Earwood v. Reeves, No. 1998-IA-01456-SCT.

Decision Date23 August 2001
Docket NumberNo. 1998-IA-01456-SCT.
PartiesMichael E. EARWOOD and Fox, Earwood & Childers, PLLC v. Mary Elizabeth REEVES, Executrix of the Estate of E.P. Reeves, Deceased.
CourtMississippi Supreme Court

Robert Bostick Childers, Jackson, Attorney for Appellants.

David Shoemake, Collins, Eddie H. Bowen, Raleigh, Attorneys for Appellee.

Before PITTMAN, C.J., MILLS and COBB, JJ.

COBB, Justice, for the Court:

¶ 1. This is an interlocutory appeal from the Covington County Circuit Court's denial of a joint motion filed by Michael E. Earwood (Earwood) and his law firm, Fox, Earwood and Childers, PLLC (the firm), requesting transfer of this case to the Hinds County Circuit Court, First Judicial District. Transfer was sought on the grounds that neither Earwood nor the firm resided in, nor was domiciled in, Covington County and that all substantial acts and omissions set forth in the complaint of E.P. Reeves (Reeves) occurred and accrued within Hinds County. ¶ 2. Aggrieved by the Covington County Circuit Court's denial of the transfer and subsequent denial of Earwood's and the firm's joint motion to amend or withdraw certain admissions, Earwood and the firm sought certification from the circuit court for an interlocutory appeal pursuant to M.R.A.P. 5(a). Upon the trial court's denial of the interlocutory appeal certification, Earwood and the firm filed a joint petition for interlocutory appeal with this Court, and it was granted in December 1998. The issues raised by Earwood and the firm are as follows:

I. DID THE TRIAL COURT ERR IN DENYING THE DEFENDANTS' MOTION TO TRANSFER AND REFUSING TO TRANSFER THE CASE UNDER THE PROVISIONS OF MISS. CODE ANN. § 11-11-3?
II. DID THE TRIAL COURT ERR IN DENYING THE DEFENDANTS' MOTION TO WITHDRAW OR AMEND ADMISSIONS PURSUANT TO MRCP 36(b)?

¶ 3. Finding no error in the Covington County Circuit Court's decisions, we affirm.

FACTS

¶ 4. Reeves's son, D. Preston Reeves (Preston), retained Earwood to provide him with legal representation concerning a proposed $1.3 million purchase of the business known as Tech Plastic Products of Jackson, Inc. (TPJ), a Mississippi corporation. In connection with the proposed purchase, Earwood prepared certain documents for Preston to send to Darrell Hart (Hart), the president of Tech Plastics and Engineering, Inc. (TPE), a Mississippi corporation and Chapter 11 Debtor in Possession, which owned TPJ. The first was a letter of agreement dated April 13, 1995, printed on Preston's letterhead showing his Jackson address, and signed by Preston in his individual capacity, and Hart as president of TPE. The second was a purchase and sale agreement executed by Preston and Hart, in the same capacities, on April 24, 1995. The wording of both documents regarding earnest money was virtually identical. The first document provided that Preston "shall deposit the sum of $100,000 in escrow with the firm of Fox, Earwood & Childers of Jackson, MS, same to be paid to TPE at closing and applied to the cash down payment" and the second document stated that Preston "has deposited the sum of $100,000 in escrow with the firm of Fox, Earwood & Childers, of Jackson, MS, same to be paid to TPE at closing and applied to the cash purchase price...."

¶ 5. One month after the execution of the purchase and sale contract, a third document was prepared and executed. This was an asset purchase agreement between TPE and Preston's newly-formed corporation, Precision Plastics & Engineering, Inc. (PPE). It was executed by Hart as president of TPE and Preston as president of PPE and contained the following provision:

This Agreement supersedes, in its entirety, the Purchase and Sale Agreement dated April 24, 1995 by and between TPE and Precision which is hereby terminated and canceled in its entirety and any and all other agreements, written or oral, by and between the parties pertaining to the subject matter hereof.

(emphasis added). The earnest money provision in this document was worded somewhat differently, acknowledging that Preston had previously paid the $100,000 into the law firm's escrow and providing that: "The Escrow Deposit shall be applied to the Purchase Price at Closing or otherwise held and disbursed in accordance with the terms and provisions hereof." (emphasis added).1

¶ 6. Apparently at Preston's direction and after being furnished copies of all three documents, Reeves wired $100,000 from his Covington County bank account to the firm's trust account for Preston's purchase of TPJ. Reeves alleges in his complaint that he talked by phone from Collins (in Covington County) with Earwood (in Hinds County) on several occasions and that Earwood confirmed that the $100,000 belonging to Reeves would go toward the down payment of the purchase price and would be "paid unto TPE at closing." In his complaint, Reeves did not claim to be a party to any of the contracts, rather that a fiduciary relationship arose when he placed confidence in Earwood upon "enter[ing] into the escrow arrangement."

¶ 7. Earwood, on the other hand, avers that neither he nor the members of the firm were aware of the source of Preston Reeves's earnest money or the nature of what Earwood considered to be a loan transaction between Preston and his father. In support of their contention that the funds were a loan, Earwood asserts that a few months after the termination of the proposed purchase, Preston filed a Chapter 7 personal bankruptcy petition, listing Reeves as an unsecured creditor to whom Preston owed $33,000. Furthermore, Earwood asserts in his answer that prior to execution of the asset purchase agreement Preston entered into an hourly fee agreement with Earwood whereby all legal fees and expenses incurred on the acquisition would be paid out of the earnest money deposit, either at closing of the sale or upon termination of the escrow account. Earwood also asserts in his that he mailed to Preston and Reeves an itemized statement of professional services rendered to Precision Plastics and Engineering, Inc., which Reeves acknowledges receiving, and a bill to him as well. The bill and fee agreement are not a part of the record.

¶ 8. Approximately six months after the contract was executed, the proposed purchase fell through and the escrow account was terminated. Earwood asserts that the fees and expenses of some $33,000 were deducted in accord with the fee arrangement and at the direction of Preston, the client and legal owner of the funds. On October 2, 1995, Reeves faxed Earwood demanding that the funds retained from the escrow account be paid over to him.

¶ 9. On the same day Earwood received the fax, Earwood responded by a letter written to Reeves and Preston, mailed separately to their respective addresses in Collins and Jackson. Earwood stated that Reeves's assumption that the escrow funds were to be used for the purchase of Tech Plastics of Jackson was correct, but he further stated his understanding that the legal fees and expenses, which he viewed as part of the costs of acquisition, were to be paid at closing or, if closing did not take place, upon the termination of the escrow account. However, Earwood indicated that he had represented and worked with Preston on various matters over a period of 12 or 13 years and that he hoped the matter of payment for work this time would not adversely affect their relationship. Earwood's letter advised that substantial fees had been incurred, owing in part, to the protracted nature of the negotiations, much of which were beyond his control and explained that it had been eight months since Earwood was retained and that settlement on the legal fees and expenses incurred needed to be made. Accordingly, Earwood advised Reeves and Preston that the attorney's fees and expenses were being withheld from the $100,000 in escrow and he enclosed a check in the amount of $66,983.80 which Reeves deposited in his bank in Covington County on October 5, 1995.

¶ 10. More than two years after depositing Earwood's check, Reeves filed his complaint. He does not claim to be a party to the contract. Rather, he relied upon the language of the clause which stated that the $100,000 would either be applied to the purchase or "otherwise disbursed in accordance with the terms and provisions hereof." Reeves interprets the phrase to mean that his entire $100,000 would be returned if the purchase did not transpire. Specific directions concerning disbursement may have been in the contract which Earwood alleges existed between Preston and Earwood; however, such contract is not part of the record.

DISCUSSION

I. DID THE COURT ERR IN DENYING EARWOOD'S MOTION TO TRANSFER AND REFUSING TO TRANSFER THE CASE PURSUANT TO MISS. CODE ANN. § 11-11-3?

Standard of Review

¶ 11. An application for a change of venue is addressed to the discretion of the trial judge, and his ruling thereon will not be disturbed on appeal unless it clearly appears that there has been an abuse of discretion or that the discretion has not been justly and properly exercised under the circumstances of the case. Beech v. Leaf River Forest Prods., Inc., 691 So.2d 446, 448 (Miss.1997) (quoting Mississippi State Highway Comm'n v. Rogers, 240 Miss. 529, 128 So.2d 353, 358 (1961)). "The trial court must give the plaintiff the benefit of reasonable doubt with respect to the venue selection, and this Court must do the same on appeal." Pisharodi v. Golden Triangle Reg'l Med. Ctr., 735 So.2d 353, 354 (Miss.1999) (citing Flight Line, Inc. v. Tanksley, 608 So.2d 1149, 1156 (Miss.1992)).

Analysis

¶ 12. Reeves points to several factors in support of his contention that venue is proper in Covington County. Reeves is a resident of Covington County. He never met with Earwood in Hinds County and all correspondence and telephone conversations occurred while he was in Covington County. In particular, Earwood's correspondence was addressed to Reeves at his address in Collins. The $100,000...

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