Legacy v. Gant

• Decision Date: 28 July 2011
• Docket Number: No. 2010–CA–00446–SCT.,2010–CA–00446–SCT.
• Citation: 66 So.3d 137
• Parties: GRAND LEGACY, LLP and Grand Legacy of Mississippi, LPv.Charles M. GANT, Individually; Stephen L. Shivers, Sr., Individually; and Gant & Shivers, LLC.
• Court: Mississippi Supreme Court

66 So.3d 137

GRAND LEGACY, LLP and Grand Legacy of Mississippi, LP

v.Charles M. GANT, Individually; Stephen L. Shivers, Sr., Individually; and Gant & Shivers, LLC.

No. 2010–CA–00446–SCT.

Supreme Court of Mississippi.

July 28, 2011.

David C. Dunbar, Grover Clark Monroe, II, Ridgeland, attorneys for appellants.John Michael Herke, Jackson, Donald C. Dornan, Jr., Tim C. Holleman, Gulfport, attorneys for appellees.EN BANC.RANDOLPH, Justice, for the Court:

¶ 1. This case involves the duties owed among members of partnerships and claims of fraud. Charles M. Gant possessed a letter of intent to purchase property. He offered to sell the property to Grand Legacy, LLP (“Grand–LLP”), once he completed the purchase. Grand–LLP responded to the offer by agreeing to purchase the property through an unnamed partnership entity with Gant that was to be formed at a later date. Gant & Shivers, LLC (as a limited partner) and Grand Legacy, LLP (as the general partner), signed a limited-partnership agreement on March 23, 2005, forming Grand Legacy of Mississippi, LP (“Grand–Miss LP”). After the purchase, Grand–Miss LP would develop the land. Grand–LLP and Grand–Miss LP (“Grand parties”) claim that Gant stated he would not profit from the purchase and resale. The Grand parties argue that a partnership was formed on that date, and that the Gant parties (including Gant, his partner, Stephen L. Shivers, and their company, Gant & Shivers, LLC (“Gant–Shivers”)) had a duty to disclose their intent to profit on the transaction, and that, in failing to disclose the intent to profit, the Gant parties committed fraud. The Gant parties counter that the sales contracts were integrated agreements that contain no clauses prohibiting different purchase and resale prices. Further, the Gant parties argue that an acknowledgment agreement, signed at closing by Grand–LLP, revealed that the price would be different and that the difference (profit) would be disbursed to Gant–Shivers. We affirm the trial court's grant of summary judgment in favor of the appellees.

FACTS

¶ 2. Orange Grove Utilities (“OGU”) owned approximately 104 acres of waterfront property in Gulfport. On October 25, 2004, OGU and Gant committed by letter of intent for the sale of the property by OGU to Gant for $100,000 per acre. The letter included a clause prohibiting disclosure of the purchase price. J. Scott Sanders, the managing partner of Grand–LLP, expressed an interest in the property. Sanders and Gant had been involved in another land transaction in the summer of 2004, after being introduced to each other by an attorney, Jay Jordan. Sanders had extensive real-estate experience. Grand–LLP is a Florida-based entity, claiming on its website to be one of that state's fastest-growing acquisition companies, with projects under development in eight states and “the strength to obtain favorable financing within weeks on land parcels valued at up to $100,000,000.”

¶ 3. After the OGU–Gant letter of intent had been signed, but before a sales contract was completed, Gant took Sanders and one of Sanders's business partners, Dr. Duane Pankratz, on a boat ride to view the property. Shivers was not present, as he was out of the country at the time. While on the boat, Sanders agreed to purchase the property, if Gant would agree to become a member of a limited partnership with Grand–LLP to own and develop the property. They agreed on a sales price of approximately $15 million, with Gant to have a thirty-percent interest in the to-be-formed limited partnership. Sanders later stated that he believed, based on his expertise in local real estate, that $15 million was a fair price for the property. Sanders and Pankratz claim that Gant told them he had the property “locked in” and that Gant had agreed to buy it for approximately $15 million, but that he could not tell them the exact price because of a confidentiality agreement. They say Gant stated that he would not profit on the sale, but that he would profit only on the “back end,” as an equity partner in the to-be-formed unnamed limited partnership. Gant denies saying he would not make a profit and claims that Sanders and Pankratz never asked how much he would be paying OGU.

¶ 4. On November 10, 2004, Gant and OGU signed a sales contract (“11–10 Agreement”) with the sale price of $100,000 per acre. The agreement included the following confidentiality clause:

PURCHASER ... AGREE[S] NOT TO DISCLOSE TO ANY PARTY, THE PURCHASE PRICE PAYABLE HEREUNDER.... NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN ... PURCHASER MAY DISCLOSE THIS CONTRACT AND THE TERMS THEROF TO ... LENDERS AND INVESTORS IN CONNECTION WITH THE ACQUISITION OF THE PROPERTY.

(Capitals in original; italics added.)

¶ 5. Two days later, Gant and Grand–LLP signed a sales contract (“11–12 agreement”). The sales price was $144,231 per acre. Gant was the seller. The purchaser was “a Limited Partnership to be formed between Grand Legacy [LLP] and Charles M. Gant.” The contract was subject to two contingencies: (1) Gant's acquisition of the property, and (2) formation of a limited partnership “MUTUALLY ACCEPTABLE TO BOTH SELLER AND PURCHASER.” (Emphasis in original.) The 11–12 agreement included a confidentiality clause identical to the one in the 11–10 agreement.

¶ 6. Other than the differences noted (price, identity of sellers and purchasers, and contingencies), the two contracts mirrored each other. Both were drafted by Jordan. Neither contract prohibited different sales prices or the making of a profit. The contracts included the following identical merger clauses:

This agreement constitutes the entire agreement between the parties hereto and, unless specified otherwise herein, no representation, inducement, promises, or prior agreements, oral or written, between the parties, or made by any agent on behalf of the parties or otherwise, shall be of any force and effect.

¶ 7. The 11–12 agreement was amended in February 2005 after being reviewed by Grand–LLP's attorneys in Florida. Jordan applied to the Mississippi Secretary of State for certification of limited-partnership status for the newly formed entity that would purchase the property, Grand–Miss LP. On March 22, 2005, the certificate was granted. By this time, Shivers had returned to Gulfport. On March 23, 2005, Gant, Shivers, and Sanders (as managing partner of Grand–LLP) signed the limited-partnership agreement that had been drafted by Jordan. The partners were Grand–LLP as general partner and Gant–Shivers as limited partner.

¶ 8. Subsequently, the limited-partnership agreement was amended, making SOJ Properties, LLC (including Jordan and his law partners) a limited partner with a seven-percent interest. On April 1, 2005, the 11–12 agreement again was amended, making Gant–Shivers the seller, and Grand–Miss LP the purchaser. On April 12, 2005, Gant, Shivers, and Sanders signed an Acknowledgment and Waiver in which they recognized that Jordan and his firm, Schwartz, Orgler, and Jordan, PLLC (“SOJ Law”), had provided services and had attorney-client relationships with “Gant & Shivers, Sanders, and Grand Legacy.” The parties agreed that SOJ Properties' share was fair and reasonable. They acknowledged that they had been advised by SOJ Law and its members “to seek independent counsel relative to this transaction and that the parties [had] sought such independent counsel or [had] waived the same....” The parties acknowledged that SOJ Law would continue to have attorney-client relationships with them (individually and collectively), and waived any conflicts inherent in having SOJ Properties own an interest while its members provided legal services for the partnership and its members. Simultaneous closings of the two sales were planned for April 15, 2005. Grand–Miss LP obtained a bank loan for approximately $9.6 million, and Grand–LLP was to provide the remainder of the funding.

¶ 9. Sanders claims that he told Jordan that he was not interested in the deal unless the new limited partnership was buying the property at the same price Gant was paying OGU. Sanders claims that Jordan told him the two contracts would mirror each other. Jordan recalls it quite differently. Jordan testified that Sanders asked about sales prices, but that he told Sanders he could not divulge the price because of the confidentiality agreement. Jordan said he told Sanders to talk to Gant.

¶ 10. On April 15, 2005, Sanders, Gant, and Shivers signed the closing documents, as well as an Acknowledgment Agreement prepared by Jordan. The agreement referred to the confidentiality clauses in the sales contracts and included two paragraphs indicating that a difference in purchase prices would be disbursed to Gant–Shivers, as follows:

WHEREAS, Grand Legacy of Mississippi, LP, by and through, Gant & Shivers, LLC, its limited partner and Grand Legacy, [LLP], its General Partner acknowledge that both the initial purchase by Gant & Shivers, LLC, from the initial Seller; and the purchase by Grand Legacy of Mississippi, LP, from Gant & Shivers, LLC, will be simultaneous closings but both purchases have confidentiality clauses in the contracts that prohibit disclosure of the terms of the purchases; and

WHEREAS, Grand Legacy of Mississippi, LP, is obtaining a [bank loan for approximately $9,600,000] to Purchase property from Gant & Shivers, LLC, with said funds also being authorized by [the bank] to be used for the initial purchase of the property by Gant & Shivers, LLC; and

WHEREAS, [Sanders] of Grand Legacy, LLP, ... has agreed to contribute ... the balance of the funds ..., with said funds also being used to fund the initial purchase ...; and

WHEREAS, Grand Legacy, LLP, ... and Gant & Shivers, LLC, ... acknowledge that on both closing statements the funds shall be shown as a loan from Grand Legacy of Mississippi, LP, but that no note and Deed of Trust are being executed as the closings are simultaneous and the difference in the initial Purchase Price...