Callicutt v. Prof'l Servs. of Potts Camp, Inc.
| Docket Number: | 2006-CA-00706-SCT Linked Case(s): 2006-CA-00706-SCT |
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| Supreme Court: | Opinion Link Opinion Date: 12-13-2007 Opinion Author: EASLEY, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Breach of fiduciary duty - Damages Judge(s) Concurring: SMITH, C.J., WALLER, P.J., CARLSON, RANDOLPH AND LAMAR, JJ. Concur in Part, Dissent in Part 1: Diaz, P.J., with separate written opinion. Concur in Part, Dissent in Part Joined By 1: Graves, J.; Dickinson, J., Joins In Part. Procedural History: Summary Judgment Nature of the Case: CIVIL - TORTS-OTHER THAN PERSONAL INJURY & PROPERTY DAMAGE |
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| Trial Court: |
Date of Trial Judgment: 03-28-2006 Appealed from: MARSHALL COUNTY CIRCUIT COURT Judge: Henry L. Lackey Disposition: Summary Judgment granted in favor of Diane G. Taylor and Professional Services of Potts Camp, Inc. Case Number: M 2005-020 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | W. WARREN CALLICUTT |
THOMAS A. WICKER |
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| Appellee: | PROFESSIONAL SERVICES OF POTTS CAMP, INC. AND DIANE G. TAYLOR | LAURA CATHERINE NETTLES, PEGGY C. JONES | ||
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: | Breach of fiduciary duty - Damages |
| Summary of the Facts: | Warren Callicutt entered into a contract to purchase approximately 954 acres of land from Dudley Moore for $2.6 million dollars. Callicutt’s intention was to develop, subdivide, and resell the property in individual, residential parcels. Callicutt had engaged in four similar real-estate-development ventures prior to this time. However, prior to closing on the Moore property, Callicutt entered into an agreement with Marianne Hurdle to sell her the entire 954 acres for $3.8 million dollars. Callicutt closed on the Moore property, taking out a mortgage for 100% of the purchase price. Callicutt and Hurdle executed a revised purchase contract with some additional terms. The Bank of Holly Springs contacted Diane Taylor and Professional Services of Potts Camp, Inc., to perform the title work on Hurdle’s behalf for the closing on the Moore property. Callicutt claims that he asked Taylor how he could reinvest his money to avoid paying income taxes and that Taylor informed him that this could be accomplished with a Section 1031 like-kind exchange, that executing a Section 1031 exchange would require a “qualified intermediary,” and that she had done Section 1031 exchanges in the past with Union Planters Bank acting as a qualified intermediary. Taylor claims that she suggested that Callicutt contact companies that specialized in Section 1031 exchange transactions and that he contact a tax attorney and a certified public accountant. She claims that Callicutt arrived at the closing and asked that the purchase be structured as a Section 1031 exchange with Union Planters acting as qualified intermediary, thus requiring Taylor to prepare an exchange agreement to accommodate his request. Callicutt and Hurdle closed on the Moore property at Taylor’s office. Taylor paid the mortgage on the property and prepared a check for the net profit of $1.2 million, made out to Union Planters as the qualified intermediary. Callicutt signed the exchange agreement between himself and Union Planters, and a representative of Union Planters signed it the following day, also picking up the check for $1.2 million. In 2004, Callicutt’s accountant prepared his 2003 taxes. The tax preparer informed Callicutt that the sale of the Moore property and his subsequent purchase of like-kind property did not qualify as a tax-exempt Section 1031, like-kind exchange. As a result, Callicutt was required to pay more than $500,000 in taxes, penalties and interest on the transaction. Callicutt filed a complaint against Taylor and Union Planters. The judge granted the defendants’ motions for summary judgment, and Callicutt appeals. |
| Summary of Opinion Analysis: | Issue 1: Damages Callicutt argues that he suffered the following damages from the alleged unlawful acts or omissions of Taylor: $478,803 in taxes he claims could have been deferred under a properly-executed Section 1031 exchange; $1,079,791.11 in lost future lease income resulting from his need to sell property to pay the taxes; $18,992.89 in damages representing the penalties and interest he paid on the taxes that he was unable to defer; and $13,943 as his cost of borrowing money in order to pay the taxes. Both Callicutt’s decision to purchase the Moore property and his decision to enter into a contract to sell that property occurred before any consultation with Taylor. Accordingly, no action or inaction by Taylor resulted in the failure of the property to qualify for a Section 1031 exchange, and thus the tax damages claim of $478,803 properly was dismissed as a matter of law. Callicutt held the property primarily for sale, and therefore, the transaction could not have qualified for Section 1031, tax-deferred treatment under any circumstances. Therefore, Taylor cannot be held liable for any actions that Callicutt was forced to take to pay taxes for which he would have been responsible with or without any involvement by Taylor. As a matter of law, the lost future profits were not the result of any conduct on the part of Taylor, and thus, summary judgment was appropriate. To the extent that Callicutt may have had to incur costs to borrow money to pay the taxes for the Moore property, Taylor’s actions or inactions had no bearing on the liquidity of Callicutt’s assets to pay his tax liability for the Moore property. Issue 2: Breach of fiduciary duty Callicutt argues that Taylor owed a fiduciary duty to him and that Taylor’s breach of her alleged fiduciary duty caused him to incur damages. A fiduciary relationship may arise in a legal, moral, domestic, or personal context, where there appears on the one side an overmastering influence or, on the other, weakness, dependence, or trust, justifiably reposed. No issue of genuine fact exists as to Taylor’s alleged fiduciary duty to Callicutt. Callicutt never qualified for a Section 1031 exchange, and Taylor’s dealings with Callicutt clearly were not fiduciary in nature. Therefore, Callicutt’s request for damages allegedly attributable to Taylor’s breach of duty is without merit. Callicutt argues that Taylor prepared the exchange agreement for a fee of $1,000 for legal services. As the settlement document reflects, Callicutt’s characterization of the fee payment is incorrect and inconsistent with notations of other fees charged by Taylor’s business, Professional Services. The settlement statement does not reflect that either Taylor or Professional Services received the $1,000 for preparation of the exchange agreement. |
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