Citizens Nat'l Bank v. Dixieland Forest Prod., et al.
| Docket Number: | 2005-IA-00384-SCT | |
| Oral Argument: | 05-16-2006 | |
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| Supreme Court: | Opinion Link Opinion Date: 08-10-2006 Opinion Author: DICKINSON, J. Holding: REVERSED AND RENDERED |
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| Additional Case Information: |
Topic: Motion to substitute - M.R.C.P. 25(c) - M.R.C.P. 17 - Dismissal Judge(s) Concurring: SMITH, C.J., WALLER AND COBB, P.JJ., EASLEY, CARLSON AND RANDOLPH, JJ. Non Participating Judge(s): GRAVES, J. Concurs in Result Only: DIAZ, J. Procedural History: Dismissal Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 12-09-2004 Appealed from: Lauderdale County Circuit Court Judge: Robert Bailey Disposition: Denied Appellant's Motion for Summary Judgment but granted Appellee's Motion for Summary Judgment Case Number: 03-CV-030-B |
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| Party Name: | Attorney Name: | |||
| Appellant: | CITIZENS NATIONAL BANK
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DON O. ROGERS |
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| Appellee: | DIXIELAND FOREST PRODUCTS, LLC, PACESETTER PROPERTIES, INC., AND ELWIN RANDY POPE | HENRY PALMER |
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| Topic: | Motion to substitute - M.R.C.P. 25(c) - M.R.C.P. 17 - Dismissal |
| Summary of the Facts: | Citizens National Bank extended lines of credit totaling $2,500,000 to Elwin Randy Pope and his wholly owned companies, Dixieland Forest Products, Inc. and Pacesetter Properties, Inc., for the purchase of real estate. Pope, Pacesetter, and Dixieland filed a complaint asserting a variety of lender liability claims against the bank. When the bank filed its Answer, it included counterclaims for debts owed to it by the plaintiffs and a third party. The bank’s first counterclaim and third-party complaint was against Clarkdale Development Group, LLC, as the maker of a November 12, 1999, promissory note for $850,025.00, and against Pacesetter and Pope as guarantors. The bank’s second counterclaim was against Pacesetter as maker of a February 3, 2003, promissory note for $123,852.42, and against Pope as guarantor. During the litigation, the bank foreclosed on a deed of trust it held as security for this note. The sale proceeds were then applied to the note, leaving a deficiency of $30,866.31. The bank filed four motions for summary judgment. The court denied summary judgment on the lender liability claims filed by Pope and Pacesetter, but granted summary judgment as to those filed by Dixie LLC. As to the counterclaims, the court granted the bank summary judgment against Clarkdale and Pope in the amount of $815,083.60, plus specified interest, and against Pacesetter in the amount of $30,866.31, plus specified interest. The issues left unresolved after the disposition of the bank’s summary judgment motions were Pope’s and Pacesetter’s lender liability claims against the bank and the bank’s claims for attorney’s fees and collection costs to be determined at a future damages hearing. However, in entering the summary judgments, the court stated there was no just reason for delay and the judgment should be made final under M.R.C.P. 54. The plaintiffs did not appeal the summary judgments. Although the bank attempted to collect the judgments by enrolling them in the Judgment Roll Books of several Mississippi counties and by sending eighteen writs of garnishment to financial institutions, the bank asserts that its efforts failed to yield payment. When the plaintiffs tendered two checks to the bank to bring current their indebtedness, the bank returned the checks, stating that the amounts did not cure the default. At the request of the bank as judgment creditor, the Lauderdale Country Circuit Court Clerk issued writs of execution directed to the sheriff to levy on Pacesetter’s and Pope’s choses in action. The writs were served, and the choses in action were sold for cash at auction by the sheriff at the front door of the Lauderdale County Courthouse. The plaintiffs neither attended nor bid at the sale. After receiving a total amount of $91,000 for the successful bids, the sheriff executed conveyances to the bank (as successful purchaser) and paid the money received to the bank (as judgment creditor). After the execution sale, Pacesetter and Pope subtracted the sale proceeds credit of $91,000 and paid the bank the balance of the final judgments, including attorney’s fees and collection costs. Fully satisfied of its claims, the bank released all pending garnishments, cancelled the enrolled judgment liens, and released the other collateral it held. The bank then filed a motion in the lender liability suit (which it had purchased) to substitute itself as the party plaintiff and to have the suit dismissed. The bank argued that because it owned all of the remaining claims in the suit, it could rightfully dismiss them. The plaintiffs claimed, however, that the execution sale did not attach to their choses in action, particularly their claim for punitive damages. The trial court denied the bank’s motion. The bank filed its Motion for Permission to Appeal Interlocutory Order, which the Supreme Court granted. |
| Summary of Opinion Analysis: | Issue 1: Motion to substitute The trial court entered final judgments against the plaintiffs and in favor of the bank for $815,083.60 and $30,866.31. The trial court also found “there is no just reason for delay” in the bank’s collection of the judgments. The judgment debtor plaintiffs did not appeal the judgments, and they became final. Thus, the bank’s right to collect the judgments is not now subject to attack. Under both clear statutory language and case precedent, the plaintiffs’ lawsuits were choses in action and subject to a writ of execution, and the procedure selected by the bank, that is, the initiation of a sheriff’s execution sale against the plaintiffs’ choses in action, was entirely appropriate. The sale was held at the door to the Lauderdale County Courthouse at 11:00 a.m., on a Monday, fourteen days after the county clerk issued the writs of execution. The bank, as the highest bidder, gave the sheriff $91,000. Each element of the sale complied with the statutory requirements. For purposes of the execution and sale, the value of the lawsuits was set by the highest bid. The bank, as the highest bidder, was eligible to purchase the plaintiffs’ choses in action at the sheriff’s sale. Under both statutory and case law, the bank became the owner of the plaintiffs’ lawsuits (choses in action) when it purchased them at the sheriff’s execution sale. Although M.R.C.P. 25(c) transfers are generally permissive, in this case, the execution sale and purchase of the lawsuits left only one party, the bank, with any interest in the litigation. Because M.R.C.P. 17 allows only the real party in interest to prosecute its claims, the trial court abused its discretion by refusing to substitute the bank as plaintiff in the actions it purchased. Issue 2: Dismissal The bank argues that the court erred in failing to dismiss the claims because it was the only party in interest remaining in the case. The case of Maranatha Faith Center, Inc. v. Colonial Trust Co., 904 So. 2d 1004 (Miss. 2004), is factually and procedurally on point with this case, and the court erred in denying the banks’ motion to dismiss. |
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