Grand Legacy, LLP, et al. v. Gant, et al.
| Docket Number: | 2010-CA-00446-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 07-28-2011 Opinion Author: Randolph, J. Holding: Affirmed |
|
| Additional Case Information: |
Topic: Real property -Fiduciary duties - Duty of disclosure - Fraud - Individual member liability - Section 79-29-305 Judge(s) Concurring: Waller, C.J., Carlson and Dickinson, P.JJ., Lamar, Kitchens, Chandler and King, JJ. Non Participating Judge(s): Pierce, J. Procedural History: Summary Judgment Nature of the Case: CIVIL - REAL PROPERTY |
|
| Trial Court: |
Date of Trial Judgment: 03-10-2010 Appealed from: Harrison County Circuit Court Judge: Lawrence P. Bourgeois, Jr. Disposition: Summary judgment granted for the Appellees. Case Number: A2401-08-117 |
|
| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | Grand Legacy, LLP and Grand Legacy of Mississippi, LP |
DAVID C. DUNBAR
GROVER CLARK MONROE, II |
|
|
| Appellee: | Charles M. Gant, Individually; Stephen L. Shivers, Sr., Individually; and Gant & Shivers, LLC | JOHN MICHAEL HERKE DONALD C. DORNAN, JR. TIM C. HOLLEMAN | ||
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. |
|
| Topic: | Real property -Fiduciary duties - Duty of disclosure - Fraud - Individual member liability - Section 79-29-305 |
| Summary of the Facts: | Charles Gant possessed a letter of intent to purchase property. He offered to sell the property to Grand Legacy, LLP, once he completed the purchase. Grand-LLP responded to the offer by agreeing to purchase the property through an unnamed partnership entity with Gant that was to be formed at a later date. Gant & Shivers, LLC, (as a limited partner) and Grand Legacy, LLP (as the general partner), signed a limited partnership agreement on March 23, 2005, forming Grand Legacy of Mississippi, LP. After the purchase, Grand-Miss LP would develop the land. Grand-LLP and Grand-Miss LP claim that Gant stated he would not profit from the purchase and resale. The Grand parties argue that a partnership was formed on that date, and that the Gant parties (including Gant, his partner, Stephen L. Shivers, and their company, Gant & Shivers, LLC) had a duty to disclose their intent to profit on the transaction, and that, in failing to disclose the intent to profit, the Gant parties committed fraud. The Gant parties counter that the sales contracts were integrated agreements that contain no clauses prohibiting different purchase and resale prices. Further, the Gant parties argue that an acknowledgment agreement, signed at closing by Grand-LLP, revealed that the price would be different and that the difference (profit) would be disbursed to Gant-Shivers. The Grand parties filed a complaint against Gant, Shivers, Gant-Shivers, and the three attorneys. Seeking disgorgement and punitive damages, they alleged fraud, fraud in the inducement, breach of fiduciary duties, negligent misrepresentation, gross negligence, and violation of the implied covenant of good faith and fair dealing. The attorney defendants settled and were dismissed. The Gant parties moved for summary judgment. Shivers filed a separate summary judgment motion in his individual capacity. The court granted both motions. The Grand parties appeal. |
| Summary of Opinion Analysis: | Issue 1: Fiduciary duties The Grand parties argue that a general partnership existed from the time of the meeting on the boat when the parties agreed upon their intent to form a partnership. Preliminarily, they argue that Gant violated the duties of a general partner by claiming falsely at that time that he had agreed to purchase the property for approximately the same price that he would sell it. They argue further that the 11-12 agreement, with its agreement to form a limited partnership, provides additional proof of the existence of a general partnership, as it evidences intent, the most important factor in determining the existence of a partnership by operation of law. However, the other two factors (control and profit-sharing) did not exist at that time. Further, as this alleged conversation involved an agreement to transfer real property, the statute of frauds would require a writing. The 11-12 agreement, which reduced to writing an intent to form a limited partnership in the future, did not create a general partnership. The parties were not yet carrying on the operation of a business as co-owners. It was not until the requirements of the Mississippi Limited Partnership Act were satisfied, including the filing of a limited-partnership certificate in the office of the Secretary of State, and the parties’ expected limited-partnership agreement, that a limited partnership was formed. The limited partnership came into existence in March 2005 as certified by the Secretary of State. Under the law in effect at the time of these transactions, partners were required to account to the partnership for any benefit, and hold as trustee for it any profits derived by him without the consent of the other partners from any transaction connected with the formation, conduct, or liquidation of the partnership or from use by him of its property. The Grand parties argue that the price-difference language in the acknowledgment was insufficient fulfillment of the Gant parties’ duty to the partnership. The Gant parties argue that they cannot be found to have failed to disclose their intent to profit, as Sanders signed the acknowledgment agreement that declared that there would be a difference in prices and that the difference would be paid to Gant-Shivers. The trial court found Gant-Shivers LLP fulfilled its duty of disclosure when the acknowledgment was presented for signature, revealing that monies were to be paid to Gant-Shivers for the difference in purchase prices. There is no error in the judge’s ruling. If Sanders wanted to hold Gant to this representation, he could have insisted on its inclusion in the 11-12 agreement, the limited partnership agreement, or the closing documents, or he could have demanded to know the difference in purchase prices when presented with the acknowledgment. Grand failed to avail itself of any opportunities to do so. It was incumbent upon Grand-LLP to read the contract before signing. Issue 2: Fraud There was no error in granting summary judgment under the circumstances specific to this case, as no admissible evidence supported claims of fraud in the inducement. The Grand parties attempted to introduce evidence from the boat-inspection conversation and similar conduct in an unrelated transaction. The remaining claims of fraudulent conduct were contracts and closing documents either adopted and executed, or unread and executed, by Grand. Issue 3: Individual member The trial court found that it was undisputed that Shivers was not present at the time of the alleged misrepresentations on the boat and that there was no evidence of him acting as an individual, but only as a member of Gant-Shivers. Thus, citing section 79-29-305, the trial court found that Shivers could not be held individually liable. The Grand parties argue that (1) as an individual member of the general partnership discussed above, Shivers had an individual duty to disclose; (2) the limited liability-shield statute is inapplicable to an LLC member’s own acts or omissions; and (3) the corporate veil may be pierced when fraud is involved. Even assuming that a general partnership arose by operation of law, Shivers was not a partner. Shivers’s involvement in this matter began when Gant-Shivers became a limited partner in Grand-Miss LP. All of Shivers’s actions occurred after the formation of Gant-Shivers. No evidence was presented of Shivers participating personally in any representations to the Grand parties. |
Home | Terms of Use | About the JDP | Feedback | Using JDP | MC Law Library | Mississippi Supreme Court
