OF JUDGMENT: 05/30/2017
FROM WHICH APPEALED: HINDS COUNTY CHANCERY COURT TRIAL JUDGE:
HON. J. DEWAYNE THOMAS
COURT ATTORNEYS: MARK D. HERBERT, PERNILA STIMLEY BROWN, CHAD
J. HAMMONS, MICHAEL MADISON TAYLOR, JR., SAMUEL L. BEGLEY,
LANCE L. STEVENS, W. DAVID WATKINS, ROBERT L. GIBBS, ROBERT
GREGG MAYER, JAMES W. SHELSON, BENJAMIN LYLE ROBINSON
ATTORNEYS FOR APPELLANTS: W. DAVID WATKINS, ROBERT L. GIBBS
ATTORNEYS FOR APPELLEES: MARK D. HERBERT, GINNY Y. DELIMAN,
JAMES W. SHELSON, PERNILA STIMLEY BROWN
RANDOLPH, C.J., ISHEE AND GRIFFIS, JJ.
The Jackson Redevelopment Authority (JRA) leased several
parcels along Farish Street in Jackson to the Farish Street
Group (FSG). In exchange for a long-term lease and other
favorable terms, FSG was given a set period of time to
renovate the properties and to sublet them to retail
establishments. Watkins Development, which owned half of FSG,
contracted with FSG to do the renovations. The plan was to
build an entertainment district on Farish Street, but after a
few years only a fraction of the renovations were done, and
none of the properties were occupied by tenants. JRA
terminated the lease, and this litigation followed. The Hinds
County Chancery Court ultimately found that the lease was
properly terminated, that no party had shown it was entitled
to money damages, and that Watkins Development could not take
a mechanic's lien on the property. We find no error and
The Farish Street project began more than two decades ago.
Between 1997 and 2001, the Jackson Redevelopment Authority
acquired properties along Farish Street. In March 2002, JRA
entered into a lease with Performa Mississippi, LLC, to
develop the area into the "Farish Street Entertainment
District." But after six years, Performa had failed to
move forward with any significant development.
During the summer of 2008, David Watkins and his company
Watkins Development formed Farish Street Group, LLC, to take
over the project. On June 17, 2009, Performa assigned the
lease to FSG. FSG and JRA then executed an amended lease
agreement on January 27, 2010. The same day, Watkins
Development entered into an agreement with FSG to perform
nearly all of the construction and development required by
the amended lease. The construction was funded in part by a
$5.4 million loan from the State.
The amended lease agreement laid out detailed and specific
deadlines FSG was required to meet to refurbish and sublet
the properties. It was uncontested that none of the deadlines
were met, and after three years none of the properties had
On July 13, 2013, JRA's board voted to terminate the
lease as to some of the parcels for "failure to commence
and/or complete construction or renovation of
improvements." On July 26, 2013, JRA gave written notice
of the termination as to those parcels. On September 25,
2013, JRA gave written notice of the termination of the rest
of the parcels, effective October 5, 2013. And on October 7,
2013, JRA sent another letter confirming that the lease was
"fully and finally terminated." JRA's letters
cited FSG's "failure to commence and/or complete
construction or renovation of improvements."
On October 3, 2013, another contractor hired by FSG, Dale
Partners Architects, filed a mechanic's lien on the
properties in the amount of $322, 180.26. Four days later,
Watkins Development filed a mechanic's lien claiming that
$4, 757, 484.33 was owed. JRA sued to expunge the liens.
On July 24, 2014, JRA filed a motion for partial summary
judgment asking the court to declare both liens invalid. On
July 23, 2015, the chancellor granted the partial
summary-judgment motion, holding that the liens were invalid
as a matter of law. The chancellor declined to award punitive
damages, however, finding that the liens had not been filed
"with a bad purpose, an evil purpose, without ground for
believing the act to be lawful."
After a trial, the chancellor found that the lease was
properly terminated, but he denied monetary damages to JRA
because of the delay in terminating the lease and the
valuable improvements that had been made to the properties.
The chancellor also denied any monetary award to FSG because
it had not proved "any specific monetary amount which
has been gained by JRA due to FSG's actions." Dale
Partners Architects did not appeal the expungement of its
Materiality of Breach of Lease
Farish Street Group admits it breached its development
obligations under the lease, "early and often," as
the chancellor found. But the developers assert FSG
substantially complied with the lease, and consequently the
chancellor was required to reinstate it. The developers
contend that the timetables were "arbitrary" and
"political cover" and that they were "assured
time and time again that the timetable would be modified, as
needed, to fit the realities of the market conditions and the
progress of the development." The developers maintain
that market conditions were difficult and that there were
unexpected construction delays, but they say they worked hard
to secure investment and to proceed with the development to
the extent it was possible. They give varying figures for the
total investment, but they assert it was more than $10
The developers argue that FSG's failure to complete the
construction on time was not a material breach of the lease
and that substantial compliance with the construction
requirements of the lease would have rendered FSG's
breaches immaterial and not a basis to terminate the lease.
"Rescission of a contract is allowed in cases of fraud,
mistake, or material breach." Daniels v.
Crocker, 235 So.3d 1, 17 (Miss. 2017) (internal
quotation marks omitted) (quoting Jackson Motor Speedway,
Inc. v. Ford, 914 So.2d 779, 783 (Miss. Ct. App. 2005)).
The remedy for a breach of contract that is not material is
money damages, not rescission. Id. This Court has
The termination of a contract is an "extreme"
remedy that should be "sparsely granted."
[citations omitted]. Termination is permitted only for a
material breach. A breach is material when there "is a
failure to perform a substantial part of the contract or one
or more of its essential terms or conditions, or if there is
such a breach as substantially defeats its purpose,"
Gulf South Capital Corp. v. Brown, 183 So.2d 802,
805 (Miss. 1966), or when "the breach of the contract is
such that upon a reasonable construction of the contract, it
is shown that the parties considered the breach as vital to
the existence of the contract," Matheney v.
McClain, 248 Miss. 842, 849, 161 So.2d 516, 520 (1964).
J.O. Hooker & Sons, Inc. v. Roberts Cabinet Co.,
683 So.2d 396, 402-03 (Miss. 1996) (alteration in original)
(quoting UHS-Qualicare v. Gulf Coast Cmty. Hosp.,
Inc., 525 So.2d 746, 756 (Miss. 1987)). In the
particular context of a lease,
A tenant's right to possession may not be conditioned on
perfect performance of the lease but may be forfeited only
upon a material breach or a violation of a substantial
obligation . . . . A tenant's immaterial or trivial
breach, or a relatively minor failure of performance on the
part of one party, does not justify a forfeiture of the
Landlord and Tenant § 189 (2019) (footnotes
omitted) (citations omitted), Westlaw.
At the outset, we note that the developers assert the
chancellor found they had substantially complied with the
lease, but the chancellor never made such a finding. Instead,
the chancellor observed that FSG had claimed