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McBride v. Meridian Public Improvement Corp.

November 12, 1998

BILL MCBRIDE
v.
MERIDIAN PUBLIC IMPROVEMENT CORPORATION AND THE CITY OF MERIDIAN, MISSISSIPPI



Before Pittman, P.j., Roberts And Smith, JJ.

The opinion of the court was delivered by: Pittman, Presiding Justice

DATE OF JUDGMENT: 09/06/96

TRIAL JUDGE: HON. SARAH P. SPRINGER

COURT FROM WHICH APPEALED: LAUDERDALE COUNTY CHANCERY COURT

NATURE OF THE CASE: CIVIL - OTHER

DISPOSITION AFFIRMED - 11/12/98

¶1. In April, 1993, the mayor and city council of Meridian, Mississippi elected to finance the purchase of property and construction of a public improvement project identified as "The Downtown Plaza Project" through Mississippi's public "Lease-Purchase-Law", Miss. Code Ann. § 31-8-1 et seq. (1990) with the issuance of Certificates of Participation ("COPS"). In March 1994, the City elected to use the same financing mechanism for a public improvement project identified as "The Multi-Modal Project."

¶2. Pursuant to Miss. Code Ann. § 31-13-5 (1990), both transactions were submitted to the State's Bond Attorney who rendered his opinion on their compliance with the law. Subsequently, both transactions were presented to the Chancery Court of Lauderdale County for validation. On May 26, 1993, for the Downtown Plaza Project and on August 12, 1994, for the Multi-Modal Project, the Chancery Court entered a Decree of Validation affirming the Opinions of the State's Bond Attorney. After the validations, the COPS were issued.

¶3. On August 19, 1996, Bill McBride, a taxpayer of the City of Meridian, filed his complaint against the City and the Meridian Public Improvement Corporation ("MPIC") attacking the validity of the agreements entered into by the City with MPIC. McBride sought to preliminarily and permanently enjoin the City from paying any portion of any indebtedness incurred by or on behalf of MPIC, to enjoin the City from proceeding with the projects, to dissolve MPIC and enjoin it from conducting any business whatsoever, to have the COPS declared null and void, to have a judgment entered against the defendants for all sums of taxpayer money expended in violation of the law, and for attorney's fees and all costs of bringing the action.

¶4. On August 23, 1996, the City filed its Motion to Dismiss Complaint or in the alternative for Judgment on the Pleadings or for Summary Judgment and for Sanctions. The City maintained that McBride's Complaint failed to state a claim upon which relief could be granted, and that all provisions and requirements of Miss. Code Ann. § 31-8-1 et seq. (1990) and other applicable laws had been met by the City and MPIC with regard to the subject transactions. On August 29, 1996, MPIC joined in the City's Motion.

¶5. On August 26, 1996, the City filed its Answer and Defenses essentially arguing the same issues presented in its Motion. The thrust of the City's Answer was that because the challenged COPS were properly validated pursuant to the provisions of Miss. Code Ann. § 31-13-3 (1990), without objection, McBride's action was barred. On September 3, 1996, MPIC joined in the City's Answer.

¶6. On September 4, 1996, McBride filed a Motion for Recusal requesting that Chancellor Springer recuse herself due to her prior employment with law firms which had previously represented the City and which at that time represented the City. McBride's Motion for Recusal was denied on that same day.

¶7. On September 6, 1997, the Chancellor dismissed McBride's Complaint pursuant to Miss. R. Civ. P. 12(b)(1), 12(b)(6) and 12(c), finding that the validation proceedings constituted res judicata on every issue raised in McBride's Complaint.

¶8. McBride timely filed his Notice of Appeal from the Chancellor's Opinion and Judgment granting the City's Motion to Dismiss on September 20, 1996.

¶9. On May 22, 1997, a subsequent hearing was conducted by the Chancellor on the City's Motion for Fees and Costs Pursuant to the Litigation Accountability Act of 1988. By Opinion and Judgment dated June 25, 1997, the Chancellor entered judgment in favor of the City against McBride's attorney, John R. Reeves, in the amount of $9778.93.

¶10. McBride and Reeves timely filed a Notice of Appeal on June 26, 1997. This appeal bears Cause No. 97-CA-00814-SCT. It has been consolidated with McBride's first appeal, Cause No. 96-CA-01018-SCT.

¶11. McBride raises the following alleged errors for this Court's consideration and review:

I. THE CHANCELLOR ERRED IN FAILING TO RECUSE HERSELF.

II. THE CHANCELLOR ERRED IN DISMISSING THE COMPLAINT PURSUANT TO M.R.C.P. 12(b)(1), 12(b)(6) AND 12(c).

III. THE CHANCELLOR ERRED IN HEARING THE MOTION FOR ATTORNEYS' FEES AFTER A JUDGMENT WAS RENDERED AND THE CASE WAS APPEALED TO THE MISSISSIPPI SUPREME COURT.

IV. THE CHANCELLOR ERRED IN ORDERING PLAINTIFF'S ATTORNEY TO PAY ATTORNEYS' FEES TO DEFENDANT UNDER THE LITIGATION ACCOUNTABILITY ACT OF 1988.

STATEMENT OF THE FACTS

¶12. In April 1993 and March 1994, the City of Meridian's governing authorities elected to finance the purchase of property and the construction of two public improvement projects identified as the "The Downtown Plaza Project" and the "The Multi-Modal Project" through the use of Mississippi's "Lease-Purchase Law", Miss. Code Ann. § 31-8-1 et seq. (1990). Under the Lease-Purchase Law, the City owns the real property on which the project is to be constructed. The City then leases the property to a corporation, in this instance a non-profit corporation, the MPIC. The non-profit corporation commits to cause the construction of the project, and leases the project to the City. This is accomplished through a Lease and Option to Purchase Agreement, the terms of which are consistent with Miss. Code Ann. § 31-8-9 (1990). At the same time, the non-profit corporation appoints the City, through an Agency Agreement, as its agent in connection with the "acquisition, construction, delivery and installation" of the project. This appointment is irrevocable and the City then constructs or causes the construction of the project, following the public bidding requirements.

ΒΆ13. Financing for the projects is provided through the issuance of COPS, which represent proportional interests in the Lease and Option to Purchase. In this case, Deposit Guaranty National Bank purchased the COPS to provide the proceeds to pay for the construction and financing costs for the Downtown Plaza Project. Three banks in Meridian did the same for the Multi-Modal Project. The proceeds were paid to Trustees. In the case of the Downtown Plaza Project, the amount of the COPS ...


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