Edith Fryar, et al v. Sav-Amil, L.L.C., et al

Filing

UNPUBLISHED OPINION FILED. [10-60367 Affirmed] Judge: JLW , Judge: ECP , Judge: PRO. Mandate pull date is 12/03/2010 [10-60367]

Edith Fryar, et al v. Sav-Amil, L.L.C., et al Document: 00511292278 Case: 10-60367

Page: 1 Date Filed: 11/12/2010

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IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
November 12, 2010 N o . 10-60367 S u m m a r y Calendar Lyle W. Cayce Clerk

E D I T H CAROLYN FRYAR; ROBERT B. FRYAR RESIDUARY TRUST, P a t r ic k B. Mason, Trustee, P la in t if f s ­ A p p e lla n t s v. S A V -A M I L , LIMITED LIABILITY CORPORATION; ALAN NUNNELEE, I n d iv id u a lly and in his capacity as President of Sav-Amil, Limited Liability C o r p o r a t io n ; STEVE HAMMACK, Individually and in his capacity as T r e a s u r e r of Sav-Amil, Limited Liability Corporation D e fe n d a n t s ­ A p p e lle e s

A p p e a l from the United States District Court for the Northern District of Mississippi U S D C No. 3:08-CV-63

B e fo r e WIENER, PRADO, and OWEN, Circuit Judges. P E R CURIAM:* E d it h Carolyn Fryar and the Robert B. Fryar Residuary Trust ("the Fryar T r u s t " ) (collectively known as "the Fryar family") appeal the district court's e n tr y of judgment in favor of appellees after a three­day bench trial. The Fryar

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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Case: 10-60367 Document: 00511292278 Page: 2 Date Filed: 11/12/2010

No. 10-60367 fa m ily sold Sav­Amil, LLC ("Sav­Amil")--a company owned by Alan Nunnelee a n d Steve Hammack--roughly 3,600 acres of land in Mississippi and Tennessee in December of 2004. The Fryar family previously reached an agreement to sell t h e land under different terms to Nunnelee in November of 2004. Edith Fryar w a s unaware that the terms of the November and December agreements were d iffe r e n t when she signed the December agreement. The Fryar family sued the d e fe n d a n t s for breach of the November 2004 agreement in state court in March 2 0 0 8 , which defendants removed to federal court. The district court entered ju d g m e n t in favor of defendants, ruling, inter alia, that the December 2004 a g r e e m e n t could not be rescinded due to Edith Fryar's unilateral mistake. Because the Fryar family has failed to establish that it qualifies for equitable r e lie f due to unilateral mistake or that the December agreement should o t h e r w is e not be enforced, we affirm the judgment of the district court. I. FACTUAL AND PROCEDURAL BACKGROUND T h e Fryar family operated the Robert B. Fryar Sawmill in Tippah County, M is s is s ip p i which eventually fell on hard economic times. On November 5, 2004, E d it h Fryar entered into an agreement with Nunnelee to sell approximately 3 ,6 0 0 acres of land for $1.7 million. That agreement included a right of first r e fu s a l and the right to repurchase the land, and provided that Nunnelee would p a y the taxes and closing costs. The parties subsequently executed leases

r e g a r d in g the sawmill property and equipment, whereby the Fryar family agreed t o pay Nunnelee $1,000 per month. Nunnelee subsequently advanced $216,000 t o Robert Allen Fryar, Edith Fryar's son, to cover the sawmill's operating costs. O n December 30, 2004, appellants and appellees attended a closing at the la w office of Gifford, Allred, Tennison, and Smith in Ripley, Mississippi to convey 3 ,5 0 8 acres from the Fryar trust and Edith Fryar to Sav­Amil for $1.98 million. The December agreement did not include a buy-back provision or a right of first r e f u s a l, and appellants were charged with paying the taxes and closing costs. 2

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No. 10-60367 T h e payment amount was made in satisfaction of loans made by the Federal L a n d Bank and the Small Business Association to the sawmill, and included a le a s e of the sawmill property and equipment back to the Fryar family for $2,500 p e r month. At the closing were the appellants and appellees, the closing

a t t o r n e y s , a representative of Federal Land Bank, and Robert Allen Fryar. Fryar signed the December agreement without reading it or having anyone else r e a d it to her. T h e parties entered into a Cancellation of Lease Agreement terminating t h e Fryar family's lease of the sawmill and its equipment in March of 2006. The p a r tie s signed a First Right of Refusal with Option to Purchase certain tracts of p r o p e r t y on April 12, 2006, and Sav­Amil issued notices of right of first refusal t o the Fryar family shortly thereafter, which the Fryar family declined to e x e r c is e . In mid-2007 and early 2008, appellants attached a lis pendens to p r o p e r t y conveyed-away by Sav­Amil, and brought suit in the Circuit Court of T ip p a h County on March 17, 2008 alleging, inter alia, breach of the November a g r e e m e n t. Appellees removed the case to federal court on June 2, 2008. The d is t r ic t court held a three-day bench trial from August 31, 2009 through S e p t e m b e r 2, 2009, after which appellants argued in their post-trial brief that t h e y had also proven the additional causes of action of fraudulent inducement a n d procedural and substantive unconscionability. The district court issued a fin a l judgment on December 10, 2009, ruling, inter alia, that the December 2004 c o n t r a c t was the relevant agreement between the parties, that it was not u n c o n s c io n a b le , that appellants were not fraudulently induced to enter into it, a n d that it could not be rescinded due to Edith Fryar's unilateral mistake. The F r y a r family filed a motion to alter or amend judgment which was subsequently d e n ie d , and timely filed the instant appeal.

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No. 10-60367 I I . JURISDICTION AND STANDARD OF REVIEW W e have jurisdiction under 28 U.S.C. § 1291. Following a bench trial, we r e v ie w the district court's legal determinations de novo and its factual findings fo r clear error. Flint Hills Resources LP v. Jag Energy, Inc., 559 F.3d 373, 375 (5 t h Cir. 2009). I I I . ANALYSIS A p p e lla n t s argue that the December agreement should be rescinded due t o Edith Fryar's unilateral mistake and argue that the December agreement s h o u ld not be enforced because it lacked consideration, appellees fraudulently in d u c e d Edith Fryar to enter into the December agreement, and because it was p r o c e d u r a lly unconscionable. It is undisputed that Edith Fryar did not read the terms of the December a g r e e m e n t before signing it and that she did not have anyone else present at the c l o s in g read it to her or on her behalf. Nor, apparently, did Pat Mason, the t r u s t e e of the Fryar Trust. Under Mississippi law, contracting parties are bound b y what they sign and are charged with knowing the contents of any contract t h e y sign. Bailey v. Estate of Kemp, 955 So. 2d 777, 783 (Miss. 2007); Andrus v. E llis , 887 So. 2d 175, 180 (Miss. 2004). "A person cannot avoid a written

c o n t r a c t which he has entered into on the ground that he did not read it or have it read to him." Andrus, 887 So. 2d at 180; Turner v. Terry, 799 So. 2d 25, 36 (M is s . 2001) ("[P]arties to an arms-length transaction are charged with a duty t o read what they sign; failure to do so constitutes negligence."). The Fryar fa m ily therefore cannot ordinarily back out of the December agreement simply b e c a u s e they did not read its contents before they signed it. A. U n i la te r a l Mistake

U n d e r certain circumstances a court has discretion to fashion equitable r e lie f and undo the transaction. The Mississippi Supreme Court has provided a four-part test which gives courts discretion to award equitable relief: 4

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No. 10-60367 [i] But where the mistake is of so fundamental a character, that the m in d s of the parties have never, in fact, met; or where an u n c o n s c io n a b le advantage has been gained, by mere mistake or m is a p p r e h e n s io n ; and [ii] there was no gross negligence on the part o f the plaintiff, either in falling into the error, or in not sooner c la im in g redress; and [iii] no intervening rights have accrued; and [iv ] the parties may still be placed in statu quo; equity will interfere, in its discretion, in order to prevent intolerable justice. C r o s b y ­ M is s . Res., Ltd. v. Prosper Energy, 974 F.2d 612, 618 (5th Cir. 1992) (q u o tin g Miss. State Bldg. Comm'n v. Becknell Constr., Inc., 329 So. 2d 57, 60­61 (M is s . 1976)) (internal quotation marks omitted, numbering added in Prosper). It therefore "remains the obligation of a court of equity to determine whether, d e s p it e [a party's] misjudgment, it would be inequitable and fundamentally u n ju s t not to grant relief from [an] honest but negligent mistake." Id. at 619. For purposes of this appeal, the Court will assume Edith Fryar was u n a w a r e of the terms of the December agreement and that the different terms w e r e so fundamental that there was no meeting of the minds. Appellants have n o n e t h e le s s failed to meet their burden for two reasons, first among them being t h a t appellants have failed to establish the two other elements necessary under t h e Becknell test: that no intervening rights have accrued or that the parties can s t ill be placed back in the status quo. Several tracts of land previously owned b y the Fryar family have apparently been sold by Sav­Amil to other buyers, and a p p e lla n t s have not argued that they have the resources to pay back the $1.98 m illio n they received for the land in 2006 or even the $280,000 difference b e tw e e n the November and December contract prices. While the record on these fr o n t s is inconclusive such that the Court cannot say that there is no way the p a r tie s could be put in the status quo--whether that would be in a contract u n d e r the terms of the November agreement or with no contractual relations to e a c h other at all--it remains the appellants' burden to prove that theirs is a case w h ic h qualifies for equitable relief. They have not done so. 5

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No. 10-60367 S e c o n d , even if all four elements of the Becknell test were met, the Court r e t a in s discretion to award equitable relief "in order to prevent intolerable ju s tic e ." Becknell, 329 So. 2d at 61. Appellants are not barred from such relief d u e to their negligent failure to read the December closing documents, but "as a general proposition, equity will not act to rescind a contract where the mistake w a s induced by the negligence of the party seeking rescission." Turner v. Terry, 7 9 9 So. 2d 25, 36 (Miss. 2001). While the Fryar family has suffered personal and e c o n o m ic misfortunes over the years, they have failed to carry their burden to s h o w that it would be fundamentally unjust to hold them to the terms of the D e c e m b e r contract. Testimony at trial showed that the Fryar family eventually e n te r e d into a separate contract for first right of refusal and right to purchase t h e ir previously owned land--the "raison d'etre" of the November

a g r e e m e n t-- a n d that they could not afford to repurchase the land when offered. While it may never have been Edith Fryar's plan to permanently sell the family la n d holdings when she signed the December agreement, the evidence at trial w a s that this outcome would have happened had the November agreement still b e e n in effect. The Fryar family clearly faced difficult financial choices in 2006 a n d 2007, but the court will not exercise its discretion to provide them relief to u n d o decisions regarding their land that they might now regret. B. O th e r Arguments

A p p e lla n t s also argue that the December agreement should not be e n fo r c e d for three reasons: (1) it is void for lack of consideration, (2) appellees fr a u d u le n t ly induced Edith Fryar to enter into the December agreement, and (3) b e c a u s e of procedural unconscionability. While these arguments are phrased as n e e d e d to be addressed only if the Court agrees that the December agreement s h o u ld be rescinded, they nevertheless amount to a direct attack on the D e c e m b e r agreement itself. With regard to the lack of consideration argument,

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No. 10-60367 t h is is clearly erroneous as the December agreement gave appellants $280,000 m o r e for their land than the November agreement provided for. Appellants' fraudulent inducement and procedural unconscionability a r g u m e n t s were thoroughly and accurately addressed by the court below such t h a t an extended discussion here would be repetitive. In brief, appellants' fr a u d u le n t inducement claim fails because they had no right to rely on any oral r e p r e s e n t a t io n s made to them which contradict the plain language of the D e c e m b e r agreement, Rankin v. Brokman, 502 So. 2d 644, 646 (Miss. 1987), and a p p e lla n t s did not prove by clear and convincing evidence that any other r e p r e s e n t a t io n s regarding the future sale of the land were made. Likewise, a p p e lla n t s ' procedural unconscionability argument falls flat because there is no e v id e n c e that Edith Fryar was prevented from consulting her attorney, Pat M a s o n , or her son, or that she lacked the opportunity to ask for help, ask q u e s t io n s , have the documents read to her, or walk out of the closing if she d is a g r e e d with the terms of the December agreement. IV. CONCLUSION T h e district court correctly ruled that the December agreement should not b e rescinded due to Edith Fryar's unilateral mistake, or that it was not o t h e r w is e unenforceable due to procedural unconscionability, a lack of c on sid era tion , or fraudulent inducement. We therefore affirm the district court's e n tr y of judgment in favor of Sav­Amil. A F F IR M E D .

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