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STATE OF MISSISSIPPI, EX REL. EDWIN LLOYD PITTMAN, ATTORNEY GENERAL, AND RAY MABUS, AUDITOR OF PUBLIC ACCOUNTS FOR THE USE AND BENEFIT OF HANCOCK COUNTY, MISSISSIPPI v. WOODROW LADNER

SEPTEMBER 16, 1987

STATE OF MISSISSIPPI, EX REL. EDWIN LLOYD PITTMAN, ATTORNEY GENERAL, AND RAY MABUS, AUDITOR OF PUBLIC ACCOUNTS FOR THE USE AND BENEFIT OF HANCOCK COUNTY, MISSISSIPPI
v.
WOODROW LADNER, LOUIE LADNER, ORIS LADNER, JOHNNY BANKS, AND MONVEL CUEVAS, BILLY D. SILLS, NATIONAL GENERAL INSURANCE COMPANY, UNITED STATES FIDELITY AND GUARANTY COMPANY, AND THE NORTH RIVER INSURANCE COMPANY



BEFORE HAWKINS, P.J.; ROBERTSON AND SULLIVAN, JJ.

ROBERTSON, JUSTICE, FOR THE COURT:

I.

Today's appeal presents important questions regarding the letting of emergency school repair contracts. For one thing these school board members and the county superintendent of education entered an electrical repair contract with a firm that employed one of the school board members. This violates our conflict of interest statute and we affirm the lower court's holding to that effect. The case, however, must be remanded for an evidentiary hearing regarding the amount of the penalty.

 In addition, the State has charged these school officials with violations of a statutory three competitive bid rule then in effect. Without doubt the violation occurred, but in 1980. Since the contracts were let, but before this suit was brought, the legislature abrogated those parts of the statute the Board members had offended. We should not at this late date enforce the earlier rule as the state acquired nor held any vested rights thereunder.

 We affirm in part and reverse in part and remand.

 II.

 A.

 On May 19, 1980, a tornado struck in Hancock County,

 causing substantial damage to Gulfview Elementary School. The morning after, the Hancock County School Board met to assess the situation. At that time the Board was composed of members Woodrow Ladner, Louie Ladner, Oris Ladner, Johnny Banks and Monvel Cuevas. Billy D. Sills was serving as the County Superintendent of Education, and Joseph Gex was the Board Attorney.

 When the Board met, all members were present except for Monvel Cuevas. The Board members declared an emergency situation at Gulfview Elementary School by reason of the tornado damages. At this meeting, the Board contracted with Tom Stinson of Stinson Fence Company to clean up and replace the fence at Gulfview and authorized Superintendent Sills to hire security personnel until emergency repairs were completed, to hire personnel to clean up the buildings and grounds, and to hire personnel to repair the inside of the buildings. Thereafter, contracts were let to various local contractors for repairs at Gulfview School. Competitive bids were not sought regarding these various contracts.

 From May 20, 1980, until August 29, 1980, on various dates reflected in the minutes, the School Board authorized the payment of School Board funds which totaled the following amounts:

 Bay Contractors $228,981.11

 Tommy Lane 4,840.00

 Gulf Coast Security Systems, Inc. 9,064.57

 Gulf Electric, Inc. 27,784.32

 Stinson Fence & Construction Co. 27,554.75

 MIRI, Inc. 52,575.00 -----------

 TOTAL PAYMENT $350,799.75

 Less repayment by Bay Contractors 4,840.00 -----------

 TOTAL EXPENDITURES $345,959.75

 Among the local contractors hired was Gulf Electric Inc., which employed one of the Board members, Louie Ladner. Pursuant to instructions by the Board, Superintendent Sills obtained Gulf Electric to do the electrical repair work at the school. The Board approved these arrangements. Fearing a conflict of interest as a result of this contract, Louie

 Ladner discussed with the Board attorney the problem of his participating in the letting of a contract to his employer. The attorney advised Louie that he saw nothing legally wrong with the Board giving the contract to Gulf Electric so long as Louie abstained from voting on any matter dealing with it. Louie followed this advice. He did not vote to award the contract to Gulf Electric nor regarding the payment of bills to Gulf Electric. However, Louie actually worked while an employee of Gulf Electric on the project at Gulfview School.

 B.

 On February 8, 1982, the State of Mississippi, acting by and through its duly empowered Attorney General and State Auditor, see Canton Farm Equipment, Inc. v. Richardson, 501 So.2d 1098, 1106, 1109 (Miss.1987), commenced the present civil action by filing its complaint in the Chancery Court of Hancock County. Named as Defendants were the five School Board members and Superintendent Sills.

 The complaint charged that, during the period between May 20, 1980, through and including August 29, 1980, the Hancock County School Board members and Superintendent Sills had voted repeatedly to contract with certain companies and individuals for repairs and construction on the Gulfview Elementary School and had authorized payments for these repairs and construction all in violation of the three competitive bids requirement of Miss. Code Ann. 31-7-39, 31-7-41, 31-7-43, 31-7-45 and 37-11-27 (1972). Additionally, the State charged that Defendants had violated the conflict of interest statute, Section 37-11-27, and were liable for repayment to the school's treasury of all sums paid to Gulf Electric, Inc. The complaint further alleged that each School Board member and Superintendent Sills were liable, individually and on their respective official bonds, for penal damages for departing from the statutory method of letting contracts.

 Thereafter, all Defendants moved to dismiss pursuant to Rule 12(b)(6), Miss.R.Civ.P., charging that the complaint failed to state a claim upon which relief could be granted because the statutory authority upon which the complaint was based had been repealed effective January 1, 1981. Subsequently, the State of Mississippi moved for summary judgment, followed by the Defendants' cross-motion for summary judgment.

 On September 28, 1984, the Chancery Court granted partial summary judgment in favor of Defendants, holding that the State had no enforceable rights under the three competitive bid rule of Section 31-7-43, because that rule had been

 repealed prior to the State acquiring any vested right thereunder. On the conflict of interest claim, the Chancery Court granted partial summary judgment in favor of the State pursuant to Section 31-11-27, against each board member and Superintendent Sills in the sum of $27,784.32. Four Board members and Superintendent Sills were assessed ...


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