H. KENNETH LEFOLDT, JR., in his capacity as Trustee for the Natchez Regional Medical Center Liquidation Trust, Plaintiff - Appellant
HORNE, L.L.P., Defendant-Appellee
from the United States District Court for the Southern
District of Mississippi
HAYNES, GRAVES, and HO, Circuit Judges.
C. HO, CIRCUIT JUDGE.
over a century, Mississippi has required that a public board
speak and act only through its minutes. See Bridges v.
Clay Cty. Sup'rs, 58 Miss. 817, 820 (Miss. 1881).
Mississippi courts will not give legal effect to a contract
with a public board unless the board's approval of the
contract is reflected in its minutes. "Otherwise, an
individual member of the board or agent thereof would be
capable of binding the board and expending the public
taxpayers' money without the benefit of the consent of
the board as a whole." Butler v. Bd. of Sup'rs
for Hinds Cty., 659 So.2d 578, 579 (Miss. 1995). The
public interest protected by the minutes rule is
"paramount to other individual rights which may also be
involved," id., and Mississippi courts
"strict[ly] adhere" to the rule even when
"the rule may work an apparent injustice."
Id. at 581-82 (quoting Colle Towing Co., Inc. v.
Harrison Cty., 57 So.2d 171, 172 (Miss. 1952)).
case, a private accounting firm, Horne, L.L.P., asks us to
enforce the minutes rule against the Natchez Regional Medical
Center, a community hospital owned by the Adams County Board
of Supervisors. The Medical Center (through its bankruptcy
trustee, H. Kenneth Lefoldt) brought this suit against Horne
alleging accounting malpractice. Horne claims the suit must
fail because there can be no accounting malpractice claim
without proof of a professional relationship, and there is no
record evidence on the minutes here that the Medical Center
ever entered into a professional relationship with Horne.
agree with Horne, as did the district court. Accordingly, we
2009 to 2014, Horne served as the Medical Center's
auditor. Horne's services were provided pursuant to a
series of engagement letters with the Medical Center. Each of
those engagement letters contained an arbitration clause. The
letters were executed by Charles Mock, the Medical
Center's chief financial officer. But none of them were
ever incorporated into the Medical Center's board
2014, the Medical Center filed for bankruptcy. The United
States Bankruptcy Court for the Southern District of
Mississippi established a liquidation trust and appointed H.
Kenneth Lefoldt as its trustee. Acting in this capacity,
Lefoldt filed the underlying action against Horne, contending
that Horne was guilty of professional malpractice when it
failed to detect significant flaws in the Medical
Center's financial controls. According to the complaint,
Horne's supposed lapse resulted in the loss of millions
of dollars in unbilled revenue that contributed to the
Medical Center's descent into bankruptcy.
the complaint was filed, Horne moved to stay the proceeding
so that the parties could start the arbitration process as
stipulated in the engagement letters. The district court
denied the motion. The Medical Center successfully argued
that, as a public body, it could speak and act only through
the minutes of its board of trustees, and that the
arbitration agreement was never approved in the board's
appeal, we affirmed on this point. We noted that, out of all
the minutes entered into the record, the board only
referenced its contractual relationship with Horne three
times. Lefoldt v. Horne, L.L.P., 853 F.3d 804,
808-09 (5th Cir. 2017). And each of those occasions referred
only to a one-year contract signed in 2009. No mention was
made of two subsequent agreements executed in 2010 and 2012.
Accordingly, we held that the 2010 and 2012 engagement
letters failed as a matter of law. Id. at 813-14.
remand, Horne moved for summary judgment on all claims
stemming from the 2010-2013 audits, using the same argument
that the Medical Center successfully invoked to void the
arbitration agreement-that the agreement failed under the
minutes rule. As Horne explained, the Medical Center must
prove the existence of a professional relationship in order
to prevail on its malpractice claim. Horne argued that, by
voiding the 2010 and 2012 engagement letters under the
minutes rule, the Medical Center invalidated the basis for
that relationship. The district court granted summary
judgment to Horne.
response, the Medical Center attempted to submit additional
evidence into the record to prove the existence of a
professional relationship with Horne-namely, minutes from the
board's regular session meetings on January 19, 2011 and
March 16, 2011, as well as minutes from the board's
executive session meetings. Based on this new evidence, the
Medical Center asked the district court to reconsider its
grant of summary judgment.
Medical Center admitted, however, that this evidence was in
fact not new at all-the Center had access to its own minutes
throughout the proceedings. It nevertheless sought to excuse
its tardiness on the ground that the minutes became relevant
only when the district court granted summary judgment to