Johnston v. Palmer, et al.
| Docket Number: | 2006-CA-00428-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 08-21-2007 Opinion Author: BARNES, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Contract - Gross and intentional breach of contract - Breach of good faith and fair dealing - Fraud - M.R.C.P. 56(f) - Unjust enrichment - Non-party - Findings of fact - Attorney’s fees - M.R.C.P. 11 - M.R.C.P. 56(h) Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., IRVING, CHANDLER, GRIFFIS, ISHEE, ROBERTS AND CARLTON, JJ. Procedural History: Summary Judgment Nature of the Case: Contact |
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| Trial Court: |
Date of Trial Judgment: 03-02-2006 Appealed from: Hinds County Circuit Court Judge: Bobby DeLaughter Disposition: CIRCUIT COURT GRANTED SUMMARY JUDGMENT IN FAVOR OF DEFENDANTS Case Number: 251-05-459 CIV |
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| Party Name: | Attorney Name: | |||
| Appellant: | GREGORY M. JOHNSTON |
DENNIS C. SWEET |
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| Appellee: | JOHN N. PALMER, INDIVIDUALLY AND GULF SOUTH CAPITAL, INC. | STEVEN H. SMITH BENNY MCCALIP “MAC” MAY |
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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 - Gross and intentional breach of contract - Breach of good faith and fair dealing - Fraud - M.R.C.P. 56(f) - Unjust enrichment - Non-party - Findings of fact - Attorney’s fees - M.R.C.P. 11 - M.R.C.P. 56(h) |
| Summary of the Facts: | Gregory Johnston filed a complaint, alleging John Palmer and Gulf South Capital, Inc. were liable for a gross and intentional breach of contract and fraudulent misrepresentation related to a brokerage agreement. Palmer and Gulf South filed a motion for declaratory judgment, motion to dismiss and/or a motion for summary judgment which was granted by the trial court with prejudice. Johnston appeals. |
| Summary of Opinion Analysis: | Issue 1: Gross and intentional breach of contract The Agreement between Johnston and Palmer provided that “Clients agree to pay to Broker for his services a commission equal to three percent (3%) of the total consideration paid by Clients to any and all shareholders of U.S. Legal Forms at the completion of this transaction. In the event that Clients do not finalize this transaction, a closing does not occur, and no consideration is paid to any of the shareholders of U.S. Legal Forms, no commission will be owed to Broker by virtue of this Agreement.” Johnston argues that, in its ruling that no commission was owed to him, the trial court focused on direct monies paid to shareholders, not consideration. The trial judge used the term “consideration” extensively in his opinion and, in fact, assumed the investment by Palmer was consideration. However, the trial court’s focus was more on to whom consideration was given and the literal meaning of the contract. Johnston drafted the Agreement so as to make the commission payable only upon the closing of a transaction in which consideration was given to the shareholders of USLF. If a broker, by special agreement, makes his commission payable only upon a contingency or the happening of a condition precedent, there is no right to recovery unless that condition or contingency occurs. Thus, there was no error in the trial court’s finding that there was no gross or intentional breach of the contract. Issue 2: Breach of good faith and fair dealing Johnston argues that Palmer used a loophole in the Agreement and structured the transaction in such a way that Johnston was circumvented and unable to obtain his commission and that this action amounted to bad faith by Palmer and Gulf South. The breach of good faith is bad faith characterized by some conduct which violates standards of decency, fairness or reasonableness. Palmer admitted in his affidavit that, within a week or two after signing the Agreement with Johnston, he and Mr. Edens decided that it would be more efficient for Palmer to negotiate with USLF directly, without Johnston’s assistance. Johnston was not given any definitive notice, prior to the announcement of the transaction between Palmer and USL, that his services were not needed under the terms of the Agreement. Johnston was told by Palmer, through an attempt by Johnston to set up another meeting, that Palmer wished to meet with USLF alone. Johnston sent an e-mail to Palmer and Gulf South two months after the original meeting to get an update on the transaction and to re-iterate his willingness to perform under the Agreement. Had Palmer refused to pay Johnston’s commission due to his failure to participate in the negotiations, the non-circumvent clause and duty of good faith would prevent Palmer’s reliance on the Agreement, as he kept Johnston “out of the loop” in Palmer’s negotiations with the shareholders of USLF. Palmer’s failure to pay the commission, however, was based solely on the fact that the deal, as structured, did not fall within the narrow parameters of the Agreement drafted by Johnston. Johnston has cited no authority for the proposition that either the duty of good faith or the non-circumvent clause required Palmer to structure the deal with USLF so as to entitle Johnston to a commission under the terms of the Agreement. Nor did Johnston present any affidavits or evidence setting forth any specified facts that the formation of the holding company, USL, was done for the sole reason of negating Palmer’s responsibility to pay Johnston’s commission. Thus, no genuine issue of material fact exists that Palmer or Gulf South breached the duty of good faith and fair dealing under the terms of the Agreement. Issue 3: Fraud Johnston argues that Palmer and Gulf South falsely promised to pay him a commission in exchange for his identification of the investment opportunity and used his relationship with Adams and Eden to give them a more advantageous position as buyer. A party alleging fraud or misrepresentation must prove by clear and convincing evidence: a representation; its falsity; its materiality; the speaker's knowledge of its falsity or ignorance of its truth; his intent that it should be acted on by the person and in the matter reasonably contemplated; the hearer's ignorance of its falsity; his reliance upon its truth; his right to rely thereon; and his consequent and proximate injury. Johnston presented no evidence that Palmer or Gulf South intended, at the signing of the Agreement, to defraud Johnston. M.R.C.P. 56 provides that parties may not simply rely on their pleadings, nor may they escape summary judgment by outlining what they might discover later. Johnston also argues that his inability to view the stock purchase agreement and conduct additional discovery was error. However, Johnston filed no motion to compel discovery, nor did he file a motion for time under M.R.C.P. 56(f) for additional discovery. Since Johnston did not utilize Rule 56(f) to request additional time for discovery, the circuit court's grant of summary judgment was not premature. Issue 4: Unjust enrichment Johnston argues that Palmer and Gulf South are liable to him for his services and have been unjustly enriched by accepting and using his services to further their business relationships without paying due consideration. To collect under an unjust enrichment or quasi-contract theory, the claimant must show there is no legal contract but the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain, but should deliver to another. There is no question that a legally binding, written contract existed between Johnston and Palmer. Therefore, damages based on claims of unjust enrichment are not an appropriate remedy. Issue 5: Non-party Gulf South was not a party to the Agreement entered into by Johnston and Palmer. Johnston argues that since he had not been made privy to information contained in the stock purchase agreement, dismissing Gulf South from the suit was improper until discovery could be conducted to determine their involvement. However, there was no evidence presented which made Gulf South a party to the Agreement. Issue 6: Findings of fact Johnston argues that the trial court made several statements in its judgment that were not contained in the record and were independent assumptions by the court, specifically statements about Johnston’s legal expertise as an experienced, practicing attorney. The record contains reasonable evidence that Johnston was an experienced legal practitioner, even though he states that he was not, at the time, employed as such. Therefore, the trial court’s findings of fact were supported by the evidence. Issue 7: Attorney’s fees Palmer and Gulf South cross-appeal that the claims asserted by Johnston are frivolous and, as such, he should be held liable for their attorney’s fees and costs and/or sanctions pursuant to section 11-55-1 and M.R.C.P. 11. Under M.R.C.P. 56(h), if summary judgment is denied, a trial court shall award to the prevailing party the reasonable expenses incurred in attending the hearing of the motion and may, if it finds that the motion is without reasonable cause, award attorneys’ fees. Since summary judgment was granted in this case, this section of the rule is not applicable. As the parties did not expressly address the issue of attorneys’ fees in the Agreement, the trial court’s failure to award attorney’s fees in the case was not an abuse of discretion. Under the circumstances of this case, the trial court did not abuse its discretion in refusing to award attorney’s fees. |
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