Bancorpsouth Bank v. Bruce Sweet Potato, Inc.

• Decision Date: 05 May 2020
• Docket Number: NO. 2019-CA-00597-COA,CONSOLIDATED WITH NO. 2019-CA-00601-COA,2019-CA-00597-COA
• Citation: 296 So.3d 143
• Parties: BANCORPSOUTH BANK, Walter S. Pearson and Jane C. Pearson, Appellants v. BRUCE SWEET POTATO, INC., Appellee BancorpSouth Bank, Walter S. Pearson and Jane C. Pearson, Appellants v. Bruce Sweet Potato, Inc., Appellee
• Court: Mississippi Court of Appeals

296 So.3d 143

BANCORPSOUTH BANK, Walter S. Pearson and Jane C. Pearson, Appellants

v.BRUCE SWEET POTATO, INC., Appellee

BancorpSouth Bank, Walter S. Pearson and Jane C. Pearson, Appellants

v.Bruce Sweet Potato, Inc., Appellee

NO. 2019-CA-00597-COA

CONSOLIDATED WITH NO. 2019-CA-00601-COA

Court of Appeals of Mississippi.

May 5, 2020

ATTORNEYS FOR APPELLANTS: GENE D. BERRY, TINA MARIE DUGARD SCOTT, Houston

ATTORNEYS FOR APPELLEE: J. HALE FREELAND, Oxford, D. BETH SMITH

BEFORE CARLTON, P.J., TINDELL AND McDONALD, JJ.

CARLTON, P.J., FOR THE COURT:

¶1. Walter Pearson and Jane Pearson purchased real property from Richard Bailey. After purchasing the property, the Pearsons and BancorpSouth¹ (collectively, the Appellants) learned that the property was subject to a default judgment entered against Bailey. Prior to the Pearsons’ purchase of the real property, the judgment was enrolled by Bruce Sweet Potato Inc.

¶2. After the Pearsons purchased the property, Bruce Sweet Potato sought to execute on its judgment against Bailey. The Appellants filed several actions seeking to enjoin Bruce Sweet Potato from executing on the judgment.

¶3. The Appellants now appeal from three orders entered by the Chickasaw County Circuit Court and Calhoun County Circuit Court.² In these orders, the circuit courts found that the default judgment entered against Bailey was not void and that the Appellants lacked standing to attack the default judgment. The circuit courts also denied the Appellants’ motions to quash or stay the writ of execution filed by Bruce Sweet Potato.

¶4. After our review, we affirm the Calhoun County Circuit Court's order denying the Appellants’ motion to intervene in the default judgment matter and to set aside as void the default judgment. However, because we find that the Appellants possessed standing to challenge the writ of execution, we reverse the March 8, 2019 orders of the Calhoun County Circuit Court and Chickasaw County Circuit Court denying the Appellants’ motions to quash or stay the writ of execution, and we remand these cases for further proceedings consistent with this opinion.

FACTS

¶5. On April 26, 2016, Bruce Sweet Potato sent a demand letter to Magnolia Brand Produce Inc. and "Richard Bailey, [I]ndividually," seeking to collect a debt in the amount of $177,019, owed for the purchase of sweet potatoes. The letter informed Bailey that "this is an attempt to collect a corporate and individual debt from you as Guarantor ...."

¶6. After Bailey or the corporations failed to respond to the demand letter, Bruce Sweet Potato filed an action in the Calhoun County Circuit Court on July 6, 2016, against "Richard Bailey, d/b/a CC Farms, Magnolia Brand Produce, Inc., [and] REB Cane Creek Farms, Inc.," seeking recovery of that $177,019 that remained due. At the time of the action, Bailey was the registered agent, incorporator, director, and president of Magnolia Brand Produce. Bailey was also the registered agent, president, and director of REB Cane Creek Farms.

¶7. On July 6, 2016, a summons was issued to "Richard Bailey, d/b/a CC Farms," "REB Cane Creek Farms, Inc." and "Magnolia Brand Produce, Inc." The proof of service indicates that Bailey was personally served on July 7, 2016. Bailey did not file an answer or otherwise respond to the complaint.

¶8. On August 22, 2016, upon motion by Bruce Sweet Potato, the Calhoun County Circuit Court entered a default judgment against Bailey in the amount of $207,019. The record reflects that this amount included attorney's fees plus interest accruing until the judgment was paid. The default judgment reflects that Bailey did not "plead or otherwise defend" against the summons and complaint. Bailey did not file a motion to set aside the default judgment, and he is not a party to this appeal.

¶9. On August 24, 2016, the judgment was enrolled in the Chickasaw County Circuit Clerk's office. This judgment listed the defendant's name as "Bailey Richard"³ and provided his address as 14 Highway 341, Vardaman, Mississippi.

¶10. On November 23, 2016, the Pearsons purchased 220 acres of land from Bailey via warranty deed. On January 30, 2017, after learning of the judgment lien against Bailey, the Appellants filed a complaint to remove cloud on the title in the Chickasaw County Chancery Court. In support of their complaint, the Appellants argued that the default judgment was void because service of process on Bailey was defective. The Appellants explained that a separate summons was not issued for each defendant as required by Mississippi Rule of Civil Procedure 4. The Appellants also argued that the August 24, 2016 abstract of the judgment against Bailey that was enrolled in the office of the Chickasaw County Circuit Clerk was improper because the judgment listed the defendant's name as "Bailey Richard," and was therefore not a valid lien on the real property of "Richard Bailey."⁴

¶11. On August 15, 2018, the Appellants filed a motion for summary judgment on their complaint to remove cloud on the title. Bruce Sweet Potato filed its response in opposition to the motion for summary judgment, arguing that the service of process upon Bailey was not defective and that the Appellants failed to perform a proper title check prior to purchasing the land.

¶12. The Chickasaw County Chancery Court held a hearing on the matter on October 18, 2018. The chancellor entered an order on October 23, 2018, denying the Appellants’ motion for summary judgment.

¶13. On January 9, 2019, more than two years after the entry of the default judgment, the Appellants filed a motion in the Calhoun County Circuit Court to intervene in the default judgment matter and to set aside as void the default judgment entered against Bailey.⁵ In their motion, the Appellants argued that a separate summons was not issued for each defendant as required by Rule 4, and, therefore, the default judgment was void because service of process on Bailey was defective.

¶14. The Appellants attached to the motion an affidavit from Bailey dated January 9, 2019. In his affidavit, Bailey stated that the debt claimed by Bruce Sweet Potato was not a debt by Bailey personally; rather, it was a corporate debt of Magnolia Brand Produce. Bailey stated that he was not served with a separate summons addressed to him individually. Bailey stated that he had "reviewed the summons that Bruce Sweet Potato ... claims that it served on [him] and the summons appears to be addressed to [him] as agent for process of Magnolia Brand Produce ...." According to Bailey's affidavit, if Bruce Sweet Potato had served him individually with a separate summons and complaint seeking to hold him personally liable for the debt of Magnolia Brand Produce, he would have made an appearance and defended himself in court.

¶15. Two days later, on January 11, 2019, Bruce Sweet Potato mailed a writ of execution to the Chickasaw County Circuit Court, and Bruce Sweet Potato's counsel began foreclosure proceedings to execute on its judgment. The writ of execution was filed with the Chickasaw County Circuit Court on January 17, 2019.

¶16. On January 18, 2019, the Appellants filed a motion as intervenors to quash the writ of execution in the Calhoun County Circuit Court, arguing that the writ of execution was issued on a void default judgment. The Appellants asked the circuit court to stay or enjoin the execution on the default judgment until the Appellants’ rights could be fully adjudicated. On that same day, the Appellants filed an almost identical motion to quash the writ of execution issued on the alleged void default judgment in the Chickasaw County Circuit Court. Bruce Sweet Potato filed a response in opposition to the motion to intervene and a response in opposition to the motion to quash the writ of execution.

¶17. On January 31, 2019, the Calhoun County Circuit Court entered an order staying the writ of execution pending the circuit court's ruling on the motion to intervene and the motion to quash.

¶18. On February 11, 2019, the Calhoun County Circuit Court entered an order denying the Appellants’ motion to intervene. The circuit court found that the Appellants "were not parties to the relevant action here and did not have an interest in that action during its pendency."

¶19. The Appellants filed a revised motion to quash the writ of execution in the Calhoun County Circuit Court on February 26, 2019. The Appellants filed a nearly identical motion in the Chickasaw County Circuit Court on February 27, 2019.

¶20. On March 8, 2019, the Calhoun County Circuit Court entered an order denying the Appellants’ motion to quash or stay the writ of execution. In its order, the circuit court acknowledged its prior ruling denying the Appellants’ motion to intervene and found that "[the Appellants] lack[ed] standing to quash the writ of execution." That same day, the Chickasaw County Circuit Court entered an order denying the Appellants’ revised motion to quash filed in that court. The order reflects that the circuit judge based his determination on the fact that the Appellants, "as interested parties, lack[ed] standing to seek the requested relief."

¶21. The Appellants timely appealed the following orders: the Chickasaw County Circuit Court's March 8, 2019 order denying their motion to stay or quash the writ of execution; the Calhoun County Circuit Court's February 25, 2019 order denying the motion to intervene; and the Calhoun County Circuit Court's March 8, 2019 order denying the motion to stay or quash the writ of execution. As stated above, although these motions and orders were filed in separate counties, the same circuit judge ruled on them.

DISCUSSION

I. Default Judgment

¶22. The Appellants argue that the default judgment entered by the Calhoun County Circuit Court against Bailey is null and void due to defective service of process. The Appellants claim that although Mississippi Rule of Civil Procedure 4(b) requires the clerk "to issue a separate summons for each defendant,"⁶ Bruce Sweet Potato served a single...