June 23, 2015
CHRISTOPHER DEANS, APPELLANT
KATHY REED MCCOLUMN, APPELLEE
OF JUDGMENT: 09/19/2013.
FROM WHICH APPEALED: HINDS COUNTY CHANCERY COURT. TRIAL
JUDGE: HON. WILLIAM H. SINGLETARY. TRIAL COURT DISPOSITION:
DISSOLVED PARTNERSHIP AND DIVIDED ASSETS.
APPELLANT: JANE E. TUCKER, SHARON D. HENDERSON.
APPELLEE: S. MALCOLM O. HARRISON, DAVID NEIL MCCARTY.
LEE, C.J., ROBERTS AND JAMES, JJ. IRVING AND GRIFFIS, P.JJ.,
ISHEE, ROBERTS, CARLTON, MAXWELL AND FAIR, JJ., CONCUR.
BARNES, J., CONCURS IN PART AND IN THE RESULT. JAMES, J.,
CONCURS IN PART.
NATURE OF THE CASE: CIVIL - OTHER
In this case, we must determine whether the chancellor
properly dissolved a partnership. We find no error by the
chancellor and affirm.
In 1998, Christopher Deans and Kathy McColumn, both physical
therapists, formed Therapy First Outpatient Rehabilitation
LLC (Therapy First). According to the operating agreement,
Deans and McColumn each had a fifty-percent interest in
Therapy First. The parties, through Therapy First, purchased
a commercial building in Jackson, Mississippi, for their
In December 2011, McColumn filed a petition for dissolution
in the Hinds County Chancery Court. Deans subsequently filed
a counterclaim alleging fraud, breach of contract, breach of
fiduciary duties, and conversion. McColumn filed a motion to
strike Deans's counterclaim. The chancellor granted the
motion to strike the counterclaim. A special master, Oran C.
Page, was appointed to review all applicable information to
assist the chancellor in dissolving Therapy First.
After a trial, the chancellor adopted the findings of the
special master and ordered Therapy First to be dissolved.
Deans now appeals, arguing several issues, which we have
condensed as follows: (1) the chancellor erred by dismissing
his counterclaim, and (2) the chancellor's findings were
unsupported by the record. McColumn filed a motion to dismiss
this appeal, which we will address as issue three.
Therapy First was formed in 1998. At first Deans and McColumn
remained working for their previous employer, Mid-Delta Home
Healthcare. Deans worked at Therapy First in the morning and
Mid-Delta in the afternoon. McColumn worked at Mid-Delta in
the morning and Therapy First in the afternoon. Approximately
one year later, Deans and McColumn were able to leave
Mid-Delta and work full-time for Therapy First. While both
Deans and McColumn worked as physical therapists, McColumn
also acted as the business manager.
In 2002, Therapy First acquired a yearly contract to service
patients at Jefferson County Nursing Home in Fayette,
Mississippi. Deans was primarily responsible
for fulfilling the services under this contract, driving to
Fayette five days a week. In 2007, Deans and McColumn opened
another Therapy First in McComb, Mississippi. Deans began to
split his time between the McComb location and the nursing
home. Deans and McColumn also opened a medical supplies
company, which ceased operations after a few years. The
McComb location of Therapy First was unsuccessful and closed
McColumn testified that in 2008, she received a phone call
from the administrator of the nursing home in Fayette.
McColumn was informed that Deans was no longer providing
services to the residents. The administrator told McColumn
that Deans was working for another nursing home. McColumn
testified she had to coax Deans into working at the nursing
home for the remainder of their contract in order to avoid
breaching the contract. Deans testified that he did start
working for another nursing home located in Port Gibson,
Mississippi, in June 2008.
Although Deans was still a partner in Therapy First, he did
not see patients there after June 2008. In December 2009,
Deans withdrew $9,000 from the Therapy First account for what
he termed " profit sharing." McColumn became aware
of this after the bank informed her that the account did not
have sufficient funds to cover other payments. McColumns
continued to provide services to the patients at Therapy
First until 2011, when she started a new company named
Physical Therapy First LLC. McColumn apparently failed to
inform Deans that she had opened a new physical therapy
business in the same building as Therapy First. At some point
McColumn, with Deans's permission, also formed, Deans and
Mac LLC, as a vehicle to hold title to the real property
owned by her and Deans. Her new company and another tenant
renting part of the Therapy First building paid rent to Deans
and Mac LLC.
McColumn testified that Deans entered the Therapy First
building in late 2011 and removed everything, including
equipment, computers, therapy machines, patient files, and
some of her personal items. Shortly thereafter, McColumn
filed a temporary restraining order as well as her request
for a judicial dissolution of Therapy First.
In his report, the special master examined the books and
records of Therapy First and documented the income, expenses,
and distributions for 2008 through 2011. In 2008, the special
master noted Deans received a distribution of $7,794 and
McColumn received $9,894. The special master noted McColumn
suffered a $7,654 loss to her capital account in 2009, and
Therapy First operated at a net loss, so there was no
distribution. That same year, Deans withdrew $9,000 from the
Therapy First account. In 2010, Deans and McColumn each
received a distribution of $20,559. In 2011, McColumn
received a $44,577 distribution. The special master
recommended the Therapy First building be sold and the
proceeds be used to pay the mortgage indebtedness. Any
remaining proceeds were to be deposited in the court registry
to pay off other creditors. The special master also
recommended that the personal property of Therapy First,
valued at $25,130, be sold and any proceeds also be placed in
the court registry. The special master determined that
McColumn was a creditor of Therapy First and was entitled to
any assets remaining following payments to creditors. The
special master further determined McColumn formed Physical
Therapy First without using any of the capital or equipment
from Therapy First.
[¶12] After a trial, the chancellor adopted
the special master's findings and made further findings
In consideration of the evidence that Deans contributed
nothing to the partnership businesses . . . after June
2008, the Court finds that he was entitled to not more than
approximately one-quarter of the total of $17,688 in
distributions made to partners for that year, or $4,422.
Since he received a distribution of $7,794 in 2008, he is
considered and found by the Court to be a debtor of the
partnership businesses for said item in the sum of $3,372.
For calendar year 2009[,] Deans is also found by the Court to
be a debtor of the partnership businesses in the amount of
the $9,000 he withdrew from corporate operating account in
that year, as mentioned above, and in the sum of $3,827
representing his fifty percent (50%) portion of the loss from
the businesses reflected in the partners' capital
accounts. Finally, in calendar year 2010[,] Deans is
considered and found by the Court to be a debtor of the
partnership businesses in the sum of $20,559, the amount of
the distribution to each of the partners during a year in
which he had no involvement with [or] contribution to the
businesses. Deans is, therefore, found by the Court to be a
debtor of the partnership businesses in a total sum of not
less than $36,758.
chancellor also agreed that McColumn was a creditor because
she paid all overhead and expenses of the business, including
mortgage payments of $1,250 per month, for the three years
Deans ceased working at Therapy First. The chancellor noted
McColumn had reduced Therapy First's indebtedness and
renovated and improved the Therapy First building with no
assistance from Deans. The chancellor valued the remaining
assets at $77,127.32 and determined that Deans's share,
or $38,563.66, would be offset by the amount of his debt, or
This Court employs a limited standard of review in appeals
from chancery court. " We will not disturb a
chancellor's factual findings when supported by
substantial evidence unless the chancellor abused his
discretion, was manifestly wrong, clearly erroneous[,] or
applied an erroneous legal standard." Venture Sales
LLC v. Perkins, 86 So.3d 910, 913 (¶ 11) (Miss.
2012). When considering a motion to dismiss, this Court
applies a de novo standard of review. Storey v.
Williamson, 101 So.3d 662, 665 (¶ 10) (Miss.
Ct.App. 2012). " When considering a motion to dismiss,
the allegations in the complaint must be taken as true and
the motion should not be granted unless it appears beyond
doubt that the plaintiff will be unable to prove any set of
facts in support of his claim. " Lang v.
Bay St. Louis/Waveland Sch. Dist., 764 So.2d 1234, 1236
(¶ 7) (Miss. 1999) (citation omitted).
The hearing on McColumn's motion to strike Deans's
counterclaim occurred on February 24, 2012. After listening
to arguments from both Deans and McColumn, the chancellor
stated the following:
[McColumn's] motion to dismiss the counterclaim is
granted. And I will not strike the answer because I think
that it might in some way be helpful to the special master, I
suppose. But the counterclaim, for purposes of the relief
that it directly requests of the Court as a separate matter
to the winding up of the business is granted. So you need to
make these positions known to the special master, who is in a
position to investigate all these things . . . and to address
the relative equities between the parties and to make a
recommendation to the Court about how to wind up and dissolve
this business equitably to both parties, and all this - - all
this will be considered by him if you make it known to him.
attorney was confused by this statement, so the chancellor
responded that the parties were to provide " the special
master with all the information that he needs relevant to the
parties' business dealings together so that he can
formulate his opinions and recommendations to the
Court." In a written order dated March 19, 2012, the
chancellor granted McColumn's motion to dismiss
Deans's counterclaim. On March 5, 2013, Deans filed a
separate lawsuit in the Hinds County Circuit Court against
McColumn, raising the same allegations as his counterclaim.
Although the chancellor technically granted McColumn's
motion to dismiss Deans's counterclaim, he did state that
any issues relating to the " parties' business
dealings together" would be allowed. Additionally, the
chancellor stated Deans would be allowed to address any
concerns to the special master. The chancellor also heard
evidence regarding Deans's claims against McColumn of
conversion and breach of fiduciary duty. Since the chancellor
was presented with testimony relating to Deans's
counterclaim, we cannot find that Deans was unduly harmed by
the chancellor's ruling.
We note that McColumn contends Deans's counterclaim was
based in tort, and thus the chancery court lacked
jurisdiction. However, caselaw states that a chancery court
has pendent jurisdiction over similar ancillary claims.
See In re Hardin, 158 So.3d 341, 347-48
(¶ 21) (Miss. Ct.App. 2014) (citing Cuevas v.
Kellum, 12 So.3d 1154, 1157-58 (¶ 15) (Miss.
Deans contends the chancellor's findings were not based
upon credible evidence. Deans claims the special master and
the chancellor disregarded evidence that showed McColumn
committed malfeasance. The special master testified that he
reviewed hundreds of pages of business records and affidavits
from the parties. These records included tax records,
detailed receipts, inventory lists, and bank statements. The
special master noted that most of the records he examined
were produced by Deans, including " four or five
notebooks which were about sixteen to twenty inches
thick." The chancellor heard testimony from the special
master, Deans, and McColumn. After reviewing the
comprehensive findings by the special master and the
chancellor as previously noted in the facts section, we find
the chancellor's findings were based upon credible
evidence. This issue is without merit.
MOTION TO DISMISS APPEAL
McColumn filed a motion to dismiss this appeal, arguing that
Deans's appeal is barred because he filed his
counterclaim in the circuit court. However, since we are
affirming the chancellor's ruling regarding the
counterclaim, we find it unnecessary to address the merits of
this motion. Therefore, McColumn's motion to dismiss the
appeal is denied.
THE JUDGMENT OF THE HINDS COUNTY CHANCERY COURT IS AFFIRMED.
ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
AND GRIFFIS, P.JJ., ISHEE, ROBERTS, CARLTON, MAXWELL AND
FAIR, JJ., CONCUR. BARNES, J., CONCURS IN PART AND IN THE
RESULT. JAMES, J., CONCURS IN PART.