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Oak Grove Marketplace, LLC v. Lamar County School District

Supreme Court of Mississippi

January 16, 2020

OAK GROVE MARKETPLACE, LLC
v.
LAMAR COUNTY SCHOOL DISTRICT, LAMAR COUNTY BOARD OF EDUCATION, LAMAR COUNTY, MISSISSIPPI, AND LAMAR COUNTY BOARD OF SUPERVISORS

          DATE OF JUDGMENT: 05/07/2018

          LAMAR COUNTY CHANCERY COURT HON. JOHNNY LEE WILLIAMS TRIAL JUDGE

          TRIAL COURT ATTORNEYS: WILLIAM A. WHITEHEAD, JR RICHARD D. NORTON JOHN ALEX FOXWORTH, JR. S. ROBERT HAMMOND, JR.

          ATTORNEY FOR APPELLANT: R. ANDREW FOXWORTH

          ATTORNEYS FOR APPELLEES: WILLIAM A. WHITEHEAD, JR RICHARD D. NORTON

          BEFORE RANDOLPH, C.J., MAXWELL AND BEAM, JJ.

          MAXWELL, JUSTICE.

         ¶1. In this interlocutory appeal, the lessee of commercially used Sixteenth Section Land seeks to prevent the leasing school board from adjusting the annual rent outside the time constraints of the lease. While the terms of the lease do appear to contain a clear time restriction within which the Board did not act, this time restriction cannot be enforced. The time restriction runs contrary to the statutory requirement that rent "shall be adjusted not less than once every ten (10) years . . . ." Miss. Code Ann. § 29-3-69 (Rev. 2010). Further, a school board's duty as trustee to assure adequate consideration is received based on current fair market value of the Sixteenth Section Land cannot be waived, even by mutual agreement in a contract.

         ¶2. For these reasons, the chancellor did not err by denying the lessee's motion for a declaratory judgment that the school board was precluded from adjusting the rent based on the time restrictions in the lease. We affirm and remand.

         Background Facts & Procedural History

         ¶3. On August 5, 2002, Oak Grove Marketplace, LLC (Marketplace), and the Lamar County School Board (the Board) entered into a forty-year commercial lease of Sixteenth Section Land.[1] Marketplace agreed to pay $8, 450.20 a year in rent. The rent would be paid in advance by August 5th of each year. Marketplace and the Board also agreed

[t]hat within a sixty (60) day period of the 10th, 20th, and 30th, anniversary dates of this lease, said anniversary dates being August 5, 2012, August 5, 2022, and August 5, 2032, respectively, [the Board] shall have the right to conduct a reappraisal of the subject property for the purpose of redetermining reasonable ground rentals.

         ¶4. The Board did not reappraise the leased property within sixty days of August 5, 2012. At that time, the Lamar County School District had only a part-time land manager. That manager was responsible for more than five hundred leases covering twelve different sections. But in 2016, the District hired a full-time manager. And this manager had the Marketplace property reappraised in April 2017. On April 11, 2017, the Board sent Marketplace a letter advising that the lease was "past due on a rental adjustment." Based on the appraisal, the Board adjusted the annual rent to $32, 250 to be paid by August 5, 2017.

         ¶5. By letter, Marketplace objected. It asserted that, under the terms of the lease, the rental adjustment was unauthorized and untimely. As Marketplace saw it, the Board had missed its window of opportunity to reappraise the property and readjust the rent in the sixty days leading up to August 5, 2012. So now the Board must wait until within sixty days of August 5, 2022, before it can require more rent.

         ¶6. Based on Marketplace's objection, the Board alternatively offered to obtain a new appraisal. This appraisal was to be based on the fair-market value of the property in August 2012. But this option would require Marketplace to pay retroactively the 2012 appraised value for August 2012 to August 2017, minus what Marketplace has already paid. Marketplace rejected this alternative. So the Board decided to impose the 2017 appraised value. It demanded Marketplace pay $32, 250 in rent by August 5, 2017, and continue to pay this new rate until 2027, when the rent would be adjusted again.

         ¶7. Marketplace paid only $8, 450.20. And on August 4, 2017, Marketplace filed a complaint against the Board in the Lamar County Chancery Court. Marketplace asked the chancellor to declare that the lease did not allow any attempted reappraisal before August 5, 2022. It also urged that Marketplace would not be in default if it did not pay $32, 250 by August 5, 2017, because the rent is $8, 450 and would remain that amount until August 5, 2022. Alternatively, if the chancellor found the Board was allowed to readjust the rent before August 2022, Marketplace sought a reappraisal based on the fair-market value of the property on August 5, 2012. In that event, Marketplace requested court-ordered application of this rate prospectively for ten years, from 2017 to 2027.[2]

         ¶8. The parties agreed to a bifurcated hearing. At the first hearing, the court would consider Marketplace's motion for a judgment declaring, under the terms of the lease, the Board could not adjust the rent until within sixty-days of August 5, 2022. Only if the court denied this motion would the court conduct a second hearing to consider Marketplace's motion for a judgment declaring that the adjustment should be based on the 2012 fair-market value and applied prospectively for ten years starting in 2017. At an April 9, 2017 hearing, the court considered the single ...


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