Doleac v. Real Estate Professionals, LLC, No. 2004-CA-00902-SCT.

• Decision Date: 15 September 2005
• Docket Number: No. 2004-CA-00902-SCT.
• Citation: 911 So.2d 496
• Parties: Barry DOLEAC, The Doleac Company and The Doleac Building, LLC v. REAL ESTATE PROFESSIONALS, LLC.
• Court: Mississippi Supreme Court

911 So.2d 496

Barry DOLEAC, The Doleac Company and The Doleac Building, LLC v. REAL ESTATE PROFESSIONALS, LLC.

No. 2004-CA-00902-SCT.

Supreme Court of Mississippi.

September 15, 2005.

COPYRIGHT MATERIAL OMITTED

Ray T. Price, Hattiesburg, attorney for appellant.

Richard Anthony Filce, Erik M. Lowrey, Hattiesburg, attorneys for appellee.

EN BANC.

ON MOTION FOR REHEARING

SMITH, Chief Justice, for the Court.

¶ 1. The motion for rehearing is denied. The prior opinion is withdrawn, and this opinion is substituted therefor.

¶ 2. Real Estate Professionals, LLC ("REP") sued Barry Doleac, The Doleac Company and The Doleac Building, LLC for breach of their Independent Contractor Agreement, tortious interference with business relations, breach of their Asset Purchase Agreement, trespass to chattels, conversion, and for punitive damages. REP also asked for an accounting, declaratory judgment and an injunction. Before trial, the Chancery Court of Forrest County granted a temporary restraining order, permitting REP to remain in possession of the leased premises. Doleac's motion to dismiss the complaint and compel arbitration was denied by the chancellor. The chancellor found for REP, and Doleac now appeals to this Court. We hold that the chancery court erred in denying the motion to compel arbitration. Therefore, we reverse and remand with directions to submit all disputes to binding arbitration.

FACTS AND PROCEDURAL HISTORY

¶ 3. Barry Doleac is the principal shareholder in Doleac Company and Doleac Building, LLC. The Doleac Company is owned 95% by Barry, president, who was also a licensed Mississippi real estate broker, and 5% is owned by his wife Carolyn. REP is a limited liability company organized and doing business as a real estate agency in Hattiesburg, Mississippi. The case sub judice is a suit for various claimed torts arising from the performance of three contracts which were signed to effectuate the sale of a real estate business.

¶ 4. The Doleac Company, Doleac Building and Barry Doleac executed three agreements with REP on December 31, 1999. Those three agreements are as follows: (1) an Asset Purchase Agreement (hereinafter "APA") for REP to buy The Doleac Company; (2) a Lease Agreement (hereinafter "LA") by which REP was to rent office space from The Doleac Building; and (3) an Independent Contractor Agreement (hereinafter "ICA") for Barry Doleac to work for REP for a period of five years.

¶ 5. The APA provided for the purchase by REP of certain business assets of The Doleac Company at a purchase price of $500,000, payable $125,000 at closing with balance evidenced by promissory note payable in monthly installments over a five-year period. The monthly installments were contingent upon Barry, agents currently associated with Barry and any other agents recruited by Barry producing a minimum of $1,100,000 gross commission income yearly. The contract references a security agreement in REP's "present and future listing agreements and all personal property owned or acquired" that was to be attached to the APA but that security agreement was never attached. In conjunction with this, a UCC-1 financing statement was filed and reflects that it applied to REP's "listing agreements and sales contracts."

¶ 6. The APA stated that Barry would enter into an employment contract with REP, the terms of which were incorporated into and made part of the APA. This ICA provided that Barry would work for REP for a term of five years beginning on January 1, 2000, and continuing through December 31, 2004. The compensation to Barry was on a commission basis, outlined with specificity in the agreement. This agreement states that it is "the entire agreement between undersigned parties and can only be amended in writing and signed by both parties." The agreement does not make any provision for termination except by completion of the stated term.

¶ 7. Also incorporated into and made a part of the APA was a lease of certain property. This LA leased "suites 1, 4, 5, and part of suite 3" at a stated location to be used primarily for offices. The rental on this certain property was $7,500 per month to be paid the first of each month and a penalty of 4% to be added if payment is not received within ten days of the due date. This agreement provided that if there is a default by Lessee, Lessor will provide written notice and if such default is not cured within 10 days then "Lessor may re-take the same as if this lease had not been made."

¶ 8. Almost immediately REP started becoming delinquent in making the payments under the LA and the APA. The Doleac Company and Building called every month to inform REP that payment was late. When the late payment was brought to the attention of REP, the sales manager would send a check which included the payment plus the late fee. This sales manager left REP and after that Doleac Company had problems getting payment. In July and August 2002, REP did not make the payments again and ignored the repeated inquiries about the late payments. On behalf of Doleac Company and Doleac Building, Barry, took the three agreements to his attorney in order to determine a course of action. Barry Doleac, on advice of the attorney, changed the locks on the building which REP rented, as authorized and agreed to in the LA. Barry said that he changed the locks on the building on Labor Day when the office was closed so that business was minimally disrupted and in order to quickly work something out regarding the late payments. There was also a security guard stationed at the door in order to regulate access to the building.

¶ 9. The agents working for REP were eventually allowed into the building, and some of the agents were accompanied by the security guard. Four agents testified that the lock-out concerned them because they did not know exactly what was happening. One agent testified that the lock-out affected REP because rumors started spreading to other companies and their agents. Furthermore, one agent lost two listings because of the rumors regarding the lock-out.

¶ 10. The next day, the owners of REP, Barry Doleac, and Doleac's attorneys met. At the meeting Doleac told REP the amount of money due under the LA and APA which was required to be paid in order for the building to be unlocked. Doleac's position was that the lease was null and void since REP was three months late. Furthermore, since REP was late on payments under the APA and since this agreement included an acceleration clause, Doleac considered the entire amount on the note due. The parties agreed that REP would pay the back due rent on the lease and that the parties would renegotiate a new lease for one suite. Furthermore, the parties agreed that REP would pay $50,000 under the APA instead of the full amount that was owed. The total amount that REP was required to pay in order to get the building unlocked was $80,600, which included the $50,000 on the APA, the back due rent and the current rent, attorney's fees and the cost of changing the locks. REP borrowed the money and paid Doleac what was owed. The next day a new key was given to REP, and it was given access to the building.

¶ 11. Subsequently, disagreements arose between the parties, and the negotiations on the new agreements fell apart. Barry Doleac, on behalf of The Doleac Company, sent letters to various real estate closing attorneys stating that they had a security agreement in present and future listings. The purported security agreement mentioned in the APA was never attached as an exhibit to the agreement, and the financing statement did not mention future commissions or listings. The real estate attorneys, upon receiving these letters, paid all commissions to The Doleac Company instead of sending them to REP. On September 17, 2002, Barry asked for REP to release his broker's license as required by state law. REP complied with this request, and Barry had his license transferred to The Doleac Company which he re-opened for business.

¶ 12. On September 30, 2002, REP filed a complaint in the Chancery Court of Forrest County against Barry Doleac, The Doleac Company, and The Doleac Building. The complaint sought an accounting, declaratory judgment, injunctive relief, and damages for conversion and trespass to chattels, tortious interference with business, breach of the APA and breach of the ICA. Injunctive relief was granted, in the form of a temporary retraining order, permitting REP to remain in possession of the leased premises through October. Barry, The Doleac Company and The Doleac Building filed a motion to dismiss the complaint and compel arbitration which was subsequently denied by the chancery court.

¶ 13. Following trial, the chancery court found that Barry Doleac breached the ICA when he withdrew his broker's license and reopened The Doleac Company. The Doleac Building was found to have committed a conversion of personal property and tortious interference with business by wrongfully locking REP out of the leased premises and awarded damages in the amount of $10,000. In addition, The Doleac Company was found to have committed a conversion when it used the locked premises to demand $50,000 payment from REP and damages were awarded in that amount. The Doleac Company was also found to have committed conversion by failing to refund $15,539.96, which REP had overpaid under the APA and damages were awarded in that amount. The chancery court also awarded punitive damages, jointly and severally against all three defendants, in the amount of $25,000 and attorney's fees in the amount of $17,500.

¶ 14. Barry Doleac, The Doleac Company and The Doleac Building now appeal to this Court raising the following issues:

1. The Chancellor erred in failing to grant defendants' motion to dismiss the complaint and compel arbitration.

2. The Chancellor erred in asserting subject matter jurisdiction over this case and in failing to grant defendants' motion to transfer to circuit court.

3. The...