Pike County , MS v. Indeck Magnolia, LLC
Filing
91
Memorandum Opinion and Order granting 80 motion for partial summary judgment. Signed by District Judge Tom S. Lee on 4/25/12 (LWE)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
JACKSON DIVISION
PIKE COUNTY, MISSISSIPPI
BY ITS BOARD OF SUPERVISORS
VS.
PLAINTIFF
CIVIL ACTION NO. 3:11CV57TSL-MTP
INDECK MAGNOLIA, LLC
DEFENDANT
MEMORANDUM OPINION AND ORDER
This cause is before the court on the motion of plaintiff
Pike County Board of Supervisors for partial summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure.
Defendant Indeck Magnolia, LLC (Indeck) has responded to the
motion and the court, having considered the memoranda of
authorities, together with attachments, submitted by the parties,
concludes the motion is well taken and should be granted.
The present litigation concerns a certain parcel of land
owned by Indeck and located in Pike County, Mississippi.
Indeck
purchased the property from Pike County on October 15, 2008 for
the purpose of constructing and operating a wood pallet
manufacturing facility.
Under the terms of the parties’ Agreement
to Convey, Indeck had two years within which to “begin to
construct and operate” the facility, failing which Pike County had
the right to re-purchase the property for Indeck’s original
purchase price of $128,400.
On December 22, 2010, Pike County
filed suit against Indeck in the Chancery Court of Pike County,
Mississippi seeking to enforce its alleged contractual right to
repurchase the property since, according to Pike County, Indeck
had failed “to construct and operate” by the October 15, 2010
deadline established in the contract.
Contemporaneously with
filing suit, the County filed a lis pendens notice in the Pike
County Chancery Court land records.
Indeck removed the case to
this court on the basis of diversity jurisdiction, then filed its
answer, along with a counterclaim against the County for breach of
contract, breach of the implied duty of good faith and fair
dealing, and conspiracy to interfere with contractual relations.
Indeck alleged that Pike County’s actions in filing the lawsuit
and lis pendens notice violated the contract, as the County had
agreed to a modification extending the two-year deadline, and it
alleged further that the County’s actions were undertaken in an
effort to block Indeck’s planned sale of the subject property to a
third party, Investar Redevelopment LLC.1
In support of its request for partial summary judgment, Pike
County argues that since it is undisputed that there is no entry
in any minutes of the Pike County Board of Supervisors authorizing
1
More precisely, Indeck Magnolia’s sole asset was the
Pike County property, and Indeck Magnolia’s parent company, Indeck
Energy Services, Inc., had contracted to sell Indeck Magnolia to
Investar Redevelopment LLC (Investar) as the means of selling the
Pike County property to Investar.
2
or approving an amendment to the Agreement to Convey for the
purpose of extending the two-year deadline by six months, or by
any other period or for any other purpose, then as a matter of
law, there was never any legally effective amendment to the
Agreement to Convey.2
In response, Indeck argues that because it
justifiably relied to its detriment on actions by Pike County
officials which led Indeck to believe that the County had agreed
to extend the deadline for invoking its repurchase right, then the
County is estopped from asserting the statute of frauds or the
minutes requirement as a bar to enforcement of the County’s
alleged agreement to extend the contract.
More specifically,
Indeck contends that in a telephone conversation on August 16,
2010, Pike County representative Britt Herrin communicated to
2
Pike County initially argued that the Agreement to
Convey and right to repurchase provided therein, and any amendment
thereto, qualify as a “contract for the sale of lands” within the
Mississippi statute of frauds, which is not enforceable unless “in
writing, and signed by the party to be charged.” See Miss. Code.
Ann. § 15-3-1; Thompson v. First American Nat’l Bank, 19 So. 3d
784, 787 (Miss. 2009) (writing requirement applies equally to any
modification or amendment of contract covered by statute of
frauds) (citing Canizaro v. Mobile Communications Corp. of Am.,
655 So. 2d 25, 29 (Miss. 1995). The County argued that it was
entitled to a summary adjudication that there was no legally
enforceable agreement to extend since there is no writing
evidencing any such alleged agreement by the County. However, the
real focus of the County’s arguments ultimately is on the
principle of Mississippi law, discussed infra, that a county board
of supervisors may enter a legally enforceable contract, or amend
or alter a contract previously entered, only where it does so
through public action which is evidenced by an entry on its
minutes. It would seem, therefore, that consideration of the
County’s arguments concerning the statute of frauds may be
superfluous.
3
Indeck’s president, Gerry DeNotto, that the County had agreed to a
six-month extension to allow for a sale of the property to
Investar; that in reliance on the County’s express assurances that
the County had agreed to this six-month extension and would not
attempt to enforce any purported deadline prior to that time,
Indeck’s parent company entered into a contract with Investar on
September 16, 2010 to sell Indeck to Investar for $1.7 million;
and that refusal to enforce the County’s agreement to a six-month
extension would virtually sanction the perpetuation of fraud and
result in injustice by potentially permitting Pike County to
reacquire the property with millions of dollars in improvements
for $128,400 at the expense of Indeck and Investar.
See C.F.
Frazier Constr. Co., Inc. v. Campbell Roofing and Metal Works,
Inc., 373 So. 2d 1036, 1038 (Miss. 1979) (elements of promissory
estoppel are: (1) the making of a promise, even though without
consideration, (2) the intention that the promise be relied upon
and in fact is relied upon, and (3) a refusal to enforce it would
virtually sanction the perpetuation of fraud or would result in
other injustice).
It is a “fundamental and inviolable policy” of the State of
Mississippi that the exclusive means by which a county government
may enter a contract or amend or alter any contract entered by the
county is through public action by the county’s board of
supervisors, which action “must be evidenced by an entry on its
4
minutes.”
Williamson Pounders Architects, P.C. v. Tunica County,
Miss., 681 F. Supp. 2d 766, 772 (N.D. Miss. 2008), aff’d, 597 F.3d
292, 296-297 (5th Cir. 2010).
For more than a century, the
Mississippi Supreme Court has consistently and routinely held that
“boards of supervisors and other public boards speak only through
their minutes and their actions are evidenced solely by entries on
the minutes.”
Thompson v. Jones County Cmty. Hosp., 352 So. 2d
795, 796 (Miss. 1977).
The court in Thompson explained:
A board of supervisors can act only as a body, and its
act must be evidenced by an entry on its minutes. The
minutes of the board of supervisors are the sole and
exclusive evidence of what the board did. The
individuals composing the board cannot act for the
county, nor officially in reference to the county's
business, except as authorized by law, and the minutes
of the board of supervisors must be the repository and
the evidence of their official acts.
Thompson, 352 So. 2d at 796 (quoting Smith v. Board of
Supervisors, 124 Miss. 36, 41, 86 So. 707, 709 (1920) (emphasis
added)).
See also Board of Supervisors v. Dawson, 208 Miss. 666,
672, 45 So. 2d 253 (1950) (holding that “boards of supervisons
[sic] can bind counties, or districts therein, only when acting
within their authority and in the mode and manner by which this
authority is to be exercised under the statutes, and that their
contracts, and every other substantial action taken by them must
be evidenced by entries on their minutes, and can be evidenced in
no other way”) (quoting Lee County v. James, 178 Miss. 554, 559,
5
174 So. 76, 77 (1937).
The court has described its justifications
for its rigidity respecting the minutes requirement as follows:
“(1) That when authority is conferred upon a board, the
public is entitled to the judgment of the board after an
examination of a proposal and a discussion of it among
the members to the end that the result reached will
represent the wisdom of the majority rather than the
opinion or preference of some individual member; and (2)
that the decision or order when made shall not be
subject to the uncertainties of the recollection of
individual witnesses of what transpired, but that the
action taken will be evidenced by a written memorial
entered upon the minutes at the time, and to which all
the public may have access to see what was actually
done.”
Rawls Springs Util. Dist. v. Novak, 765 So. 2d 1288, 1291-92
(Miss. 2000)(quoting Lee County v. James, 174 So. at 77).
Because
of the minutes requirement, “oral contracts can not be formed by
or enforced against county boards of supervisors.”
Williamson
Pounders, 681 F. Supp. 2d at 771 (citing Butler v. Bd. of
Supervisors for Hinds County, 659 So. 2d 578, 581 (Miss. 1995)).
And, since a board's “minutes are the exclusive evidence of what
the board did, ... parol evidence is not admissible to show what
actions the board took.”
Myers v. Blair, 611 So. 2d 969, 972
(Miss. 1992) (quoting Noxubee County v. Long, 141 Miss. 72, 106
So. 83, 86 (1925)).
In this case, it is undisputed that there is nothing in the
minutes of any meeting of the Pike County Board of Supervisors
which records or refers to any agreement to amend the Agreement to
Convey.
Notwithstanding this, Indeck argues that the County
6
representative’s assurance to Indeck that the Board had approved
an extension estops the County from denying its agreement to amend
the Agreement to Convey to extend the deadline for Indeck’s
performance (or from asserting the statute of frauds to avoid
enforcement of such agreement).
In the court’s opinion, Indeck’s
reliance on estoppel as a basis to deny the County’s motion is
foreclosed by the minutes requirement.
The Mississippi Supreme Court has held that the minutes
requirement is to be strictly adhered to, even where doing so
would result in apparent injustice.
Urban Developers LLC v. City
of Jackson, Miss., 468 F.3d 281, 299 (5th Cir. 2006) (citing
Butler, 659 So. 2d at 581 (discussing Mississippi's “past strict
adherence to the requirement that a board of supervisors only be
bound by a contract entered upon its minutes”), and Warren County
Port Comm'n v. Farrell Constr., 395 F.2d 901, 904 (5th Cir. 1968)
(describing the Mississippi requirement as “stringent”)).
See
also Williamson Pounders, 597 F.3d at 296-97, 298 (observing that
“[t]he Mississippi Supreme Court requires ‘strict adherence’ to
having a writing placed upon the minutes in order to bind a board
of supervisors” and noting Mississippi Supreme Court's “insistence
that the requirement of a minute entry must be enforced even if it
might seem to lead to an injustice”)(quoting Butler, 659 So. 2d at
581-82).
Thus, in Urban Developers LLC, supra, the Fifth Circuit
7
rejected the plaintiff’s assertion of estoppel as a means to
overcome Mississippi’s minutes requirement, stating,
The general rule ... is that “[s]uch contracts when so
entered upon the minutes may not be varied by parol nor
altered by a court of equity.” Farrell Constr., 395
F.2d at 904 (emphasis added) (citing McPherson v.
Richards, 134 Miss. 282, 98 So. 685 (1924)). The
plaintiff's invocation of equities to meet the “spread
upon the minutes” requirement is usually prohibited, in
part, because “each person, firm or corporation
contracting with a board of supervisors is responsible
to see that the contract is legal and properly recorded
on the minutes of the board.” Thompson, 352 So. 2d at
797; see also id. at 798 (“It was the responsibility of
the plaintiff to see that the contract was properly
recorded on the minutes”).
468 F.3d 281, 300 (5th Cir. 2006).
See also Butler, 659 So. 2d at
582 (stating that all contracting parties are “charged with the
knowledge that a board of supervisors can only make the county
liable for a contract by a valid order duly entered upon its
minutes”); Novak, 765 So. 2d at 1292 (applying “well-established
rule in Mississippi that the doctrine of equitable estoppel cannot
be applied against the state or its counties where the acts of
their officers were unauthorized” to bar enforcement of agreement
by individual board member where board minutes did not reflect
member’s authorization to enter subject agreement on behalf of
board) (quoting Oktibbeha County Bd. of Educ. v. Town of Sturgis,
531 So. 2d 585, 589 (Miss. 1988)); Colle Towing Co. v. Harrison
County, 213 Miss. 442, 57 So. 2d 171, 172 (1952) (observing that
“[i]t has been repeatedly held in this State that a board of
8
supervisors can contract and render the county liable only by a
valid order duly entered upon its minutes, that all persons
dealing with a board of supervisors are chargeable with knowledge
of this law, ... and ... that in such case there is no estoppel
against the county”).3
Indeed, it stands to reason that where a
party is charged by law with knowledge that a writing placed upon
the minutes is required in order to bind a board of supervisors,
and where such party bears the responsibility of seeing to it that
its contract was properly recorded on the minutes, then it is not
inequitable or unfair to hold that party to the consequences of
3
The only case cited by Indeck which arguably involves
estoppel in the context of governmental board is AmericanLaFrance, Inc., v. City of Philadelphia, 183 Miss. 207, 184 So.
620. However, the Mississippi Supreme Court found that reliance
on American-LaFrance was unfounded where the issue was the
liability of a county board of supervisors. In Colle Towing Co.
v. Harrison County, the court observed that American-LaFrance
“involved the question of liability of a municipality,” and
stated, “[Mississippi] laws pertaining to municipalities are so
radically different from those governing proceedings of a board of
supervisors that [American-LaFrance] [is] no authority on the
question here presented.” 213 Miss. 442, 57 So. 2d 171, 172
(1952).
The court notes, too, that in Urban Developers LLC v. City of
Jackson, Miss., the Fifth Circuit distinguished a line of cases
which broadly applied equitable estoppel against public boards,
see, e.g., Bd. of Educ. of Lamar County v. Hudson, 585 So. 2d 683,
688 (Miss. 1991) (holding that a public board "may be equitably
estopped under the proper circumstances"), on the basis that “they
do not involve the strict Mississippi minutes requirement, but
instead simply permit equitable estoppel to be enforced against a
board in other contexts, for example, as through the doctrine of
after-acquired title.” 468 F.3d 281, 299 (5th Cir. 2006) (citing,
as an example, Oktibbeha County Bd. of Educ. v. Town of Sturgis,
531 So. 2d 585, 589 (Miss. 1988)).
9
his failure to ensure that the contract (or an amendment thereto)
was properly recorded on the minutes.
Prior to entering the
contract with Investar, Indeck could have ascertained whether the
Board’s alleged agreement to grant a six-month extension of its
repurchase right under the Agreement to Convey had been recorded
in the minutes, and in the court’s view, proceeded at its own risk
in failing to do so.
Even if the minutes requirement allowed for application of
estoppel, the undisputed facts in this case foreclose Indeck’s
assertion of estoppel as a basis for enforcing an alleged
amendment to the Agreement to Convey.4
4
First, not only are there
The court in Urban Developers acknowledged that in
Community Extended Care Centers v. Board of Supervisors for
Humphreys County, 756 So.2d 798, 804 (Miss. Ct. App. 1999), the
Mississippi Court of Appeals, after first concluding that the
minutes requirement was satisfied where the minutes reflected the
Board’s authorization for the Board president to enter a specific
lease, held alternatively that the supervisors were equitably
estopped by their actions (which included the original resolution
on the minutes and two resolutions to amend the lease, which were
also entered in the minutes) from arguing that the “technical
omission” of not having the lease contract itself “spread across
the minute book” should invalidate the lease contract. 468 F.3d
at 301-02. The court in Community Extended Care Centers had noted
that although “no estoppel may be enforced ‘against the state or
its counties where the acts of their officers were unauthorized,’
... the resolution entered on the Board minutes shows the
supervisors unanimously approved the lease contract with CECC and
authorized the Board president to sign the lease contract on
behalf of the Board.” 756 So. 2d at 804.
Even accepting the proposition that the minutes requirement
does not necessarily foreclose the assertion of estoppel against a
county board of supervisors, however, does not change the court’s
opinion that in this case, as in Urban Developers, estoppel is
unavailable on the facts presented.
10
no Board minutes reflecting the Board’s approval of an amendment
to the Agreement to Convey, there is no evidence in any form
tending to prove the Board’s approval of an amendment.
Further,
the only reliance claimed by Indeck as the basis for estoppel is
the execution on September 16, 2010 of the contract with Investar.
According to Indeck, the only communication from the County
relating to Indeck’s request for an extension which predated
execution of the contract was from Britt Herrin, who in an August
16, 2010 phone call, allegedly represented that the County had
approved a six-month extension.
However, while Herrin
acknowledged in deposition testimony that he may have spoken with
Gerry DeNotto of Indeck on August 16, he denied that he told
DeNotto unequivocally or unconditionally that the Board had agreed
to an extension, and testified, instead, that he told DeNotto only
that the Board would be agreeable to an extension, or to
considering an extension, depending on its review of Investar’s
financial statements and business plan.
Indeck has offered no
evidence to refute Herrin’s recollection of this conversation,
which is consistent with an email sent by Herrin to Investar on
the same date, which recited that “[t]he county has agreed to the
six month extension, with the ... conditions” that the County
“have access to Investar’s financial statements and business
plan.”
The evidence plainly establishes, without dispute, that on
11
the date the contract was executed between Indeck and Investar,
Investar had not yet provided its financial statements and
business plan to the County.
Given that the evidence reflects
that the County’s alleged agreement to extend was conditional,
Indeck cannot reasonably claim to have been justified in relying
on that alleged agreement in executing the contract with Investar
at a time when the conditions set by the County had not yet been
met.5
Thus, Indeck cannot prove the essential elements of
estoppel.
Based on the foregoing, it is ordered that Pike County’s
motion for partial summary judgment is granted.
SO ORDERED this 25th day of April, 2012.
/s/Tom S. Lee
UNITED STATES DISTRICT JUDGE
5
Much of the conduct which Indeck claims led it
reasonably to believe that the County had agreed to the extension
involved efforts by the County to work with Investar to facilitate
the sale of Indeck to Investar. However, all of those efforts
post-dated the September 16th execution of the Indeck-Investar
contract and thus cannot have induced reliance. See Bandal v.
Baldwin, No. C8-99-972, 1999 WL 1102595, 2 (Minn. Ct. App. Dec. 7,
1999) (“a promisee cannot rely on a ‘promise’ or conduct that
occurred after the action allegedly induced thereby”).
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?