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MARK D. WHOLEY, M.D. v. CAL-MAINE FOODS

JULY 27, 1988

MARK D. WHOLEY, M.D.
v.
CAL-MAINE FOODS, INC., A CORPORATION, AND CAL-MAINE EGGS, INC., A CORPORATION JOHN A. RODGERS v. CAL-MAINE FOODS, INC., A CORPORATION, AND CAL-MAINE EGGS, INC., A CORPORATION CONSOLIDATED



BEFORE DAN LEE, P.J., SULLIVAN AND ZUCCARO, JJ.

ZUCCARO, JUSTICE, FOR THE COURT:

On September 22, 1986, the Chancery Court of Hinds County entered two summary judgments in favor of Cal-Maine, dismissing separately the actions of Wholey and Rodgers. These actions were at trial, and now on appeal, companion cases raising identical issues, and as a consequence will be consolidated. After due consideration, we reverse and remand.

FACTS

 Appellants were two of many limited partners in National Farming Program/1973, a limited partnership in which appellees were the general managing partner. The partnership term was for five years, beginning on June 11, 1973, and ending on December 31, 1978. Each of appellants' interest in National Farming Program/1973 consisted of a $5,000 investment out of a total of $6,000,000 of limited partnership interest. The limited partnership during its term was economically unsuccessful and by August, 1977, Wholey and Rodgers, as well as the other limited partners, were made aware through a regularly transmitted status report letter that the partnership was experiencing net losses and that their capital investment had diminished with little or no hope of obtaining any refund of said investment. In December, 1978, the limited partnership was dissolved, and by a letter dated February 28, 1979, the limited partners were informed that there would be no return of capital.

 On April 2, 1986, Wholey and Rodgers separately filed complaints against appellees in the Chancery Court of Hinds County alleging that appellees, as general managing partners, by misappropriations from the partnership and through self dealing, made hidden profits for itself and concealed those profits from the limited partners, which led to the demise of National Farming/1973. On this basis, appellants contended that appellees breached the fiduciary duty placed upon it to act in good faith and with integrity concerning partnership affairs. In furtherance of this contention, appellants asserted the fact that appellees charged the limited partnership management fees as follows:

 1973 - $21,371.00 1974 - $990,457.00 1975 - $1,009,408.00 1976 - $1,087,662.00 1977 - $1,084,440.00 1978 - $1,072,516.00

 Other examples of over reaching were alleged in furtherance of the claims.

 On June 12, 1986, Cal-Maine filed two motions for summary judgment based solely on its contention that appellants' complaints were barred by the six-year statute of limitations set forth in 15-1-49 of the Mississippi Code of 1972. The chancellor granted Cal-Maine's motion not only upon the basis that Wholey and Rodgers' claims were barred by the six-year statute of limitations, but upon the additional basis that the doctrine of res judicata acted so as to bar both suits. Prior to the lower court's order granting Cal-Maine's motions for summary judgment, the issue of res judicata had not been raised in the pleadings, discovery, or in the motion itself. Wholey and Rodgers appeal the lower court's determination, each assigning three errors as follows.

 I. DID THE TRIAL COURT ERR BY GRANTING SUMMARY JUDGMENT FOR CAL-MAINE ON THE BASIS OF RES JUDICATA?

 As stated above, one of the reasons for the lower court's granting of Cal-Maine's motions for summary judgment was res judicata. The lower court's determination that res judicata precluded appellants' actions were based upon the fact that appellants had filed on March 3, 1983 an almost identical actions against Cal-Maine in the Chancery Court of Hinds County. These matters were never brought to trial, and on March 13, 1986, Chancery Judge Paul G. Alexander dismissed both actions for failure to prosecute. Subsequently, on April 2, 1986, appellants filed the present actions, which Chancellor Stuart Robinson dismissed in part on the basis that Chancellor Alexander's dismissal of appellants' previously filed suits for failure to prosecute was res judicata to the present actions. A critical fact that must be noted is that none of the pleadings, discovery, motions, etc. reflected by the records in either case mention the prior filing by Wholey and Rodgers, their subsequent dismissal by Chancellor Alexander, or that such might be res judicata. Indeed, the first point in the record at which res judicata is raised is in Chancellor Robinson's order dismissing both cases.

 Rule 8 (c) of the Mississippi Rules of Civil Procedure provides that:

 Affirmative Defenses. In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense. When a party has mistakenly designated a defense as a counterclaim or a counterclaim as a defense, the court on terms, if justice so requires, shall treat the pleading as if there had been proper designation.

 As is readily apparent from the plain language of the above rule, if a party intends to rely on one of the above enumerated defenses, including res judicata, he must affirmatively plead it. Affirmative defenses neither pleaded nor tried by consent are deemed waived. Bell v. First Columbus National Bank, 493 So.2d 964, 968 (Miss.1986). Cal-Maine did not set forth res judicata in its answer as an affirmative defense, as is required by Rule 8 (c). The question thus becomes whether a trial court, in this instance the Chancery Court of Hinds County, may raise res judicata on its own motion or otherwise utilize such when this defense has not been affirmatively plead.

 In Glass v. Armstrong, 330 So.2d 57 (Fla. App. 1976), it was held that a trial court is not authorized to take judicial notice of cases pending or previously disposed of in the same court but outside the record in the case before it. Glass at 58 quoting Kostecos v. Johnson, 85 So.2d 594 (Fla.1956). Further, the Glass case held that res judicata may not be first raised on a motion to dismiss, as in the present case, for the reason that res judicata is an affirmative defense requiring both pleading and proof. 330 So.2d at 58. Res judicata is an affirmative defense which may not be raised on ...


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