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LLC v. Pike County

Supreme Court of Mississippi

May 17, 2018

SW 98/99, LLC
v.
PIKE COUNTY, MISSISSIPPI, LEXIE ELMORE, TAZWELL BOWSKY, AUBREY L. MATTHEWS, VENTON ADAMS, CARROLL L. FORTENBERRY, JOE B. YOUNG, TAX ASSESSOR, CHUCK E. LAMBERT AND GARY HONEA

          DATE OF JUDGMENT: 12/08/2015

          PIKE COUNTY CHANCERY COURT HON. DEBBRA K. HALFORD TRIAL JUDGE

          TRIAL COURT ATTORNEYS: JOHN H. OTT KEN R. ADCOCK WAYNE DOWDY DUNBAR DOWDY WATT

          ATTORNEYS FOR APPELLANT: KEN R. ADCOCK WILLIAM C. IVISON

          ATTORNEY FOR APPELLEES: WAYNE DOWDY

          BEFORE WALLER, C.J., CHAMBERLIN AND ISHEE, JJ.

          WALLER, CHIEF JUSTICE.

         ¶1. SW 98/99, LLC ("SW"), appeals the order of the Pike County Chancery Court dismissing its complaint with prejudice under Mississippi Rule of Civil Procedure 41(b). Finding that the chancery court abused its discretion in ruling that SW had failed to prosecute its complaint, we reverse the chancery court's judgment and remand this case to the chancery court for further proceedings.

         FACTS & PROCEDURAL HISTORY

         ¶2. SW owns two low-income housing properties in Pike County, which it operates as "affordable rental housing" under Section 42 of the Internal Revenue Code. In 2005, the Mississippi Legislature amended Section 27-35-50 of the Mississippi Code to address the tax-appraisal method for affordable rental housing, such as SW's properties. However, SW alleges that the Pike County Board of Supervisors and Tax Assessor disregarded this new statutory requirement and continued to appraise SW's properties using a "cost approach" method, which included the value of certain federal tax credits in the properties' appraised values. Under the appraisal method required by the amended Section 27-35-50(4)(d), [1] SW alleges that these tax credits should not have been included in the value of its properties.

         ¶3. SW filed objections to the tax assessments for the years 2005 and 2006, but those objections were denied. SW then filed a complaint in Pike County Chancery Court alleging that Pike County, the Pike County Board of Supervisors, and the Pike County Tax Assessor (collectively "the defendants") had wrongfully and excessively assessed taxes on SW's properties using an appraisal method not authorized by Section 27-35-50(4)(d). SW sought damages for the defendants' negligent and/or willful statutory violations, as well as an injunction prohibiting the defendants from using the "cost approach" method for future tax appraisals. SW also asked the chancery court to remove the individual defendants from office for violation of their official duties. SW subsequently filed identical lawsuits for the years 2007 and 2008, and the chancellor consolidated all of these cases into a single cause of action.

         ¶4. Along with SW's chancery-court lawsuit, SW also appealed the property-tax assessments to the Pike County Circuit Court. SW presented the same legal argument in its tax appeals as it did in this case: the defendants had violated Section 27-35-50(4)(d) by including the value of federal tax credits in the tax appraisals of its properties. The only difference between the two actions is the relief sought: SW's circuit-court tax appeals seek a refund of overpaid taxes, while SW's chancery-court suit seeks damages and injunctive relief.

         ¶5. This case and SW's tax appeals proceeded separately along their own paths until March 2011, when the chancellor entered an order granting the defendants' motion to stay the proceedings in this case pending final resolution of SW's circuit-court tax appeals. The chancellor found that the two cases shared the same threshold issue: "whether or not the Defendants violated Miss. Code Ann. § 27-35-50(4)(d) by including the value of the sale of tax credits in appraising the value of the property each year and assessing ad valorem taxes on that value." Accordingly, the chancellor stayed the proceedings in this case and held SW's summary-judgment motion in abeyance "until such time as the tax appeals currently pending in the Circuit Court of Pike County are finally resolved." As a result of the stay, this case sat dormant from March 28, 2011, until February 2, 2015.

         ¶6. In 2013, while SW's tax appeals were pending before the circuit court, this Court issued an opinion holding that Section 27-35-50(4)(d) prohibits the inclusion of federal tax credits in the tax-appraisal value of properties that qualify as "affordable rental housing." Willow Bend Estates, LLC v. Humphreys Cty. Bd. of Supervisors, 166 So.3d 494, 495 (Miss. 2013). The mandate in Willow Bend issued on August 14, 2014.

         ¶7. Following this Court's ruling in Willow Bend, on February 12, 2015, SW and the defendants entered an agreed order in the chancery-court case setting a trial date for September 15, 2015. SW alleges that it agreed to this trial date only because it believed its tax appeals in the parallel circuit-court action would be resolved well in advance of that date in light of the Willow Bend decision. The agreed order setting the trial date does not mention the chancellor's prior order staying proceedings.

         ¶8. On May 4, 2015, the Pike County Circuit Court granted summary judgment to SW on each of its tax appeals, ordering the defendants to refund SW's overpayments for the years 2005 through 2012. The defendants filed a motion for reconsideration of the circuit court's judgment on May 14, 2015.

         ¶9. On June 25, 2015, SW filed a motion to amend and consolidate its chancery-court complaints to include claims for the tax years 2009 through 2013. This motion was scheduled for a hearing on September 8, 2015. In response to SW's motion, the defendants filed a motion to dismiss, or alternatively, for summary judgment.

         ¶10. During this time period, SW's attorney was involved in an unrelated case in the United States District Court for the Southern District of Mississippi. On August 12, 2015, the district court contacted SW's attorney to inquire as to his availability for a trial beginning September 14, 2015 - one day before the trial setting in the instant case. Because the circuit court had not yet ruled on the defendants' motion for reconsideration in SW's tax appeals, SW's attorney believed that the chancellor's stay of proceedings in this case remained in effect, as the circuit-court proceedings were not "finally resolved." Because of this, SW's attorney contacted the chancery court to request that the trial date be continued and removed from the trial docket. The chancellor was on medical leave at this time. SW's attorney called the chancellor's court administrator to inform her of the need for a continuance of the scheduled trial date. Although later disputed by the court administrator, SW's attorney believed at this time that the case had been continued and that the trial setting had been removed from the docket. SW's attorney then informed counsel for the defendants of the continuance. The defendants had no objection to the continuance. SW's attorney then informed the federal court that he would be available for a September 14, 2015, trial.

         ¶11. On September 4, 2015, SW's attorney's secretary called the chancellor's court administrator to request that SW's motion to amend and consolidate its complaints be taken off the hearing docket. SW's attorney was unable to get in touch with the court administrator at this time but his secretary left a voicemail message. SW's attorney also called the defendants' counsel to inform him that the motions hearing would be cancelled.

         ¶12. On September 8, 2015, the date scheduled for SW's motions hearing, counsel for the defendants was attending a meeting of the Pike County Board of Supervisors at the chancery courthouse and was called into the courtroom by Senior Status Judge Larry Buffington, who was serving as a special appointed judge while the chancellor was on medical leave. According to SW, counsel for the defendants told Judge ...


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