritize the

claims of unsecured creditors of SJP. In his response, Kolessar also

argued that the issue whether the receivership estate should be used to

pay pre-receivership claims was already before the circuit court in the

parties' competing motions to amend the October 2023 order and the

motion to clarify the May 2024 order. According to Kolessar,

"[SJP] asks this Court for a financial 'get out of jail free' card,
at the expense of the Receivership Estate and creditors to the
17
SC-2024-0492

Receivership Estate and seeks to require [Kolessar] to
significantly improve the Hotel [SJP] mismanaged for years.
Indeed, in paragraph 4 and the referenced Exhibit A to the
Motion to Compel, [SJP] is even so bold as to insist that the
Receivership Estate shoulder over $256,000.00 in legal fees
incurred by [SJP]."

Wells Fargo and Kolessar requested that the circuit court deny SJP's

motion to compel and grant the motion to clarify the May 2024 order.

On July 21, 2024, the circuit court entered an "Order Clarifying the

Court's May 14, 2024, Order." The July 2024 order stated:

"Upon review and consideration of [Wells Fargo's motion
for clarification], the Court CLARIFIES as follows:

"….

"2. Paragraph No. 4 of the Court's Order of May 14,
2024[,] orders [Kolessar] to pay vendor expenses and other
expenses of the Hotel, as well as adhering to contractual
obligations of [SJP]. This includes payment of pre-
receivership expenses of the Hotel, as this Court has directed
the parties to confer on said expenses regarding the
management and operation of the Hotel."

(Capitalization in original.)

Contemporaneously with the entry of the July 2024 order denying

the relief that Kolessar and Wells Fargo had requested in their motion to

clarify, the circuit court also entered an order denying SJP's June 2024

motion to compel the payment of the pre-receivership claims as "moot."

18
SC-2024-0492

According to the case-action-summary sheet, the circuit court set the

respective motions to amend for a hearing to be held on September 5,

2024.

On August 2, 2024, Kolessar filed in the circuit court a notice of

appeal to this Court, naming both SJP and Wells Fargo as appellees,7

and Kolessar filed a motion to reconsider the July 2024 order and a

motion to stay. In support of those motions, Kolessar argued that the

circuit court had erred by instructing him to pay the pre-receivership

claims. According to Kolessar, the circuit court had issued that mandate

"without concern for whether there [were] available funds to pay said

expenses from the revenues of the Hotel." Kolessar also alleged that, if

he was "immediately required to pay [the pre-receivership claims] …,

which purportedly exceed $1,000,000, such a financial burden could do

7In its appellate brief, Wells Fargo agrees with Kolessar's argument

that the July 2024 order is due to be reversed. Wells Fargo does not
dispute that Kolessar "could choose to pay pre-receivership expenses
(e.g., taxes and utilities) provided that funds exist to pay them, and
provided that those expense are necessary to protect the Receivership
Estate." Wells Fargo's brief at 10 n.5 (emphasis in original). "But," Wells
Fargo notes, "the July 21 Order makes no such distinctions, instead
apparently requiring [Kolessar] to pay any pre-receivership expense,"
including SJP's legal expenses unrelated to the preservation of the
receivership estate. Id. (emphasis in original).
19
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irreparable harm to the Hotel, [Kolessar], and [the Hotel's] creditors."

On September 3, 2024, the circuit court entered an order granting

Kolessar's motion to stay pending the disposition of his appeal.

We must first address the issue of the appealability of the July 2024

order. SJP has filed a motion to dismiss Kolessar's appeal. According to

SJP, this Court lacks jurisdiction over the appeal because, it says, the

May 2024 order was not an interlocutory injunction but, even if it was,

the July 2024 order was an order clarifying the May 2024 order not

modifying or amending that order, and, it therefore asserts, Kolessar's

notice of appeal was thus untimely filed. According to Kolessar, however,

the July 2024 order was an appealable order because, he says, it was an

"interlocutory order granting, continuing, modifying, refusing, or

dissolving an injunction, or refusing to dissolve or to modify an

injunction." Rule 4(a)(1)(A), Ala. R. App. P. 8 Because the jurisdictional

issue and the merits of Kolessar's argument that the circuit court erred

in entering the July 2024 order are intertwined, some clarification

8Kolessar does not purport to be appealing from an order appointing

or refusing to appoint a receiver. See Ala. Code 1975, § 12-22-9; Rule
4(a)(1)(B), Ala. R. App. P.
20
SC-2024-0492

regarding the nature of that order will assist in our determination of

those issues.

We first address whether the July 2024 order is an appealable

interlocutory order. It is important to note that SJP is not in

receivership. Only certain properties owned by SJP have been placed in

receivership, namely the properties operated as the Hotel. Kolessar

consistently has raised concerns about SJP's repeated attempts to have

SJP's pre-receivership creditors (only some of which appear to have

provided services relating to the operation of the Hotel) paid from the

receivership estate, particularly in a manner that might adversely affect

his ability to pay the Hotel's current operating expenses, including the

mortgage obligations to Wells Fargo, which has vested rights in collateral

held in the receivership estate. For practical purposes, this is important

because it appears to be undisputed that it will be necessary for Kolessar

to obtain additional disbursements from Wells Fargo, specifically from

the reserve funds and the cash-management accounts, to maintain and

repair the Hotel and eventually return it to the control of SJP, if possible.

According to submissions made by Wells Fargo in support of the

appointment of Kolessar, during the period leading up to the

21
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appointment of Kolessar, SJP had made unauthorized distributions to

itself and related third parties from revenues of the Hotel, rather than

paying certain of the Hotel's operating expenses. Although it does not

appear that all the pre-receivership claims at issue were unpaid because

of the alleged unauthorized distributions, those claims are nevertheless

claims against SJP, not against the receivership estate, i.e., the Hotel,

which is not a legal entity. Also, the pre-receivership claims do not

appear to be expressly related to any lien regarding the properties

composing the receivership estate. In other words, SJP has attempted to

have unsecured pre-receivership claims against it paid through the

receivership estate, and Kolessar has attempted to prevent the dilution

of the receivership estate in a manner that would benefit SJP and its

unsecured creditors at the expense of a secured creditor, Wells Fargo, as

to the properties composing the receivership estate and to the detriment

of Kolessar's ability to pay the Hotel's current operating expenses,

including the Hotel's current debt obligations.

Kolessar argues in his appellate brief that the July 2024 order

required him to pay all the pre-receivership claims SJP had requested

that he pay, "without regard for the priority of creditors." SJP does not

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disagree that Kolessar was ordered to pay all of those claims. And, in

light of the circuit court's denial, as "moot," of SJP's motion to compel the

payment of the pre-receivership claims, we must agree that Kolessar was

ordered to pay all the pre-receivership claims.9 The issue is when that

order was entered. For the reasons hereinafter discussed, we conclude

that the July 2024 order was the first order requiring Kolessar to take

the specific action of paying the pre-receivership claims.

First, the October 2023 order did not require Kolessar to pay the

pre-receivership claims. The October 2023 order "enjoined" SJP's pre-

receivership creditors from "discontinuing service to [Kolessar] or the

Hotel based upon the nonpayment of such taxes, assessments, goods or

9The circuit court's use of the term "moot" cannot be understood in

the sense of there ceasing to be any controversy between the parties
regarding whether the pre-receivership claims were to be paid because
Kolessar and Wells Fargo continued to object to the payment of those
claims. See Irwin v. Jefferson Cnty. Pers. Bd., 263 So. 3d 698, 703 (Ala.
2018) (discussing mootness in relation to the absence of a justiciable
controversy); Black's Law Dictionary 1205 (12th ed. 2024) (defining
"moot" as "3. (Of a putative legal dispute) no longer involving a real, live
controversy."). Instead, the circuit court's use of the term "moot" only
makes sense as reflecting its conclusion that the issue whether Kolessar
must pay all the pre-receivership claims finally had been resolved in
favor of SJP and against Kolessar and Wells Fargo. Black's Law
Dictionary at 1205 (defining "moot" as "2. Having no practical
significance; hypothetical or academic.").
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services, and/or utilities provided prior to the date of [the October 2023

order]" and from "attempting to collect taxes, assessments, invoices and

utility charges from [Kolessar] … for any payment obligations

whatsoever that arose prior to the date of th[at] Order," while also

directing Kolessar

"to manage and operate [the Hotel]; to preserve and maintain
[the Hotel]; to collect the rents and proceeds of [the Hotel] and
all income and profits derived therefrom; to pay the mortgage
payment to [Wells Fargo], payroll, franchise fees, utilities,
vendor expenses and other expenses; [and] to exercise all
rights of [SJP] in and to [the Hotel], including, but not limited
to adhering to contractual obligations of [SJP] or Court
Orders."

In light of the prohibition on SJP's pre-receivership creditors

discontinuing services for nonpayment of their pre-receivership claims

and from attempting to collect from Kolessar on those claims, and in light

of the purpose of the receivership, which was to maintain the status quo

pending resolution of the claims of SJP and Wells Fargo, reading the

broad directives to Kolessar as requiring him to pay the pre-receivership

claims is not a reasonable reading of the October 2023 order, particularly

in light of the insufficient revenue being generated by the Hotel's

operations.

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Second, the May 2024 order did not require Kolessar to pay the pre-

receivership claims. The May 2024 order stated that, "[a]s directed in

the [October 2023 order], [Kolessar] shall pay vendor expenses and other

expenses of the Hotel, as well as adher[e] to contractual obligations of

[SJP]." (Emphasis added.) Clearly that language did not alter the

pertinent language in the October 2023 order in the least. Also, the

discussions during the March 2024 hearing further support the

conclusion that the May 2024 order was not intended to require Kolessar

to pay the pre-receivership claims. The parties agreed that after that

hearing they were to discuss proposed amendments to the October 2023

order, and, in the May 2024 order, the circuit court expressly denied

SJP's motion to amend the October 2023 order.

As discussed above, after the March 2024 hearing, SJP and Wells

Fargo disagreed about how to amend the October 2023 order, and,

thereafter, Kolessar and Wells Fargo requested an order prohibiting the

payment of the pre-receivership claims, except at the discretion of

Kolessar, which the circuit court effectively denied when it entered the

July 2024 order. In other words, instead of granting the requested

prohibition on paying pre-receivership claims from the receivership

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estate, at least pending consideration of the respective motions to amend,

the circuit court did the opposite, modifying Kolessar's legal obligations

as receiver by requiring him, for the first time, to pay all the pre-

receivership claims from the receivership estate, without condition.

Having resolved when Kolessar was first ordered to pay the pre-

receivership claims, all that remains regarding the question of the

appealability of the July 2024 order is to determine whether it reflects an

injunction for purposes of Rule 4(a)(1)(A). SJP attempts to buttress its

argument that the July 2024 order does not reflect an injunction by

noting that it had not requested an injunction pursuant to Rule 65, Ala.

R. Civ. P. 10 However, SJP's argument confuses the issue whether an

10It is clear from the record that the circuit court did not require

SJP to comply with the requirements of Rule 65. In part, Rule 65 would
have required SJP to present evidence establishing

" 'that (1) [SJP] would suffer irreparable harm without the
injunction, (2) [SJP] has no adequate remedy at law, (3) [SJP]
has at least a reasonable chance of success on the ultimate
merits of the case, and (4) the hardship that the injunction
will impose on [the receivership estate] will not unreasonably
outweigh the benefit accruing to [SJP].' "

Ex parte Alabama Dep't of Youth Servs., 401 So. 3d 276, 286 (Ala. 2024)
(quoting City of Helena v. Pelham Bd. of Educ., 375 So. 3d 750, 752 (Ala.
2022)). See also Rule 65(d)(2) (stating that "[e]very order granting an
injunction shall set forth the reasons for its issuance; shall be specific in
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injunction satisfies the requirements of Rule 65 with the issue whether

an order is considered an "injunction" under our precedents discussing

the application of Rule 4(a)(1)(A).

In Kappa Sigma Fraternity v. Price-Williams, 40 So. 3d 683 (Ala.

2009), this court concluded that an interlocutory order addressing the

final substantive relief at issue in an action and requiring payment before

a final judgment had been entered was an appealable order "injunctive

in nature" for purposes of Rule 4(a)(1)(A). Compare Rule 4(a)(1)(A) with

28 U.S.C. § 1292(a)(1) (authorizing appeals from "[i]nterlocutory orders

of the district courts … granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or modify injunctions,

except where a direct review may be had in the Supreme Court"). See

generally 16 Charles Alan Wright et al., Federal Practice & Procedure:

Jurisdiction & Related Matters § 3922 (3d ed. 2012) ("If an affirmative

definition of a § 1292(a)(1) 'injunction' must be attempted, it would

embrace orders that are directed to a party, enforceable by contempt, and

designed to accord or protect 'some or all of the substantive relief sought

terms; shall describe in reasonable detail, and not by reference to the
complaint or other document, the act or acts sought to be [enjoined]").
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by a complaint' in more than temporary fashion."). We stated in Kappa

Sigma Fraternity:

"Rule 4(a)(1)(A), Ala. R. App. P., expressly contemplates
appeals from orders 'granting, continuing, modifying,
refusing, or dissolving an injunction, or refusing to dissolve or
to modify an injunction.' 'An injunction is defined as "[a] court
order commanding or preventing an action." Black's Law
Dictionary 788 (7th ed.1999).' Dawkins v. Walker, 794 So. 2d
333, 335 (Ala. 2001). The trial court's March 6, 2009, order
commanded the chapter to take specific action -- to pay the
settlement proceeds to Price-Williams by March 9, 2009.
Because the March 6, 2009, order commands the chapter to
take action, we conclude that it is injunctive in nature. See
Dawkins, 794 So. 2d at 335. 'An appeal may be taken from
"any interlocutory order granting, continuing, modifying,
refusing, or dissolving an injunction, or refusing to dissolve or
to modify an injunction." Rule 4(a)(1)(A), Ala. R. App. P.'
Watson v. Watson, 910 So. 2d 765, 768 (Ala. 2005)."

40 So. 3d at 689-90; see also Lem Harris Rainwater Fam. Tr. v.

Rainwater, 344 So. 3d 331, 335 (Ala. 2021) (stating that the payment

"order was injunctive in nature -- because it commanded the parties to

take specific action" in relation to the substantive relief at issue); Bates

v. Stewart, 99 So. 3d 837, 851 (Ala. 2012) (citing Rule 4(a)(1)(A) and

stating: "The trial court's August 22 and September 9 orders commanded

the trustee of the Abernathy trust to take specific action -- to stop making

certain payments contemplated by the trust and to release certain

information. Because the August 22 and September 9 orders clearly
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command the trustee to take action, we conclude that it is injunctive in

nature."); cf. City of Orange Beach v. Lamar Cos., 403 So. 3d 832, 839-40

(Ala. 2024) (applying Rule 4(a)(1)(A) when "[t]he circuit court's … order

denying Orange Beach's motion to enforce the consent decrees

constituted a refusal to require Lamar to remove Billboard C from the

beach highway, i.e., refusing to require Lamar to take a specific action").

For purposes of Rule 4(a)(1)(A), the issue is not whether the July

2024 order complied with Rule 65 but whether the order is injunctive in

nature, as discussed in the above-referenced precedents. The fact that

no injunction pursuant to Rule 65 was requested is not determinative of

that issue. And, considering the discussion above regarding the

circumstances under which the July 2024 order was entered and the

language used in that order in relation to previous orders, that order is

injunctive in nature as to Kolessar for purposes of Rule 4(a)(1)(A) and is

not a mere clarification of the October 2023 order or May 2024 order. See

Southland Quality Homes, Inc. v. Williams, 781 So. 2d 949, 952 (Ala.

2000) ("[T]his Court looks to the substance of a motion or order, rather

than its form."); cf. Securities & Exch. Comm'n v. Credit Bancorp., Ltd.,

297 F.3d 127, 136 (2d Cir. 2002) (stating that an order authorizing an

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interim plan for partial distributions by a receiver and that implicated

creditor priorities was appealable because it modified a preliminary

injunction that had frozen Bancorp's assets). Accordingly, SJP's motion

to dismiss is due to be denied, and, contemporaneously with the release

of this opinion, the Court has issued an order denying the motion.

As for Kolessar's arguments that the July 2024 order should be

reversed, we see no need to go beyond his argument that the circuit court

exceeded its discretion by requiring him to pay the pre-receivership

claims without regard to the priority of creditors. Based on Kolessar's

appointment as receiver, we must conclude that Wells Fargo already had

established "a reasonable probability of success on the [merits regarding

its complaint], and that the subject-matter in controversy [i.e., the Hotel]

[was] in danger." Ashurst v. Lehman, Durr & Co., 86 Ala. 370, 371, 5 So.

731, 731 (1889). And it is well settled that a receivership

"is preventive in its nature, and its purpose is the
preservation of the subject-matter of litigation, for the benefit
of all the parties in interest, until their rights can be finally
adjudicated. It does not affect the title, nor establish the
rights of the parties. Such being the nature of the remedy,
the appointment of a receiver is authorized, when the party
seeking the appointment shows, prima facie, a title
reasonably free from doubt, or a lien upon the subject-matter
of controversy, to which he has a right to resort for the
satisfaction of his claim, and that it is in danger of loss from
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waste, misconduct, or insolvency, if the defendant is
permitted to retain the possession."

Id.; see also C.E. Dev. Co. v. Kitchens, 288 Ala. 660, 666-67, 264 So. 2d

510, 516 (1972) (" ' "The remedy [of receivership] is preventive in its

nature, and its purpose is the preservation of the subject-matter of

litigation, for the benefit of all the parties in interest, until their rights

can be finally adjudicated." ' " (citations omitted)). Requiring Kolessar to

pay the pre-receivership claims against SJP from the receivership estate,

unconditionally, does not protect the receivership estate from danger of

loss, particularly to the extent that such payments might affect

Kolessar's ability to pay the current operating expenses of the Hotel or

might adversely affect the security interests of Wells Fargo without its

consent. See 65 Am. Jur. 2d Receivers § 72 (2021) ("The appointment of

a receiver does not alter, affect, determine, or destroy any prior vested

right, encumbrance, or lien, nor affect the order of existing liens. Courts

do not have the power, in receivership proceedings, to take away vested

lien rights without the consent of the lien holders.").

As this Court stated in Bridgeport Electric & Ice Co. v. Bridgeport

Land & Improvement Co., 104 Ala. 276, 281-82, 16 So. 93, 93 (1894):

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"The very purpose of placing the property in the hands of a
receiver was to have it held and protected for the benefit of
creditors. The bill was filed for the benefit of all creditors who
might come in and contribute to the litigation. The priority of
creditors, if there were any, could be ascertained and
determined, and their priorities protected. The effect of the
order of the court was to permit one who claimed to be a
judgment creditor, by levy of execution, to take from the
receiver all the assets, and appropriate them, if necessary, to
the payment of the one claim, to the exclusion of the
complainant's demand; and that upon a judgment recovered
subsequent to the filing of complainant's bill and the
appointment of a receiver, without a reference to the register,
or without giving complainant or any other creditor an
opportunity to show, if they could, any defense to the
judgment, or that it had no priority over other claims. To
permit this order of the court to be executed would give the
petitioner an advantage not warranted by any evidence in the
record, and, if the averments of the bill be true, complainant
and other creditors would sustain irremediable loss."

The principles discussed in Bridgeport Electric & Ice Co. are

instructive in the present case, and we see no reason to draw a distinction

between the attempt to obtain payment made by the judgment creditor

at issue in that case and SJP's attempt to require Kolessar to discharge

its pre-receivership obligations from the receivership estate, particularly

in the absence of evidence establishing that payment of each of the pre-

receivership claims was required for the Hotel to continue operating, that

making such payments would not adversely affect Kolessar's continuing

operation of the Hotel, and that making such payments would not
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adversely affect the interests of priority creditors, such as Wells Fargo,

without the consent of such creditors.

Based on the foregoing, the July 2024 order is reversed and the case

is remanded to the circuit court for further proceedings consistent with

this opinion.

REVERSED AND REMANDED.

Shaw, Wise, and Sellers, JJ., and Minor, Special Justice,* concur.

Bryan, J., concurs in the result.

Stewart, C.J., and McCool and Lewis, JJ., dissent.

Cook, J., recuses himself.

*Judge Richard J. Minor of the Alabama Court of Criminal Appeals
was appointed to serve as a Special Justice in regard to this appeal.

33