Jackson Motor Speedway, Inc. v. Ford, No. 2004-CA-00628-COA.

• Decision Date: 08 November 2005
• Docket Number: No. 2004-CA-00628-COA.
• Parties: JACKSON MOTOR SPEEDWAY, INC., Appellant v. D.L. FORD, James M. Ford and The Ford Company, Appellees.
• Court: Mississippi Supreme Court

914 So.2d 779

JACKSON MOTOR SPEEDWAY, INC., Appellant v. D.L. FORD, James M. Ford and The Ford Company, Appellees.

No. 2004-CA-00628-COA.

Court of Appeals of Mississippi.

November 8, 2005.

Bradley Barron Vance, Kenneth Charles Miller, Michael Verdier Cory, attorneys for appellant.

Michele Dawn Biegel, B. Ruth Johnson, attorneys for appellees.

EN BANC.

ISHEE, J., for the Court.

¶ 1. The Appellees, D.L. Ford, James M. Ford, and The Ford Company ("Fords"), filed suit against the Appellant, Jackson Motor Speedway ("JMS"), seeking damages and partial rescission of an agreement for the sale and purchase of assets ("agreement") previously executed by the parties. After trial on the merits, the Chancery Court of the First Judicial District of Hinds County granted judgment in favor of the Fords. From that decision JMS timely appeals.

FACTS

¶ 2. On November 10, 1995, the Fords entered into an agreement for sale and purchase of assets with JMS. Within the agreement, the Fords conveyed to JMS buildings, equipment, and other property which the Fords had previously owned and operated as a quarter mile dirt track under the name "Jax Tracks." Because the property being conveyed was landlocked, the agreement also necessarily included the grant of an easement across certain real property, also owned by the Fords. The easement granted to JMS crosses railroad tracks owned by the Illinois Central Railroad Company ("ICRC").

¶ 3. While under the operation of JMS, there have been at least three train/vehicular accidents on the easement. At least one of these accidents is the subject matter of a pending lawsuit against JMS. On April 12, 2002, the Fords notified JMS by letter that they were unilaterally terminating a portion of the easement due to JMS's failure to use and maintain a portion of the easement. On April 17, 2002, the Ford's filed their complaint for breach of agreement and discharge of performance, for temporary restraining order without notice, preliminary injunctive relief, and other relief. Pursuant to Rule 56(b) of the Mississippi Rules of Civil Procedure, the chancery court entered a temporary restraining order barring JMS from conducting races until April 30, 2002.

¶ 4. On May 1, 2002, the Fords and JMS entered into an agreed order that allowed JMS to continue to use the easement and stated (1) that JMS would have two law enforcement personnel present and directing traffic at the railroad crossing on the easement; (2) that there be two million dollars of liability insurance covering the facility; and (3) that JMS agree to indemnify and defend the Fords for any liability occurring from the use of the easement for racing purposes. On May 8, 2002, JMS entered into an agreed preliminary injunction which allowed JMS to use and operate the raceway and all easements until a trial upon the merits or, upon motion, by further order of the chancery court.

¶ 5. On December 16 and 17, 2003, this matter was tried before Chancellor Patricia D. Wise. On March 14, Judge Wise entered her order and opinion, finding that the easement granted to JMS was rescinded as to the general public, and granting the Fords $38,674.30 in attorneys' fees. Aggrieved by this decision, JMS asserts the following errors on appeal: (1) whether there was sufficient evidence to support the chancery court's conclusion that JMS committed a material breach of any maintenance obligation; (2) whether there was sufficient evidence to support the chancery court's conclusion that JMS committed a material breach by not following any possible rules or regulations of the ICRC; (3) whether the trial court erred in finding that the agreement was severable and that the easement could be partially rescinded; (4) whether the Fords materially breached the terms of the agreement; and (5) whether JMS was entitled to recover attorneys' fees.

ISSUES AND ANALYSIS

I. Whether there was sufficient evidence to support the chancery court's conclusion that JMS committed a material breach of any maintenance obligation.

¶ 6. JMS asserts on appeal that the chancellor erred when she concluded that JMS committed a material breach of the agreement by failing to satisfy its maintenance obligations. We will not disturb a chancellor's findings unless they were manifestly wrong, clearly erroneous, constituted an abuse of discretion, or the court applied an erroneous legal standard. Sanderson v. Sanderson, 824 So.2d 623, 625-26(¶ 8) (Miss.2002). Questions of law are reviewed de novo. Carter v. Carter, 735 So.2d 1109, 1114(¶ 20) (Miss.Ct.App.1999).

¶ 7. JMS argues that the plain language of the maintenance provision found in the agreement requires JMS to maintain the easement, subject only to its sole discretion, only to the extent that the maintenance allows the use of the easement for JMS and its guests. JMS further argues that it was under no affirmative duty to maintain the easement in any other manner, and that no evidence was put forth of any such duty or of any failure to comply with any such duty. According to JMS, no testimony was provided at trial that showed any failure by JMS to maintain the easement made it unusable or unpassable for guests of the speedway. The maintenance provision, found in paragraph six of the agreement, states:

Easement. The easement across Seller's property for ingress and egress for the use by Buyer and its guests shall be maintained entirely by Buyer. Buyer shall hold Sellers harmless from and pay all costs of litigation arising out of use of this easement by Buyer and its guests. If the easement is not used for a period of twelve months, it will terminate. This easement will also be subject to any and all prior easements of record. The gates on the easement will be locked at all times when not in use by Buyer. Buyer will furnish keys to the locks on gates to Sellers for their use. Sellers will reserve unto themselves, their heirs and assigns the right to use the easement.

¶ 8. The Fords argue that the plain terms of the language in the provision makes clear the degree of JMS's duty to maintain the easement. The Fords argue as follows:

Simple grammar reveals the prepositional phrase "across (the Ford's) property for ingress and egress for use by (JMS) and its guests" describes the easement, not determining the degree by which JMS shall maintain the easement. The simple sentence is "[t]he easement . . . shall be maintained entirely by (JMS)." The verb "maintain" is defined in Merriam-Webster's Collegiate Dictionary, Tenth Edition: "1. To keep in an existing state. . .: preserve from failure or decline."

According to the Fords, the clear intent of the easement provision was that the easement be maintained by JMS in the same condition as when granted in the agreement. The Fords further contend that JMS failed to maintain the easement in the same condition as when granted due to several facts. At trial, the Fords presented videotapes that depicted flooding caused by clogged culverts. According to the Fords, some of the flooding that occurred arose after JMS was ordered to clean the culverts by an agreed preliminary injunction. The Fords presented testimony that prior to their agreement with JMS, they cleaned the culverts on the easement two to three times per year as chronic flooding had been a problem since 1995. However, the testimony at trial established that the culverts were only cleaned by JMS once between May 2002 and December 2003, and only because JMS was ordered by the court to do so. Furthermore, the Fords imbedded a stop sign in concrete that also served as a gate post that allowed the easement to be locked off. At some time during the JMS's management of the easement, the gate post was knocked over by a collision. As of the date of this appeal, the stop sign and post had not been replaced. Furthermore, despite the injunction against JMS, it did not clean the debris from the numerous accidents that occurred at the intersection of the easement and the train tracks. Finally, the Fords presented evidence that JMS had failed to prevent overgrowth from vegetation and that no action had been taken to level a dip in a portion of gravel on the easement that can cause large vehicles to become stuck momentarily on the tracks.

¶ 9. In response to the Fords' contention that the failures of JMS to maintain the easement constitute a material breach of the agreement, JMS argues that the...