Hughes v. Shipp

• Decision Date: 26 August 2021
• Docket Number: No. 2018-CT-01654-SCT,2018-CT-01654-SCT
• Citation: 324 So.3d 286
• Parties: James L. HUGHES v. Sandra Humphreys SHIPP, David Shipp, Individually, David Shipp d/b/a Rose Lake LLC, and Rose Lake LLC
• Court: Mississippi Supreme Court

324 So.3d 286

James L. HUGHES

v.Sandra Humphreys SHIPP, David Shipp, Individually, David Shipp d/b/a Rose Lake LLC, and Rose Lake LLC

No. 2018-CT-01654-SCT

Supreme Court of Mississippi.

August 26, 2021

ATTORNEYS FOR APPELLANT: DENNIS L. HORN, SHIRLEY PAYNE, Madison, LEIGH KATHRYN PAYNE HORN

ATTORNEYS FOR APPELLEES: JOHN PRINCE MARTIN, DONALD A. McGRAW, JR., Canton

EN BANC.

ON WRIT OF CERTIORARI

MAXWELL, JUSTICE, FOR THE COURT:

¶1. Twice, James L. Hughes invested in the Shipp family's efforts to develop their property near Bentonia, Mississippi, into a gated community called Rose Lake, in exchange for lots in the future subdivision. And twice, Hughes came up empty handed. Hughes sued the Shipps. At the close of Hughes's case, the chancellor found the situation "very inequitable." Yet he still denied Hughes any equitable relief based on the running of the statute of limitations.

¶2. The Court of Appeals affirmed on alternate grounds. We granted Hughes's petition for writ of certiorari specifically to review Hughes's unjust-enrichment claim. And after review, we agree with the Court of Appeals that the statute of limitations should not have run from the date Hughes cut the checks for the lots but from the time his cause of action for unjust enrichment actually accrued. But we disagree with the Court of Appeals' deciding to resolve this fact-intensive question on appeal. We also disagree that the dismissal of this claim should be affirmed on alternate grounds, namely Hughes's failure to "identify a promise."

¶3. Unjust enrichment lies in a promise implied in law .¹ So Hughes's evidence of an express promise was not required for Hughes's unjust-enrichment claim to survive involuntary dismissal. Should the chancellor find Hughes's claim was timely, it should next consider whether Hughes proved unjust enrichment—that is, whether the Shipps are "in possession of money or property which in good conscience and justice [they] should not retain but should deliver to another[.]"²

¶4. We reverse the dismissal of Hughes's unjust-enrichment claim only and remand this claim to the trial court. We affirm the trial court's dismissal of all other claims.

Background Facts and Procedural History

¶5. Hughes first paid property owner Tom Shipp $100,000 in July 2004. In exchange, Tom promised in writing to sell Hughes two lots of approximately four acres. These two lots were located to the west of an artificial lake in the proposed Rose Lake community. Three months later, Tom died. Hughes never probated a claim with Tom's estate. Nor did he otherwise assert an ownership in estate property. Instead, he continued to work with Tom's wife, Sandy, who was Tom's heir, and Tom's son, David. In 2008, at David's request, Hughes wrote a check to Rose Lake, LLC, for $33,000. The memo line stated the money was for "Investment Lot (total 3)."

¶6. After the development continued to stall, Hughes asked Sandy and David to meet with him in March 2015. Hughes walked away from the meeting thinking Sandy and David had "ratified" the agreement between Hughes and the late Tom. Sandy and David remember this meeting differently. After this meeting, Sandy and David avoided Hughes and refused to meet with him. So in September 2017, Hughes sued Sandy, David, and the now-defunct Rose Lake, LLC. Hughes's complaint asserted breach of contract and sought $133,000 in unjust enrichment, as well as other damages.

¶7. During the bench trial, at the close of Hughes's evidence, the Defendants moved for involuntary dismissal under Mississippi Rule of Civil Procedure 41(b). While sensitive to the "very inequitable situation" before him, the chancellor still granted the motion and dismissed Hughes's case. As to Hughes's breach-of-contract claim, the chancellor found Hughes's theory rested solely on his assertion that Sandy and David in March 2015 had somehow orally ratified the 2004 agreement between the deceased Tom and Hughes. But the chancellor found there was no evidence of a meeting of the minds sufficient to support formation or ratification of a contract. As to Hughes's alternative implied-contract claim of unjust enrichment, the judge found the statute of limitations "has long since passed."

¶8. Hughes appealed. We assigned his appeal to the Court of Appeals, which affirmed. Hughes v. Shipp , No. 2018-CA-01654-COA, ––– So. 3d ––––, 2020 WL 5525383 (Miss. Ct. App. Sept. 15, 2020). Specifically, the Court of Appeals held that, because of the Statute of Frauds, no valid contract for purchase of land occurred between Hughes and Tom in 2004. Id. at –––– – ––––, 2020 WL 5525383 at **8-9. Consequently, the appellate court held there was no contract for Sandy and David to ratify in 2015. Id. at –––– – ––––, 2020 WL 5525383 at **9-13. So Hughes's claims based on the existence of a contract between Tom and/or Sandy and David failed. Id. at ––––, 2020 WL 5525383 at *13.

¶9. The Court of Appeals then turned to Hughes's request for damages based on equitable theories, including unjust enrichment. Id. The Court of Appeals disagreed with the chancellor that the three-year statute of limitations had run against these claims. Id. at ––––, 2020 WL 5525383 at *14. But the appellate court still opted to affirm their dismissal. The court reasoned that Hughes had paid $100,000 to Tom. So when Tom died in 2004, any equitable claim based on this payment should have been made against Tom's estate, which has long since closed. Id. at ––––, 2020 WL 5525383 at *15. Hughes wrote the $33,000 check to Rose Lake after Tom died. So this obviously is not an estate claim. But, according to the Court of Appeals, to recover under either equitable theory of promissory estoppel or unjust enrichment, Hughes had to first "identify a promise," which he failed to do through his evidence presentation. Id. at ––––, 2020 WL 5525383 at *17 (quoting Leal v. Univ. of S. Miss. , 296 So. 3d 660, 668 (Miss. 2020) ).

¶10. Following the Court of Appeals' decision to affirm the judgment of dismissal, Hughes sought certiorari review. We granted the petition to review his specific claim that both the chancellor and the Court of Appeals failed to adequately consider his request for an equitable remedy.

Discussion

¶11. We do not disturb the chancellor's dismissal of Hughes's breach-of-contract claim. The Court of Appeals opinion provides a thorough discussion of why the Statute of Frauds precluded the existence of a contract to transfer property and why Hughes's ratification theory failed. Hughes , ––– So. 3d at –––– – ––––, 2020 WL 5525383, at **7-13.

¶12. Our concern on certiorari review is limited solely to Hughes's quasi-contract claim of unjust enrichment. "Unjust enrichment is an equitable remedy closely associated with ‘implied contracts’ and trusts." Estate of Johnson v. Adkins , 513 So. 2d 922, 926 (Miss. 1987). It "applies to situations where there is no legal contract but where the person sought to be charged is in possession of money or property which in good conscience and justice he should not retain but should deliver to another, the courts imposing a duty to refund the money or the use value of the property to the person to whom in good conscience it ought to belong." Hans , 482 So. 2d at 1122 (emphasis added) (quoting 66 Am. Jur. 2d Restitution and Implied Contracts § 11 (1973) ). Stated differently, "unjust enrichment" is a "modern designation for the doctrine of ‘quasi-contracts’ and the basis for an action for ‘unjust enrichment’ lies in a promise, which is implied in law, that one will pay to the person entitled thereto which in equity and good conscience is his." Magnolia Fed. Sav. & Loan Ass'n , 342 So. 2d at 1311.

¶13. Based on the evidence presented, the chancellor found Hughes's transferring $133,000 to the Shipps with "no benefit" in return was "inequitable to say the least." As the judge saw it, David "now lives in a nice pretty shiny new house, with fish that he basically stole, on land that it appears potentially Mr. Hughes had quite a bit of impact on providing that lifestyle." Yet the judge concluded legally there was no way to redress this inequity due to the running of the three-year statute of limitations.

I. Trial Court's Statute-of-Limitations Ruling

¶14. Claims for unjust enrichment fall under the three-year limitations period of Mississippi Code Section 15-1-49(1) (Rev. 2019). Anderson v. LaVere , 136 So. 3d 404, 411 (Miss. 2014). Hughes filed his action in September 2017. By this point, the chancellor concluded the three-year limitations period "has long since passed." David had argued that the three-year limitations period began to run in 2004 for the $100,000 payment and 2008 for the $33,000. Presumably, the chancellor agreed, tying the statute of limitations to when Hughes made the payments and entered into what he thought were binding agreements that he would receive property in exchange.

¶15. But for unjust enrichment, the three-year statute of limitations begins to run when the cause of action accrues , that is, "when it comes into existence as an enforceable claim." Id. A breach-of-contract claim does not accrue when the contract is entered into—it begins when the contract is allegedly breached. Young v. S. Farm Bureau Life Ins. Co. , 592 So. 2d 103, 107 (Miss. 1991). Similarly, quasi-contract causes of action, like unjust enrichment, do not accrue when the implied promise is made that the defendant "will pay to the person entitled thereto which in equity and good conscience is his." Magnolia Fed. Sav. & Loan Ass'n , 342 So. 2d at 1311. The action instead accrues when that implied promise is broken . Anderson , 136 So. 3d at 411. Stated differently, it is not the initial possession but the unjust retention of money or property that triggers an enforceable unjust-enrichment claim. Hans , 482 So. 2d at 1122.

¶16. Here, the Court of Appeals recognized the statute of limitations for unjust enrichment does not begin to run until the cause of action accrues. Hughes , ––– So. 3d at ––––, 2020 WL...