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Wayne Johnson Electric Inc. v. Robinson Electric Supply Company, Inc.

Supreme Court of Mississippi, En Banc

March 21, 2019


          DATE OF JUDGMENT: 05/25/2017





          ISHEE, JUSTICE.

         ¶1. Johnson Electric[1] sued Robinson Electric Supply[2] in the Forrest County Chancery Court for numerous claims, including breach of contract, fraud, and a variety of other torts. Johnson asserted that Robinson Electric Supply carried out a fraudulent scheme to overcharge Johnson. Robinson Electric Supply counterclaimed for balances due on Johnson's accounts. Both parties requested an accounting. The chancellor appointed a special master to hear the case due to its complexity and size of the amount in controversy. The chancellor stayed discovery until the special master could release her findings; however, the chancellor also ordered Robinson to release numerous business records sought by Johnson. Before the accounting was concluded by the special master, Johnson Electric was administratively dissolved, and as a result, the chancellor dismissed the claims brought on behalf of the corporation. After the special master released her recommendations and a supplemental report, the chancellor agreed with the special master's findings and adopted the report.

         ¶2. On appeal, Johnson challenges the chancellor's decision to dismiss Johnson Electric from the lawsuit, the chancellor's adoption of the special master's report, and the chancellor's decision to stay discovery until an accounting could be conducted by the special master. This Court finds that because Johnson Electric was administratively dissolved, it cannot "maintain" a claim as a corporation under Mississippi Code Section 79-4-14.22(a)(4) (Rev. 2013). In addition, we find that neither the chancellor's acceptance of the special master's report nor the chancellor's discovery rulings were an abuse of discretion.


         ¶3. Johnson Electric was established in 1993 and provided electrical services to general contractors on large commercial construction projects in the Hattiesburg area. Johnson bought electrical parts and supplies for various jobs from Robinson Electric Supply. Robinson Electric Supply and Johnson entered into a "joint pay agreement," in which Johnson Electric would submit orders to Robinson Electric Supply, and Robinson Electric Supply would fill the orders and send the invoice for payment to Johnson and the respective general contractor. The invoices were to be paid by the general contractor.

         ¶4. In June of 2010, Hanco Corporation awarded Johnson a subcontract for the electrical work for the Camp Shelby project, a massive undertaking including the construction of over 315 buildings. It is undisputed that both parties came to an agreement regarding the price of the supplies and fixtures. While the project was ongoing, however, Johnson Electric ceased doing business.

         ¶5. Johnson alleged that, beginning in 2010, Robinson Electric Supply conspired to fraudulently overcharge for the supplies and fixtures that Johnson ordered. Johnson alleges that the fraudulent scheme continued until 2012, when he discovered the conspiracy and confronted Robinson Electric Supply. According to Johnson, Robinson Electric Supply admitted overbilling and charging for nondelivered items. But in court, Robinson Electric Supply vehemently denied the charge and asserted that-by the time of the Camp Shelby Project- Johnson was delinquent in payment to Robinson Electric Supply for a sum approaching $100, 000.

         ¶6. Johnson sued Robinson Electric Supply on June, 5, 2013. In response, Robinson Electric Supply filed a motion for an accounting and requested a special master. The chancellor granted Robinson Electric Supply's request and appointed a special master. The chancellor required Robinson Electric Supply to produce to the special master all documents related to Johnson's (1) invoices; (2) delivery tickets; (3) pick tickets;[3] (4) payment records; (5) charges; (6) joint-checking agreements; (7) orders; and (8) return/exchange receipts. The chancellor also stayed all discovery until the special master had an opportunity to review the records submitted by Robinson Electric Supply.

         ¶7. On December 17, 2013, and January 7, 2014, both parties met separately with the special master. Robinson Electric Supply sent the special master a chronology of events, along with a letter that denied Johnson Electric's allegations and asserted that Robinson Electric Supply was owed $93, 522 of what remained on Johnson's balance. Likewise, Johnson submitted a letter to the special master that sought to identify the specific instances of Robinson Electric Supply's overbilling. Johnson also provided documents pertaining to direct shipments from manufacturers and an itemization of amounts owed by Robinson Electric Supply to Johnson.

         ¶8. Johnson Electric was administratively dissolved on December 20, 2014, for failing to file an annual report. On July 6, 2015, Robinson Electric Supply filed a motion to dismiss Johnson Electric as a party, contending, under Mississippi Code Section 79-4-14.21 (Rev. 2013), that because Johnson Electric had been administratively dissolved, it could not continue in the lawsuit. After Johnson filed a response in opposition, the matter was heard before the chancellor on July 15, 2015. While the chancellor acknowledged that Wayne Johnson, as an individual, had signed personal guarantees relating to the debts and liabilities of Johnson Electric, she held that Johnson Electric must be dismissed from the suit. However, the court found that Wayne Johnson could proceed with his individual claim against Robinson Electric Supply.[4]

         ¶9. With all parties in agreement, the special master categorized three general issues to be addressed in her report.[5] On September 23, 2015, the special master filed her report. The report documented thousands of transactions-including a line-by-line itemization for each of the jobs Johnson alleged was overbilled-and found that Johnson owed Robinson Electric Supply $38, 585.99. Robinson Electric then filed a motion to accept the special master's report, and Johnson filed a motion objecting to it. Johnson's objection discussed, in great detail, many objections to the special master's findings on specific jobs.

         ¶10. On January 1, 2016, a hearing was conducted by the chancellor. At the hearing, both parties had an opportunity to question the special master regarding the methodology used to reach the conclusion in her final report. At Johnson's request, the chancellor ordered the special master to reconsider three issues[6] but stayed discovery until the special master's supplemental report had been filed.

         ¶11. On March 7, 2016, the chancellor conducted another hearing, which included testimony by the special master. On September 20, 2016, the special master released her supplemental report, which found that the objections raised by Johnson to the original report were not supported by evidence or additional arguments. The special master also confirmed her prior finding that Johnson owed Robinson Electric Supply $38, 585.99. Robinson Electric Supply subsequently filed a motion for summary judgment.

         ¶12. An additional hearing was conducted on December 8, 2016, at which Johnson once again objected to the special master's conclusions. Specifically, Johnson contended that the special master's finding was erroneous because Johnson was unable to conduct discovery. After the hearing, the chancellor entered an order accepting the special master's report. The chancellor also delayed ruling on Robinson Electric Supply's motion for summary judgment. ¶13. On March 1, 2017, after both parties had filed motions regarding whether discovery should be conducted or stayed, the chancellor granted Johnson's request to depose eight key witnesses, while requiring both parties to produce documents requested by the other party. However, the chancellor limited discovery only to Johnson's claims for negligent infliction of emotional distress and to his individual claims for fraud. Ultimately, Johnson and Robinson Electric Supply agreed to dismiss the case to make the chancellor's rulings immediately appealable. On May 25, 2017, the chancellor granted an agreed judgment of dismissal. On June 1, 2017, Johnson filed a notice of appeal in this Court.


         I. Dismissal of Wayne Johnson Electric, Inc., as a Party

         ¶14. Whether dismissal of a dissolved corporation is appropriate is governed by statute and is therefore a question of law. See Columbus Cheer Co. v. City of Columbus, 155 So.3d 744, 746 (Miss. 2014). A chancellor's conclusions on issues of law are reviewed de novo. In re Estate of Baumgarder, 82 So.3d 592, 598 (Miss. 2012) (citing Corp. Mgmt., Inc. v. Greene Cty., 23 So.3d 454, 459 (Miss. 2009)).

         ¶15. Under the plain language of Mississippi Code Section 79-4-14.21(f) (Rev. 2013), "[a] corporation that has been administratively dissolved may not maintain any action, suit or proceeding in any court of this state until the corporation is reinstated."

         ¶16. Johnson argues that the Court of Appeals has interpreted "maintain" to mean "to commence" litigation. Johnson cites the Court of Appeals's holding in Royer Homes of Mississippi v. Steiner 131 So.3d 592 (Miss. Ct. App. 2013). In Royer, the Court of Appeals held that "[d]issolution of a corporation does not . . . [p]revent commencement of a proceeding by or against the corporation in its corporate name . . . ." Id. at 593 (quoting Miss. Code Ann. § 79-4-14.05(b)(5) (Rev. 2013)). The Court of Appeals also found that the legislature did not intend to stop a lawsuit that was legally commenced because the lawsuit was not concluded within the five-year time frame enunciated in the statute.[7] Id. at 593.

         ¶17. However, the Royer court repeatedly mentioned that the statutes used to make a decision were the statutes in effect at the time of the corporation's dissolution. Id. The Royer corporation was dissolved in December of 2003. Id. In 2013, the Legislature enacted Section 79-4-14.21(f), which bars administratively dissolved corporations from maintaining an action.[8] Specifically, that statute states, "[a] corporation that has been administratively dissolved may not maintain any action, suit or proceeding in any court until the corporation is reinstated." Miss. Code. Ann. § 79-4-14.21(f) (Rev. 2013). Although Section 79-4-14.21(f) was in effect at the time of the Royer decision, the Royer court ...

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