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Brown v. McKee

Supreme Court of Mississippi, En Banc

May 10, 2018

MONTY Y. BROWN, INDIVIDUALLY AND AS "MANAGER ONE" OF BROWNE, LLC; BROWNSVILLE, LLC; AND BROWNE, LLC
v.
GEORGE C. McKEE, INDIVIDUALLY AND AS "MANAGER" OF BROWNE, LLC AND AS "MANAGER" OF BROWNSVILLE STATION, LLC; AND BROWNSVILLE STATION, LLC

          DATE OF JUDGMENT: 08/11/2016

          OKTIBBEHA COUNTY CIRCUIT COURT HON. LARRY E. ROBERTS JUDGE

          TRIAL COURT ATTORNEYS: CHARLES E. WINFIELD KEN R. ADCOCK WILBUR O. COLOM SCOTT WINSTON COLOM

          ATTORNEYS FOR APPELLANT: KEN R. ADCOCK WILLIAM CHRISTOPHER IVISON

          ATTORNEYS FOR APPELLEES: ASHLYN BROWN MATTHEWS CHARLES E. WINFIELD

          MAXWELL, JUSTICE

         ¶1. The trial court granted summary judgment in favor of George C. McKee and Brownsville Station, LLC, dismissing Monty Y. Brown's claims against them. Brown appeals, arguing the judge wrongly granted summary judgment without first allowing discovery. We disagree. Had summary judgment been granted on the merits-or lack thereof-of Brown's case, we would agree Brown should have been afforded an opportunity to conduct discovery under Mississippi Rule of Civil Procedure 56(f). But the judge did not grant summary judgment on the merits. He granted it based on the clear running of the statute of limitations. And, as the trial judge rightly found, none of Brown's discovery requests were aimed at establishing his claims were timely. Instead, they were zeroed in on proving his untimely claims.

         ¶2. Therefore, the trial judge did not abuse his discretion by denying Brown's Rule 56(f) motion for a continuance. We affirm the judgment dismissing Brown's untimely claims.

         Background Facts and Procedural History

         I. Brown's Divestment of Brownsville Station

         ¶3. Brown and McKee are former business partners. At one time they each owned a fifty- percent interest in Brownsville Station, which owned and operated an apartment complex in Starkville, Mississippi. But beginning in 2003, Brown began selling his interest to McKee. From July 2003 to January 2006, through a series of four agreements, Brown transferred all his interest units to McKee in exchange for $150, 000 and title to the company tractor.[1] As part of the final agreement, both parties agreed to a full and final release of any and all claims against each other.

         II. Brown's Complaint Against McKee and Brownsville Station

         ¶4. For six years, Brown had no dealings with McKee or Brownsville Station. Then, in September 2012, Brown received notice from the Secretary of State that McKee had filed articles of reinstatement for Brownsville Station and its subsidiary, BrownE, LLC. According to Brown, the September 2012 notice prompted him to tell his boss about his former business relationship with McKee. And his boss, who was also an attorney, suggested McKee had engaged in wrongdoing.

         ¶5. So on April 13, 2013-almost ten years after the first transfer and seven years after the final transfer-Brown sued McKee and Brownsville Station in the Circuit Court of Oktibbeha County. Brown's complaint alleged that McKee had been Brown's personal attorney before they became business partners. Brown is a licensed general contractor, who had built several apartment buildings before going into business with McKee. Based on Brown's experience, McKee proposed that he and Brown enter a joint venture to build and operate an upscale apartment complex in Starkville. Brown would be responsible for the construction side, and McKee would handle the legal and financial aspects.[2]

         ¶6. To carry out this venture, McKee formed a limited liability company, BrownE, which McKee and Brown owned and controlled fifty/fifty. When the initial phase of the apartment complex was almost complete, however, the City of Starkville adopted an ordinance prohibiting development of new, unplatted apartments. According to Brown, this ordinance "had the effect of stopping further growth" of Brown and McKee's project. It also was the impetus for McKee's plot to get rid of Brown, whose construction services were no longer needed.

         ¶7. Brown's complaint alleged that McKee formed Brownsville Station, which became the sole owner of BrownE. Though Brown owned a fifty-percent interest in Brownsville Station, he asserted McKee formed the new LLC "solely to provide a vehicle to take secret or uniformed [sic] advantage of [Brown] by enabling [McKee], among other things, to change provisions of Brownsville LLC's Operating Agreement without [Brown's] informed consent." Brown further alleged that, during the 2003-2006 transactions, McKee hid important financial information and documentation about Brownsville Station and its true value, violating the fiduciary duties McKee owed as both Brown's attorney and fellow LLC member. Brown claimed McKee's action led to Brown's financial detriment. Brown had trusted McKee to provide all relevant information about the company. Instead, McKee fraudulently induced Brown to sell his interests below market value.

         ¶8. Brown's eight-count complaint[3] sought a constructive trust over fifty percent of Brownsville Station and the disgorgement of any fees and revenue Brown would have received had he remained a fifty-percent owner.

         III. McKee's and Brownsville Station's Response

         ¶9. On July 15, 2013, through separate responses, both defendants denied the allegations in Brown's complaint. Both also moved to transfer the complaint to chancery court and to dismiss the action based on the statute of limitations. On April 24, 2014, while the motions to transfer and dismiss were still pending, the defendants filed a joint motion for summary judgment, asserting the same statute-of-limitations argument. They also pointed to the full and final release from the January 2006 final agreement, as well as the testimony of attorney Dolton McAlpin.

         ¶10. At this point, the only discovery not opposed by the defendants was Brown's deposition of McAlpin.[4] According to McAlpin's sworn affidavit and deposition, Brown had sought out and received McAlpin's independent legal advice about the January 2006 final agreement, which Brown signed and notarized in McAlpin's office. In McAlpin's view, McKee had done nothing to improperly influence the advice McAlpin gave. Nor did McKee ask McAlpin to conceal any information. According to McAlpin, there had been no reason to believe the circumstances surrounding the transfer were anything but fully discoverable by Brown.

         IV. Brown's Rule 56(f) Motion to Postpone

         ¶11. Brown opposed the motion for summary judgment with his own motion. He requested the summary-judgment ruling be postponed under Mississippi Rule of Civil Procedure 56(f). According to Brown, this rule entitled him to the discovery he had requested through pending motions to compel before the trial court ruled on the summary-judgment motion. Specifically, Brown wanted to see documents related to the value of Brownsville Station at the time Brown transferred his interest and to depose McKee on the circumstances surrounding the transfer.[5]

         ¶12. Brown also argued the statute of limitations had been tolled for three reasons: (1) because McKee had acted as Brown's attorney, it was reasonable for Brown not to discover McKee's wrongful actions; (2) McKee had fraudulently concealed Brown's cause of action; and (3) McKee was equitably estopped from asserting the statute of limitations as a defense.

         V. Trial Court's Judgment

         ¶13. After denying the pending motion to transfer, the trial judge denied Brown's motion to postpone and granted the defendants' motion for summary judgment. The judge agreed with McKee and Brownsville Station that Brown had filed his action at least four years too late. Brown's claims accrued, and thus the three-year statute of limitations began to run, by January 2006-the time of his alleged injury. And none of Brown's tolling arguments applied. Specifically, the trial judge found the "discovery rule" did not apply, because Brown's alleged injury was not latent. Instead, the true value of the company was discoverable at the time of the transfer. And Mississippi Code Section 15-1-67's fraudulent-concealment provision was inapplicable because Brown could not demonstrate McKee engaged in some affirmative act to prevent Brown from discovering his claims. Finally, the extraordinary remedy of equitable estoppel did not apply because Brown could point to no action or misrepresentation by McKee to justify tolling the statute of limitations.

         ¶14. The trial judge also found Brown had failed to demonstrate additional discovery was warranted, because the discovery Brown sought "would not answer the necessary predicate question of when Brown's claim accrued, whether he had a latent injury, and when he knew or should have known of his claims." Instead, the information Brown sought "would only advance a potential finding regarding the extent of Brown's alleged damages." And "discovery related to the degree of harm . . . is of no consequence to the defendants' motion." Moreover, the trial court noted Brown should have in his possession the information necessary to prove when he reasonably discovered his injury and thus did not need discovery from McKee. Because summary judgment had been granted and Brown's Rule 56(f) motion had been denied, the trial court dismissed Brown's pending motions to compel as moot.

         ¶15. After the trial court entered its final judgment, Brown appealed.[6]

         Discussion

         ¶16. "Rule 56(b) permits a defendant to move for summary judgment 'at any time.'" Roberts v. Boots Smith Oilfield Servs., LLC, 200 So.3d 1022, 1026 (Miss. 2016) (quoting Miss. R. Civ. P. 56(b)). Under Rule 56(c), "The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Relevant to this case, summary judgment shall be granted if no genuine issue of material fact exists concerning the question of the running of the statute of limitations. Smith v. Sanders, 485 So.2d 1051, 1053 (Miss. 1986). And we review the grant of summary judgment de novo. Prescott v. Leaf River Forest Prods., Inc., 740 So.2d 301, 308 (Miss. 1999).

         ¶17. "But if a summary-judgment motion is filed before discovery is complete, the trial court may postpone ruling on the motion to permit depositions to be taken and other discovery to be had." Roberts, 200 So.3d 1022, 1026 (citing Miss. R. Civ. P. 56(f); Owens v. Thomae, 759 So.2d 1117, 1120 (Miss. 1999)). We review the denial of a Rule 56(f) motion to continue for abuse of discretion. Prescott, 740 So.2d at 307.

         ¶18. With this standard in mind, after de novo review, we agree there are no genuine issues of material fact concerning the running of the statute of limitations. Brown's claims are indisputably time-barred. Moreover, the trial court did not abuse its discretion when it denied Brown's motion for postponement to conduct discovery, as none of Brown's discovery requests were aimed at proving his untimely claims were not barred.

         I.Brown's claims accrued by ...


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