Gulfport Shopping Ctr., Inc., et al. v. Durham
| Docket Number: | 2011-CA-00304-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 07-17-2012 Opinion Author: Roberts, J. Holding: Affirmed in part, reversed and rendered in part. |
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| Additional Case Information: |
Topic: Contract - Implied duty of good faith and fair dealing - Bad faith - Conscious wrongdoing - Misappropriation Judge(s) Concurring: Lee, C.J., Irving and Griffis, P.JJ., Barnes, Ishee and Maxwell, JJ. Concur in Part, Concur in Result 1: Russell, J. Concurs in Result Only: Carlton and Fair, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 04-07-2010 Appealed from: Harrison County Chancery Court Judge: James H.C. Thomas, Jr. Disposition: JUDGMENT OF $263,988.89 FOR APPELLEE; COUNTERCLAIM FOR $110,000 DENIED |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Gulfport Shopping Center, Inc., H. Dewayne Williams, John M. Hill, Michael V. Shannon, David L. Strobel and C. Hadley Weaver, Jr. |
LUTHER T. MUNFORD
BENJAMIN LYLE ROBINSON |
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| Appellee: | William H. Durham | MARK A. NELSON WALTER JEROME BLESSEY IV | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Implied duty of good faith and fair dealing - Bad faith - Conscious wrongdoing - Misappropriation |
| Summary of the Facts: | William Durham sued Gulfport Shopping Center Inc. and five of its six shareholders - John Hill, Michael Shannon, David Stroebel, C. Hadley Weaver, and Dewayne Williams - after Durham had agreed to assume GSC’s financial liabilities during a failed attempt to acquire all of GSC’s stock incident to an option agreement. The chancellor found that GSC and the accused shareholders acted in bad faith when they neglected to inform Durham that GSC had received income during the term of Durham’s option and awarded Durham a judgment of $263,988.89. The chancellor found no merit to GSC’s counterclaim for $110,000 in rental income received during Durham’s option. GSC and the accused shareholders appeal. |
| Summary of Opinion Analysis: | The only issue on appeal is whether the accused shareholders acted in bad faith by concealing GSC’s receipt of the Bruno’s bankruptcy proceeds during Durham’s option. The chancellor held that the accused shareholders were liable to Durham because they breached their implied contractual duty of good faith and fair dealing, i.e., the accused shareholders acted in bad faith when they concealed GSC’s receipt of the Bruno’s bankruptcy proceeds which were realized during Durham’s option. Bad faith has been defined as requiring a showing of more than bad judgment or negligence; rather, bad faith implies some conscious wrongdoing because of dishonest purpose or moral obliquity. The chancellor was manifestly incorrect when he found that GSC “realized” the Bruno’s bankruptcy proceeds during Durham’s option. Durham repeatedly and unequivocally testified that the accused shareholders terminated his option on April 19, 2000. Acting on GSC’s behalf, Hill signed a release for the Bruno’s bankruptcy proceeds on May 12, 2000. And although GSC had received a check from the Bruno’s bankruptcy proceedings on May 25, 2000, GSC could not deposit that check because it had incorrectly been assigned to “Flynt’s Crossing Shopping Center.” GSC returned that check. In that sense, the chancellor was manifestly incorrect when he held that GSC received its portion of the Bruno’s bankruptcy proceeds on May 25, 2000. The chancellor was also manifestly incorrect when he held that the accused shareholders had “couched” the minutes of the June 8, 2000 meeting “with language that presupposed [that] the [Bruno’s bankruptcy] funds were not on hand or may not even materialize.” It is clear that the minutes were not couched to be misleading. The resolution stated that GSC “anticipate[d] receiving a settlement from the bankruptcy court on behalf of Bruno’s in the amount of $263,988.89.” The only uncertainty was when GSC would receive those funds. There was no evidence that GSC or the accused shareholders acted in any way that implied conscious wrongdoing because of dishonest purpose or moral obliquity. Thus, the chancellor committed reversible error when he concluded that GSC and the accused shareholders acted in bad faith. As for GSC and the accused shareholders’ counterclaim for $110,000, the chancellor did not commit manifest error when he declined to award a judgment against Durham for that figure. There was no evidence that Durham misappropriated the rental income. There was sufficient evidence for the chancellor to conclude that the State Farm rental income was essentially a setoff of the money that Durham spent during his option. |
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