Beach Community Bank v. Cushman & Wakefield of Georgia, Inc. et al
Filing
78
MEMORANDUM OPINION AND ORDER granting 55 Motion for Summary Judgment; denying as moot 74 Motion to Strike Affidavit. Ordered that Plaintiff, Beach Community Bank's claims against Defendants are dismissed with prejudice. Signed by District Judge Halil S. Ozerden on 2/13/17. (RLW)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
BEACH COMMUNITY BANK
PLAINTIFF
v.
CIVIL NO. 1:15cv4-HSO-JCG
CUSHMAN & WAKEFIELD OF GEORGIA,
INC., SCOTT R. TONNESON, AND
JOHN DOES 1-10
DEFENDANTS
MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANTS CUSHMAN & WAKEFIELD OF GEORGIA,
INC., AND SCOTT R. TONNESON’S MOTION FOR SUMMARY
JUDGMENT [55] AND DENYING AS MOOT DEFENDANTS’
MOTION TO STRIKE AFFIDAVIT OF JAMES TURNER [74]
BEFORE THE COURT are Defendants Cushman & Wakefield of Georgia,
Inc., and Scott R. Tonneson’s Motion for Summary Judgment [55] and Motion to
Strike Affidavit of James Turner [74]. These Motions have been fully briefed.
Having considered the parties’ submissions, the record as a whole, and relevant
legal authority, the Court is of the opinion that Defendants’ Motion for Summary
Judgment [55] should be granted and their Motion to Strike [74] should be denied
as moot.
I. BACKGROUND
A.
Relevant Background
This case arises out of a real estate appraisal (the “Appraisal” or “2007
Appraisal”) conducted on a proposed subdivision of real property, specifically the
Beaver Dam Crossing Subdivision in Stone County, Mississippi. Defendant
Cushman & Wakefield of Georgia, Inc.’s (“C&W”), employee Defendant Scott R.
Tonneson (“Tonneson”) (collectively “Defendants”) performed the Appraisal on or
about June 21, 2007, on behalf of The People’s Bank in Biloxi, Mississippi. Compl.
[1] at 2.1
On or about February 25, 2008, William Mike Adkinson (“Adkinson”)
submitted an application to Beach Community Bank (“Plaintiff”) for a $1 million
loan to be secured by the real property that was the subject of Defendants’ 2007
Appraisal. Id. at 3. On or about March 30, 2008, Plaintiff’s loan committee
conditionally approved the loan, contingent in part upon the receipt of an updated
appraisal on certain parcels contained within the original appraised real property.
Id.
On April 24, 2008, Defendants updated their 2007 Appraisal and supplied
Plaintiff with a “Recertification Letter to [A]ppraisal of Real Property Effectively
dated July 21, 2007” (“Recertification” or “2008 Recertification”). Ex. HH [68-34] at
1-4. This 2008 Recertification estimated a value of $1.6 million for the smaller 20.3
acre tract (the “Property”) of “Multi-Family Land,” Ex. HH [68-34] at 3, which was
contained within the ‘large “‘Parent tract’ of approximately 314 acres,” Ex. BB [6828] at 3. Compl. [1] at 2-3. Plaintiff alleges that, in reliance upon Defendants’
valuation of the Property in the 2008 Recertification, it issued a promissory note in
the amount of $1 million, secured by the Property, to Adkinson. Id.
In 2012, Adkinson defaulted on the promissory note. In conducting the
foreclosure, Plaintiff secured a new appraisal on November 13, 2012, for the
1 The actual Appraisal, Ex. GG [68-33], appears to be dated July 21, 2007. Whether the
Appraisal was completed in June or July 2007 is not relevant to the issues before the Court.
2
Property from The Appraisal Shop which valued the Property at $86,000.00. Id.
The Property ultimately sold for $65,000.00. Id. at 3.
B.
Procedural History
1.
Complaint
On January 8, 2015, Plaintiff filed a Complaint [1] in this Court advancing
claims against Defendants for negligence/gross negligence and fraudulent
concealment/latent injury. Id. at 4-7. Plaintiff alleges that as a result of Tonneson’s
negligent and grossly negligent breach of the applicable standards of care in valuing
the Property at $1.6 million, when the Property was only worth $86,000.00, Plaintiff
was able to recover merely a “fraction of the promissory note issued to Adkinson”
and suffered compensatory and consequential damages. Id. at 4-5. Plaintiff
asserts that C&W is liable to Plaintiff “under the doctrine of respondeat superior
and/or vicarious liability for the negligence and gross negligence of its employee
Tonneson” because he was acting within the course and scope of his employment.
Id. According to the Complaint, the “updated [A]ppraisal/[R]ecertification was an
affirmative act” performed by Defendants, subsequent to the initial Appraisal, that
served to fraudulently conceal Defendant’s negligent and grossly negligent acts such
that the three-year statute of limitations for Plaintiff’s negligence claims for “latent”
damages was tolled until the receipt of the November 13, 2012, appraisal, Exh. K
[67-7] at 1-2, which valued the property at $86,000.00. Id. at 5-7.
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2.
Defendants’ Motion for Summary Judgment
On July 6, 2016, Defendants filed their Motion for Summary Judgment [55]
which maintains that Plaintiff’s negligence claims arising out of the 2007 Appraisal
and 2008 Recertification are barred by the three-year statute of limitations found at
Mississippi Code § 15-1-49. Mot. Summ. J. [55] at 1; Mem. in Supp. [56] at 9-13.
Defendants posit that, even taking into consideration Plaintiff’s assertion of
fraudulent concealment or latent injury, Plaintiff was put on notice as early as June
16, 2009, when Plaintiff obtained an appraisal, Ex. BB [68-28] at 1-4, from R. David
Belew (“Belew”), with Appraisal Associates, LLC, which valued the Property at only
$71,000.00, that there might be an issue with Defendants’ earlier 2007 Appraisal
and/or 2008 Recertification. Mem. in Supp. [56] at 9-13. Thus the three-year
statute of limitations began running in June 2009 at the latest. Id.
Defendants also assert that Plaintiff did not rely upon their 2007 Appraisal
or 2008 Recertification in making its loan decisions such that neither could be the
proximate cause of any damages. Mot. Summ. J. [55] at 1-3; Mem. in Supp. [56] at
13-15. Alternatively, Defendants seek partial summary judgment as to Plaintiff’s
claims for the loss of $325,000.00 of the loan monies, attorneys’ fees, and punitive
damages. Mot. Summ. J. [55] at 1-3; Mem. in Supp. [56] at 17-20.
Plaintiff’s Response in Opposition [65] argues that Defendants’ fraudulent
concealment was “so thoroughly done” through the 2008 Recertification that
Plaintiff “was greatly misled as to the accurate values and reasonably believed” that
Belew was the one who performed a negligent appraisal. Resp. in Opp’n Summ. J.
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[65] at 20-25. Plaintiff asserts that a genuine issue of material fact exists as to
whether Tonneson’s “refusals” to again update his Appraisal/Recertification, after
Belew’s 2009 appraisal was rejected, could be found by a reasonable juror to be
“affirmative acts of fraudulent concealment” tolling the statute of limitations. Id.
Plaintiff’s second argument is that Defendants waived their statute of limitations
defense pursuant to Mississippi law by actively litigating the matter “for over
eighteen months” because the statute of limitations is a substantive defense
requiring the application of Mississippi law. Id. at 25-27.
Defendants’ Rebuttal [73] maintains that Tonneson’s act of declining to
perform any additional appraisals cannot be found to have been an affirmative act
designed to prevent the discovery of Plaintiff’s claims because
[u]nder even the most charitable definition, declining to perform
subsequent appraisals (which Tonnesson replied he did not have time to
do) is not an affirmative act. In the first place, Mississippi law is clear
that “the affirmative act must in fact be designed to prevent the
discovery of the claim”. (sic) Channel v. Loyacono, 954 So.2d 415, 423
(Miss. 2007). Merely declining to do an updated appraisal is a passive
act, not an affirmative one, and there is no evidence that it was designed
to prevent discovery of a claim, the Plaintiff’s bare assertion
notwithstanding.
Rebuttal [73] at 4 (emphasis in the original).
Defendants further contend that
they have not waived their statute of limitations defense. Rebuttal [73] at 2-11.
3.
Defendants’ Motion to Strike Affidavit of James Turner, Plaintiff’s
Expert Witness.
On September 1, 2016, Defendants filed a Motion [74] to Strike asking the
Court to strike the Affidavit of James Turner (“Turner”) [74-1] which was produced
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after Defendants filed their Motion for Summary Judgment and proffered opinions
not previously or timely expressed by Turner. Mot. to Strike [74] at 1-7.
II. DISCUSSION
A.
Summary Judgment Standard
“Summary judgment is appropriate when there is no genuine issue as to any
material fact, and the moving party is entitled to judgment as a matter of law.” Cox
v. Wal-Mart Stores E., L.P., 755 F.3d 231, 233 (5th Cir. 2014); see Fed. R. Civ. P.
56(a). In deciding a motion for summary judgment, a court “view[s] the evidence
and draw[s] reasonable inferences in the light most favorable to the nonmoving
party.” Hemphill v. State Farm Mut. Auto. Ins. Co., 805 F.3d 535, 538 (5th Cir.
2015) (quoting Cox, 755 F.3d at 233); Maddox v. Townsend & Sons, Inc., 639 F.3d
214, 216 (5th Cir. 2011).
Before it can determine that there is no genuine issue for trial, a court must
be satisfied that “the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party.” Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587 (1986). If the movant carries this burden, “the nonmovant
must go beyond the pleadings and designate specific facts showing that there is a
genuine issue for trial.” Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994) (en banc); see also Lujan v. National Wildlife Federation, 497 U.S. 871, 888
(1990) (the nonmovant must set forth specific facts to contradict the specific facts
set forth by the movant, general averments are not sufficient).
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To rebut a properly supported motion for summary judgment, the opposing
party must show, with “significant probative evidence,” that there exists a genuine
issue of material fact. Hamilton v. Segue Software, Inc., 232 F.3d 473, 477 (5th Cir.
2000). “A genuine dispute of material fact means that evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Royal v. CCC&R
Tres Arboles, LLC, 736 F.3d 396, 400 (5th Cir. 2013) (quotation omitted). An actual
controversy exists “when both parties have submitted evidence of contradictory
facts.” Salazar-Limon v. Houston, 826 F.3d 272, 277 (5th Cir. 2016) (quotation
omitted).
B.
Defendants did not waive their affirmative defense that Plaintiff’s claims are
barred by the statute of limitations.
Plaintiff does not dispute that Defendants pled the affirmative defense of the
statute of limitations in their Answer [8]. Plaintiff instead argues that because
Mississippi Code § 15-1-67 tolls the applicable statute of limitations pending the
discovery of a claim that was fraudulently concealed, Mississippi’s statute of
limitations in this context constitutes substantive law which requires a federal
court to apply Mississippi procedural law to determine whether a party has waived
a statute of limitations defense. Resp. in Opp’n Summ. J. [65] at 25-26. Plaintiff
then alleges that Defendants waived their statute of limitations defense pursuant to
Mississippi law by actively litigating the matter “for over eighteen months.” Id. at
25-27.
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In support of its position, Plaintiff relies upon an opinion from the United
States District Court for the Southern District of Mississippi which provides in
relevant part that:
. . . as regards procedural matters, including, as a general rule, statutes
of limitations, Mississippi applies its own law. A well-recognized
exception to this general rule exists where the limitations period is an
integral part of the statute which created the cause of action, and
expiration of the limitations period extinguishes the right of action. In
such cases, the limitations period is considered to be substantive.
Robinson v. General Motors Corp., 150 F. Supp. 2d 930 (S.D. Miss. 2001) (internal
citations and quotations omitted).
However, in Huss v. Gayden, 508 F.3d 240, 244-45 (5th Cir. 2007), the United
States Court of Appeals for the Fifth Circuit certified to the Mississippi Supreme
Court the question of whether the plaintiffs’ medical malpractice claims in that case
were barred as a matter of law. Id. at 241-42. In its response to the Fifth Circuit,
the Mississippi Supreme Court reaffirmed the general rule that “[u]nder Mississippi
law, the plea of statute of limitations is an affirmative defense for which the party
asserting it has the burden of proof.” Huss v. Gayden, 991 So. 2d 162, 165 (Miss.
2008). Turning to the question of whether the plaintiffs’ claims in that case were
barred by the statute of limitations as a matter of law, the Mississippi Supreme
Court responded that
[t]he success vel non of this disputed affirmative defense requires a jury
determination, but only if actually presented. Under Mississippi law,
Gayden's failure to establish factually the proof necessary to be accorded
the protection created by this substantive right, precludes Gayden from
prevailing upon it as a matter of law. This substantive issue should not
be confused with the separate procedural issue of whether the defense is
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raised, preserved or should be barred, all of which are controlled by
federal procedural law.
Huss, 991 So. 2d at 165 (emphasis added).
This Court finds that that it is clear that under Mississippi law, an
affirmative defense based upon a statute of limitations “is a substantive right to
which Mississippi law applies” and the burden of proof falls on the party asserting
it. Huss, 991 So. 2d at 165. However, when a party asserts an affirmative defense
in a federal court case, federal procedural law controls the analysis of whether the
defense was timely “raised, preserved, or should be barred.” Id. “The Federal Rules
of Civil Procedure provide the manner and time in which defenses are raised and
when waiver occurs.” Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d
602, 610 (5th Cir. 2007) (internal citations and quotations omitted); see also Bryant
v. Wyeth Inc., 816 F. Supp. 2d 329, 332-33 (S.D. Miss. 2011).
Under federal law, a defendant “does not waive an affirmative defense if it is
raised at a pragmatically sufficient time, and [the plaintiff] was not prejudiced in its
ability to respond.” Arismendez, 493 F.3d at 610 (internal citations and quotations
omitted); see also Huss, 991 So. 2d at 165 (whether an affirmative defense was
“raised, preserved or should be barred” in a federal court matter is controlled by
federal procedural law).
In the present matter, Defendants raised their statute of limitations defense
in their Answer and, pursuant the Court’s June 29, 2016, Text Only Order granting
Defendants an extension of time to file dispositive motions, Defendants timely filed
their Motion for Summary Judgment maintaining their statute of limitations
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defense. Based upon the record, the Court finds that Defendants timely asserted
and prosecuted their statute of limitations affirmative defenses, and that Plaintiff
has not been prejudiced in this regard.
C.
Plaintiff’s negligence claims are barred by the three-year statute of
limitations.
There appears to be no dispute between the parties that the applicable
statute of limitations in this case is three years as set forth in Mississippi Code §151-49. Section 15-1-49 provides in relevant part:
(1)
All actions for which no other period of limitation is prescribed
shall be commenced within three (3) years next after the cause of
such action accrued, and not after.
(2)
In actions for which no other period of limitation is prescribed and
which involve latent injury or disease, the cause of action does not
accrue until the plaintiff has discovered, or by reasonable
diligence should have discovered, the injury.
MISS. CODE ANN. §15-1-49 .
Defendants’ Motion for Summary Judgment posits that Plaintiff’s negligence
claims are clearly barred by the three-year statute of limitations because Plaintiff
received Defendants’ Appraisal in 2007 and Recertification in 2008, such that
Plaintiff was required to file suit for any alleged negligence no later than 2011.
Even if it were to be determined that Plaintiff was not put on notice of any alleged
negligence by Defendants until Plaintiff received Belew’s June 2009 appraisal [6828] which valued the property at $71,000.00, Defendants contend that Plaintiff’s
negligence claims are still barred in that the Complaint was not filed until January
8, 2015, well after the statute ran.
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Plaintiff counters that the statute of limitations was tolled pursuant to
Mississippi Code §15-1-49(2) or § 15-1-67 because Defendants’ negligence was “so
thoroughly done” through the 2008 Recertification “that Plaintiff believed Belew
was the one who performed the negligent appraisal” and “rejected Belew’s
[a]ppraisal.” Resp. in Opp’n Summ. J. [65] at 24-25. Plaintiff further asserts that
after Belew’s 2009 appraisal was rejected, Tonneson was contacted by Plaintiff in
“March and August 2011 to see if he would do updated appraisals,” but Tonneson
“declined on both of these occasions.” Resp. in Opp’n Summ. J. [65] at 5.
Tonneson’s “refus[al]” to update his Appraisal/Recertification prohibited
Plaintiff from discovering Defendants’ negligence until Plaintiff received the 2012
Appraisal Associates appraisal [67-7], which valued the property at $86,000.00.
Compl. [1] at 2-3; Resp. in Opp’n Summ. J. [65] at 24-25. Plaintiff argues that
Defendants’ negligence constituted either a latent injury or fraudulent concealment
which tolled the statute of limitations until Plaintiff’s receipt of the 2012 appraisal.
The facts material to Defendants’ Motion are not in dispute. The last written
report Plaintiff received from Defendants was the Recertification [68-34] dated
April 2008, which valued the Property at $1.6 million. In June 2009, Plaintiff
received an appraisal [68-28] from the Appraisal Associates valuing the Property at
$71,000.00. Defendants maintain that the three-year statute of limitations began to
run, at the latest, in June 2009 when Plaintiff, a sophisticated lender, was placed on
notice of the vast disparity in the appraisal valuations.
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The statute of limitations may have been tolled until Plaintiff “discovered, or
by reasonable diligence should have discovered, the injury.” MISS. CODE ANN. §15-149(2). Mississippi Code § 15-1-67 provides that:
If a person liable to any personal action shall fraudulently conceal the
cause of action from the knowledge of the person entitled thereto, the
cause of action shall be deemed to have first accrued at, and not before,
the time at which such fraud shall be, or with reasonable diligence might
have been, first known or discovered.
MISS. CODE ANN. §15-1-67. For Plaintiff to prevail on its fraudulent concealment
theory, a two step process applies. The first step requires Plaintiff to prove that
some affirmative act or conduct was done by Defendants that prevented discovery of
the claim, and the second step requires Plaintiff to prove that due diligence was
exercised to discover the claim. Ill. Cent. RR Co. v. Guy, 682 F.3d 381, 393-94 (5th
Cir. 2012); Raddin v. Manchester Educ. Found. Inc., 175 So. 3d 1243, 1249 (Miss.
2015).
For Plaintiff to sustain its burden of proof and survive summary judgment
under either a latent injury or fraudulent concealment theory, Plaintiff was
required to come forward with material facts that would allow a reasonable jury to
conclude that after Plaintiff received the 2009 appraisal, which valued the Property
over $1.5 million less than Defendants’ 2008 Recertification, Plaintiff exercised
“reasonable diligence” to determine which appraisal properly valued the Property or
was allegedly negligently prepared. Plaintiff has pointed to no such evidence. Nor
has Plaintiff adduced competent summary judgment evidence demonstrating that
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any reasonable juror could find an affirmative act of concealment was committed by
either Defendant.
After receipt of the 2009 appraisal, Plaintiff elected on its own to assume that
the 2009 appraisal, as opposed to Defendants’ 2008 Recertification, was negligently
prepared. In the Court’s view, Plaintiff’s decision to do nothing more than request
Defendants update their prior Appraisal/Recertification and to forgo obtaining an
appraisal from an independent third party prior to the 2012 appraisal does not
equate to an affirmative act of concealment by Defendants, nor does it demonstrate
“reasonable diligence” by a sophisticated lending institution. In the absence of
reasonable diligence, Plaintiff’s Complaint filed in January 2015 is barred by the
three-year statute of limitations, which began to run in 2009.
Plaintiff has supplied no authority to support its contention that Tonneson’s
declining to provide updated appraisals could be considered an affirmative act
sufficient to toll the statute of limitations, and the Court has located none. See
Bonds v. Modern Woodmen of America, Civil No. 3:13cv059, 2014 WL 1255426, at *3
(N. D. Miss. March 26, 2014) (finding no fraudulent concealment because “the
alleged acts are not affirmative in nature. ‘Not discussing’ the transaction is not an
affirmative act.”).
This is insufficient to sustain Plaintiff’s burden.
Viewing the facts in the light most favorable to Plaintiff, the Court finds that
reasonable minds could not differ and Defendants should be granted summary
judgment. There can be no dispute that Plaintiff’s claims are barred by the threeyear statute of limitations. For this reason, there is no need for the Court to
13
consider Defendants’ alternative arguments in support of summary judgment.
Swanson v. Hearst Corp., 586 F.3d 1016, 1019 (5th Cir. 2009).
Nor is there any need for the Court to consider Plaintiff’s claim for punitive
damages because Plaintiff is not entitled to recover compensatory damages. See
MISS. CODE ANN. § 11-1-65; James v. State Farm Mut. Auto. Ins. Co., 743 F.3d 65, 70
n.5 (5th Cir. 2014) (citing Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618,
628 (5th Cir. 2008)); see also Dykes v. Husqvarna Outdoor Products, N.A., Inc., 869
F. Supp. 2d 749, 760 (S.D. Miss. 2012).
D.
Defendants’ Motion to Strike Affidavit of James Turner should be denied as
moot.
Plaintiff submitted Turner’s Affidavit [67-9] in support of its Response in
Opposition [65] to summary judgment. Plaintiff asserted that Turner’s Affidavit
supplemented his prior expert opinions and supported Plaintiff’s negligence claims
as to Defendants’ preparation of the 2007 Appraisal and 2008 Recertification. Mot.
in Opp. Summ. J. [65] at 9-20.
The Court finds that Defendants’ Motion to Strike should be denied as moot
because Plaintiff’s claims are barred by the three-year statute of limitations,
regardless of any opinion expressed in Turner’s Affidavit as to the merits of a
negligence claim against Defendants.
III. CONCLUSION
To the extent the Court has not addressed any of the parties’ arguments, it
has considered them and determined that they would not alter the result. The
Court will grant Defendants Cushman & Wakefield of Georgia, Inc., and Scott R.
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Tonneson’s Motion for Summary Judgment [55] and deny as moot their Motion to
Strike Affidavit of James Turner [74]. Plaintiff Beach Community Bank’s claims
against Defendants will be dismissed with prejudice.
IT IS, THEREFORE, ORDERED AND ADJUDGED that Defendants
Cushman & Wakefield of Georgia, Inc., and Scott R. Tonneson’s Motion for
Summary Judgment [55] is GRANTED and their Motion to Strike Affidavit of
James Turner [74] is DENIED AS MOOT.
IT IS, FURTHER, ORDERED AND ADJUDGED that Plaintiff Beach
Community Bank’s claims against Defendants are DISMISSED WITH
PREJUDICE.
SO ORDERED this the 13th day of February, 2017.
s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE
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